Western Alliance Bancorporation
Annual Report 2022

Plain-text annual report

STABLE. RELIABLE. READY. (cid:48)(cid:73)(cid:88)(cid:88)(cid:73)(cid:86)(cid:4)(cid:74)(cid:86)(cid:83)(cid:81)(cid:4)(cid:52)(cid:86)(cid:73)(cid:87)(cid:77)(cid:72)(cid:73)(cid:82)(cid:88)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:41)(cid:92)(cid:73)(cid:71)(cid:89)(cid:88)(cid:77)(cid:90)(cid:73)(cid:4)(cid:51)(cid:446)(cid:71)(cid:73)(cid:86)(cid:4) Kenneth A. Vecchione Dear Fellow Shareholders, (cid:37)(cid:88)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:71)(cid:80)(cid:83)(cid:87)(cid:73)(cid:4)(cid:83)(cid:74)(cid:4)(cid:22)(cid:20)(cid:22)(cid:22)(cid:16)(cid:4)(cid:77)(cid:88)(cid:4)(cid:91)(cid:83)(cid:89)(cid:80)(cid:72)(cid:4)(cid:76)(cid:69)(cid:90)(cid:73)(cid:4)(cid:70)(cid:73)(cid:73)(cid:82)(cid:4)(cid:72)(cid:77)(cid:446)(cid:71)(cid:89)(cid:80)(cid:88)(cid:4)(cid:88)(cid:83)(cid:4)(cid:74)(cid:83)(cid:86)(cid:73)(cid:87)(cid:73)(cid:73)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:73)(cid:90)(cid:73)(cid:82)(cid:88)(cid:87)(cid:4)(cid:88)(cid:76)(cid:69)(cid:88)(cid:4)(cid:91)(cid:83)(cid:89)(cid:80)(cid:72)(cid:4)(cid:84)(cid:80)(cid:69)(cid:93)(cid:4)(cid:83)(cid:89)(cid:88)(cid:4)(cid:77)(cid:82)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4) 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(cid:45)(cid:82)(cid:88)(cid:73)(cid:86)(cid:73)(cid:87)(cid:88)(cid:17)(cid:41)(cid:69)(cid:86)(cid:82)(cid:77)(cid:82)(cid:75) (cid:37)(cid:87)(cid:87)(cid:73)(cid:88)(cid:87)(cid:4)(cid:22)(cid:20)(cid:22)(cid:21) 2 | EXECUTIVE PERSPECTIVES Consistent Performance Makes Us a Bank for All Seasons Dale M. Gibbons (cid:58)(cid:77)(cid:71)(cid:73)(cid:4)(cid:39)(cid:76)(cid:69)(cid:77)(cid:86)(cid:81)(cid:69)(cid:82)(cid:16)(cid:4)(cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:42)(cid:77)(cid:82)(cid:69)(cid:82)(cid:71)(cid:77)(cid:69)(cid:80)(cid:4)(cid:51)(cid:446)(cid:71)(cid:73)(cid:86) (cid:45)(cid:4)(cid:76)(cid:69)(cid:90)(cid:73)(cid:4)(cid:80)(cid:83)(cid:82)(cid:75)(cid:4)(cid:72)(cid:73)(cid:87)(cid:71)(cid:86)(cid:77)(cid:70)(cid:73)(cid:72)(cid:4)(cid:59)(cid:73)(cid:87)(cid:88)(cid:73)(cid:86)(cid:82)(cid:4)(cid:37)(cid:80)(cid:80)(cid:77)(cid:69)(cid:82)(cid:71)(cid:73)(cid:4)(cid:69)(cid:87)(cid:4)(cid:392)(cid:69)(cid:4)(cid:70)(cid:69)(cid:82)(cid:79)(cid:4)(cid:74)(cid:83)(cid:86)(cid:4)(cid:69)(cid:80)(cid:80)(cid:4)(cid:87)(cid:73)(cid:69)(cid:87)(cid:83)(cid:82)(cid:87),(cid:393)(cid:4)(cid:88)(cid:76)(cid:69)(cid:82)(cid:79)(cid:87)(cid:4)(cid:88)(cid:83)(cid:4)(cid:83)(cid:89)(cid:86)(cid:4) 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(cid:56)(cid:76)(cid:77)(cid:87)(cid:4)(cid:77)(cid:87)(cid:4)(cid:91)(cid:76)(cid:69)(cid:88)(cid:4)(cid:83)(cid:89)(cid:86)(cid:4)(cid:82)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:69)(cid:80)(cid:4)(cid:70)(cid:89)(cid:87)(cid:77)(cid:82)(cid:73)(cid:87)(cid:87)(cid:4)(cid:80)(cid:77)(cid:82)(cid:73)(cid:87)(cid:4)(cid:69)(cid:86)(cid:73)(cid:4)(cid:69)(cid:80)(cid:80)(cid:4)(cid:69)(cid:70)(cid:83)(cid:89)(cid:88)(cid:18)(cid:4) As a national bank with a regional branch footprint, Western Alliance’s uniquely flexible, diversified business model positions us as a premier commercial bank with strong asset quality across economic cycles. This approach enabled us to close out the fourth quarter with record revenues.” $2.2B (cid:50)(cid:73)(cid:88)(cid:4)(cid:45)(cid:82)(cid:88)(cid:73)(cid:86)(cid:73)(cid:87)(cid:88) (cid:45)(cid:82)(cid:71)(cid:83)(cid:81)(cid:73)(cid:4)(cid:22)(cid:20)(cid:22)(cid:22) $1.5B (cid:50)(cid:73)(cid:88)(cid:4)(cid:45)(cid:82)(cid:88)(cid:73)(cid:86)(cid:73)(cid:87)(cid:88)(cid:4) (cid:45)(cid:82)(cid:71)(cid:83)(cid:81)(cid:73)(cid:4)(cid:22)(cid:20)(cid:22)(cid:21) 55 Diverse Deposit Generators Strengthen Western Alliance 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(cid:22)(cid:20)(cid:22)(cid:22)(cid:4)(cid:69)(cid:80)(cid:83)(cid:82)(cid:73)(cid:16)(cid:4)(cid:44)(cid:51)(cid:37)(cid:4)(cid:70)(cid:69)(cid:82)(cid:79)(cid:77)(cid:82)(cid:75)(cid:4)(cid:75)(cid:86)(cid:73)(cid:91)(cid:4)(cid:70)(cid:93)(cid:4)(cid:8)(cid:22)(cid:29)(cid:23)(cid:4)(cid:81)(cid:77)(cid:80)(cid:80)(cid:77)(cid:83)(cid:82)(cid:4)(cid:83)(cid:90)(cid:73)(cid:86)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:84)(cid:86)(cid:77)(cid:83)(cid:86)(cid:4)(cid:85)(cid:89)(cid:69)(cid:86)(cid:88)(cid:73)(cid:86)(cid:18) $1.384B (cid:52)(cid:52)(cid:50)(cid:54)(cid:4)(cid:22)(cid:20)(cid:22)(cid:22) $1.122B (cid:52)(cid:52)(cid:50)(cid:54)(cid:4)(cid:22)(cid:20)(cid:22)(cid:21) 6 | EXECUTIVE PERSPECTIVES Regional Banking Excellence Tim R. 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(cid:88)(cid:76)(cid:69)(cid:88)(cid:4)(cid:87)(cid:89)(cid:84)(cid:84)(cid:83)(cid:86)(cid:88)(cid:4)(cid:71)(cid:89)(cid:87)(cid:88)(cid:83)(cid:81)(cid:73)(cid:86)(cid:87)(cid:4)(cid:89)(cid:87)(cid:77)(cid:82)(cid:75)(cid:4)(cid:86)(cid:83)(cid:70)(cid:89)(cid:87)(cid:88)(cid:16)(cid:4)(cid:80)(cid:73)(cid:69)(cid:72)(cid:77)(cid:82)(cid:75)(cid:17)(cid:73)(cid:72)(cid:75)(cid:73)(cid:4)(cid:88)(cid:73)(cid:71)(cid:76)(cid:82)(cid:83)(cid:80)(cid:83)(cid:75)(cid:93)(cid:4)(cid:88)(cid:83)(cid:83)(cid:80)(cid:87)(cid:18) Western Alliance’s ongoing (cid:74)(cid:83)(cid:71)(cid:89)(cid:87)(cid:4)(cid:83)(cid:82)(cid:4)(cid:83)(cid:89)(cid:86)(cid:4)(cid:72)(cid:77)(cid:90)(cid:73)(cid:86)(cid:87)(cid:77)(cid:444)(cid:73)(cid:72)(cid:4)(cid:72)(cid:73)(cid:84)(cid:83)(cid:87)(cid:77)(cid:88)(cid:4) businesses is an essential element of our national commercial bank strategy.” 3.41% (cid:50)(cid:73)(cid:88)(cid:4)(cid:45)(cid:82)(cid:88)(cid:73)(cid:86)(cid:73)(cid:87)(cid:88) 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(cid:54)(cid:69)(cid:88)(cid:77)(cid:83)(cid:4)(cid:22)(cid:20)(cid:22)(cid:22) 42.9% (cid:41)(cid:446)(cid:71)(cid:77)(cid:73)(cid:82)(cid:71)(cid:93)(cid:4) (cid:54)(cid:69)(cid:88)(cid:77)(cid:83)(cid:4)(cid:22)(cid:20)(cid:22)(cid:21) 10 | EXECUTIVE PERSPECTIVES Risk Management Is Part of Everyone’s Job Emily Nachlas (cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:54)(cid:77)(cid:87)(cid:79)(cid:4)(cid:51)(cid:446)(cid:71)(cid:73)(cid:86) 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Helps Build a Better Bank Jessica Jarvi (cid:43)(cid:73)(cid:82)(cid:73)(cid:86)(cid:69)(cid:80)(cid:4)(cid:39)(cid:83)(cid:89)(cid:82)(cid:87)(cid:73)(cid:80) (cid:45)(cid:82)(cid:4)(cid:83)(cid:89)(cid:86)(cid:4)(cid:91)(cid:83)(cid:86)(cid:80)(cid:72)(cid:16)(cid:4)(cid:71)(cid:83)(cid:86)(cid:84)(cid:83)(cid:86)(cid:69)(cid:88)(cid:73)(cid:4)(cid:86)(cid:73)(cid:87)(cid:84)(cid:83)(cid:82)(cid:87)(cid:77)(cid:70)(cid:77)(cid:80)(cid:77)(cid:88)(cid:93)(cid:4)(cid:77)(cid:87)(cid:4)(cid:69)(cid:4)(cid:88)(cid:83)(cid:88)(cid:69)(cid:80)(cid:4)(cid:73)(cid:71)(cid:83)(cid:87)(cid:93)(cid:87)(cid:88)(cid:73)(cid:81)(cid:4)(cid:87)(cid:89)(cid:84)(cid:84)(cid:83)(cid:86)(cid:88)(cid:77)(cid:82)(cid:75)(cid:4)(cid:71)(cid:80)(cid:77)(cid:73)(cid:82)(cid:88)(cid:87)(cid:16)(cid:4) 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Vecchione (cid:52)(cid:86)(cid:73)(cid:87)(cid:77)(cid:72)(cid:73)(cid:82)(cid:88)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:41)(cid:92)(cid:73)(cid:71)(cid:89)(cid:88)(cid:77)(cid:90)(cid:73)(cid:4)(cid:51)(cid:446)(cid:71)(cid:73)(cid:86) 14 | EXECUTIVE PERSPECTIVES Putting People First at Western Alliance Barbara Kennedy (cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:44)(cid:89)(cid:81)(cid:69)(cid:82)(cid:4)(cid:54)(cid:73)(cid:87)(cid:83)(cid:89)(cid:86)(cid:71)(cid:73)(cid:87)(cid:4)(cid:51)(cid:446)(cid:71)(cid:73)(cid:86) 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(cid:73)(cid:74)(cid:74)(cid:83)(cid:86)(cid:88)(cid:87)(cid:4)(cid:88)(cid:83)(cid:4)(cid:84)(cid:86)(cid:77)(cid:83)(cid:86)(cid:77)(cid:88)(cid:77)(cid:94)(cid:73)(cid:4)(cid:76)(cid:77)(cid:86)(cid:77)(cid:82)(cid:75)(cid:4)(cid:72)(cid:73)(cid:80)(cid:77)(cid:70)(cid:73)(cid:86)(cid:69)(cid:88)(cid:73)(cid:80)(cid:93)(cid:4)(cid:88)(cid:83)(cid:4)(cid:73)(cid:82)(cid:87)(cid:89)(cid:86)(cid:73)(cid:4)(cid:91)(cid:73)(cid:4)(cid:71)(cid:76)(cid:83)(cid:83)(cid:87)(cid:73)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:86)(cid:77)(cid:75)(cid:76)(cid:88)(cid:4)(cid:84)(cid:73)(cid:83)(cid:84)(cid:80)(cid:73)(cid:18)(cid:4) (cid:37)(cid:88)(cid:4)(cid:59)(cid:73)(cid:87)(cid:88)(cid:73)(cid:86)(cid:82)(cid:4)(cid:37)(cid:80)(cid:80)(cid:77)(cid:69)(cid:82)(cid:71)(cid:73)(cid:16)(cid:4)(cid:83)(cid:89)(cid:86)(cid:4)(cid:84)(cid:73)(cid:83)(cid:84)(cid:80)(cid:73)(cid:4)(cid:69)(cid:86)(cid:73)(cid:4)(cid:73)(cid:82)(cid:75)(cid:69)(cid:75)(cid:73)(cid:72)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:73)(cid:81)(cid:84)(cid:83)(cid:91)(cid:73)(cid:86)(cid:73)(cid:72)(cid:4)(cid:385)(cid:4)(cid:77)(cid:82)(cid:4)(cid:88)(cid:89)(cid:86)(cid:82)(cid:16)(cid:4) (cid:74)(cid:89)(cid:73)(cid:80)(cid:77)(cid:82)(cid:75)(cid:4)(cid:69)(cid:4)(cid:71)(cid:83)(cid:80)(cid:80)(cid:69)(cid:70)(cid:83)(cid:86)(cid:69)(cid:88)(cid:77)(cid:90)(cid:73)(cid:16)(cid:4)(cid:71)(cid:83)(cid:81)(cid:81)(cid:77)(cid:88)(cid:88)(cid:73)(cid:72)(cid:4)(cid:86)(cid:73)(cid:80)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:87)(cid:76)(cid:77)(cid:84)(cid:4)(cid:91)(cid:77)(cid:88)(cid:76)(cid:4)(cid:83)(cid:89)(cid:86)(cid:4)(cid:71)(cid:89)(cid:87)(cid:88)(cid:83)(cid:81)(cid:73)(cid:86)(cid:87)(cid:18)(cid:4)(cid:38)(cid:73)(cid:77)(cid:82)(cid:75)(cid:4) (cid:82)(cid:77)(cid:81)(cid:70)(cid:80)(cid:73)(cid:16)(cid:4)(cid:74)(cid:80)(cid:73)(cid:92)(cid:77)(cid:70)(cid:80)(cid:73)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:73)(cid:82)(cid:88)(cid:86)(cid:73)(cid:84)(cid:86)(cid:73)(cid:82)(cid:73)(cid:89)(cid:86)(cid:77)(cid:69)(cid:80)(cid:4)(cid:69)(cid:86)(cid:73)(cid:4)(cid:69)(cid:80)(cid:80)(cid:4)(cid:71)(cid:76)(cid:69)(cid:86)(cid:69)(cid:71)(cid:88)(cid:73)(cid:86)(cid:77)(cid:87)(cid:88)(cid:77)(cid:71)(cid:87)(cid:4)(cid:88)(cid:76)(cid:69)(cid:88)(cid:4)(cid:72)(cid:73)(cid:87)(cid:71)(cid:86)(cid:77)(cid:70)(cid:73)(cid:4)(cid:83)(cid:89)(cid:86)(cid:4) (cid:84)(cid:73)(cid:83)(cid:84)(cid:80)(cid:73)(cid:18)(cid:4)(cid:56)(cid:76)(cid:73)(cid:87)(cid:73)(cid:4)(cid:69)(cid:88)(cid:88)(cid:86)(cid:77)(cid:70)(cid:89)(cid:88)(cid:73)(cid:87)(cid:4)(cid:69)(cid:80)(cid:87)(cid:83)(cid:4)(cid:72)(cid:73)(cid:74)(cid:77)(cid:82)(cid:73)(cid:4)(cid:59)(cid:73)(cid:87)(cid:88)(cid:73)(cid:86)(cid:82)(cid:4)(cid:37)(cid:80)(cid:80)(cid:77)(cid:69)(cid:82)(cid:71)(cid:73)(cid:4)(cid:38)(cid:69)(cid:82)(cid:79)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:83)(cid:89)(cid:86)(cid:4)(cid:87)(cid:77)(cid:82)(cid:75)(cid:89)(cid:80)(cid:69)(cid:86)(cid:4) (cid:71)(cid:89)(cid:80)(cid:88)(cid:89)(cid:86)(cid:73)(cid:4)(cid:88)(cid:76)(cid:69)(cid:88)(cid:4)(cid:84)(cid:89)(cid:88)(cid:87)(cid:4)(cid:84)(cid:73)(cid:83)(cid:84)(cid:80)(cid:73)(cid:4)(cid:74)(cid:77)(cid:86)(cid:87)(cid:88)(cid:18)(cid:4) FACTS AND FIGURES $5.4B $67.7B Total Equity Total Assets 3,365 Employees (cid:51)(cid:446)(cid:71)(cid:73)(cid:87) LONG-TERM D EPOSIT RATING 1 A2 (cid:49)(cid:83)(cid:83)(cid:72)(cid:93)(cid:389)(cid:87) (cid:45)(cid:82)(cid:90)(cid:73)(cid:87)(cid:88)(cid:83)(cid:86)(cid:4)(cid:55)(cid:73)(cid:86)(cid:90)(cid:77)(cid:71)(cid:73) A (cid:47)(cid:86)(cid:83)(cid:80)(cid:80)(cid:4)(cid:38)(cid:83)(cid:82)(cid:72)(cid:4) (cid:54)(cid:69)(cid:88)(cid:77)(cid:82)(cid:75)(cid:4)(cid:37)(cid:75)(cid:73)(cid:82)(cid:71)(cid:93) LONG-TERM D EBT RATIN G 1 A- (cid:47)(cid:86)(cid:83)(cid:80)(cid:80)(cid:4)(cid:38)(cid:83)(cid:82)(cid:72)(cid:4) (cid:54)(cid:69)(cid:88)(cid:77)(cid:82)(cid:75)(cid:4)(cid:37)(cid:75)(cid:73)(cid:82)(cid:71)(cid:93) Baa2 (cid:49)(cid:83)(cid:83)(cid:72)(cid:93)(cid:389)(cid:87) (cid:45)(cid:82)(cid:90)(cid:73)(cid:87)(cid:88)(cid:83)(cid:86)(cid:4) (cid:55)(cid:73)(cid:86)(cid:90)(cid:77)(cid:71)(cid:73) ID C FIN A NCI A L PUBLI SHI NG The Standard in Financial Rating Institutions, Rated 300 Superior* (cid:14)(cid:54)(cid:73)(cid:84)(cid:83)(cid:86)(cid:88)(cid:4)(cid:72)(cid:69)(cid:88)(cid:73)(cid:72)(cid:4)(cid:20)(cid:22)(cid:19)(cid:22)(cid:24)(cid:19)(cid:22)(cid:20)(cid:22)(cid:22) (cid:21)(cid:18)(cid:4)(cid:37)(cid:87)(cid:4)(cid:83)(cid:74)(cid:4)(cid:37)(cid:84)(cid:86)(cid:77)(cid:80)(cid:4)(cid:22)(cid:20)(cid:16)(cid:4)(cid:22)(cid:20)(cid:22)(cid:23) I NDUSTRY AC CO L A DE S #1 Top-Performing Large Bank with Assets $50 Billion and Above AMERICAN BANKER #1 Bank with Assets of $50 Billion+ & Top 10 U.S. Banks for Growth Strategy BANK DIRECTOR’S 2022 RANKINGBANKING STUDY #2 Best-Performing of the 50 Largest Public U.S. Banks S&P GLOBAL MARKET INTELLIGENCE 2021 One of Forbes’ “America’s Best Banks” Year After Year Financial Highlights Balance Sheet ($ in millions) 2020 2021 2022 (cid:56)(cid:83)(cid:88)(cid:69)(cid:80)(cid:4)(cid:37)(cid:87)(cid:87)(cid:73)(cid:88)(cid:87) 36,461 55,983 67,734 (cid:44)(cid:42)(cid:45)(cid:4)(cid:48)(cid:83)(cid:69)(cid:82)(cid:87)(cid:16)(cid:4)(cid:82)(cid:73)(cid:88)(cid:4)(cid:83)(cid:74)(cid:4)(cid:72)(cid:73)(cid:74)(cid:73)(cid:86)(cid:86)(cid:73)(cid:72)(cid:4)(cid:74)(cid:73)(cid:73)(cid:87) 27,053 39,075 51,862 (cid:56)(cid:83)(cid:88)(cid:69)(cid:80)(cid:4)(cid:40)(cid:73)(cid:84)(cid:83)(cid:87)(cid:77)(cid:88)(cid:87) (cid:56)(cid:83)(cid:88)(cid:69)(cid:80)(cid:4)(cid:41)(cid:85)(cid:89)(cid:77)(cid:88)(cid:93) (cid:52)(cid:86)(cid:83)(cid:444)(cid:88)(cid:69)(cid:70)(cid:77)(cid:80)(cid:77)(cid:88)(cid:93)(cid:4)(cid:12)(cid:8)(cid:4)(cid:77)(cid:82)(cid:4)(cid:81)(cid:77)(cid:80)(cid:80)(cid:77)(cid:83)(cid:82)(cid:87)(cid:13) (cid:50)(cid:73)(cid:88)(cid:4)(cid:45)(cid:82)(cid:88)(cid:73)(cid:86)(cid:73)(cid:87)(cid:88)(cid:4)(cid:45)(cid:82)(cid:71)(cid:83)(cid:81)(cid:73) (cid:52)(cid:52)(cid:50)(cid:54)2 (cid:50)(cid:73)(cid:88)(cid:4)(cid:45)(cid:82)(cid:71)(cid:83)(cid:81)(cid:73) (cid:54)(cid:51)(cid:37)(cid:37)(cid:4)(cid:12)(cid:9)(cid:13) (cid:54)(cid:51)(cid:37)(cid:56)(cid:39)(cid:41)2(cid:4)(cid:12)(cid:9)(cid:13) (cid:50)(cid:73)(cid:88)(cid:4)(cid:45)(cid:82)(cid:88)(cid:73)(cid:86)(cid:73)(cid:87)(cid:88)(cid:4)(cid:49)(cid:69)(cid:86)(cid:75)(cid:77)(cid:82)(cid:4)(cid:12)(cid:9)(cid:13) (cid:41)(cid:446)(cid:71)(cid:77)(cid:73)(cid:82)(cid:71)(cid:93)(cid:4)(cid:54)(cid:69)(cid:88)(cid:77)(cid:83)2(cid:4)(cid:12)(cid:9)(cid:13) (cid:56)(cid:69)(cid:82)(cid:75)(cid:77)(cid:70)(cid:80)(cid:73)(cid:4)(cid:39)(cid:83)(cid:81)(cid:81)(cid:83)(cid:82)(cid:4)(cid:41)(cid:85)(cid:89)(cid:77)(cid:88)(cid:93)(cid:4)(cid:19)(cid:4)(cid:56)(cid:69)(cid:82)(cid:75)(cid:77)(cid:70)(cid:80)(cid:73)(cid:4)(cid:37)(cid:87)(cid:87)(cid:73)(cid:88)(cid:87)2(cid:4)(cid:12)(cid:9)(cid:13) Asset Quality (%) (cid:50)(cid:83)(cid:82)(cid:17)(cid:52)(cid:73)(cid:86)(cid:74)(cid:83)(cid:86)(cid:81)(cid:77)(cid:82)(cid:75)(cid:4)(cid:37)(cid:87)(cid:87)(cid:73)(cid:88)(cid:87)(cid:23)(cid:4)(cid:19)(cid:4)(cid:56)(cid:83)(cid:88)(cid:69)(cid:80)(cid:4)(cid:37)(cid:87)(cid:87)(cid:73)(cid:88)(cid:87) (cid:48)(cid:83)(cid:69)(cid:82)(cid:4)(cid:48)(cid:83)(cid:87)(cid:87)(cid:4)(cid:54)(cid:73)(cid:87)(cid:73)(cid:86)(cid:90)(cid:73)(cid:87)(cid:4)(cid:19)(cid:4)(cid:42)(cid:89)(cid:82)(cid:72)(cid:73)(cid:72)(cid:4)(cid:48)(cid:83)(cid:69)(cid:82)(cid:87) (cid:39)(cid:83)(cid:81)(cid:81)(cid:83)(cid:82)(cid:4)(cid:41)(cid:85)(cid:89)(cid:77)(cid:88)(cid:93)(cid:4)(cid:56)(cid:77)(cid:73)(cid:86)(cid:4)(cid:21)(cid:4)(cid:12)(cid:39)(cid:41)(cid:56)(cid:21)(cid:13)(cid:4)(cid:54)(cid:69)(cid:88)(cid:77)(cid:83) Per Share Information ($) (cid:39)(cid:83)(cid:81)(cid:81)(cid:83)(cid:82)(cid:4)(cid:40)(cid:77)(cid:90)(cid:77)(cid:72)(cid:73)(cid:82)(cid:72)(cid:87)(cid:4)(cid:40)(cid:73)(cid:71)(cid:80)(cid:69)(cid:86)(cid:73)(cid:72)(cid:4)(cid:84)(cid:73)(cid:86)(cid:4)(cid:55)(cid:76)(cid:69)(cid:86)(cid:73) (cid:24) (cid:41)(cid:69)(cid:86)(cid:82)(cid:77)(cid:82)(cid:75)(cid:87)(cid:4)(cid:52)(cid:73)(cid:86)(cid:4)(cid:55)(cid:76)(cid:69)(cid:86)(cid:73) 31,930 47,612 53,644 3,413 4,963 5,356 1,166.9 1,548.8 2,216.3 746.1 1,122.8 1,384.2 506.6 899.2 1,057.3 1.61 17.7 3.97 38.8 8.6 0.32 1.17 9.9 1.00 5.04 1.83 26.2 3.41 42.9 7.3 0.15 0.74 9.1 1.20 8.67 1.62 25.4 3.67 44.9 6.5 0.14 0.69 9.3 1.42 9.70 (cid:22)(cid:18) (cid:59)(cid:76)(cid:73)(cid:86)(cid:73)(cid:4)(cid:82)(cid:83)(cid:82)(cid:17)(cid:43)(cid:37)(cid:37)(cid:52)(cid:4)(cid:444)(cid:82)(cid:69)(cid:82)(cid:71)(cid:77)(cid:69)(cid:80)(cid:4)(cid:81)(cid:73)(cid:69)(cid:87)(cid:89)(cid:86)(cid:73)(cid:87)(cid:4)(cid:69)(cid:86)(cid:73)(cid:4)(cid:89)(cid:87)(cid:73)(cid:72)(cid:16)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:71)(cid:83)(cid:81)(cid:84)(cid:69)(cid:86)(cid:69)(cid:70)(cid:80)(cid:73)(cid:4)(cid:43)(cid:37)(cid:37)(cid:52)(cid:4)(cid:444)(cid:82)(cid:69)(cid:82)(cid:71)(cid:77)(cid:69)(cid:80)(cid:4)(cid:81)(cid:73)(cid:69)(cid:87)(cid:89)(cid:86)(cid:73)(cid:16)(cid:4)(cid:69)(cid:87)(cid:4)(cid:91)(cid:73)(cid:80)(cid:80)(cid:4)(cid:69)(cid:87)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:86)(cid:73)(cid:71)(cid:83)(cid:82)(cid:71)(cid:77)(cid:80)(cid:77)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:4)(cid:88)(cid:83)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:71)(cid:83)(cid:81)(cid:84)(cid:69)(cid:86)(cid:69)(cid:70)(cid:80)(cid:73)(cid:4)(cid:43)(cid:37)(cid:37)(cid:52)(cid:4)(cid:444)(cid:82)(cid:69)(cid:82)(cid:71)(cid:77)(cid:69)(cid:80)(cid:4)(cid:81)(cid:73)(cid:69)(cid:87)(cid:89)(cid:86)(cid:73)(cid:16)(cid:4) (cid:71)(cid:69)(cid:82)(cid:4)(cid:70)(cid:73)(cid:4)(cid:74)(cid:83)(cid:89)(cid:82)(cid:72)(cid:4)(cid:77)(cid:82)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:39)(cid:83)(cid:81)(cid:84)(cid:69)(cid:82)(cid:93)(cid:389)(cid:87)(cid:4)(cid:37)(cid:82)(cid:82)(cid:89)(cid:69)(cid:80)(cid:4)(cid:54)(cid:73)(cid:84)(cid:83)(cid:86)(cid:88)(cid:4)(cid:83)(cid:82)(cid:4)(cid:42)(cid:83)(cid:86)(cid:81)(cid:4)(cid:21)(cid:20)(cid:17)(cid:47)(cid:4)(cid:74)(cid:83)(cid:86)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:93)(cid:73)(cid:69)(cid:86)(cid:4)(cid:73)(cid:82)(cid:72)(cid:73)(cid:72)(cid:4)(cid:40)(cid:73)(cid:71)(cid:73)(cid:81)(cid:70)(cid:73)(cid:86)(cid:4)(cid:23)(cid:21)(cid:16)(cid:4)(cid:22)(cid:20)(cid:22)(cid:22)(cid:4)(cid:69)(cid:87)(cid:4)(cid:444)(cid:80)(cid:73)(cid:72)(cid:4)(cid:91)(cid:77)(cid:88)(cid:76)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:55)(cid:73)(cid:71)(cid:89)(cid:86)(cid:77)(cid:88)(cid:77)(cid:73)(cid:87)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:41)(cid:92)(cid:71)(cid:76)(cid:69)(cid:82)(cid:75)(cid:73)(cid:4)(cid:39)(cid:83)(cid:81)(cid:81)(cid:77)(cid:87)(cid:87)(cid:77)(cid:83)(cid:82)(cid:18)(cid:4) (cid:23)(cid:18)(cid:4)(cid:50)(cid:83)(cid:82)(cid:17)(cid:84)(cid:73)(cid:86)(cid:74)(cid:83)(cid:86)(cid:81)(cid:77)(cid:82)(cid:75)(cid:4)(cid:69)(cid:87)(cid:87)(cid:73)(cid:88)(cid:87)(cid:4)(cid:77)(cid:82)(cid:71)(cid:80)(cid:89)(cid:72)(cid:73)(cid:4)(cid:82)(cid:83)(cid:82)(cid:69)(cid:71)(cid:71)(cid:86)(cid:89)(cid:69)(cid:80)(cid:4)(cid:80)(cid:83)(cid:69)(cid:82)(cid:87)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:86)(cid:73)(cid:84)(cid:83)(cid:87)(cid:87)(cid:73)(cid:87)(cid:87)(cid:73)(cid:72)(cid:4)(cid:69)(cid:87)(cid:87)(cid:73)(cid:88)(cid:87)(cid:18) (cid:24)(cid:18)(cid:4)(cid:53)(cid:89)(cid:69)(cid:86)(cid:88)(cid:73)(cid:86)(cid:80)(cid:93)(cid:4)(cid:71)(cid:69)(cid:87)(cid:76)(cid:4)(cid:72)(cid:77)(cid:90)(cid:77)(cid:72)(cid:73)(cid:82)(cid:72)(cid:4)(cid:77)(cid:82)(cid:77)(cid:88)(cid:77)(cid:69)(cid:88)(cid:73)(cid:72)(cid:4)(cid:77)(cid:82)(cid:4)(cid:23)(cid:53)(cid:4)(cid:22)(cid:20)(cid:21)(cid:29)(cid:18) 17 Financial Highlights Continued Growth in TBV per Share (cid:59)(cid:37)(cid:48)(cid:4)(cid:4)(cid:4)(cid:4) (cid:59)(cid:37)(cid:48)(cid:4)(cid:91)(cid:77)(cid:88)(cid:76)(cid:4)(cid:40)(cid:77)(cid:90)(cid:77)(cid:72)(cid:73)(cid:82)(cid:72)(cid:87)(cid:4)(cid:37)(cid:72)(cid:72)(cid:73)(cid:72)(cid:4)(cid:38)(cid:69)(cid:71)(cid:79)(cid:4)(cid:4)(cid:4) (cid:52)(cid:73)(cid:73)(cid:86)(cid:4)(cid:37)(cid:90)(cid:73)(cid:86)(cid:69)(cid:75)(cid:73)(cid:25) (cid:52)(cid:73)(cid:73)(cid:86)(cid:4)(cid:37)(cid:90)(cid:73)(cid:86)(cid:69)(cid:75)(cid:73)(cid:25) with Dividends Added Back 192% 165% 76% 62% 2016 2017 2018 2019 2020 2021 2022 Net Interest Income, NIM and Average Interest on Earning Assets 4.65% 4.68% 4.58% $916M $785M $657M $1.2B 3.97% 4.52% $1.0B $2.2B $1.5B 3.67% 3.41% (cid:50)(cid:73)(cid:88)(cid:4)(cid:45)(cid:82)(cid:88)(cid:73)(cid:86)(cid:73)(cid:87)(cid:88)(cid:4)(cid:45)(cid:82)(cid:71)(cid:83)(cid:81)(cid:73) (cid:37)(cid:90)(cid:73)(cid:86)(cid:69)(cid:75)(cid:73)(cid:4)(cid:45)(cid:82)(cid:88)(cid:73)(cid:86)(cid:73)(cid:87)(cid:88)(cid:4)(cid:41)(cid:69)(cid:86)(cid:82)(cid:77)(cid:82)(cid:75)(cid:4)(cid:37)(cid:87)(cid:87)(cid:73)(cid:88)(cid:87) (cid:50)(cid:45)(cid:49) $15.1B $17.8B $20.1B $23.6B $30.1B $46.4B $61.3B 2016 2017 2018 2019 2020 2021 2022 (cid:25)(cid:18)(cid:4)(cid:52)(cid:73)(cid:73)(cid:86)(cid:87)(cid:4)(cid:71)(cid:83)(cid:82)(cid:87)(cid:77)(cid:87)(cid:88)(cid:4)(cid:83)(cid:74)(cid:4)(cid:23)(cid:23)(cid:4)(cid:84)(cid:89)(cid:70)(cid:80)(cid:77)(cid:71)(cid:80)(cid:93)(cid:4)(cid:88)(cid:86)(cid:69)(cid:72)(cid:73)(cid:72)(cid:4)(cid:70)(cid:69)(cid:82)(cid:79)(cid:87)(cid:4)(cid:76)(cid:73)(cid:69)(cid:72)(cid:85)(cid:89)(cid:69)(cid:86)(cid:88)(cid:73)(cid:86)(cid:73)(cid:72)(cid:4)(cid:77)(cid:82)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:57)(cid:55)(cid:4)(cid:91)(cid:77)(cid:88)(cid:76)(cid:4)(cid:88)(cid:83)(cid:88)(cid:69)(cid:80)(cid:4)(cid:69)(cid:87)(cid:87)(cid:73)(cid:88)(cid:87)(cid:4)(cid:70)(cid:73)(cid:88)(cid:91)(cid:73)(cid:73)(cid:82)(cid:4)(cid:8)(cid:22)(cid:25)(cid:38)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:8)(cid:21)(cid:25)(cid:20)(cid:38)(cid:16)(cid:4)(cid:73)(cid:92)(cid:71)(cid:80)(cid:89)(cid:72)(cid:77)(cid:82)(cid:75)(cid:4)(cid:88)(cid:69)(cid:86)(cid:75)(cid:73)(cid:88)(cid:4)(cid:70)(cid:69)(cid:82)(cid:79)(cid:87)(cid:4)(cid:83)(cid:74)(cid:4)(cid:84)(cid:73)(cid:82)(cid:72)(cid:77)(cid:82)(cid:75)(cid:4)(cid:69)(cid:71)(cid:85)(cid:89)(cid:77)(cid:87)(cid:77)(cid:88)(cid:77)(cid:83)(cid:82)(cid:87)(cid:16)(cid:4)(cid:69)(cid:87)(cid:4)(cid:83)(cid:74)(cid:4) (cid:40)(cid:73)(cid:71)(cid:73)(cid:81)(cid:70)(cid:73)(cid:86)(cid:4)(cid:23)(cid:21)(cid:16)(cid:4)(cid:22)(cid:20)(cid:22)(cid:22)(cid:18)(cid:4)(cid:55)(cid:83)(cid:89)(cid:86)(cid:71)(cid:73)(cid:30)(cid:4)(cid:55)(cid:10)(cid:52)(cid:4)(cid:43)(cid:80)(cid:83)(cid:70)(cid:69)(cid:80)(cid:4)(cid:49)(cid:69)(cid:86)(cid:79)(cid:73)(cid:88)(cid:4)(cid:45)(cid:82)(cid:88)(cid:73)(cid:80)(cid:80)(cid:77)(cid:75)(cid:73)(cid:82)(cid:71)(cid:73)(cid:18) 18 Deposits, Borrowings, and Cost of Funds (cid:40)(cid:83)(cid:80)(cid:80)(cid:69)(cid:86)(cid:87)(cid:4)(cid:77)(cid:82)(cid:4)(cid:38)(cid:77)(cid:80)(cid:80)(cid:77)(cid:83)(cid:82)(cid:87) (cid:56)(cid:83)(cid:88)(cid:69)(cid:80)(cid:4)(cid:38)(cid:83)(cid:86)(cid:86)(cid:83)(cid:91)(cid:77)(cid:82)(cid:75)(cid:87) (cid:50)(cid:83)(cid:82)(cid:17)(cid:77)(cid:82)(cid:88)(cid:73)(cid:86)(cid:73)(cid:87)(cid:88)(cid:4)(cid:38)(cid:73)(cid:69)(cid:86)(cid:77)(cid:82)(cid:75)(cid:4)(cid:40)(cid:73)(cid:84)(cid:83)(cid:87)(cid:77)(cid:88)(cid:87) (cid:45)(cid:82)(cid:88)(cid:73)(cid:86)(cid:73)(cid:87)(cid:88)(cid:4)(cid:38)(cid:73)(cid:69)(cid:86)(cid:77)(cid:82)(cid:75)(cid:4)(cid:40)(cid:73)(cid:84)(cid:83)(cid:87)(cid:77)(cid:88)(cid:87) (cid:39)(cid:83)(cid:87)(cid:88)(cid:4)(cid:83)(cid:74)(cid:4)(cid:42)(cid:89)(cid:82)(cid:72)(cid:87) 23.2% CAGR 25.0% CAGR 0.31% 0.37% $0.8 $7.4 $9.5 $0.5 $5.6 $8.9 0.34% $0.6 $13.4 0.86% $0.4 $8.5 $14.3 $18.5 0.64% $0.9 $7.5 $11.7 $7.2 $19.7 0.80% $33.9 $2.4 $21.3 $26.3 .25% 2016 2017 2018 2019 2020 2021 2022 Loans and HFI Yields (cid:40)(cid:83)(cid:80)(cid:80)(cid:69)(cid:86)(cid:87)(cid:4)(cid:77)(cid:82)(cid:4)(cid:38)(cid:77)(cid:80)(cid:80)(cid:77)(cid:83)(cid:82)(cid:87) 5.62% 5.40% 5.82% 5.83% $1.2 $51.9 4.74% $39.1 4.32% 4.79% $27.1 (cid:48)(cid:83)(cid:69)(cid:82)(cid:87) (cid:48)(cid:83)(cid:69)(cid:82)(cid:87)(cid:16)(cid:4)(cid:44)(cid:42)(cid:55) (cid:61)(cid:77)(cid:73)(cid:80)(cid:72) $21.1 $17.7 $15.1 $13.2 1 2016 2017 2018 2019 2020 2021 2022 19 Our Leadership Team BOARD OF DIRECTORS Bruce Beach (cid:38)(cid:83)(cid:69)(cid:86)(cid:72)(cid:4)(cid:39)(cid:76)(cid:69)(cid:77)(cid:86)(cid:81)(cid:69)(cid:82) Kevin M. Blakely (cid:49)(cid:73)(cid:81)(cid:70)(cid:73)(cid:86) Juan R. Figuereo (cid:49)(cid:73)(cid:81)(cid:70)(cid:73)(cid:86) Paul S. Galant (cid:49)(cid:73)(cid:81)(cid:70)(cid:73)(cid:86) Howard N. Gould (cid:49)(cid:73)(cid:81)(cid:70)(cid:73)(cid:86) Marianne Boyd Johnson (cid:49)(cid:73)(cid:81)(cid:70)(cid:73)(cid:86) Robert P. Latta (cid:49)(cid:73)(cid:81)(cid:70)(cid:73)(cid:86) Adriane C. McFetridge (cid:49)(cid:73)(cid:81)(cid:70)(cid:73)(cid:86) Michael Patriarca (cid:49)(cid:73)(cid:81)(cid:70)(cid:73)(cid:86) Bryan K. Segedi (cid:49)(cid:73)(cid:81)(cid:70)(cid:73)(cid:86) Donald D. Snyder (cid:49)(cid:73)(cid:81)(cid:70)(cid:73)(cid:86) Sung Won Sohn, Ph.D. (cid:49)(cid:73)(cid:81)(cid:70)(cid:73)(cid:86) Mary Tuuk Kuras (cid:49)(cid:73)(cid:81)(cid:70)(cid:73)(cid:86) Kenneth A. Vecchione (cid:52)(cid:86)(cid:73)(cid:87)(cid:77)(cid:72)(cid:73)(cid:82)(cid:88)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:39)(cid:41)(cid:51) William S. Boyd (cid:40)(cid:77)(cid:86)(cid:73)(cid:71)(cid:88)(cid:83)(cid:86)(cid:4)(cid:41)(cid:81)(cid:73)(cid:86)(cid:77)(cid:88)(cid:89)(cid:87) 20 E X E C U T I V E L E A D E R S H I P T E A M Kenneth A. Vecchione (cid:52)(cid:86)(cid:73)(cid:87)(cid:77)(cid:72)(cid:73)(cid:82)(cid:88)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:39)(cid:41)(cid:51) Dale M. Gibbons (cid:58)(cid:77)(cid:71)(cid:73)(cid:4)(cid:39)(cid:76)(cid:69)(cid:77)(cid:86)(cid:81)(cid:69)(cid:82) (cid:69)(cid:82)(cid:72)(cid:4)(cid:39)(cid:42)(cid:51) Tim Boothe (cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:51)(cid:84)(cid:73)(cid:86)(cid:69)(cid:88)(cid:77)(cid:82)(cid:75)(cid:4) (cid:51)(cid:446)(cid:71)(cid:73)(cid:86) Tim R. Bruckner (cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:39)(cid:86)(cid:73)(cid:72)(cid:77)(cid:88)(cid:4)(cid:51)(cid:446)(cid:71)(cid:73)(cid:86) Stephen R. Curley (cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:38)(cid:69)(cid:82)(cid:79)(cid:77)(cid:82)(cid:75)(cid:4)(cid:51)(cid:446)(cid:71)(cid:73)(cid:86)(cid:16)(cid:4) (cid:50)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:69)(cid:80)(cid:4)(cid:38)(cid:89)(cid:87)(cid:77)(cid:82)(cid:73)(cid:87)(cid:87)(cid:4)(cid:48)(cid:77)(cid:82)(cid:73)(cid:87)(cid:4) (cid:69)(cid:82)(cid:72)(cid:4)(cid:52)(cid:86)(cid:73)(cid:87)(cid:77)(cid:72)(cid:73)(cid:82)(cid:88)(cid:16)(cid:4)(cid:37)(cid:80)(cid:80)(cid:77)(cid:69)(cid:82)(cid:71)(cid:73)(cid:4) Association Bank Jessica Jarvi (cid:43)(cid:73)(cid:82)(cid:73)(cid:86)(cid:69)(cid:80)(cid:4)(cid:39)(cid:83)(cid:89)(cid:82)(cid:87)(cid:73)(cid:80) Barbara J. Kennedy (cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:44)(cid:89)(cid:81)(cid:69)(cid:82)(cid:4) (cid:54)(cid:73)(cid:87)(cid:83)(cid:89)(cid:86)(cid:71)(cid:73)(cid:87)(cid:4)(cid:51)(cid:446)(cid:71)(cid:73)(cid:86) Emily Nachlas (cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:54)(cid:77)(cid:87)(cid:79)(cid:4)(cid:51)(cid:446)(cid:71)(cid:73)(cid:86) Randall S. Theisen (cid:39)(cid:76)(cid:77)(cid:73)(cid:74)(cid:4)(cid:48)(cid:73)(cid:75)(cid:69)(cid:80)(cid:4)(cid:51)(cid:446)(cid:71)(cid:73)(cid:86)(cid:4)(cid:10)(cid:4) (cid:44)(cid:73)(cid:69)(cid:72)(cid:4)(cid:83)(cid:74)(cid:4)(cid:39)(cid:83)(cid:86)(cid:84)(cid:83)(cid:86)(cid:69)(cid:88)(cid:73)(cid:4)(cid:37)(cid:74)(cid:74)(cid:69)(cid:77)(cid:86)(cid:87) 21 UNITED STATT TEAA S SECURITIES AND EXCHANGE COMMISSION WaW shington, D.C. 20549 FORM 10-K ☒ ☐ ANNUAL REPORTRR PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiff scal year ended December 31, 2022 TRANSITION REPORTRR PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 __ For the transition period frff om _______ _____ __ to _______ ___ ____ ____ __ Commission file number: 001-32550 WESTERN ALLIANCE BANCORPORATAA ION (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) One E. WasWW hington Street, Suite 1400 Phoenix Arizona (Address of principal executive offices) 88-0365922 (I.R.S. Employer Identification No.) 85004 (Zip Code) (602) 389-3500 (Registrant’s telephone number,rr including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, $0.0001 Par ValVV ue th Depositary Shares, Each Representing a 1/400 Interest in a tut al Share of 4.250% Fixed-Rate Reset Non-Cumulative Perperr Preferred Stock, Series A TT Trading ( ) Symbol(s) y WALWW WALWW PrA Name of each exchangeg on which register New YoYY rk Stock Exchange New YoYY rk Stock Exchange g ed Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in RuleRR 405 of the Securities Act. YeYY s ☒ No ☐ Indicate by check mark if the registrant is not required to filff e reports pursuant to Section 13 or Section 15(d) of the Act. YeYY s ☐ No ☒ Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has fiff led all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or forff shorter period that the registrant was required to filff e such reports), and (2) has been subject to such filing requirements for the past 90 days. YeYY s ☒ No ☐ b such Indicate by check mark whether the registrant has submi during the preceding 12 months (or foff r such shorter period that the registrant was required to submit such files). YeYY s ☒ No ☐ Interactive Data File required to be submi tted electronically everyrr u u tted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company,yy or emerging growth company. See the definitions of “large accelerated filer ,” "accelerated filff er" "smaller reporting company,yy " and "emerging growth company" in RuleRR 12b-2 of the Exchange Act. ☐ ff Large accelerated filer Non-accelerated filer ☒ ☐ Accelerated filer Smaller reporting company Emerging growth company ☐ ☐ ☐ If an emerging growth company,yy indicate by check mark if the registrant has elected not to use the extended transition period foff r complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant has filff ed a report on and attestation to its management's assessment of the effeff ctiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financ ff ial statements. ☐ s Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officer ff during the relevant recovery period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in RuleRR 12b-2 of the Exchange Act). YesYY ☐ No ☒ The aggregate market value of the registrant’s voting stock held by non-affiff liates was approximately $7.26 billion based on the June 30, 2022 closing price of said stock on the New YoYY rk Stock Exchange ($70.60 per share). As of February 17, 2023, WesteWW rn Alliance Bancorpor ration had 109,614,818 shares of common stock outstanding. DOCUMENTS INCORPORARR TAA ED BY REFERENCE Portions of the registrant’s definitive proxy statement forff its 2023 Annual Meeting of Stockholders are incorporated by reference into Part III of this report. INDEX PART I Forward-Looking Statements Item 1. Item 1A. Item 1B. Item 2. 3. Item 4. Business Risk Factors Unresolved Staff Comments Properties Legal Proceedings Mine Safety Disclosures PART II Item 5. Item 6. Item 7. Item 7A. Item 8. Item 9. Item 9A. Item 9B. Item 9C. PART III Item 10. 11. 12. Item 13. Item 14. PART IV Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Reserved Management's Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accountant Fees and Services Item 15. Item 16. Exhibits and Financial Statement Schedules Form 10-K Summary SIGNATURES Page 3 5 15 28 28 28 28 29 30 31 66 69 150 150 152 152 152 152 152 152 152 153 155 156 2 PARPP TRR I Forward-rr Looking Statementstt Certain statements contained in this Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (this “Form 10-K”) are “foff rward-looking statements” within the meaning of the Private Securities Litigation Reforff m Act of 1995 (the “Refoff rm Act”). Statements that constitutt e forff ward-looking Act are generally identified through the inclusion of words such as “aim,” “anticipate,” “believe,” “drive,” statements within the meaning of the Reformff “estimate,” “expect,” “expressed confiff dence,” “foff recast,” “futff urt e,” “goals,” “guidance,” “intend,” “may,”yy “plan,” “position,” “potential,” “project,” “ seek,” “should,” “strategy,”yy “target,” “will,” “would” or similar statements or variations of such words and other similar expressions. All statements other than statements of historical fact are “forwff ard-looking statements” within the meaning of the Reform Act, including statements that are related to or are projections, futurt e plans and strategies, anticipated events or trends and similar dependent on estimates or assumptions relating to expectations, beliefs,ff expressions concerning matters that are not historical faff cts. These forward-looking statements reflect the Company's current views about fuff ture events and financial perforff mance and involve certain risks, uncertainties, assumptions, and changes in circumstances that may cause the Company's actual results to diffeff r significant results to diffff erff materially froff m those ff contemplated by such forward-looking statements include, but are not limited to, those described in “Risk Factors” in Item 1A of this Form 10-K. Forward- looking statements speak only as of the date they are made and the Company undertakes no obligation to publicly update or revise any forward-looking statements included in this Form 10-K or to update the reasons why actual those contained in such statements, whether as a result of new inforff mation, futur securities laws. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Form 10-K might not occur, and you should not put undue reliance on any forward-looking statements. ly from historical results and those expressed in any foff rward-looking statement. Factors that may cause actual e events or otherwise, except to the extent required by federal results could diffff erff “opportunity,”yy fromff ff ff t t 3 The acronyms and abbreviations identified below are used in various sections of this Form 10-K, including "Management's Discussion and Analysis of Financial Condition and Results of Operations," in Item 7 and the Consolidated Financial Statements and the Notes to Consolidated Financial Statements in Item 8 of this Form 10-K: GLOSSARYRR OF ENTITIES AND TERMS ENTITIES / DIVISIONS: WeWW stern Alliance Bancorporation and subsidiaries WAWW PWI CS Insurance Company Digital Settlement TeTT chnologies LLC WAWW B or Bank WAWW BT u WelWW farff e Investments, LLC WeWW stern Alliance Public WeWW stern Alliance Bank WeWW stern Alliance Business TrustTT WAWW L or Parent WAWW TCAA n WeWW stern Alliance Bancorporatio WeWW stern Alliance TrTT urr st Company,yy N.A. rr IRLC ISDA LGD LIBOR LIHTC MBS MSA MSR NBL NOL NPV NYSE OCI OFACFF OREO PCAOB PCD PD PPNR ROU SEC SERP SLC SOFR TDR TEB TSR UPB USDA VAVV VIE XBRL Interest Rate Lock Commitment International Swapa s and Derivatives Association Loss Given Defaff ult London Interbar nk Offff eff red Rate Low-Income Housing TaxTT Credit Mortgage-Backed Securities Metropolitan Statistical Area Mortgage Servicing Right National Business Lines Net Operating Loss Net Present VaVV lue Stock Exchange New YorkYY Other Comprehensive Income Offff icff e of Foreign Asset Control Other Real Estate Owned Public Company Accounting Oversight Board Purchased Credit Deteriorated t Probaba ility of Defaul ff Pre-Provision Net Revenue Right of Use Securities and Exchange Commission Supplemental Executive Retirement Plan Senior Loan Committee Secured Overnight Funding Rate TrTT oubled Debt Restructuring rr TaTT x Equivalent Basis TotaTT l Shareholder Return Unpaid Principal Balance United States Department of Agriculture VeVV terans Affff aff irs VaVV riablea Interest Entity eXtensible Business Reporting Language ABA AmeriHome Aris Alliance Bank of Arizona AmeriHome Mortgage Company,yy LLC Aris Mortgage Holding Company,yy LLC Bank of Nevada Bridge Bank Allowance forff Credit Losses BON Bridge ACL AFS ALCO Ameribor AOCI ASC ASU Basel Committee Basel III BHCA BOD BOLI BSBY CAMELS Capital Rules CBDP CCO CDARS CDO CECL CEO CET1 CFO CFPB CLO COSO AvaiAA lable-forff Asset and Liability Management Committee -Sale EBO EGRRCPAPP American Interbar nk Offff ered Accumulated Other Comprehensive Income Accounting Standards Codification Rate ff EPS ESG EVE Accounting Standards Update Basel Committee on Banking Superu Banking Supervision's December 2010 Final Capital Framework Bank Holding Company Act of 1956 Board of Directors vision Insurance Bank Owned Lifeff Bloomberg Short TerTT m Bank YieYY ld Index Capital Adequacy,yy Assets, Management Capability,yy Earnings, Liquidity,yy Sensitivity The FRB, the OCC, and the FDIC 2013 Approved Final RulRR es Commercial Banking Development Program Chief Credit Offiff cer ff Certificate Deposit Account Registryrr Service Collateralized Debt Obligation Current Expected Credit Loss Chief Executive Offff icer ff Common Equity Tier 1 Chief Financial Offff icer ff Consumer Financial Protection Bureau Collateralized Loan Obligation Committee of Sponsoring Organizations of the TreaTT dway Commission Company CSI DST FIB TPB EAD FDIA FDIC FHA FHLB FHLMC FICO FNMA FOMC FRA FRB FTC FVO GAAP GLBA GNMA GSE HELOC HFI HFS HTM HUD COVID-19 CRA CRE DEI Coronavirusrr Disease 2019 Community Reinvestment Act Commercial Real Estate Diversity,yy Equity,yy and Inclusion Dodd-Frank Act DTATT The Dodd-Frank WallWW Street Reforff m and Consumer Protection Act of 2010 ff Deferre d TaxTT Asset ICS IRAR Exchange Act FASFF B FCRA Securities Exchange Act of 1934, as Amended Financial Accounting Standards Board Fair Credit Reporting Act of 1971 First Independent Bank y Pines Bank TorreTT TERMS: Exposure at Default Early buyout The Economic Growth, Regulatoryrr Relief,ff and Consumer Protection Act Earnings per Share Environmental, Social, and Governance Economic VaVV lue of Equity Federal Deposit Insurance Act Federal Deposit Insurance Corporation Federal Housing Administration Federal Home Loan Bank Federal Home Loan Mortgage Corprr oration The Financing Corporation Federal National Mortgage Association Federal Open Market Committee Federal Reserve Act Federal Reserve Bank Federal TraTT de Commission Fair VaVV lue Option U.S. Generally Accepted Accounting Principles Gramm-Leach-Bliley Act Government National Mortgage Association Government-Sponsored Enterprise Home Equity Line of Credit Held for Investment Held for Sale y Held-to-Maturit tt U.S. Department of Housing and Urban Development Insured Cash Sweep Service Inflation Reduction Act of 2022 4 Item 1. Business. Organization Structure and Description of Services WALWW is a bank holding company headquartered in Phoenix, Arizona, incorprr orated under the laws of the state of Delaware. WAWW L provides a fuff ll spectrumrr customized loan, deposit and treasuryr management capabilities, including 24/7 funds transfer and other digital payment offeri banking subsiu of ngs through its wholly-owned diary,yy WAB.WW ff ff WABWW operates the foll owing full-service banking divisions: ABA, BON, Bridge, FIB, and TPB. The Company also provides an array of specialized financial services to business customers across the countryr ,yy including mortgage banking services through AmeriHome, and has added to its capabia lities with the acquisition of DST on Januaryr 25, 2022, which provides digital payment services for the class action legal industry. In addition, the Company has the folff lowing non-bank subsiu insurance company foff rmed and licensed under the laws of the State of Arizona and estaba lished as part of the Company's overall enterprise risk management strategy,yy and WAWW TAA C, which will provide corpor ate trust services and levered loan administration solutions. diaries: CSI, a captive a rr rr WALWW also has eight unconsolidated subsidiaries used as business trusts in connection with issuance of trust-prefeff rred securities as described in "Note 12. ff Qualifying Debt" in Item 8 of this Form 10-K. SS Bank Subsi diary At December 31, 2022, WALWW has the follow ff ing bank subsidiary:r Bank Name Headquarters Location Cities ToTT tal Assets Net Loans (i(( nii milii lill ons)s Deposits WestWW ern Alliance Bank Phoenix, Arizona Arizona: Chandler, Flagstaffff ,ff Gilbert, Mesa, Phoenix, Scottsdale, and TuTT cson Nevada: Carson City,yy Fallon, Henderson, Las VeVV gas, Mesquite, Reno, and Sparks Califorff nia: Beverly Hills, Carlsbad, Costa Mesa, Irvine, La Mesa, Los Angeles, Oakland, Pleasanton, San Diego, San Francisco, San Jose, and WoodWW land Hills Other: Atlanta, Georgia; Austin, Houston, and Irving, TeTT xas; Boston, Massachusetts; Chicago, Illinois; Denver, Colorado; Minneapolis, Minnesota; New YoYY rk, New YoYY rk; Seattle, WaWW shington; and TysoTT ns, VirVV ginia $ 67,684 $ 52,737 $ 53,918 WABWW also has the foll ff owing significff ant wholly-owned subu sidiaries: • WABTWW holds certain investment securities, municipal and non-profit loans, and leases. • WAWW PWI holds interests in certain limited partnerships invested primarily in low income housing tax credits and small business investment corporr rations. • • BW Real Estate, Inc. operates as a real estate investment trust rr and holds certain of WAWW B's real estate loans and related securities. Helios Prime, Inc. holds certain equity interests in renewable energy tax credit transactions. • WestWW ern Finance Company purchases and originates equipment finance leases and provides mortgage banking services through its wholly-owned u subsid iaryr ,yy AmeriHome. • DST provides digital payments services forff the class action legal industd ryr . rr Market Segmentstt The Company's reportable segments are aggregated with a focus on producd ts and services offff erff ed and consist of three reportable segments: • • Commercial: provides commercial banking and treasuryr management producd ts and services to small and middle-market businesses, specialized banking services to sophisticated commercial institutions and investors within niche industries, as well as fiff nancial services to the real estate indud stryrr . Consumer Related: offeff rs both commercial banking services to enterprises in consumer-related sectors and consumer banking services, such as residential mortgage banking and beginning on Januaryrr 25, 2022, includes the fiff nancial results of DST, which provides digital payment services for the class action legal industryr . 5 • rate & Other: consists of the Company's investment portfolff Corporr allocated to other reportable segments, and inter-segment eliminations. io, Corpor rr ate borrowings and other related items, income and expense items not Loan and deposit accounts are typically assigned directly to the segments where these products are originated and/or serviced. Equity capital is assigned to each rate segment based primarily on the risk profilff e of their assets and liabilities. Any excess equity not allocated to segments based on risk is assigned to the Corporr & Other segment. Net interest income, provision forff credit losses, and non-interest expense amounts are recorded in their respective segments to the extent that the amounts are directly attributable to those segments. Net interest income of a reportabla e segment includes a fuff nds transfer pricing process that matches assets and liabilities ty characteristics. Using this funff ds transfeff r pricing methodology,yy liquidity is transferred between users and with similar interest rate sensitivity and maturi each reportable segment are fuff rther derived by the use of expense allocations. Certain expenses not directly attributable to a providers. Net income amounts forff loans and specificff deposits, and average loan and deposit balances. Income taxes are apa plied to each segment based on the effff ect ic location of the segment. Any differ ff tive tax rates in the segments are adjusted in the Corporate & Other segment. segment are allocated across all segments based on key metrics, such as number of employees, number of transactions processed forff ate tax rate and the aggregate effff ecff ive tax rate foff r the geographa ence in the corpor ff rr t Lending Activities General The Company’s lending has focused primarily on meeting the needs of business customers. Through WAWW B and its banking divisions and operating subu sidiaries, the Company provides a variety of lending products to customers, including the loan types discussed below. and Industrial: Commercial and indudd strial loans are a signififf cant portion of the Company's loan portfolff Commer io, representing 40% and 47% of the rr cial CC Company's HFI loan portfoff lio as of December 31, 2022 and 2021, respectively. These loans include working capa ital lines of credit, loans to technology companies, inventoryr and accounts receivable lines, mortgage warehouse lines, and other commercial loans. Equipment loans and leases, tax-exempt municipalities, and not-for-profiff t organizations are also categorized as commercial and industd rial loans. ff d the purchase or refinaff io. These CRE loans are secured by multi-family ncing of CRE for investors (non-owner occupiu ed) or owner occupau nts are a significant portion of the Company's loan CRECC : Loans to funff portfolff s, industrial facilities, retail centers, hotels, and other commercial properties. Approximately 16% and 13% of the Company's CRE investor portfoff lio consisted of offiff ce loans as of December 31, 2022 and 2021, loans are primarily shorter-term bridge loans that enabla e borrowers to reposition or redevelop projects and are geographically well respectively. These office diversified, locations. At the time of origination, these loans have an initial loan-to-value ratio of less than 55% and a weighted average loan-to-cost of less than 60%. The properties underlying these loans have stabla e business trends and low vacancy rates. In addition, conservative underwriting focus ont sponsor cash equity,yy re-appraisal rights by the Company,yy re- margining requirements and ongoing debt service and debt yield covenants mitigates asset-type credit risk and provides for ongoing sponsor support of and commitment to projects. ed on loan-to-cost lending with significant up-fr ff with the vast majora residential properties, professional office ity located in midtown or subuu rbanr u ff ff ff u Substa ntially all of the Company's remaining CRE loans are secured by first liens with an initial loan-to-value ratio of generally not more than 75%. As of December 31, 2022 and 2021, 16% and 23% of the Company's CRE loans were owner occupied. Owner occupied CRE loans are loans secured by owner occupied non-farm nonresidential properties forff which the primary source of repayment (more than 50%) is the cash flow frff om the ongoing operations and source of repayment is activities conducted by the borrower who owns the property. Non-owner occupied CRE loans are CRE loans for which the primaryr rental income generated fromff the collateral property. Const ion and Land Development: Construction and land development tt ruct CC s, industrial/warehouse properties, offff icff e buildings, retail centers, medical offff iff ce facff ilities, and residential lot developments. These loans are primarily originated n projeo ct is perforff med to experienced local and national developers with whom the Company has a satisfaff ctoryr as part of the underwriting process to determine whether the type of property,yy location, construrr ction costs, and contingency funds are appropriate and adequate. Loans to finance commercial raw land are primarily to borrowers who plan to initiate active development of the property within two years. lending historyr . An analysis of each constructio include single family and multi-famff ily residential project loans o ff rr 6 Residential: The Company executes flow and bulk residential loan purchases that meet the Company's goals and underwriting criteria through its residential mortgage acquisition program. These loan purchases consist of both conforff ming and non-conforming loans. Non-conforming loan purchases are considered to be high quality as the borrowers have high FICO scores and the loans generally have low loan-to-values. mer: Limited types of consumer loans are offff eff red to meet customer demand and to respond to community needs. Examples of these consumer loans CC Consu include home equity loans and lines of credit, home improvement loans, personal lines of credit, and loans to individuals forff investment purposes. At December 31, 2022, the Company's HFI loan portfoff lio totaled $51.9 billion, or approximately 77% of total assets. The folff composition of the Company's HFI loan portfoli o: ff lowing table sets forff th the d ial Commercial and industr Commercial real estate - non-owner occupiu ed Commercial real estate - owner occupiu ed Constructio rr Residential real estate Consumer n and land development Loans HFI, net of deferred loan feeff s and costs Allowance forff credit losses Net loans HFI December 31, 2022 2021 Amount Percent Amount Percent (d(( oldd lars in millions)s $ $ $ 20,710 9,319 1,818 4,013 15,928 74 51,862 (310) 51,552 39.9 % $ 18.0 3.5 7.7 30.7 0.2 100.0 % $ $ 18,297 6,526 1,898 3,023 9,282 49 39,075 (252) 38,823 46.8 % 16.7 4.9 7.7 23.8 0.1 100.0 % For additional inforff mation concerning loans, see "Note 5. Loans, Leases and Allowance foff r Credit Losses" in Item 8 or "Management's Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition – Loans" in Item 7 of this Form 10-K. The Company adheres to a specific set of credit standards that are intended to ensure apa propriate management of credit risk. Furthermore, the Bank's senior management team plays an active role in monitoring compliance with such standards. Loan originations are subjeu ct to a process that includes the credit evaluation of borrowers, utilizing estaba lished lending limits, analysis of collateral, and procedures for continual monitoring and identification of credit deterioration. Loan offff iff cers actively monitor their individual credit relationships in order to report suspected risks and potential downgrades as early as possible. The BOD approves all material changes to loan policy,yy as well as lending limit authorities. ate consistent underwriting standards across all geographic regions in which the Bank operates, customized as The Bank's lending policies generally incorpor necessaryrr ion of troublu ed credits to allow management to take prompt corrective action, when necessaryrr . to conform to state law and local market conditions. The Bank's credit culture emphasizes timely identificat ff rr Loan AppA roval Procedures and Authorityii The Company's loan approval procedures are executed through a tiered loan limit authorization process, which is structurt ed as folff lows: • IndII ividudd al Credit administration offff iceff t Authori a rs' appr rr oval authorities are established on a delegated basis. ties. The credit apa proval levels for individuadd l divisional and senior credit offff iff cers are set by policy and certain credit • Management Loan ComCC mittees. Credits in excess of individud al divisional or senior credit offff iceff r apa proval authority are submitted to the appropriate divisional or NBL loan committee. The divisional committees consist of members of the Bank's senior management team of each division and the NBL loan committees consist of the Bank's divisional or senior credit offff iff cers. • Credit Administration. Credits in excess of the divisional or NBL loan committee apa proval authority require the additional approval of the Bank's rr CCO and any credits in excess of the CCO's individual approval authority are submitted to the WAWW B SLC. In addition, the SLC reviews all other loan approvals to any one new borrower in excess of established thresholds. The SLC is chaired by the WAWW B CCO and includes the Company’s CEO. 7 er.rr In addition to the limits set forff Loans to One Borrowrr to certain exceptions, state banking laws generally limit the amount of funds that a bank may lend to a single borrower. Under Arizona law,ww the obligations of one borrower to a bank generally may not exceed 20% of the bank’s capia tal, plus an additional 10% of its capital if the additional amounts are fuff lly secured by readily marketable collateral. Arizona law does not specificaff lly require aggregation of loans to affff iliff ated entities in determining compliance with the lending limit. As a matter of longstanding practice, the Arizona Department of Financial Institutions uses the same aggregation analysis as apa plied to national banks by the OCC. th above, subu ject b rr trations of CrCC edit Risii k. The Company's lending policies also establia Concen CC which are based on outstanding amounts, to control single customer and product exposures. The Company's lending policies have several diffff ereff limit concentration exposures. Set forff 2022: its HFI and HFS loan portfoff lios, nt measures to l measures based on outstanding amounts as of December 31, sh customer and product concentration limits forff segmentation limits and actuat th below are the primaryr Loans HFI CRE Commercial and industrial Constructio rr Residential real estate Consumer Loans HFS n and land development Residential real estate Asset Quality General rcent of Tier 1 Capital and ACL Policy Limit Actual 295 % 485 85 300 10 215 193 % 359 70 276 1 21 ToTT measure asset quality,yy the Company has institutt ed a loan grading system consisting of nine diffeff rent categories. The first fiff ve are considered satisfactory "pass" ratings. The other four "non-pass" grades range from a “Special mention” category to a “Loss” category and are consistent with the grading systems used by federal banking regulators. All loans are assigned a credit risk grade at the time they are made and forff mally reviewed on a quarterly basis as part of the loans that may be exhibiting early-warning signs of credit stress and determine whether a change in the Company's loan grade certififf cation process to identifyff credit risk grade is warranted. In addition, the grading of the Company's loan portfoff lio is reviewed on a regular basis by its internal Loan Review Department. Collection Proced urdd err rr Bank personnel are responsible forff monitoring activity that may indicate an increased risk rating, including, but not limited to, past-dues, overdrafts, and loan agreement covenant defaults. If a borrower faiff ls to make a scheduled payment on a loan, Bank personnel attempt to remedy the deficiency by contacting the borrower and seeking payment. Contact is generally made within 15 business days aftff er the payment becomes past due. The Bank also maintains a special assets department, which generally services and collects loans rated Substandard or worse. Loans deemed uncollectible are charged-off.ff NonpNN erforming Assetstt Nonperformff ing assets include loans past due 90 days or more and still accruing interest (that are not government guaranteed), non-accrual and TDR loans, and repossessed assets, including OREO. In general, loans are placed on non-accrual statust when the Company determines that ultimate collection of principal and ncial condition, collateral value, and collection effff orff interest is in doubt due to the borrower’s finaff ts. In addition, the Company considers all loans rated ncial diffiff culty. A TDR loan is a loan for which the Company,yy for reasons related to a borrower’s finff ancial Substandard or lower to be experiencing finaff diffff icult ies, grants a concession to the borrower that the Company would not otherwise consider. Other repossessed assets result from loans where the ff Company has received title or physical possession of the borrower’s assets. The Company generally re-apa praises OREO and collateral dependent non- residential loans with balances greater than $0.5 million everyrr 12 months. The total net realized and unrealized gains and losses of repossessed and other assets g each of the years ended December 31, 2022, 2021, and 2020. However, losses may be experienced in futuret was not significant durin periods. d 8 Criticizedii Assetstt Federal bank regulators require banks to classifyff authority to identify problem assets and, if appropriate, re-classifyff utilized to identifyff potential problem assets and loan grades of "Substandard," "Doubtfuff l," and "Loss" are utilized to identifyff actuat its assets on a regular basis. In addition, in connection with their examinations of the Bank, examiners have them. A loan grade of "Special Mention" frff om the Company's internal loan grading system is l problem assets. ff The follow ing describes the potential and actual problem assets using the Company's internal loan grading system definff itions: • • • • al Mention" (Gr(( ade 6): Generally these are assets that possess potential weaknesses that warrant management's close attention. These loans may "Speci SS ncial trends, higher debt to equity ratios, or weaker liquidity positions, but not to the degree of being considered a involve borrowers with adverse finaff “problem loan” where risk of loss may be apparent. Loans in this category are usually perforff ming as agreed, although there may be non-compliance with financial covenants. (Gr(( “SuSS bstandadd rd”rr the distinct possibility that the Company will sustain some loss if such weakness or defiff ciency is not corrected. All loans 90 days or more past due and all loans on non-accrual status are considered at least "Substandard," unless extraordinary circumstances would suggest otherwise. ade 7): These assets are characterized by well-defined credit weaknesses and carryr ff “Doubtful” (Gradedd 8): These assets have all the weaknesses inherent in those classififf ed as "Substandard" with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and example, capital injection, improbable, but because of certain known faff ctors which may work to the advantage and strengthening of the asset (forff perfectin ed until a more precise status may be ff determined. g liens on additional collateral and refiff nancing plans), classififf cation as an estimated loss is deferr ff (( “Loss” (Grad edd 9): These assets are considered uncollectible and having such little recoveraba le value that it is not practical to defer writing offff the asset. This classificff ation does not mean that the loan has absolutely no recoveryr or salvage value, but rather that it is not practicable or desirable to defer writing offff the asset, even though partial recoveryr may be achieved in the fuff ture. Allowance forff Credit Losses The provision for credit losses in each period is reflff ected as a reducd tion in earnings foff r that period and includes amounts related to funff ded loans, unfunded loan commitments, and investment securities. The provision is equal to the amount required to maintain the ACL at a level that is adequate to absa orbr estimated ff me credit losses inherent in the loan and investment securities portfolios as well as offff -ff balance sheet credit exposures. Charge-offff sff are recorded as a lifeti reduction to the ACL and subsequent recoveries of previously charged-offff amounts are credited to the ACL. The ACL on funff ded loans and investment securities are presented as a reduction to the respective asset balance on the Consolidated Balance Sheet. The ACL on unfunded loan commitments is classified in other liabilities on the Consolidated Balance Sheet. For a detailed discussion of the Company’s methodology see “Management’s Discussion and Analysis and Financial Condition – Critical Accounting Policies – Allowance foff r Credit Losses” in Item 7 of this Form 10-K. Investment Activities The Company has an investment policy,yy which is apa proved by the BOD on an annual basis. This policy dictates that investment decisions be made based on the of the investment, liquidity requirements of the Bank and holding company,yy potential returt ns, cash flff ow targets, and consistency with the Company's safetyff io decisions in accordance with established policies. The CFO and interest rate risk management. The Bank’s ALCO is responsible for making securities portfolff TrTT easurer have the authority to purchase and sell securities within specififf ed guidelines. All investment transactions for the Bank and forff the holding company were reviewed by the ALCO and BOD. 9 The Company's investment policy limits new securities purchases to certain eligible investment types and, in the aggregate, are furt quantitative limits of the Bank: ff b her subu ject to the following Securities Category Basis Limit Policy Limit Actual Collateralized loan obligations Commercial mortgage-backed securities Corporate debt securities Investment grade corporate bond mutual Preferr ff TaxTT -exempt low income housing development bonds TaxTT -exempt municipal securities ed stock fuff nds t TotaTT l assets TotaTT l assets TotaTT l assets Tier 1 capital Common equity tier 1 TotaTT l capa ital TotaTT l assets 5.0 % 1.0 2.5 5.0 10.0 30.0 5.0 4.1 % — 0.6 — 2.0 17.4 1.4 The Company's policies also govern the use of derivatives, and provide that the Company prudent as a risk management tool to reduce the overall exposure to interest rate risk, and not foff r speculative purposes rr rr . ly use derivatives in accordance with applicable regulations as AFS or HTM pursuant to ASC ToTT pic 320, The Company's investment securities portfolio Investments rities. For and ASC TopiTT c 825, Financial Inst t further discussion of significant accounting policies related to the Company's investment securities portfolio refer to "Note 1. Summary of Significant Accounting Policies" in Item 8 of this Form 10-K. includes debt and equity securities. Debt securities are classifiedff rt umentstt . Equity securities are reported at faiff r value in accordance with ASC TopiTT c 321, Equity SecuSS II ff As of December 31, 2022, the Company's investment securities portfolff roximately 13% of the Company's total assets, with a significant portion of the portfolio invested in AAA/AA+ rated securities. The average duration, which is a measure of the interest rate sensitivity of the Company's debt securities portfoli o, is 5.5 years as of December 31, 2022. io totals $8.5 billion, representing appa ff ff The follow ing table summarizes the carrying rr Debt securities CLO Commercial MBS issued by GSEs Corporate debt securities Private label residential MBS Residential MBS issued by GSEs TaxTT -exempt U.S. treasury securities Other ToTT tal debt securities Equity securities Common stock CRARR investments Preferred stock ToTT tal equity securities ToTT tal investment securities value of the Company's investment securities: December 31, 2022 2021 Amount Percent Amount Percent (d(( oldd lars in millions)s $ $ $ $ $ 2,706 97 390 1,397 1,740 1,982 — 69 8,381 3 49 108 160 8,541 31.7 % $ 1.1 4.6 16.3 20.4 23.2 — 0.8 98.1 % $ 0.0 % $ 0.6 1.3 1.9 % $ 926 69 383 1,725 1,993 2,105 13 82 7,296 — 45 114 159 12.4 % 1.0 5.1 23.1 26.8 28.2 0.2 1.1 97.9 % — % 0.6 1.5 2.1 % 100.0 % $ 7,455 100.0 % As of December 31, 2022 and 2021, the Company had investments in BOLI of $182 million and $180 million, respectively. BOLI is used to help offff set employee benefitff costs. For additional informa tion concerning investments, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Financial Condition – Investments” in Item 7 of this Form 10-K. ff ff 10 Deposit Products The Company offff ersff deposit accounts, including fixed-rate, fiff xed matut rity certificates deposits. As of December 31, 2022, the deposit portfolff a variety of deposit products, including demand deposits, checking accounts, savings accounts, money market accounts, and other types of of deposit. The Company has historically focused on growing its lower cost core customer ff io was comprised of 37% non-interest-bearing deposits and 63% interest-bearing deposits. The competition for deposits in the Company's markets is strong. The Company has historically been successfulff several factor s, including its: ff in attracting and retaining deposits dued to • • • knowledgeable and empowered bankers committed to providing personalized and responsive service that translates into long lasting relationships; broad selection of cash management services offff erff ed; and incentives to employees forff business development and retention. Deposit balances are generally influeff t perceived stability of financial instituti d introducing new products and services that meet the needs of its customers. nced by national and local economic conditions, changes in prevailing interest rates, competitiveness of offff erff ed rates, ons, and competition. In order to attract and retain deposits, the Company relies on providing quality service and The Bank's deposit rates are determined through an internal oversight process under the direction of its ALCO. The Bank considers a number of factors when determining deposit rates, including: • • • • current and projected national and local economic conditions and the outlook for interest rates; competition fromff other institutions; loan and deposit positions and forff ecasts, including any concentrations in either; and alternative borrowing costs fromff the FHLB or other sources. ff The follow ing table shows the Company's deposit composition: Non-interest-bearing demand deposits Interest-bearing transaction accounts Savings and money market accounts Time certificates of deposit ($250,000 or more) Other time deposits ToTT tal deposits 2022 2021 Amount Percent Amount Percent December 31, $ $ 19,691 9,507 19,397 3,815 1,234 53,644 (i(( n millions) 36.7 % $ 17.7 36.2 7.1 2.3 100.0 % $ 21,353 6,924 17,279 523 1,533 47,612 44.9 % 14.5 36.3 1.1 3.2 100.0 % Although the Company does not pay interest to depositors of non-interest-bearing accounts, earnings credits and refeff rral fees are awarded to some account holders, which offff set charges incurred by account holders for other services. Earnings credits and referral fees earned in excess of charges incurred by account holders are recorded in deposit costs as part of non-interest expense and flff uctuat te as a result of eligible deposit balances and rates on these deposit balances. ff In addition to the Company's deposit base, it has access to other sources of funff ding, including FHLB and FRB advances, Federal funff agreements, and secured and unsecured lines of credit with other financial institutt trust ff red, credit linked note, subordinated debt, and Senior Note offff eri rr “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Balance Sheet Analysis – Deposits” in Item 7 of this Form 10-K. ds purchased, repurchase ions. Previously,yy the Company has also accessed the capital markets through ngs. For additional information concerning the Company's deposits, see preferff Other Financial Products and Services In addition to traditional commercial banking activities, the Company offff erff s other fiff nancial services to its customers, including internet banking, wire transfers, electronic bill payment and presentment, 24/7 funff ds transferff rings, lock box services, courier, and cash management services. and other digital payment offeff 11 Customer,rr Product, and Geographic Concentrations rial loans make up 40% and 47% of the Company's HFI loan portfolff io as of December 31, 2022 and 2021, respectively. In addition, Commercial and industd 29% of the Company's loan portfoli o at December 31, 2022 and 2021 was represented by CRE and construrr ction and land development loans. The Company’s CRE business is concentrated primarily in the Phoenix, Las VegaVV s, Los Angeles, Reno, San Francisco, San Jose, San Diego and TucTT son metropolitan areas. Consequently,yy the Company is dependent on the trends of these regional economies. ff The Company is not dependent upon any single or limited number of customers, the loss of which would have a material adverse effecff Neither the Company nor any of its reportable segments have customer relationships that individuald revenues. No material portion of the Company’s business is seasonal. t on the Company. ly account for 10% or more of consolidated or segment Competition ff The finff ancial services indusd try is highly competitive and has been significan non-bank financial institutions to compete with the Company. The Company competes foff r loans, deposits, and customers with other banks, mortgage companies, ncial technology fiff rms, and other non-bank finff ancial services providers. This strong competition foff r deposit and insurance companies, finan red to customers. In addition, many of the Company's loan products directly affecff competitors are much larger in total assets and capitalization and are able to offeff . r a broader range of financial services than the Company can offff erff Technol delivery systems and web-based tools, also continue to contribute to greater TT competition in domestic and international financial services markets and larger competitors may be aba le to allocate more resources to these technology initiatives. ce companies, finaff ts the interest rates on those produd cts and the terms on which they are offeff al and state legislation that makes it easier forff lities, including changes in productd ogical innovation and capabi tly impacted by feder a ff ff Human Capital Resources d by its corpor the Company's definff ate values of integrity,yy creativity,yy teamwork, passion, and excellence. People, Perforff mance, and Possibilities The Company’s culture is defineff capturet ing values and behaviors that shape our unique culturt e and how we do business. People are the foff undation of the Company and the Company invests in their success by providing expanded opportunities to attract and retain its people. Our people are committed to our clients’ success and, by putting clients firff st, we create strong shareholder perforff mance. This leads to tremendous possibilities to fuff el client growth and suppu ort the Company’s communities. rr The Company is deeply committed to giving back to the communities where it does business and strives to help low-to-moderate income geographies become healthier and more sustainable communities. Employees are encouraged to dedicate their time and expertise to charitable and civic organizations they are passionate about. In total, employees have volunteered more than 25,000 hours since 2020. The Company is also committed to providing financial support foff r education, affff orda housing, and community development lending and investments. blea ff As of December 31, 2022, the Company employed 3,365 fuff ll-time equivalent employees in its branches and loan producd tion offff iceff s across the United States, an increase of 7% from December 31, 2021 due to continued organic growth. The Company’s employees are not represented by a union or covered by a collective bargaining agreement. Diversitytt ,yy Equitytt ,yy and InII clusion The Company is committed to improving workforce diversity at all levels of the organization and to providing equal opportuni ty in all aspects of employment. In 2022, the Company continued to make progress towards enhancing its abia lity to attract and retain a diverse population of employees. The Company has built relationships with community and educational institutions to strengthen its pipelines of talent in underrepresented communities. The Company has established an executive-led Opportunt ity Council, which guides and sponsors DEI initiatives, provides access to leadership, and evaluates organizational and best practice DEI strategies. Overall, the Opportunity Council is foff cused on accelerating DEI activities and results. One aspect of this work is the active supu port of Business Resource Groups focused on the career advancement of diverse groups within the Company,yy such as women, minority groups,u and LGBTQIA+ employees. These groups fost ies to engage in programs, network with peers, and connect with Bank leadership. er opportunit ff t t 12 The Company employs a diverse workforff ce that reflects table below: ff its communities, which is shown in the Company's ethnic and gender diversity metrics presented in the Employees belonging to an ethnic minority groupu Female employees 2022 December 31, 2021 2020 (as a percerr ntage of total employees)s 43 % 52 44 % 55 38 % 58 Of the employees that are women, 44% occupy roles that involve supervising and managing other employees as of December 31, 2022, compared to 47% in the prior year. The below table presents the ethnic and gender diversity metrics foff r the Company's BOD: Directors belonging to an ethnic minority group Female directors December 31, 2022 2021 (as a percerr ntage of total direrr ctorsrr )s 21 % 21 15 % 15 The Company remains committed to increasing the share of women and minority groups in the ranks of its leadership and BOD. Recruiting, Retention, and TaleTT nt Development The Company recognizes that its success is highly dependent on its aba ility to attract, retain and develop employees. ToTT foster this development, the Company has created three early talent identificff ation programs, a college internship program, the CBDP,PP and iLead, the goal of each of which is to enhance management’s ability to promote pathways forff tment initiatives and partnerships also help expand the Company’s pipeline of talent. WithWW in the internship program, college stut dents and recent graduates are paired with leaders across the Company to create a valuabla e, immersive experience, with an objective of retaining promising interns and creating a pipeline foff r the CBDP or other roles. The CBDP is an 18-month, on-the- progressive assignments, mentoring, opportunities to learn the business and various job development program to train successfulff aspects of leadership, with the objective of developing fuff ture leaders of the Company. The iLead Program is an 18-month program for recent MBA gradud ates, designed to accelerate the development of high potential mid-career talent in sales or corpor ate career paths. Additionally,yy the Company has expanded its sales training and mentoring effoff rts to foster internal development within its commercial lending teams. growth of future leaders. Campus recruirr credit analysts that offff ersff rr rr ing new talent to the organization is key to the Company’s success and part of that objecb tive includes building a diverse As a growing company,yy recruit workforce that is representative of the communities that the Company serves. In 2022, 48% of WAWW B’s open positions were filff led by external candidates ff belonging to an ethnic minority group and 74% of promotions were awarded to ethnically diverse or female employees. The Company has made a commitment to growing the share of its employee population from diverse communities and has experienced success in recent years, although the Company believes there is still an opportunity foff r additional advancement in this area. Retaining employees who have been key contributors to the Company's success storyr overall employee turnover rate: remains an important objb ective. The table below presents the Company's TurTT nover Rate YeYY ar ended December 31, 2022 (1) 2021 2020 17 % 19 % 13 % (1) Excludes the impact of reductd ions in workforff ce durid ng the period. For 2022 compared to 2021, the turnover rate decreased frff om 19% to 17%. During 2022, the Company’s residential mortgage banking workforff ce was redud ced to align with lower residential mortgage loan produd ction volumes compared to 2021, which was driven by rising interest rates throughout 2022. This redud ction represented 7% of the Company’s total 2021 employees. 13 For 2021, the Company’s turt nover rate was impacted by the Great Resignation, which refers to the trend in which employees voluntarily resigned froff m their jobs in record numbers, with turnover rates highest among mid-career employees. In both 2022 and 2021, the Company's turt nover rate was highest among employees in the Under 30 age group, as shown in the taba le below. Under 30 Between 30-50 Over 50 TuTT rnover Rate by Age Group YeYY ar ended December 31, 2022 2021 27 % 15 15 27 % 19 16 a variety of resources to help its employees grow in their current roles and build new skills, including online development programs The Company also offff ersff and workshops, mentoring programs, and internal webinars that feaff speakers frff om across the Company,yy sharing infoff rmation aboa ut and success in their business line, division, or functional area. The Company encourages its employees to take an active role in their career and through the annual perforff mance management process, employees are able to identifyff individud al development goals and create an action plan to achieve these goals. turet WitWW h the understanding that bias is a larger societal issue, the Company offff erff s training to create awareness and understanding of everydr behaviors, and helps individuals to implement solutions to create a more inclusive workplace. This training is required forff focused trainings are required for all managers, including one specificaff lly promoting inclusion. ay biases and micro- all employees and additional, CompCC ensation and Benefits The Company’s compensation and benefits programs are designed to attract, retain, motivate, and reward employees to deliver strong perforff mance and excellence. In addition to salaries, these programs include annual bonuses, stock awards, a 401(k) Plan with an employer matching contribution, healthcare, life insurance and other benefitff s, health savings and flexible spending accounts, and various paid time offff benefits. Throughout the organization, 100% of employees participate in the annual bonus plan or are eligible to receive business incentives. Healtht and WellWW ness The Company is committed to supporting the wellness of its people, to enaba le their personal and professional productivity,yy improve physical and mental well- rt these effff off rts, the Company has establa ished WellWW ness Committees to engage its being, and provide suppu es that suppu ort wellness. people in well-being initiatives that provide opportunities for employees to develop healthier lifestyles by promoting habia ts and attitudt optimal health at work and at home. ToTT suppo ort forff u Supervision and Regulation The Company and its subsidiaries are extensively regulated and supervised under both federal and state laws. A summaryr description of the laws and regulations that relate to the Company’s operations are discussed in Item 7 of this Form 10-K. Additional AvaAA ilable Inforff mation The Company maintains an internet website at httpp://w// ww.westernalliancebancorpprr oration.com. The Company makes availabla e its annual reports on Form 10- K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange Act and other information related to the Company frff ee of charge, through this site, as soon as reasonabla y practicable aftff er it electronically files those documents with, or otherwise furff nishes them to the SEC. The SEC maintains an internet site at httppt ://www.sec.gov,vv fromff electronically may be accessed. The Company’s internet website and the infoff rmation contained therein are not incorprr orated into this Form 10-K. which all forms filedff ff In addition, copies of the Company’s annual report will be made available, free of charge, upon written request. 14 Item 1A. Risk Factors. Investing in our common stock involves various risks, many of which are specififf c to our business. The discussion below addresses the material risks and uncertainties, of which we are currently aware, that could have a material adverse effff ecff t on our business, results of operations, and financial condition. Other risks that we do not know about now,ww or that we do not currently believe are material, could negatively impact our business or the trading price of our securities. Additionally,yy investors should not interprr ret the disclosure of a risk to imply that the risk has not already materialized. See additional discussions t credit, interest rate, market, and litigation risks in "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations." aboua Market and Economic Risks Our finff ancial performa ff nce may be adverserr ff ly affected byb condidd tii ons inii thett finaff ncial markets and economic conditii ons generallyll .yy ff al performance Our financi is highly dependent upu on the business environment in the markets where we operate and in the U.S. as a whole. Unfavff orable or ff uncertain economic and market conditions can be caused by declines in economic growth, business activity,yy or investor or business confidff ence, limitations on the availability or increases in the cost of credit and capital, increases in inflation or interest rates, US government debt default or shutdown, the imposition of tariffff sff on trade, natural disasters, the emergence of widespread health emergencies or pandemics (including the COVID-19 pandemic), terrorist attacks, acts of war (including the militaryr confliff ct between RusRR sia and Ukraine), or a combination of these or other faff ctors. impact on us of unfavor The specificff such as disruprr conditions generally or specifically in the principal markets in which we conducd t business could have adverse effff ect able or uncertain economic or market conditions is diffff iff cult to predict, could be long or short term, and may be indirect, tions in our customers' supply chain or a reducd tion in the demand foff r their products or services. A worsening of business and economic s, including the foff llowing: ff ff • • • • • • • a decrease in deposit balances or the demand for loans and other products and services we offff eff r; an increase in the number of borrowers who become delinquent, fiff le for protection under bankruptcy laws or defaul to us, which could lead to higher levels of nonperforff ming assets, net charge-offff s,ff ff and provisions for credit losses; t on their loans or other obligations a decrease in the value of loans and other assets or in the value of collateral; a decrease in net interest income frff om our lending and deposit gathering activities; an impairment of certain intangible assets such as goodwill; and an increase in competition resulting from increasing consolidation within the financial services industry; and an increase in borrowing costs in excess of changes in the rate at which we reinvest funds. In the U.S. financial services industryrr ,yy the soundness of fiff nancial institutt between the institutions. As a result, concerns aba out, or a defaul t or threatened defaul ff credit problems, losses or defaults by other institutions. This is sometimes referr as clearing agencies, clearing houses, banks, securities firms, and exchanges, with which we interact on a daily basis, and thereforff e could adversely affff ect ions is closely interrelated because of credit, trading, clearing or other relationships t by,yy one institution could lead to signififf cant market-wide liquidity and t financial intermediaries, such ed to as “systemic risk” and may adversely affecff us. ff ff ff It is possible that the business environment in the U.S. will continue to be challenging or experience recession or additional volatility in the future. There can be no assurance that such conditions will improve in the near term or that conditions will not worsen. Such conditions could adversely affecff t our business, results of operations, and financial condition. Changes in intii erest tt rates and increased rate competititt on couldll adverselyll affeff ct our profiff tii abi lii itll ytt ,yy business, and prospects. tt Most of our assets and liabilities reprice with changes in interest rates, which subu jecb net interest income, mortgage banking revenues, the valuation of our assets and liabilities, and our aba ility to effecff ts us to significant risks from changes in interest rates and can impact our tively manage our interest rate risk. WeWW derive a significant amount of our revenue frff om net interest income and, therefore, our net income depends heavily on our net interest margin. Net interest margin is the diffff erff ence between the interest we receive on loans, securities, and other earning assets and the interest we pay on interest-bearing deposits, borrowings, and other liabilities. These rates are highly sensitive to many factors beyond our control, including competition, general economic conditions, the authorities, including the FRB. In a rising rate and fiscal policies of various governmental and regulatoryr slope of the interest rate curve, and monetaryr environment, the rate of interest we pay on our interest-bearing deposits, borrowings, and other liabilities may increase more quickly than the rate of interest we receive on loans, securities, and other earning assets, which could adversely impact our net 15 interest income and earnings. Interest rates rose dudd ring 2022 and may continue to rise during 2023. As a result, we have experienced certain of the rising rate environment effecff ts described herein. If interest rates continue to increase, our business, finff ancial condition and results of operations may be materially and adversely affeff cted. Conversely,yy our earnings also could be adversely affected those on our deposits and other liabila changes in market rates than other finaff ff more quickly than in a declining rate environment if the rates on our loans and other investments fall ities. Because of our relatively high reliance on net interest income, our revenue and earnings are more sensitive to ncial institutions that have more diversified sources of revenue. ff Loan volumes are also affecff ted by market interest rates on loans. Lower interest rates are usually associated with higher loan originations, but also result in net servicing revenues on residential loans with an associated ff higher loan refinanci write-down of MSRs. In contrast, in rising interest rate environments, loan repayment rates generally decline and result in a lower volume of loan originations. In addition to the impact on our lending business, a decrease in loan originations would adversely affff eff ct the volume of loans available for purchase by our mortgage warehouse lending platforff m. ngs which can result in lower average loan yields and the loss of fuff turet the ability of certain In addition to the potential effff ecff borrowers to pay interest and principal on their obligations and reducd ed the amount of non-interest income we can earn due to potentially lower levels of banking business conducted generally as well lower levels of servicing, gain on sale, and other revenues generated through our residential mortgage business. ts on net interest margin and loan volumes, an increase in the general level of interest rates affff ected ff Our finff ancial inst ii rutt mentstt expose us tott certain markrr et riskskk and may incr ii ease thett volatll iltt ill tyii ofo earnings ii and AOCI. ff al instrumrr ents measured at faiff value of such instrume WeWW hold certain financi the fair ff have a corresponding impact on reported earnings or AOCI. Fair value can be affff ecff credit spreads, interest rate volatility,yy liquidity,yy and other economic fact accounting may cause our earnings and AOCI to be more volatile than would be suggested by our underlying perfoff rmance. r value, we are required to recognize the changes in nts in either earnings or AOCI each quarter. Therefore, any increases or decreases in the fair value of these finff ancial instrument s ors, many of which are beyond our control, including ted by a variety of fact value ors. Accordingly,yy we are subject to mark-to-market risk and the application of fair r value. For those finff ancial instrumen ts measured at faiff ff ff rr rr rr ff Due to the inherent risk associatedtt withii adverselyll afa feff ct our finff ancial condition and resultsll ofo opo erations. accountingtt tt estimates, our ACLCC may be insuffff iff cient,tt which couldll requireii us to raise additi itt onal capia taii l or otherwise io, asset classificatio Credit losses are an inherent risk in the business of making loans. Management makes various assumptions and judgments aba out the collectability of our loan portfolff io and maintains an ACL deemed to cover expected losses over the life of the loan portfolio. The measurement of expected credit losses takes place at the time the financial asset is firff st added to the balance sheet (with periodic updates thereaftff er) and is based on a number of factors, including the size of the ry and geographic concentrations, estimated collateral values, portfolff management’s assessment of the credit risk inherent in the portfolff ortable forecasts. In addition, with the exception of residential loans, we individuad lly evaluate all loans identified as problem loans with a total commitment of $1.0 million or more, and establish an allowance based upu on our estimation of the potential loss associated with those problem loans. Additions to the ACL recorded through our provision forff credit losses decrease our net income. If management’s assumptions and judgments are incorrect or if economic conditions worsen ff compared to foreca io, loan underwriting policies, historical loan loss experience, and reasonabla e and suppu credit losses may exceed our ACL. experience and trends, ns, economic trends, st, our actual indusd tryr industd ff t ed loan commitments and letters of credit totals $309.7 million and $47.0 At December 31, 2022, our ACL on funded loans and loss contingency on unfundff million, respectively. Deterioration in the real estate market or general economic conditions could affecff t the abia lity of our loan customers to service their debt, which could result in additional loan loss provisions and increases in our ACL. In addition, we may be required to record additional loan provisions or increase our ACL based on new information regarding existing loans, input from regulators in connection with their review of our loan portfoli o, changes in regulatory on of additional problem loans, changes in economic outlook, and other factors, both within and guidance, regulations or accounting standards, identificati ly identifyff all deteriorating loans in a outside of our management’s control. Moreover, because future events are uncertain and because we may not successfulff timely manner, there may be loans that deteriorate in an accelerated time frame. ff ff ff Any increases in the provision or ACL would decrease our net income and capa ital, and may have a material adverse effff ect on our financial condition and results of operations. If actual credit losses materially exceed our ACL, we may be required to raise additional capital, which may not be available to us on acceptable terms or at all. Our inability to raise additional capa ital on acceptaba le terms when needed could materially and adversely affeff ct our fiff nancial condition, results of operations, and capital. ff 16 The markets in which we opero atett are subject to the risk ofo both natural and man-made disii asters.rr ia experiences wildfirff es fromff Many of the real and personal properties securing our loans are located in Californff ia and more generally in the southwestern portion of the United States. Much of Californff time to time that cause significant damage throughout the state. While these wildfires have not significantly damaged which may materially impair their ability to meet the terms of their our own properties, it is possible that our borrowers may experience losses in the futff ure, obligations. Califorff nia and the southwestern United States are also prone to other naturt al disasters, including, but not limited to, drought, earthquakes, flooding, and mudslides. In recent years, drought and decreased snowfall in the Rocky Mountains has led to decreased water flff ow in the Colorado River, from which many areas in the southwest obtain water, including certain of our markets. Persistence of such conditions or additional significan t naturt al or man-made disasters in the state of California or in our other markets could lead to damage or injn ury to our own properties and/odd r employees, declines in population in our tion, which may materially impair their ability to maintain markets, and increased risk that our borrowers may experience losses or sustained job interruprr deposits or meet the terms of their loan obligations. Therefoff re, additional natural disasters, a man-made disaster or a catastrophic event, persistence of detrimental environmental conditions, or a combination of these or other facto on our business, financial condition, results of operations, and cash flows. rs, in any of our markets could have a material adverse effff ect ff ff ff t change or societal responses to climii atett change could adverselyll afa feff ct our business and performance, ff inii cludinii g indi ii ri ectltt yll throughgg impm acts on our ii CliCC mate tt customers and vendors. dd The lack of empirical data surrounding the credit and other financial risks posed by climate change makes it impossible to predict the specific impact climate change may have on our finff ancial condition and results of operations; however, the physical effff ect s of climate change may also impact us. In addition to the risk of more frequent and/or severe naturt al disasters, climate change can result in longer term shifts in climate patterns such as extreme heat, sea level rise, declining fresh water resources, and more frequent and prolonged drought. The effff ecff in our geographic markets, and could disruprr y chains generally. These disrurr ptu ions, including increased regulation and compliance cost for our customers and changes in consumer behaviors, could result in declines in the economic conditions the value of in geographic markets or industries in which our customers operate and impact their ability to repay loans or maintain deposits and could affff ect real estate and other assets that serve as collateral foff r loans. t our operations, the operations of our customers or third parties on which we rely,yy or supplu ts of climate change may have a significant effff ect ff ff ff Bank regulators have increasingly viewed fiff nancial institutions as playing an important role in helping to address climate change, which may result in increased requirements regarding the disclosure and management of climate risks and related lending activities. WeWW may also become subject to new or heightened regulatoryrr requirements related to climate change, such as requirements relating to operational resiliency or stress testing foff r various climate stress scenarios. New or increased regulations, including potential additional climate-related disclosure requirements, could result in increased compliance costs or capital requirements. Changes in regulations and customer prefeff rences and behaviors could negatively affeff ct our growth or foff rce us to alter our business strategies, including whether and on what terms and conditions we will engage in certain activities or offff erff certain products or services and which growth industries and customers we pursue. Additionally,yy our reputation and customer relationships may be damaged due to our practices related to climate change, including our involvement, or our customers’ involvement, in certain indusd tries or projects associated with causing or exacerbating climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change. Overall, climate change, its effff ect s and the resulting, unknown impact could have a material adverse effect on our fiff nancial condition and results of operations. ff ff sed scrutintt yn and evolving expectation Increa II additiii onal coststt on the Company or expos s froff m custome tt e itii tott new or adddd itidd onal riskii rs, regulators,rr s.kk ee tt ii inve tt stors, and other staktt ll eholder srr withtt respect tott ESG practices maya impose ff cial institution and a publicly traded company,yy we are faci As a regulated finan ng increasing scrutiny frff om customers, regulators, investors, and other stakeholders related to ESG practices and disclosure. Investor advocacy groups, investment fuff nds, and inflff uential investors are increasingly focused on these practices, especially as they relate to climate risk, hiring practices, the diversity of the workforce, and racial and social justice issues. Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with of ESG oversight and certain customers and business partners, and stock price. New government regulations could also result in new or more stringent forms expanding mandatory or voluntaryr reporting, diligence, and disclosure. ESG-related costs, including with respect to compliance with any additional regulatoryr or disclosure requirements or expectations, could adversely impact our results of operations. ff ff 17 The COVID- CC conditioii n and resultsll of operations. 19 pandemic and resultinll dd g adverse economic conditdd itt ons have adversely impa ii ctett d,dd and could contitt nue ii to adversely impact, our finii ancial Our business is dependent on the willingness and ability of our customers to conductd banking and other financial transactions. The ongoing COVID-19 global and national health emergency caused significff ant disrurr pu tion in the United States and international economies and financial markets and continues to cause illness, quarantines, reduced attendance at events and reduced travel, reducd ed commercial and financial activity,yy and overall economic and financial market instability. d While the level of disruprr tion caused by,yy and the economic impact of,ff COVID-19 has lessened in 2022, there is no assurance that the pandemic will not worsen s on the economy could further impact again, including as a result of the emergence of new strains of the virus. our business, our provision and ACL, and the value of certain assets that we carryrr on our balance sheet, such as goodwill. Our customers, business partners, and third-party providers, including those who perform critical services foff r our business, may also be adversely affecff rr Any worsening of the pandemic and its effff ect ted. ff Credit Risks WeWW are highi lyll dependent dd on real estatett and eventstt that negativelyll ii impa ct the real estattt ett market willll hurt our busineii ss and earnings.gg nt portion of our business is located in areas in which economic growth is largely dependent on the real estate market, and a large part of our loan io is secured by or otherwise dependent on real estate. The market for real estate is cyclical and a signififf cant change in the real estate market that t borrowers’ ability to repay loans. Changes in the real estate the value of forff eclosed assets. A decline in real estate activity would likely cause a decline in asset and deposit growth and negatively A significaff portfolff resulted in deterioration in the value of collateral or rental or occupancy rates could adversely affecff market could also affect impact our earnings and financial condition. ff Our loan portfolio indd g risks.kk lendll ff tt contains concentrat tt iontt s in certain businii ess lill nes ii or product types tt thtt at have unique riskii charactertt istii icstt and maya expoxx se us to inii creased ff consists primarily of commercial and industdd rial, residential mortgage, and CRE loans, which contain material concentrations in certain Our loan portfolio business lines or product types, such as mortgage warehouse, real estate, corporate fiff nance, as well as in specificff business sectors such as technology and innovation. These loan concentrations present unique risks and involve specialized underwriting and management as they oftff en involve large loan balances to a single borrower or groupu of related borrowers. Consequently,yy an adverse development with respect to one commercial loan or one credit relationship may us. In addition, based on the nature of lending to these specialty markets, repayment of loans may be dependent upu on borrowers receiving adversely affff ect ff additional equity financing or, in some cases, a successfulff ng, or other foff rm of liquidity event. sale to a third party,yy publu ic offff eri ff Our commercial and industrial, CRE, and construction and land development loans, are also largely concentrated in selected markets in Arizona, California, concentration, deterioration in economic conditions in these markets could result in an increase in loan and Nevada. As a result of this geographic our products and services or a decrease in the value delinquencies and charge-offff s,ff of real estate and other collateral for loans. Unforeseen adverse events, changes in economic conditions, and changes in regulatoryr policy affff ecti ng borrowers’ industries or markets could have a material adverse impact on our fiff nancial condition and results of operations. an increase in problem assets and forff eclosures, a decrease in the demand forff a ff Our creditii ll ofo loss has been transferred ff pursurr ant to these transactions. linkii ed notes do not ensure full protectiott n aga ainst creditii loll sses, and as such we couldll stilii lll incii ur signifi gg cant creditii losses on loall ns forff which risk WeWW have entered into transactions to mitigate exposure to losses on our loan portfolio. These transactions are strurr ctured as credit linked notes, which transferff the risk of firff st losses on covered loans to these note holders. These notes have an aggregate principal amount of $1.0 billion on a $12.0 billion reference pool of warehouse and equity fund resource loans and residential mortgages. Pursuant to these arrangements, in the event of borrower default, the principal balance risk over and aboa ve the of the notes will be reduced first loss position is retained by us. While current estimates of futurt e credit losses are below the fiff rst loss position, no assurances can be given that these losses will not exceed the first loss position and, if credit losses were to exceed the firff st loss position, our fiff nancial condition and results of operations could be adversely effeff cted. WeWW may enter into more such transactions in the futff urt e. by the amount of the loss, upu to the amount of the aggregate principal of the notes. However, all residualdd d t 18 WeWW are exposed to risk ofo environii mental liabilitiii es withtt respect tott properties tott which we obtaitt nii titt tii ltt ell .ee ff o at December 31, 2022 was secured by real estate. In the course of our business, we may foreclose on and take title to Approximately 60% of our loan portfoli real estate, and could be subjeu ct to environmental liaba ilities with respect to these properties. WeWW may be held liabla e to a governmental entity or to third parties for property damage, personal injuryrr ,yy investigation, and clean-upu costs incurred by these parties in connection with environmental contamination, or may be required to investigate or clean up hazardous or toxic subu stances, or chemical releases at a property. The costs associated with investigation or remediation activities could be substantial. In addition, if we are the owner or former owner of a contaminated site, we may be subju ect to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. These costs and claims could be subsu tantial and adversely affeff ct our business and prospects. Strategicg Risks Our futff ure success depends on our abiliii tyii yll to compete efe feff ctivel tt inii a highl i yll compm etittt ivett and rapidlyll evolving market.tt rent competitors. Our competitors, including money center banks, national WeWW face substantial competition in all phases of our operations from a variety of diffeff ions, mutual savings banks, credit unions, finance companies, insurance companies, securities and regional commercial banks, community banks, thriftff institutt ds, financial technology companies and other financial institutions, compete dealers, brokers, mortgage bankers, investment advisors, money market mutual with lending and deposit-gathering services offff erff ed by us. Increased competition in our markets or our inability to compete effff eff ctively may result in reducedd d loans and deposits or less favor able pricing. funff ff t In particular, we have experienced intense price and terms competition in some of the lending lines of business and deposits in recent years. Many of these ff competing institutions have much greater financ ial and marketing resources than we have. Due to their size and brand recognition, larger competitors can a broader range of producd ts and services or more attractive pricing than us. In addition, some of the finff ancial services achieve economies of scale and may offff erff organizations with which we compete are not subu ject erally insured to the same degree of regulation as is imposed on bank holding companies and fedff depositoryr ons. As a result, these non-bank competitors have certain advantages over us in accessing funding and in providing various services. t instituti b The banking business in our primaryr market areas are veryr competitive, and the level of competition faci growth and finan including sustaining loan and deposit growth at our historical levels, our business and results of operations may be adversely affff eff cted. cial results. In particular, our predominate source of revenue is net interest income. Therefore, if we are unable to compete effff ect ng us may increase further, which may limit our asset ively,yy ff ff ff cial services industryr also is facff The finan ff digital payments, oftenff customers to complete financ intermediaries foff r certain transactions, as well as further disruprr income and deposits and otherwise adversely affff eff ct our business and results. ing increasing competitive pressure frff om the introducd tion of disruptu ive new technologies such as blockchain and by non-traditional competitors and financial technology companies. Among other things, technology and other changes are allowing ial transactions that historically have involved banks at one or both ends of the transaction. The elimination of banks as ff tion of traditional bank businesses and producdd ts by non-banks, could result in the loss of feeff Our expansion strategy maya not prove to be successfuff l and our market value and profo itff att biliii tii ytt may suffeff r.rr WeWW continually evaluate expansion through acquisitions of banks and other finff ancial assets and businesses. Like previous acquisitions by us such as the acquisition of AmeriHome in 2021 and DST in 2022, any fuff turt e acquisitions will be accompanied by risks commonly encountered in such transactions, including, among other things: • • • • • • • • time and expense incurred while identifyinff g, evaluating and negotiating potential acquisitions and transactions; diffiff culty in accurately estimating the value of target companies or assets and in evaluating their credit, operations, management, and market risks; potential payment of a premium over book and market values that may cause dilution of our tangible book value or earnings per share; exposure to unknown or contingent liabia lities of the target company; potential exposure to asset quality issues of the target company; diffiff culty of integrating the operations and personnel; potential disruptiu on of our ongoing business; ff ure to retain key personnel at the acquired business; fail 19 • • inability of our management to maximize our fiff nancial and strategic position by the successfuff l implementation of unifoff rm productd incorporation of uniform technology into our product offff erin gs and control systems; and ff ff offff eri ngs and the ff ure to realize any expected revenue increases, cost savings, and other projected benefits from an acquisition. fail acquisition candidates may be signififf cant. WeWW may compete with other banks or finff ancial service companies with WeWW expect that competition forff similar acquisition strategies, many of which are larger and have greater financial and other resources. WeWW cannot assure that we will be able to successfully identifyff rovals needed to complete any such transactions. and acquire suitable acquisition targets on acceptable terms and conditions, or that we will be aba le to obtain the regulatoryr suitablea appa WeWW cannot provide any assurance that we will be successfuff l in overcoming these risks or any other problems encountered in connection with acquisitions. Potential regulatory enforceme t our aba ility to engage in certain acquisition activities. Our inability to overcome the risks nt actions could also adversely affff ecff inherent in the successful completion and integration of acquisitions could have an adverse effff ect on the achievement of our business strategy. ff ff ThTT ere are substantial risks and uncertaintt exiee stinii g linll es ofo business. ties associated withii the intrtt oductitt on or expansion of lill nii es of busineii ss or new productstt and services withtt in new products and services within existing lines of business, or offeff From time to time, we may implement new lines of business, offff erff r existing produd cts or services to new industries, geographies, or market segments. There are substantial risks and uncertainties associated with these effff off rts, particularly in instances where the markets are not fully developed or indud stries are heavily regulated. In developing and marketing new lines of business and/odd r new produdd cts and services, we may invest significff ant time and resources. Initial timetaba les for the introducd tion and development of new lines of business and/odd r new producdd ts or services may not be achieved and price and profiff tability targets may not prove attainaba le. External fact ors, such as compliance with laws and regulations, competitive alternatives, and shifting market prefeff rences or government policies, may also impact the successful implementation of a new line of business, s and services to an emerging industdd product or service or the offeff ryr . Furthermore, any new line of business and/odd r new produd ct or ring of existing productd veness of our system of internal controls. Failure to successfuff lly manage these risks in the development service could have a significant impact on the effecti on our business, results of operations, and and implementation of new lines of business or new products or services could have a material adverse effff ect financial condition. ff ff ff WeWW are pursuing digitaltt ll results. a paymen ts initiatives which are subjecb i t to signi ficant i uncertainii tytt and could adversely afa feff ct our busineii ss, reputatiott n, or financial dd WeWW are pursuing digital payments initiatives, including our 2022 acquisition of DST, a digital payments platformff the class action legal industry,yy and implementation of a fully integrated digital banking platforff m for our customers, including a digital token powered by the TaTT ssatPay platforff m. The digital payments products r may use or rely on blockchain-based technologies or assets. Use of blockchain-based technologies in payments are a relatively new and unproven technology,yy and the laws and regulations surrounding them are uncertain and evolving. Blockchain and digital payment iny to continue. Any changes in technology has drawn significant scrutrr iny frff om governments and regulators in multiple jurisdictions and we expect that scrutrr such laws and regulations applicablea to, or scrutiny directed at, our products and services may impede or delay the offff eff ring of digital payments solutions, increase our operating costs, require significaff nt management time and attention, or otherwise harm our business or results of operations. and services we offeff forff In addition, market acceptance of digital payments produd cts and services is subjb ect to significant uncertainty. As such, there can be no assurance that digital payments products and services we offff eff r and the technologies we have chosen to implement will be accepted and desired by customers. WeWW do not have our aba ility to successfuff lly integrate and market such digital significant ff payments products s, and our investments may not be successful. Any of these events could adversely affeff ct our business, reputation, or fiff nancial results. and services. WeWW also will continue to incur increased costs in connection with these effff ort prior experience with blockchain-based technology,yy which may adversely affff ect d ff ff Our success is dependent dd uponu our abilityii to recruit and retaitt nii qualifll iff ed empm loye ll es,s including membersrr of our leadershi rr . pii and management teams tt level. In particular, Our business plan includes and is dependent upon hiring and retaining highly qualifiedff our relative success to date has been partly the result of our management’s ability to identify and retain highly qualifiedff employees in leadership and administrative support roles, and experienced bankers with expertise in certain specialty areas or that have long-standing relationships in their communities or ledge, specialized skills and markets, including with respect to our business-to-business mortgage platformff expertise, customer relationships and in some cases extensive ties within markets upon which our competitive strategy is based, and have been an integral part of our ability to attract deposits and to expand our market share. WeWW have not . These professionals bring with them valuable knowk and motivated executives and employees at everyr 20 entered into employment agreements with most of our employees and competition for talent in our industry is intense. The labor market is currently challenging, with employee turnover at an all-time high and increased wage pressure. In addition, the transition to an increased remote work environment, may exacerbate the challenges of attracting and retaining talented and diverse employees as job markets may be less constrained by physical geographa y. WeWW r incentivize employee retention through our equity incentive plans; however, we cannot guarantee the effff eff ctiveness of our equity incentive plans in retaining these key employees and executives. WerWW e we to lose key employees, we may not be able to replace them with equally qualififf ed persons who bring the same skills and knowledge of and ties to the communities and markets within which we operate. If we are unabla e to retain qualififf ed employees or hire new qualified employees to keep upu with or outpac ly execute our business strategy or may incur additional costs to achieve our objectives. e employee turnover, we may not be able to successfulff t WeWW couldll be harmed ifi our succession plannll ing isii inadequatett to mitii gai . te the loll ss ofo keye members ofo our senior managea ment teamtt WeWW believe that our senior management team has contributed greatly to our perfoff rmance. In addition, we from time to time experience retirements and other changes to our senior management team. Our fuff ture perfoff rmance depends on a smooth transition of our senior management, including finding and training replacements who are properly equipped to lead us. WeWW have adopted retention strategies, including equity awards, from which our senior highly qualifiedff ve and the management team benefits in order to achieve our goals. However, we cannot assure our succession planning and retention strategies will be effff ecti loss of senior management could have an adverse effect on our business. ff ff Cappital and Liquq idityy Risks WeWW are subject to capital ii adequacyc standar tt ds and liqll uidityii ll rules, and a faiff dd lii ure to meet thtt ese stand tt ards couldll adverselyll affff ect ff our financial conditidd on. ct to capita al adequacy and liquidity rules and other regulatoryrr requirements specifyiff ng minimum amounts and types of capital WALWW and WABWW are each subjeu that must be maintained. From time to time, the regulators implement changes to these regulatory capital adequacy and liquidity guidelines. If we fail to meet these minimum capital and liquidity guidelines and other regulatory requirements, we may be restricted in the types of activities we may conducd t and may be taking certain capital actions, such as paying executive bonuses or dividends and repurchasing or redeeming capa ital securities. At December prohibited fromff 31, 2022, our CET1 ratio was 9.3%. While this ratio is above the well-capitalized regulatory ratio threshold of 6.5%, it is still below our targeted capital level. As we continue to focus on building our capita al ratios, we may need to issue additional equity capa ital or reduce the pace at which we are growing in order to increase our CET1 and other capita l ratios. a ff IfII we lose a signigg fii cant portiontt and/or profito abtt would be adverserr ilityii ly imii pacm ted.dd of our core depositstt or a signifgg iff cant dedd poee sitii relatll itt onship,pp or our cost ofo fund ingdd ff depositsii incii reases signifi gg cantly,yy our liqll uidityii ff ity to maintain sufficien Our success depends on our abila t liquidity to funff d our current obligations and support loan growth and, specififf cally,yy to attract and retain a stable base of relatively low-cost deposits. The competition foff r these deposits in our markets is strong and customers may demand higher interest rates on ing higher rates of retut rn. Additionally,yy we may accept brokered deposits, which may be more price sensitive than their deposits or seek other investments offff erff r reciprocal deposit produd cts through third party other types of deposits and may become less available if alternative investments offff erff networks to customers seeking fede ion. WeWW also frff om time to time offff erff certain deposits of publu ic monies, pledges of collateral in the form of readily marketable securities. Any event or circumstance that interfeff res with or limits our aba ility to offff eff r these producd ts to customers that require greater security for their deposits, such as a signififf cant regulatory enforcement action or a signififf cant decline in capa ital levels at our bank subu sidiary,yy could negatively impact our ability to attract and retain deposits. If we were to lose a significaff nt deposit relationship or a significant portion of our low-cost deposits, we would be required to borrow from other sources at higher rates and our liquidity and profitff aba ility would be adversely impacted. deposit amounts that exceed the apa plicabla e deposit insurance limit at a single institutt other credit enhancements to depositors, such as FHLB letters of credit and, forff higher returt ns. WeWW offeff ral insurance forff ff WeWW maya be requiredii tott repurchase mortgage loans or indemdd nifi yff investors under certaitt nii circumstanc tt es. A substantial portion of our mortgage banking operations involves the sale of loans to third parties, including through securitization. When loans are sold or securitized, we make customary representations and warranties about such loans to the loan purchaser or through documents governing our securitized loan pools. If a mortgage loan does not comply with the representations and warranties made with respect to it at the time of its sale, we could be required to repurchase the loan, replace it with a substitutet secondaryr market purchasers or investors for losses, and may not have recourse to the correspondent seller that sold the mortgage loans and breached similar or other representations and warranties. Signififf cant indemnification or repurchase activity on securitized or sold loans without offff sett on ff our financi ing recourse to a counterparty frff om which the loan was purchased could have a material adverse effff ect ff al condition and results of operations. loan and/odd r indemnifyff ff 21 WeWW utiliii zeii borrowings ii fromff the FHFF LHH B and the FRFF B,B and thtt ere can be no assurance thes tt e programs willll be availaii blell as neededd d.dd As of December 31, 2022, we have $4.3 billion of borrowings frff om the FHLB of San Francisco and no borrowings frff om the FRB. WeWW utilize borrowings froff m short-term liquidity needs. Our borrowing capacity is generally dependent on the value of our collateral the FHLB of San Francisco and the FRB to satisfyff ity or eliminate certain types of collateral and could otherwise modify or terminate pledged to these entities. These lenders could redud ce our borrowing capac their loan programs. Any change to or termination of these programs could have an adverse effeff ct on our liquidity and profitff ability. a A change in our creditwoii rthineii ss couldll incii rease our cost of fuff ndingii or advdd ersely rr affff ecff t our liqi uiditii ytt .yy Market participants regularly evaluate our creditworthiness and the creditworthiness of our long-term debt based on a number of factors, some of which are not entirely within our control, including our financial strength and conditions within the finff ancial services industd ryr generally. There can be no assurance that our perceived creditworthiness will remain the same. Changes could adversely affff eff ct the cost and other terms upon which we are aba le to obtain funding and our access to the capia tal markets, and could increase our cost of capital. Likewise, any loss of or decline in the credit rating assigned to us could impair our abia lity to attract deposits or to obtain other funding sources, or increase our cost of fuff nding. ff Operp ational and Techn TT ological Risks re in or breach ofo our opero A failuff a result of cyber-attacks, could disruptu our businii esses, result inii ii increase our costs,tt and cause loss ational or security systems or infra es. ll ii tt struc thtt e disii closull ture,e or thtt ose ofo our third- ii re or misuse ofo confiff dentitt al or proprietary p- artytt vendorsdd and other service providersdd tt rmrr atiott n, dadd magea infoii ,s inii cluding as tation, our repuee ff on across all geographie Our operations rely on the secure processing, storage, and transmission of confidff ential and other information. Moreover, a portion of our employees work remotely at least some of the time. Although we take numerous protective measures to maintain the confidentiality,yy integrity,yy and security of our customers’ informati these protective measures as circumstances warrant, the nature of cyber threats e, and networks and those of our customers and third-party vendors may be vulnerable to continues to evolve. As a result, our computer systems, softwar unauthorized payments and account access, loss or destrurr ction of data (including confidential client informat ion), account takeovers, unavailability of service, computer viruses or other malicious code, cyber-attacks, and other events that could have an adverse security impact and result in significff ant losses to us and/or our customers. These threats may originate externally frff om increasingly sophisticated third parties, including forff eign governments, organized criminal groupu s, and other hackers, or from outsourced or infraff structut re-support providers and application developers, or the threats may originate frff om within our organization. s and product lines, and endeavor to modifyff a ff ff rr ff the risk of operational disrupti WeWW also face ity constraints of any of the third parties that facilitate our business activities, including vendors, exchanges, clearing agents, clearing houses, or other finff ancial intermediaries. Such parties could also be the source or cause of an attack on, lure with respect to our customers’ systems. Our or breach of, our operational systems, data or infrastrurr cturt e. In addition, we may be at risk of an operational faiff of these threats, the outsourcing of many of our risk and exposure to these matters remains heightened because of,ff among other things, the evolving naturet t business operations, and the continued uncertain global economic environment. As cyber threats continue to evolve, we may be required to expend significan additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities. on, failure, termination, or capac a ff WeWW maintain insurance policies that we believe provide reasonabla e coverage forff However, we cannot assure that these policies will affoff penalties, including lost revenues, should we experience any one or more of our or a third party’s systems failing or experiencing an attack. ion of our size and scope with similar technological systems. rd coverage foff r all possible losses or would be suffff iff cient to cover all finff ancial losses, damages, or an institutt tt WeWW rely on third parties tott provide keye components ofo our business inii fn rast ruct ff ure.ee WeWW rely on third parties to provide key components foff r our business operations, such as data processing and storage, recording and monitoring transactions, online banking interfacff es and services, internet connections, and network access. While we have a robust due diligence process in place to select third-party vendors, we do not control their actions. Any problems caused by these third parties, including those resulting from breakdowns or other disrurr ptu ions in communication services provided by a vendor, failu lure our abia lity to deliver products and services to our of a vendor to provide services forff customers and otherwise conduct our business. Financial or operational diffff iff culties of a third-party vendor could also impact our operations if those diffff icuff lties with their ability to serve us. Replacing third-party vendors could create significant delays and expense and there is no guarantee that such interfereff replacement vendors will be availablea re of a vendor to handle current or higher volumes, cyber-attacks and security breaches at a vendor, faiff ff any reason, or poor perfoff rmance by a vendor could adversely affff ect at ff 22 comparable rates, on similar terms, or in a timely manner, if at all. Any of these things could adversely affeff ct our business and financial performance. Our business maya be advedd rsely affff eff cted by frauff d.dd cial institution, we are inherently exposed to a wide range of operational risks, including, but not limited to, theftff and other fraudulent activity by ff As a finan employees, customers, and other third parties targeting us and/dd or our customers or data. Such activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering and other dishonest acts. ff Although we devote substantial resources to maintaining effect and increasing sophistication of possible perperr ff trators, we may experience finff ancial losses or reputational harm as a result of fraff ud. ive policies and internal controls to identify and prevent such incidents, given the persistence Our controls and processes, our reporting systems could cause us to experience complianll ff afa fff ect our finff ancial results. tt and procedures,s and our operatitt onal infrastruc tt ture maya not be ablell tott keep pace withii ce and operatiott nal problell ms,s to lose customers, or incur ii additdd itt onal expenditi ures, any one ofo which could advers our growth, which ely dd re success will depend on the ability of officer Our futuff s and other key employees to effff eff ctively implement solutions designed to continually enhance operational, credit, financial, management and other internal risk controls and processes, as well as improve reporting systems and procedures, while at the same time maintaining and growing existing businesses and client relationships. WeWW may not successfuff lly implement such changes or improvements in an effff ici cies in our existing systems and controls that adversely affeff ct our aba ility to support and grow our ff existing businesses and client relationships, and could require us to incur additional expenditures to expand our administrative and operational infraff strurr cture. If we are unable to maintain and implement improvements to our controls, processes, and reporting systems and procedures, we may lose customers, experience our financial results. compliance and operational problems or incur additional expenditures ent or timely manner, or we may discover deficien tions, any one of which could adversely affff ect beyond current projeco ff ff ff t ThTT e replacement of LIBOR may adverserr ff ly affff ect our business. LIBOR and certain other interest rate benchmarks are the subject of national, international and other regulatory guidance and reform. Effecff tive Januaryr 1, 2022, the administrator of the LIBOR ceased the publication of one-week and two-month US dollar LIBOR and will cease the publications of the remaining tenors of US dollar LIBOR (one, three, six, and 12-month) immediately aftff er June 30, 2023. The market transition away fromff and results of operations. In particular, the transition could: LIBOR to alternative referff ence rates is complex and could have a range of adverse effff ects ff on our business, finff ancial condition • • • • adversely affecff on the alternative benchmark rates; t the interest rates received or paid on the value of our LIBOR-based assets and liaba ilities compared to the rate received or paid based adversely affecff interest rates globally; t the interest rates received or paid on the value of other securities or finff ancial arrangements, given LIBOR's role in determining market prompt inquiries or other actions frff om regulators in respect of our preparation and readiness forff refereff nce rate; and the replacement of LIBOR with an alternative result in disputes, litigation or other actions with borrowers or counterparr LIBOR-based contracts and securities. rties about the interprrr etation and enforceaba ility of certain fall ff back language in The transition away from LIBOR to an alternative refeff rence rate or rates has required the transition to or development of apa propriate systems, models and analytics to effecff tively transition our risk management and other processes from LIBOR-based products to those based on the applicable alternative referff ence rate. Accordingly,yy management’s LIBOR transition team is actively working on the LIBOR transition projo ect. During the second half of 2021, we began ng three alternative rate indices (including Ameribor, SOFR, and BSBY) on our lending producdd ts, with Ameribor as our preferred rate index and, as of ff offff eri December 31, 2021, we are no longer originating new loans using any LIBOR index. Despite these effoff rts, the manner and impact of this transition and related developments, as well as the effff ecff t of these developments on our funding costs, investment and trading securities portfolios, and business, is uncertain and could have a material adverse impact on our profitability. 23 Our risk managemen a t practices may prove tott be inadedd quate or inii efe fff ecff .ee tivett ff ork seeks to mitigate risk and appa Our risk management framew ropriately balance risk and returt n. WeWW have established policies and procedud res intended to identifyff ,yy monitor, and manage the types of risk to which we are subju ect, including, but not limited to credit risk, market risk, liquidity risk, operational risk, legal and compliance risk, and reputational risk. A BOD level risk committee approves and reviews our key risk management policies and oversees operation nt resources to developing our risk management policies and procedures and expect to of our risk management framework. Although we have devoted significaff continue to do so in the futuff ive. In addition, as regulations and the markets in which we operate continue to evolve, our risk management framework may not keep suffff ici ent pace with those changes. If our risk management t or material risks, we could suffff eff r unexpected losses or other material adverse impacts. framework does not effff ecti vely identifyff or mitigate significan asting models. If the models we use to mitigate these risks are Management of our risks in some cases depends upon the use of analytical and/or forec inadequate, or are subject to ineffff ecff tive governance, we may incur increased losses. In addition, there may be risks that exist, or that develop in the futff urt e, that we have not appropriately anticipated, identififf ed, or mitigated. re, these policies and procedurd es, as well as our risk management techniques, may be ineffff ect ff ff ff ff ff Our internal controls and procedures may faiff may impact operatingtt resultsll and finff ancial conditidd on. lii or be circumv ii entett d and thett accuracyc of jff udgmentstt and estitt mii ates about fiff nanc ii ial and accounting matters tt d u rate governance Our management regularly reviews and updat Any system of controls and procedurdd es, however well designed and operated, is based in part on certain assumptions and can provide policies and procedures. only reasonable, not absolute, assurances that the objb ectives of the system are met. Any fail ff ure to comply with regulations related to controls and procedud res, could result in materially inaccurate reported financial statements and/or have a material adverse effff ect on our business, results of operations, and finff ancial condition. Similarly,yy our management makes certain estimates and judgments in preparing financial ff statements. The quality and accuracy of those estimates and judgments will impact operating results and fiff nancial condition. es internal controls over finff ancial reporting, disclosure controls and procedures, and corporr ff ure or circumvention of controls and procedures, or fail IfII we are unable to understand and adapt tott adverselyll afa feff cted. tett chnologo ical change and impii lement new technology- ll driven productstt and services, our business could be al services industryr The financi is continually undergoing rapid technological change with frff equent introductions of new technology-driven products and ff services. WeWW expect that new technologies will continue to emerge and may be supu erior to or render obsolete the technologies currently used in our producd ts and services. Our future success depends in part upu on our aba ility to address the needs of our customers by using technology to provide produd cts and services that will satisfy customer demands, as well as to create additional effff iff ciencies in operations. Many of our competitors, because of their larger size and available capital, have substantially greater resources to invest in technological improvements. Developing or acquiring new technologies and incorprr orating them into . WeWW cannot predict which our products technological developments or innovations will become widely adopted or how those technologies may be regulated. WeWW also may not be abla e to effff ecti vely market new technology-driven products and services to our customers. Failure to successfulff ly keep pace with technological change affeff cting the financial services industryrr could have a material adverse impact on our business and, in tut rn, our fiff nancial condition and results of operations. and services may require significff ant investment, take considerable time, and ultimately may not be successfulff dd ff Legalg and Comppliance Risks WeWW operate in a highlygg and accountingtt lawll ii principles, or changes in thett m, or our failur environii ment and thett regulatedtt s and regulatll e tott compm lyll withtt thtt em, maya advdd erselyll affecff t us. iott ns that tt govern our opeo rations, corprr oratett governance,e executivett compensatiott n, WeWW are subject to extensive regulation, supervision, and legislation that govern almost all aspects of our operations. Intended to protect customers, depositors, and the DIF, these laws and regulations, among other matters, prescribe minimum capital requirements, impose limitations on the business activities in which we can engage, require monitoring and reporting of suspicious activity and of customers who are perceived to present a heightened risk of money laundering or other illegal activity,yy limit the dividends or distributions that WAWW B can pay to WAWW L or that we can pay to our stockholders, restrict the ability of affff iliff ates to accounting requirements on us that may be more restrictive and result in greater or earlier charges to earnings or guarantee our debt, impose certain specificff reductions in our capa ital than does GAAP,PP among other things. Our mortgage warehouse lending operations subjecb t us to regulations that have grown in complexity in recent years and may continue to do so as the government continues to prioritize consumer protection measures. Our mortgage warehouse lending operations are subjeu ral, state and local laws, regulations and judicial and administrative decisions, including those designed to discourage predatoryrr lending and regulate collections and servicing practices with respect to mortgage loans. ff ct to fede 24 Compliance with laws and regulations can be diffiff cult and costly,yy and changes to laws and regulations often impose significaff nt additional compliance costs. ToTT the extent we continue to grow and become more complex, regulatoryrr oversight and risk and the cost of compliance will likely increase, which may adversely affff ect us. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Supervision and Regulation” included in this Form ff 10-K forff a more detailed summary of the regulations and supu ervision to which we are subject. Changes to the legal and regulatory frff amework governing our operations, including the passage and continued implementation of the Dodd-Frank Act and EGRRCPA,PP have drastically revised the laws and regulations under which we operate. In general, bank regulators have increased their foff cus on risk management and regulatory compliance, and we expect this foff cus to continue. Additional compliance requirements may be costly to implement, may require additional compliance personnel, and may limit our abia lity to offeff r competitive productd s to our customers. u ff to changes in fede ff g banks and other financial institutt WeWW are also subject Regulations affectin cannot be predicted. Regulations and laws may be modififf ed at any time, and new legislation may be enacted that will affeff ct us, WAB,WW subsidiaries. Any changes in fede in substantial and unpredictable ways, including ways that may adversely affff ect opriately comply with any such laws, regulations or principles or an alleged faiff appr a a diffff eren ff ff affff ect ral and state law,ww as well as regulations and governmental policies, income tax laws, and accounting principles. of such changes and our other us ff our business, fiff nancial condition, or results of operations. Failure to lure reflects ce in interprr retation, could result in sanctions by regulatoryr agencies, civil money penalties or damage to our reputation, all of which could adversely ral and state law,ww as well as regulations and governmental policies, income tax laws, and accounting principles, could affff ect ions are undergoing continuous review and frff equently change, and the ultimate effff ect lure to comply,yy even if we acted in good faith or the alleged faiff l condition, or results of operations. our business, financia ff ff ff ff State and federa complyll withtt any supervisory actions to which we are or become subject as a resultll of such examinat l banking agencies periodicallll yll conduct exee aminaii tions of our busines ff ii ii iott ns maya adversely affecff e and regul t us. s, including complm ill ance withii ll laws atll iott ns, and our faiff luii re to State and federal banking agencies, including the FRB, FDIC, and CFPB, periodically conduct examinations of our business, including foff r compliance with laws and regulations. If, as a result of an examination, a federal agency were to determine that our fiff nancial condition, capital resources, asset quality,yy earnings prospects, management, liquidity,yy or other aspects of our operations had become unsatisfactory,yy or that we or our management was in violation of any law or regulation, the agency may take a number of diffff erff ent remedial or enforcement actions it deems appropriate to remedy such a defiff ciency. These actions include the power to enjoin “unsafe or unsound” practices, to require affiff rmative actions to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforff ced, to direct an increase in our capital, to restrict our growth, and to assess civil monetaryr penalties against us and/or offff icer s or directors, and to remove offff icff ers and directors. If the FDIC concludes that such conditions cannot be corrected or there is an imminent risk of soryrr authority has many of the same enforcement loss to depositors, it may terminate WAWW B’s deposit insurance. Under Arizona law,ww the state banking supervi powers with respect to our state-chartered bank. The CFPB also has the authority to examine us and to take enforcement actions, including the issuance of ral consumer cease-and-desist orders or civil monetaryr penalties against us if it finds that we offeff financial protection laws or in an unfaiff eral t to periodic examinations by such state and federal agencies, which and government-sponsored agency approvals required to conductdd can result in increases in administrative costs, substantial penalties dud e to compliance errors, or the loss of licenses. r, deceptive, or abusive manner. Finally,yy our AmeriHome subsidiaryrr needs to maintain certain state licenses and fedff r consumer fiff nancial products and services in violation of fede its business and is subjecb u ff ff u or if we were unaba le to comply with the terms of any future supervisoryr t If we were unable to comply with regulatoryr directives in the futff ure, which we may become subject, then we could become subu jecb t to a variety of supervisoryr corrective actions, MOUs, and/or other regulatoryrr enfoff rcement actions. If our regulators were to take such superu things, become subjec also could be required to raise additional capita measures in the time frames of the remedial actions described above. ff be placed into receivership by the FDIC or the chartering agency. The terms of any such supervisory action and the consequences associated with any fail comply therewith could have a material negative effect requirements to actions and orders, including cease and desist orders, prompt visory actions, then we could, among other t to restrictions on our ability to enter into acquisitions and develop any new business, as well as restrictions on our existing business. WeWW al, dispose of certain assets and liabilities within a prescribed period of time, or both. Failure to implement the provided, or at all, could result in additional orders or penalties frff om feff deral and state regulators, which could result in one or more and ff ure to In the event we were ultimately unaba le to comply with the terms of a regulatory enforcement action, we could fail on our business, operating flexibility,yy and financial condition. a ff ff 25 Current and proposed regulationtt s addressing consumer privacy and dadd ta use and securitytt couldll increase our coststt and imii pm act our reputation. WeWW are subject to federal, state and local laws related to consumer privacy and data use and security,yy including inforff mation safegff uard rules under the Gramm- Leach-Bliley Act and the Califorff nia Consumer Protection Act. These rurr les require that finff ancial institutions develop, implement, and maintain a written, ion’s size and complexity,yy the nature and scope comprehensive information security program containing safeguff ’s activities, and the sensitivity of any customer inforff mation at issue. The United States has experienced a heightened legislative and of the financial institution regulatoryrr ion in the event of data breaches and certain types of security ff focuff breaches. Additional regulations in these areas may increase compliance costs, which could negatively impact earnings. In addition, failure to comply with the privacy,yy data use and security laws and regulations to which we are subjecb t, including by reason of inadvertent disclosure of confiff dential inforff mation, could result in fines, sanctions, penalties, reputational harm, loss of consumer confidence, and other adverse consequences, any of which could have a material adverse effect s on privacy and data security,yy including requirements as to consumer notificat on our results of operations and business. ropriate to the financial institutt ards that are appa ff t WeWW couldll be subject tott advedd rserr changes or intii ertt prr retatt tions ofo tax lall ws, taxtt i audits, or challell nges tott our taxtt positii iott ns. a b ff to feder al and appli cable state income tax laws and regulations. Income tax laws and regulations are oftff en complex and require significant WeWW are subject judgment in determining our effff eff ctive tax rate and in evaluating our tax positions. Changes in tax laws, changes in interpret ations, guidance or regulations that may be promulgated, or challenges to judgments or actions that we may take with respect to tax laws could negatively impact our current and futff urt e finff ancial performanc rations with three- year average annual adjusted finff ancial statement income exceeding $1 billion and a 1% excise tax on corporate stock repurchases after December 31, 2022. WeWW are currently assessing the potential impact of these legislative changes and will continue to evaluate the overall impact of other current, future and proposed regulations and interprerr e. In August 2022, the IRARR was signed into law. The IRA, among other provisions, imposes a 15% book minimum tax on corporr tive guidance frff om tax authorities on our effeff ctive tax rate and consolidated balance sheets. ff rr a In addition, our determination of our tax liabili examinations and challenges frff om feder have made and the businesses in which we have engaged. Recently,yy federal challenging tax positions taken by finaff income or deducti ff effff ecti to al and applicable state and local taxing authorities regarding the amount of taxes due in connection with investments we and state and local taxing authorities have been increasingly aggressive in ncial institutions. The challenges made by taxing authorities may result in adjud stments to the timing or amount of taxable our ons, or the allocation of income among tax jurisdictions. Any such challenges that are not resolved in our favff or may adversely affff ect ty is subjb ect to review by apa plicabla e tax authorities. In the normal course of business, we are routinely subu ject ve tax rate, tax payments or finaff ncial condition. d b ff ff ff Securities-Related Risks The price of our common stoctt k may fluctuate signigg fi icaff ntlyll in thett futff ure. The price of our common stock on the New YorYY k Stock Exchange constantly changes. There can be no assurances aboa ut the market price forff stock. our common Our stock price may fluctuate as a result of a variety of factors many of which are beyond our control. These factors include: • • • • • • • • • • • actual or anticipated changes in the political climate or public policy; sales of our equity securities; our financial condition, performance, creditworthiness, and prospects; quarterly variations in our operating results or the quality of our assets; operating results that vary from the expectations of management, securities analysts, and investors; changes in expectations as to our futurt e financial perfoff rmance; announcements of strategic developments, acquisitions, and other material events by us or our competitors; the operating and securities price performance of other companies that investors believe are comparable to us; the credit, mortgage, and housing markets, the markets forff institutions generally; changes in interest rates and the slope of the yield curve; securities relating to mortgages or housing, and developments with respect to finff ancial changes in national and global finaff stock, commodity or real estate valuations or volatility and other global, geopolitical, ncial markets and economies and general market conditions, such as interest or foreign exchange rates, inflat ff ion, 26 regulatoryr or judicial events that effff eff ct the financial markets and economy including pandemics, terrorism and war, including the military conflicff t between Russia and the Ukraine; and • our past and future dividend and share repurchase practices. ThTT ere may be future sales or other diluii representintt g preferre d stock. ff tion of our equitytt ,yy which maya adversely rr affff ecff t thtt e markrr et price of our common stock or depositary shares WeWW are not restricted fromff issuing additional common stock or preferred stock, including any securities that are convertible into or exchangeabla e foff r, or that represent the right to receive, common stock. WeWW also grant a significant number of shares of common stock to employees and directors under our Incentive shares, or preferred stock or securities convertible into, exchangeable Plan each year. The issuance of any additional shares of our common stock, depositaryr for or that represent the right to receive common stock, or the exercise of such securities could be substu antially dilutive to stockholders of our common stock. Holders of our common stock, depositaryrr shares, and prefeff rred stock have no preemptive rights that entitle such holders to purchase their pro rata share of any ng of shares of any class or series. Because our decision to issue securities in the future will depend on market conditions, our acquisition activity,yy and offff eri ff ings ff other factor reducing the market price of our common stock and diluting their stock holdings in us. s, we cannot predict or estimate the amount, timing, or nature of our fuff ture offff erff ings. Thus, our stockholders bear the risk of our futff urt e offff erff ThTT ere can be no assurance that we willii continuii dd e to decla re cash didd vidends or repurchase stoctt k as we have inii thtt e past.tt WeWW have paid regular quarterly dividends on our common stock since the third quarter of 2019, subjecb t to quarterly declarations by the BOD, and also have red stock since the issuance of such securities in the third quarter of 2021. WeWW have previously paid dividends on our depositary shares representing our preferff adopted common stock repurchase programs, pursuant to which we have repurchased shares of our outstanding common stock, the most recent of which expired in December 2020. Our dividend payments and/ordd stock repurchase practices may change frff om time-to-time, and no assurance can be provided that we will continue to declare t to capia tal availability dividends in any particular amounts or at all, or institut te a new stock repurchase program. Dividends and/or stock repurchases are subjecb and the discretion of our BOD, which must evaluate, among other things, whether cash dividends and/or stock repurchases are in the best interest of our stockholders and are in compliance with all applicable laws and any agreements containing provisions that limit our ability to declare and pay cash dividends and/or repurchase stock. Furthermore, our outstanding Series A preferr t the abia lity of us to ed stock, we are prohibited from paying dividends on our declare or pay dividends or distributions on common stock. Under the terms of the Series A preferr common stock unless all dividends forff the latest dividend period on all outstanding shares of Series A prefeff rred stock have been declared and paid in full or declared and a sum suffiff cient forff the payment of those dividends has been set aside. A reduction in or elimination of our dividend payments or dividend program could have a negative effff eff ct on our stock price. ed stock is senior to our common stock and could adversely affecff ff ff Offff erinff for purposes of didd vidend distdd ritt butiontt gs of debt, which wouldll be senior to our common stock upou n lill qi uidation, and/or// prefe eff rred equitytt securitii es that s or upon liqll uidadd tion, maya advdd erselyll affeff ct thett market price of our common stott ck. tt maya be senior to our common stocktt WeWW may fromff time to time issue debt securities, borrow money through other means, or issue preferred stock. WeWW may also borrow money froff m the FRB, the FHLB, other financial institutions, and other lenders. At December 31, 2022, we had outstanding subordinated debt, senior secured and unsecured debt, and short-term borrowings. In addition, AmeriHome has outstanding senior notes that were issued prior to the acquisition. WeWW also have outstanding depositaryr red stock, which is senior to our common stock. All of these securities or borrowings have priority over our common stock in shares representing Series A preferff a liquidation, which could affff eff ct the market price of our stock. Our BOD is authorized to issue one or more classes or series of preferred stock from time to time without any action on the part of the stockholders. Our BOD also has the power, without stockholder approval, to set the terms of any such classes or series of preferred stock that may be issued, including voting rights, and liquidation and other terms. If we dividend rights, and preferences over our common stock with respect to dividends or upon our dissolution, winding-up,u issue additional preferr e that has a preferff ence over our common stock, with respect to the payment of dividends or upon our liquidation, dissolution, or winding up, or if we issue preferred stock with voting rights that dilute the voting power of our common stock and/or the rights of holders of our ted. common stock, the market price of our common stock could be adversely affff ecff ed stock in the futur ff ff 27 Anti-takeover provisions could negativtt ely imii pacm t our stott ckholdedd rs. Provisions of Delaware law and provisions of our Certificate for a third party to acquire control of us or have the effect Incorporr response to a takeover proposal. These provisions could make it more diffff icul of our stockholders. of Incorpor rr ff ff of discouraging a third party from attempting to acquire control of us. Additionally,yy our Certificat ation, as amended, and our Amended and Restated Bylaws could make it more diffff icuff lt ff e of sive measure in t foff r a third party to acquire us even if an acquisition might be in the best interest ff ration, as amended, authorizes our BOD to issue additional series of preferred stock and such preferred stock could be issued as a defenff Item 1B. Unresolved Staffff Comments. None. Item 2. Properties. The Company and WABWW are headquartered at One E. WasWW hington Street in Phoenix, Arizona. WAWW B operates 36 domestic branch locations, which include six executive and administrative offiff ces, of which 20 of these locations are owned and 16 are leased. The Company also has several loan production and other offff ices across the United States. In addition, WABWW owns and occupiu es a 36,000 square foot operations facility in Las VegaVV s, Nevada. See "Item 1. Business” in ff this Form 10-K forff location cities. For inforff mation regarding rental payments, see "Note 7. Premises and Equipment" in Item 8 included in this Form 10-K. Item 3. Legal Proceedings. There are no material pending legal proceedings to which the Company is a party or to which any of its properties are subject. There are no material proceedings known to the Company to be contemplated by any governmental authority. See "Note 18. Commitments and Contingencies" in Item 8 included in this Form 10-K forff additional information. From time to time, the Company is involved in a variety of litigation matters in the ordinary course of its business and anticipates that it will become involved in new litigation matters in the fuff ture. b Item 4. Mine Safetyff Disclosures. Not applicable. a 28 PARPP TRR II Item 5. Market for Registrant's Common Equity,yy Related Stockholder Matters and Issuer Purchases of Equity Securities. rr Market II Inform ation The Company’s common stock began trading on the New YorYY k Stock Exchange under the symbol “WAWW L” on June 30, 2005. The Company has fileff d, without ons, its 2022 Domestic Company Section 303A CEO Certififf cation regarding its compliance with the NYSE’s corporate governance listing standards. ff qualificati srr Holder HH rr At February 17, 2023, there were approximately 1,870 stockholders of record of our common stock. This number does not include stockholders who hold shares in the name of brokerage firff ms or other financial institutions. The Company is not provided the exact number of or identities of these stockholders. There are no other classes of common equity outstanding. dd Dividends During the fourth quarter of 2022, the Company's BOD approved a cash dividend of $0.36 per common share. The dividend payment to shareholders totaled $39.2 million and was paid on December 2, 2022. In addition, the Company paid a cash dividend of $0.27 per depository share to preferff red shareholders on December 30, 2022, totaling $3.2 million. Sharerr Repurcharr ses The follo ff Exchange Act for the periods indicated: wing table provides information about the Company's purchases of equity securities that are registered by the Company pursuant to Section 12 of the TotTT al Number of Shares Purchased (1)(2) AveAA rage Price Paid Per Share ToTT tal Number of Shares Purchased as cly Announced Plans or Part of Publiu (2) Programs Approximate Dollar ValVV ue of Shares That May YeYY t to be Purchased Under the Plans or Programs October 2022 November 2022 December 2022 ToTT tal 1,436 — 101 1,537 $ $ 66.56 — 65.64 66.50 — $ — — — $ — — — — (1) Shares purchased during the period outside of the publu icly announced repurchase program were transferred to the Company froff m employees in satisfaction of minimum tax withholding obligations associated with the vesting of restricted stock awards during the period. (2) The Company does not currently have a common stock repurchase program. 29 Performance Grapha ing graph summarizes a fiveff The follow for the Company’s common stock, the Standard & Poor’s 500 stock ff index and the KBW Regional Banking TotTT al Return Index, each of which assumes an initial value of $100.00 on December 31, 2017 and reinvestment of dividends. year comparison of the cumulative total returns t Item 6. [Reserved]. 30 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. The foll owing discussion is designed to provide insight on the financial condition and results of operations of WeWW stern Alliance Bancorprr oration and its ff subsidiaries and should be read in conjunction with “Item 8. Financial Statements and Supplementaryrr Data” of this Form 10-K. This discussion and analysis rs, including, but not limited contains forward-looking statements that involve risk, uncertainties, and assumptions. Certain risks, uncertainties, and other facto to, those set forth under “Forward-Looking Statements” at the beginning of Part I of this Form 10-K and those discussed in Part I, Item 1A of this Form 10-K under the heading "Risk Factors," may cause actual results to diffeff r materially froff m those projected in the forward-looking statements. ff For a comparison of the 2021 results to the 2020 results and other 2020 information not included herein, refer to the "Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K forff the year ended December 31, 2021. Financial Overview and Highlights WALWW is a bank holding company headquartered in Phoenix, Arizona, incorporated under the laws of the state of Delaware. WAWW L provides a fuff ll spectrumrr customized loan, deposit and treasuryr management capabilities, including 24/7 funds transfer and other digital payment offeri banking subsiu of ngs through its wholly-owned diary,yy WAB.WW ff WABWW operates the following full-service banking divisions: ABA, BON and FIB, Bridge, and TPB. The Company also provides an array of specialized financial services across the country,yy including mortgage banking services through AmeriHome, and has added to its capabi lities with the acquisition of DST on Januaryr 25, 2022, which provides digital payment services for the class action legal industry. a Acquisition of Digit i ii al Disbur serr ments d On January 25, 2022, the Company completed its acquisition of DST, doing business as Digital Disbursements, a digital payments platform foff r the class action . DST's proprietaryr platforff m enables claimants to select their payment method, including direct-to-bank account options and popular digital legal industry wallets. This provides the Company with the internal capability to significantly increase effff icaff cy,yy reducd e distribution costs and improve potential fraff ud detection for the legal class action market. The acquisition is expected to grow the Company's deposit base and continue to extend the suite of legal banking from digital payments technology. services offer ed while serving adjacent sectors that will benefitff ff 2022 Financial Highlights • • • • • • • • • • • • • • • Net income availaba le to common stockholders of $1.0 billion forff 2022, an increase frff om $895.7 million foff r 2021 Diluted earnings per share of $9.70 forff 2022, an increase frff om $8.67 per share for 2021 Net revenue of $2.5 billion, constituting year-over-year growth of 30.1%, or $587.9 million, compared to an increase in non-interest expenses of 35.9%, or $305.3 million PPNR increased $282.6 million to $1.4 billion, compared to $1.1 billion in 2021 1 Effff ectiv ff e tax rate of 19.7% for 2022, compared to 19.9% for 2021 ToTT tal loans HFI of $51.9 billion, up $12.8 billion frff om December 31, 2021 ToTT tal deposits of $53.6 billion, up $6.0 billion froff m December 31, 2021 Stockholders' equity of $5.4 billion, an increase of $393 million frff om December 31, 2021 Nonperforming assets (nonaccrual loans and repossessed assets) decreased to 0.14% of total assets, frff om 0.15% at December 31, 2021 Net loan charge-offff sff to average loans outstanding of apa proximately 0.00% for 2022, compared to 0.02% forff 2021 Net interest margin of 3.67% in 2022, increased from 3.41% in 2021 Retut rn on average assets of 1.62% forff 2022, compared to 1.83% for 2021 TanTT gible common equity ratio of 6.5%, compared to 7.3% at December 31, 2021 1 TanTT gible book value per share, net of tax , of $40.25, an increase of 6.4% fromff 1 $37.84 at December 31, 2021 Effff icien ff cy ratio of 44.9% in 2022, compared to 42.9% in 2021 1 The impact to the Company frff om these items, and others of both a positive and negative naturt e, are discussed in more detail below as they pertain to the Company’s overall comparative perforff mance forff the year ended December 31, 2022. 1 See Non-GAAP Financial Measures section beginning on page 34. 31 As a bank holding company,yy management focff uses on key ratios in evaluating the Company's financial condition and results of operations. Resultstt of Operations and Financial Condit CC ion A summary of the Company's results of operations, finff ancial condition, and selected metrics are included in the folff lowing taba les: YeYY ar Ended December 31, 2022 2021 2020 Net income Net income available to common stockholders Earnings per share - basic Earnings per share - diluted Return on average assets Return on average equity Return on average tangible common equity (1) Net interest margin (1) See Non-GAAP Financial Measures section beginning on page 34. $ s and costs ToTT tal assets Loans HFS Loans HFI, net of deferred loan feeff Investment securities ToTT tal deposits Other borrowings Qualifyiff ng debt Stockholders' equity TanTT gible common equity,yy net of tax 1 (dolldd 1,057.3 1,044.5 9.74 9.70 1.62 % 20.7 25.4 3.67 ars in millions, excepe t per sharerr amountstt )s $ $ $ 899.2 895.7 8.72 8.67 1.83 % 22.3 26.2 3.41 cember 31, 2022 2021 (in millions)s $ 67,734 1,184 51,862 8,541 53,644 6,299 893 5,356 4,383 506.6 506.6 5.06 5.04 1.61 % 16.1 17.7 3.97 55,983 5,635 39,075 7,454 47,612 1,502 896 4,963 4,035 (1) See Non-GAAP Financial Measures section beginning on page 34. Asset Quality For all banks and bank holding companies, asset quality plays a significant role in the overall finff ancial condition of the institutt The Company measures asset quality in terms of nonaccrurr al loans as a percentage of gross loans and net charge-offsff charge-offsff summarizes the Company's key asset quality metrics for loans HFI: ion and results of operations. as a percentage of average loans. Net rence between charged-offff loans and recoveryr payments received on previously charged-offff loans. The foff llowing tabla e are calculated as the diffeff Nonaccrual loans Repossessed assets Non-performing assets Nonaccrual loans to funff ded loans Nonaccrual and repossessed assets to total assets loan losses to funff Allowance forff credit losses to funff Allowance forff loan losses to nonaccruarr Allowance forff credit losses to nonaccrur al loans Allowance forff to average loans outstanding Net charge-offsff ded loans ded loans l loans $ At or foff r the YeYY ar Ended December 31, 2022 2021 (dolldd ars in millions) 2020 $ 85 11 98 0.16 % 0.14 0.60 0.69 364 419 0.00 $ 73 12 87 0.19 % 0.15 0.65 0.74 348 400 0.02 115 1 150 0.43 % 0.32 1.03 1.17 242 274 0.06 32 Asset and Deposit Growrr th The Company’s assets and liabilities are comprised primarily of loans and deposits. Therefore, the aba ility to originate new loans and attract new deposits is fundamental to the Company’s growth. TotTT al assets increased to $67.7 billion at December 31, 2022 from $56.0 billion at December 31, 2021. The increase in total assets of $11.7 billion, or 20.9%, was driven by continued organic loan and deposit growth. loans HFI increased by $12.8 billion, or 32.7%, to $51.9 billion as of December 31, 2022, compared to $39.1 billion as of December 31, 2021. The increase in loans HFI from December 31, 2021 was driven by increases of $6.6 billion in residential real estate red from HFS to HFI in 2022 with a $1.9 billion balance at December 31, 2022), $2.8 billion in CRE, non-owner occupu ied, $2.4 (including EBO loans transferff on and land development loans. This increase in loans HFI was partially offsff et by a decrease billion in commercial and industrial, and $990 million in constructi in loans HFS of $4.5 billion from $5.6 billion as of December 31, 2021. The decrease in loans HFS was attributabla e to sales, a decline in production volumes, and transferff of the remaining EBO loan balance to HFI dudd ring the year ended December 31, 2022. rr TotTT al deposits increased $6.0 billion, or 12.7%, to $53.6 billion as of December 31, 2022 frff om $47.6 billion as of December 31, 2021. The increase in deposits tes of deposits, $2.6 billion of interest bearing demand deposits, and $2.1 billion in from December 31, 2021 was driven by increases of $3.0 billion in certificaff savings and money market accounts, partially offff sff et by a decrease of $1.7 billion in non-interest bearing demand deposits. RESULTLL S OF OPERATION AA S ff The follow ing table sets fort ff h a summaryr finaff ncial overview: Consolidated Income Statement Data: Interest income Interest expense Net interest income Provision for (recovery of)ff credit losses Net interest income after provision forff (recoveryrr of)ff credit losses Non-interest income Non-interest expense Income before provision for income taxes Income tax expense Net income Dividends on preferred stock Net income available to common stockholders Earnings per share: Basic Diluted YeYY ar Ended December 31, 2022 2021 Increase (Decrease) (in millions, excee ept per sharerr amounts)s $ $ $ $ 2,691.8 475.5 2,216.3 68.1 2,148.2 324.6 1,156.7 1,316.1 258.8 1,057.3 12.8 1,044.5 9.74 9.70 $ $ $ $ 1,658.7 109.9 1,548.8 (21.4) 1,570.2 404.2 851.4 1,123.0 223.8 899.2 3.5 895.7 8.72 8.67 $ $ $ $ 1,033.1 365.6 667.5 89.5 578.0 (79.6) 305.3 193.1 35.0 158.1 9.3 148.8 1.02 1.03 33 Non-GAAP Financial Measures The following discussion and analysis contains financial informa tion determined by methods other than those prescribed by GAAP.PP The Company's management uses these non-GAAP financial measures in their analysis of the Company's perfoff rmance. Management believes presentation of these non-GAAP supplemental infoff rmation that is essential to a complete understanding of the operating results of the Company. Since the financial measures provides usefulff between companies, these non-GAAP disclosures should not be viewed as a presentation of these non-GAAP performance measures and their impact diffff erff substitutet ance measures that may be presented by other companies. operating results determined in accordance with GAAP,PP nor are they necessarily comparable to non-GAAP performff forff ff rr Pre-Prr rovisi on Net Revenue Banking regulations define PPNR as the sum of net interest income and non-interest income less expenses befoff re adjusting forff loss provisions. Management believes that this is an important metric as it illustrates the underlying perforff mance of the Company,yy it enabla es investors and others to assess the Company's abia lity to generate capital to cover credit losses through the credit cycle, and provides consistent reporting with a key metric used by bank regulatory agencies. ff The follow ing table shows the components used in the calculation of PPNR: Net interest income ToTT tal non-interest income Net revenue ToTT tal non-interest expense Pre-provision net revenue Less: Provision for (recovery of)ff credit losses Income tax expense Net income Efficiency Ratio 2022 YeYY ar Ended December 31, 2021 (in millions)s 2020 $ $ $ $ $ $ $ 2,216.3 324.6 2,540.9 1,156.7 1,384.2 68.1 258.8 1,057.3 $ 1,548.8 404.2 1,953.0 851.4 1,101.6 $ $ $ (21.4) 223.8 899.2 $ 1,166.9 70.8 1,237.7 491.6 746.1 123.6 115.9 506.6 ff The follow ing table shows the components used in the calculation of the effff ici ff ency ratio, which management uses as a metric forff assessing cost effff ici ff ency: ToTT tal non-interest expense Divided by: ToTT tal net interest income Plus: TaxTT equivalent interest adjustment ToTT tal non-interest income 2022 YeYY ar Ended December 31, 2021 (d(( oldd lars in millions)s 1,156.7 $ 851.4 $ 2020 2,216.3 33.7 324.6 1,548.8 33.3 404.2 2,574.6 $ 1,986.3 $ 491.6 1,166.9 28.4 70.8 1,266.1 $ $ ff Effici ency ratio - tax equivalent basis 44.9 % 42.9 % 38.8 % 34 TangTT ible ComCC mon Equity and Return on Average TanTT gible Common Equity The follow ff and intangible assets and preferff strength, finan ff cial condition, and ability to manage potential losses. ing tables present fiff nancial measures related to tangible common equity. TaTT ngible common equity represents total stockholders' equity less goodwill in evaluating the Company's capital red stock. Management believes that tangible common equity fiff nancial measures are usefulff ToTT tal stockholders' equity Less: Goodwill and intangible assets ff Preferr ed stock ToTT tal tangible common stockholders' equity Plus: deferred tax - attributed to intangible assets ToTT tal tangible common equity,yy net of tax ToTT tal assets Less: goodwill and intangible assets, net TaTT ngible assets Plus: deferred tax - attributed to intangible assets ToTT tal tangible assets, net of tax TanTT gible common equity ratio Common shares outstanding Book value per common share TanTT gible book value per common share, net of tax Net income available to common shareholders Divided by: AverAA age stockholders' equity Less: AverAA age goodwill and intangible assets AverAA age preferred stock AverAA age tangible common equity AverAA age accumulated other comprehensive loss (income) AverAA age tangible common equity,yy excluding AOCI Return on average tangible common equity Return on average tangible common equity,yy excluding AOCI December 31, 2022 2021 (dodd llars and sharesrr in millions)s 5,356 $ 680 295 4,381 2 4,383 67,734 680 67,054 2 67,056 6.5 % 108.9 46.47 40.25 $ $ $ $ $ $ $ $ $ $ $ $ 2022 December 31, 2021 (d(( olldd arsrr in millions) 1,044.5 $ 895.7 $ 2020 5,099.0 (688.0) (294.5) 4,116.5 407.5 4,524.0 25.4 % 23.1 $ $ 4,033.8 (528.6) (81.5) 3,423.7 (56.9) 3,366.8 26.2 % 26.6 $ $ 4,963 635 295 4,033 2 4,035 55,983 635 55,348 2 55,350 7.3 % 106.6 43.78 37.84 506.6 3,151.8 (297.6) — 2,854.2 (63.8) 2,790.4 17.7 % 18.2 35 l Regulatoryr Capita a ing table presents certain finaff The follow ff banking regulators use CET1 and total capital as a basis foff r assessing a bank's capital adequacy; thereforeff condition and capital adequacy using this same basis. Specifical financial instrumrr assessing asset quality. ncial measures related to regulatory capital under Basel III, which includes CET 1 and total capital. The FRB and other , management believes it is useful to assess finff ancial ly,yy the total capa ital ratio takes into consideration the risk levels of assets and offff -bff alance sheet assets to CET1 plus allowance measure is an important regulatoryrr metric forff ents. In addition, management believes that the classifiedff ff As permitted by the regulatoryrr capital rules, the Company elected to delay the estimated impact of CECL on its regulatoryrr capa ital over a five-year transition ion to the capa ital benefiff t that resulted frff om the increased period ending December 31, 2024. Beginning in 2022, capital ratios and amounts include a 25% reductd ACL related to the adoption of ASC 326. December 31, 2022 2021 (d(( olldd ars in millions)s 5,097 $ 4,715 672 12 (664) 4 5,073 54,461 9.3 % 5,073 376 5,449 69,814 7.8 % $ $ $ $ $ 5,449 $ 817 320 1,137 6,586 12.1 % 393 5,449 320 5,769 6.8 % $ $ $ $ 631 — 16 — 4,068 44,697 9.1 % 4,068 376 4,444 56,973 7.8 % 4,444 815 240 1,055 5,499 12.3 % 301 4,444 240 4,684 6.4 % $ $ $ $ $ $ $ $ $ $ $ Common equity tier 1: Common equity Less: goodwill and intangibles ff Non-qualifying Disallowed deferred tax asset d AOCI related adjustmen ts Unrealized gain on changes in faiff r value liabia lities Common equity tier 1 Divided by: Risk-weighted assets Common equity tier 1 ratio Common equity tier 1 Plus: Preferred stock and trust preferff red securities Tier 1 capital Divided by: TangTT Tier 1 leverage ratio ible average assets ToTT tal capital: Tier 1 capital Plus: Subu ordinated debt Adjusd ted allowances for credit losses Tier 2 capital ToTT tal capital ToTT tal capital ratio Classified assets to tier 1 capital plus allowance: Classified assets Divided by: Tier 1 capital Plus: Adjusted allowances forff credit losses ToTT tal Tier 1 capital a plus adjusted allowances forff credit losses Classified assets to tier 1 capital plus allowance 36 Net Interest Margin The net interest margin is reported on a TEB. A tax equivalent adjustment is added to reflect interest earned on certain securities and loans that are exempt frff om federal and state income tax. The following tables set forth the average balances, interest income, interest expense, and average yield (on a fully TEB) for the periods indicated: a AvAA erage Balance 2022 Interest YeYY ar Ended December 31, AveAA rage YieYY ld / Cost AveraAA ge Balance (dolldd ars in millions) 2021 Interest AveAA rage YielYY d / Cost $ 4,364 $ 180.3 4.13 % $ 5,476 $ Interest earning assets Loans HFS Loans HFI: Commercial and industrial CRE - non-owner occupied CRE - owner occupied Construction and land development Residential real estate Consumer ToTT tal loans HFI (1), (2), (3) Securities: Securities - taxable Securities - tax-exempt ToTT tal securities (1) Other ToTT tal interest earning assets (4) Non-interest earning assets Cash and dued Allowance forff Bank owned lifeff Other assets froff m banks credit losses insurance ToTT tal assets Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts Savings and money market accounts ff Certificat es of deposit ToTT tal interest-bearing deposits Short-term borrowings Long-term debt Qualifyiff ng debt ToTT tal interest-bearing liabilities ding earning assets Interest cost of funff Non-interest-bearing liabilities Non-interest-bearing demand deposits Other liabilities Stockholders’ equity ToTT tal liabilities and stockholders' equity Net interest income and margin (5) 1,002.8 416.4 93.2 229.1 468.5 3.1 2,213.1 195.3 77.3 272.6 25.8 2,691.8 78.8 158.6 39.0 276.4 92.1 72.0 35.0 475.5 20,083 7,769 1,841 3,426 13,771 61 46,951 6,325 2,067 8,392 1,574 61,281 260 (280) 180 3,948 65,389 8,331 18,518 2,772 29,621 3,424 1,008 893 34,946 24,133 1,211 5,099 65,389 $ $ $ $ $ 2,216.3 5.05 5.37 5.16 6.69 3.40 5.07 4.74 3.09 4.68 3.48 1.64 4.45 $ 0.95 % $ 0.86 1.40 0.93 2.69 7.14 3.92 1.36 0.78 $ 3.67 % 14,979 5,829 2,030 2,790 5,129 39 30,796 5,284 2,137 7,421 2,718 46,411 293 (261) 178 2,487 49,108 4,751 15,814 1,850 22,415 1,206 373 827 24,821 19,416 837 4,034 49,108 $ 174.4 624.8 271.3 97.7 160.0 158.9 1.7 1,314.4 95.8 68.9 164.7 5.2 1,658.7 5.9 33.1 8.5 47.5 8.2 21.1 33.1 109.9 3.18 % 4.26 4.67 4.92 5.74 3.10 4.43 4.32 1.81 4.05 2.46 0.19 3.65 0.13 % 0.21 0.46 0.21 0.68 5.65 4.00 0.44 0.24 $ 1,548.8 3.41 % the year ended December 31, 2022 and 2021, (1) (2) (3) (4) (5) on loans and securities have been adjusted to a TEB. The taxable-equivalent adjustment was $33.7 million and $33.3 million forff Yields YY respectively. Included in the yield computation are net loan fees ff of $132.2 million and $131.7 million forff the year ended December 31, 2022 and 2021, respectively. Includes non-accrual loans. Net yield on interest earning assets based on the balance at December 31, 2022 and 2021 was 3.56% and 2.96%, respectively. Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actuat l/actual basis. 37 Interest income: Loans HFS Loans HFI: Commercial and industrial CRE - non-owner occupied CRE - owner occupied Construction and land development Residential real estate Consumer ToTT tal loans HFI Securities: Securities - taxable Securities - tax-exempt ToTT tal securities Other ToTT tal interest income Interest expense: Interest-bearing transaction accounts Savings and money market accounts Time certificates of deposit Short-term borrowings Long-term debt Qualifyiff ng debt ToTT tal interest expense Net change YeYY ar Ended December 31, 2022 versus 2021 Increase (Decrease) Due to Changes in (1) VolVV ume Rate (in millions) ToTT tal $ (45.9) $ 51.8 $ 254.9 104.0 (9.6) 42.5 294.0 1.1 686.9 32.1 (2.6) 29.5 (18.7) 651.8 33.9 23.2 13.0 59.7 45.3 2.6 177.7 $ 123.1 41.1 5.1 26.6 15.6 0.3 211.8 67.4 11.0 78.4 39.3 381.3 39.0 102.3 17.5 24.2 5.6 (0.7) 187.9 $ 474.1 $ 193.4 $ $ $ 5.9 378.0 145.1 (4.5) 69.1 309.6 1.4 898.7 99.5 8.4 107.9 20.6 1,033.1 72.9 125.5 30.5 83.9 50.9 1.9 365.6 667.5 (1) Changes attributablea to both volume and rate are designated as volume changes. CC Compa rison of interest income,e intertt est expense and net inii terest margr in The Company's primaryr source of revenue is interest income. For the year ended December 31, 2022, interest income was $2.7 billion, an increase of $1.0 the year ended December 31, 2021. This increase was primarily the result of a $898.7 million increase in interest billion, or 62.3%, compared to $1.7 billion forff the year ended December 31, 2022 and to a lesser extent income froff m loans HFI that was driven by a $16.2 billion increase in the average HFI loan balance forff investment securities also increased by $107.9 million for the comparable period due to increased investment yields driven higher rates. Interest income fromff by a higher rate environment and investment securities mix as the Company held a higher proportion of variabla e rate securities in 2022 compared to 2021. AverAA age yield on interest earning assets increased to 4.45% for the year ended December 31, 2022, compared to 3.65% for 2021, which was primarily the result of a higher rate environment. For the year ended December 31, 2022, interest expense was $475.5 million, compared to $109.9 million foff r the year ended December 31, 2021. Interest expense on deposits increased $228.9 million for the same period due to increasing deposit rates, coupled with a $7.2 billion increase in average interest- bearing deposits. Interest expense across all debt types increased $136.7 million for the year ended December 31, 2022 compared to the same period in 2021 as a result of an increase of $2.9 billion in average total debt. The increase in average total debt during the year ended December 31, 2022 is attributable to increases in overnight borrowings and $579 million of credit linked notes issuances, net of issuance costs. For the year ended December 31, 2022, net interest income was $2.2 billion, compared to $1.5 billion foff r the year ended December 31, 2021. The increase in net interest income reflects a $14.9 billion increase in average interest earning assets, partially offseff t by an increase of $10.1 billion in average interest-bearing liabilities. The increase in net interest margin of 26 basis points compared to 2021 is the result of an increase in average loan balances couplu e with higher loan and investment security yields due to a rising rate environment, partially offff seff t by higher fuff nding costs on deposits and borrowings durd ing 2022. 38 Provision forff Credit Losses ff me credit losses inherent in the loan and investment securities portfolios based on remaining contractual The provision for credit losses in each period is reflff ected as a reducd tion in earnings foff r that period and includes amounts related to funff ded loans, unfunded loan commitments, and investment securities. The provision is equal to the amount required to maintain the ACL at a level that is adequate to absa orbr estimated ty,yy adjusted foff r estimated prepayments as of lifeti each period end. The Company's CECL models incorporr forecasts in measuring expected credit losses. For the year ended December 31, 2022, the Company recorded a provision foff r credit losses of $68.1 million, which is primarily attributable to the Company's strong loan growth dud ring the year and to a lesser extent, the current weakened economic outlook. For the year ended December 31, 2021, the Company recorded a recoveryr of credit losses of $21.4 million due to improvement in economic forff ecasts relative to 2020. rate historical experience, current conditions, and reasonable and suppo t maturi rtablea u t Non-interest Income ff The follow ing table presents a summaryr of non-interest income: Net loan servicing revenue (expense) Net gain on loan origination and sale activities Service charges and fees Commercial banking related income Income from equity investments Gain on recoveryrr Gain on sales of investment securities Fair value loss on assets measured at faff ir value, net Other income from credit guarantees ToTT tal non-interest income YeYY ar Ended December 31, 2022 130.9 104.0 27.0 21.5 17.8 14.7 6.8 (28.6)) 30.5 2021 (in millions) $ $ (16.3) 326.2 28.3 17.4 22.1 7.2 8.3 (1.3) 12.3 324.6 $ 404.2 $ $ $ Increase (Decrease) 147.2 (222.2) (1.3) 4.1 (4.3) 7.5 (1.5) (27.3) 18.2 (79.6) the year ended DecD ember 31, 2022 compared to the same period in 2021 decreased by $79.6 million. The decrease in non-interest TotTT al non-interest income forff income was primarily driven by a decrease in net gain on loan origination and sale activities of $222.2 million as the rise in interest rates throughout 2022 impacted the Company's residential mortgage banking business, resulting in compressed margins, a decline in production volume, and reduced gains dued ff to fair value changes. The rising rate environment also contributed to mark-to-market losses on the Company's equity securities, which was the primaryrr driver of the $27.3 million increase to fair value loss on assets measured at fair value, net. These decreases were partially offff sff et by an increase in net loan servicing revenue of $147.2 million fromff lower payoffff s,ff gain on sales of MSRs, and higher servicing fees. ff 39 Non-interest Exppense ff The follow ing table presents a summaryr of non-interest expense: Salaries and employee benefits Deposit costs Legal, professional, and directors' fees Data processing Loan servicing expenses Occupancy Insurance Loan acquisition and origination expenses Business development and marketing Net gain on sales and valuations of repossessed and other assets Acquisition and restructure expenses Loss on extinguishment of debt Other expense ToTT tal non-interest expense YeYY ar Ended December 31, 2022 $ 2021 (in millions)s $ $ 466.7 29.8 58.6 58.2 53.5 43.8 23.0 28.8 13.5 (3.5) 15.3 5.9 57.8 539.5 165.8 99.9 83.0 55.5 55.5 31.1 23.1 22.1 (0.7) 0.4 — 81.5 $ 1,156.7 $ 851.4 $ Increase (Decrease) 72.8 136.0 41.3 24.8 2.0 11.7 8.1 (5.7) 8.6 2.8 (14.9) (5.9) 23.7 305.3 the year ended December 31, 2022 increased $305.3 million compared to the same period in 2021. The increase in non-interest TotTT al non-interest expense forff onal, and directors' fees, and data processing costs. expense was primarily driven by increases in deposit costs, salaries and employee benefitff s, legal, professi The increase in deposits costs of $136.0 million primarily relates to higher earnings credit rates as a result of the rising rate environment in 2022. Salaries and employee benefits increased $72.8 million due to an increase in headcount frff om the prior year to support the Company's continued growth, higher incentive l year of compensation costs in 2022 forff AmeriHome employees. The compensation from loan and deposit growth dud ring the year, and inclusion of a fulff increase in legal, professiona t initiatives and consulting work to supu port ongoing implementations and the increase in data processing costs of $24.8 million was driven by an increase in softff ware licensing costs. l, and directors' fees of $41.3 million relates to an increase in projeco ff ff Income Taxes TT For the years ended December 31, 2022 and 2021, the Company's effff ecti ff the effff ecti ve tax rate from 2021 to 2022. ff ve tax rate was 19.7% and 19.9%, respectively. There was not a significaff nt change in 40 Business Segment Results The Company's reportable segments are aggregated with a focus on producd ts and services offff erff ed and consist of three reportable segments: • • • Commercial: provides commercial banking and treasuryr management producd ts and services to small and middle-market businesses, specialized banking services to sophisticated commercial institutions and investors within niche industries, as well as fiff nancial services to the real estate indud stryrr . Consumer Related: offff erff s consumer banking services, such as mortgage banking and commercial banking services to enterprises in consumer-related sectors and beginning on Januaryr 25, 2022, includes the fiff nancial results of DST. rate & Other: consists of the Company's investment portfolff Corporr allocated to other reportable segments, and inter-segment eliminations. io, Corpor rr ate borrowings and other related items, income and expense items not ff The follow ing tables present selected operating segment infoff rmation: December 31, 2022 Loans HFI, net of deferre Deposits ff d loan feff es and costs December 31, 2021 Loans HFI, net of deferre Deposits ff d loan feff es and costs YearYY Ended December 31, 2022 Income (loss) before provision for income taxes YearYY Ended December 31, 2021 Income (loss) before provision for income taxes BALANCE SHEET ANALYSLL IS Consolidated Company Commercial Consumer Related Corporate & Other $ $ $ $ $ $ 51,862 53,644 39,075 47,612 (i(( n millions) $ $ 31,414 29,494 25,092 30,467 $ $ 20,448 18,492 13,983 15,363 — 5,658 — 1,782 1,316.1 $ 1,095.3 $ 450.1 $ (229.3) 1,123.0 $ 861.5 $ 496.1 $ (234.6) TotTT al assets increased to $67.7 billion at December 31, 2022 from $56.0 billion at December 31, 2021. The increase in total assets of $11.7 billion, or 20.9%, was driven by continued organic loan and deposit growth. Loans HFI increased by $12.8 billion, or 32.7%, to $51.9 billion as of December 31, 2022, compared to $39.1 billion as of December 31, 2021. The increase in loans HFI frff om December 31, 2021 was driven by increases in residential real estate loans of $6.6 billion (including EBO loans transfeff rred from HFS to HFI in 2022 with a $1.9 billion balance at December 31, 2022), CRE, non-owner occupied loans of $2.8 billion, commercial and indusd trial loans of $2.4 billion, and construction and land development loans of $990 million. In addition, loans HFS decreased $4.5 billion, down froff m $5.6 billion as of December 31, 2021, related to sales, a decline in production volumes, and transfer of the remaining EBO loan balance to loans HFI dud ring the year ended December 31, 2022. TotTT al liabilities increased $11.4 billion, or 22.3%, to $62.4 billion at December 31, 2022, compared to $51.0 billion at December 31, 2021. The increase in liabilities is dued primarily to an increase in total deposits and borrowings. ToTT tal deposits increased $6.0 billion, or 12.7%, to $53.6 billion at December 31, 2022. The increase in deposits frff om December 31, 2021 was driven by increases in certififf cates of deposit of $3.0 billion, interest-bearing demand deposits of $2.6 billion, and savings and money market accounts of $2.1 billion, partially offsff et by a decrease in non-interest-bearing demand deposits of $1.7 billion. Other borrowings also increased $4.8 billion due to an increase in overnight borrowings and issuance of credit linked notes during the year. TotTT al stockholders’ equity increased by $393 million, or 7.9%, to $5.4 billion at December 31, 2022, compared to $5.0 billion at December 31, 2021. The ction of net income and net proceeds of $157.7 million frff om issuance of common stock dud ring the year, offsff et increase in stockholders' equity is primarily a funff by quarterly dividends to common and preferff r value losses on AFS securities recorded net of tax in other comprehensive income. red shareholders and unrealized faiff 41 tt Investment securities Debt securities are classifieff d at the time of acquisition as either HTM, AFS, or trading based upon various fact strategies, liquidity and profitff ability objectives, and regulatoryr premiums or accretion of discounts. AFS securities are debt securities that may be sold prior to maturity based upon Investment securities classififf ed as AFS are carried at fair of tax. Amortization of premiums or accretion of discounts on MBS is periodically adjusted forff value, with unrealized gains and losses on these securities included in current period earnings. ors, including asset/lit ability management amortization of asset/liability management decisions. value with unrealized gains or losses on these securities recorded in AOCI in stockholders’ equity,yy net estimated prepayments. TraTT ding securities are reported at fair requirements. HTM securities are carried at amortized cost, adjd usted forff u ff ff The Company's investment securities portfoli manage liquidity,yy capital, and interest rate risk. ff o is utilized as collateral forff borrowings, required collateral forff publu ic deposits and repurchase agreements, and to ff The follow ing table summarizes the carrying rr Debt securitiestt CLO Commercial MBS issued by GSEs Corporate debt securities Private label residential MBS Residential MBS issued by GSEs TaxTT -exempt U.S. treasury securities Other ToTT tal debt securities Equityi securities Common stock CRARR investments Preferred stock ToTT tal equity securities value of the Company's investment securities portfolio: December 31, 2022 2021 (in millions) Increase (Decrease) $ $ $ $ 2,706 97 390 1,397 1,740 1,982 — 69 8,381 3 49 108 160 $ $ $ $ 926 69 383 1,725 1,993 2,105 13 82 7,296 $ $ — $ 45 114 159 $ 1,780 28 7 (328) (253) (123) (13) (13) 1,085 3 4 (6) 1 The carryinrr g value of debt securities increased $1.1 billion, or 14.9%, frff om December 31, 2021. The increase in investment securities is largely attributable to by paydowns and unrealized fair value losses. The Company continued to increase its investment in CLOs during 2022 as these purchases of CLOs, offset variable rate securities generate yields that are higher than those foff r MBS and benefiff ted frff om the rising rate environment. The Company's CLO portfoff lio consists of second or third credit tranche bonds of strurr ctured transactions, rated AA to A. The rates on these securities will convert to a SOFR index when LIBOR is discontinued in June 2023. ff 42 The weighted average yield on investment securities is calculated by dividing income within each maturi ty range by the outstanding amount of the related investment. For purposes of calculating the weighted average yield, AFS securities are carried at amortized cost in the table below and tax-exempt obligations have not been tax-effecff ty distribution and weighted average yield of the Company's investment security portfolios at December 31, 2022 are summarized in the table below: ted. The maturi t t Due Under 1 YeYY ar Due 1-5 YeYY ars Due 5-10 YeYY ars Due Over 10 YearsYY ToTT tal Amount YieYY ld Amount YieYY ld Amount YiYY eld Amount YiYY eld Amount YieldYY (dollars in millions) HeldHH -tdd o-tt maturity Private label residential MBS (1) TaxTT -exempt bonds ToTT tal HTM securities ll le orff -sarr Availaii ble-f CLO Commercial MBS issued by GSEs (1) Corporate debt securities Private label residential MBS (1) Residential MBS issued by GSEs (1) TaxTT -exempt Other ToTT tal AFS securities $ $ $ $ — 9 9 — — — — — — 1 1 — % $ 4.10 4.10 % $ — % $ — — — — — 2.00 — 17 17 — 21 157 — 3 5 8 — % $ 5.21 5.21 % $ — % $ 2.77 4.28 — 2.70 2.85 2.65 — 29 29 817 37 267 31 5 42 10 — % $ 4.80 4.80 % $ 198 1,036 1,234 2.20 % $ 4.33 3.99 % $ 198 1,091 1,289 2.20 % 4.36 4.03 % 6.13 % $ 1,979 6.03 % $ 2,796 6.06 % 7.02 3.78 4.37 2.82 3.06 5.06 46 5 1,411 2,115 957 56 6,569 2.45 3.70 2.49 2.16 2.66 4.84 3.50 % $ 104 429 1,442 2,123 1,004 75 7,973 4.16 3.97 2.53 2.17 2.68 4.59 3.81 % 2.00 % $ 194 3.99 % $ 1,209 5.46 % $ (1) MBS are comprised of pools of loans with varyirr ng maturities, the majority of which are due after 10 years. The Company does not hold any subprime MBS in its investment portfolio. Approximately 58% of its MBS are GSE issued. The MBS that are not GSE issued consist primarily of investment grade securities, including $1.2 billion rated AAA and $41 million rated AA. Gross unrealized losses on the Company's AFS securities at December 31, 2022 relate primarily to changes in interest rates and other market conditions that are not considered to be credit-related issues. The Company has reviewed its securities on which there is an unrealized loss in accordance with its ACL policy described in "Note 1. Summaryr of Significff ant Accounting Policies" in Item 8 of this Form 10-K. Based on the analysis perforff med, management determined that an ACL on the Company's AFS securities was not necessaryr at December 31, 2022. The credit loss model under ASC 326-20, applicable to HTM securities, requires recognition of lifeff time expected credit losses through an allowance account at the time the security is purchased. For the year ended December 31, 2022, the Company recognized no provision for credit losses on HTM securities, compared to a recoveryr of credit losses of $1.6 million forff the same period in 2021, resulting in a total allowance of $5.2 million as of December 31, 2022 and 2021. 43 Loans HFS The Company purchases and originates residential mortgage loans through its AmeriHome mortgage banking business channel that are held foff r sale or securitization. At December 31, 2022, the Company had $1.2 billion of loans HFS, compared to $5.6 billion at December 31, 2021. The decrease in loans HFS from December 31, 2021 relates to sales, a decline in produd ction volumes, and transfer of the remaining EBO loan balance to loans HFI. Loans HFIFF The table below summarizes the distribution of the Company’s held foff r investment loan portfoff lio: WarWW ehouse lending Municipal & nonprofitff TechTT & innovation Equity fund resources Other commercial and indusd trial CRE - owner occupied Hotel franchise finance Other CRE - non-owner occupied Residential Residential - EBO Constructio rr Other ToTT tal loans HFI n and land development Allowance forff credit losses ToTT tal loans HFI, net of allowance $ $ 5,561 1,524 2,293 3,717 7,793 1,656 3,807 5,457 13,996 1,884 3,995 179 51,862 (310) $ 51,552 $ December 31, 2022 2021 (in millions) Increase (Decrease) $ 5,156 1,579 1,418 3,830 6,465 1,723 2,534 3,952 9,243 — 3,006 169 39,075 (252) 38,823 $ 405 (55) 875 (113) 1,328 (67) 1,273 1,505 4,753 1,884 989 10 12,787 (58) 12,729 Loans classified as HFI are stated at the amount of unpaid principal, adjusted for net defeff rred feff es and costs, premiums and discounts on acquired and purchased loans, and an ACL. Net defeff rred loan fees of $141 million and $86 million reducd ed the carryir ng value of loans as of December 31, 2022 and 2021, respectively. Net unamortized purchase premiums on acquired and purchased loans of $195 million and $185 million increased the carrying value of loans as of December 31, 2022 and 2021, respectively. ff 44 wing table sets forff years, after fiveff th the amount of loans outstanding by type of loan as of December 31, 2022 that were contractuat The follo ff through fiveff having no stated final maturity and no stated schedud le of repayments are reported as dued structur prepayment, refinancing, or other facff in under one year, one through 15 years, and more than 15 years based on remaining scheduled repayments of principal. Lines of credit or other loans in one year or less. The taba le also presents an analysis of the rate to ty time periods. Actut al cash flff ows frff om these loans may differ ff materially frff om contractual maturities dued e for loans within the same maturi t tors. lly dued rr WarWW ehouse lending VariVV able rate Fixed rate Municipal & nonprofit VariVV able rate Fixed rate TechTT & innovation VariVV able rate Fixed rate Equity fund resources VariVV able rate Fixed rate Other commercial and industrial VariVV able rate Fixed rate CRE - owner occupied VariVV able rate Fixed rate Hotel franchise finance VariVV able rate Fixed rate Other CRE - non-owner occupied u VariVV able rate Fixed rate Residential VariVV able rate Fixed rate Residential - EBO VariVV able rate Fixed rate Construction and land development VariVV able rate Fixed rate Other VariVV able rate Fixed rate ToTT tal Due Under 1 YeYY ar Due 1 - 5 YearsYY Due 5 - 15 YeYY ars Due Over 15 YearsYY TotaTT l (in millions) $ $ 2,180 149 $ 2,991 234 $ 7 — — 48 211 — 2,015 544 821 111 65 15 378 45 844 164 2 — — 8 1,095 131 104 1 44 72 2,016 50 984 167 3,271 1,671 310 286 2,531 572 2,874 772 16 1 — — 2,560 135 18 21 420 647 16 — 7 — 1,405 495 379 477 58 223 396 390 3 51 — 2 55 12 14 19 — $ — 15 278 — — — — 11 8 91 33 — — 17 — 747 13,176 — 1,874 7 — 2 — $ 8,931 $ 21,596 $ 5,076 $ 16,259 $ 5,178 383 479 1,045 2,243 50 3,006 711 5,508 2,285 845 811 2,967 840 4,131 1,326 768 13,228 — 1,884 3,717 278 138 41 51,862 mately $21.6 billion, or 74.5%, of total variable rate loans were subject to rate floors with a weighted average interest rate of As of December 31, 2022, approxi 4.1%. At December 31, 2021, approxi t to rate flff oors with a weighted average interest rate of 4.0%. At December 31, 2022, total loans consisted of 55.9% with variable rates and 44.1% with fixff ed rates, compared to 63.0% with variabla e rates and 37.0% with fixed mately $18.3 billion, or 74.3% of total variaba le rate loans were subjecb rates at December 31, 2021. a a ff The Company began offer of 2021, with Ameribor as its preferff diffff erff ent rate index and spread adjustment, if necessaryr . ff ing three alternative rate indices (including Ameribor, SOFR, and BSBY) on its lending producd ts to its customers in the second half red rate index. Existing variable rate loan contracts contain LIBOR replacement language, which allow for conversion to a 45 Concentrations of Lending Activities The Company monitors concentrations of lending activities at the product and borrower relationship level. As of December 31, 2022 and 2021, no borrower relationships at both the commitment and funded loan level exceeded 5% of total loans HFI. ff Commercial and industd rial loans made up 40% and 47% of the Company's HFI loan portfolio as of December 31, 2022 and 2021, respectively. ff o includes significant approximately 29% of In addition, the Company's loan portfoli ff loans as of December total loans at December 31, 2022 and 2021. Approximately 16% and 13% of the Company's CRE investor portfolff s and are 31, 2022 and 2021, respectively. These offiff ce loans are primarily shorter-term bridge loans that enabla e borrowers to reposition or redevelop project geographically well diversififf ed, with the vast maja ority located in midtown or subur bar n locations. At the time of origination, these loans have an initial loan-to- u value ratio of less than 55% and a weighted average loan-to-cost of less than 60%. The properties underlying these loans have staba le business trends and low vacancy rates. Substu antially all of the Company's remaining CRE loans are secured by first liens with an initial loan-to-value ratio of generally not more than 75%. Approximately 16% and 23% of these CRE loans, excluding construction and land loans, were owner-occupied at December 31, 2022 and 2021, respectively. credit exposure to the CRE market as CRE related loans accounted forff io consisted of offff iceff o ff Non-perf ormi - ng Assetstt TotTT al non-perfoff rming loans increased by $11 million at December 31, 2022 to $87 million frff om $76 million at December 31, 2021. ToTT tal nonaccrual loans (1) Loans past dued Accruing troubled debt restructur r ed loans 90 days or more on accrur al statust (2) ToTT tal nonperforming loans Other assets acquired through forff eclosure, net Nonaccrual loans to funff ded loans HFI Loans past dued 90 days or more on accrual rr statust to fuff nded loans HFI $ $ December 31, 2022 2021 (dodd llars in millions)s $ $ 85 — 2 87 11 0.16 % — 73 — 3 76 12 0.19 % — (1) (2) Includes non-accrual TDR loans of $12 million and $18 million at December 31, 2022 and 2021, respectively. Excludes government guaranteed residential mortgage loans of $582 million and zero at December 31, 2022 and 2021, respectively. Interest income that would have been recorded under the original terms of nonaccrual December 31, 2022, 2021, and 2020, respectively. rr loans was $4.7 million, $5.3 million, and $5.0 million forff the years ended The composition of nonaccrual rr loans HFI by loan portfoff lio segment were as foff llows: Municipal & nonprofitff TechTT & innovation Other commercial and indusd trial CRE - owner occupied Hotel franchise finance Other CRE - non-owner occupied Residential rr Constructio n and land development ToTT tal non-accrual loans Nonaccrual Balance December 31, 2022 Percent of Nonaccrual Balance (dolldd ars in millions) Percent of ToTT tal Loans HFI $ $ 7 1 24 12 10 8 19 4 85 8.2 % 1.2 28.2 14.1 11.8 9.4 22.4 4.7 100.0 % 0.01 % 0.00 0.04 0.02 0.02 0.02 0.04 0.01 0.16 % 46 & innovation TechTT Equity fund resources Other commercial and indusd trial CRE - owner occupied Other CRE - non-owner occupied Residential Constructio rr Other n and land development ToTT tal non-accrual loans TrTT oubrr led Debt Restructuredrr Loans Nonaccrurr al Balance December 31, 2021 Percent of Nonaccrual Balance (d(( oldd lars in millions)s Percent of TotaTT l Loans HFI $ $ 13 1 16 13 13 15 1 1 73 18.3 % 0.8 22.2 17.9 18.0 20.8 1.4 0.6 100.0 % 0.03 % 0.00 0.05 0.03 0.03 0.05 0.00 0.00 0.19 % reasons related to a borrower’s financial diffff icul A TDR loan is a loan on which the Company,yy forff would not otherwise consider. The loan terms that have been modified or restructu reduction in the stated interest rate, an extension of the maturity or renewal of the loan at an interest rate below current market, a reduction in the face of the debt, a reduction in the accruedrr of payments which result in no lost principal or interest. Consistent with regulatoryr guidance, a TDR loan that is subsequently modifiedff agreement but has shown sustained perforff mance and classificati based at the time of modification. ties, grants a concession to the borrower that the Company on include, but are not limited to, a amount ral in another restrurr cturing provided that the modified terms were market- ral of interest payments. The maja ority of the Company's modificat on as a TDR, will be removed frff om TDR statust ions are extensions in terms or deferff to a borrower’s fiff nancial situati interest, or deferff red dued ff ff ff ff rr t ff The follow ing table presents TDR loans: d ial & innovation TechTT Other commercial and industr CRE - owner occupied Hotel franchise financ e ff Other CRE - non-owner occupied rr Constructio n and land development ToTT tal cember 31, 2022 December 31, 2021 Number of Loans Recorded Investment Number of Loans Recorded Investment (d(( oldd lars in millions)s — $ 4 1 1 1 — 7 $ — 2 1 10 1 — 14 2 7 1 — 5 1 16 $ $ 2 6 1 — 11 1 21 The ACL on TDR loans totaled $4 million and zero as of December 31, 2022 and 2021, respectively. There were no outstanding commitments on TDR loans as of December 31, 2022 and 2021. 47 Allowll ance for CrediCC ti Losses on Loans HFIFF The ACL consists of the ACL on loans and an ACL on unfunff discussed within the Investment Securities section. ded loan commitments. The ACL on HTM securities is estimated separately from loans and is ff The follow ing table summarizes the allocation of the ACL on loans HFI by loan portfolff io segment: Allowance for credit losses $ WarWW ehouse lending Municipal & nonprofitff TechTT & innovation Equity fund resources Other commercial and indusd trial CRE - owner occupied Hotel franchise finance Other CRE - non-owner occupied Residential Residential - EBO Constructio rr Other n and land development 8.4 15.9 30.8 6.4 85.9 7.1 46.9 47.4 30.4 — 27.4 3.1 December 31, 2022 Percent of total allowance foff r credit losses (doldd lars in millions) 2.7 % 5.1 9.9 2.1 27.7 2.3 15.1 15.3 9.8 — 8.8 1.0 Percent of loan type to total loans HFI Allowance for credit losses December 31, 2021 Percent of total allowance for credit losses (dodd llars in millions)s 1.2 % 5.4 10.2 3.8 41.0 4.2 16.4 6.7 5.0 — 5.0 1.1 Percent of loan type to total loans HFI 13.2 % 4.1 3.6 9.8 16.5 4.4 6.5 10.1 23.7 — 7.7 0.4 100.0 % 100.0 % 3.0 13.7 25.7 9.6 103.6 10.6 41.5 16.9 12.5 — 12.5 2.9 252.5 10.7 % $ 3.0 4.4 7.2 15.0 3.2 7.4 10.5 27.0 3.6 7.7 0.3 ToTT tal $ 309.7 100.0 % 100.0 % $ During the years ended December 31, 2022 and 2021, net loan charge-offff sff to average loans outstanding were approximately 0.00% and 0.02%, respectively. In addition to the ACL on funded loans HFI, the Company maintains a separate ACL related to off-ff balance sheet credit exposures, including unfunff ded loan commitments. This allowance balance totaled $47.0 million and $37.6 million at December 31, 2022 and 2021, respectively,yy and is included in Other liabilities on the Consolidated Balance Sheets. 48 rr Probl em Loans The Company classifies loans consistent with feff deral banking regulations using a nine category grading system. These loan grades are described in fuff rther detail in "Item 1. Business” of this Form 10-K. The foff llowing taba le presents infoff rmation regarding potential and actuat l problem loans, consisting of loans graded as Special Mention, Substandard, Doubtfulff , and Loss, but which are still perforff ming: WarWW ehouse lending TechTT & innovation Other commercial and industrial CRE - owner occupied Hotel franchise finance Other CRE - non-owner occupied Residential Construction and land development Other ToTT tal & innovation TechTT Other commercial and industrial CRE - owner occupied Hotel franchise finance Other CRE - non-owner occupied Residential Construction and land development Other ToTT tal Mortgage Servicing Righi ts Number of Loans Problem Loan Balance Percent of Problem Loan Balance Percent of ToTT tal Loans HFI December 31, 2022 $ 1 27 50 8 2 9 39 2 18 arsrr in millions) (d(( olldd 43 81 36 4 26 55 20 98 16 156 $ 379 11.3 % 21.4 9.5 1.0 6.9 14.5 5.3 25.9 4.2 100.0 % 0.08 % 0.16 0.07 0.01 0.05 0.10 0.04 0.19 0.03 0.73 % Number of Loans Problem Loan Balance Percent of Problem Loan Balance Percent of ToTT tal Loans HFI (dodd llars in millions) December 31, 2021 $ 13 66 14 9 5 35 7 17 166 $ 39 60 16 139 11 16 28 30 339 11.4 % 17.9 4.7 40.9 3.4 4.6 8.3 8.8 100.0 % 0.10 % 0.16 0.04 0.35 0.03 0.04 0.07 0.08 0.87 % The fair ff respectively. The increase in MSRs is primarily related to new producti d value of the Company's MSRs related to residential mortgage loans totaled $1.1 billion and $698 million as of December 31, 2022 and 2021, on that was not fulff ly offff seff t by sales of MSRs. ff The follow ing is a summary of the UPB of loans underlying the Company's MSR portfolio by type: FNMA and FHLMC GNMA Non-agency ToTT tal unpaid principal balance of loans December 31, 2022 2021 (in millions)s $ 38,113 31,046 1,690 70,849 $ 38,754 14,379 1,215 54,348 $ $ 49 Goodwillll and Other Intangiblell Assets Goodwill represents the excess consideration paid for net assets acquired in a business combination over their fair value. Goodwill and other intangible assets acquired in a business combination that are determined to have an indefinff ite useful lifeff are not subject to amortization, but are subsequently evaluated forff impairment at least annually. The Company has goodwill totaling $527 million as of December 31, 2022. The increase from $491 million at December 31, 2021 is attributable to the DST acquisition in Januaryrr 2022. See "Note 2. Mergers, Acquisitions and Dispositions" in Item 8 of this form 10-K foff r further discussion of the acquisition. The Company perforff ms its annual goodwill and intangibles impairment tests as of October 1 each year, or more oftff en if events or circumstances indicate that g value may not be recoverable. During the years ended December 31, 2022, 2021, and 2020, there were no events or circumstances that indicated the carryinr an interim impairment test of goodwill or other intangible assets was necessary. ff The follow ing is a summary of acquired intangible assets: December 31, 2022 December 31, 2021 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount $ $ $ 14 76 18 4 56 10 178 $ 11 7 3 1 2 1 25 $ $ (i(( n millions) $ 3 69 15 3 54 9 $ 14 76 3 — 56 9 153 $ 158 $ 10 3 1 — 1 0 15 $ $ 4 73 2 — 55 9 143 to amortization b Subject Core deposits Correspondent customer relationships Customer relationships Developed technology Operating licenses e names TradTT Deferred ff TaxTT Assetstt As of December 31, 2022, the net DTATT balance totaled $311 million, an increase of $290 million frff om $21 million as of December 31, 2021. This overall increase in the net DTATT was primarily the result of decreases in the faff ir market value of AFS securities, an increase to expected tax credit carryrr overs, and an increase to the ACL. As of December 31, 2022 and 2021, the Company had no defeff rred tax valuation allowance. stt Deposit ee source forff Deposits are the primaryrr December 31, 2021, an increase of $6.0 billion, or 12.7%. By deposit type, the increase in deposits is attributaba le to increases in certificat billion, interest-bearing demand deposits of $2.6 billion, and savings and money market accounts of $2.1 billion, partially offseff bearing demand deposits of $1.7 billion. the Company's asset growth. TotTT al deposits increased to $53.6 billion at December 31, 2022 frff om $47.6 billion at es of deposit of $3.0 t by a decrease in non-interest- ff funding ff produd cts that qualify large WABWW is a participant in the IntraFi Network, a network that offers deposits forff FDIC insurance. At December 31, 2022, the Company had $683 million of CDARS deposits and $2.1 billion of ICS deposits, compared to $729 million of CDARS deposits and $1.8 billion of ICS deposits at December 31, 2021. At December 31, 2022 and 2021, the Company also had wholesale brokered deposits of $4.8 billion and $1.8 billion, respectively. deposit placement services such as CDARS and ICS, which offff erff ff In addition, deposits forff which the Company provides account holders with earnings credits or refeff rral fees totaled $13 billion and $11 billion at December 31, 2022 and 2021, respectively. The Company incurred $162.8 million and $27.4 million in deposit related costs on these deposits during the year ended December 31, 2022 and 2021, respectively. These costs are reported as Deposit costs in non-interest expense. The increase in these costs from the prior year is dued to an increase in earnings credit rates as well as an increase in average deposit balances eligible foff r earnings credits or refeff rral fees. ff ff 50 The average balances and weighted average rates paid on deposits are presented below: Interest-bearing transaction accounts Savings and money market accounts ff Certificat es of deposit ToTT tal interest-bearing deposits Non-interest-bearing demand deposits ToTT tal deposits 2022 earYY Ended December 31, 2021 2020 AverAA age Balance Rate AA Average Balance Rate AveraAA ge Balance Rate $ $ 8,331 18,518 2,772 29,621 24,133 53,754 (dodd llars in millions) 0.95 % $ 0.86 1.40 0.93 — 0.51 % $ 4,751 15,814 1,850 22,415 19,416 41,831 0.13 % $ 0.21 0.46 0.21 — 0.11 % $ 3,488 10,009 1,998 15,495 11,466 26,961 0.26 % 0.35 1.33 0.45 — 0.26 % At December 31, 2022 and 2021, the Company had total uninsured deposits of $29.5 billion and $26.9 billion, respectively. TotTT al U.S. time deposits in excess of the FDIC insurance limit were $1.1 billion and $466 million at December 31, 2022 and 2021, respectively. The table below discloses the remaining maturity for estimated uninsured time deposits as of December 31, 2022: 3 months or less 3 to 6 months 6 to 12 months Over 12 months ToTT tal (in(( millions)s 423 378 274 51 1,126 $ $ ff Uninsured deposit informat to uninsured time deposits, the Company made certain assumptions to estimate uninsured amounts by maturity. At the account level, deposit insurance was assumed to apply first to non-time deposits, then any remaining insurance amounts were apa plied to maturt ity groupings on a pro-rata basis, based on the depositor's total amount of time deposits. ion presented herein is estimated using the same methodologies utilized foff r regulatoryrr reporting, where applicable. Specificff Other Borrowings Short-TermTT Borrowrr ings The Company utilizes short-term borrowed funff ds to supu port short-term liquidity needs generally created by increased loan demand. The majority of these l funds purchased from correspondent banks or the FHLB, and repurchase agreements. short-term borrowed funff ds consist of advances frff om the FHLB, federa ity with the FHLB is determined based on collateral pledged, generally consisting of securities and loans. In addition, the The Company’s borrowing capac a Company has borrowing capac ted at the amount of cash received in connection with the transaction, and may require additional collateral based on the faff ir value of the underlying securities. At eral funff ds purchased of $640 million, repurchase December 31, 2022, total short-term borrowed funds consisted of FHLB advances of $4.3 billion, fedff agreements of $27 million, and secured borrowings of $25 million. At December 31, 2021, total short-term borrowed funds consisted of fede ral funds purchased of $675 million, secured borrowings of $35 million, and repurchase agreements of $17 million. ity from other sources, collateralized by securities, including securities sold under agreements to repurchase, which are reflecff a ff ff Long-TermTT Borrorr wings The Company's long-term borrowings consist of AmeriHome senior notes from the acquisition on April 7, 2021 and credit linked notes, inclusive of issuance costs and fair market value adjustments. At December 31, 2022, the carryrr ing value of long-term borrowings was $1.3 billion, compared to $775 million at December 31, 2021. The increase in long-term borrowings frff om December 31, 2021 relates to 2022 credit linked note issuances, totaling $579 million, net of issuance costs. Qualifi yinff g Debt Qualifying ff 2022, the carryinr g value of qualifying ff debt consists of subordinated debt and junior subordinated debt, inclusive of issuance costs and fair market value adjustments. At December 31, debt was $893 million, compared to $896 million at December 31, 2021. 51 Capitaii l Resources The Company and the Bank are subject to various regulatoryr capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements could trigger certain mandatoryr or discretionaryrr actions that, if undertaken, could have a direct material effff ect on the Company’s business frff amework for prompt corrective action, the Company and the Bank must meet ff and financial capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-ff balance sheet items (discussed in "Note 18. specificff Commitments and Contingencies" in Item 8 of this Form 10-K) as calculated under regulatoryr accounting practices. The capital amounts and classificat ion are also subject to qualitative judgments by the regulators aba out components, risk weightings, and other facff al adequacy guidelines and the regulatoryr statements. Under capita tors. ff ff al rules, the Company elected the CECL transition option that delays the estimated impact on regulatory capia tal resulting As permitted by the regulatoryr capita from the adoption of CECL over a five-year transition period ending December 31, 2024. Beginning in 2022, capia tal ratios and amounts include a 25% reduction to the capa ital benefitff that resulted frff om the increased ACL related to the adoption of ASC 326. As a result of the Company's continued commercial loan growth and the acquisition of AmeriHome, the Company continues to undertake various capia tal actions to ensure that its capital levels remain strong, which dud ring the year ended December 31, 2022, included sales of common stock under the Company's ATAA M program and three credit linked note issuances. As of December 31, 2022 and 2021, the Company and the Bank exceeded the capital levels necessaryrr to be classifiedff l capital amounts and ratios foff r the Company and the Bank are presented in the folff d by the various banking agencies. The actuat as well-capia talized, as defineff lowing tables: TotTT al Capital Tier 1 Capital Risk-WeiWW ghted Assets TanTT gible AA Average Assets TotaTT l Capital Ratio Tier 1 Capital Ratio Tier 1 Leverage Ratio Common Equity Tier 1 (dollars in millions)s December 31, 2022 WALWW WABWW Well-WW capitalized ratios Minimum capital ratios December 31, 2021 WALWW WABWW WellWW -capia talized ratios ratios a Minimum capital $ $ $ $ 6,586 6,280 5,499 5,120 $ $ 5,449 5,737 4,444 4,658 $ $ 54,461 54,411 44,697 44,726 69,814 69,762 56,973 56,962 12.1 % 11.5 10.0 8.0 12.3 % 11.4 10.0 8.0 10.0 % 10.5 8.0 6.0 9.9 % 10.4 8.0 6.0 7.8 % 8.2 5.0 4.0 7.8 % 8.2 5.0 4.0 9.3 % 10.5 6.5 4.5 9.1 % 10.4 6.5 4.5 The Company is also required to maintain specified levels of capa ital to remain in good standing with certain federal government agencies, including FNMA, FHLMC, GNMA, and HUD. These capital requirements are generally tied to the unpaid balances of loans included in the Company's servicing portfolio or loan production volume. Noncompliance with these capital requirements can result in various remedial actions upu to, and including, removing the Company's d abia lity to sell loans to and service loans on behalf of the respective agency. The Company believes that it is in compliance with these requirements as of December 31, 2022. 52 Critical Accounting Estimates The Notes to the Consolidated Financial Statements contain a discussion of the Company's signififf cant accounting policies, including inforff mation regarding recently issued accounting pronouncements, adoption of such policies, and the related impact of their adoption. The Company believes that certain of these policies, along with various estimates that it is required to make in recording its finff ancial transactions, are important to have a complete understanding of the Company's finan cial position. In addition, these estimates require management to make complex and subju ective judgments, many of which include matters with a high degree of uncertainty. The folff lowing is a summaryr of these critical accounting policies and significant estimates. ff Allowll ance for credit losses ff o, in light of the facff The ACL guidance requires that an organization measure all expected credit losses foff r financial assets held at the reporting date, including off-ff balance sheet credit exposures, based on historical experience, current conditions, and reasonabla e and suppou rtable foff recasts. Determining the appropriateness of the allowance is complex and requires judgment by management about the effff ecff t of matters that are inherently uncertain. In futff urt e periods, evaluations of the tors and forecasts then prevailing, may result in significant changes in the ACL and credit loss expense in those future overall loan portfoli ties, loan perfoff rmance metrics, asset quality characteristics, periods. The allowance level is influenced by loan volumes and mix, average remaining maturi delinquency status, historical credit loss experience, and other conditions inflff uencing loss expectations, such as reasonable and supportabla e forff ecasts of economic conditions. During the year ended December 31, 2022, the allowance level was most impacted by the Company's strong loan growth, which resulted in recognition of a provision forff credit losses of $68.1 million. Changes to the assumptions in the model in futff urt e periods could have a material impact on the Company's Consolidated Financial Statements. See "Note 1. Summaryr of Significant Accounting Policies" in Item 8 of this Form 10-K foff r a detailed discussion of the Company's methodologies forff estimating expected credit losses. t t FairFF value of fiff naii ncial instruments rr ents at faiff r value. The Company holds finff ancial instruments, including loans The Company uses fair value measurements to recognize certain fiff nancial instrumrr , that are recorded at fair value and require management to make signififf cant judgments in estimating the fair value of HFS, MSRs, and derivative instruments these finff ancial instruments. The degree of management judgment involved in determining the faff ir value of a fiff nancial instrumrr ent is dependent upon the availability of quoted market prices or observable market inputs. For fiff nancial instrurr ments that are actively traded and have quoted market prices or observable market inputs, there is minimal subjectivity involved in measuring fair ly available, significant management judgment may be necessaryr value of these financial instruments. The fair value of MSRs is determined model based on unobservaba le inputs, as MSRs are not traded in active markets. Assumptions used to value the Company’s MSRs using a discounted cash flowff represent management’s best estimate of assumptions that market participants would use to value this asset and may require signififf cant judgement. The primaryr risk of material changes to the value of the MSRs resides in the potential volatility and judgment in the assumptions used, specificall y prepayment speeds, option adjusted spreads, and discount rates. Hypothetical changes in the value of MSRs based on assumed immediate changes in certain inputs are disclosed in “Note 6. Mortgage Servicing Rights” in Item 8 of this Form 10-K. value. However, when quoted market prices or observaba le market inputs are not fulff to estimate the fair ff ff ff II me taxes Inco The Company’s income tax expense, deferff current and future taxes to be paid. The Company is subjb ect to fede required in the determination of the consolidated income tax expense. ff red tax assets and liabia lities, and liabia lities for unrecognized tax benefiff ts reflect management’s best estimate of ral and state income taxes in the United States. Significant judgments and estimates are Deferff red income taxes arise frff om temporaryr diffff erff ences between the tax basis of assets and liaba ilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. In evaluating the Company's ability to recover its DTATT s in the jurisdictions frff om which they arise, all available positive and negative evidence is considered, including scheduld ed reversals of deferred tax liabia lities, tax planning strategies, projeo cted future taxable income, and recent operating results. The assumptions about fuff ture taxable income require the use of significant judgment and are consistent with the plans and estimates used to manage the underlying business. 53 Liquidity Liquidity is the ongoing ability to accommodate liaba ility maturi ties and deposit withdrawals, fund asset growth and business operations, and meet contractual obligations through unconstrained access to fuff nding at reasonable market rates. Liquidity management involves forecasting fuff nding requirements and to changes in the Company's business ff maintaining suffff ici operations or unanticipated events. ent capacity to meet the needs and accommodate fluctuat tions in asset and liabia lity levels dued t The ability to have readily available funds suffff icien importance to depositors, creditors, and regulators. The Company's liquidity,yy represented by cash and amounts due from banks, feff deral funds sold, loans HFS, and non-pledged marketabla e securities, is a result of the ing activities and related cash flff ows. The Company actively monitors and manages liquidity,yy and no less than Company's operating, investing, and financ quarterly will estimate probablea liquidity needs on a 12-month horizon. Liquidity needs can also be met through short-term borrowings or the disposition of short-term assets. ng liabilities is of primaryr t to repay fuff lly maturi ff ff t ff The follow ing table presents the availablea and outstanding balances on the Company's lines of credit as of December 31, 2022: Unsecured fed funds credit lines at correspondent banks AvAA ailable Balance $ Outstanding Balance (in millions)s 3,989 $ 640 In addition to lines of credit, the Company has borrowing capa acity with the FHLB and FRB frff om pledged loans and securities and warehouse borrowing lines of credit. The borrowing capacity,yy outstanding borrowings, and availaba le credit as of December 31, 2022 are presented in the foff llowing table: FHLB: ity Borrowing capac a Outstanding borrowings Letters of credit ToTT tal availablea credit FRB: Borrowing capac a Outstanding borrowings ity ToTT tal availablea credit WaWW rehouse borrowings: Borrowing capac a Outstanding borrowings ity ToTT tal availablea credit n millions)s 11,133 4,300 21 6,812 5,249 — 5,249 1,000 — 1,000 $ $ $ $ $ $ The Company also plans for potential fundin termination. Further, the Company has entered into certain letters of credit or other commitments to extend credit to customers of the Bank. g needs related to operating expenses, which in some cases involve contracts that contain penalties forff ff early ff The follow ing table sets fort ff h the Company's significant ff Time deposit maturities Qualifyiff ng debt Other borrowings Operating lease obligations Purchase obligations ToTT tal contractual t obligations as of December 31, 2022: TotalTT Less Than 1 YearYY Payments Due by Period 1-3 YearsYY (i(( n millions) 3-5 YearYY s Aftff er 5 YeYY ars $ $ $ 5,049 909 6,320 209 55 $ 4,904 — 5,289 18 17 12,542 $ 10,228 $ 143 — 97 62 20 322 $ $ $ 2 — 77 52 18 — 909 857 77 — 149 $ 1,843 Purchase obligations primarily relate to contracts for softwff are licensing, maintenance, and outsourced service providers. 54 Offff -ff balance sheet commitments associated with outstanding letters of credit, commitments to extend credit, and credit card guarantees as of December 31, 2022 are summarized below. Since commitments associated with letters of credit and commitments to extend credit may expire unused, the amounts shown do not necessarily reflect the actual e cash funding requirements. ff futur t Commitments to extend credit Credit card commitments and finff ancial guarantees Letters of credit ToTT tal TotTT al Amounts Committed Less Than 1 YearYY ount of Commitment Expiration per Period 1-3 YearsYY (i(( n millions) 3-5 YeYY ars After 5 YeaYY rs $ $ $ 18,674 379 265 19,318 $ 4,496 379 253 5,128 $ $ 7,307 — 7 7,314 $ $ 4,902 — 5 4,907 $ $ 1,969 — — 1,969 ff The follow ing table sets fort ff h certain inforff mation regarding short-term borrowings: Repurchase Agreements: Maximum month-end balance Balance at end of year AvAA erage balance Federal Funds Purchased Maximum month-end balance Balance at end of year AvAA erage balance FHLB Advances: Maximum month-end balance Balance at end of year AvAA erage balance WarWW ehouse borrowings: Maximum month-end balance Balance at end of year AvAA erage balance ToTT tal Short-TermTT Borrowed Funds WeigWW hted average interest rate at end of year WeighWW ted average interest rate during year 2022 $ $ 523 27 76 1,860 640 568 6,000 4,300 2,526 160 — 201 $ 4,967 $ December 31, 2021 (d(( olldd arsrr in millions) 2020 22 17 20 2,283 675 419 4,200 — 393 820 — 442 692 $ $ 34 16 23 690 — 75 130 5 21 — — — 21 4.64 % 2.28 0.16 % 0.67 0.12 % 0.46 red securities The Company has also committed to irrevocably and unconditionally guarantee the payments or distributions with respect to the holders of preferff s to the extent that the trurr sts have not made such payments or distributions, including: 1) accrued and unpaid of the Company's eight statutor distributions; 2) the redemption price; and 3) upon a dissolution or termination of the trust, the lesser of the liquidation amount and all accrued and unpaid t remaining availaba le for distribution. The Company does not believe that these offff -ff balance sheet arrangements distributions and the amount of assets of the trusrr have or are reasonably likely to have a material effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity,yy capital expendituret . s, or capital resources. However, there can be no assurance that such arrangements will not have a futff urt e effff ect yrr business trust rr ff ff t The Company has a formal liquidity policy and, in the opinion of management, its liquid assets are considered adequate to meet cash floff w needs foff r loan funding and deposit cash withdrawals forff the next 90-120 days. At December 31, 2022, there were $7.7 billion in liquid assets, comprised of $1.1 billion in cash and cash equivalents, $1.1 billion in loans HFS, and $5.5 billion in unpledged marketabla e securities. At December 31, 2021, the Company maintained $8.7 billion in liquid assets, comprised of $516 million of cash and cash equivalents, $4.0 billion in loans HFS, and $4.2 billion of unpledged marketable securities. The Parent maintains liquidity that would be sufficien t to fuff nd its operations and certain non-bank affff iff liate operations for an extended period should fuff nding from normal sources be disrupted. In the Company's analysis of Parent liquidity,yy it is assumed that the Parent is unabla e to generate funds frff om additional debt or equity issuances, receives no dividend income from subsidiaries and does not pay dividends to stockholders, while continuing to make non-discretionaryr payments needed to maintain operations and repayment of contractual principal and interest payments owed by the Parent and affff iff liated companies. ff t 55 Under this scenario, the amount of time the Parent and its non-bank subsidiaryr exhausted is considered as part of the Parent liquidity analysis. Management believes the Parent maintains adequate liquidity capac additional fund can operate and meet all obligations before the current liquid assets are ity to operate without ing frff om new sources forff over twelve months. a ff ff ient funding capacity to address large increases in fund ing requirements, such as deposit outflff ows. This capa acity is comprised of liquidity WABWW maintains sufficff derived frff om a reduction in asset levels and various secured fuff nding sources. On a long-term basis, the Company’s liquidity will be met by changing the relative distribution of its asset portfoli example, by reducing investment or loan volumes, or selling or encumbering assets). Further, the Company can increase liquidity by soliciting higher levels of deposit accounts through promotional activities and/odd r borrowing frff om correspondent banks, the FHLB of San Francisco, and the FRB. At December 31, 2022, the Company's long-term liquidity needs primarily relate to funds required to support loan originations, commitments, and deposit withdrawals, which can be met by cash flff ows from investment payments and maturi ties, and investment sales, if necessary. os (forff ff ff t The Company’s liquidity is comprised of three primaryr classificff ations: 1) cash flff ows provided by operating activities; 2) cash flff ows used in investing activities; and 3) cash flows provided by financing activities. Net cash provided by or used in operating activities consists primarily of net income, adjud sted forff changes in certain other asset and liability accounts and certain non-cash income and expense items, such as the provision forff credit losses, investment and other amortization and depreciation. For the years ended December 31, 2022, 2021, and 2020, net cash provided by (used in) operating activities was $2.2 billion, $(2.7) billion, and $670.2 million, respectively. The Company's primary investing activities are the origination of real estate and commercial loans, the collection of repayments of these loans, and the purchase and sale of securities. The Company's net cash provided by and used in investing activities has been primarily influff enced by its loan and securities d by $11.2 billion, $12.7 billion, and $5.9 activities. The Company's cash balance during the years ended December 31, 2022, 2021, and 2020, was reduced billion, respectively,yy as a result of a net increase in loans as well as a net increase in investment securities of $1.8 billion, $2.0 billion, and $1.5 billion, respectively. Net cash provided by financing activities has been impacted significantly by increased deposit levels. During the years ended December 31, 2022, 2021, and 2020, net deposits increased $6.0 billion, $15.7 billion, and $9.1 billion, respectively. Fluctuations in core deposit levels may increase the Company's need foff r liquidity as certificates of deposit maturet or are withdrawn beforff e maturity,yy and as non-maturity deposits, such as checking and savings account balances, are withdrawn. Additionally,yy the Company is exposed to the risk that customers with large deposit balances will withdraw all or a portion of such deposits, dud e in part to the FDIC limitations on the amount of insurance coverage provided to depositors. ToTT mitigate the uninsured deposit risk, the Company participates in the CDARS and ICS programs, which allow an individual customer to invest upu to $50.0 million and $150.0 million, respectively,yy through one participating fiff nancial institutt ion or, a combined total of $200.0 million per individudd al customer, with the entire amount being covered by FDIC insurance. As of December 31, 2022, the Company has $683 million of CDARS and $2.1 billion of ICS deposits. As of December 31, 2022, the Company has $4.8 billion of wholesale brokered deposits outstanding. Brokered deposits are generally considered to be deposits that have been received froff m a third party who is engaged in the business of placing deposits on behalf of others. A traditional deposit broker will direct deposits to the banking institution institutions regarding brokered deposits because of the general concern that these deposits are not relationship based and are at a greater risk of being withdrawn and placed on deposit at another institution offff eff ring a higher interest rate, thus posing liquidity risk foff r institutt ions that gather brokered deposits in significant amounts. ing the highest interest rate availabla e. Federal banking laws and regulations place restrictions on depositoryrr offff erff t Federal and state banking regulations place certain restrictions on dividends paid. The total amount of dividends which may be paid at any date is generally limited to the retained earnings of the bank. Dividends paid by WABWW to the Parent would be prohibited if the effff eff ct thereof would cause the Bank’s capital to be reduced below applicablea al requirements. During the year ended December 31, 2022, WAWW B and CSI paid dividends to the Parent of $105.0 million and $155.0 million, respectively. Subsequent to December 31, 2022, WABWW paid dividends to the Parent of $55.0 million. minimum capita Recent accounting pronouncements See "Note 1. Summaryr of Significaff pronouncements and their expected impact, if any,yy on the Company's Consolidated Financial Statements. nt Accounting Policies," in Item 8 of this Form 10-K for informff ation on recent and recently adopted accounting 56 SUPERVISRR ION AND REGULATAA ION WAL,WW WABWW , and certain of its non-banking subu sidiaries are subu jecb appl a system is not designed to protect equity investors in bank holding companies such as WAWW L. al and state laws. The regulatory framework to bank holding companies and their subsidiaryr banks is intended to protect depositors, the DIF, and the U.S. banking system as a whole. This t to comprehensive regulation under feder icablea ff Set forth below is a summaryr of the significff ant laws and regulations applicable to WALWW and its subsiu entirety by reference to the full review by Congress and state legislatures and feder a appl diaries. The description that follows is qualifieff d in its text of the statutt es, regulations, and policies that are described. Such statutt es, regulations, and policies are subju ect to ongoing al and state regulatory agencies. A change in any of the statutes, regulations, or regulatory policies to WALWW and its subsidiaries could have a material effeff ct on the results of the Company. icablea ff ff Overview u t to inspection, WALWW is a separate and distinct legal entity frff om WABWW and its other subsidiaries. As a registered bank holding company,yy WAWW L is subjecb ision by the FRB, and is regulated under the BHCA. WAWW L is also under the jurisdiction of the SEC and is subject to the disclosure and examination, and superv other regulatory requirements of the Securities Act of 1933, as amended, and the Exchange Act, as administered by the SEC. The Company’s common stock is listed on the NYSE under the trading symbol “WAWW L” and the Company is subju ect to the rules of the NYSE forff listed companies. The Company is a finff ancial institution holding company within the meaning of Arizona law. WALWW provides a fuff ll spectrum of deposit, lending, treasuryr management, and online banking products and services through WAWW B, its wholly-owned banking subsidiaryr . WAWW B is an Arizona chartered bank and a member of the Federal Reserve System. t to the supervision of,ff and to regular ff WABWW operates the following full- examination by,yy the Arizona Department of Financial Institutt ions, the FRB as its primary federal regulator, and the FDIC as its deposit insurer. WAB'WW s deposits are insured by the FDIC up to the applicable deposit insurance limits in accordance with FDIC laws and regulations. The Company also serves business customers through a national platforff m of specialized financial services providers. service banking divisions: ABA, BON, Bridge, FIB, and TPB. WAWW B is subjecb WALWW and WABWW are also superu subject to federal and state laws and regulations, including regulations of the FRB. vised by the CFPB for compliance with feff deral consumer financial protection laws. The Company’s non-bank subu sidiaries are The Dodd-Frank Act significantly changed the financial regulatoryr financial services firff ms have been subject to enhanced regulation and oversight. Several provisions of the Dodd-Frank Act are subject to furff guidance, and interpretat regime in the United States. Since the enactment of the Dodd-Frank Act, U.S. banks and ther rulrr emaking, ral banking agencies. ion by the fede ff rr t ff cial instituti among other things, amended certain provisions of the Dodd-Frank Act. The EGRRCPAPP provides limited regulatory relief to Enacted in 2018, the EGRRCPA,PP ons while preserving the existing framework under which U.S. financial institutions are regulated. The EGRRCPAPP relieves bank certain finan holding companies with less than $100 billion in assets, such as the Company,yy frff om the enhanced prudrr ential standards imposed under Section 165 of the Dodd- Frank Act (including, but not limited to, resolution planning and enhanced liquidity and risk management requirements). In addition to amending the Dodd- Frank Act, the EGRRCPAPP also includes certain additional banking-related provisions, consumer protection provisions and securities law-related provisions. While many of the EGRRCPAPP ’AA s changes have been implemented through rules adopted by feff deral agencies, the Company expects to continue to evaluate the potential impact of the EGRRCPAPP as it is furff ther implemented. SS Supervi sioii n, Regulation and Licensing ofo Amff eriHome eral banking AmeriHome is a residential mortgage producer and servicer that operates in a heavily regulated industryr . In addition to supeu rvision by the fedff agencies with primaryr eral, state and local governmental authorities, including the CFPB, HUD, and GNMA, and government-sponsored enterprises in the mortgage industry such as FHLMC and FNMA. jurisdiction over the Company and WABWW , AmeriHome is subju ect to the rurr les, regulations and oversight of certain fedff Further, AmeriHome must comply with a large number of federal consumer protection laws and regulations including, among others: • • the Real Estate Settlement Procedures Act and Regulation X, which require lenders, mortgage brokers, or servicers to provide borrowers with pertinent and timely disclosures regarding the nature and costs of the settlement process and prohibit specificff practices related thereto; the TrTT uthrr the real estate settlement process; In Lending Act and Regulation Z, which require disclosures and timely information on the naturet and costs of the residential mortgages and 57 • • • • the Secure and Fair Enforff cement forff Mortgage Licensing Act, which apa plies to businesses and individuad ls engaging in the residential mortgage loan business; the Dodd-Frank WalWW l Street Reformff rulrr es and regulations of the FTC and CFPB that prohibit unfaiff r, aba usive or deceptive acts or practices; and Consumer Protection Act, the Fair Debt Collection Practices Act, the Federal TrTT ade Commission Act, and the the Fair Credit Reporting Act (as amended by the Fair and Accurate Credit TrTT ansactions Act) and Regulation V,VV which address the accuracy,yy fairness, and privacy of information in the files of consumer reporting agencies; and t the Equal Credit Opportunit y Act and Regulation B, the Fair Housing Act, the Homeowners Protection Act, and the Home Mortgage Disclosure Act and Regulation C, which generally disallow discrimination on a prohibited basis, provide applicants and borrowers rights with respect to credit decisioning and the residential mortgage process, and require disclosures and impose obligations on financial businesses condud cting residential lending and mortgage servicing. The CFPB as well as the FTC have rulerr making authority with respect to many of the federal consumer protection laws apa plicaba le to mortgage lenders and servicers, and their rulemaking and regulatoryr agendas relating to the residential mortgage industryrr continues to evolve. In particular, as part of its enforff cement ion, authority,yy the CFPB can order, among other things, rescission or reforff mation of contracts, the refund of moneys or the returnt disgorgement or compensation forff tions regarding violations, remediation of practices, external compliance monitoring and civil money penalties. unjust enrichment, the payment of damages or other monetary relief, public notificaff of real property,yy restitutt b AmeriHome is also subject loan servicing, origination and collection activities of mortgage industry participants. Despite the fact depositoryr to) incur significan promulgated, amended, interprrr eted and enforff ced. to state and local laws, rules and regulations and oversight by various state agencies that license and oversee consumer protection, that AmeriHome is the operating subsu idiaryr of a institution, it must comply with regulatoryr and licensing requirements in certain states in order to conducd t its business, and does (and will continue t costs to comply with these requirements. These laws, rurr les and regulations may change as statutt es and regulations are enacted, ff ff SS Supervi sioii n and Regulation of WAWW TCTT is an OCC-chartered, non-depositoryr national trust bank. WAWW TAA C will offeff WAWW TCAA ity administration, loan administration, and securities custody produd cts. As a national trust bank, the ability of WAWW TAA C to engage in fiducd iaryr activities is governed by federal law at 12 U.S.C. § 92a and the OCC law and regulation. WAWW TCAA may engage in any of the regulations at 12 C.F.R. Part 9, as well as certain state laws to the extent not preempted by federal ity that the OCC authorizes enumerated activities or roles permitted forff pursuant to feder al law. As a non-depository national trurr st bank, WAWW TCAA may not accept deposits and is not subject to legal requirements to maintain FDIC deposit insurance. eral statutt es and regulations as well as any other capac national trurr st banks listed in fedff r levered loan facil a ff ff ff The OCC has primaryr supervisory and regulatory authority over the operations of WAWW TAA C. As part of this authority,yy WAWW TCAA u with the OCC and is subject charge fees to supervision and periodic examination by the OCC. ToTT support its supervisoryr rr on all national banks, including non-depositoryrr national trust banks like WAWW TC.AA funff ff periodic reports ction, the OCC has the authority to assess and is required to fileff Bank Holdingdd CC Compa ll ny Regul ation e ff WALWW is a bank holding company as defined under the BHCA. The BHCA generally limits the business of bank holding companies to banking, managing or controlling banks, and other activities that the FRB has determined to be so closely related to banking as to be a proper incident thereto. Business activities that have been determined to be related to banking, and therefoff re appropriate foff r bank holding companies and their affiff liates to engage in, include securities brokerage services, investment advisory services, fiff duciaryrr services, and certain management advisory and data processing services, among others. Bank holding companies that have elected to become finff ancial holding companies may engage in any activity,yy or acquire and retain the shares of a company engaged ial in nature or incidental to such fiff nancial activity (as determined by the FRB in consultation with the Secretaryr of the in any activity that is either: (i) financ institutions or the TrTT easury)rr financial system generally (as solely determined by the FRB). Activities that are fiff nancial in naturet include securities underwriting and dealing, insurance underwriting, and making merchant banking investments. to a financial activity,yy and that does not pose a subu stantial risk to the safety and soundness of depositoryr ff or (ii) complementaryrr 58 MergerMM s srr and Acquisition ii The BHCA, the Bank Merger Act, and other feff deral and state statutt es regulate the direct and indirect acquisition of depository institutt ions. The BHCA requires prior FRB approval for a bank holding company to acquire, directly or indirectly,yy 5% or more of any class of voting securities of a commercial bank or its a company,yy other than a bank holding company,yy to acquire 25% or more of any class of voting securities of a bank or bank parent holding company and forff holding company. In April 2020, the Federal Reserve adopted a fiff nal rulrr e codifyff ing the presumptions used in determinations of whether a company has the abia lity to exercise a controlling influeff purposes of the BHCA, and providing greater transparency on the types of relationships that the Federal Reserve generally views as supporting a determination of control. Under the Change in Bank Control Act, any person, including a company,yy may not acquire, directly or indirectly,yy control of a bank without providing 60 days’ prior notice and receiving a non-objection from the appropriate fedff eral banking agency. nce over another company forff ions to merge or enter into Under the Bank Merger Act, the prior approva purchase and assumption transactions. In reviewing apa plications seeking approval of merger and purchase and assumption transactions, the fede ral banking agencies will consider, among other things, the competitive effeff cts and publu ic benefiff ts of the transactions, the capital position of the combined banking organization, the applicant's performance record under the CRA,RR and the effff eff ctiveness of the subju ect organizations in combating money laundering activities. For furff ther information relating to the CRARR , see the section titled “Community Reinvestment Act and Fair Lending Laws.” l of the appropriate feff deral banking agency is required for insured depository institutt a ff Under Section 6-142 of the Arizona Revised Statut tes, no person may acquire control of a company that controls an Arizona bank without the prior approval of the Arizona Supu erintendent of Financial Institutions, or Arizona Supeu rintendent. A person who has the power to vote 15% or more of the voting stock of a controlling company is presumed to control the company. EnhE anced Prudenti PP al Standards Section 165 of the Dodd-Frank Act imposes enhanced prudrr ential standards on larger banking organizations, with certain of these standards applicable to banking organizations over $10 billion, including WAWW L and WAWW B, as of the quarter ending June 30, 2014. In October 2012, the FDIC, the OCC, and the FRB issued separate but similar rules requiring covered banks and bank holding companies with $10 billion to $50 billion in total consolidated assets to condud ct an annual company-runrr capia tal stress test as required by the Dodd-Frank Act in 2017 and provided the results to the FRB. WALWW fouff nd the Company would have sufficient stress test. WAWW L and WAWW B conducted ff capital to maintain regulatoryr capa ital levels throughout an economic downturn. a company-runrr d bank holding companies with less than $100 billion in assets, such as the Company,yy are exempt froff m the enhanced As a result of passage of the EGRRCPA,PP prudent ial standards imposed under Section 165 of the Dodd-Frank Act (including, but not limited to, the resolution planning and enhanced liquidity and risk rr management requirements therein). Notwithstanding these changes, the capia tal planning and risk management practices of the Company and the Bank will continue to be reviewed through the regular supervisoryr processes of the FRB. Further, in connection with the FRB’s rules implementing the enhanced ial standards required by Dodd-Frank (and as subu sequently modified by application of the EGRRCPAPP ’AA s higher consolidated asset thresholds foff r bank prudent se-wide risk and has retained its separate risk committee of holding companies), the Company has established a risk committee of the BOD to manage enterpri independent directors. rr rr ial standards required by Dodd-Frank (and as subsequently modified by ication of the EGRRCPAPP ’AA s higher consolidated asset thresholds for bank holding companies), the Company has estaba lished a risk committee of the BOD to Further, in connection with the FRB’s rulrr es implementing the enhanced prudent appl a manage enterprise-wide risk and has retained its separate risk committee of independent directors. rr VolckVV er Rule Section 619 of the Dodd-Frank Act, commonly known as the VolVV cker Rule, restricts the ability of banking entities, such as the Company and WABWW , froff m: (i) trading” and (ii) investing in or sponsoring certain covered fuff nds, subject to certain limited exceptions. Under the VolVV cker Rule, the engaging in “proprietaryr term "covered funds" is defined as any issuer that would be an investment company under the Investment Company Act but for the exemption in Section 3(c) (1) or 3(c)(7) of that Act, which includes CLO and CDO securities. There are also several exemptions frff om the definition of covered fund, including, among other things, loan securitizations, joint venturt es, certain types of forei , and registered investment l rules permit banking entities, subju ect to certain conditions and limitations, to invest in or sponsor a covered fuff nd in connection companies. Further, the finaff ring the covered funff d; (2) certain risk-mitigating hedging activities; and (3) de minimis investments in covered fuff nds. Compliance with: (1) organizing and offeff with the VolckVV gn fuff nds, entities issuing asset-backed commercial paper er Rule was required by July 21, 2017. a ff 59 The EGRRCPAPP and subsequent promulgation of inter-agency final rules have aimed at simplifyiff ng and tailoring requirements related to the VolVV cker Rule, including by eliminating collection of certain metrics and reducid ng the compliance burdens associated with other metrics for banks with less than $20 billion in average trading assets and liabila ities. In June 2020, the Federal Reserve - along with the Commodity Futures TrTT ading Commission, FDIC, the OCC, and the SEC - issued a final rule modifyiff ng the VolcVV ker RuRR le’s prohibition on banking entities investing in or sponsoring hedge funds or private equity funds (“covered funds”). The Volcker trading and from acquiring or retaining ownership interests in, sponsoring or having certain relationships with a hedge fund or private equity fuff nd. The finff al rulrr e modifies three areas of the VolVV cker Rule by: (1) streamlining finff ancial the covered funds portion of the rulrr e; (2) addressing the extraterritorial treatment of certain foreff services and engage in other activities that do not raise concerns that the VoVV lcker Rule was intended to address. The new rule became effff ect ive October 1, 2020. The Company believes it is full Rule generally prohibits banking entities frff om engaging in proprietaryr ign funds; and (3) permitting banking entities to offff erff RulRR e, including as modified by the new rulrr e. y compliant with the Volcker VV VV ff ff sdd Dividenddd The Company has paid regular quarterly dividends since the third quarter of 2019. Whether the Company continues to pay quarterly dividends and the amount of any such dividends will be at the discretion of WAWW L's BOD and will depend on the Company’s earnings, fiff nancial condition, results of operations, business l restrictions, and other facto prospects, capital requirements, regulatory restrictions, contractuat rs that the BOD may deem relevant. ff The Company’s ability to pay dividends is subject company’s capia tal position, its abili depositoryr t instituti operating earnings. to the regulatoryr authority of the FRB. The supervisoryrr concern of the FRB focff uses on a bank holding ty to meet its finff ancial obligations as they come due, and its capa acity to act as a source of financial strength to its insured on subsidiaries. In addition, FRB policy discourages the payment of dividends by a bank holding company that is not suppu orted by current b a ation Law,ww dividends may only be paid out of surprr lus or out of net profits forff As a Delaware corporation, the Company is also subu jb ect to limitations under Delaware law on the payment of dividends. Under the Delaware General the year in which the dividend is declared or the preceding year, and no Corpor rr dividends may be paid on common stock at any time dud ring which the capa ital of outstanding preferr ce stock exceeds the Company's net assets. ed stock or preferen ff ff From time to time, the Company may become a party to finff ancing agreements and other contractual the declaration or payment of dividends under certain circumstances. Holding company expenses and obligations with respect to its outstanding trust preferff securities and corresponding subordinated debt also may limit or impair the Company’s ability to declare and pay dividends. of limiting or prohibiting red obligations that have the effff ect ff t Since the Company has no significff ant assets other than the voting stock of its subsidiaries, it currently depends on dividends frff om WAWW B and, to a lesser extent, its non-bank subsidiaries, forff a substantial portion of its revenue and as the primaryrr sources of its cash flow. The aba ility of a state member bank, such as WAB,WW to pay cash dividends is restricted by the FRB and the State of Arizona. The FRB’s Regulation H states that a member bank may not declare or pay a dividend if the total of all dividends declared during that calendar year exceed the bank’s net income during that calendar year and the retained net income of the prior val from both the FRB and two-thirds of its shareholders, a bank cannot declare or pay a dividend that would two years. Further, without receiving prior appro exceed its undivided profits or withdraw any portion of its permanent capa ital. a Under Section 6-187 of the Arizona Revised Statutes, WABWW may pay dividends on the same basis as any other Arizona corporation, except that cash dividends paid out of capita al surplus require the prior approval of the Arizona Superintendent. Under Section 10-640 of the Arizona Revised Statutes, a corporation may not make a distribution to stockholders if to do so would render the corprr oration insolvent or unable to pay its debts as they become due. However, an Arizona bank may not declare a non-stock dividend out of capital surprr lus without the approval of the Arizona Superintendent. FF Federa l Reserve SystemSS As a member of the Federal Reserve System, WABWW has historically been required by law to maintain reserves against its transaction deposits, which were to be held in cash or with the FRB. In response to the COVID-19 pandemic, the Federal Reserve reduced the reserve requirement ratios to zero percent effeff ctive on March 26, 2020. Additionally,yy on June 4, 2021, the Federal Reserve adopted amendments to Regulation D (Reserve Requirements of Depositoryrr Institutions, 12 C.F.R. Part 204) to eliminate references to an “interest on required reserves” rate and to an “interest on excess reserves” rate and replace them with a referff ence to a single “interest on reserve balances” rate. The amendments also simplififf ed the formula used to calculate the amount of interest paid on balances maintained by or on behalf of eligible institutio tive on July 29, 2021. ns in master accounts at Federal Reserve Banks, and to made other conforming amendments. The rule became effecff t 60 Source ofo StrenSS gth Doctrineii FRB policy requires bank holding companies to act as a source of finff ancial and managerial strength to their subsidiaryr banks. Section 616 of the Dodd-Frank Act codifiedff the requirement that bank holding companies act as a source of fiff nancial strength. As a result, the Company is expected to commit resources to including at times when the Company may not be in a finff ancial position to provide such resources. Any capa ital loans by a bank holding support WAB,WW company to any of its subsidiaryr banks are subordinate in right of payment to deposits and to certain other indebtedness of such subsidiaryr banks. The U.S. Bankruprr ral banking agency to maintain the capia tal of a subsidiaryr bank will be assumed by the bankruptu cy trurr stee and entitled to priority of payment. tcy Code provides that, in the event of a bank holding company's bankrurr ptu cy,yy any commitment by the bank holding company to a fede ff CapiCC taii l Adequacy The Capital Rules established a comprehensive capital frff amework for U.S. banking organizations. The Capital Rules generally implement the Basel strengthening international capia tal standards. The Capa ital RulRR es revise the defiff nitions and the components of Committee's Basel III final capital frff amework forff ions’ regulatoryr capa ital ratios. The Capia tal Rules also address asset regulatoryrr capia tal, as well as address other issues affectin ff capital ratios and replaced the existing general risk-weighting risk weights and other matters affff ecff a a appr ting the denominator in banking institutt oach with a more risk-sensitive approa g the numerator in banking institutt ions’ regulatoryr ch. The Capital Rules: (i) include CET1 and the related regulatoryr capa ital ratio of CET1 to risk-weighted assets; (ii) specifyff that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements; (iii) mandate that most deductions/adjustments to regulatory capital measures and adjustments to capital as compared to be made to CET1 and not to the other components of capital; and (iv) expand the scope of the deductions fromff of Additional Tier 1 capa ital is non-cumulative perprr etual existing regulations. Under the Capita preferred stock, and the most common forff ms of Tier 2 capital are subordinated notes and a portion of the allocation forff loan and lease losses, in each case, subject to the Capital Rules’ specificff al RulRR es, foff r most banking organizations, the most common formff requirements. Pursuant to the Capital RulesRR , the minimum capia tal ratios are as folff lows: • • • • 4.5% CET1 to risk-weighted assets; 6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets; 8.0% TotalTT capital (that is, Tier 1 capita a l plus Tier 2 capital) to risk-weighted assets; and 4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (called “leverage ratio”). ff r,” composed entirely of CET1, in addition to these minimum risk-weighted asset ratios. The capital The Capital Rules also include a “capital conservation buffeff losses dud ring periods of economic stress. Banking institutions with a ratio of CET1 to risk-weighted assets above the conservation buffer is designed to absorbr ent repurchases and compensation based minimum but below the capita on the amount of the shortfaff ll. The Capital RuleRR s became fuff lly phased-in on Januaryr 1, 2019. Thus, the capia tal standards applicable to the Company include an additional capital conservation buffff eff r of 2.5% of CET1, effeff ctively resulting in minimum ratios inclusive of the capital conservation buffff erff of (i) CET1 to risk- weighted assets of at least 7%, (ii) Tier 1 capita l to risk-weighted assets of at least 8.5%, and (iii) ToTT tal capital to risk-weighted assets of at least 10.5%. al conservation buffff erff will face constraints on dividends, equity,yy and other capa ital instrumrr a a number of deductions from and adjustments to CET1. These include, foff r example, the requirement that mortgage servicing The Capital Rules provide forff assets, DTAsTT arising from temporaryr diffff erff ences that could not be realized through net operating loss carryrr backs, and significant investments in non- consolidated financial entities be deducted frff om CET1 to the extent that any one such category exceeds 10% of CET1 or all such items, in the aggregate, ts of accumulated other comprehensive income or loss items reported as a component of exceed 15% of CET1. The Capital RulRR es furff stockholders’ equity be included in CET1 capita roaches banking organizations may make a one-time permanent election to exclude these items. The Company,yy as a non-advanced appa roaches institution, has made this one-time election. al; however, non-advanced appa ther prescribe that the effff ecff The Capital Rules also preclude certain hybrid securities, such as trust companies’ Tier 1 capital. The Company has used trust preferff regulatoryrr capita these securities as Tier 1 capital going forff ward may limit the Company’s ability to raise capia tal in the fuff ture. ff May 19, 2010 frff om inclusion in bank holding red securities in the past as a tool foff r raising additional Tier 1 capa ital and otherwise improving its al ratios. Although the Company may continue to include its existing trurr st prefeff rred securities as Tier 1 capital, the prohibition on the use of prefeff rred securities, issued on or after rr 61 The risk-weighting categories in the Capital RulRR es are standardized and include a risk-sensitive number of categories, depending on the naturt e of the assets, generally ranging fromff a variety of asset classes. 0% for U.S. government and agency securities, to 600% forff certain equity exposures, and higher risk weights forff As of April 1, 2020, final instrumen rr compliance, with the targeted capital ratios. tive simplifyiff ng the capa ital treatment forff mortgage servicing assets, certain DTATT s, investments in the capia tal ts of unconsolidated fiff nancial institutions, and minority interest. Management believes the Company is in compliance, and will continue to be in rules became effff ecff ff In response to the COVID-19 pandemic, the federal bank regulatory authorities issued a final rulrr e in late August 2020 that allows institutt ff CECL accounting standard in 2020 to mitigate CECL’s estimated effff ects Company has elected this capital relief option. on regulatoryr capia tal for two years, folff ions that adopted the lowed by a three-year transition period. The Prompt Correc CC tive Actiontt and SafSS etyff and SounSS dd dnes s ff ral banking agencies are required to take “prompt corrective action” should a depositoryr ion fail to meet certain Pursuant to Section 38 of the FDIA, fede capital adequacy standards. At each successive lower capital categoryr ,yy an insured depositoryr institution is subju ect to more restrictions and prohibitions, including restrictions on growth, restrictions on interest rates paid on deposits, restrictions or prohibitions on payment of dividends and restrictions on the acceptance of brokered deposits. Furthermore, if an insured depositoryr ion is classified in one of the undercapitalized categories, it is required to subu mit a capital restoration plan to the appropr ral banking agency,yy and the holding company must guarantee the performance of that plan. Based upon its capital levels, a bank that is classifieff d as well-capia talized, adequately capa italized, or undercapitalized may be treated as though it were in the next lower capital categoryrr hearing, determines that an unsafeff or unsound condition, or an unsafe or unsound practice, warrants such treatment. if the appropriate federal banking agency,yy aftff er notice and opportuni ff iate fede institutt institutt ty forff a t For purposes of prompt corrective action, to be: (i) well-capitalized, a bank must have a total risk based capital ratio of at least 10%, a Tier 1 risk based capital rr ratio of at least 8%, a CET1 risk based capital ratio of at least 6.5%, and a Tier 1 leverage ratio of at least 5%; (ii) adequately capa italized, a bank must have a total risk based capital ratio of at least 8%, a Tier 1 risk based capa ital ratio of at least 6%, a CET1 risk based capa ital ratio of at least 4.5%, and a Tier 1 leverage ratio of at least 4%; (iii) undercapitalized, a bank would have a total risk based capital ratio of less than 8%, a Tier 1 risk based capital ratio of less than 6%, a CET1 risk based capital ratio of less than 4.5%, and a Tier 1 leverage ratio of less than 4%; (iv) significantly undercapitalized, a bank would have a total risk based capital ratio of less than 6%, a Tier 1 risk based capital ratio of less than 4%, a CET1 risk based capa ital ratio of less than 3%, and a Tier 1 leverage ratio of less than 3%; (v) critically undercapita lized, a bank would have a ratio of tangible equity to total assets that is less than or equal to 2%. a Bank holding companies and insured banks also may be subju ect to potential enforcement actions of varyirr ng levels of severity by the fedff eral banking agencies for unsafeff or unsound practices in conducting their business, or for violation of any law,ww rulrr e, regulation, condition imposed in writing by the agency or term of a written agreement with the agency. In more serious cases, enforce ment actions may include: (i) the issuance of directives to increase capital; (ii) the issuance and informal agreements; (iii) the imposition of civil monetary penalties; (iv) the issuance of a cease and desist order that can be judicially enforced; of formal (v) the issuance of removal and prohibition orders against officff ion-affff ilff iated parties; (vi) the termination of the bank’s deposit ers, directors, and other institutt insurance; (vii) the appointment of a conservator or receiver foff r the bank; and (viii) the enforff cement of such actions through injun nctions or restraining orders based upon a judicial determination that the agency would be harmed if such equitabla e relief was not granted. ff ff TranTT sactions with Affiff liaii tes and Insidersrr ff al law,ww transactions between insured depositoryr Under feder ions and their affff iff liates are governed by Sections 23A and 23B of the FRARR and implementing Regulation W.WW In a bank holding company context, at a minimum, the parent holding company of a bank, and any companies which are controlled by such parent holding company,yy are affff ilff iates of the bank. Generally,yy Sections 23A and 23B of the FRA are intended to protect insured depositoryr institutions frff om ates by limiting the extent to which a bank or its subsidiaries may engage in covered transactions with losses arising from transactions with non-insured affili any one affiff liate and with all affff iff liates of the bank in the aggregate, and requiring that such transactions be on terms consistent with safeff and sound banking practices. institutt ff 62 t s, and principal stockholders (“insiders”). Further, Section 22(h) of the FRARR and its implementing Regulation O restricts loans to directors, executive offff icer iated Under Section 22(h), loans to insiders and their related interests may not exceed, together with all other outstanding loans to such persons and affilff roval of the BOD. Further, under Section entities, the institutio d in comparable 22(h) of the FRA,RR loans to directors, executive officer transactions to other persons, except that such insiders may receive preferential loans made under a benefit or compensation program that is widely available to the bank's employees and does not give prefeff rence to the insider over the employees. Section 22(g) of the FRARR places additional limitations on loans to executive offiff cers. s, and principal stockholders must be made on terms substantially the same as offff ereff . Loans to insiders above specififf ed amounts must receive the prior appa n's total capital and surplus ff rr ff Lending Limitsii In addition to the requirements set forff s that a state-chartered bank may lend to a single borrower. Under Section 6-352 of the Arizona Revised Statutes, the obligations of one borrower to a bank may not exceed 20% of the bank’s capital, plus an additional 10% of its capital if the additional amounts are fuff lly secured by readily marketaba le collateral. th above, state banking law generally limits the amount of fundff Brokered Depositstt Section 29 of the FDIA and FDIC regulations generally limit the ability of any bank to accept, renew or roll over any brokered deposit unless it is “well oval, “adequately capitalized.” On December 15, 2020, the FDIC issued rulrr es to revise brokered deposit regulations in capitalized” or, with the FDIC’s appr light of modern deposit-taking methods. The rulerr ition and amended the tive on April 1, 2021 and, to date, there has been no material impact to FDIC’s interest rate methodology calculating rates and rate caps. The rules became effff ecff either the Company or the Bank frff om the rulerr s established a new frff amework for certain provisions of the “deposit broker” definff s. a ConCC sumer ProtPP ectio tt n and CFPFF BPP Supervision The Dodd-Frank Act centralized responsibility forff consumer fiff nancial protection by creating the CFPB, an independent agency charged with responsibility for implementing, enforcing, and examining compliance with federal consumer fiff nancial protection laws. The Company is subject to a number of federal and state laws designed to protect borrowers and promote lending to various sectors of the economy and population. These laws include the Equal Credit Opportut nity Act, the Fair Credit Reporting Act, the Fair Debt Collection Procedures Act, the TrTT utrr h in Lending Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Practices Act, various state law counterprr arts, and the Consumer Financial Protection Act of 2010, which is part of the Dodd-Frank Act. The Dodd- Frank Act does not prevent states from adopting stricter consumer protection standards. State regulation of finff ancial producd ts and potential enfoff rcement actions could also adversely affecff t the Company’s business, fiff nancial condition, or operations. Deposit ee ortt PrefePP rence ion, the claims of depositors of the institution, The FDIA provides that, in the event of the “liquidation or other resolution” of an insured depository institutt administrative expenses of the FDIC as a receiver, will have priority including the claims of the FDIC as subrogee of insured depositors, and certain claims forff over other general unsecured claims against the institution. If an insured depository institutt ion fails, insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, non-deposit creditors, including the parent bank holding company,yy with respect to any extensions of credit they have made to such insured depositoryr institut tion. dd Federal Depositi InsuII rance ntially all of the deposits of WAWW B are insured upu to applicable limits by the FDIC’s DIF. The basic limit on FDIC deposit insurance is $250,000 per u Substa depositor. WABWW is subject b to deposit insurance assessments to maintain the DIF. The FDIC uses a risk-based assessment system that imposes insurance premiums based upon a risk matrix that takes into account a bank's CAMELS rating. The risk matrix utilizes diffff eff rent risk categories distinguished by capital levels and supervisory ratings. As a result of the Dodd-Frank Act, the base foff r insurance assessments is now consolidated average assets less average tangible equity. Assessment rates are calculated using foff rmulas that take into account the risk of the institution being assessed. WAWW B is classififf ed as, and subject to the scorecard foff r, a large and highly complex institutt ion to determine its total base assessment rate. Under the FDIA, the FDIC may terminate deposit insurance upon a finff ding that the institutt ion has engaged in unsafeff and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicaba le law,ww regulation, rulrr e, order or condition imposed by the FDIC. The Company’s management is not aware of any practice, condition, or violation that might lead to the termination of its deposit insurance. 63 Financial Privacy and Datatt SecSS uritytt u The Company is subjec the ability of banks and other finaff reuse of certain consumer inforff mation received frff om non-affilff circumstances, allow consumers to prevent disclosure of certain personal information to affilff in” authorizations. t to federal laws, including the GLBA, and certain state laws containing consumer privacy protection provisions. These provisions limit ons to disclose non-public information about consumers to affff iff liated and non-affiff liated third parties and limit the ions. These provisions require notice of privacy policies to consumers and, in some iates or non-affiff liated third parties by means of “opt out” or “opt ncial instituti iated institutt t ff For example, in August 2018, the CFPB published its fiff nal rurr le to update Regulation P pursuant to the amended GLBA. Under this rule, certain qualifying financial institutions are not required to provide annual privacy notices to customers. ToTT qualify,yy a finff ancial institution must not share nonpublu ic personal informati on about customers except as described in certain statutoryrr exceptions that do not trigger a customer’s statutt ory opt-out right. In addition, the finff ancial institution must not have changed its disclosure policies and practices from those disclosed in its most recent privacy notice. The rurr le sets forth timing requirements for deliveryr of annual privacy notices in the event that a fiff nancial institutt foff r the annual notice exemption later changes its policies or practices in such a way that it no longer qualifiesff for the exemption. ion that qualifiedff The GLBA also requires that finaff ncial institutions implement comprehensive written inforff mation security programs that include administrative, technical, and physical safeguards to protect consumer inforff mation. Further, pursuant to interprrr etive guidance issued under the GLBA and certain state laws, financial institutions are required to notifyff customers of security breaches that result in unauthorized access to their nonpublu ic personal informatio n. ff For example, under California law,ww everyr business that owns or licenses personal information aboa ut a California resident must maintain reasonable security procedures and policies to protect that informa tion and comply with specififf c requirements relating to the destrurr ction of records containing personal inforff mation and disclosure of breaches to customers, and restrictions on the use of customer inforff mation unless the customer "opts in." Other states, including Arizona and Nevada where WABWW has branches, may also have applicable laws requiring businesses that retain consumer personal inforff mation to develop reasonable security policies and procedures, notifyff consumers of a security breach, or provide disclosures about the use and sharing of consumer personal information. ff al banking agencies, including the FRB, through the Federal Financial Institutt The feder ions Examination Council, have adopted guidelines to encourage ff financial institutions to address cybersecurity risks and identifyff ,yy assess, and mitigate these risks, both internally and at critical third-party services providers. In October 2016, the federal bank regulatoryr agencies issued proposed rulrr es on enhanced cybersecurity risk management and resilience standards that would appl these proposed rules has closed a ff and a final large financial instituti rurr le has not been published. ons and to services provided by third parties to these institutt ions. The comment period forff y to veryr t requires a banking organization to notifyff ral bank regulatoryr agencies issued fiff nal rule to improve the sharing of information aba out cyber incidents that may affff ect On November 18, 2021, the fede ff the U.S. banking system. The rulerr federal regulator of any signififf cant computer-security incident as soon as possible and no later than 36 hours after the banking organization determines that a cyber incident has occurred. Notificaff incidents that have s he viability of a banking organization’s operations, its abia lity to deliver banking productd ff materially affect and services, or the stability of the financial sector. In addition, the rurr le requires a bank service provider to notify affff eff cted banking organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has materially affff ected or is reasonabla y likely to materially affff ecff t banking organization customers for four or more hours. The rurr le became effff ecti ed—or are reasonably likely to materially affect—t tion is required forff ve May 1, 2022. its primaryr ff ff ff ff These laws and regulations impose compliance costs and create obligations and, in some cases, reporting obligations, and compliance with these laws, regulations, and obligations require significff ant resources of WALWW and WABWW . CC Commu nityii Reinvestment Act and FairFF Lendingii Laws lending requirements or programs for finff ancial institutt WABWW has a responsibility under the CRARR to help meet the credit needs of its communities, including low and moderate income neighborhoods. The CRA does ion's discretion to develop the types of products and not establish specificff services that it believes are best suited to its particular community,yy consistent with the CRA. In addition, the Equal Credit Opportunt ity Act and the Fair Housing Act prohibit discrimination in lending practices on the basis of characteristics specified in those statutt es. WAWW B’s failure to comply with the provisions of the CRARR could, at a minimum, result in regulatoryr lure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enfoff rcement actions. WABWW received a rating of “Satisfactory” in its most recent CRA examination, in Januaryr 2019. restrictions on its activities and the activities of the Company. WAWW B’s faiff ions nor does it limit an institutt 64 Federal Home Loan Bank ofo San FrFF ancisco rt residential lending, as WABWW is a member of the FHLB of San Francisco, which is one of 12 regional FHLBs that provide fuff nding to their members to suppou well as afford the members within its assigned region. Each FHLB makes loans to its members in accordance with policies and procedures established by the board of directors of the FHLB. As a member, WABWW must purchase and maintain stock in the FHLB of San Francisco. At December 31, 2022, WAWW B’s total investment in FHLB stock was $134 million. able housing and community development loans. Each FHLB serves as a reserve, or central bank, forff ff II Incen tive CompCC ensation ral banking agencies and the SEC to establish joint regulations or guidelines prohibiting incentive-based payment The Dodd-Frank Act requires the fede regulated entities, including the Company and WAWW B, with at least $1 billion in total consolidated assets, that encourage inappropriate arrangements at specifiedff risks by providing an executive offff icff er, employee, director, or principal shareholder with excessive compensation, fees, or benefiff ts that could lead to material financial loss to the entity. The federal banking agencies and the SEC most recently proposed such regulations in 2016, but the regulations have not yet been finalized. If the regulations are adopted in the foff rm initially proposed, they will restrict the manner in which executive compensation is strucrr tured. ff ff The Dodd-Frank Act also requires publicly traded companies to give stockholders a non-binding vote on executive compensation at least everyr three years and on so-called “golden parachute” payments in connection with approvals of mergers and acquisitions. WAWW L gives stockholders a non-binding vote on executive compensation annually. Preventintt g Suspicious Activi tyii tt ff federa ff l banking agencies and law enfoff rcement agencies. Information sharing among financial institutt their customers, prevent money laundering, Under Title III of the USA PAPP TRAA IOT Act, all financial institutions are required to take certain measures to identifyff nt agencies. Financial institutions also are required to respond to requests monitor customer transactions, and report suspicious activity to U.S. law enforceme ions for the above purprr oses is for inforff mation fromff ions frff om the privacy provisions of the GLBA and other privacy laws. Financial institutions encouraged by an exemption granted to complying financial institutt that hold correspondent accounts for foreign banks or provide private banking services to forei gn individuals are required to take measures to avoid dealing with certain foreign individuals or entities, including foff reign banks with profiles that raise money laundering concerns, and are prohibited froff m dealing with federal banking agencies and the Secretary of the TreTT asury have foreign “shell banks” and persons frff om jurisdictions of particular concern. The primaryr ions also are required to establa ish internal anti-money laundering programs. adopted regulations to implement several of these provisions. All financial institutt lication submitted by the finff ancial The effff ecti institution under the Bank Merger Act. The Company has a Bank Secrecy Act and USA PAPP TRIO T Act Board-approved compliance program and engages in relatively few transactions with foreign finaff on in combating money laundering activities is a facff AA ncial institutions or foff reign persons. tor to be considered in any appa veness of a financi al instituti ff ff ff t The FCRARR ’AA s Red Flags Rule requires financ ial institutions with covered accounts (e.g., consumer bank accounts and loans) to develop, implement, and administer an identity theft prevention program. This program must include reasonable policies and procedurd es to detect suspicious patterns or practices that indicate the possibility of identity theft, such as inconsistencies in personal information or changes in account activity. ff Offff iceff of Foreigngg Assets ConCC trol Regue lation ff based on their administration by the OFAFF C. The OFAFF C-administered sanctions targeting countries take many differ The United States has imposed economic sanctions that affect transactions with designated foreign countries, nationals, and others. These are typically known ent forff ms. Generally,yy as the OFACFF rr rules lowing elements: (i) restrictions on trade with or investment in a sanctioned countryr ,yy including prohibitions against direct or they contain one or more of the folff indirect imports fromff and exports to a sanctioned countryr and prohibitions on “U.S. persons” engaging in financial transactions relating to making investments in, or providing investment-related advice or assistance to, a sanctioned countryr ; and (ii) a blocking of assets in which the government or specially designated of property subject to U.S. jurisdiction (including property in the possession or nationals of the sanctioned countryr have an interest, by prohibiting transfersff control of U.S. persons). Blocked assets (property and bank deposits) cannot be paid out, withdrawn, set offff ,ff or transferred in any manner without a license from OFACFF . Failure to comply with these sanctions could have serious legal and reputational consequences. ff 65 Future Legislati ll ve Initiat s ivett tt ff initiatives that are likely to impact the finff ancial services industd Federal and state legislatures may introduce legislation that will impact the fiff nancial services industd regulatoryrr enacted, what their effff ect and unpredictable ways. If enacted, such legislation could increase or decrease the cost of doing business, limit or expand permissible activities, or affff ect competitive balance among banks, savings associations, credit unions, and other finff ancial institutt legislation will be enacted, and, if enacted, the effff ect the Company. A change in statutes, regulations, or regulatoryr policies applicable to WAWW L or any of its subsiu of the Company. banking agencies may introduce ryrr ,yy generally. However it is not clear whether such changes will be enacted or, if on the Company will be. New legislation could change banking statutt es and the operating environment of the Company in substantial the ions. The Company cannot predict whether any such that it or any implementing regulations would have on the finff ancial condition or results of operations of on the business diaries could have a material effff ect ryr . In addition, federal ff ff ff ff Item 7A. Quantitative and Qualitative Disclosures about Market Risk. Market risk is the risk of loss in a financial instrurr ment arising from adverse changes in market prices and rates, foreign currency exchange rates, commodity prices, and equity prices. The Company's market risk arises primarily from interest rate risk inherent in its lending, investing, and deposit taking activities. ToTT that end, management actively monitors and manages the Company's interest rate risk exposure. The Company generally manages its interest rate sensitivity by evaluating re-pricing opportunit ies on its earning assets to those on its fund ing liabilities. ff t Management uses various asset/liability strategies to manage the re-pricing characteristics of the Company's assets and liabia lities, all of which are designed to ons is limited to within the Company's guidelines of acceptable levels of risk-taking. Hedging strategies, including ensure that exposure to interest rate fluctuati the terms and pricing of loans and deposits and management of the deployment of its securities, are used to reduce mismatches in interest rate re-pricing opportunities of portfoli o assets and their funding sources. ff ff t Interest rate risk is addressed by ALCO, which includes members of executive management, finance, and operations. ALCO monitors interest rate risk by analyzing the potential impact on the net EVE and net interest income frff om potential changes in interest rates and considers the impact of alternative strategies or changes in balance sheet structur e. The Company manages its balance sheet in part to maintain the potential impact on EVE and net interest income within acceptable ranges despite changes in interest rates. rr The Company's exposure to interest rate risk is reviewed at least quarterly by ALCO. Interest rate risk exposure is measured using interest rate sensitivity analysis to determine its change in both EVE and net interest income in the event of hypothetical changes in interest rates. If potential changes to EVE and net interest income resulting from hypothetical interest rate changes are not within the limits establa ished by the BOD, the BOD may direct management to adjust the asset and liability mix to bring interest rate risk within Board-appa roved limits. rr foreff II Income casted changes in interest rates. This analysis calculates the diffeff Simulation. ToTT measure interest rate risk at December 31, 2022, the Company used a simulation model to project changes in net interest NetNN IntII erest rence between a baseline net interest income forecast using current income that result fromff yield curves that do not take into consideration any future anticipated rate hikes, compared to forecasted net income resulting frff om an immediate parallel shiftff in rates upward or downward, along with other scenarios directed by ALCO. The income simulation model includes various assumptions regarding re-pricing relationships for each of the Company's products. Many of the Company's assets are variabla e rate loans, which are assumed to re-price immediately and, proportional to the change in market rates, depending on their contracted index, including the impact of caps or flff oors. Some loans and investments contain rates prepayment assumptions. The Company's non-term contractual deposit products re-price concurrently with interest rate changes taken by the FOMC. s (embedded options) and, accordingly,yy the simulation model incorporr prepayment featuret t This analysis indicates the impact of changes in net interest income foff r the given set of rate changes and assumptions. It assumes the balance sheet remains static and that its structur all faff ctors that could impact the Company's results, including changes by management to mitigate interest rate changes or secondary facto rs, such as changes to the Company's credit risk profile as interest rates change. e does not change over the course of the year. It does not account forff rr ff Furthermore, loan prepayment rate estimates and spread relationships change regularly. Interest rate changes create changes in actual that will differ ff effff ect from the market estimates incorporated in this analysis. Changes that vary signififf cantly frff om the modeled assumptions may have a significaff loan prepayment speeds nt on the Company's actual net interest income. ff t 66 This simulation model assesses the changes in net interest income that would occur in response to an instantaneous and sustained increase or decrease (shock) in market interest rates. At December 31, 2022, our net interest income exposure foff r the next twelve months related to these hypothetical changes in market interest rates was within our current guidelines. SS Sensiti vitytt ofo Net Interest tt Income Interest Income Interest Expense Net Interest Income % Change Interest Income Interest Expense Net Interest Income % Change Down 100 Base Up 100 Up 200 Parallel Shiftff Rate Scenario (change in basis points frff om Base) $ $ $ $ 3,176.2 1,004.9 2,171.3 (3.0)% Down 100 3,358.3 1,148.7 2,209.6 (1.3)% (in millions) $ 3,499.6 1,260.1 2,239.5 3,824.6 1,516.0 2,308.6 3.1 % Interest Rate Ramp Scenario (change in basis points frff om Base) Base Up 100 (in millions) $ 3,499.6 1,260.1 2,239.5 3,642.2 1,371.7 2,270.5 1.4 % $ $ 4,142.6 1,771.9 2,370.7 5.9 % Up 200 3,782.9 1,483.4 2,299.5 2.7 % Economic ValueVV and off-ff balance sheet items, defineff financial instrumrr of Equity.yy The Company measures the impact of market interest rate changes on the NPV of estimated cash floff ws from its assets, liabilities, d as EVE, using a simulation model. This simulation model assesses the changes in the market value of interest rate sensitive ents that would occur in response to an instantaneous and sustained increase or decrease (shock) in market interest rates. At December 31, 2022, the Company's EVE exposure related to these hypothetical changes in market interest rates was within the Company's current guidelines, with the exception of the Up 100 rate scenario, where there was a slight breach on the Company's guideline of (10.0)%. The breach is the result of a decline in duration of the Company's deposit liabilities frff om lower non-interest bearing deposit balances and increasing decay rates as well as an increase in the durati on of earning assets related to decreases in loans HFS and shorter-term investments. The BOD and ALCO have accepted the breach and believe that as d the Company continues to grow its balance sheet with an emphasis on deposits, the EVE exposure in the Up 100 rate scenario will be redudd ced. ff The follow ing table shows the Company's projected change in EVE foff r this set of rate shocks at December 31, 2022: Economic VaVV lue of Equityii Down 200 Down 100 Base Up 100 Up 200 Up 300 Interest Rate Scenario (change in basis points frff om Base) Assets Liabilities Net Present ValuVV e % Change $ $ 66,887 57,278 9,609 27.7 %% $ 64,861 56,310 8,551 13.7 % (in millions) $ 63,049 55,527 7,522 $ 61,484 54,765 6,719 (10.7)%% $ 60,126 54,034 6,092 (19.0)% 58,939 53,255 5,684 (24.4)% The computation of prospective effff ecff rates, asset prepayments, and deposit decay,yy and should not be relied upon as indicative of actual actions the Company may undertake in response to changes in interest rates. Actuat conditions varyrr ts of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest results. Further, the computations do not contemplate any th above should market t l amounts may differ from the underlying assumptions. frff om the projections set forff ff 67 Derivative Contracts. In the normal course of business, the Company uses derivative instruments to meet the needs of its customers and manage exposure to fluctuations in interest rates. The following table summarizes the aggregate notional amounts, market values, and terms of the Company’s derivative positions: Outstandingdd Derivatives Positiii ons Notional 2022 NPV $ 322,057 $ 11 December 31, WeigWW hted AveAA rage TeTT rm YY (Years) Notional (dodd llars in millions) 0.6 $ 2021 NPV WeigWW hted AvAA erage TeTT rm (YeaYY rs) 480,766 $ (50) 1.5 68 Item 8. Financial Statements and Supplementary Data. The Company's Consolidated Financial Statements and Supu plementaryr Data included in this Annual Report is immediately following the Index to Consolidated Financial Statements page to this Annual Report. INDEX TO CONSOLIDATEAA D FINANCIAL STATT TAA EMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID: 49) Consolidated Balance Sheets Consolidated Income Statements Consolidated Statements of Comprehensive Income Consolidated Statements of Stockholders’ Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements PAGPP E 70 73 74 75 76 77 79 69 Report of Independent Registered Public Accounting Firm ToTT the Stockholders and Board of Directors of WeWW stern Alliance Bancorporr ration Opinion on the Financial Statements WeWW have audited the accompanying consolidated balance sheets of WesWW tern Alliance Bancorpor and 2021, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flff ows forff ended December 31, 2022, and the related notes to the consolidated fiff nancial statements (collectively,yy the fiff nancial statements). ation and subsidiaries (the Company) as of December 31, 2022 each of the three years in the period rr In our opinion, the financial statements present fairly,yy in all material respects, the finff ancial position of the Company as of December 31, 2022 and 2021, and the each of the three years in the period ended December 31, 2022, in conformity with accounting principles results of its operations and its cash flowff generally accepted in the United States of America. s forff WeWW have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal ll control over finan tegrgg ated FraFF mework issued by the Committee of 23, 2023, expressed an unqualified opinion on the Sponsoring Organizations of the TreTT adway Commission in 2013, and our report, dated Februaryr ff effff ecti cial reporting as of December 31, 2022, based on criteria established in Internal Contrt orr l—In veness of the Company’s internal control over financial reporting. ff Basis forff Opinion ff These finan cial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. WeWW are a public accounting firff m registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. feder licaba le rurr les and regulations of the Securities and Exchange Commission and the PCAOB. al securities laws and the appa ff WeWW conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perfoff rm the audits to obtain reasonable assurance about whether the fiff nancial statements are frff ee of material misstatement, whether due to error or fraud. Our audits included performing procedurd es to assess the risks of material misstatement of the financial statements, whether due to error or frff aud, and perfoff rming procedurd es that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and signififf cant estimates made by management, as well as evaluating the overall presentation of the finff ancial statements. WeWW believe that our audits provide a reasonablea basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising frff om the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,ww providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Allowance forff Credit Losses – Loans Held for Investment As described in Notes 1 and 5 to the finaff commitments totaled $310 million and $47 million as of December 31, 2022, respectively. The allowance forff unfunded loan commitments is calculated under the expected credit loss model and is an estimate of life-off investment and unfunded loan commitments. ncial statements, the Company’s allowance forff credit losses for loans held for investment and unfunff ded loan credit losses on loans held foff r investment and the Company’s loans held for f-ff loan losses forff loans held forff credit losses forff The allowance forff share risk characteristics with other loans and a pooled component forff allowance forff characteristics and includes consideration of the likelihood that estimated funding levels will occur. The allowance for the pooled component forff for credit losses on loans held for investment and the allowance foff r credit losses on unfuff nded loan commitments is estimating credit losses for individud al loans that do not pools of loans that share similar risk characteristics. The estimating credit losses for pools of loans that share similar risk the allowance d loan commitments consists of a pooled component forff investment consists of an asset-specific component forff estimating credit losses forff credit losses on unfunde ff 70 derived from an estimate of expected credit losses primarily using an expected loss methodology that incorporr given default a appr lt, loss and exposure at defaff ult) which are derived from various vendor models, internally developed statistical models or nonstatistical estimation rates risk parameters (probability of defauff ff oaches. Probability of default is projected in these models or estimation apa proaches using economic scenarios, whose outcomes are weighted based on the Company’s economic outlook and were developed to incorprr orate relevant information about past events, current conditions, and reasonaba le and supportable forff ecasts. Loss given default is typically derived from the Company’s own loss experience; however, for the warehouse lending, equity funff d resources and municipal and nonprofit loan segments, non-modeled methodologies are employed to estimate loss given defaff ult. Exposure at default refers to the Company’s exposure to loss at the time of borrower defaul expectation of increased line utilization forff calculated using an amortization schedule based on loan terms, adjusted forff a higher exposure at defaff ult on defauff prepayment assumptions. lted loans based on historical experience. For term loans, exposure at defauff t. For revolving lines of credit, the Company incorporates an lt is ff t and exposure at default are then adjusted to The quantitative estimates of expected credit losses derived from the probability of defaff ult, loss given defaul incorpor ate considerations of current trends and conditions that are not capa tured in the quantitative credit loss estimates through the use of qualitative or rr environmental factors. The measurement of expected credit losses is inflff uenced by loan volumes, loan mix, loan perforff mance metrics, asset quality characteristics, delinquency status, historical credit loss experience, current conditions and reasonable and supportable economic forecast s. ff ff t The estimation of the allowance forff characteristics involves many inputs and assumptions, many of which are derived fromff include, among others, the selection, evaluation and measurement of the reasonable and supportaba le forecast scenarios, which requires management to appa ff significant pools of loans and unfuff nded loan commitments that share similar risk various vendor and in-house models. These inputs and assumptions ly a amount of judgment and involves a high degree of estimation. credit losses on loans held for investment forff ff WeWW identified the determination and evaluation of the probaba ility of defaff ult, loss given defaul assumptions and forecasted on unfund ff for credit losses on loans held forff auditor judgment given the high degree of subjectivity exercised by management in developing the allowance forff the allowance for credit losses on unfunded loan commitments, which resulted in high estimation uncertainty. ded credit utilization ff investment and the allowance foff r credit losses ed loan commitments as a critical audit matter because auditing the underlying assumptions, and economic scenario forecasts used in the allowance investment and the allowance for credit losses on unfunff ded loan commitments involved a high degree of complexity and credit losses on loans held for investment and economic scenario components of the allowance for credit losses for loans held forff t and estimated unfunff t, exposure at defaul ff Our audit procedures related to management’s evaluation and estaba lishment of the probabia lity of defaff ult, loss given default, exposure at defauff unfunded credit utilization assumptions and foreff allowance forff casted economic scenarios components of the allowance forff d loan commitments included the following, among others: credit losses on unfunde lt and estimated loans held foff r investment and the credit losses forff ff • WeWW obtained an understanding of the relevant controls related to the evaluation and establishment of the probaba ility of default, loss given default, exposure at default and estimated unfunded credit utilization assumptions and the foff recasted economic scenario components of the allowance forff credit losses forff investment and tested such controls foff r design and operating effeff ctiveness. loans held forff • WeWW tested management’s process and significant t, loss given default, exposure at default and estimated unfunded credit utilization assumptions and foff recasted economic scenario components of the allowance foff r credit losses, which included: judgments in the evaluation and estaba lishment of the probabia lity of defaul ff ff ◦ WeWW evaluated management’s considerations and data utilized as a basis foff r the probabia lity of defauff lt, exposure at default and estimated unfunded credit utilization assumptions and selection of forecasted economic scenarios and weightings and tested the completeness and accuracy of the underlying data that was availaba le to management. lt, loss given defauff ◦ WeWW evaluated the reasonableness of management’s judgments related to the probabia lity of defaul t, loss given defaff ult, exposure at default and credit utilization assumptions and forecasted scenarios, and qualitative and quantitative assessment of the considerations ff estimated unfunded and data utilized in the determination of the ff 71 forecasted ff allowance forff credit losses on unfuff nded loan commitments. economic scenarios and the resulting components of the allowance forff credit losses forff loans held foff r investment and the ◦ WeWW evaluated the reasonablea ness of management’s judgments related to the establishment of the models being used in determining the probability of defaff ult, loss given default, exposure at defauff lt and estimated unfuff nded credit utilization assumptions. ◦ WeWW utilized internal specialists to assist in evaluating the statistical documentation and process used by management in validating the models established by vendors. ValuVV ation of Mortgage Servicing Rights As described in Note 6 to the fiff nancial statements, the Company’s mortgage servicing rights totaled $1,148 million as of December 31, 2022. When the Company sells mortgage loans in the secondaryr market and retains the right to service these loans, a servicing right asset is capitalized at the time of sale when the benefitff s of servicing are deemed to be greater than adequate compensation for performff ing the servicing activities. Mortgage servicing rights represent the then-current fair value of futff urt e net cash flows expected to be realized frff om perfoff rming servicing activities. The Company has elected to subsu equently measure ff mortgage servicing rights at faiff rates value of mortgage servicing rights using a discounted cash flow model that incorporr assumptions that market participants would use in estimating the faiff r value of servicing rights, including, but not limited to, option adjusted spread, conditional prepayment rate, servicing feff e rate, and cost to service. r value. The Company estimates the fair the option adjusted spread and conditional prepayment rate assumptions used in the valuation of mortgage servicing rights as a critical audit WeWW identifiedff matter due to the significant judgement required by management in determining these assumptions. Auditing these assumptions involved a high degree of auditor judgement and increased audit effff orff tion and the calculated fair value of the mortgage servicing rights is sensitive to changes in these key assumptions. t as there was limited observable market informa ff Our audit procedures related to the valuation of mortgage servicing rights as of December 31, 2022 included, among others, testing management’s process foff r determining the fair value, including: • WeWW obtained an understanding of the relevant controls related to the establishment of the option adjud sted spread and conditional prepayment assumptions used in the valuation of mortgage servicing rights and tested such controls foff r design and operating effff eff ctiveness. • WeWW evaluated the appropriateness of the valuation model. • WeWW tested the completeness and accuracy of the data used in the model. • WeWW utilized valuation specialists to assist with evaluating the reasonaba leness of the option adjusted spread and conditional prepayment rate assumptions by considering the consistency with external market and industryr data. /s/ RSM US LLP WeWW have served as the Company’s auditor since 1994. San Francisco, Califorff nia yr 23, 2023 rr Februar 72 WESTERN ALLIANCE BANCORPORARR TION AA AND SUBSIDIARIES CONSOLIDATEDAA BALANCE SHEETS December 31, 2022 2021 excee ept sharesrr (in millions, and per sharerr amounts)s $ $ $ $ 259 784 1,043 7,092 1,284 160 224 1,184 51,862 (310) 51,552 1,148 276 163 182 680 311 624 1,811 67,734 $ $ 19,691 33,953 53,644 6,299 893 185 1,357 62,378 295 2,163 (105) (661) 3,664 5,356 $ 67,734 $ 166 350 516 6,189 1,102 159 92 5,635 39,075 (252) 38,823 698 182 133 180 635 21 631 987 55,983 21,353 26,259 47,612 1,502 896 143 867 51,020 295 1,966 (87) 16 2,773 4,963 55,983 Assets: Cash and dued Interest-bearing deposits in other fiff nancial institutions froff m banks r value; amortized cost of $7,973 and $6,167 at December 31, 2022 and 2021, respectively Cash and cash equivalents Investment securities - AFS, at faiff Investment securities - HTM, at amortized cost and net of allowance for credit losses of $5 and $5 (fair value of $1,112 and $1,146) at December 31, 2022 and 2021, respectively Investment securities - equity Investments in restricted stock, at cost Loans HFS Loans HFI, net of deferre Less: allowance forff d loan feff es and costs ff credit losses investment Net loans held forff Mortgage servicing rights Premises and equipment, net Operating lease right of use asset Bank owned lifeff Goodwill and intangible assets, net Deferred tax assets, net Investments in LIHTC and renewable energy Other assets insurance TotalTT assets Liabilities: Deposits: Non-interest-bearing demand Interest-bearing ToTT tal deposits Other borrowings Qualifyiff ng debt Operating lease liability Other liabilities TotalTT liabilities Commitments and contingencies (Note 18) Stockholders’ equity: Preferred stock (par value $0.0001 and liquidation value per share of $25; 20,000,000 authorized; 12,000,000 issued and outstanding at December 31, 2022 and 2021) Common stock (par value $0.0001; 200,000,000 authorized; 111,465,292 and 108,981,341 shares issued at December 31, 2022 and 2021, respectively) and additional paid in capital TreaTT sury stock, at cost (2,550,766 and 2,350,021 shares at December 31, 2022 and 2021, respectively) Accumulated other comprehensive (loss) income Retained earnings ToTT tal stockholders’ equity TotalTT liabilities and stockholders’ equity See accompanying Notes to Consolidated Financial Statements. 73 WESTERN ALLIANCE BANCORPORARR TION AA AND SUBSIDIARIES CONSOLIDATEDAA INCOME STATT TEMENT AA S YeYY ar Ended December 31, 2022 2021 2020 (i(( n millions, excee ept per sharerr amountstt )s Interest income: Loans, including fees Investment securities Dividends and other ToTT tal interest income Interest expense: Deposits Qualifyiff ng debt Other borrowings ToTT tal interest expense Net interest income Provision for (recovery of) credit losses Net interest income after provision foff r (recoveryr of)ff credit losses Non-interest income: Net loan servicing revenue (expense) Net gain on loan origination and sale activities Service charges and feeff s Commercial banking related income Income from equity investments Gain on recovery from credit guarantees Gain on sales of investment securities Fair value (loss) gain on assets measured at faiff Other income r value, net ToTT tal non-interest income Non-interest expense: Salaries and employee benefitsff Deposit costs Legal, professional, and directors' feff es Data processing Loan servicing expenses Occupancy Insurance Loan acquisition and origination expenses Business development and marketing Net gain on sales and valuations of repossessed and other assets Acquisition and restructu re expenses Loss on extinguishment of debt Other expense rr ToTT tal non-interest expense Income before provision forff Income tax expense income taxes Net income Dividends on preferred stock Net income available to common stockholders Earnings per share: Basic Diluted WeigWW hted average number of common shares outstanding: Basic Diluted See accompanying Notes to Consolidated Financial Statements. $ $ $ $ 2,393.4 265.6 32.8 2,691.8 276.4 35.0 164.1 475.5 2,216.3 68.1 2,148.2 130.9 104.0 27.0 21.5 17.8 14.7 6.8 (28.6) 30.5 324.6 539.5 165.8 99.9 83.0 55.5 55.5 31.1 23.1 22.1 (0.7) 0.4 — 81.5 1,156.7 1,316.1 258.8 1,057.3 12.8 1,044.5 $ $ 9.74 9.70 107.2 107.6 $ 1,488.8 158.6 11.3 1,658.7 47.5 33.1 29.3 109.9 1,548.8 (21.4) 1,570.2 (16.3) 326.2 28.3 17.4 22.1 7.2 8.3 (1.3) 12.3 404.2 466.7 29.8 58.6 58.2 53.5 43.8 23.0 28.8 13.5 (3.5) 15.3 5.9 57.8 851.4 1,123.0 223.8 899.2 3.5 895.7 8.72 8.67 102.7 103.3 $ $ 1,144.3 107.8 9.7 1,261.8 70.4 23.9 0.6 94.9 1,166.9 123.6 1,043.3 — — 23.3 14.7 12.7 — 0.2 3.8 16.1 70.8 303.6 18.5 42.2 35.7 — 34.1 13.3 — 9.6 (1.5) — — 36.1 491.6 622.5 115.9 506.6 — 506.6 5.06 5.04 100.2 100.5 74 WESTERN ALLIANCE BANCORPORARR TION AA CONSOLIDATEDAA AND SUBSIDIARIES S OF COMPREHENSIVE INCOME STATT TEMENT AA 2022 YeYY ar Ended December 31, 2021 (in millions)s 1,057.3 $ 899.2 $ 2020 (674.9) — 3.7 (5.5) (676.7) (69.0) — (1.2) (6.4) (76.6) 380.6 $ 822.6 $ 506.6 70.9 (0.3) (3.1) (0.2) 67.3 573.9 $ $ Net income Other comprehensive (loss) income, net: Unrealized (loss) gain on AFS securities, net of tax effff ect Unrealized loss on SERP,PP net of tax effff ecff Unrealized gain (loss) on junior subordinated debt, net of tax effeff ct of $(1.2), $0.3, and $1.1, respectively Realized gain on sale of AFS securities included in income, net of tax effecff respectively of $225.3, $22.4, and $(23.1), respectively t of $—, $—, and $0.1, respectively t of $1.9, $2.1, and $0.0, ff Net other comprehensive (loss) income Comprehensive income See accompanying Notes to Consolidated Financial Statements. 75 WESTERN ALLIANCE BANCORPORARR TION AA AND SUBSIDIARIES CONSOLIDATEDAA STATT TEMENT AA S OF STOCKHOLDERS’ EQUITY Preferred Stock Common Stock Shares Amount Shares Amount Additional Paid in Capital TrTT easury Stock Accumulated Other Comprehensive Income (Loss) Retained Earnings TotalTT Stockholders’ Equity Balance, December 31, 2019 Balance, January 1, 2020 (2) Net income Restricted stock, performance stock units, and other grants, net Restricted stock surrendered (1) Stock repurchase Dividends paid to common stockholders Other comprehensive income, net — $ — — — — — — — Balance, December 31, 2020 — $ Net income Restricted stock, performance stock unit, and other grants, net Restricted stock surrendered (1) Preferr ed stock issuance, net ff Common stock issuance, net Dividends paid to preferred stockholders Dividends paid to common stockholders Other comprehensive loss, net Balance, December 31, 2021 Net income Restricted stock, performance stock unit, and other grants, net Restricted stock surrendered (1) Common stock issuance, net Dividends paid to preferred stockholders Dividends paid to common stockholders Other comprehensive loss, net — — — 12.0 — — — — 12.0 — — — — — — — $ — — — — — — — — — — — — 294.5 — — — — 294.5 — — — — — — — 102.5 $ — $ (in millions) $ 1,374.1 (62.7) $ 25.0 $ 1,680.3 $ 102.5 — 0.6 (0.2) (2.1) — — — — — — — — — 1,374.1 — 29.1 — (12.3) — — (62.7) — — (8.4) — — — 100.8 $ — $ 1,390.9 $ (71.1) $ — 0.6 (0.2) — 5.4 — — — — — — — — — — — — 35.0 — — 540.3 — — — — — (15.7) — — — — — 25.0 — — — — — 67.3 92.3 — — — — — — — (76.6) 1,655.4 506.6 — — (59.3) (101.3) — $ 2,001.4 $ 899.2 — — — — (3.5) (124.1) — 106.6 $ — $ 1,966.2 $ (86.8) $ 15.7 $ 2,773.0 $ — 0.6 (0.2) 1.9 — — — — — — — — — — — 39.8 — 157.7 — — — — — (18.5) — — — — — 1,057.3 — — — — — (676.7) — — — (12.8) (153.4) — 3,016.7 2,991.8 506.6 29.1 (8.4) (71.6) (101.3) 67.3 3,413.5 899.2 35.0 (15.7) 294.5 540.3 (3.5) (124.1) (76.6) 4,962.6 1,057.3 39.8 (18.5) 157.7 (12.8) (153.4) (676.7) Balance, December 31, 2022 12.0 $ 294.5 108.9 $ — $ 2,163.7 $ (105.3) $ (661.0) $ 3,664.1 $ 5,356.0 (1) Share amounts represent TrTT easuryrr Shares, see "Note 1. Summaryrr of Significant Accounting Policies" for further discussion. (2) As adjusted for adoption of ASU 2016-13, Measuremrr ent of Crerr dit Losses on Financial Instruments. The cumulative effeff ct of adoption of this guidance at January 1, 2020 resulted in a decrease to retained earnings of $24.9 million due to an increase in the ACL. See accompanying Notes to Consolidated Financial Statements. 76 WESTERN ALLIANCE BANCORPORARR TION AA AND SUBSIDIARIES CONSOLIDATEDAA STATT TEMENTS AA OF CASH FLOWS Cash flows from operating activities: Net income Adjusd tments to reconcile net income to cash provided by (used in) operating activities: 2022 December 31, 2021 (in millions)s 2020 $ 1,057.3 $ 899.2 $ 68.1 52.4 39.8 (68.6)) 21.1 63.2 22.2 (73.6)) (45,407.0)) 47,285.0 (719.7)) (73.9)) 17.7 (38.7)) (21.4) 33.7 35.1 42.0 39.8 49.5 16.3 (66.3) (59,569.6) 56,647.7 (763.8) 177.7 (16.3) (157.6) 2,245.3 $ (2,654.0) $ $ (2,396.3)) 604.2 177.0 $ (3,248.4) 1,634.1 164.5 (281.9)) 100.6 (36.2)) 6.9 14.1 391.9 (346.6)) — (11,172.8)) (141.0)) (50.0)) (13,130.1)) 6,032.1 578.4 (30.7)) 4,859.0 (18.5)) — (166.2)) 157.7 — $ $ (595.6) 54.9 (36.2) 21.0 4.4 1,182.8 (134.6) — (12,665.0) (69.4) (1,024.4) (14,711.9) 15,681.5 1,055.7 (475.9) (1,742.1) (15.8) — (127.6) 540.3 294.5 $ $ 11,411.8 $ 15,210.6 $ 527.0 516.4 (2,155.3) 2,671.7 1,043.4 $ 516.4 $ $ $ $ $ $ $ investment securities Provision for (recovery of) credit losses Depreciation and amortization Stock-based compensation Deferred income taxes Amortization of net premiums forff Amortization of tax credit investments Amortization of operating lease right of use asset Amortization of net deferred loan feeff Purchases and originations of loans HFS Proceeds from sales and payments on loans held foff r sale Mortgage servicing rights capita Net (gains) losses on: Change in fair Other ff s and net purchase premiums alized upon sale of mortgage loans value of loans HFS, mortgage servicing rights, and related derivatives Other assets and liabilities, net Net cash provided by (used in) operating activities Cash flows from investing activities: Investment securities - AFS Purchases Principal pay downs and maturities Proceeds from sales Investment securities - HTM Purchases Principal pay downs and maturities Equity securities carried at fair ff value Purchases Redemptions Proceeds from sales Proceeds from sale of mortgage servicing rights and related holdbacks, net Purchase of other investments Proceeds from bank owned life insurance, net Net increase in loans HFI Purchase of premises, equipment, and other assets, net Cash consideration paid for acquisitions, net of cash acquired Net cash used in investing activities Cash flows from financing activities: Net increase in deposits Net proceeds from issuance of long-term debt Payments on long-term debt Net increase (decrease) in short-term borrowings Cash paid forff Common stock repurchases Cash dividends paid on common stock and prefeff rred stock Proceeds from issuance of common stock in offff eff rings, net Proceeds from issuance of preferff red stock, net tax withholding on vested restricted stock and other Net cash provided by finan Net increase (decrease) in cash and cash equivalents cing activities ff Cash, cash equivalents, and restricted cash at beginning of period Cash, cash equivalents, and restricted cash at end of period 77 506.6 123.6 22.9 28.7 (25.1) 28.2 49.2 11.7 (51.2) — — — — (9.4) (15.0) 670.2 (2,966.2) 1,515.5 156.6 (182.7) 17.4 (34.5) 7.6 — — (133.1) 5.9 (5,897.2) (26.8) — (7,537.5) 9,134.0 221.9 (75.0) 4.3 (7.9) (71.6) (101.3) — — 9,104.4 2,237.1 434.6 2,671.7 2022 December 31, 2021 (i(( n millions) 2020 $ $ $ $ 452.9 197.6 259.3 205.0 1,638.1 780.0 610.5 $ $ 111.6 175.7 294.1 144.5 — — 640.6 108.6 44.2 (102.2) — — — — Supplemental disclosure: d Cash paid durin Interest Income taxes, net g the period for: Non-cash operating, investing, and finff ancing activity: ded commitments and obligations Net increase (decrease) in unfunff TranTT TranTT TranTT TranTT sfers of securitized loans HFS to AFS securities sfer of EBO loans previously classififf ed as HFS to HFI sfers of loans HFI to HFS sfers of mortgage-backed securities in settlement of secured borrowings See accompanying Notes to Consolidated Financial Statements. 78 WESTERN ALLIANCE BANCORPORARR TIOAA N AND SUBSIDIARIES NOTES TO CONSOLIDATAA ED FINANCIAL STATT TEAA MENTS 1. SUMMARYRR OF SIGNIFICANT ACCOUNTING POLICIES Nature of operation WALWW is a bank holding company headquartered in Phoenix, Arizona, incorprr orated under the laws of the state of Delaware. WAWW L provides a fuff ll spectrumrr customized loan, deposit and treasuryr management capabilities, including 24/7 funds transfer and other digital payment offeri banking subsiu of ngs through its wholly-owned diary,yy WAB.WW ff WABWW operates the following full-service banking divisions: ABA, BON, FIB, Bridge, and TPB. The Company also serves business customers through a ncial services, including mortgage banking services through AmeriHome, and has added to its capabilities with the national platfoff rm of specialized finaff lowing acquisition of DST on Januaryr 25, 2022, which provides digital payment services for the class action legal industry. In addition, the Company has the folff non-bank subsiu insurance company foff rmed and licensed under the laws of the State of Arizona and estaba lished as part of the Company's overall enterprise risk management strategy,yy and WAWW TAA C, which will provide corpor ate trust services and levered loan administration solutions. diaries: CSI, a captive a rr rr Basis of presentation The accounting and reporting policies of the Company are in accordance with GAAP and conformff accounts of the Company and its consolidated subsu idiaries are included in the Consolidated Financial Statements. to practices within the financial services industry. The Recent accounting pronouncements TrTT oubrr led Debt Restructurings and VintVV age Discii losuresrr In March 2022, the FASFF B issued guidance within ASU 2022-02, Financial Instrument the accounting guidance and related disclosures foff r TDRs by creditors in Subtu opic 310-40, Receivables—TrTT orr ubled Debt Restrt ucturings by Credrr enhancing disclosure requirements forff requiring an entity to disclose current-period gross writeoffsff Subtopic 326-20, Financial Instruments—tt CrCC err dit Losses—Me— asuredrr ate eliminate itorsrr , while lty and by year of origination foff r financing receivables and net investments in leases within the scope of ngs by creditors when a borrower is experiencing finff ancial diffff icuff certain loan refinff ancings and restrurr cturi c 326). The amendments in this updu at Amortized Cost. Losses (TopiTT rr s—tt CrCC edit t t tive for fiff scal years beginning after December 15, 2022, including interim periods within those fisff cal years and are ied prospectively,yy except with respect to the recognition and measurement of TDRs, where an entity has the option to apply a modified retrospective The amendments in this update are effff ecff appl a transition method. The adoption of this accounting guidance is not expected to have a material impact on the Company's Consolidated Financial Statements. Recently adopted accounting guidance rr Reference Rate Reform issued guidance within ASU 2020-04, Refe erff err nce Rate Refoff rm (T(( opiTT ce Rate Refoe rm on In March 2020, the FASBFF ing, in response to the schedudd led discontinuation of LIBOR. Since the issuance of this guidance, cessation of U.S. dollar LIBOR has been FinFF ancial Report e (T(( oTT po ic 848): Deferral ofo the SuSS nset Date ofo extended to June 30, 2023. Accordingly,yy in December 2022, the FASBFF TopiTT c 848, which deferred the sunset date of ASC ToTT pic 848 from December 31, 2022, to December 31, 2024. The amendments in this upu date provide optional guidance designed to provide relief from the accounting analysis and impacts that may otherwise be required forff modififf cations to agreements (e.g., loans, debt securities, derivatives, borrowings) necessitated by referff ence rate reforff m. issued ASU 2022-06, Refeff rerr nce Rate Refe ormff c 848):8 FaciFF litation ofo thet EfE fff eff ctstt ofo Referff enrr a applyi ng the requirements of certain ASC TopiTT cs or Industry Subtopics in the Codificaff The following optional expedients forff contracts that are modified because of refeff rence rate reform and that meet certain scope guidance: 1) modififf cations of contracts within the scope of ASC ToTT pics 310, Receivables, and 470, Debt, should be accounted foff r by prospectively adjusting the effff ecff tive interest rate; 2) modifications of contracts within the scope of tion and the discount ASC TopiTT c 842, Leases, should be accounted forff rate or remeasurements of lease payments that otherwise would be required under this ASC TopiTT c forff modififf cations not accounted foff r as separate contracts; 3) modificat ions of contracts do not require an entity to reassess its original conclusion about whether that contract contains an embedded derivative that is clearly ff and closely related to the as a continuation of the existing contracts with no reassessments of the lease classificaff tion are permitted forff 79 economic characteristics and risks of the host contract under Subtopic ASC 815-15, Derivatives and HedgHH TopTT ics or Industry Subu topics in the Codificaff modificat ff accounting determination. ing- EmEE beddedd d Derivatives; and 4) for other ASC tion, the amendments in this update also include a general principle that permits an entity to consider contract ions due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous In January 2021, the FASBFF in ASC ToTT pic 848 apply to derivatives that are affected a appl 848): Scopo e in order to clarify that certain optional expedients and exceptions by the discounting transition. Specifically,yy certain provisions in ASC TopTT ic 848, if elected by an entity,yy nts that use an interest rate for margining, discount, or contract price alignment that is modififf ed as a result of referff ence rate reform. issued ASU 2021-01, Refeff rerr nce Rate Refe orff m (T(( opic y to derivative instrume TT rr ff Due to the prospective nature of the revised guidance, the adoption of this accounting guidance did not have a material impact on the Company's Consolidated Financial Statements. Convertible Debt and Derivatives and Hedgi HH ng (( - Contracts in Entity’tt s Own Equity (Subt issued guidance within ASU 2020-06, Debt - Debt with ConvCC topio c 470-20)0 and Derivatives and In August 2020, the FASBFF entities that issue convertible instruments and/or contracts Hedging HH the convertible accounting framework through elimination of the beneficial indexed to and potentially settled in an entity’s own equity. This upu date simplifiesff certain contracts in an entity’s own equity conversion and cash conversion accounting models for convertible instrumrr how particular convertible that are currently accounted for as derivatives because of specififf c settlement provisions. In addition, the new guidance modifiesff ts and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The Company adopted the amendments within ASU rr instrumen 2020-06 using the modified retrospective method. The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements. opic 815-40)0 . The amendments in this update affff ect ents. It also amends the accounting forff ersion and Othet r OptO ions (Sub(( ff Use of estimates The preparation of financial statements in conforff mity with GAAP requires management to make estimates and assumptions that affecff t the reported amounts of assets and liabilities and disclosures of contingent assets and liabia lities at the date of the fiff nancial statements and the reported amounts of revenues and expenses during the reporting period. Management's estimates and judgments are ongoing and are based on experience, current and expected future conditions, third-party evaluations and various other assumptions that management believes are reasonaba le under the circumstances. The results of these estimates form the r values of assets and liabilities, as well as identifyff ing and assessing the accounting treatment with respect to basis forff making judgments about the carrying r frff om those estimates and assumptions used in the Consolidated Financial Statements and related commitments and contingencies. Actual results may diffeff notes. Material estimates that are susceptible to significan t changes in the near term, relate to: 1) the determination of the ACL; 2) certain assets and liabilities carried at fair value; and 3) accounting for income taxes. ff ff t Principles of consolidation As of December 31, 2022, WALWW has the follow connection with the issuance of trust ff -preferred securities. ing significant ff rr wholly-owned subsiu diaries: WABWW and eight unconsolidated subsidiaries used as business trusts in WABWW has the following significff ant wholly-owned subsu idiaries: 1) WAWW BT, which holds certain investment securities, municipal and nonprofitff loans, and leases; 2) WAWW PWI, which holds interests in certain limited partnerships invested primarily in low income housing tax credits and small business investment ations; 3) Helios Prime, which holds interests in certain limited partnerships invested in renewaba le energy projects; 4) BW Real Estate, Inc., which corpor rr operates as a real estate investment trust and holds certain of WABWW 's real estate loans and related securities; and 5) WeWW stern Finance Company,yy which purchases and originates equipment finaff nce leases and provides mortgage banking services through its wholly-owned subsiu diary,yy AmeriHome. rr The Company does not have any other signififf cant entities that should be consolidated. All significant intercompany balances and transactions have been eliminated in consolidation. Reclassificat ff ions Certain amounts in the Consolidated Income Statements foff r the prior periods have been reclassififf ed to conformff had no effff ect on net income or stockholders’ equity as previously reported. ff to the current presentation. The reclassificaff tions 80 Cash and cash equivalents For purposes rr interest-bearing balances due frff om correspondent banks and the FRB, and fedff of reporting cash flowff s, cash and cash equivalents include cash on hand, amounts dued eral fundff s sold. fromff banks (including cash items in process of clearing), Business combinations Business combinations are accounted forff under the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method, the acquiring entity in a business combination recognizes all of the acquired assets and assumed liaba ilities at their estimated fair values as value of net assets and other identififf abla e intangible assets acquired is recorded as of the date of acquisition. Any excess of the purchase price over the fair goodwill. ToTT the extent the fair value of net assets acquired, including identified intangible assets, exceeds the purchase price, a bargain purchase gain is recognized. Assets acquired and liabilities assumed from contingencies are also recognized at fair value if the faff ir value can be determined dud ring the measurement period. Results of operations of an acquired business are included in the Consolidated Income Statement fromff the date of acquisition. Acquisition-related costs, including conversion and restrurr ctut ring charges, are expensed as incurred. ff ff Investment securities Investment securities include debt and equity securities. Debt securities may be classififf ed as HTM, AFS, or trading. The apa propriate classificaff tion is initially decided at the time of purchase. Securities classififf ed as HTM are those debt securities that the Company has both the intent and aba ility to hold to maturity regardless of changes in market conditions, liquidity needs, or general economic conditions. The sale of an HTM security within three months of its maturity s of classififf cation and disclosure. Securities date or after ff classifiedff ity. Any decision to sell a an indefinff security classified as AFS would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, decline in credit quality,yy and regulatory capital considerations. rr ite period of time, but not necessarily to maturt the majority of the principal outstanding has been collected is considered a maturity for purpose as AFS are debt securities that the Company intends to hold forff HTM securities are carried at amortized cost. AFS securities are carried at their estimated faiff r value, with unrealized holding gains and losses reported in OCI, net of tax. When AFS debt securities are sold, the unrealized gains or losses are reclassififf ed frff om OCI to non-interest income. TraTT ding securities are carried at their estimated fair value, with changes in fair value reported in earnings as non-interest income. ff Equity securities are carried at their estimated fair value, with changes in fair value reported in earnings as non-interest income. Interest income is recognized based on the coupon rate and, foff r HTM and AFS securities, includes the amortization of purchase premiums and the accretion of purchase discounts. Premiums and discounts on investment securities are generally amortized or accreted over the contractual lifeff of the security using the interest method. For the Company's mortgage-backed securities, amortization or accretion of premiums or discounts are adjud sted for anticipated prepayments. Gains and losses on the sale of investment securities are recorded on the trade date and determined using the specific identificaff tion method. t A debt security is placed on nonaccrual security placed on nonaccruarr rr l is reversed through interest income. status at the time its principal or interest payments become 90 days past due. Interest accrued but not received forff a Allowance forff credit losses on investment securities The credit loss model under ASC 326-20, applicable to HTM debt securities, requires recognition of lifeff time expected credit losses through an allowance account at the time the security is purchased. The Company measures expected credit losses on its HTM debt securities on a collective basis by major security type. The Company's HTM securities portfolio consists of low income housing tax-exempt bonds and private label residential MBS. Low income housing tax- exempt bonds share similar risk characteristics with the Company's CRE, non-owner occupied or construction and land loan pools, given the similarity in underlying assets or collateral. Accordingly,yy expected credit losses on HTM securities are estimated using the same models and apa proaches as these loan pools, which utilize risk parameters (PD, LGD and EAD) in the measurement of expected credit losses. The historical data used to estimate probability of defauff lt and severity of loss in the event of defaul of reasonable and t is derived or obtained frff om internal and external sources and adjud sted forff supportable forecasts over the expected lives of the securities on those historical losses. Accruerr d interest receivabla e on HTM securities, which is included in Other assets on the Consolidated Balance Sheet, is excluded from the estimate of expected credit losses. the expected effff ects a ff ff The credit loss model under ASC 326-30, applicable to AFS debt securities, requires recognition of credit losses through an allowance account with credit losses recognized once securities become impaired. For AFS debt securities, a decline in fair value due to credit loss results in recognition of an ACL. Impairment may result fromff credit deterioration of the issuer or ff 81 collateral underlying the security. An assessment to determine whether a decline in faiff r value resulted from a credit loss is perforff med at the individuad l security level. Among other factors, the Company considers: 1) the extent to which the fair value is less than the amortized cost basis; 2) the finff ancial condition and near term prospects of the issuer, including consideration of relevant finff ancial metrics or ratios of the issuer; 3) any adverse conditions related to an indud stryr or geographic area of an issuer; 4) any changes to the rating of the security by a rating agency; and 5) any past due principal or interest payments froff m the issuer. If an assessment of the above factors indicates that a credit loss exists, the Company records an ACL for the excess of the amortized cost basis over the present value of cash flows r value is less than its amortized cost basis. Subu sequent changes in the (or recoveryr of)ff credit loss expense. Interest accruals and amortization and accretion of premiums and discounts are ACL are recorded as a provision forff suspended when a credit loss is recognized in earnings. Any interest received after the security has been placed on nonaccrual statust is recognized on a cash on AFS debt securities, which is included in Other assets on the Consolidated Balance Sheet, is excluded from the estimate of basis. Accruedrr expected credit losses. expected to be collected, limited to the amount that the security's faiff interest receivablea ff For each AFS security in an unrealized loss position, the Company also considers: 1) its intent to retain the security until anticipated recoveryrr of the security's fair value; and 2) whether it is more-likely-than not that the Company would be required to sell the security beforff e recoveryr of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the debt security is written down to its faff ir value and the write-down is charged against the ACL with any incremental impairment recorded in earnings. Charge-offsff events to be indicators that a charge-offff should be taken: 1) bankrupt improbable forff Recoveries on debt securities, if any,yy are recorded in the period received. are made through reversal of the ACL and a direct charge to the amortized cost basis of the AFS security. The Company considers the foff llowing cy of the issuer; 2) significant adverse event(s) affff eff cting the issuer in which it is the issuer to make its remaining payments on the security; and 3) significant loss of value of the underlying collateral behind a security. rr Restricted stock WABWW is a member of the Federal Reserve System and, as part of its membership, is required to maintain stock in the FRB in a specified ratio to its capital. In addition, WABWW is a member of the FHLB system and, accordingly,yy maintains an investment in the capia tal stock of the FHLB based on the borrowing capacity used. These investments are considered equity securities with no actively traded market. Therefoff re, the shares are considered restricted investment securities. These investments are carried at cost, which is equal to the value at which they may be redeemed. Dividend income received from the stock is reported in interest income. The Company conducts a periodic review and evaluation of its restricted stock to determine if any impairment exists. No impairment has been recorded to date. Loans held for sale ff The Company's loans HFS are primarily purchased and originated loans to be sold or securitized through its mortgage banking business. Loans HFS are reported at either fair value, or the lower of cost or fair value, depending on the acquisition source. The Company has elected to record loans purchased from value of loans HFS correspondent sellers or originated directly to consumers at fair value to more timely reflff ect the Company's performance. Changes in fair are reported in current period income as a component of Net gain on loan origination and sale activities in the Consolidated Income Statement. Alternatively,yy delinquent loans repurchased under the terms of the GNMA MBS program, referr value. For EBO ff loans, the amount by which cost exceeds faff ir value is accounted for as a valuation allowance and any changes in the valuation allowance are included in Net gain on loan origination and sale activities in the Consolidated Income Statement. ed to as EBO loans, are reported at the lower of cost or fair ff ff The Company recognizes a transfeff r of loans as a sale when it surrenders control over the transfeff rred loans. Control is considered to be surrendered when the red loans have been legally isolated froff m the Company,yy the transferee has the right (frff ee of conditions that constrain it frff om taking advantage of that transferff ve control over the transferred loans through either an agreement right) to pledge or exchange the transferff that entitles or obligates the Company to repurchase or redeem the loans beforff e their maturt ity or the ability to unilaterally cause the holder to return loans. If as a sale, the Company derecognizes such loans. If the transfer of loans does not qualify as a sale, the proceeds from the transfer the transferff are accounted forff red loans, and the Company does not maintain effff ecti as secured borrowings. of loans qualifiesff ff Loan acquisition and origination feff es on loans HFS consist of feff es earned by the Company forff the loans are purchased or originated. These feeff activities in the Consolidated Income Statement. purchasing and originating loans and are recognized at the time s generally represent flff at, per loan feff e amounts and are included as Net gain on loan origination and sale Recognition of interest income on non-government guaranteed or uninsured loans HFS is suspended and accruerr d unpaid interest receivable is reversed through interest income when loans become 90 days delinquent or when recovery of income and 82 principal becomes doubtfulff status when the principal and interest become current and it is probable that the amounts are fuff lly collectible. For government guaranteed or insured loans HFS that are 90 days delinquent, the Company continues to recognize interest income at a rate between the debenture and notes rates, as adjusted forff t forff FHA loans and at the note rate for VAVV and USDA loans. . Loans return to accrual probability of defaul ff rr red frff om HFS to If management determines that it no longer intends to sell loans classified as HFS, such loans will be transferred to loans HFI. Loans transferff HFI are transferr . The loans are then evaluated to determine the ACL in accordance with the Company's policy as described in the Allowance foff r credit losses on loans HFI section within this note. ed at amortized cost and any valuation allowance previously recorded is reversed and recognized in earnings at the time of the transferff ff Loans held for investment Loans HFI are loans that management has the intent and ability to hold for the foreseeabla e futff urt e or until maturit Amortized cost is the amount of unpaid principal, adjusted for unamortized net deferred feeff the amortized cost basis of loans subject to faiff interest rate risk. r value hedges are adjud sted forff changes in value attributaba le to the effff ect ff t s and costs, premiums and discounts, and charge-offff s.ff y or payoffff are reported at amortized cost. In addition, ive portion of the hedged benchmark borrowers and forff The Company may also purchase loans or acquire loans through a business combination. At the purchase or acquisition date, loans are evaluated to determine whether there has been more than insignificff ant credit deterioration since origination. Loans that have experienced more than insignificant credit deterioration since origination are referred to as PCD loans. In its evaluation of whether a loan has experienced more than insignififf cant deterioration in credit quality since and TDR loans. The Company may also consider external credit origination, the Company takes into consideration loan grades, past due and nonaccruarr rating agency ratings forff non-commercial loans, FICO score or band, probaba ility of default levels, and number of times past dud e. At the purchase or acquisition date, the amortized cost basis of PCD loans is equal to the purchase price and an initial estimate of credit losses. The initial recognition of expected credit losses on PCD loans has no impact on net income. When the initial measurement of expected credit losses on PCD loans is calculated on a pooled loan basis, the expected credit losses are allocated to each loan within the pool. Any diffeff rence between the initial amortized cost basis and the unpaid principal balance of the loan represents a noncredit discount or premium, which is accreted (or amortized) into interest income over the life of the loan. Subsequent changes to the ACL on PCD loans are recorded through the provision for credit losses. For purchased loans that are not deemed to have experienced more than insignificff ant credit deterioration since origination and are therefore not deemed PCD, any discounts or premiums included in the purchase price are accreted (or amortized) over the contractual lifeff of the individual loan. For additional infoff rmation, see "Note 5. Loans, Leases and Allowance forff Credit Losses" of these Notes to Consolidated Financial Statements. t l status, t t tive yield method to loans, the Company generally applies the contractual the origination of loans In applying the effecff s), as well as premiums and discounts and certain purchase accounting adjustments, are amortized over the less direct loan origination costs (net deferff is calculated using the interest contractual life of the loan through interest income. If a loan has scheduld ed payments, the amortization of net deferred fees method over the contractual lifeff of the loan. If a loan does not have scheduld ed payments, such as a line of credit, net deferred loan fees are recognized as interest income on a straight-line basis over the contractual lifeff of the loan commitment. Commitment fees based on a percentage of a customer’s unused line of credit and fees related to standby letters of credit are recognized over the commitment period. When loans are repaid, any remaining unamortized balances of premiums, discounts, or net deferff red fees are recognized as interest income. t method whereby loan fees collected forff red feeff ff ff ff NonaNN ccrual loans interest. The Company ceases accruing ly required by the note, the Company must determine whether it is appropriate to continue to When a borrower discontinues making payments as contractual interest income when a loan becomes delinquent by more than 90 days or when management determines that the accruerr terms of the full repayment of principal and collection of interest according to contractuat loan. The Company may decide to continue to accruerr interest on certain loans more than 90 days delinquent if the loans are well secured by collateral and in the process of collection. For government guaranteed or insured loans that are 90 days delinquent, the Company continues to recognize interest income at a rate between the debenture rate and note rates, as adjusted for probability of default forff FHA loans, and at the note rate foff r VAVV and USDA loans. l terms is no longer likely. Past dued is based on the contractual statust rr t t For all loans HFI, when a loan is placed on nonaccrual status, all interest accrurr ed but uncollected is reversed against interest income in the period in which the statust is changed, and the Company makes a loan-level decision to apply either the cash basis or cost recoveryr method. The Company may recognize income loans for which the collection of the remaining principal balance is not in doubtu . Under the on a cash basis when a payment is received forff cost recoveryr method, subsequent payments received frff om the customer are apa plied to principal and generally no further interest income is recognized until the or until circumstances have changed such that payments are again consistently received as loan principal has been paid in full those nonaccrual ff rr rr 83 t contractuall payments are reasonably assured. y required. Loans are returned to accrual rr statust when all of the principal and interest amounts contractuat lly dued are brought current and future TrTT oubrr led Debt Restructuredrr Loans reasons related to a borrower’s fiff nancial difficul A TDR loan is a loan on which the Company,yy forff ties, grants a concession to the borrower that the Company would not otherwise consider. In order to determine whether a borrower is experiencing finff ancial diffff iff culty,yy an evaluation is perfoff rmed to assess the probabia lity able fuff ture without the modififf cation. The evaluation is perforff med in accordance that the borrower will be in payment defaff ult on any of its debt in the foresee with the Company's internal underwriting policy. The loan terms that may be modifiedff or restructurt ed due to a borrower’s fiff nancial situation include, but are ity or renewal of the loan at an interest rate below current market, a reducd tion in not limited to, a reduction in the stated interest rate, an extension of the maturt the face ed to accrurr al statut s when the loan is ff brought current, has performed in accordance with the contractual restructured terms forff a reasonable period of time (generally six months), and the ultimate ut red principal and interest is no longer in doubt. Consistent with regulatoryr guidance, a TDR loan that is collectability of the total contractual restruct subsequently modified in another restrucrr turing agreement but has shown sustained perfoff rmance and classififf cation as a TDR, will be removed froff m TDR statust provided that the modifiedff amount of the debt, a reduction in the accrurr ed interest, or deferral of interest payments. A TDR loan may be returnt terms were market-based at the time of modification. rr ff ff rr Reference Rate Reform On March 5, 2021, the United Kingdom administrator of LIBOR announced that the 1-month, 3-month, 6-month and 12-month US dollar LIBOR settings would cease to exist after June 30, 2023. The US federal banking agencies issued a statement in November 2020 encouraging banks to transition away frff om US ing three dollar LIBOR as soon as practicable and to stop entering into new contracts that use US dollar LIBOR by December 31, 2021. The Bank began offff erff alternative rate indices (Ameribor, SOFR, and BSBY) on its loans in the second half of 2021, with Ameribor as its preferred rate index and ceased offff erff ing loans indexed to US dollar LIBOR on December 31, 2021. Loans indexed to US dollar LIBOR will be converted to Ameribor, SOFR, or BSBY.YY The Company appl ve interest rate. For the Company's borrowing ied the optional expedient in TopiTT c 848 for such conversions by prospectively adjud sting the effff ecti a arrangements currently indexed to LIBOR, the paying agent is responsible foff r choosing the alternate rate index. ff rr CrCC edit quality indicators Loans are regularly reviewed to assess credit quality indicators and to determine appropriate loan classification and grading in accordance with applicable bank 1 to 9, where a higher rating represents higher risk. The Company regulations. The Company’s risk rating methodology assigns risk ratings ranging fromff diffff erff entiates its loan segments based on shared risk characteristics for which expected credit losses are measured on a pool basis. The nine risk rating categories can generally be described by the following groupings forff loans: ency or weakness to some noted weakness; however, the risk of defauff 1 throurr gh 5):5 The Company has five pass risk ratings, which represent a level of credit quality that ranges from having no well-defined lt on any loan classififf ed as pass is expected to be remote. The five pass risk ratings (( (grades " "Pass" defici ff are described below: Minimal risk. ConC sist of loans that are fulff acceptable margin based on the type of security pledged. ly secured either with cash held in a deposit account at the Bank or by readily marketable securities with an Low risk. ii Consist of loans with a high investment grade rating equivalent. Modest risk. Consist of loans where the credit facility greatly exceeds all policy requirements or with policy exceptions that are appropriately mitigated. A secondary source of repayment is verified and considered sustainable. Collateral coverage on these loans is suffici ent to fully cover the debt as a tertiaryr source of repayment. Debt of the borrower is low relative to borrower’s fiff nancial strength and abia lity to pay. ff Average risk.kk Consist of loans where the credit facff ility meets or exceeds all policy requirements or with policy exceptions that are appropriately mitigated. A secondary source of repayment is availabla e to service the debt. Collateral coverage is more than adequate to cover the debt. The borrower exhibits acceptable cash flow and moderate leverage. Acceptable risk. adequate to service debt but there is minimal excess cash flow. Leverage is moderate or high. ii Consist of loans with an acceptable primary source of repayment but a less than preferaba le secondary source of repayment. Cash flow is 84 mention" (gra(( "Special de 6): These are generally assets that possess potential weaknesses that warrant management's close attention. These loans may involve SS borrowers with adverse financial trends, higher debt-to-equity ratios, or weaker liquidity positions, but not to the degree of being considered a “problem loan” where risk of loss may be apparent. Loans in this categoryr are usually performff ing as agreed, although there may be non-compliance with finff ancial covenants. standard"rr (gradedd 7)7 : These assets are characterized by well-defined credit weaknesses and carryrr "Sub" some loss if such weakness or defiff ciency is not corrected. All loans 90 days or more past due and all loans on nonaccruarr "Substandard," unless extraordinaryrr circumstances would suggest otherwise. the distinct possibility that the Company will sustain l statut s are considered at least (grade 8): These assets have all the weaknesses inherent in those classifiedff "Doubtful"ff present make collection or liquidation in fulff certain known factors that may work to the advantage and strengthening of the asset (forff refinancing plans), classification as an estimated loss is deferff classifiedff andard" with the added characteristic that the weaknesses l, on the basis of currently existing faff cts, conditions and values, highly questionaba le and improbabla e, but because of tion, perfeff cting liens on additional collateral and red until a more precise status may be determined. Due to the high probabia lity of loss, loans as "Doubtfuff l" are placed on nonaccrual example, capa ital injecn as "Substu status. rr "Loss" (gra(( classificat ff asset, even though partial recoveryr may be achieved in the future. de 9): These assets are considered uncollectible and having such little recoverable value that it is not practical to deferff writing offff the asset. This ion does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practicable or desiraba le to deferff writing offff the Allowance forff credit losses on loans HFI ed within the ACL. Credit risk is inherent in the business of extending loans and leases to borrowers and is continuously monitored by management and reflect The ACL is an estimate of life-of-loan losses foff r the Company's loans HFI. The ACL is a valuation account that is deducted frff om the amortized cost basis of a loan to present the net amount expected to be collected on the loan. The estimate of expected credit losses excludes accruerr d interest receivabla e on these loans, interest related to the Residential-EBO loan pool. Accrued interest receivaba le, net of an ACL on the Residential-EBO loan pool, is included except for accruedrr t foff r expected in Other assets on the Consolidated Balance Sheet. The ACL on loans HFI includes an estimate of futurt e net charge-offff sff as well as an offff seff recoveries of amounts previously charged-off.ff The Company foff rmally re-evaluates and estaba lishes the appropriate level of the ACL on a quarterly basis. d ff periods, evaluations of the overall loan portfolff ts of matters that are inherently uncertain. Determining the appropriateness of the allowance is complex and requires judgment by management about the effecff In futff uret then prevailing, may result in significant changes in the ACL and credit loss expense in those futut re periods. The allowance level is influff enced by loan volumes and mix, average remaining maturities, loan perforff mance metrics, asset quality characteristics, delinquency status, historical credit loss experience, and other conditions influen cing loss expectations, such as reasonable and supportable foff recasts of economic conditions. The methodology for estimating the amount of expected ff credit losses reported in the ACL has two basic components: first, an asset-specific component involving individuad l loans that do not share similar risk characteristics with other loans and the measurement of expected credit losses for such individual loans and second, a pooled component foff r estimated expected credit losses forff io or particular segments of the loan portfolff loans that share similar risk characteristics. io, in light of the factors and forecasts ff t Loans that do not sharerr riskii characteristics withtt other loans Loans that do not share risk characteristics with other loans are evaluated on an individuald basis. Loans evaluated individuad lly are not included in the collective evaluation. These loans consist of loans with unique featurt es or loans that no longer share risk characteristics with other pooled loans. The process foff r determining whether a loan should be evaluated on an individuad l basis begins with a determination of credit rating. WitWW h the exception of residential loans, all loans graded substandard or worse with a total commitment of $1.0 million or more are evaluated on an individual basis. For these loans, the accruing rr raisals, and assessment of borrower guarantees. allowance is based primarily on the faff ir value of the underlying collateral, utilizing independent third-party appa Loans that sharerr similar riskii characteristics with other loans In estimating the component of the ACL forff loans that share similar risk characteristics, loans are segregated into loan segments with shared risk characteristics. The Company's primaryr portfolio segments align with the methodology applied in estimating the ACL under CECL. Loans are designated and pooled into loan segments based on productd types, business lines, and other risk characteristics. In determining the ACL, the Company derives an estimate of expected credit losses primarily using an expected loss methodology that incorprr orates risk parameters (PD, LGD, and EAD), which are derived from various vendor models, 85 t rr status, have a charge-off,ff or obligor bankrurr ptu cy. Input reversion is used forff internally-developed statistical models, or non-statistical estimation approaches. Probability of defaff ult is projected in these models or estimation approaches rate relevant infoff rmation aba out past events, current conditions, and reasonabla e and supu portable using a single economic scenario and were developed to incorporr forecasts. WitWW h the exception of the Company's residential loan segment, the Company's PD models defiff ne defaff ult as loans that are 90 days past due,d on the commercial and indud strial and nonaccrual CRE, owner-occupied loan segments. Output reversion is used foff r the commercial and industrial and CRE, owner-occupied loan segments by incorprr orating, the forff ecast period, a one-year linear reversion to the long-term reversion rate in year three through the remaining lifeff of the loans within the respective after ff segments. LGDs are typically derived frff om the Company's historical loss experience. However, forff the warehouse lending and municipal and nonprofit loan segments, where the Company has either zero (or near zero) losses, or has a limited loss history through the last economic downtut rn, certain non-modeled each loan segment and are further described below. EAD methodologies are employed to estimate LGD. Factors utilized in calculating average LGD varyr refers to the Company's exposure to loss at the time of borrower defaff ult. For revolving lines of credit, the Company incorprr orates an expectation of increased line utilization for a higher EAD on defaff ulted loans based on historical experience. For term loans, EAD is calculated using an amortization schedudd le based on loan terms, adjusted for a prepayment rate assumption. Prepayment trends are sensitive to interest rates and the macroeconomic environment. Fixed contractual rate loans are more influenced by interest rates, whereas variable rate loans are more inflff uenced by the macroeconomic environment. After the quantitative expected loss estimates are calculated, management then adjusts these estimates to incorprr orate consideration of diffff erff ent probability weighted economic scenarios, current trends and conditions that are not captured in the quantitative loss estimates, through the use of qualitative and/or environmental facto all loan segment models, except forff forff rs. ff ff t The following provides credit quality indicators and risk elements most relevant in monitoring and measuring the ACL on loans for each of the loan portfolff segments identififf ed: io rr WarWW ehou se lending ff o segment consists of mortgage warehouse lines, MSR fiff nancing facil ities, and note finance loans, which have a monitored The warehouse lending portfoli borrowing base to mortgage companies and similar lenders and are primarily strurr cturt ed as commercial and industr these loans is ial loans. The collateral forff primarily comprised of residential whole loans and MSRs, with the borrowing base of these loans tightly monitored and controlled by the Company. The ion. The collateral- primaryr suppo driven nature of these loans distinguish them from traditional commercial and industrial loans. These loans are impacted by interest rate shocks, residential lending rates, prepayment assumptions, and general real estate stress. As a result of the unique loan characteristics, limited historical defauff lt and loss experience, and the collateral nature of this loan portfoff lio segment, the Company uses a non-modeled approach to estimate expected credit losses, leveraging grade inforff mation, grade migration historyr ,yy and management judgment. of pledged collateral, with secondary support provided by the capacity of the fiff nancial institutt rt for these loans takes the formff u d ff Municipal and nonprofrr itff The municipal and nonprofitff portfolio segment consists of loans to local governments, government-operated utilities, special assessment districts, hospitals, schools and other nonprofitff s. These loans are generally,yy but not exclusively,yy entered into forff refinff ancing and in some cases tax liens on real tured as commercial and industrial loans. Loans are supported by taxes or utility fees, existing debt and are primarily strucrr estate, operating revenue of the institution, or other collateral support the loans. While unemployment rates and the market valuation of residential properties t on the tax revenues supporting these loans, these loans tend to be less cyclical in comparison to similar commercial loans dud e to reliance on have an effecff diversifiedff roach to estimate expected credit losses for this portfolio segment, leveraging grade information and historical municipal default rates. the purprr ose of financing real estate investment or forff tax bases. The Company uses a non-modeled appa ff TechTT & innovation The tech & innovation portfolio segment is comprised of commercial loans that are originated within this business line and are not collateralized by real estate. The source of repayment of these loans is generally expected to be the income that is generated frff om the business or contributions froff m ownership to sustain the business's growth model. Expected credit losses foff r this loan segment are estimated using internally-developed models. These models incorprr orate market level and company-specific factors such as finaff ncial statement variabla es, adjud sted foff r the current stage of the credit cycle and foff r the Company's loan e data such as delinquency,yy utilization, maturity,yy and size of the loan commitment under specific macroeconomic scenarios to produd ce a probabia lity performanc ff of defaul s include average investment to GDP and treasuryrr yields. LGD and the prepayment rate assumption forff EAD are driven by ff unemployment levels forff t. Macroeconomic variablea this loan segment. 86 Equity fund resou rr rr rces The equity fund resources portfolio these loans is typically uncalled capital commitments from institutt to estimate expected credit losses forff this portfolio ff ff segment is comprised of commercial loans to private equity and venturet capital fuff nds. The primary source of repayment of ional investors and high net worth individuals. The Company uses a non-modeled approach segment, leveraging loan grade infoff rmation. Other commercial rr and industrial The other commercial and industrial segment is comprised primarily of commercial and industr ial loans to middle market companies and large corporations that are not collateralized by real estate. The models used to estimate expected credit losses foff r middle market companies are the same as those used for the o segment, whereas a vendor model is used to estimate expected credit losses for loans to large corprr orations. tech & innovation portfoli dd ff rr Commer cial CC rr real estate, owner-rr occupied segment is comprised of commercial loans that are collateralized by real estate, where the borrower has a business that ff The CRE, owner-occupied portfolio the purprr ose of providing real estate fiff nance or improvement. The primaryr source of repayment occupies the property. These loans are typically entered into forff of these loans is the income generated by the business and where rental or sale of the property may provide secondaryr the loan. These loans are sensitive to general economic conditions as well as the market valuation of CRE properties. The PD estimate for this loan segment is modeled using the same model as the commercial and industrial loan segment. LGD foff r this loan segment is driven by property appreciation and the prepayment rate assumption forff EAD is driven by unemployment levels. support forff ff Hotel franch ff ise finan ce The hotel franchise finance segment is comprised of loans that are originated within this business line and are collateralized by real estate, where the owner is tenant. These loans are typically entered into for the purprr ose of fiff nancing or the improvement of commercial investment properties. The not the primaryr primaryr source of repayment of these loans are the rents paid by tenants and where the sale of the property may provide secondary support foff r the loan. These loans are sensitive to the market valuation of CRE properties, rental rates, and general economic conditions. The vendor model used to estimate expected credit losses forff the commercial real estate market. Real estate market factors utilized in this model include vacancy rate, rental growth rate, net operating income growth rate, and ates loan and property-level characteristics including debt commercial property price changes forff coverage, leverage, collateral size, seasoning, and property type. LGD foff r this loan segment is derived frff om a non-modeled approach that is driven by property appr variabla e rate a loans. this loan segment projects PD and EAD based on multiple macroeconomic scenarios by modeling how macroeconomic conditions affff ect eciation and the prepayment rate assumption foff r EAD is driven by the property appreciation for fixff ed rate loans and unemployment levels forff property type. The model then incorpor each specificff rr ff Other commercial rr rearr l estate, non-owner occupied The other commercial real estate, non-owner occupied segment is comprised of loans that are collateralized by real estate where the owner is not the primaryr tenant, but are not originated within the Company's specialty business lines. The model used to estimate expected credit losses for this loan segment is the same as the model used forff the hotel frff anchise finance portfolff io segment. Residential ff o segment is comprised of loans collateralized primarily by first liens on 1-4 residential famff ily properties and home equity lines of The residential loan portfoli credit that are collateralized by either firff st liens or junior liens on residential properties. The primaryr source of repayment of these loans is the value of the property and the capacity of the owner to make payments on the loan. Unemployment rates and the market valuation of residential properties will impact the ultimate repayment of these loans. The residential mortgage loan model is a vendor model that projects PD, LGD severity,yy prepayment rate, and EAD to calculate expected losses. The model is intended to capture the borrower's payment behavior dud ring the lifeff time of the residential loan by incorprr orating loan level characteristics such as loan type, coupon, age, loan-to-value, and credit score and economic conditions such as Home Price Index, interest rate, and unemployment rate. A default event forff as 60 days or more past due, with property appreciation as the driver forff LGD results. The prepayment rate assumption forff EAD forff residential loans is defined residential loans is based on industry prepayment history. ff PD forff HELOCs is derived fromff and macroeconomic conditions such as property apa preciation. LGD forff an internally-developed model that incorpor rr ates loan level information such as delinquency status, t loan term, and FICO score this loan segment is 87 driven by property appreciation and lien position. EAD forff HELOCs is calculated based on utilization rate assumptions using a non-modeled approach and also rr incorpor ates management judgment. Residential - EBO ff o segment is comprised of government guaranteed or insured loans collateralized primarily by first liens on 1-4 residential The residential EBO loan portfoli family properties purchased frff om GNMA pools, which were at least three months delinquent at the time of purchase. These loans differ froff m the residential loans included in the Company's Residential loan portfoff lio segment as the principal balance of these loans are government guaranteed or insured. The Company has not recognized an ACL on this portfoff lio segment as management's expectation of nonpayment of the amortized cost basis, based on historical losses, adjusd current and forff ecasted conditions, is zero. ted forff ff The estimate of expected credit losses related to accrurr ed interest and other fees foff r the Residential-EBO loan pool is based on an expected loss methodology that incorpor ates risk parameters, PD and LGD, which are derived frff om an internally-developed statistical model. PD is derived frff om froff m delinquency transition rates based on historical data and LGD is derived from historical losses. rr tt Const ruct CC ion and land devedd lopment ff rr ort forff and land portfoli The construction development. The primary source of repayment of these loans is the eventual sale or refinance of the completed projeco provide secondary suppu that have a higher sensitivity to real estate markets compared to other real estate loans. Default risk of a property is driven by loan-specificff loan-to-value, maturi model include loan level drivers such as origination loan-to-value, loan maturt unemployment rate, and national GDP growth. LGD forff driven by the property appreciation forff o segment is comprised of loans collateralized by land or real estate, which are entered into for the purpose of real estate t and where claims on the property the loan. These loans are impacted by the market valuation of CRE and residential properties and general economic conditions drivers, including ty,yy origination date, and the MSA in which the property is located, among other items. The variabla es used in the internally-developed ity,yy and macroeconomic drivers such as property appreciation, MSA level this loan segment is driven by property appreciation. The prepayment rate assumption for EAD is rate loans and unemployment levels foff r variable rate loans. ff fixed t Other The other portfoff lio consists of loans not already captut red in one of the afoff rementioned loan portfolff io segments, which include, but may not be limited to, services, credit cards, consumer loans not collateralized by real estate, and small business loans collateralized by residential real overdraft lines for treasuryr estate. The consumer and small business loans are supu ported by the capacity of the borrower and the valuation of any collateral. General economic facto rs such as unemployment will have an effff eff ct on these loans. The Company uses a non-modeled approach to estimate expected credit losses, leveraging average this loan segment is driven by unemployment levels and lien position. The prepayment rate assumption for EAD is driven by historical default rates. LGD forff d rate loans and unemployment levels for variaba le rate loans. the BBB corporr rate spread forff fixeff ff TranTT sfers of financial assets of a financial asset is accounted forff A transferff as a sale when control over the asset has been surrendered. Control over a transferred asset is deemed surrendered when the: 1) asset has been isolated from the Company; 2) transferee obtains the right to pledge or exchange the transferred asset; and 3) Company of a no longer maintains effff ecff financial asset does not qualify as a sale, the proceeds from the transfeff r are accounted for as a secured borrowing. red asset through an agreement to repurchase the transfeff rred asset before maturity. If a transferff tive control over the transferff 88 Premises and equipment Premises and equipment amounts are stated at cost less accumulated depreciation and amortization. Depreciation is computed principally using the straight-line method over the estimated usefulff lives of the assets. Leasehold improvements are amortized over the term of the lease or the estimated lifeff of the improvement, whichever is shorter. Depreciation and amortization is computed using the folff lowing estimated lives: Bank premises , and equipment ff Furniture, fixtures Leasehold improvements Softwff are YeaYY rs 31 3 - 10 3 - 10 1 - 8 Management periodically reviews premises and equipment in order to determine whether facts recoverable. ff and circumstances suggest that the value of an asset is not Off-ff balance sheet credit exposures, including unfuff nded loan commitments The Company maintains a separate ACL on off-ff balance-sheet credit exposures, including unfunded loan commitments, fiff nancial guarantees, and letters of credit, which is classified in Other liabilities on the Consolidated Balance Sheet. The ACL on off-ff balance sheet credit exposures is adjud sted through increases or decreases to the provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur, an estimate of EAD that is derived frff om utilization rate assumptions using a non-modeled approach, and PD and LGD estimates that are derived frff om the same models and appa roaches foff r the Company's other loan portfolio segments described in the ACL on loans HFI section within this note. The Company does not record a credit loss estimate for offff -ff balance sheet credit exposures that are unconditionally cancellabla e by the Company or for undrawn amounts under such arrangements that may be drawn prior to the cancellation of the arrangement. Mortgage servicing rights The Company generates MSRs frff om its mortgage banking business. When the Company sells mortgage loans in the secondaryr market and retains the right to service these loans, a servicing right asset is capitalized at the time of sale when the benefits of servicing are deemed to be greater than adequate compensation net cash flff ows expected to be realized froff m performing servicing for perforff ming the servicing activities. MSRs represent the then-current faiff activities. The Company has elected to subsequently measure MSRs at faff ir value and report changes in faiff r value in current period income as a component of Net loan servicing revenue in the Consolidated Income Statement. r value of futuret antially all of the risks and rewards of ownership are irrevocably passed to the transferee The Company may in the ordinaryr course of business sell MSRs and will recognize, as of the trade date, a gain or loss on the sale equal to the diffff erff ence between the carryr ing value of the transferred MSRs and the estimated proceeds to be received as consideration. The Company subsequently derecognizes MSRs when substu and any protection provisions retained by the Company are minor and can be reasonably estimated, which typically occurs on the settlement date. Protection provisions are considered to be minor if the obligation created by such provisions is estimated to be no more than 10 percent of the sales price and the Company retains the risk of prepayment for no more than 120 days. The Company records an estimated liaba ility foff r retained protection provisions as of the trade date, with any changes in the estimated liability recorded in earnings. In addition, fees to transfeff r loans associated with the sold MSRs to a new servicer are also recorded on the settlement date. Gains or losses on sales of MSRs, net of retained protection provisions, and transferff are included in Net loan servicing revenue in the Consolidated Income ff fees Statement. ff Leases (lessee) At inception, contracts are evaluated to determine whether the contract constitutt es a lease agreement. For contracts that are determined to be an operating lease, a corresponding ROU asset and operating lease liaba ility are recorded in separate line items on the Consolidated Balance Sheet. A ROU asset represents the Company’s right to use an underlying asset during the lease term and a lease liaba ility represents the Company’s commitment to make contractuat lly obligated lease payments. Operating lease ROU assets and liabia lities are recognized at the commencement date of the lease and are based on the present value of lease payments over the lease term. The measurement of the operating lease ROU asset includes any lease payments made and is reduced by lease incentives that are paid or are payable to the Company. VarVV iablea lease payments that depend on an index or rate such as the Consumer Price Index are included in lease payments based on the rate in effect at the commencement date of the lease. Lease payments are recognized on a straight-line basis over the lease term as Occupancy ff expense in the Consolidated Income Statements. 89 As the rate implicit in the lease is not readily determinable, the Company's incremental collateralized borrowing rate is used to determine the present value of lease payments. This rate gives consideration to the appa licable FHLB collateralized borrowing rates and is based on the infoff rmation availabla e at the commencement date. The Company has elected to apply the short-term lease measurement and recognition exemption to leases with an initial term of 12 months or less; therefore, these leases are not recorded on the Company’s Consolidated Balance Sheet, but rather, lease expense is recognized over the lease term on a straight-line basis. The Company’s lease agreements may include options to extend or terminate the lease. These options are included in the lease term when it is reasonably certain that the options will be exercised. The Company also made an accounting policy election to not separate non-lease components from the associated lease component, and instead account foff r them together as part of the applicable lease component. The majority of the Company’s non-lease components such as common area maintenance, parking, and taxes are variable, and are expensed as incurred. VaVV riable payment amounts are determined in arrears by the landlord depending on actual costs incurred. Goodwill and other intangible assets The Company records as goodwill the excess of the purchase price in a business combination over the fair value of the identifiaba le net assets acquired in accordance with applicable guidance. The Company perfoff rms its annual goodwill and intangibles impairment tests as of October 1 each year, or more often if events or circumstances indicate that the carrying value may not be recoverable. The Company may fiff rst elect to assess, through qualitative factors, whether it is more likely than not that goodwill is impaired. If the qualitative assessment indicates potential impairment, a quantitative impairment test is perforff med. If, based on the quantitative test, a reporting unit's carryir ng amount exceeds its faff ir value, a goodwill impairment charge forff ce is recorded to current period earnings as non-interest expense. this diffff eren ff The Company’s intangible assets consist of correspondent relationships, operating licenses, tradenames, core deposit intangibles, customer relationships, and developed technology assets that are being amortized over periods of fiff ve to 40 years. See "Note 2. Mergers, Acquisitions and Dispositions" of these Notes to Consolidated Financial Statements forff discussion of the intangible assets acquired in the AmeriHome and DST acquisitions. r, to The Company considers the remaining useful lives of its intangible assets each reporting period, as required by ASC 350, IntII angibles—Goodwill and Othet determine whether events and circumstances warrant a revision to the remaining period of amortization. If the estimate of an intangible asset’s remaining useful lifeff has changed, the remaining carrying life. The Company has not revised its estimates of the useful lives of its intangible assets durd ing the years ended December 31, 2022, 2021, or 2020. amount of the intangible asset is amortized prospectively over the revised remaining usefulff r Low income housing and renewable energy tax credits rdable housing and renewable energy projects. The Company holds ownership interests in limited partnerships and limited liability companies that invest in affoff These investments are designed to generate a return primarily through the realization of federa l tax credits and deductions, which may be subju ect to recapture by taxing authorities if compliance requirements are not met. The Company accounts foff r its low income housing investments using the proportional ed as an immediate amortization method. Renewable energy projects are accounted foff r under the deferral method, whereby the investment tax credits are reflect reduction in income taxes payable and the carrying value of the asset in the period that the investment tax credits are claimed. See "Note 17. Income TaxTT es of these Notes to Consolidated Financial Statements for further discussion. ff ff The Company evaluates its interests in these entities to determine whether it has a variabla e interest and whether it is required to consolidate these entities. A variable interest is an investment or other interest that will aba sorbr portions of an entity's expected losses or receive portions of the entity's expected residud al returns. If the Company determines that it has a variable interest in an entity,yy it evaluates whether such interest is in a VIE. A VIE is broadly definff ed as an entity where either: 1) the equity investors as a group, if any,yy lack the power through voting or similar rights to direct the activities of an entity that most significantly impact the entity's economic perforff mance or 2) the equity investment at risk is insuffff iff cient to finff ance that entity's activities without additional subu ordinated financial suppo rt. The Company is required to consolidate any VIE when it is determined to be the primary benefici ary of the VIE's operations. u ff ntly A variable interest holder is considered to be the primaryr benefici losses of, or the right to receive benefits from, the entity that could potentially be impact the entity's economic perforff mance and has the obligation to aba sorbr rs such as: 1) the significant ff Company's ability to direct the activities that most significff antly impact the entity's economic perfoff rmance; 2) its formff of ownership interest; 3) its representation on the entity's governing body; 4) the size and seniority of its investment; and 5) its abia lity and the rights of other investors to participate in policy making decisions and to replace the manager of and/odd r liquidate the entity. The Company is required to to the VIE. The Company’s assessment of whether it is the primaryr beneficiaryr of a VIE includes consideration of various facto ary of a VIE if it has both the power to direct the activities of a VIE that most significaff ff ff 90 evaluate whether to consolidate a VIE both at inception and on an ongoing basis as changes in circumstances require reconsideration. The Company’s investments in qualifieff d affff orda urt ed such that the limited partner investors lack substantive voting rights. The general partner or managing member has both the power to direct the activities that most losses or the right to receive benefits that could be significant to the ff significant entities. Accordingly,yy as a limited partner, the Company is not the primary beneficiaryr and is not required consolidate these entities. ly impact the economic performance of the entities and the obligation to absorbr ts meet the definition of a VIE as the entities are struct bla e housing and renewable energy projeco ff rr Bank owned lifeff insurance BOLI is carried at its cash surrender value with changes recorded in other non-interest income in the Consolidated Income Statement. The face amount of the underlying lifeff t against cash insurance policies was $456 million and $463 million as of December 31, 2022 and 2021, respectively. There are no loans offff seff surrender values, and there are no restrictions as to the use of proceeds. Credit linked notes ff ively transferff tured to effff ect Credit linked notes are strucrr the risk of first losses on a reference pool of loans and are considered to be freff e standing credit enhancements. These notes are recorded at the amount of the proceeds received, net of debt issuance costs. In addition, as the credit guarantee component of these notes is considered to be free standing, the ACL measured on the reference pool of loans in accordance with ASC 326 is not reduced by the credit ce pool of loans is recorded, which reduces the carryir ng value of the notes. guarantee. Rather, a contra debt balance equal to the estimated ACL on the referen ff frff om credit guarantees recognized in The initial contra debt balance and subsequent adjustments are recorded with a corresponding gain or loss on recoveryrr earnings. Stock compensation plans The Company has an incentive plan that gives the BOD the authority to grant stock awards, consisting of unrestricted stock, stock units, dividend equivalent rights, stock options (incentive and non-qualified), stock apa preciation rights, restricted stock, and perforff mance and annual incentive awards. Compensation expense on non-vested restricted stock awards is based on the fair value of the award on the measurement date which, for the Company,yy is the date of the grant and is recognized ratably over the service period of the award. Forfeiff tures are estimated at the time of the award grant and revised in subu sequent periods if actual forfei those estimates. The fair value of non-vested restricted stock awards is the market price of the Company’s stock on the date of ff grant. tures differ fromff ff ff ff The Company's performance stock units have a cumulative EPS target and a TSR perforff mance measure component. The TSR component is a market-based condition that is separately valued as of the date of the grant. A Monte Carlo valuation model is used to determine the fair value of the TSR performance performance metric, which simulates potential TSR outcomes over the perfoff rmance period and determines the payouts that would occur in each scenario. The resulting fair value of the TSR component is based on the average of these results. Compensation expense related to the TSR component is based on the fair value determination on the date of the grant and is not subu sequently revised based on actuat l perforff mance. Compensation expense related to the EPS component for these awards is based on the faff ir value (market price of the Company's stock on the date of the grant) of the award. Compensation expense related to both the TSR and EPS components is recognized ratably over the service period of the award. See "Note 13. Stockholders' Equity" of these Notes to Consolidated Financial Statements forff ff furt her discussion of stock awards. Dividends nt assets other than the capital stock of its WALWW is a legal entity separate and distinct frff om its subsidiaries. As a holding company with limited significaff diaries. The Company's subsidiaries, WALWW 's ability to pay dividends depends primarily upon the receipt of dividends or other capia tal distributions from its subsiu ds, as well as subsidiaries' ability to pay dividends to WAWW L is subu jb ect to, among other things, their individuad l earnings, fiff nancial condition, and need for funff federal and state governmental policies and regulations apa plicable to WALWW and each of those subsiu diaries, which limit the amount that may be paid as dividends without prior approval. In addition, the terms and conditions of other securities the Company issues may restrict its ability to pay dividends to holders of the Company's common stock. For example, if any required payments on outstanding trurr st preferred securities are not made, WAWW L would be prohibited from paying cash dividends on its common stock. 91 ff Preferr ed stock On September 22, 2021, the Company issued an aggregate of 12,000,000 depositaryr shares, each representing a 1/400th ownership interest in a share of the Company’s 4.250% Fixed-Rate Reset Non-Cumulative Perpet l Preferred Shares, Series A, par value $0.0001 per share, with a liquidation preferff ence of $25 red stock that is per Depositary Share (equivalent to $10,000 per share of Series A prefeff rred stock). The Company's Series A preferred stock is perpetual preferff not subject to any mandatory redemption, resulting in classififf cation as permanent equity. Dividends on prefeff rred stock are recognized on the declaration date and are recorded as a reduction of retained earnings. uat rr TrTT easury shares The Company separately presents treasury shares, which represent shares surrendered to the Company equal in value to the statut tory payroll tax withholding obligations arising froff m the vesting of employee restricted stock awards. TrTT easuryr shares are carried at cost. Sales of common stock under ATAA M program The Company has a distribution agency agreement with J.P.PP Morgan Securities LLC and Piper Sandler & Co., under which the Company may sell shares of its common stock on the NYSE. The Company pays the distribution agents a mutuat ring proceeds of the shares sold pursuant to the distribution agency agreement. The common stock is sold at prevailing market prices at the time of the sale or at negotiated prices and, as a result, prices will vary. Any sales under the ATMAA with the ing of shares from the Company's shelf registration statement on Form S-3 (No. 333-256120). See "Note 13. Stockholders' Equity" of these SEC in an offer Notes to Consolidated Financial Statements forff lly agreed rate, not to exceed 2% of the gross offeff program are made pursuant to a prospectust dated May 14, 2021 and prospectust further discussion of this program. supplements filedff ff Derivative financial instruments Derivative instrurr ments are contracts between two or more parties that have a notional amount and an underlying variaba le, require a small or no initial investment, and allow forff the net settlement of positions. A derivative’s notional amount serves as the basis for the payment provision of the contract and takes the form of units, such as shares or dollars. A derivative’s underlying variaba le is a specified interest rate, security price, commodity price, foreign exchange rate, index, or other variable. The interaction between the notional amount and the underlying variabla e determines the number of units to be exchanged between the parties and influences the faiff r value of the derivative contract. . The accounting for changes in the faiff The Company recognizes derivatives as assets or liabilities on the Consolidated Balance Sheet at their faff ir value in accordance with ASC 815, Derivatives and Hedging r value of a derivative instrument depends on whether it has been designated and qualifieff s as part of a hedging HH relationship and further, on the type of hedging relationship. Derivative instruments designated in a hedge relationship to mitigate exposure to changes in the fair value of an asset or liability attributable to a particular risk, such as interest rate risk, are considered faiff r value hedges. ents and the hedged items, as well as its risk management The Company documents its hedge relationships, including identififf cation of the hedging instrumrr undertaking the hedge transaction after the derivative contract is executed. At inception, the Company perfoff rms a quantitative objectives and strategies forff ing changes in the faiff r assessment to determine whether the derivatives used in hedging transactions are highly effff ecff r the value of the hedged item. Retroactive effff eff ctiveness is assessed, as well as the continued expectation that the hedge will remain effff eff ctive prospectively. Afteff tiveness assessment. This assessment takes initial quantitative assessment is performe into consideration any adverse developments related to the counterprr arty's risk of default and any negative events or circumstances that affecff rs that originally enabled the Company to assess that it could reasonabla y supu port, qualitatively,yy an expectation that the hedging relationship was and will continue to e. The Company discontinues hedge accounting prospectively when it is determined that a hedge is no longer highly effeff ctive. When hedge be highly effectiv accounting is discontinued on a fair r value r value. The adjud stment to the on the Consolidated Balance Sheet, but the carryr ing amount of the hedged item is no longer adjud sted for fuff ture changes in faiff carryir ng amount of the hedged item that existed at the date hedge accounting is discontinued is amortized over the remaining lifeff of the hedged item into earnings. d, on a quarterly basis, the Company perfoff rms a qualitative hedge effecff tive hedge, the derivative instrument continues to be reported at faiff value hedge that no longer qualifies as an effff ecff tive (as definff ed in the guidance) in offff sett ff t the facto ff ff ff ff The Company uses interest rate contracts to mitigate interest-rate risk associated with changes to the fair value of certain fixed-rate financial instruments (fair value of the hedged value hedges). Changes in the fair value of a derivative that is designated and qualifiesff to the hedged risk, are recorded in the same line item as the offff sff etting loss or gain on the related interest rate contracts asset or liability that are attributablea durin inated debt, the gain or loss on the d hedged items was included in interest expense. g the period of change. For loans, the gain or loss on the hedged item is included in interest income and forff r value hedge, along with changes in the fair as a faiff u subord ff 92 rr ts that are not designated as hedges, so called frff ee-standing derivatives, are reported on the Consolidated Balance Sheet at fair Derivative instrumen value and the changes in fair value are recognized in earnings as non-interest income during the period of change. The Company enters into commitments to purchase mortgage loans that will be held for sale. These loan commitments, described as IRLCs, qualifyff as derivative instrument s, except those that are originated rather than purchased, and intended forff HFI classififf cation. Changes in faff ir value associated with changes in interest rates are economically hedged by utilizing es, and interest rate swapa s. These hedging instrurr ments are typically entered into contemporaneously with IRLCs. forward sale commitments, interest rate futur Loans that have been or will be purchased or originated may be used to satisfy the Company's forwar d sale commitments. In addition, derivative finff ancial io. Changes in the fair value of derivative fiff nancial instruments that hedge IRLCs instrumen rr and loans HFS are included in Net gain on loan origination and sale activities in the Consolidated Income Statement. Changes in the faiff r value of derivative ents that hedge MSRs are included in Net loan servicing revenue in the Consolidated Income Statement. financial instrumrr ts are also used to economically hedge the Company's MSR portfolff rr ff ff ff The Company may in the normal course of business purchase a fiff nancial instrument or originate a loan that contains an embedded derivative instrument. Upon purchasing the instrument or originating the loan, the Company assesses whether the economic characteristics of the embedded derivative are clearly and closely related to the economic characteristics of the remaining component of the fiff nancial instrument (i.e., the host contract) and whether a separate instrument ent. When it is determined that the embedded derivative with the same terms as the embedded instrument possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract and a separate instrument with the same terms would qualifyff as a derivative instrument, the embedded derivative is separated frff om the host contract and carried at fair value. However, in cases r value reported in current earnings, or the Company is unabla e to reliably identify and where the host contract is measured at faff ir value, with changes in faiff measure an embedded derivative forff value and is not designated as a hedging instrument. separation frff om its host contract, the entire contract is carried on the Consolidated Balance Sheet at fair ition of a derivative instrumrr would meet the definff rr ff Off-ff balance sheet instruments r In the ordinaryr course of business, the Company enters into offff -ff balance sheet financial instrument arrangements consisting of commitments to extend credit and letters of credit. Such finaff ncial instruments are recorded in the Consolidated Balance Sheets when fuff nded. These offff -ff balance sheet finff ancial instrurr ments degrees, elements of credit risk in excess of amounts recognized on the Consolidated Balance Sheet. Losses could be experienced when the impact, to varying Company is contractually obligated to make a payment under these instruments and must seek repayment frff om the borrower, which may not be as financially sound in the current period as they were when the commitment was originally made. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition estaba lished in the contract and, in certain instances, may be unconditionally cancellabla e. Commitments generally The Company enters into credit arrangements that generally provide ff have fixed for the termination of advances in the event of a covenant violation or other event of default. Since many of the commitments are expected to expire without the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s being drawn upon, creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the party. The commitments are collateralized by the same types of assets used as loan collateral. expiration dates or other termination clauses and may require payment of a fee. u ff The Company also has offff -baff ents are recognized in the Consolidated Balance Sheets at fair value and their notional values are carried off-ff balance sheet. See "Note 15. Derivatives and Hedging Activities" of these Notes to Consolidated Financial Statements for furt lance sheet arrangements related to its derivative instrume nts. Derivative instrumrr her discussion. rr ff Fair values of fiff nancial instruments ff value measurements. The valuation hierarchy is based upon r value and a three-level valuation hierarchy foff r disclosure of faiff value measurements to record fair value adjd ustments to certain assets and liabilities. ASC 820, Fair VaVV lue Measuremen The Company uses fair hes a framework for measuring faiff r value measurement, and also sets forth disclosure requirements for fair ff the transparency of inputs to the valuation of an asset or liabia lity as of the measurement date. The Company uses various valuation appro aches, including market, income, and/or cost approaches. ASC 820 estaba lishes a hierarchy foff r inputs used in value that maximizes the use of observaba le inputs and minimizes the use of unobservaba le inputs by requiring that observable inputs be used measuring fair when available. Observable inputs are inputs that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflff ect the Company’s assumptions about the factors market participants would consider in pricing the asset or liability and are developed based on the best inforff mation available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs, as folff a t, establis lows: u a rr ff • Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, 93 • • unrestricted assets or liabila ities. Level 2 - Inputs other than quoted prices included in Level 1 that are observabla e foff r the asset or liaba ility,yy either directly or indirectly. These might include quoted prices forff identical or similar instruments in markets that are not active, inputs other than quoted prices that are observable foff r the asset or liability (such as interest rates, prepayment speeds, volatilities, etc.) or model-based valuation techniques where all significant assumptions are observable, either directly or indirectly,yy in the market. similar instruments in active markets, quoted prices forff VV Level 3 - Valuatio the market. These unobservablea asset or liability. ValVV uation techniques may include use of matrix pricing, discounted cash flow models, and similar techniques. nt inputs are not observable, either directly or indirectly,yy in the Company’s own estimates of assumptions that market participants would use in pricing the model-based techniques where one or more significaff assumptions reflect n is generated fromff ff The availability of observable inputs varies based on the naturt e of the specific financial instrume that are less observable or unobservable in the market, the determination of faiff by the Company in determining fair ff diffff erff ent levels of the fair value hierarchy. For disclosure purpose in the fair nt. ToTT the extent that valuation is based on models or inputs r value requires more judgment. Accordingly,yy the degree of judgment exercised instrurr ments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into r value measurement determines the level s, the lowest level input that is significant to the faiff value measurement faff lls in its entirety. value hierarchy within which the fair value is greatest forff rr ff rr ff Fair value is a market-based measure considered frff om the perspective of a market participant who may purchase the asset or assume the liability,yy rather than an entity-specific measure. When market assumptions are available, ASC 820 requires that the Company consider the assumptions that market participants would use to estimate the fair ncial instrument at the measurement date. value of the finaff ff ASC 825, Financial Instrut mentstt , requires disclosure of fair value informat which it is practicable to estimate that value. ff ion aba out financial instrume rr nts, whether or not recognized on the balance sheet, foff r value of the Company’s financial instruments; however, there are inherent limitations in any Management uses its best judgment in estimating the fair r value estimates presented herein are not necessarily indicative of the ents, the faiff estimation technique. Thereforff e, forff amounts the Company could have realized in a sales transaction at December 31, 2022 and 2021. The estimated fair value amounts foff r December 31, 2022 and 2021 have been measured as of period-end and have not been re-evaluated or upu dated for purprr oses of these Consolidated Financial Statements subsu equent to those dates. As such, the estimated faiff nt than the amounts reported at period-end. r values of these financial instruments subsequent to the reporting date may be differe substantially all fiff nancial instrumrr ff ff The inforff mation in "Note 19. Fair ValVV ue Accounting" of these Notes to Consolidated Financial Statements should not be interprrr eted as an estimate of the fair value of the entire Company since a faiff a limited portion of the Company’s assets and liabilities. r value calculation is only required forff ff Due to the wide range of valuation techniques and the degree of subjectivity used in making the estimate, comparisons between the Company’s disclosures and those of other companies or banks may not be meaningfuff l. ff The follow ing methods and assumptions were used by the Company in estimating the faiff r value of its fiff nancial instrume rr nts: CC Cash, cash equivalents, and rerr stritt cted cash The carryinr g amounts reported on the Consolidated Balance Sheet foff r cash and due from banks approximate their faiff r value. II Investme nt securities values of U.S. treasury and certain other debt securities as well as publu icly-traded CRA investments and exchange-listed common and preferff red stock The fair ff are based on quoted market prices and are categorized as Level 1 in the faiff r value hierarchy. The fair values of debt securities are primarily determined based on matrix pricing. Matrix pricing is a mathematical technique that utilizes observable market ff inputs including, yield curves, credit ratings, and prepayment speeds. Fair values determined using matrix pricing are generally categorized as Level 2 in the fair value hierarchy. In addition to matrix pricing, the Company uses other pricing sources, including observed prices on publu icly traded securities and dealer quotes, to estimate the fair value of debt securities, which are also categorized as Level 2 in the fair value hierarchy. ff 94 Loans HFSFF Government-insured or guaranteed and agency-confoff rming loans HFS are salabla e into active markets. Accordingly,yy the fair value of these loans is based on quoted market or contracted selling prices or a market price equivalent, which are categorized as Level 2 in the faiff r value hierarchy. value of non-agency loans HFS as well as certain loans that become nonsalabla e into active markets due to the identififf cation of a defect ff The fair ff based on valuation techniques that utilize Level 3 inputs. is determined Loans HFIFF value of loans HFI is estimated based on discounted cash flff ows using interest rates currently being offff eff red forff The fair loans with similar terms to borrowers ff with similar credit quality and adjustments that the Company believes a market participant would consider in determining fair value based on a third-party independent valuation. As a result, the faff ir value for loans HFI is categorized as Level 3 in the faiff r value hierarchy. Mortgage servicing rightsgg The fair value of MSRs is estimated using a discounted cash floff w model that incorprr orates assumptions that a market participant would use in estimating the ff fair value of servicing rights, including, but not limited to, option adjusted spread, conditional prepayment rate, servicing fee rate, and cost to service. As a result, the fair value for MSRs is categorized as Level 3 in the fair value hierarchy. ff Accrued interest rr recrr eivable and payable The carryinr g amounts reported on the Consolidated Balance Sheet foff r accruerr d interest receivable and payable appa roximate their faiff r values. Derivative financial instrumt ents ts varies by type. Interest rate contracts, foff reign currency contracts, and forwff value of derivative All derivatives are recognized on the Consolidated Balance Sheets at fair instrumen ard purchase and sales contracts are measured based on valuation rr techniques using Level 2 inputs, such as quoted market price, contracted selling price, or market price equivalent. IRLCs are measured based on valuation techniques that consider loan type, underlying loan amount, maturt ity date, note rate, loan program, and expected settlement date, with Level 3 inputs for the servicing release premium and pull-through rate. These measurements are adjusted at the loan level to consider the servicing release premium and loan pricing adjustment specific to each loan. The base value is then adjd usted forff the pull-through rate. The pull-through rate and servicing feff e multiple are unobservable inputs based on historical experience. value. The valuation methodologies used to estimate the fair ff ff stt Deposit e The fair value for demand and savings deposits is by definff these deposits do not have a contractual term. The carryrr ing amount forff certificat ff aggregated expected monthly maturities on these deposits. The fair value measurement of deposit liabilities is categorized as Level 2 in the fair ition equal to the amount payaba le on demand at the reporting date (that is, their carrying amount), as fixed rate tes to a schedudd le of red on certificaff value hierarchy. ff es of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offeff variaba le rate deposit accounts approximates their fair value. Fair values forff FHLFF B advandd ces and repurr rchrr ase agreemrr ents The fair ff arrangements. The carrying categorized as Level 2 in the fair value hierarchy. values of the Company’s borrowings are estimated using discounted cash flff ow analyses, based on the market rates for similar types of borrowing to their short durdd ations and have been value of FHLB advances and repurchase agreements appa roximate their faff ir values dued r rr Credit linked notes ff The fair value of credit linked notes is based on observable inputs, when availaba le, and as such credit linked notes are categorized as Level 2 liabilities. SS Subo rr rdinat ed debt The fair value of subordinated debt is based on the market rate for the respective subordinated debt security. Subordinated debt has been categorized as Level 2 in the fair value hierarchy. ff 95 Junior subordinrr ated debtdd Junior subordinated debt is valued based on a discounted cash flow model which uses the TrTT easuryr Bond rates and the 'BB' and 'BBB' rated finff ancial indexes as inputs. Junior subou rdinated debt has been categorized as Level 3 in the faiff r value hierarchy. Income taxes The Company is subject to income taxes in the United States and filff es a consolidated federal BW Real Estate, Inc. Deferff red income taxes are recorded to reflect the effff ects assets and liabilities and their income tax bases using enacted tax rates that are expected to be in effff ect changes in tax laws or rates are enacted, deferff of temporary diffff erence ff red tax assets and liabilities are adjud sted through the provision forff ff ff ff income tax returt n with all of its subsiu diaries, with the exception of s between the fiff nancial reporting carryr ing amounts of y paid or recovered. As t when the taxes are actuall income taxes. Net DTAsTT evidence is considered, including scheduled reversals of deferff results. If it is determined that deferff allowance will be recorded, which will reduce the Company's provision forff are recorded to the extent that these assets will more-likely-than-not be realized. In making these determinations, all available positive and negative red tax liabilities, tax planning strategies, projected fuff ture taxable income, and recent operating red income tax assets to be realized in the futff urt e are in excess of their net recorded amount, an adjustment to the valuation income taxes. A tax benefit froff m an unrecognized tax benefitff may be recognized when it is more-likely-than-not that the position will be sustained upou n examination, including related appeals or litigation, based on technical merits. Income tax benefits must meet a more-likely-than-not recognition threshold at the effeff ctive date to be recognized. Interest and penalties related to unrecognized tax benefiff ts are recognized as provision for income taxes in the Consolidated Income Statement. Accruerr d interest and penalties are included in the related tax liaba ility line with other liabia lities on the Consolidated Balance Sheet. See "Note 17. Income TaxTT es" of these Notes to Consolidated Financial Statements forff further discussion on income taxes. Non-interest income Non-interest income includes revenue associated with mortgage banking and commercial banking activities, investment securities, equity investments, and BOLI. These non-interest income streams are primarily generated by diffff erff ent types of fiff nancial instrurr ments held by the Company for which there is specificff accounting guidance and thereforff e, are not within the scope of ASC 606, Revenue frff omrr CoCC ntractstt witht CustCC omers. s. Service charges and feeff ff related to equity investments, debit and credit card Non-interest income amounts within the scope of ASC 606 include service charges and feff es, success fees nce of account analysis, general account interchange fees, and legal settlement services feeff are recognized as the related services are provided. Success feff es are one-time fees detailed as part of services, and other deposit account services. These fees certain loan agreements and are earned immediately upou earned from customer use of debit and n occurrence of a triggering event. Card income includes fees credit cards, interchange income frff om merchants, and international charges. Card income is generally within the scope of ASC 310, Receivables; however, certain processing transactions for merchants, such as interchange feeff its services during the period or at the time services are provided and, therefore, does not have material contract asset or liability balances at period end. Legal s from legal settlements and are recognized upon transfer of fuff nds to a settlement service fees relate to payment services provided foff r the distribution of fundff claimant. See "Note 25. Revenue fromff further details related to the nature and timing of revenue recognition for non-interest income revenue streams within the scope of this standard. s, are within the scope of ASC 606. The Company generally receives payment forff Contracts with Customers" of these Notes to Consolidated Financial Statements forff s consist of fees earned from performa ff ff ff 96 2. MERGERS, ACQUISITIONS AND DISPOSITIONS ii Acquisiti on of Digit i ii al Disbur serr ments On January 25, 2022, the Company completed its acquisition of DST, doing business as Digital Disbursements, a digital payments platform foff r the class action legal industd ryr . The acquisition of DST extends the Company's digital payment effff off rts by providing a digital payments platfoff rm foff r the class action market and broader legal industryr . as a business combination under the acquisition method of accounting. Assets purchased and liabilities assumed were This transaction was accounted forff values, which are fiff nal as of December 31, 2022. During the measurement period (not to exceed one recorded at their respective acquisition date estimated fair year frff om the acquisition date), the fair values of assets acquired and liabilities assumed are subject to adjud stment if additional informat ion becomes available to indicate a more accurate or appropriate value for an asset or liabia lity. During the year ended December 31, 2022, the Company adjud sted its initial provisional estimates for identifiedff ation regarding conditions that existed as of the acquisition date, and recognized a decrease of $7.4 million to the faff ir value of identifiedff intangible assets as a result of adjustments to certain valuation inputs. This measurement period adjustment resulted in a $0.5 million reduction in previously recorded amortization expense which is a component of Other expense in the Consolidated Income Statement. intangible assets based on new available informff ff ff TotTT al consideration of $57.0 million, comprised of cash paid at closing of $50.6 million and contingent consideration with an estimated fair value of $6.4 million, was exchanged for all of the issued and outstanding membership interests of DST. The terms of the acquisition include a contingent consideration the three year period subsequent to the acquisition. There is no required minimum or maximum payment amount arrangement that is based on perforff mance forff under the terms of the contingent consideration agreement. During the year ended December 31, 2022, the Company adjusted its initial provisional specifiedff estimate of the fair value of the contingent consideration and recognized a decrease of $10.8 million dued to new availaba le inforff mation regarding conditions that existed as of the acquisition date and adjustments to certain valuation inputs. The fair value of the contingent consideration recognized on the acquisition date was estimated using a discounted cash flow approach. ff DST’s results of operations have been included in the Company's results beginning Januaryr 25, 2022 and are reported as part of the Consumer Related segment. Acquisition and restruct the year ended December 31, 2022, were included as a expenses related to the DST acquisition of $0.4 million forff component of non-interest expense in the Consolidated Income Statement, all of which are acquisition related costs as definff ed by ASC 805. uret rr ff The fair value amounts of identifiable assets acquired and liabia lities assumed in the DST acquisition are as foff llows: Assets acquired: Cash and cash equivalents intangible assets Identifiedff Other assets ToTT tal assets Liabilities assumed: Other liabilities ToTT tal liabilities Net assets acquired Consideration paid Cash Contingent consideration ToTT tal consideration Goodwill January 25, 2022 (in millions)s 0.6 20.1 0.1 20.8 0.4 0.4 20.4 50.6 6.4 57.0 36.6 $ $ $ $ $ $ $ 97 In connection with the acquisition, the Company acquired identifiable intangible assets totaling $20.1 million, as detailed in the tabla e below: Customer relationships Developed technology TradTT e name ToTT tal Acquisition Date Fair VaVV lue (i(( n millions) Estimated Useful Life (in yearsrr )s $ $ 15.7 4.1 0.3 20.1 7 5 10 Goodwill in the amount of $36.6 million was recognized, of which $31.8 million is expected to be deductd s. Goodwill was allocated entirely to the Consumer Related segment and represents the strategic, operational, and financial benefitff s expected frff om the acquisition, including expansion of the Company's settlement services offeff on of its revenue sources, and post-acquisition synergies frff om integrating Digital Disbursements, as well as the value of the acquired workforce. ible for tax purpose rings, diversificati ff rr ii Acquisition of Ameri Home ff On April 7, 2021, the Company completed its acquisition of Aris, the parent company of AmeriHome, and certain other parties, pursuant to which, Aris merged with and into an indirect subsidiaryr of WAWW B. As a result of the merger, AmeriHome is a wholly-owned indirect subsidiaryr of the Company and continues to operate as AmeriHome Mortgage, a WeWW stern Alliance Bank company. AmeriHome is a leading national business-to-business mortgage acquirer and servicer. The acquisition of AmeriHome complements the Company’s national commercial businesses with a mortgage frff anchise that allows the Company to expand mortgage-related offff eri the Company’s revenue profiff le by expanding sources of non-interest income. ngs to existing clients and diversifiesff ff TotTT al cash consideration of $1.2 billion was paid in exchange for all of the issued and outstanding membership interests of Aris. AmeriHome's results of operations have been included in the Company's results beginning April 7, 2021 and are reported as part of the Consumer Related segment. No acquisition and restructure expenses related to the AmeriHome acquisition were recognized during the year ended December 31, 2022. For the year ended December 31, 2021, the Company recognized $15.3 million in acquisition and restrucrr turt e expenses related to the AmeriHome acquisition, which included $3.4 million of acquisition related costs, as defineff d by ASC 805. This transaction was accounted forff recorded at their respective acquisition date estimated fair values, which were considered fiff nal as of March 31, 2022. as a business combination under the acquisition method of accounting. Assets purchased and liabilities assumed were 98 ff The fair value amounts of identifiable assets acquired and liabia lities assumed in the AmeriHome acquisition are as folff lows: Assets acquired: Cash and cash equivalents Loans held for sale Mortgage servicing rights Premises and equipment, net Operating right of use asset Identifiedff intangible assets Loans eligible forff Deferr ed tax asset ff Other assets repurchase ToTT tal assets Liabilities assumed: Other borrowings Operating lease liability Liability forff Other liabilities loans eligible for repurchase ToTT tal liabilities Net assets acquired Consideration paid Cash Elimination of pre-existing debt ToTT tal consideration Goodwill April 7, 2021 (in millions)s 207.2 3,552.9 1,347.0 11.3 18.9 141.0 2,744.7 6.6 236.0 8,265.6 3,633.9 18.9 2,744.7 149.5 6,547.0 1,718.6 1,231.6 686.8 1,918.4 199.8 $ $ $ $ $ $ $ In connection with the acquisition, the Company acquired identifiable intangible assets totaling $141.0 million, as detailed in the table below: Correspondent customer relationships Operating licenses e name TradTT ToTT tal Acquisition Date Fair ValueVV Estimated Useful Lifeff (in millions) (in yearsrr )s $ 76.0 55.5 9.5 141.0 20 40 20 Goodwill in the amount of $199.8 million was recognized and allocated entirely to the Consumer Related segment. Goodwill represents the strategic, ings, diversification of its revenue operational, and finan sources, and post-acquisition synergies frff om integrating AmeriHome’s operating platform, as well as the value of the acquired workforce. Approximately $185.0 million of goodwill is expected to be deductible for tax purposes. cial benefiff ts expected from the acquisition, including expansion of the Company's mortgage offff erff ff The follow ing table presents pro forff ma inforff mation as if the AmeriHome acquisition was completed on Januaryrr 1, 2020. The pro forff ma inforff mation includes ff adjustments foff r interest income and interest expense on existing loan agreements between WALWW and AmeriHome prior to acquisition, the impact of MSR sales contemplated in connection with the acquisition, amortization of intangible assets arising fromff the acquisition, recognition of stock compensation expense for awards issued to certain AmeriHome executives, transaction costs, and related income tax effff eff cts. The pro foff rma information is not necessarily indicative of the results of operations as they would have been had the transactions been effff ecff ted on the assumed dates. Interest income Non-interest income Net income $ cember 31, 2021 2020 (in millions)s $ 1,679.9 470.5 909.7 1,322.6 902.7 931.2 99 3. INVESTMENT SECURITIES The carryinr g amounts and faff ir values of investment securities at December 31, 2022 and 2021 are summarized as foff llows: Amortized Cost Gross Unrealized Gains Gross Unrealized (Losses) Fair VaVV lue December 31, 2022 (in millions)s HeldHH -tdd o-tt maturity Private label residential MBS TaxTT -exempt ToTT tal HTM securities ll orff -sarr le debt securities Availaii ble-f CLO Commercial MBS issued by GSEs Corporate debt securities Private label residential MBS Residential MBS issued by GSEs TaxTT -exempt Other ToTT tal AFS debt securities Equityi securities Common stock CRARR investments Preferred stock ToTT tal equity securities Held-todd -maturity Private label residential MBS TaxTT -exempt ToTT tal HTM securities Available-foff r-srr ale debt securities CLO Commercial MBS issued by GSEs Corporate debt securities Private label residential MBS Residential MBS issued by GSEs TaxTT -exempt U.S. treasury securities Other ToTT tal AFS debt securities Equity securities CRARR investments Preferred stock ToTT tal equity securities $ $ $ $ $ $ $ $ $ $ $ $ 198 1,091 1,289 2,796 104 429 1,442 2,123 1,004 75 7,973 4 53 116 173 $ $ $ $ $ $ — $ — — $ — $ 1 — — — 2 6 9 $ — $ — — — $ $ $ $ $ $ (39) (138) (177) (90) (8) (39) (243) (383) (115) (12) (890) (1) (4) (8) (13) $ Amortized Cost Gross Unrealized Gains Gross Unrealized (Losses) Fair ValuVV e December 31, 2021 217 890 1,107 926 68 383 1,529 2,028 1,145 13 75 6,167 45 107 152 $ $ $ $ $ $ (i(( n millions) — $ 43 $ $ 43 1 1 9 3 7 71 — 11 103 $ — $ 8 8 $ (2) (2) (4) (1) — (9) (24) (42) (1) — (4) (81) $ $ $ $ — $ (1) (1) $ 159 953 1,112 2,706 97 390 1,199 1,740 891 69 7,092 3 49 108 160 215 931 1,146 926 69 383 1,508 1,993 1,215 13 82 6,189 45 114 159 Securities with carryr ing amounts of approx purposes as required or permitted by law. a imately $1.7 billion and $2.2 billion at December 31, 2022 and 2021, respectively,yy were pledged foff r various 100 lowing tables summarize the Company's AFS debt securities in an unrealized loss position at December 31, 2022 and 2021, aggregated by major The folff security type and length of time in a continuous unrealized loss position: Less Than Twelv TT e Months December 31, 2022 More Than TweTT lve Months TotaTT l ll orff -sarr le debt securities Availaii ble-f CLO Commercial MBS issued by GSEs Corporate debt securities Private label residential MBS Residential MBS issued by GSEs TaxTT -exempt Other ToTT tal AFS securities Available-foff r-srr ale debt securities CLO Commercial MBS issued by GSEs Corporate debt securities Private label residential MBS Residential MBS issued by GSEs TaxTT -exempt Other ToTT tal AFS securities Gross Unrealized Losses Fair VaVV lue Gross Unrealized Losses Fair VaVV lue Gross Unrealized Losses Fair VaVV lue $ $ $ $ $ 81 4 28 27 82 93 4 319 $ 2,467 46 263 279 600 752 26 4,433 Less Than TwTT elve Months Gross Unrealized Losses Fair ValueVV 1 1 9 24 32 1 — 68 $ $ 171 19 107 1,250 1,356 141 2 3,046 $ $ $ $ (in millions)s 9 4 11 216 301 22 8 571 $ $ 216 14 120 912 1,101 78 26 2,467 $ $ December 31, 2021 More Than TwelTT ve Months 2,683 60 383 1,191 1,701 830 52 6,900 90 8 39 243 383 115 12 890 $ $ TotaTT l Gross Unrealized Losses Fair VaVV lue Gross Unrealized Losses Fair ValueVV (i(( n millions) — $ — — — 9 — 4 13 $ — $ — — — 142 — 28 170 $ 1 1 9 24 41 1 4 81 $ $ 171 19 107 1,250 1,498 141 30 3,216 The total number of AFS debt securities in an unrealized loss position at December 31, 2022 is 832, compared to 179 at December 31, 2021. On a quarterly basis, the Company performs an impairment analysis on its AFS debt securities that are in an unrealized loss position at the end of the period to determine whether credit losses should be recognized on these securities. Qualitative considerations made by the Company in its impairment analysis are further discussed below. ff Government Issued II SS Securi ties Commercial and residential MBS are issued by either government agencies or GSEs. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies. Further, principal and interest payments on these securities continue to be made on a timely basis. Non-Government Issued II Securities Qualitative factors used in the Company's credit loss assessment of its securities that are not issued and guaranteed by the U.S. government include consideration of any adverse conditions related to a specififf c security,yy industryr ,yy or geographic region of its securities, any credit ratings below investment grade, the payment structure lure of the issuer to make any scheduled principal or interest payments. of the security and the likelihood of the issuer to be able to make payments that increase in the fuff ture, and faiff rr For the Company's corporate debt and tax-exempt securities, the Company also considers various metrics of the issuer including days of cash on hand, the ratio of long-term debt to total assets, the net change in cash between reporting periods, and consideration of any breach in covenant requirements. The Company's ate debt securities are investment grade, issuers continue to make timely principal and interest payments, and the unrealized losses on these security corpor rr ios primarily relate to changes in interest rates and other market conditions that are not considered to be credit-related issues. The Company portfolff 101 continues to receive timely principal and interest payments on its tax-exempt securities and the maja ority of these issuers have revenues pledged foff r payment of debt service prior to payment of other types of expenses. For the Company's private label residential MBS, which consist of non-agency collateralized mortgage obligations that are secured by pools of residential rt, whether there were any mortgage principal mortgage loans, the Company also considers metrics such as securitization risk weight factor, current credit suppo defaults in payments on the underlying mortgage collateral, and the credit default rate over the last twelve months. These securities losses resulting fromff primarily carryrr investment grade credit ratings, principal and interest payments on these securities continue to be made on a timely basis, and credit suppu ort for these securities is considered adequate. u ff e, high yield bank loans. The Company's CLO portfoli These are variable rate securities that have an investment grade rating of Single-A or better. The Company has increased its investment in these securities over the past year and unrealized losses on these securities are primarily a fuff nction of the diffeff r price and the valuation mid-market price as well as changes in interest rates. o consists of highly rated securitization tranches, containing pools of medium to large-sized corporat rential frff om the offeff rr io relate to taxaba le municipal and trust preferred securities. The Company is continuing to receive Unrealized losses on the Company's other securities portfolff timely principal and interest payments on its taxabla e municipal securities, these securities continue to be highly rated, and the number of days of cash on hand is strong. The Company's trusrr red securities are investment grade and the issuers continue to make timely principal and interest payments. t preferff Based on the qualitative fact be required to sell the securities prior to their anticipated recoveryr ,yy no credit losses have been recognized on these securities durid 31, 2022 and 2021. In addition, as of December 31, 2022 and 2021, no ACL on the Company's AFS securities has been recognized. ors noted above and as the Company does not intend to sell these securities and it is more likely than not that the Company will not ng the years ended December ff The credit loss model under ASC 326-20, applicable to HTM debt securities, requires recognition of lifeff time expected credit losses through an allowance account at the time the security is purchased. ff The follow ing table presents a rollforwff ard by majoa r security type of the ACL on the Company's HTM debt securities: HeldHH -tdd o-tt maturity debtdd securities TaxTT -exempt Held-todd -maturity debtdd securities TaxTT -exempt Balance, December 31, 2021 Provision for Credit Losses YeaYY r Ended December 31, 2022 Charge-offsff (in millions) Recoveries Balance, December 31, 2022 $ 5.2 $ — $ — $ — $ 5.2 Balance, December 31, 2020 Recovery of Credit Losses YeaYY r Ended December 31, 2021: Charge-offsff (in(( millions) Recoveries Balance December 31, 2021 $ 6.8 $ (1.6) $ — $ — $ 5.2 No allowance has been recognized on the Company's HTM private laba el residential MBS as losses are not expected dued position in these securities. to the Company holding a senior Accruedrr estimate of expected credit losses. interest receivable on HTM securities totaled $4 million and $3 million at December 31, 2022 and 2021, respectively,yy and is excluded froff m the 102 The follow ff quarterly and used to monitor the credit quality of the Company's securities: ing tables summarize the carrying r amount of the Company’s investment ratings position as of December 31, 2022 and 2021, which are updu ated HeldHH -tdd o-tt maturity Private label residential MBS TaxTT -exempt ToTT tal HTM securities (1) ll orff -sarr le debt securities Availaii ble-f CLO Commercial MBS issued by GSEs Corporate debt securities Private label residential MBS Residential MBS issued by GSEs TaxTT -exempt Other ToTT tal AFS securities (1) Equityi securities Common stock CRARR investments Preferred stock ToTT tal equity securities (1) AAA Split-rated AAA/AA+ AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Unrated TotTT als mber 31, 2022 $ $ $ $ $ $ — $ — — $ 310 — — 1,158 — 11 — 1,479 $ $ — $ — — — $ — $ — — $ — $ 97 — — 1,740 15 — 1,852 $ — $ 24 — 24 $ — $ — — $ 2,121 — — 41 — 392 9 2,563 $ $ — $ — — — $ (in millions) — $ — — $ 275 — 74 — — 425 9 783 $ $ — $ — — — $ — $ — — $ — $ — 316 — — — 27 343 $ — $ — 82 82 $ — $ — — $ — $ — — — — — 6 6 $ — $ — 17 17 $ 198 1,091 1,289 $ $ — $ — — — — 48 18 66 3 25 9 37 $ $ $ 198 1,091 1,289 2,706 97 390 1,199 1,740 891 69 7,092 3 49 108 160 (1) For rated securities, if ratings diffff erff , the Company uses an average of the available ratings by major credit agencies. AAA Split-rated AAA/AA+ AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Unrated TotaTT ls December 31, 2021 Held-todd -maturity Private label residential MBS TaxTT -exempt ToTT tal HTM securities (1) Available-foff r-srr ale debt securities CLO Commercial MBS issued by GSEs Corporate debt securities Private label residential MBS Residential MBS issued by GSEs TaxTT -exempt U.S. treasury securities Other ToTT tal AFS securities (1)1 Equity securities CRARR investments Preferred stock ToTT tal equity securities (1) $ $ $ $ $ $ — $ — — $ 45 — — 1,420 — 43 — — 1,508 $ $ — $ — — $ — $ — — $ — $ 69 — — 1,993 40 13 — 2,115 $ 28 — 28 $ $ — $ — — $ 636 — — 87 — 469 — 12 1,204 $ $ — $ — — $ (in(( millions) — $ — — $ 245 — 45 — — 629 — 10 929 $ $ — $ — — $ — $ — — $ — $ — 319 1 — — — 30 350 $ — $ 79 79 $ (1) For rated securities, if ratings diffff erff , the Company uses an average of the available ratings by major credit agencies. — $ — — $ — $ — 19 — — — — 10 29 $ — $ 20 20 $ 217 890 1,107 $ $ — $ — — — — 34 — 20 54 $ 17 15 32 $ $ 217 890 1,107 926 69 383 1,508 1,993 1,215 13 82 6,189 45 114 159 103 A security is considered to be past due once it is 30 days contractuat not have a significant amount of investment securities that were past due or on nonaccruarr t l status. lly past due under the terms of the agreement. As of December 31, 2022, the Company did The amortized cost and fair separately as individual MBS are comprised of pools of loans with varying maturities. Therefore, these securities are listed separately in the maturt value of the Company's debt securities as of December 31, 2022, by contractual ities, are shown below. MBS are shown ity summary. maturt ff t HeldHH -tdd o-tt maturity Due in one year or less Aftff er one year through fiveff years Aftff er five years through ten years Aftff er ten years Mortgage-backed securities ToTT tal HTM securities Availaii ble-f ll le orff -sarr Due in one year or less Aftff er one year through fiveff years Aftff er five years through ten years Aftff er ten years Mortgage-backed securities ToTT tal AFS securities ff The follow ing table presents gross gains and losses on sales of investment securities: Availaii ble-f orff ll Gross gains -sarr le securities Gross losses Net gains on AFS securities Equityi securities Gross gains Gross losses Net losses on equity securities December 31, 2022 Amortized Cost Estimated Fair VaVV lue (in millions)s $ $ $ $ 9 17 29 1,036 198 1,289 1 170 1,136 2,997 3,669 7,973 2022 YeYY ar Ended December 31, 2021 (in millions) 7.6 (0.2) 7.4 $ $ — $ (0.5) (0.5) $ 8.4 — 8.4 0.1 (0.2) (0.1) $ $ $ $ $ $ $ $ $ $ $ $ 9 17 28 900 158 1,112 1 159 1,086 2,810 3,036 7,092 0.4 (0.2) 0.2 — — — 2020 During the years ended December 31, 2022 and 2021, the Company sold securities with a carryir ng value of $170 million and $161 million, respectively,yy and recognized net gains of $7.4 million and $8.4 million, respectively. These sales were largely related to the Company's interest rate management actions to secure gains on tax-exempt municipal securities that were purchased at a discount at the onset of the COVID-19 pandemic. During the year ended December 31, 2020, the Company did not have significff ant sales of investment securities. 104 4. LOANS HELD FOR SALE The Company purchases and originates residential mortgage loans to be sold or securitized through its AmeriHome mortgage banking business channel. The following is a summaryr of loans HFS by type: Government-insured or guaranteed: EBO (1) Non-EBO ToTT tal government-insured or guaranteed Agency-conforff ming Non-agency ToTT tal loans HFS December 31, 2022 2021 (in millions)s $ $ — $ 591 591 593 — 1,184 $ 1,693 1,396 3,089 2,483 63 5,635 (1) EBO loans are delinquent FHA, VA,VV or USDA loans repurchased under the terms of the GNMA MBS program that can be repooled or resold when loans are brought current either through the borrower's reperformance or through completion of a loan modification. During the year ended December 31, 2022, the Company transferr ff ed the remaining balance of its EBO loans from HFS to HFI. ff The follow ing is a summary of the net gain on loan purchase, origination, and sale activities: YeYY ar Ended December 31, 2022 2021 (2) (in millions)s $ $ $ 719.7 (1,076.6) 1.7 (6.8) (5.9) 408.0 402.1 40.1 63.9 104.0 $ $ $ 763.8 (465.3) (0.6) (0.3) (69.9) 20.1 (49.8) 247.8 78.4 326.2 a Mortgage servicing rights capital Net proceeds from sale of loans (1) Provision for and change in estimate of liabia lity forff value of loans HFS Change in fair ff ized upon sale of loans losses under representations and warranties, net Change in fair value of derivatives related to loans HFS: Unrealized loss on derivatives Realized gain on derivatives ToTT tal change in fair value of derivatives Net gain on loans HFS Loan acquisition and origination fees Net gain on loan origination and sale activities (1) Represents the diffff ereff nce between cash proceeds received upon settlement and loan basis. (2) Period from April 7, 2021, the acquisition date of AmeriHome, through December 31, 2021. 105 5. LOANS, LEASES AND ALLOWAWW NCE FOR CREDIT LOSSES The composition of the Company's HFI loan portfoff lio is as follows: WarWW ehouse lending Municipal & nonprofitff & innovation TechTT Equity fund resources Other commercial and indusd trial CRE - owner occupied Hotel franchise finance Other CRE - non-owner occupied Residential Residential - EBO Constructio rr Other n and land development ToTT tal loans HFI Allowance forff credit losses ToTT tal loans HFI, net of allowance December 31, 2022 2021 (in millions)s $ $ 5,561 1,524 2,293 3,717 7,793 1,656 3,807 5,457 13,996 1,884 3,995 179 51,862 (310) $ 51,552 $ 5,156 1,579 1,418 3,830 6,465 1,723 2,534 3,952 9,243 — 3,006 169 39,075 (252) 38,823 Loans classified as HFI are stated at the amount of unpaid principal, adjusted for net defeff rred feff es and costs, premiums and discounts on acquired and of $141 million and $86 million reducd ed the carryir ng value of loans as of December 31, 2022 and 2021, purchased loans, and an ACL. Net defeff rred loan fees respectively. Net unamortized purchase premiums on acquired and purchased loans of $195 million and $185 million increased the carrying value of loans as of December 31, 2022 and 2021, respectively. ff Nonaccrual and Past Due Loans Loans are placed on nonaccruarr terms is no longer likely,yy generally when the loan becomes 90 days or more past dud e. l status when management determines that the fulff l repayment of principal and collection of interest according to contractual ff The follow ing tables present nonperforming loan balances by loan portfolff io segment: Municipal & nonprofitff TechTT & innovation Other commercial and indusd trial CRE - owner occupied Hotel franchise finance Other CRE - non-owner occupied Residential Residential - EBO rr Constructio n and land development ToTT tal Nonaccrual with No Allowance for Credit Loss Nonaccrual with an Allowance forff Credit Loss ToTT tal Nonaccrual Loans Past Due 90 Days or More and Still Accruing December 31, 2022 $ $ — $ — 1 10 — 5 — — 4 20 $ (i(( n millions) 7 1 23 2 10 3 19 — — 65 $ $ 7 1 24 12 10 8 19 — 4 85 $ $ — — — — — — — 582 — 582 Loans contractually delinquent by 90 days or more and still accruirr ng totaled $582 million at December 31, 2022 and consist entirely of government guaranteed EBO residential loans. 106 & innovation TechTT Equity fund resources Other commercial and indusd trial CRE - owner occupied Other CRE - non-owner occupied Residential Constructio rr Other n and land development ToTT tal Nonaccrual with No Allowance forff Credit Loss Nonaccrual with an Allowance for Credit Loss ToTT tal Nonaccrual Loans Past Due 90 Days or More and Still Accruing ecember 31, 2021 $ $ 2 — 13 12 11 — 1 — 39 $ $ (in millions)s 11 1 3 1 2 15 — 1 34 $ $ 13 1 16 13 13 15 1 1 73 $ $ — — — — — — — — — The reduction in interest income associated with loans on nonaccrual status was approximately $4.7 million, $5.3 million, and $5.0 million for the years ended December 31, 2022, 2021, and 2020, respectively. ff The follow ing table presents an aging analysis of past dud e loans by loan portfoff lio segment: Current 30-59 Days Past Due 60-89 Days Past Due Over 90 days Past Due ToTT tal Past Due ToTT tal December 31, 2022 WarWW ehouse lending Municipal & nonprofitff TechTT & innovation Equity fund resources Other commercial and indusd trial CRE - owner occupied Hotel franchise finan ce ff Other CRE - non-owner occupied Residential Residential - EBO Constructio rr Other n and land development $ $ 5,561 1,524 2,270 3,717 7,791 1,656 3,807 5,454 13,955 969 3,995 178 ToTT tal loans $ 50,877 $ — $ — 23 — 2 — — 3 37 217 — 1 283 $ (i(( n millions) — $ — — — — — — — 4 116 — — 120 $ cember 31, 2021 — $ — — — — — — — — 582 — — 582 $ — $ — 23 — 2 — — 3 41 915 — 1 985 $ 5,561 1,524 2,293 3,717 7,793 1,656 3,807 5,457 13,996 1,884 3,995 179 51,862 WarWW ehouse lending Municipal & nonprofitff TechTT & innovation Equity fund resources Other commercial and indusd trial CRE - owner occupied Hotel franchise finan ce ff Other CRE - non-owner occupied Residential rr Constructio Other n and land development ToTT tal loans Current 30-59 Days Past Due 60-89 Days Past Due Over 90 days Past Due TotaTT l Past Due TotTT al $ $ 5,156 1,579 1,418 3,830 6,465 1,723 2,534 3,952 9,191 3,006 169 39,023 $ $ — $ — — — — — — — 51 — — 51 $ (i(( n millions) — $ — — — — — — — 1 — — 1 $ — $ — — — — — — — — — — — $ — $ — — — — — — — 52 — — 52 $ 5,156 1,579 1,418 3,830 6,465 1,723 2,534 3,952 9,243 3,006 169 39,075 107 Credit Quality Indicators ff on, historical payment experience, credit documentation, public infoff rmation, and current economic trends, among other facto The Company categorizes loans into risk categories based on relevant informff ation about the ability of borrowers to service their debt such as current finff ancial informati rs. The Company the loans as to credit risk. This analysis is perfoff rmed on a quarterly basis. The risk rating categories are described in analyzes loans individually to classifyff "Note 1. Summary of Significff ant Accounting Policies" of these Notes to Consolidated Financial Statements. The following taba les present risk ratings by loan portfolff io segment and origination year. The origination year is the year of origination or renewal. ff December 31, 2022 WaWW rehouse lending Pass Special mention Classified ToTT tal Municipal & nonprofitff Pass Special mention Classified ToTT tal TechTT & innovation Pass Special mention Classified ToTT tal Equity fund ff resources Pass Special mention Classified ToTT tal Other commercial and industrial Pass Special mention Classified ToTT tal CRE - owner occupied Pass Special mention Classified ToTT tal e finance ff Hotel franchis Pass Special mention Classified ToTT tal Other CRE - non-owner occupied Pass Special mention Classified ToTT tal TermTT Loan Amortized Cost Basis by Origination YeYY ar 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis TotaTT l (in millions) — $ — — — $ 78 — — 78 66 — — 66 16 — — 16 277 — 3 280 157 — 1 158 528 — 117 645 264 12 12 288 $ $ $ $ $ $ $ $ $ $ $ $ $ $ — $ — — — $ 43 — — 43 4 — — 4 $ $ $ $ — $ — — — $ 312 — 3 315 211 — 5 216 290 — 45 335 160 — 10 170 $ $ $ $ $ $ $ $ — $ — — — $ 917 — 7 924 1 — — 1 $ $ $ $ — $ — — — $ 206 — 1 207 339 1 10 350 103 — — 103 218 — 5 223 $ $ $ $ $ $ $ $ 4,928 — — 4,928 $ $ — $ — — — $ 853 20 — 873 1,301 — — 1,301 2,406 3 2 2,411 29 — 11 40 118 — — 118 315 1 — 316 $ $ $ $ $ $ $ $ $ $ $ $ 5,518 43 — 5,561 1,517 — 7 1,524 2,198 81 14 2,293 3,717 — — 3,717 7,703 47 43 7,793 1,607 1 48 1,656 3,581 26 200 3,807 5,372 54 31 5,457 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 397 43 — 440 107 — — 107 813 36 2 851 1,020 — — 1,020 2,968 — 3 2,971 338 — — 338 1,762 — 18 1,780 2,344 3 — 2,347 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 41 — — 41 185 — — 185 374 22 12 408 1,189 — — 1,189 1,272 44 21 1,337 359 — 14 373 726 — 20 746 1,201 38 4 1,243 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 152 — — 152 187 — — 187 87 3 — 90 191 — — 191 262 — 10 272 174 — 7 181 54 26 — 80 870 — — 870 108 December 31, 2022 2022 2021 2020 2019 2018 Prior eTT rm Loan Amortized Cost Basis by Origination YeYY ar Revolving Loans Amortized Cost Basis ToTT tal Residential Pass Special mention Classified ToTT tal Residential - EBO Pass Special mention Classified ToTT tal Construction and land development Pass Special mention Classified ToTT tal Other Pass Special mention Classified ToTT tal ToTT tal by Risk Category Pass Special mention Classified ToTT tal $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 4,041 — 6 4,047 3 — — 3 1,533 — — 1,533 23 — — 23 15,349 82 29 $ $ $ $ $ $ $ $ $ 8,474 — 9 8,483 268 — — 268 815 — — 815 10 — — 10 14,914 104 80 15,460 $ 15,098 $ 878 — — 878 712 — — 712 273 98 — 371 13 — — 13 3,853 127 17 3,997 $ $ $ $ $ $ $ $ $ $ (in millions) 308 — 3 311 454 — — 454 14 — 4 18 5 — — 5 2,167 12 140 2,319 $ $ $ $ $ $ $ $ $ $ 150 — 1 151 191 — — 191 $ $ $ $ — $ — — — $ 2 — — 2 1,363 — 64 1,427 $ $ $ $ 90 — — 90 256 — — 256 $ $ $ $ — $ — — — $ 61 1 — 62 2,191 2 23 2,216 $ $ $ $ 36 — — 36 $ $ — $ — — — $ 1,258 — — 1,258 64 — — 64 11,308 24 13 11,345 December 31, 2021 2021 2020 2019 2018 2017 Prior TermTT Loan Amortized Cost Basis by Origination YeYY ar WarWW ehouse lending Pass Special mention Classified ToTT tal Municipal & nonprofit Pass Special mention Classified ToTT tal TechTT & innovation Pass Special mention Classified ToTT tal Equity fund resources Pass Special mention Classified ToTT tal $ $ $ $ $ $ $ $ 243 — — 243 129 — — 129 763 26 3 792 9 — — 9 $ $ $ $ $ $ $ $ 12 — — 12 195 — — 195 157 5 5 167 2 — — 2 $ $ $ $ $ $ $ $ (in(( millions) — $ — — — $ 53 — — 53 6 — — 6 $ $ $ $ — $ — — — $ — $ — — — $ 219 — — 219 $ $ — $ — — — $ 2 — — 2 $ $ — $ — — — $ 101 — — 101 101 — 7 108 $ $ $ $ — $ — — — $ 109 Revolving Loans Amortized Cost Basis — $ — — — $ 878 — — 878 1 — — 1 $ $ $ $ — $ — — — $ 4,901 — — 4,901 4 — — 4 334 8 2 344 3,817 — — 3,817 13,977 — 19 13,996 1,884 — — 1,884 3,893 98 4 3,995 178 1 — 179 51,145 351 366 51,862 TotaTT l 5,156 — — 5,156 1,579 — — 1,579 1,362 39 17 1,418 3,830 — — 3,830 $ $ $ $ $ $ $ $ $ $ $ $ $ $ December 31, 2021 2021 2020 2019 2018 2017 Prior (in millions) TeTT rm Loan Amortized Cost Basis by Origination YeYY ar Revolving Loans Amortized Cost Basis ToTT tal Other commercial and industrial Pass Special mention Classified ToTT tal CRE - owner occupied Pass Special mention Classified ToTT tal Hotel franchise finance Pass Special mention Classified ToTT tal Other CRE - non-owner occupied u Pass Special mention Classified ToTT tal Residential Pass Special mention Classified ToTT tal Construction and land development Pass Special mention Classified ToTT tal Other Pass Special mention Classified ToTT tal ToTT tal by Risk Category Pass Special mention Classified ToTT tal TrTT oubled Debt Restructurings $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 2,911 5 — 2,916 417 — 2 419 721 — 30 751 1,398 15 — 1,413 7,459 — 9 7,468 958 — 1 959 16 — — 16 15,024 46 45 15,115 $ 360 27 10 397 199 — 2 201 205 — — 205 755 — — 755 1,019 — 1 1,020 632 22 4 658 12 — — 12 3,548 54 22 3,624 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 387 22 6 415 220 — 1 221 659 88 99 846 673 10 4 687 396 — 3 399 394 — 1 395 4 — — 4 2,935 120 121 3,176 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 210 18 2 230 190 10 5 205 332 51 16 399 279 — 5 284 201 — 1 202 112 — — 112 4 — — 4 1,387 79 29 1,495 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 80 — 1 81 278 — 8 286 135 — 11 146 186 — — 186 42 — — 42 4 6 — 10 4 — — 4 950 6 20 976 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 98 — — 98 322 2 11 335 64 — — 64 283 1 17 301 75 — 1 76 $ $ $ $ $ $ $ $ $ $ — $ — — — $ 82 — 1 83 1,803 3 30 1,836 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 2,306 15 7 2,328 56 — — 56 123 — — 123 315 — 11 326 36 — — 36 870 — 2 872 46 — — 46 12,808 23 22 12,853 $ 6,352 87 26 6,465 1,682 12 29 1,723 2,239 139 156 2,534 3,889 26 37 3,952 9,228 — 15 9,243 2,970 28 8 3,006 168 — 1 169 38,455 331 289 39,075 reasons related to a borrower’s financial diffff icul A TDR loan is a loan on which the Company,yy forff would not otherwise consider. The loan terms that have been modified or restructu reduction in the stated interest rate, an extension of the maturity or renewal of the loan at an interest rate below current market, a reduction in the face of the debt, a reduction in the accruedrr of payments which result in no lost principal or interest. Consistent with regulatoryr guidance, a TDR loan that is subsequently modifiedff agreement but has shown sustained perforff mance and classificati based at the time of modification. ties, grants a concession to the borrower that the Company on include, but are not limited to, a amount ral in another restrurr cturing provided that the modified terms were market- ral of interest payments. The maja ority of the Company's modificat on as a TDR, will be removed frff om TDR statust ions are extensions in terms or deferff to a borrower’s fiff nancial situati interest, or deferff red dued ff ff rr ff ff t 110 ff The follow ing table presents TDR loans by loan portfoff lio segment: d ial & innovation TechTT Other commercial and industr CRE - owner occupied Hotel franchise financ e ff Other CRE - non-owner occupied rr Constructio n and land development ToTT tal cember 31, 2022 December 31, 2021 Number of Loans Recorded Investment Number of Loans Recorded Investment (dodd llars in millions) — $ 4 1 1 1 — 7 $ — 2 1 10 1 — 14 2 7 1 — 5 1 16 $ $ 2 6 1 — 11 1 21 The ACL on TDR loans totaled $4 million and zero as of December 31, 2022 and 2021, respectively. There were no outstanding commitments on TDR loans as of December 31, 2022 and 2021. During the year ended December 31, 2022, the Company had three new TDR loans with a recorded investment of $11 million, compared to nine new TDR loans with a recorded investment of $13 million during the year ended December 31, 2021. No principal amounts were forff given and there were no waived fees or other expenses resulting fromff these TDR loans. ff A TDR loan is deemed to have a payment default when it becomes past dued , or is restructurt ed again. Payment defaults, along with other qualitative indicators, are considered by management in the determination of the ACL. During the year ended lt within 12 months following the modififf cation. During the year ended December December 31, 2022, there were no loans forff which there was a payment defauff 31, 2021, there was one commercial and industrial loan with a recorded investment of $2 million forff which there was a payment defauff lt within 12 months following the modificat 90 days under the modified terms, goes on nonaccrual statust ion, which resulted in a charge-offff of $2 million. ff Collateral-Dependent Loans ff The follow ing table presents the amortized cost basis of collateral-dependent loans by loan portfoff lio segment: Municipal & nonprofitff TechTT & innovation Other commercial and indusd trial CRE - owner occupied Hotel franchise finan ce ff Other CRE - non-owner occupied rr Constructio n and land development ToTT tal 2022 2021 December 31, Real Estate Collateral Other Collateral ToTT tal Real Estate Collateral (in millions)s Other Collateral TotaTT l $ $ — $ — — 42 186 27 4 259 $ 7 6 30 — — — — 43 $ $ 7 6 30 42 186 27 4 302 $ $ — $ — — 23 156 31 4 214 $ — $ — 13 — — — — 13 $ — — 13 23 156 31 4 227 The Company did not identifyff any significff ant changes in the extent to which collateral secures its collateral dependent loans, whether in the foff rm of general deterioration or froff m other facff tors during the period ended December 31, 2022. 111 Allowance forff Credit Losses The ACL consists of the ACL on funded loans HFI and an ACL on unfundff loans, see "Note 3. Investment Securities" of these Notes to Consolidated Financial Statements for furt to be a reasonable and supportable estimate of expected credit losses inherent within the Company's HFI loan portfolio as of December 31, 2022. ed loan commitments. The ACL on HTM securities is estimated separately froff m her discussion. Management considers the level of ACL ff The below tables reflect ff the activity in the ACL on loans HFI by loan portfolff io segment, which includes an estimate of future recoveries: YeaYY r Ended December 31, 2022 WarWW ehouse lending Municipal & nonprofitff TechTT & innovation Equity fund resources Other commercial and indusd trial CRE - owner occupied Hotel franchise finan ce ff Other CRE - non-owner occupied Residential rr Constructio n and land development Other ToTT tal WarWW ehouse lending Municipal & nonprofitff TechTT & innovation Equity fund resources Other commercial and indusd trial CRE - owner occupied ce ff Hotel franchise finan Other CRE - non-owner occupied Residential Constructio rr Other n and land development ToTT tal $ $ $ $ Balance, December 31, 2021 Provision for (Recovery of)ff Credit Losses Charge-offsff (in millions) $ 3.0 13.7 25.7 9.6 103.6 10.6 41.5 16.9 12.5 12.5 2.9 252.5 $ $ 5.4 2.2 3.0 (3.2) (14.4) (3.6) 5.4 30.4 17.8 15.3 0.4 58.7 $ Recoveries Balance, December 31, 2022 — $ — (2.1) — (5.2) (0.1) — (0.1) (0.1) (0.1) (0.1) (7.8) $ 8.4 15.9 30.8 6.4 85.9 7.1 46.9 47.4 30.4 27.4 3.1 309.7 — $ — — — 8.5 — — — — 0.5 0.3 9.3 $ YeYY ar Ended December 31, 2021 Charge-offff sff (in millions) $ Balance, December 31, 2020 Provision forff (Recovery of)ff Credit Losses $ 3.4 15.9 33.4 1.9 94.7 18.6 43.3 39.9 0.8 22.0 5.0 (0.4) (2.2) (6.2) 7.7 14.0 (8.0) (2.1) (22.5) 11.2 (9.5) (2.5) 278.9 $ (20.5) $ Recoveries Balance, December 31, 2021 — $ — (0.5) — (2.3) — (0.3) (1.5) (0.5) — (0.6) (5.7) $ 3.0 13.7 25.7 9.6 103.6 10.6 41.5 16.9 12.5 12.5 2.9 252.5 — $ — 2.0 — 7.4 — — 2.0 — — 0.2 11.6 $ Accruedrr respectively,yy and is excluded fromff allowance of $9 million as of December 31, 2022. interest receivable on loans totaled $304 million, befoff re the allowance on Residential-EBO loans, and $198 million at December 31, 2022 and 2021, the estimate of credit losses, except foff r accrurr ed interest related to the Residential-EBO loan portfolio segment, which had an 112 In addition to the ACL on funded loans HFI, the Company maintains a separate ACL related to off-ff balance sheet credit exposures, including unfunff ded loan commitments. This allowance is included in Other liaba ilities on the Consolidated Balance Sheets. The below table reflects the activity in the ACL on unfuff nded loan commitments: Balance, beginning of period Provision for credit losses Balance, end of period YeYY ar Ended December 31, 2022 2021 $ $ (in millions)s 37.6 9.4 $ 47.0 $ ff The follow ing tables disaggregate the Company's ACL on funded loans HFI and loan balances by measurement methodology: Collectively Evaluated for Credit Loss Loans Individually Evaluated for Credit Loss December 31, 2022 TotalTT Collectively Evaluated for Credit Loss (in millions) Allowance Individually Evaluated for Credit Loss ToTT tal WarWW ehouse lending Municipal & nonprofitff TechTT & innovation Equity fund resources Other commercial and indusd trial CRE - owner occupied Hotel franchise finan ce ff Other CRE - non-owner occupied Residential Residential EBO rr Constructio Other n and land development $ $ 5,561 1,517 2,280 3,717 7,754 1,612 3,607 5,428 13,996 1,884 3,991 179 ToTT tal $ 51,526 $ — $ 7 13 — 39 44 200 29 — — 4 — 336 $ $ 5,561 1,524 2,293 3,717 7,793 1,656 3,807 5,457 13,996 1,884 3,995 179 $ 8.4 13.4 30.3 6.4 80.4 7.1 44.7 47.4 30.4 — 27.4 3.1 — $ 2.5 0.5 — 5.5 — 2.2 — — — — — 51,862 $ 299.0 $ 10.7 $ 309.7 37.0 0.6 37.6 8.4 15.9 30.8 6.4 85.9 7.1 46.9 47.4 30.4 — 27.4 3.1 WarWW ehouse lending Municipal & nonprofitff TechTT & innovation Equity fund resources Other commercial and indusd trial CRE - owner occupied Hotel franchise finan ce ff Other CRE - non-owner occupied Residential rr Constructio n and land development Other ToTT tal Loans Allowance December 31, 2021 Collectively Evaluated for Credit Loss Individually Evaluated foff r Credit Loss ToTT tal Collectively Evaluated foff r Credit Loss Individuad lly Evaluated foff r Credit Loss ToTT tal $ $ 5,156 1,579 1,401 3,830 6,442 1,699 2,378 3,917 9,243 2,998 169 $ 38,812 $ — $ — 17 — 23 24 156 35 — 8 — 263 $ (i(( n millions) $ 5,156 1,579 1,418 3,830 6,465 1,723 2,534 3,952 9,243 3,006 169 39,075 $ 3.0 13.7 22.9 9.6 101.1 10.6 30.7 16.9 12.5 12.5 2.9 236.4 $ $ — $ — 2.8 — 2.5 — 10.8 — — — — 16.1 $ 3.0 13.7 25.7 9.6 103.6 10.6 41.5 16.9 12.5 12.5 2.9 252.5 113 Loan Purchases and Sales Loan purchases during each of the years ended December 31, 2022 and 2021 totaled $8.8 billion, which primarily consisted of residential loan purchases. There were no loans purchased with more-than-insignifican t deterioration in credit quality during the years ended December 31, 2022 and 2021. ff During the year ended December 31, 2022, the Company sold loans with a carryir ng value of $780 million and recognized a net loss of $8.4 million on these loan sales. During the year ended December 31, 2021, the Company sold loans with a carryir ng value of $551 million and recognized a net gain of $7.2 million on these loan sales. 6. MORTRR GAGE SERVICI RR NG RIGHTS The followi ff to its servicing portfoli ff o: ng table presents the changes in fair ff value of the Company's MSR portfolff io related to its mortgage banking business and other information related Balance, beginning of period Acquired in AmeriHome acquisition Additions froff m loans sold with servicing rights retained MSRs sold Change in fair value Realization of cash flows ff Balance, end of period Unpaid principal balance of mortgage loans serviced forff others (1) Period from April 7, 2021, the acquisition date of AmeriHome, through December 31, 2021. YeYY ar Ended December 31, 2022 2021 (1) $ (i(( n millions)s 698 — 720 (350) 192 (112) 1,148 70,849 $ $ — 1,347 764 (1,271) (2) (140) 698 54,348 $ $ $ Changes in the fair value of MSRs are recorded as Net loan servicing revenue in the Consolidated Income Statement. Due to the regulatory capital impact of MSRs on capia tal ratios, the Company sells certain MSRs and related servicing advances in the normal course of business. During the year ended December 31, 2022, MSR sales had an aggregate net sales price of $350 million and the UPB of loans underlying these sales totaled $24.1 billion. During the period frff om the AmeriHome acquisition date through December 31, 2021, the Company completed sales of MSRs and related servicing advances with an aggregate net sales price of $1.3 billion and UPB of loans underlying these sales of $97.2 billion. As of December 31, 2022 and 2021, the Company had a remaining receivable balance of $39 million and $83 million related to holdbd acks on MSR sales for pending servicing transferff , which was recorded in Other assets on the Consolidated Balance Sheet. The Company receives loan servicing feeff are collected from payments made by borrowers. The Company may receive other remuneration from rights to various borrower contracted feff es, such as late charges, collateral reconveyance charges, and non-suffff icff income associated with the Company's lly specififf ed servicing feeff the year ended December 31, 2022, and $138.9 million for the period frff om the AmeriHome acquisition on April 7, MSR portfolio 2021 through December 31, 2021, which are recorded as Net loan servicing revenue in the Consolidated Income Statement. s, net of subu servicing costs, based on the UPB of the underlying loans. Loan servicing fees ient funds fees. Contractuat totaled $194.5 million forff s, late feff es, and ancillaryrr ff ff In accordance with its contractual loan servicing obligations, the Company is required to advance funds to or on behalf of investors when borrowers do not make payments. The Company advances property taxes and insurance premiums for borrowers who have insuffiff cient funds in escrow accounts, plus any other costs to preserve real estate properties. The Company may also advance funds to maintain, repair, and market foreclosed real estate properties. The Company is entitled to recover all or a portion of the advances frff om borrowers of reinstated and performff ing loans, from the proceeds of liquidated properties or from the government agency or GSE guarantor of charged-offff loans. Servicing advances are charged-offff when they are deemed to be uncollectible. As of December 31, 2022 and 2021, net servicing advances totaled $102 million and $82 million, respectively,yy which are recorded as Other assets on the Consolidated Balance Sheet. 114 The following table presents the effff eff ct of hypothetical changes in the faiff rates, and prepayment speeds that are used to determine fair value: r value of MSRs caused by assumed immediate changes in interest rates, discount Fair value of mortgage servicing rights Increase (decrease) in fair value resulting frff om: ff Interest rate change of 50 basis points Adverse change Favorable change Discount rate change of 50 basis points Increase Decrease Conditional prepayment rate change of 1% Increase Decrease Cost to service change of 10% Increase Decrease December 31, 2022 (in(( millions)s $ 1,148 (46) 38 (23) 24 (24) 26 (15) 15 Sensitivities are hypothetical changes in fair not be linear. In addition, the offff seff assumption is calculated without changing any other assumptions, whereas a change in one facto can be given that actual results would be consistent with the results of these estimates. As a result, actual from those reported. lated because the relationship of changes in assumptions to changes in fair value may tting effff eff ct of hedging activities are not contemplated in these results and further, the effff eff ct of a variation in a particular r may result in changes to another. Accordingly,yy no assurance significantly changes in MSR values may diffff erff value and cannot be extrapoa futff uret ff ff t 7. PREMISES AND EQUIPMENT The follow ff ing is a summaryr of the major categories of premises and equipment: Bank premises Constructio n in progress rr Furniturt e, fixtures, and equipment Land and improvements Leasehold improvements Softwff are ToTT tal Accumulated depreciation and amortization Premises and equipment, net December 31, 2022 2021 (in millions)s $ $ $ 95 60 97 32 66 83 433 (157) 276 $ 92 43 59 32 41 41 308 (126) 182 Depreciation and amortization expense totaled $31.8 million, $20.7 million, and $15.2 million forff respectively. the years ended December 31, 2022, 2021, and 2020, 115 8. LEASES The Company has operating leases under which it leases its branch offff iff ces, corporate headquarters, other offff iff ces, and data faff cility centers. As of December 31, 2022, and 2021 the Company's operating lease ROU asset totaled $163 million and $133 million, respectively,yy and and operating lease liabia lity totaled $185 million and $143 million, respectively. A weighted average discount rate of 2.81%, 2.14%, and 2.80% was used in the measurement of the ROU asset and lease liability as of December 31, 2022, 2021, and 2020 respectively. The Company's leases have remaining lease terms of one to 11 years, with a weighted average lease term of 7.4 years, 7.5 years, and 7.7 years at December 31, 2022, 2021, 2020, respectively. Some leases include multiple five- year renewal options. The Company’s decision to exercise these renewal options is based on an assessment of its current business needs and market factors at the time of the renewal. Currently,yy the Company has no leases forff which the option to renew is reasonably certain and thereforff e, options to renew were not factored into the calculation of its ROU asset and lease liability as of December 31, 2022. ff ff The follow ing is a scheduled of the Company's operating lease liabia lities by contractuat l maturt ity as of December 31, 2022: 2023 2024 2025 2026 2027 Thereafter ToTT tal lease payments Less: imputed interest ToTT tal present value of lease liabilities (in(( millions)s 18 31 31 28 24 77 209 24 185 $ $ $ location that will commence within the next 12 months and will have a lease term of 8 years. The Company also has an additional operating lease foff r an office The aggregate futur e commitment related to this additional lease totals $3 million. ff ff TotTT al operating lease costs of $25.4 million and other lease costs of $4.0 million, which include common area maintenance, parking, and taxes dudd ring the year cy expense. For the year ended December 31, 2021, total operating lease costs and other lease ended December 31, 2022, were included as part of Occupanu costs were $18.8 million and $3.8 million, respectively,yy and for the year ended December 31, 2020, were $14.0 million and $3.9 million, respectively. Short- term lease costs were not material forff the years ended December 31, 2022, 2021, and 2020. The below table shows the supplemental cash flow inforff mation related to the Company's operating leases: Cash paid for amounts included in the measurement of operating lease liabilities Right-of-use assets obtained in exchange foff r new operating lease liabia lities $ $ 15.1 51.6 $ 16.3 76.7 13.0 11.8 2022 YeYY ar Ended December 31, 2021 (i(( n millions) 2020 116 9. GOODWILL AND OTHER INTATT NGIBLE ASSETS Goodwill represents the excess consideration paid for net assets acquired in a business combination over their faiff acquired in a business combination that are determined to have an indefinff impairment at least annually. The Company had goodwill of $527 million and $491 million as of December 31, 2022 and 2021, respectively. r value. Goodwill and other intangible assets ite useful lifeff are not subject to amortization, but are subsequently evaluated forff The Company perforff ms its annual goodwill and intangibles impairment tests as of October 1 each year, or more often if events or circumstances indicate that the carryinr Based on the Company's annual goodwill and intangibles impairment tests as of October 1 durdd ing the years ended December 31, 2022, 2021, and 2020, it was determined that goodwill and intangible assets are not impaired. g value may not be recoverable. a ff The follow ing is a summary of the Company's acquired intangible assets: to amortization b Subject Core deposits Correspondent customer relationships Customer relationships Developed technology Operating licenses e names TradTT December 31, 2022 December 31, 2021 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount $ $ $ 14 76 18 4 56 10 178 $ 11 7 3 1 2 1 25 $ $ (i(( n millions) $ 3 69 15 3 54 9 $ 14 76 3 — 56 9 153 $ 158 $ 10 3 1 — 1 0 15 $ $ 4 73 2 — 55 9 143 As of December 31, 2022, the Company's intangible assets had a weighted average estimated useful lifeff of 24.2 years. Amortization expense recognized on amortizable intangibles totaled $10.4 million, $6.1 million, and $1.6 million for the years ended December 31, 2022, 2021, and 2020, respectively. Below is a summaryrr of future estimated aggregate amortization expense as of December 31, 2022: 2023 2024 2025 2026 2027 Thereafter ToTT tal (in(( millions)s 10.5 10.5 9.7 8.8 8.0 105.4 152.9 $ $ 117 10. DEPOSITS The table below summarizes deposits by type: Non-interest-bearing demand deposits Interest-bearing transaction accounts Savings and money market accounts Time certificates of deposit ($250,000 or more) Other time deposits ToTT tal deposits The summaryrr of the contractual t maturi t ties forff 2023 2024 2025 2026 2027 ToTT tal all time deposits as of December 31, 2022 is as foff llows: December 31, 2022 2021 (i(( n millions)s $ 19,691 9,507 19,397 3,815 1,234 53,644 $ 21,353 6,924 17,279 523 1,533 47,612 $ $ (in millions)s 4,904 132 11 1 1 5,049 $ $ WABWW is a participant in the Promontory Interfinancial Network, a network that offff erff s deposit placement services such as CDARS and ICS, which offff erff products that qualify large deposits forff institutions regarding brokered deposits because of the general concern that these deposits are not relationship-based and are at a greater risk of being withdrawn, thus posing liquidity risk forff institutions that gather brokered deposits in significan t amounts. At December 31, 2022 and 2021, the Company had $683 million and $729 million, respectively,yy of reciprocal CDARS deposits and $2.1 billion and $1.8 billion, respectively,yy of ICS deposits. The Company also had $4.8 billion and $1.8 billion of wholesale brokered deposits at December 31, 2022 and 2021, respectively. FDIC insurance. Federal banking law and regulation places restrictions on depositoryr ff In addition, deposits for which the Company provides account holders with earnings credits or referral fees tottaled $12.9 billion aand $10.8 billion at December 31, 2022 and 2021, respectively. The Company incurred $162.8 million, $27.4 million, and $17.0 million in deposit related costs on these deposits durd ing the years ended December 31, 2022, 2021, and 2020 respectively. ff 118 11. OTHER BORROWINGS ff The follow ing table summarizes the Company’s borrowings: TT Short-Term: Federal funds purchased FHLB advances Repurchase agreements Secured borrowings ToTT tal short-term borrowings : Long-TermTT AmeriHome senior notes, net of faff ir value adjustment Credit linked notes, net of debt issuance costs ToTT tal long-term borrowings ToTT tal other borrowings Short-TermTT Borrowings Federal FunFF dsdd Lines of CrCC edit rr December 31, 2022 2021 (in millions)s $ $ $ $ $ 640 4,300 27 25 4,992 315 992 1,307 6,299 $ $ $ $ $ 675 — 17 35 727 318 457 775 1,502 The Company maintains overnight fede ve rate plus 0.10% to 0.20%. ff effff ecti ff ral fundff lines of credit totaling $4.0 billion as of December 31, 2022, which have rates comparable to the federal funds FHLB Advances The Company also maintains secured overnight lines of credit with the FHLB and the FRB. The Company’s borrowing capac ity is determined based on collateral pledged, generally consisting of investment securities and loans, at the time of the borrowing. As of December 31, 2022 and 2021, the Company had additional available credit with the FHLB of appa roximately $6.8 billion and $7.8 billion, respectively,yy and with the FRB of apa proximately $5.2 billion and $3.4 billion, respectively. The weighted average rate on FHLB advances was 4.70% as of December 31, 2022. a rr Repurchase Agrgg eemen rr ts Other short-term borrowing sources availablea repurchase agreements was 0.15% as of December 31, 2022 and 2021. to the Company include customer and securities repurchase agreements. The weighted average rate on customer SS Secur edrr Borrowrr ings Secured borrowings consist of transfers of loans HFS not qualifying for sales accounting treatment. The weighted average interest rate on secured borrowings was 6.39% and 3.05% as of December 31, 2022 and 2021, respectively. rr WarWW ehou se Borrorr wingsgg WarehWW ouse borrowing lines of credit are used to finff ance the acquisition of loans through the use of repurchase agreements. Repurchase agreements operate as financings under which the Company transferff s loans to secure these borrowings. The borrowing amounts are based on the attributes of the collateralized loans and are defined in the repurchase agreement of each warehouse lender. The Company retains beneficial ownership of the transfeff rred loans and will receive the loans from the lender upon full repayment of the borrowing. The repurchase agreements may require the Company to transfeff r additional assets to the lender in the event the estimated fair value of the existing transferff red loans declines. ff ff As of December 31, 2022, the Company had access to apa proximately $1.0 billion in uncommitted warehouse fundff ing, of which no amounts were drawn. 119 Long-TermTT Borrowings AmeriHome Senio SS r Notes Prior to the Company's acquisition of AmeriHome, in October 2020, AmeriHome issued senior notes with an aggregate principal amount of $300 million, maturing on October 26, 2028. The senior notes accrurr e interest at a rate of 6.50% per annum, paid semiannually. The senior notes contain provisions that allow for redemption of up to 40% of the original aggregate principal amount of the notes during the firff st three years after issuance at a price equal to 106.50%, plus accruedrr this three-year period, AmeriHome may redeem some or all of the senior notes at a price equal to 103.25% of the outstanding principal amount, plus accruerr d and unpaid interest. In 2025, the redemption price of these senior notes declines to 100% of the outstanding principal balance. value adjustment (premium) of $19.3 million recognized as of the acquisition date that is being The carryinr amortized over the term of the notes. g amount of the senior notes includes a fair and unpaid interest. After ff ff rr Credit Linked NotesNN ff resource loans to the purchasers of these notes. In the event of a faiff The Company has entered into credit linked note transactions that effeff ctively transfer the risk of fiff rst losses on certain pools of the Company’s warehouse and equity fund lure to pay by the relevant obligor, insolvency of the relevant obligor, or restructuring of such loans that results in a loss on a loan that is included in any of the refeff rence pools, the principal balance of the notes will be reduced to the extent of such loss and a gain on recovery of credit guarantees will be recognized within non-interest income in the Consolidated Income Statement. The purchasers of the notes have the option to acquire the underlying refeff rence loan in the event of obligor defaul t. Losses on the warehouse lines of credit and equity fund resource loans have not generally been signififf cant. ff ff The Company has also entered into credit linked note transactions that effeff ctively transfer the risk of fiff rst losses on reference pools of the Company's loans purchased under its residential mortgage purchase program to the purchasers of the notes. The principal and interest payabla e on these notes may be redud ced by a portion of the Company's loss on such loans if one of the following occurs with respect to a covered loan: (i) realized losses incurred by the Company on a wing a liquidation of the loan or certain other events, or (ii) a modififf cation of the loan resulting in a reducd tion in payments. The aggregate losses, if ff loan follo any,yy forff each payment date will be allocated to reduce the class principal amount and (forff modifications) the current interest of the notes in reverse order of class priority. Losses on residential mortgages have not generally been significaff nt. The Company's credit linked note issuances are detailed in the tables below: Description Issuance Date Interest Rate Principal Debt Issuance Costs Residential mortgage loans (1) Residential mortgage loans (2) Equity fund resource loans (3) Residential mortgage loans (4) WarWW ehouse loans (5) ToTT tal December 31, 2022 Maturity Date October 25, 2052 April 25, 2052 June 30, 2028 July 25, 2059 SOFR + 7.80% SOFR + 6.00% SOFR + 6.75% SOFR + 4.67% December 12, 2022 June 30, 2022 June 23, 2022 December 29, 2021 June 28, 2021 December 30, 2024 LIBOR + 5.50% Description Issuance Date December 31, 2021 Maturity Date Interest Rate Residential mortgage loans (4) WarWW ehouse loans (5) ToTT tal December 29, 2021 June 28, 2021 July 25, 2059 December 30, 2024 SOFR + 4.67% LIBOR + 5.50% (in millions)s $ 95 189 300 202 242 1,028 $ Principal Debt Issuance Costs (i(( n millions)s 228 242 $ 470 $ 2 3 4 3 2 14 3 2 5 $ $ $ $ (1) There are multiple classes of these notes, each with an interest rate of SOFR plus a spread that ranges from 2.25% to 11.00% (or, a weighted average spread of 7.80%) on a reference pool balance of $1.9 billion as of December 31, 2022. (2) There are multiple classes of these notes, each with an interest rate of SOFR plus a spread that ranges from 2.25% to 15.00% (or, a weighted average spread of 6.00%) on a referff ence pool balance of $3.8 billion as of December 31, 2022. (3) These notes had a refereff nce pool balance of $1.6 billion as of December 31, 2022. (4) There are six classes of these notes, each with an interest rate of SOFR plus a spread that ranges frff om 3.15% to 8.50% (or, a weighted average spread of 4.67%) on a reference pool balance of $4.0 billion and $4.6 billion as of December 31, 2022 and 2021, respectively. (5) The benchmark rate on these notes will convert to SOFR upon the discontinuation of LIBOR in June 2023. These notes had a reference pool balance of $689 million and $1.9 billion as of December 31, 2022 and 2021, respectively. 120 12. QUALIFYING DEBT Subordinated Debt The Company's subou rdinated debt issuances are detailed in the tables below: Description Issuance Date Maturity Date Interest Rate Principal Debt Issuance Costs December 31, 2022 WALWW fixff ed-to-variable-r WABWW fixff ed-to-variable- a a ate (1) rate (2) ToTT tal June 2021 May 2020 June 15, 2031 June 1, 2030 3.00 % $ 5.25 % $ (i(( n millions)s 600 225 $ 825 $ Description Issuance Date t Maturity Date Interest Rate Principal Debt Issuance Costs ember 31, 2021 WALWW fixff ed-to-variable-r a ate (1) WABWW fixff ed-to-variable- a rate (2) ToTT tal June 2021 May 2020 June 15, 2031 June 1, 2030 3.00 % $ 5.25 % $ (in millions)s 600 225 $ 825 $ 7 1 8 8 2 10 (1) Notes are redeemable, in whole or in part, beginning on June 15, 2026 at their principal amount plus accrued and unpaid interest and has a fixed interest rate of 3.00%. The notes also convert to a variable rate of three-month SOFR plus 225 basis points on this date. (2) Debt is redeemable, in whole or in part, on or aftff er June 1, 2025 at its principal amount plus accrued and unpaid interest and has a fixed interest rate of 5.25% through June 1, 2025 and then converts to a variable rate per annum equal to three-month SOFR plus 512 basis points. The carryinr g value of all subor u dinated debt issuances totaled $817 million and $815 million at December 31, 2022 and 2021, respectively. Junior Subordinated Debt The Company has formed ff Preferred Securities. or acquired through acquisition eight statutoryr business trurr sts, which exist for the exclusive purpose of issuing Cumulative TruTT st TrTT urr st I and Bridge Capital TrTT ust to the FVO election made by the Company under ASC 825. The Company did not make the FVO election for the junior subor WitWW h the exception of debt issued by Bridge Capital dued Bridge acquisition. Accordingly,yy the carryir ng value of these trusts does not reflecff established at acquisition that is being accreted over the remaining life of the trurr sts. dinated debt is recorded at fair value at each reporting date dinated debt acquired in the t the current fair value of the debt and includes a fair market value adjud stment II, junior subor u u a rr The carryinr g value of junior subordinated debt was $76 million and $81 million as of December 31, 2022 and 2021, respectively,yy with maturity dates ranging from 2033 through 2037. The weighted average interest rate of all junior subu ordinated debt as of December 31, 2022 was 7.11%, which is equal to three-month LIBOR plus the contractual spread of 2.34%, compared to a weighted average interest rate of 2.55% at December 31, 2021. Subsequent to June 30, 2023, interest rates on the Company's junior subordinated debt will be based on SOFR plus a spread adjustment. In the event of certain changes or amendments to regulatoryr instrumen rr Company. Based on guidance issued by the FRB, the Company's securities continue to qualifyff as Tier 1 Capia tal. requirements or federal tax rurr les, the debt is redeemabla e in whole. The obligations under these y and unconditionally guaranteed by the Company and rank subordinate and junior in right of payment to all other liabilities of the ts are full ff 121 13. STOCKHOLDERS' EQUITY Stock-Based Compensation Restricted Stock SS Awardrr sdd The Incentive Plan, as amended, gives the BOD the authority to grant upu to 11.8 million in stock awards consisting of unrestricted stock, stock units, dividend equivalent rights, stock options (incentive and non-qualifiedff ), stock appreciation rights, restricted stock, and perforff mance and annual incentive awards. The Incentive Plan limits the maximum number of shares of common stock that may be awarded to any person eligible for an award to 300,000 per calendar year and also limits the total compensation (cash and stock) that can be awarded to a non-employee director to $600,000 in any calendar year. Stock awards available for grant at December 31, 2022 were 2.6 million. Restricted stock awards granted to employees generally vest over a 3-year period and stock grants made to non-employee WAWW L directors generally vest over six months. The Company estimates the compensation cost forff the grant date faff ir value. Stock compensation expense is recognized on a straight-line basis over the requisite service period foff r the entire award. Stock compensation expense related to restricted stock awards granted to employees is included in Salaries and employee benefitff s in the Consolidated Income Statement. For restricted stock awards granted to WAWW L directors, the related stock compensation expense is included in Legal, professional, and directors' fees. For the year ended December 31, 2022, the Company recognized $28.7 million in stock-based compensation expense related to these stock grants, compared to $22.9 million and $20.3 million forff the years ended December 31, 2021 and 2020, respectively. stock grants based upon u In addition, the Company previously granted shares of restricted stock to certain members of executive management that had both perforff mance and service conditions that affect ed vesting. The last of these perfoff rmance-based restricted stock grants was made in 2017, however expense was still being recognized through June 30, 2021, the end of the vesting period. The Company recognized $0.6 million in stock-based compensation expense related to these stock grants in 2021, compared to $1.2 million during the year ended December 31, 2020. ff A summary of the status of the Company’s unvested shares of restricted stock and changes dud ring the years then ended is presented below: Balance, beginning of period Granted VestVV ed Forfeited Balance, end of period 2022 2021 cember 31, Shares WeigWW hted AverAA age Grant Date Fair VaVV lue Shares WeiWW ghted AvAA erage Grant Date Fair VaVV lue (i(( n millions, excee epe t per sharerr amounts)s $ 0.9 0.5 (0.4) (0.1) 0.9 $ 63.53 97.61 52.00 79.09 84.16 $ 1.0 0.4 (0.4) (0.1) 0.9 $ 50.12 83.56 53.50 59.24 63.53 The total weighted average grant date faiff $35.4 million, and $22.7 million, respectively. The total faiff was $35.8 million, $34.2 million, and $19.6 million, respectively. r value of all stock awards granted durid r value of restricted stock that vested durid ng the years ended December 31, 2022, 2021, and 2020 was $42.8 million, ng the years ended December 31, 2022, 2021, and 2020 As of December 31, 2022, there was $33.6 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Incentive Plan. That cost is expected to be recognized over a weighted average period of 1.9 years. Performance Stock SS Units ff cumulative The Company grants perforff mance stock units to members of its executive management that do not vest unless the Company achieves a specifiedff e measure over a three-year perfoff rmance period. The number of shares issued will varyr based on the cumulative EPS target EPS target and a TSR performanc and relative TSR performance faff ctor that is achieved. The Company estimates the cost of perforff mance stock units based upon the grant date fair value and expected vesting percentage over the three-year perfoff rmance period. For the year ended December 31, 2022, the Company recognized $11.1 million in stock- based compensation expense related to these perfoff rmance stock units, compared to $11.2 million and $7.1 million in stock-based compensation expense forff such units during the years ended December 31, 2021 and 2020, respectively. ff 122 The three-year performan measure forff fully vested and distributed to executive management in the first quarter of 2023. the 2020 grant ended on December 31, 2022, and based on the Company's cumulative EPS and TSR perfoff rmance the performance period, these shares will vest at 180% of the target award under the terms of the grant. As a result, 157,780 shares will become ce period forff ff The three-year performance period forff performance distributed to executive management in the firff st quarter of 2022. ff the 2019 grant ended on December 31, 2021, and the Company's cumulative EPS and TSR performance measure for the period exceeded the level required foff r a maximum award under the terms of the grant. As a result, 203,646 shares became fully vested and were ff Preferr ed Stock On September 15, 2021, the Company entered into an underwriting agreement, pursuant to which the Company agreed to issue and sell an aggregate of 12,000,000 depositary shares, each representing a 1/400th ownership interest in a share of the Company’s 4.250% Fixed-Rate Reset Non-Cumulative Perperr tual Preferred Shares, Series A, par value $0.0001 per share, with a liquidation prefeff rence of $25 per depositaryr share (equivalent to $10,000 per share of Series A preferred stock). During the year ended December 31, 2022, the Company declared and paid a quarterly cash dividend of $0.27 per depositaryrr a total dividend payment to preferred shareholders of $12.8 million. The Company paid a dividend of $3.5 million to prefeff rred shareholders durdd ing the year ended December 31, 2021. share, forff Common Stock Issuances Pursuant to ATMTT Distri ii bution Agrerr ement The Company has a distribution agency agreement with J.P.PP Morgan Securities LLC and Piper Sandler & Co., under which the Company may sell upu to ring 6,132,670 shares of its common stock on the NYSE. The Company pays the distribution agents a mutually agreed rate, not to exceed 2% of the gross offeff proceeds of the shares sold pursuant to the distribution agency agreement. The common stock will be sold at prevailing market prices at the time of the sale or at negotiated prices and, as a result, prices will varyr . Sales under the ATMAA dated May 14, 2021 and prospectust ring of shares frff om the Company's shelf registration statement on Form S-3 (No. 333-256120). During the year ended supplements filed with the SEC in an offeff December 31, 2022, the Company sold 1.9 million shares under the ATMAA program at a weighted-average selling price of $83.89 per share foff r gross proceeds of $158.7 million. During the year ended December 31, 2021, the Company sold 3.1 million shares under the ATAA M program at a weighted-average selling price of $106.41 per share forff the year ended December 31, 2022, subsu tantially all of which relates to compensation costs paid to the distribution agents, and $2.3 million forff the year ended December 31, 2021, of which $2.0 million relates to compensation costs paid to the distribution agent. As of December 31, 2022, the remaining number of shares that can be sold under this agreement totaled 1,107,769. gross proceeds of $333.4 million. ToTT tal related offff erff program are being made pursuant to a prospectust ing costs totaled $1.0 million forff ii Register edrr Direct rr OfferiO ng The Company sold 2.3 million shares of its common stock in a registered direct offff eri $91.00 per share forff aggregate net proceeds of $209.2 million. ff ng during the year ended December 31, 2021. The shares were sold for Cash Dividend on Common Shares During the year ended December 31, 2022, the Company declared and paid quarterly cash dividends of $0.35 per share for the fiff rst two quarters of the year and increased the quarterly cash dividend to $0.36 per share in the last two quarters of the year, for a total dividend payment to shareholders of $153.4 million. During the year ended December 31, 2021, the Company declared and paid a quarterly cash dividend of $0.25 per share foff r the fiff rst two quarters of the year a total dividend payment to shareholders of $124.1 million. and increased the quarterly cash dividend to $0.35 per share for the last two quarters of the year, forff TrTT easury Shares share purchases represent shares surrendered to the Company equal in value to the statut toryr payroll tax withholding obligations arising froff m the TrTT easuryrr shares of 200,745 at a weighted vesting of employee restricted stock awards. During the year ended December 31, 2022, the Company purchased treasuryrr average price of $92.21 per share, compared to 180,607 shares at a weighted average price per share of $86.63 in 2021, and 165,489 shares at a weighted average price per share of $50.80 in 2020. 123 14. ACCUMULATEAA D OTHER COMPREHENSIVE INCOME (LOSS) ff The follow ing table summarizes the changes in accumulated other comprehensive income (loss) by component, net of tax: Balance, December 31, 2019 Other comprehensive income (loss) beforff e reclassificff ations Amounts reclassified from AOCI Net current-period other comprehensive income (loss) Balance, December 31, 2020 Other comprehensive loss before reclassififf cations Amounts reclassified from accumulated other comprehensive income Net current-period other comprehensive loss Balance, December 31, 2021 Other comprehensive (loss) income beforff e reclassififf cations Amounts reclassifiedff frff om AOCI Net current-period other comprehensive (loss) income Balance, December 31, 2022 ff The follow ing table presents reclassifications out of AOCI: $ $ $ $ Unrealized holding gains (losses) on AFS securities Unrealized holding losses on SERP Unrealized holding gains (losses) on junior subordinated debt TotaTT l 21.4 $ 70.9 (0.2) 70.7 92.1 (69.0) (6.4) (75.4) $ (i(( n millions) — $ (0.3) — (0.3) (0.3) — — — $ 16.7 $ (0.3) $ (674.9) (5.5) (680.4) — — — (663.7) $ (0.3) $ 3.6 $ (3.1) — (3.1) 0.5 $ (1.2) — (1.2) (0.7) 3.7 — 3.7 3.0 $ $ 25.0 67.5 (0.2) 67.3 92.3 (70.2) (6.4) (76.6) 15.7 (671.2) (5.5) (676.7) (661.0) Income Statement Classififf cation 2022 eYY ar Ended December 31, 2021 (i(( n millions) 2020 Gain on sales of AFS debt securities, net Income tax expense Net of tax $ $ 7.4 (1.9) 5.5 $ $ 8.5 (2.1) 6.4 $ $ 0.2 — 0.2 124 15. DERIVAVV TIVAA ES AND HEDGING ACTIVITIES The Company is a party to various derivative instruments. The primaryr and sale commitments, and interest rate futur IRLCs and its inventory of loans HFS and MSRs and also to meet client fiff nancing and hedging needs. types of derivatives that the Company uses are interest rate contracts, foff rward purchase es. Generally,yy these instrurr ments are used to help manage the Company's exposure to interest rate risk related to ff Derivatives are recorded at faiff ff agreements. These agreements allow the Company to settle all derivative contracts held with the same counterparr positions with related cash collateral, where applicable. r value on the Consolidated Balance Sheets, aftff er taking into account the effff ects of bilateral collateral and master netting t net derivative rty on a net basis, and to offff seff As of December 31, 2022, 2021, and 2020, the Company did not have any outstanding cash flff ow hedges. Derivatives Designated in Hedge Relationships The Company utilizes derivatives that have been designated as part of a hedge relationship in accordance with the applicable accounting guidance to minimize the exposure to changes in benchmark interest rates and volatility of net interest income and EVE to interest rate fluctuat ions. The primary derivative instrumen l interest rate index of agreed-upon amounts of assets and ts used to manage interest rate risk are interest rate swaps, which convert the contractuat rr liabilities (i.e., notional amounts) from either a fixed rate to a variable rate, or frff om a variable rate to a fixed rate. t designated as fair value hedges of certain fiff xed rate loans. As a result, the Company receives The Company has pay fixed/receive variablea variable-rate interest payments in exchange forff making fiff xed-rate payments over the lives of the contracts without exchanging the notional amounts. The variable-rate interest payments are based on LIBOR and will convert to SOFR plus a spread adjustment upon the discontinuation of LIBOR in June 2023. interest rate swapsa u ff value associated with fixeff d rate loans, resulting from changes in the designated benchmark interest rate (feder interest rate swaps, designated as fair value hedges using the last-of-layer method to manage the exposure to The Company also had pay fiff xed/receive variablea al funds rate). These last-of-layer changes in fair hedges provided the Company the abila ity to execute a faff ir value hedge of the interest rate risk associated with a portfoff lio of similar prepayable assets whereby the last dollar amount estimated to remain in the portfoff lio of assets was identified as the hedged item. Under these interest rate swap contracts, the Company received a variable rate and paid a fixeff d rate on the outstanding notional amount. During the year ended December 31, 2021, the Company completed a partial discontinuation of one of its last-of-lff ayer hedges, which redud ced the total hedged amount on these hedges frff om $1.0 billion to $880 million. During the year ended December 31, 2022, the Company discontinued the remaining portion of these last-of-layer hedges. The cumulative basis adjustment on the discontinued last-of-ff layer hedges totaled $31 million, which was allocated across the remaining loan pool upon termination of the hedges and is being amortized over the remaining term. At December 31, 2022, the remaining cumulative basis adjustment on the discontinued last-of-ff layer hedges totaled $21 million. ff The Company had a receive fixeff r value hedge on its $175 million subordinated debenturt es issued on June 16, 2016. This swap was terminated during the year ended December 31, 2021 in connection with the full redemption of the debt. The Company was paying a variable rate of three-month LIBOR plus 3.25% and was receiving quarterly fiff xed payments of 6.25% to match the payments on the debt. d/pay variable interest rate swap,a designated as a faiff Derivatives Not Designated in Hedge Relationships Management enters into certain foreign exchange derivative contracts, back-to-back interest rate contracts, and risk participation agreements which are not designated as accounting hedges. Foreign exchange derivative contracts include spot, forward, forff ward window,ww and swap contracts. The purpose of these ign currency risk on transactions entered into, or on behalf of customers. Contracts with customers, along with the related derivative contracts is to mitigate foreff derivative trades that the Company places, are both remeasured at faiff r value, and are referred to as economic hedges since they economically offsff et the Company's exposure. The Company's back-to-back interest rate contracts are used to allow customers to manage long-term interest rate risk. Risk participation agreements are entered into with lead banks in certain loan syndications to share in the risk of defaul t on interest rate swaps on the participated loan. ff As it relates to the Company's mortgage banking business, it also uses derivative fiff nancial instruments to manage exposure to interest rate risk related to IRLCs, and its inventoryr of loans HFS and MSRs. The Company economically hedges the changes in faff ir value associated with changes in interest rates generally by utilizing forwar d sale commitments and interest rate fuff tures. ff 125 Fair ValuVV e Hedges As of December 31, 2022 and 2021, the foll value hedges: outstanding fair ff ff owing amounts are reflff ected on the Consolidated Balance Sheets related to cumulative basis adjustments for Loans HFI, net of deferred loan feeff s and costs (2) $ 447 $ (in millions) 17 $ 1,391 $ 39 December 31, 2022 December 31, 2021 Carrying ValuVV e of Hedged Assets/(Liabilities) Cumulative Fair VaVV lue Hedging Adjustment Carryirr ng ValVV ue of Hedged Assets/(Liaba ilities) Cumulative Fair ValuVV e Hedging Adjustment (1) (1) Included in the carryinrr g value of the hedged assets/(liabila ities). (2) As of December 31, 2021, included last-of-ff layer derivative instruments, with $880 million designated as the hedged amount (from a closed portfolio of prepayaba le fixff ed rate loans with a carrying value of $1.4 billion). The cumulative basis adjud stment included in the carrying value of these hedged items totaled $16 million and the basis adjd ustment related to the discontinued portion was $1 million as of December 31, 2021. ff nt as well as the For the Company's derivative instruments that are designated and qualifyff as a faiff offff setting ting loss or gain on the related interest rate swaps. For loans, the gain or loss on the hedged item is included in interest income and for subordinated debt, the gain or loss on the hedged items was included in interest expense, as shown in the table below. loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings in the same line item as the offff set r value hedge, the gain or loss on the derivative instrume rr ff 2022 YeYY ar Ended December 31, 2021 2020 Income Statement Classification Gain/(Loss) on Swaps Gain/(Loss) on Hedged Item Gain/(Loss) on Swaps Gain/(Loss) on Hedged Item Gain/(Loss) on Swaps Gain/(Loss) on Hedged Item Interest income Interest expense $ $ 71.7 — $ (71.6) — (in millions) 44.8 (2.7) $ $ (45.6) 2.7 $ (32.2) 3.1 32.2 (3.1) r value hedges presented in the above table, the Company recognized $9.9 million and In addition to the gains and losses on the Company's outstanding faiff $0.1 million in interest income related to the amortization of the cumulative basis adjustment on its discontinued last-of-layer hedges dud ring the years ended December 31, 2022 and 2021, respectively. 126 Fair ValuVV es, VolumVV e of Activity,yy and Gain/Loss Infoff rmation Related to Derivative Instruments The foll owing table summarizes the faff ir value of the Company's derivative instrurr ments on a gross basis as of December 31, 2022, 2021, and 2020. The change ff in the notional amounts of these derivatives from December 31, 2020 to December 31, 2022 indicates the volume of the Company's derivative transaction lication of bilateral collateral and master activity during these periods. The derivative asset and liabia lity balances are presented on a gross basis, prior to the appa derivative assets and liabia lities are adjusted to take into account the impact of legally enforff ceaba le master netting agreements that netting agreements. TotalTT allow the Company to settle all derivative contracts with the same counterpar the net derivative position with the related cash collateral. Where master netting agreements are not in effect tcy laws, the Company does not adjust those derivative amounts with counterparti ty on a net basis and to offff set eaba le under bankruprr or are not enforcff es. rr ff rr ff ecember 31, 2022 Fair ValueVV December 31, 2021 Fair VaVV lue December 31, 2020 Fair ValueVV Notional Amount Derivative Assets Derivative Liabilities Notional Amount Derivative Assets (in millions) Derivative Liabilities Notional Amount Derivative Assets Derivative Liabilities Derivatives designated as hedging instrumrr ents: Fair value hedges Interest rate swaps (1) $ ToTT tal 476 476 Derivatives not designated as hedging instrume rr Foreign currency contracts Forward purchase contracts Forward sales contracts Futurt es purchase contracts (3) Futurt es sales contracts (3) Interest rate lock commitments Interest rate contracts Risk participation agreements ToTT tal Margin ToTT tal, including margin $ $ $ $ $ $ $ 18 18 1 1 16 — — 5 6 — 29 4 33 $ $ $ $ — $ — 1,383 1,383 9 13 8 — — 3 6 — 39 1 40 $ $ $ 180 11,714 17,358 218,054 229,040 3,033 4 — 479,383 — 479,383 $ $ $ $ $ 14 14 — $ 8 16 — — 11 — — 35 1 36 $ $ 55 55 1 18 18 — — 2 — — 39 6 45 $ $ $ $ 1,690 1,690 119 — — — — — 4 — 123 — 123 $ $ $ $ 3 3 1 — — — — — — — 1 — 1 $ $ $ $ 86 86 1 — — — — — — — 1 — 1 nts (2): 250 2,709 4,985 150,943 159,649 1,459 1,538 48 321,581 — 321,581 (1) (2) (3) Interest rate swap amounts include a notional amount of $880 million and $1.0 billion related to the last-of-layer hedges at December 31, 2021 and 2020, respectively. Relate to economic hedging arrangements. The Company enters into foff rward purchase and sales contracts that are subject to daily remargining and almost all of which are based on three-month LIBOR to hedge against its MSR valuation exposure. The notional amount on these contracts is subsu tantial as these contracts have a duration of only 0.25 years and are intended to cover the longer dud ration of MSR hedges. 127 value of derivative contracts, after The fair ff Consolidated Balance Sheets, as summarized in the taba le below: taking into account the effff ecff ff ts of master netting agreements, is included in other assets or other liabilities on the December 31, 2022 December 31, 2021 December 31, 2020 Gross amount of recognized assets (liabilities) Gross offff seff t Net assets (liabilities) Gross amount of recognized assets (liabilities) Gross offseff t (in millions) Net assets (liaba ilities) Gross amount of recognized assets (liaba ilities) Gross offsff et Net assets (liabilities) Derivatives subjecb t to master netting arrangements: Assets Forward purchase contracts Forward sales contracts Interest rate contracts Margin Netting Liabilities Forward purchase contracts Forward sales contracts Interest rate contracts Margin Netting $ $ $ $ 1 13 18 4 — 36 (12)) (8)) — (1)) — (21)) $ $ $ $ Derivatives not subject to master netting arrangements: Assets Foreign currency contracts Forward sales contracts Interest rate lock commitments Interest rate contracts Options contracts Liabilities Foreign currency contracts Forward purchase contracts Forward sales contracts Interest rate lock commitments Interest rate contracts ToTT tal derivatives and margin Assets Liabilities $ $ $ $ $ $ $ $ 1 3 5 6 — $ 15 (9)) (1)) — (3)) (6)) (19)) 51 (40)) $ $ $ $ $ — $ — — — (17) (17) $ — $ — — — 17 17 $ — $ — — — — $ — $ — $ — — — — — $ (17) $ $ 17 $ $ $ 1 13 18 4 (17) 19 (12) (8) — (1) 17 (4) $ $ 1 3 5 6 — $ 15 (9) (1) — (3) (6) (19) 34 (23) $ $ $ $ $ 8 15 14 1 — 38 (18) (18) (54) (6) — (96) $ $ $ $ — $ 1 11 — — $ 12 (2) — — (2) — (4) 50 (100) $ $ $ $ $ — $ — — — (28) (28) $ — $ — — — 28 28 $ — $ — — — — $ — $ — $ — — — — — $ (28) $ $ 28 8 15 14 1 (28) 10 (18) (18) (54) (6) 28 (68) $ $ $ $ — $ 1 11 — — $ 12 (2) — — (2) — (4) 22 (72) $ $ $ $ $ — $ — 3 — — 3 $ — $ — (86) — — (86) $ $ 1 — — — — $ 1 (1) — — — — (1) 4 (87) $ $ $ $ $ — $ — — — — — $ — $ — — — — — $ — $ — — — — $ — $ — $ — — — — — $ — $ — $ — — 3 — — 3 — — (86) — — (86) 1 — — — — 1 (1) — — — — (1) 4 (87) 128 ff The follow ing table summarizes the net gain (loss) on derivatives included in income: Net gain (loss) on loan origination and sale activities: Interest rate lock commitments Forward contracts Interest rate swaps Other contracts ToTT tal gain (loss) Net loan servicing revenue: Forward contracts Options contracts Futures contracts Interest rate swaps ToTT tal loss Counterparty Credit Risk YeYY ar Ended December 31, 2022 2021 (i(( n millions)s $ $ $ $ (7.4) $ 425.6 (8.4) (7.6) 402.2 $ (62.4) $ — (36.2) (54.6) (153.2) $ 1.0 (52.2) — 1.4 (49.8) (4.2) (0.3) (23.9) — (28.4) ff Like other finan cial instruments, derivatives contain an element of credit risk. This risk is measured as the expected replacement value of the contracts. Management enters into bilateral collateral and master netting agreements that provide forff the net settlement of all contracts with the same counterprr arty. Additionally,yy management monitors counterparty credit risk exposure on each contract to determine appropriate limits on the Company's total credit exposure ties when these contracts are in a net liabia lity position and conversely,yy across all producd t types, which may require the Company to post collateral to counterpar rr for counterpar ties to post collateral to the Company when these contracts are in a net asset position. Management reviews the Company's collateral positions on a daily basis and exchanges collateral with counterprr arties in accordance with standard ISDA documentation and other related agreements. The Company generally posts or holds collateral in the forff m of cash deposits or highly rated securities issued by the U.S. TrTT easuryr or government-sponsored enterprrr ises, such as GNMA, FNMA, and FHLMC. At December 31, 2022, and 2021 collateral pledged by the Company to counterparr rties foff r its derivatives totaled $11 million and $80 million, respectively. rr 16. EARNINGS PER SHARE Diluted EPS is calculated using the weighted average outstanding common shares durid calculated using the weighted average outstanding common shares dud ring the period. ng the period, including common stock equivalents. Basic EPS is ff The follow ing table presents the calculation of basic and diluted EPS: WeigWW hted average shares - basic Dilutive effeff ct of stock awards WeigWW hted average shares - diluted Net income available to common stockholders Earnings per share - basic Earnings per share - diluted YeYY ar Ended December 31, 2022 2021 2020 (i(( n millions, excee ept per sharerr amountstt )s $ 107.2 0.4 107.6 1,044.5 9.74 9.70 $ 102.7 0.6 103.3 895.7 8.72 8.67 $ 100.2 0.3 100.5 506.6 5.06 5.04 129 17. INCOME TAXES TT The provision foff r income tax expense consists of the following components: Current Deferred ToTT tal tax expense 2022 YeYY ar Ended December 31, 2021 (i(( n millions) 2020 $ $ 327.4 (68.6) 258.8 $ $ 181.8 42.0 223.8 $ $ 141.0 (25.1) 115.9 ff The follow ing table presents a reconciliation between the statutoryr federal income tax rate and the Company’s effeff ctive tax rate: Income tax at statutory rate Increase (decrease) resulting froff m: State income taxes, net of federal benefiff ts Investment tax credits TaxTT -exempt income Other, net ToTT tal tax expense Effecti ff ve tax rate 2022 YeYY ar Ended December 31, 2021 (i(( n millions) 276.4 $ 235.8 $ 2020 45.4 (32.1) (26.0) (4.9) 258.8 19.7 % $ 35.8 (15.9) (25.6) (6.3) 223.8 19.9 % $ 130.7 13.9 (13.9) (21.7) 6.9 115.9 18.6 % $ $ There was not a significan increases in pretax book income and state taxes associated with the AmeriHome acquisition which were not fulff items forff the year. ff t change in the effeff ctive tax rate frff om 2021 to 2022. The increase in the effff eff ctive tax rate from 2020 to 2021 is primarily dued to ly offff sff et by growth in permanent tax benefitff 130 The cumulative tax effecff ts of the temporary diffff erff ences are shown in the folff lowing table: Deferred tax assets: credit losses Unrealized loss on AFS securities Allowance forff Lease liability TaxTT credit carryovers Accrued expenses Passthrough income Premises and equipment Other ToTT tal gross deferred tax assets Deferred tax asset valuation allowance ToTT tal deferred tax assets Deferred tax liabilities: Mortgage servicing rights Right of use asset Deferred loan costs Leasing basis diffeff rences Deferred REIT dividend Other ToTT tal deferred tax liabilities Deferrff ed tax assets, net December 31, 2022 2021 (i(( n millions)s $ 221 93 47 24 21 19 13 45 483 — 483 (56) (41) (16) (13) (11) (35) (172) 311 $ — 81 38 — 10 9 10 35 183 — 183 (58) (36) (15) (12) — (41) (162) 21 $ $ At December 31, 2022, the net DTATT balance totaled $311 million, an increase of $290 million frff om $21 million at December 31, 2021. The overall increase in the net DTATT was primarily attributablea vers, and an increase to the ACL. Although realization is not assured, the Company believes that the realization of the recognized net DTATT of $311 million at December 31, 2022 is more-likely-than-not based on expectations as to fuff ture taxable income and based on availabla e tax planning strategies that could be implemented if necessaryr to prevent a carryor to a decrease in the fair market value of AFS securities, an increase to expected tax credit carryor expiring. ver fromff The Company had no deferr ff ed tax valuation allowance as of December 31, 2022 and 2021. As of December 31, 2022, the Company’s gross federal NOL carryr overs, all of which are subject to limitations under Section 382 of the IRC, totaled $39 million, forff which a DTATT of $4 million has been recorded, reflff ecting the expected benefiff t of these feff deral NOL carryrr overs remaining afteff r application of the r Section 382 limitation. The Company does not currently have any remaining state NOL carryov ers. The Company filff es income tax returns in the U.S. federal jurisdiction and in various states. WiWW th few exceptions, the Company is no longer subjecb t to U.S. feff deral, state, or local income tax examinations by tax authorities for years befoff re 2018. When tax returns are filed, it is highly certain that most positions taken would be sustained upu on examination by the taxing authorities, while others are subjeb ct to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the Consolidated Financial Statements in the period in which, based on all availabla e evidence, management believes it is more-likely-than-not that the t or aggregated position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. TaTT x positions taken are not offff seff with other positions. TaxTT positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the apa plicable taxing authority. The portion of the benefiff ts associated with tax positions taken that exceeds the amount measured as described above is reflff ected as a liability for unrecognized tax benefits on the accompanying Consolidated Balance Sheet along with any associated interest and penalties payablea to the taxing authorities upon examination. a 131 The total gross activity of unrecognized tax benefiff ts related to the Company's uncertain tax positions are shown in the following taba le: Beginning balance Gross increases TaxTT positions in prior periods Current period tax positions Gross decreases TaxTT positions in prior periods Settlements Lapse of statute of limitations Ending balance December 31, 2022 2021 (i(( n millions)s 6.4 $ — 0.8 (0.6) — — 6.6 $ 3.4 0.8 2.2 — — — 6.4 $ $ During the year ended December 31, 2022, the Company added a new position, which resulted in a tax detriment of $0.8 million. At December 31, 2022 and 2021, unrecognized tax benefitsff recognized, would favorably impact the effff ecff months. , net of associated deferred tax benefiff ts, totaled $5.3 million and $5.1 million, respectively,yy that, if tive tax rate. The Company does not anticipate resolution of any unrecognized tax benefitsff within the next 12 During the years ended December 31, 2022, 2021, and 2020, no amounts were recognized foff r interest and penalties and as of December 31, 2022 and 2021, there was no accrual forff penalties and interest. LIHTCII rr and renew able energyr projerr ctstt The Company holds ownership interests in limited partnerships and limited liability companies that invest in affff off rdable housing and renewable energy projects. These investments are designed to generate a return primarily through the realization of federa l tax credits and deductions. The limited liability entities are considered to be VIEs; however, as a limited partner, the Company is not the primary beneficiary and is not required to consolidate these entities. ff Investments in LIHTC and renewable energy totaled $624 million and $631 million as of December 31, 2022 and 2021, respectively. Unfunded LIHTC and renewable energy obligations are included in Other liabilities on the Consolidated Balance Sheet and totaled $398 million and $361 million as of December 31, 2022 and 2021, respectively. For the years ended December 31, 2022, 2021, and 2020, $63.2 million, $49.5 million, and $49.2 million of amortization related to LIHTC investments was recognized as a component of income tax expense, respectively. 132 18. COMMITMENTS AND CONTINGENCIES Unfunded Commitment t stt and Letters of CrCC err dit s with off-ff balance sheet risk in the normal course of business to meet the fiff nancing needs of its customers. These The Company is party to financial instrument financial instruments include commitments to extend credit and letters of credit. They involve, to varying degrees, elements of credit risk in excess of amounts recognized on the Consolidated Balance Sheets. rr Lines of credit are obligations to lend money to a borrower. Credit risk arises when the borrower's current fiff nancial condition may indicate less abia lity to pay than when the commitment was originally made. In the case of letters of credit, the risk arises frff om the potential failure of the customer to perform according to the terms of a contract. In such a situation, the third party might draw on the letter of credit to pay forff completion of the contract and the Company would look to its customer to repay these funds with interest. ToTT minimize the risk, the Company uses the same credit policies in making commitments and conditional obligations as it would forff a loan to that customer. ff Letters of credit and financial guarantees are commitments issued by the Company to guarantee the performance of a customer to a third party in borrowing arrangements. The Company generally has recourse to recover from the customer any amounts paid under the guarantees. TypTT ically,yy letters of credit issued have expiration dates within one year. A summary of the contractual amounts for unfunde ff d commitments and letters of credit are as foff llows: Commitments to extend credit, including unsecured loan commitments of $1,209 at December 31, 2022 and $1,200 at December 31, 2021 Credit card commitments and finff ancial guarantees Letters of credit, including unsecured letters of credit of $7 at December 31, 2022 and $13 at December 31, 2021 ToTT tal December 31, 2022 2021 (in millions)s $ $ $ 18,674 379 265 19,318 $ 13,396 307 198 13,901 ff The follow ing table represents the contractual t commitments forff lines and letters of credit by maturi t ty at December 31, 2022: ToTT tal Amounts Committed Less Than 1 YeYY ar ount of Commitment Expiration per Period 1-3 YearsYY (i(( n millions) 3-5 YeYY ars After 5 YeaYY rs Commitments to extend credit Credit card commitments and finff ancial guarantees Letters of credit ToTT tal $ $ $ 18,674 379 265 19,318 $ 4,496 379 253 5,128 $ $ 7,307 — 7 7,314 $ $ 4,902 — 5 4,907 $ $ 1,969 — — 1,969 Commitments to extend credit are agreements to lend to a customer provided that there is no violation of any condition established in the contract. d expiration dates or other termination clauses and may require payment of a feff e. The Company enters into credit Commitments generally have fixeff arrangements that generally provide forff the termination of advances in the event of a covenant violation or other event of default. Since many of the commitments are expected to expire without being drawn upu on, the total commitment amounts do not necessarily represent futff urt e cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upu on extension of credit, is based on management’s credit evaluation of the party. The commitments are collateralized by the same types of assets used as loan collateral. The Company has exposure to credit losses fromff s have not been disbursed on these commitments, they are not reported as loans outstanding. Credit losses related to these commitments are included in Other liabilities as a separate loss contingency and are not included in the ACL reported in "Note 5. Loans, Leases and Allowance for Credit Losses" of these Consolidated Financial Statements. This loss contingency for unfunded loan commitments and letters of credit was $47 million and $38 million as of December 31, 2022 and 2021, respectively. Changes to this liaba ility are adjusted through the provision for credit losses in the Consolidated Income Statement. unfuff nded commitments and letters of credit. As fundff 133 Commitments to Invest in Renewable EnerEE gyr Projrr ects The Company has off-ff balance sheet commitments to invest in renewable energy projects, as described in "Note 17. Income TaxeTT s" of these Consolidated Financial Statements, subject to the underlying project meeting certain milestones. These conditional commitments totaled $117 million as of December 31, 2022. CC Concen trations of Lending Activities ff The Company does not have a single external customer frff om which it derives 10% or more of its revenues. The Company monitors concentrations of lending and borrower relationship level. Commercial and industrial loans made up 40% and 47% of the Company's HFI loan portfoff lio as of activities at the productd December 31, 2022 and December 31, 2021, respectively. The Company's loan portfolio includes significant credit exposure to the CRE market. As of December 31, 2022 and 2021, CRE related loans accounted foff r approximately 29% of total loans. Approximately 16% and 13% of the Company's CRE investor portfolio consisted of offff icff e loans as of December 31, 2022 and 2021, respectively. These offff iff ce loans are primarily shorter-term bridge loans that enable borrowers to reposition or redevelop projects and are geographically well diversififf ed, with the vast maja ority located in midtown or subuu rbar n locations. At the time of origination, these loans have an initial loan-to-value ratio of less than 55% and a weighted average loan-to-cost of less than 60%. The properties underlying these loans have stable business trends and low vacancy rates. Substu antially all of the Company's remaining CRE loans are secured by firff st liens with an initial loan-to-value ratio of generally not more than 75%. Approximately 16% and 23% of these CRE loans, excluding construction and land loans, were owner-occupied as of December 31, 2022 and 2021, respectively. No borrower relationships at both the commitment and funded loan level exceeded 5% of total loans HFI as of December 31, 2022 and December 31, 2021. ContCC ingencies The Company is involved in various lawsuits of a routine naturt e that are being handled and defeff nded in the ordinary course of the Company’s business. Expenses are being incurred in connection with these lawsuits, but in the opinion of management, based in part on consultation with outside legal counsel, the se costs will not have a material impact on the Company’s fiff nancial position, results of operations, or cash resolution of these lawsuits and associated defenff flows. 19. FAIRFF VV VALUE ACCOUNTING value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in ff The fair the principal market (or most advantageous market in the absence of a principal market) forff such asset or liabia lity. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, the income approach, and/or the cost apa proach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability. ASC 825 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 unadjusted quoted prices in active markets forff measurements). The three levels of the faff ir value hierarchy under ASC 825 are described in "Note 1. Summary of Significant Accounting Policies" of these Notes to Consolidated Financial Statements. In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not availaba le, fair value is based upou n internally- developed models that primarily use, as inputs, observable market-based parameters. ValVV uation adjustments may be made to ensure that finff ancial instrurr ments are recorded at fair value. These adjustments may include amounts to reflect counterpar ty credit quality and the Company’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizabla e value or reflff ective of futff urt e fair values. While management believes the Company’s opriate and consistent with other market participants, the use of diffff eff rent methodologies or assumptions to determine the fair valuation methodologies are appr value amounts have ent estimate of faiff ff value of certain financia not been comprehensively revalued since the presentation dates, and therefore, ntly frff om r significaff the amounts presented herein. A more detailed description of the valuation methodologies used foff r assets and liabilities measured at fair value is set forth below. r value at the reporting date. Furthermore, the reported fair estimates of faff ir value aftff er the balance sheet date may diffeff a rr l instrument s could result in a differ ff rr ff ff ff dinated debt issued by WAWW L. This election is irrevocabla e and results in the Under ASC 825, the Company elected the FVO treatment forff recognition of unrealized gains and losses on the debt at each reporting date. These unrealized gains and losses are recognized in OCI rather than earnings. The Company did not elect FVO treatment forff the junior subu ordinated debt assumed in the Bridge Capital Holdings acquisition. junior subor u 134 ff The follow ing table presents unrealized gains and losses from faff ir value changes on junior subordinated debt: Unrealized gains (losses) Changes included in OCI, net of tax Fair value on a recurring basis 2022 YeYY ar Ended December 31, 2021 (in millions)s 2020 $ $ 4.9 3.7 $ (1.5) (1.2) (4.2) (3.1) Financial assets and finan ff cial liabilities measured at fair value on a recurring basis include the folff lowing: AFSFF debt securities: Securities classified as AFS are reported at faiff r value utilizing Level 1 and Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include quoted prices in active , the U.S. TreTT asury yield curve, live trading levels, trade execution data, market consensus prepayment markets, dealer quotes, market spreads, cash flows speeds, credit informati on, and the bond’s terms and conditions, among other things. ff ff ff Equity securities: Preferr ff ed and common stock and CRARR investments are reported at faiff r value primarily utilizing Level 1 inputs. Indep endent pricing service: The Company's independent pricing service provides pricing information on the maja ority of the Company's Level 1 and Level 2 II AFS debt securities. For a small subset of securities, other pricing sources are used, including observed prices on publicly-traded securities and dealer quotes. Management independently evaluates the faiff r value measurements received frff om the Company's third-party pricing service through multiple review steps. First, management reviews what has transpired in the marketplace with respect to interest rates, credit spreads, volatility,yy and mortgage rates, among other things, and develops an expectation of changes to the securities' valuations from the previous quarter. Then, management selects a sample of investment third-party pricing service to the market values obtained from secondary sources, including other securities and compares the values provided by its primaryr pricing services and safekee ping statements, and evaluates those with notable variances. In instances where there are discrepancies in pricing froff m various sources and management expectations, management may manually price securities using currently observed market data to determine whether they can develop similar prices or may utilize bid inforff mation frff om broker dealers. Any remaining discrepancies between management's review and the prices provided by the vendor are discussed with the vendor and/or the Company's other valuation advisors. ff Loans HFS: Government-insured or guaranteed and agency-conformff based on quoted market or contracted selling prices or a market price equivalent, which are categorized as Level 2 in the faiff ing loans HFS are salable into active markets. Accordingly,yy the fair value of these loans is r value hierarchy. value of EBO loans, non-agency loans, and loans that are delinquent or have an underwriting defect ff The fair ff active markets. are valued using Level 3 inputs since they lack Mortgage servicing rights: MSRs are measured based on valuation techniques using Level 3 inputs. The Company uses a discounted cash floff w model that incorpor ates assumptions that market participants would use in estimating the fair value of servicing rights, including, but not limited to, option adjusted rr spread, conditional prepayment rate, servicing feeff rate, recapturt e rate, and cost to service. Derivative financial instrumentstt : Forward purchase and sales contracts are measured based on valuation techniques using Level 2 inputs, such as quoted market price, contracted selling price, or market price equivalent. Interest rate and forei gn currency contracts are reported at faff ir value utilizing Level 2 inputs. The Company obtains dealer quotations to value its interest rate contracts. IRLCs are measured based on valuation techniques that consider loan type, underlying loan amount, maturity date, note rate, loan program, and expected settlement date, with Level 3 inputs for the servicing release premium and pull- through rate. These measurements are adjusted at the loan level to consider the servicing release premium and loan pricing adjud stment specific to each loan. the pull-through rate. The pull-through rate and servicing feeff multiple are unobservable inputs based on historical The base value is then adjusted forff experience. ff Junior subordrr inated debt: effff ect ff as the Company anticipates that it will pay the debt according to its contractual of the Company’s own credit risk in the fair The Company estimates the fair value of its junior subordinated debt using a discounted cash flow model which incorporates the value of the liabilities (Level 3). The Company’s cash flff ow assumptions are based on contractual cash floff ws terms. dd ff t 135 ff The fair value of assets and liabila ities measured at fair value on a recurring basis was determined using the foff llowing inputs: December 31, 2022 AvAA ailable-for-sale debt securities CLO Commercial MBS issued by GSEs Corporate debt securities Private label residential MBS Residential MBS issued by GSEs TaxTT -exempt Other ToTT tal AFS debt securities Equity securities Common Stock CRARR investments ff Preferr ed stock ToTT tal equity securities Loans HFS MSRs Derivative assets (1) Liabilities: Junior subu ordinated debt (2) Derivative liabilities (1) Fair ValuVV e Measurements at the End of the Reporting Period Using: Quoted Prices in Active Identical Markets forff Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair ValVV ue (in millions) $ $ $ $ $ $ — $ — — — — — 24 24 3 24 108 135 $ $ $ — $ — — — $ — 2,706 97 390 1,199 1,740 891 45 7,068 $ $ — $ 25 — $ $ 25 1,172 — 46 — $ 37 — $ — — — — — — — $ — $ — — — $ $ $ 1 1,148 5 63 3 2,706 97 390 1,199 1,740 891 69 7,092 3 49 108 160 1,173 1,148 51 63 40 (1) (2) See "Note 15. Derivatives and Hedging Activities." In addition, the carrying value of loans is increased by $17 million as of December 31, 2022 foff r the effectiv which relates to the fair value of the hedges put in place to mitigate against flff uctuat tions in interest rates. ff e portion of the hedge, Includes only the portion of junior subou rdinated debt that is recorded at fair ff value at each reporting period pursuant to the election of FVO treatment. 136 December 31, 2021 Assets: AvAA ailable-forff -sale debt securities CLO Commercial MBS issued by GSEs Corporate debt securities Private label residential MBS Residential MBS issued by GSEs TaxTT -exempt U.S. treasury securities Other ToTT tal AFS debt securities Equity securities CRARR investments ff Preferr ed stock ToTT tal equity securities Loans - HFS Mortgage servicing rights Derivative assets (1) Liabilities: Junior subu ordinated debt (2) Derivative liabilities (1) Fair VaVV lue Measurements at the End of the Reporting Period Using: Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observaba le Inputs (Level 2) Signififf cant Unobservable Inputs (Level 3) Fair ValueVV (i(( n millions) $ $ $ $ $ $ — $ — — — — — 13 28 41 28 114 142 $ $ $ — $ — — — $ — $ $ $ $ $ 926 69 383 1,508 1,993 1,215 — 54 6,148 17 — 17 3,894 — 39 — $ 98 — $ — — — — — — — — $ — $ — — $ $ $ 46 698 11 67 2 926 69 383 1,508 1,993 1,215 13 82 6,189 45 114 159 3,940 698 50 67 100 (1) (2) See "Note 15. Derivatives and Hedging Activities." In addition, the carrying value of loans is increased by $39 million as of December 31, 2021 foff r the effectiv which relates to the fair value of the hedges put in place to mitigate against flff uctuat tions in interest rates. ff e portion of the hedge, Includes only the portion of junior subou rdinated debt that is recorded at fair ff value at each reporting period pursuant to the election of FVO treatment. The change in Level 3 liabilities measured at fair value on a recurring basis included in OCI was as foff llows: Beginning balance Change in fair value (1) Ending balance 2022 Junior Subordinated Debt YeYY ar Ended December 31, 2021 (i(( n millions) 2020 $ $ (67.4) 4.9 (62.5) $ $ (65.9) (1.5) (67.4) $ $ (61.7) (4.2) (65.9) (1) Unrealized gains/(losses) attributable to changes in the fair value of junior subordinated the years ended December 31, 2022, 2021, and 2020, respectively. u debt are recorded in OCI, net of tax, and totaled $3.7 million, $(1.2) million, and $(3.1) million for The significff ant unobservable inputs used in the faff ir value measurements of these Level 3 liabilities were as follows: Junior subordinated debt Junior subu ordinated debt $ $ December 31, 2022 ValuaVV tion TecTT hnique Significaff nt Unobservable Inputs Input VaVV lue (in millions)s 63 Discounted cash flow Implied credit rating of the Company December 31, 2021 VV Valuati on TeTT chnique Significant Unobservable Inputs Input ValVV ue (in(( millions)s 67 Discounted cash flow Implied credit rating of the Company 8.13 % 2.61 % ff The significan implied credit risk for the Company. As of December 31, 2022 and 2021, the implied credit risk spread was calculated as the diffff eren the 15-year 'BB' and 'BBB' rated fiff nancial indexes over the corresponding swapa index. t unobservable inputs used in the faff ir value measurement of the Company’s junior subordinated debt as of December 31, 2022 and 2021 was the ce between the average of ff 137 As of December 31, 2022, the Company estimates the discount rate at 8.13%, which represents an implied credit spread of 3.36% plus three-month LIBOR (4.77%). As of December 31, 2021, the Company estimated the discount rate at 2.61%, which was a 2.40% credit spread plus three-month LIBOR (0.21%). The change in Level 3 assets and liabilities measured at fair value on a recurring basis included in income was as follows: Loans HFS 2022 MSRs YearYY Ended December 31, Net IRLCs (1) Loans HFS (i(( n millions) 2021 MSRs Net IRLCs (1) Balance, beginning of period Acquired in Amerihome acquisition Purchases and additions Sales and payments sfers from Level 2 to Level 3 TranTT sfers from Level 3 to Level 2 TranTT Settlement of IRLCs upon acquisition or origination of loans HFS Change in fair value ff Realization of cash flows Balance, end of period Changes in unrealized gains (losses) foff r the period (2) $ $ $ 46 — 1,294 (1,363) 42 (18) — — — 1 $ $ — $ 698 — 720 (350) — — — 192 (112) 1,148 135 $ $ $ $ 9 — 19,513 — — — (19,481) (39) — 2 2 $ $ (1) IRLC asset and liability positions are presented net. (2) Amounts included in income that are attributabla e to Level 3 assets or liabia lities held at period end. — $ 1 132 (93) 7 (1) — — — 46 $ — $ — $ 1,347 765 (1,271) — — — (3) (140) 698 $ (20) $ — 24 23,044 — — — (23,054) (5) — 9 9 The significff ant unobservable inputs used in the faff ir value measurements of these Level 3 assets and liabilities were as folff lows: Asset/liability Key inputs MSRs: Loans HFS: IRLCs: Option adjd usted spread (in basis points) Conditional prepayment rate (1) Recapa turt e rate Servicing feff e rate (in basis points) Cost to service Whole loan spread to TBA price (in basis points) Servicing feff e multiple Pull-through rate Asset/liability Key inputs MSRs: Loans HFS: IRLCs: (1) Lifeti ff me total prepayment speed annualized. Option adjusted spread (in basis points) Conditional prepayment rate (1) Recapture rate Servicing feff e rate (in basis points) Cost to service Whole loan spread to TBA price (in basis points) Servicing feff e multiple Pull-through rate December 31, 2022 Range 190 - 621 8.5% - 18.5% 20.0% - 20.0% 25.0 - 56.5 $87 - $94 (0.6) - (0.6) 2.9 - 5.5 69% - 100% WeWW ighted average 378 13.4 % 20.0 % 33.2 $90 (0.6) 4.3 89 % December 31, 2021 Range 553 - 735 9.9% - 20.7% 20.0% - 20.0% 25.0 - 50.0 $84 - $91 (3.7) - (2.9) 3.6 - 5.4 75% - 100% WeigWW hted average 600 15.2% 20.0% 29.5 $86 (3.3) 4.6 90% 138 ff The follow ing is a summary of the diffeff rence between the aggregate faff ir value and the aggregate UPB of loans HFS for which the FVO has been elected: Fair value 2022 UPB December 31, Diffff erff ence Fair value (in millions) 2021 UPB ff Differe nce $ $ 1,172 1 1,173 $ $ 1,138 1 1,139 $ $ 34 — 34 $ $ 3,938 2 3,940 $ $ 3,808 2 3,810 $ $ 130 — 130 Loans HFS: Current through 89 days delinquent 90 days or more delinquent ToTT tal Fair value on a nonrecurring basis Certain assets are measured at faff ir value on a nonrecurring basis. That is, the assets are not measured at faiff value adjustments in certain circumstances (forff Consolidated Balance Sheet by captia ff to fair example, when there is evidence of credit deterioration). The following table presents such assets carried on the on and by level within the ASC 825 hierarchy: r value on an ongoing basis, but are subu ject b As of December 31, 2022 Loans HFI Other assets acquired through foreclosure As of December 31, 2021 Loans HFI Other assets acquired through foreclosure Fair ValuVV e Measurements at the End of the Reporting Period Using Quoted Prices in Active Markets for Identical Assets (Level 1) TotTT al Active Markets for Similar Assets (Level 2) Unobservable Inputs (Level 3) $ $ $ $ 295 11 216 12 (in millions)s — $ — — $ — — $ — — $ — 295 11 216 12 For Level 3 assets measured at fair value on a nonrecurring basis as of period end, the significaff as folff lows: nt unobservable inputs used in the faiff r value measurements were December 31, 2022 (in(( millions)s ValuVV ation TecTT hnique(s) Significant Unobservable Inputs Range Collateral method Third party appraisal Costs to sell Discount rate Contractut al loan rate 6.0% to 10.0% 3.0% to 8.0% 295 Discounted cash flff ow method Scheduled cash collections Probaba ility of defaff ult 0% to 20.0% Proceeds from non-real estate collateral Loss given default 0% to 70.0% 11 Collateral method Third party appraisal Costs to sell 4.0% to 10.0% December 31, 2021 (in millions) VV Valuation TeTT chnique(s) Signififf cant Unobservable Inputs Range Collateral method Third party appraisal Costs to sell Discount rate Contractual loan rate 6.0% to 10.0% 3.0% to 6.0% 216 Discounted cash flff ow method Scheduled cash collections Probability of defaff ult 0% to 20.0% Proceeds frff om non-real estate collateral Loss given defaff ult 0% to 70.0% 12 Collateral method Third party appraisal Costs to sell 4.0% to 10.0% $ $ Loans HFI Other assets acquired through foff reclosure Loans HFI Other assets acquired through foff reclosure 139 Loans HFI:II Loans measured at faiff r value on a nonrecurring basis include collateral dependent loans. The specific reserves foff r these loans are based on collateral value, net of estimated disposition costs and other identififf ed quantitative inputs. Collateral value is determined based on independent third-party aisals or internally-developed discounted cash flow analyses. Appraisals may utilize a single valuation apa proach or a combination of approaches, including appr a ch. Fair value is determined, where possible, using market prices derived frff om an apa praisal or evaluation, which are comparable sales and the income approa considered to be Level 2. However, certain assumptions and unobservable inputs are often used by the apa praiser, therefore qualifyff ing the assets as Level 3 in the fair ors such as the age of the appraisal or known ff changes in the market or the collateral, such valuation inputs are considered unobservaba le and the faff ir value measurement is categorized as a Level 3 measurement. Internal discounted cash flow analyses are also utilized to estimate the fair value of these loans, which considers internally-developed, unobservable inputs such as discount rates, default value hierarchy. In addition, when adjustments are made to an appraised value to reflff ect various fact rates, and loss severity. a ff ff TotTT al Level 3 collateral dependent loans had an estimated fair value of $295 million and $216 million at December 31, 2022 and 2021, respectively,yy net of a specificff ACL of $7 million and $11 million at December 31, 2022 and 2021, respectively. throrr ugh forecrr Other assets acquiredrr losure:rr Other assets acquired through foreclosure consist of properties acquired as a result of, or in-lieu-of, foff reclosure. These assets are initially reported at the faff ir value determined by independent appraisals using appraised value less estimated cost to sell. Such properties are generally re-appraised everyr 12 months. Costs relating to the development or improvement of the assets are capitalized and costs relating to holding the assets are charged to expense. Fair value is determined, where possible, using market prices derived from an appraisal or evaluation, which are considered to be Level 2. However, certain t assumptions and unobservable inputs are often used by the appraiser, therefoff re qualifying the assets as Level 3 in the faff ir value hierarchy. When significan adjustments are based on unobservable inputs, such as when a current appraised value is not available or management determines the fair value of the collateral is furff aised value and there is no observable market price, the resulting faff ir value measurement has been categorized as a Level 3 measurement. The Company had $11 million and $12 million of such assets at December 31, 2022 and 2021, respectively. ther impaired below the appr a ff Fair ValuVV e of Financial Instruments The estimated fair ff value of the Company’s finaff ncial instrurr ments is as follows: Financial assets: Investment securities: HTM AFS Equity securities Derivative assets Loans HFS Loans HFI, net Mortgage servicing rights Accrued interest receivablea Financial liabilities: Deposits Other borrowings Qualifyiff ng debt Derivative liabilities Accrued interest payaba le Carrying Amount Level 1 cember 31, 2022 Fair ValueVV Level 2 (in millions)s Level 3 TotTT al $ $ $ $ 1,289 7,092 160 51 1,184 51,552 1,148 357 53,644 6,299 893 40 35 — $ 24 135 — — — — — — $ — — — — $ $ 1,112 7,068 25 46 1,172 — — 357 53,698 6,261 735 37 35 — $ — — 5 1 47,679 1,148 — — $ — 75 3 — 1,112 7,092 160 51 1,173 47,679 1,148 357 53,698 6,261 810 40 35 140 Carrying Amount Level 1 December 31, 2021 Fair VaVV lue Level 2 (in millions) Level 3 TotaTT l $ $ $ $ 1,107 6,189 159 50 5,635 38,823 698 228 47,612 1,502 896 100 9 — $ 41 142 — — — — — — $ — — — — $ $ 1,146 6,148 17 39 3,894 — — 228 47,616 1,518 858 98 9 — $ — — 11 1,760 39,218 698 — — $ — 81 2 — 1,146 6,189 159 50 5,654 39,218 698 228 47,616 1,518 939 100 9 Financial assets: Investment securities: HTM AFS Equity securities Derivative assets Loans HFS Loans HFI, net Mortgage servicing rights Accrued interest receivablea Financial liabilities: Deposits Other borrowings Qualifyiff ng debt Derivative liabilities Accrued interest payaba le tt Interest rate risk The Company assumes interest rate risk (the risk to the Company’s earnings and capital frff om changes in interest rate levels) as a result of its normal operations. As a result, the fair nts, as well as its future net interest income, will change when interest rate levels change and ff that change may be either favora values of the Company’s finff ancial instrume ff or unfavor able to the Company. blea ff rr Interest rate risk exposure is measured using interest rate sensitivity analysis to determine the Company's change in EVE and net interest income resulting from hypothetical changes in interest rates. If potential changes to EVE and net interest income resulting frff om hypothetical interest rate changes are not within the limits established by the BOD, the BOD may direct management to adjd ust the asset and liability mix to bring interest rate risk within BOD-approved limits. WABWW has an ALCO charged with managing interest rate risk within the BOD-approved limits. Limits are strucrr does not conformff interest rate risk forff turt ed to preclude an interest rate risk profilff e that to both management and BOD risk tolerances without ALCO approval. There is also ALCO reporting at the Parent level for reviewing the Company,yy which gets reported to the BOD and its Finance and Investment Committee. FairFF value of commitments tt The estimated fair value of letters of credit outstanding at December 31, 2022 and 2021 approximates zero as there have been no significan t changes in borrower creditworthiness. Loan commitments on which the committed interest rates are less than the current market rate are insignificant at December 31, 2022 and 2021. ff 141 20. REGULATAA ORYRR CAPITALTT REQUIREMENTS banking agencies. Failure to meet minimum on the Company’s business frff amework for prompt corrective action, the Company and the Bank must meet capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-ff balance sheet items as calculated under regulatoryr t to qualitative judgments by the regulators about components, risk weightings, and The Company and the Bank are subject to various regulatoryr capital requirements administered by the federal capital requirements could trigger certain mandatoryr or discretionaryrr actions that, if undertaken, could have a direct material effff ect ff and financial specificff accounting practices. The capita other fact al adequacy guidelines and the regulatoryr al amounts and classificati statements. Under capita on are also subjecb ors. ff ff ff ff al rules, the Company elected the CECL transition option that delays the estimated impact on regulatory capia tal resulting As permitted by the regulatoryr capita from the adoption of CECL over a five-year transition period ending December 31, 2024. Beginning in 2022, capia tal ratios and amounts include a 25% reduction to the capa ital benefitff that resulted frff om the increased ACL related to the adoption of ASC 326. As of December 31, 2022 and 2021, the Company and the Bank's capital ratios exceeded the well-capa italized thresholds, as defined by the federal banking agencies. The actual capa ital amounts and ratios forff the Company and the Bank are presented in the foff llowing tables: TotTT al Capital Tier 1 Capital Risk-WeiWW ghted Assets TanTT gible AA Average Assets TotaTT l Capital Ratio Tier 1 Capital Ratio Tier 1 Leverage Ratio Common Equity Tier 1 (dollars in millions)s December 31, 2022 WALWW WABWW Well-WW capitalized ratios Minimum capital ratios December 31, 2021 WALWW WABWW WellWW -capia talized ratios ratios a Minimum capital $ $ $ $ 6,586 6,280 5,499 5,120 $ $ 5,449 5,737 4,444 4,658 $ $ 54,461 54,411 44,697 44,726 69,814 69,762 56,973 56,962 12.1 % 11.5 10.0 8.0 12.3 % 11.4 10.0 8.0 10.0 % 10.5 8.0 6.0 9.9 % 10.4 8.0 6.0 7.8 % 8.2 5.0 4.0 7.8 % 8.2 5.0 4.0 9.3 % 10.5 6.5 4.5 9.1 % 10.4 6.5 4.5 WitWW h the acquisition of AmeriHome, the Company is also required to maintain specififf ed levels of capital to remain in good standing with certain government sponsored entities and government agencies, including FNMA, FHLMC, GNMA, and HUD. These capital requirements are generally tied to the unpaid io or loan production volume. Noncompliance with these capa ital requirements can result in balances of loans included in the Company's servicing portfolff various remedial actions up to, and including, removing the Company's ability to sell loans to and service loans on behalf of the respective agency. The Company believes that it is in compliance with these requirements as of December 31, 2022. 142 21. EMPLOYEE BENEFIT PLANS 401(k) employee benefitff plan for all eligible employees. Participants are aba le to deferff between 1% and 75% (upu to a maximum of The Company has a qualifiedff $20,500 forff those under 50 years of age and up to a maximum of $27,000 foff r those over 50 years of age in 2022) of their annual compensation. The Company may elect to match a discretionary amount each year, which was 100% of the fiff rst 5% of the participant’s compensation defeff rred into the plan dudd ring the year ended December 31, 2022. The Company’s contributions to this plan totaled $15.9 million, $12.0 million, and $7.1 million for the years ended December 31, 2022, 2021, and 2020, respectively. In addition, the Company has a SERP,PP which is an unfuff nded noncontributoryrr defined benefiff t pension plan. The SERP provides retirement benefitff s to certain Bridge offiff cers based on years of service and final average salaryr . The projected benefiff t obligation was $14 million and $13 million as of December 31, 2022 and 2021, respectively,yy all of which was unfunde the years ended December 31, 2021 and 2020. the year ended December 31, 2022 and $1.1 million forff d. Net periodic benefiff t cost totaled $1.0 million forff ff 22. RELATEAA D PARPP TYRR TRANRR SACTIONS Principal stockholders, directors, and executive officer s of the Company,yy their immediate faff mily members, and companies they control or own more than a 10% interest in, are considered to be related parties. In the ordinaryr course of business, the Company engages in various related party transactions, including extending credit and bank service transactions. All related party transactions are subju ect to review and appa roval pursuant to the Company's related party transactions policy. ff The increase in related party transactions during the year ended December 31, 2022 is due to changes in composition of the Company's BOD. Federal banking regulations require that any extensions of credit to insiders and their related interests not be offere ff offff ered to non-related borrowers of similar creditworthiness. The folff lowing table summarizes the aggregate activity forff ff d on terms more favff orable than would be such loans: YeYY ar Ended December 31, 2022 2021 Balance, beginning New loans Advances Repayments and other Balance, ending $ $ (in millions)s — $ 231 2,144 (2,203) 172 $ 3 — — (3) — al of interest or principal because of None of these loans are past due, on non-accrual status or have been restrurr ctured deterioration in the finan cial position of the borrower. There were no loans to a related party that were considered classififf ed loans at December 31, 2022 or 2021. The interest income associated with these loans was apa proximately $2.5 million, $0.1 million, and $0.2 million foff r the years ended December 31, 2022, 2021 and 2020, respectively. In addition, the Company purchased $914 million of residential loans frff om related parties during the year ended December 31, 2022. There were no such loan purchases during the years ended December 31, 2021 and 2020. to provide a reducd tion or deferr ff ff t Loan commitments outstanding with related parties totaled $476 million and $7 million at December 31, 2022 and 2021, respectively. The Company also accepts deposits frff om related parties, which totaled $398 million and $101 million at December 31, 2022 and 2021, respectively,yy with related interest expense of approximately $0.2 million durdd ing each of the years ended December 31, 2022, 2021, and 2020 and earnings credits of $1.9 million for the year ended December 31, 2022. There were no earnings credits on deposits frff om related parties forff the years ended December 31, 2021 and 2020. Long-term borrowings with related parties totaled $1 million and zero at December 31, 2022 and 2021, respectively. s paid to related parties totaled $1.5 million forff the year ended December 31, 2022, with $2.1 billion of residential loans serviced by related Loan servicing feeff the years ended December 31, 2021 and 2020 and no loans serviced parties at December 31, 2022. There were no loan servicing feff es paid to related parties forff by related parties at December 31, 2021. Donations, sponsorships, and other payments to related parties totaled less than $1.0 million dud ring each of the years ended December 31, 2022, 2021, and 2020. 143 December 31, 2022 2021 (i(( n millions)s $ $ $ $ 85 — 34 5,862 66 6,047 669 22 691 5,356 6,047 2022 YeYY ar Ended December 31, 2021 (i(( n millions) $ $ $ $ $ $ 79 1 41 5,500 23 5,644 673 8 681 4,963 5,644 160.0 3.1 4.7 167.8 10.6 19.7 30.3 137.5 4.5 142.0 364.6 506.6 — 506.6 2020 PP 23. PARE NT COMPANYPP FINANCIAL INFORMATAA ION The condensed finan ff cial statements of the holding company are presented in the foff llowing tables: WESTERN ALLIANCE BANCORPORARR TAA ION Condensed Balance Sheets ASSETS: Cash and cash equivalents Investment securities - AFS Investment securities - equity u Investment in subsid Other assets iaries ToTT tal assets LIABILITIES AND STOCKHOLDERS' EQUITY: Qualifyiff ng debt Accrued interest and other liabilities ToTT tal liabilities ToTT tal stockholders’ equity ToTT tal liabilities and stockholders’ equity WESTERN ALLIANCE BANCORPORARR TAA ION Condensed Income Statements Income: subsu idiaries Dividends fromff Interest income Non-interest (loss) income ToTT tal income Expense: Interest expense Non-interest expense ToTT tal expense Income before income taxes and equity in undistributed earnings of subsiu diaries Income tax benefit Income before equity in undistributed earnings of subsiu diaries Equity in undistributed earnings of subsidiaries Net income Dividends on preferred stock $ $ 261.8 3.8 (0.9) 264.7 22.6 26.5 49.1 215.6 11.0 226.6 830.7 1,057.3 12.8 Net income available to common stockholders $ 1,044.5 $ 50.0 3.2 13.4 66.6 19.5 31.9 51.4 15.2 7.4 22.6 876.6 899.2 3.5 895.7 144 2022 YeYY ar Ended December 31, 2021 (i(( n millions) 2020 $ 1,057.3 $ 899.2 $ (830.7) 8.7 — (16.8) 218.5 (0.4) 1.8 (193.0) (12.1) (203.7) — — — 157.7 (166.2) — — (8.5) 6.3 79.0 85.3 (876.6) (0.1) 5.9 (1.4) 27.0 (16.0) 28.6 (1,139.3) — (1,126.7) 591.9 — (176.0) 540.3 (127.6) 294.5 0.1 1,123.2 $ 23.5 55.5 79.0 $ 506.6 (364.6) — — 8.0 150.0 (6.9) 7.7 — 1.2 2.0 — (71.6) — — (101.3) — 0.5 (172.4) (20.4) 75.9 55.5 WestWW ern Alliance Bancorporation Condensed Statements of Cash Flows Cash flows from operating activities: Net income Adjusd tments to reconcile net income to net cash provided by operating activities: Equity in net undistributed earnings of subsu idiaries Change in fair value of assets and liabilities measured at fair Loss on extinguishment of debt Other operating activities, net ff value Net cash provided by operating activities Cash flows from investing activities: Purchases of securities Principal pay downs, calls, maturities, and sales proceeds of securities Capital contributions to subsid Other investing activities, net iaries u Net cash (used in) provided by investing activities rdinated debt Cash flows from financing activities: Net proceeds from issuance of subou Common stock repurchases Redemption of subordinated debt Proceeds from issuance of common stock in offff erff Cash dividends paid on common and preferff Proceeds from issuance of preferred stock, net Other finff ancing activities, net ings, net red stock Net cash (used in) provided by finff ancing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year $ 145 24. SEGMENTS The Company's reportable segments are aggregated with a focus on producd ts and services offff erff ed and consist of three reportable segments: • • • Commercial: provides commercial banking and treasuryr management producd ts and services to small and middle-market businesses, specialized banking services to sophisticated commercial institutions and investors within niche industries, as well as fiff nancial services to the real estate indud stryrr . Consumer Related: offeff residential mortgage banking and beginning on Januaryr 25, 2022, includes the financial results of DST. rs both commercial banking services to enterprises in consumer-related sectors and consumer banking services, such as rate & Other: consists of the Company's investment portfolff Corporr allocated to other reportable segments, and inter-segment eliminations. io, Corpor rr ate borrowings and other related items, income and expense items not The Company's segment reporting process begins with the assignment of all loan and deposit accounts directly to the segments where these producd ts are al is assigned to each segment based on the risk profile of their assets and liaba ilities. WitWW h the exception of goodwill, originated and/ordd ng the year. Any excess or deficient equity not allocated to which is assigned a 100% weighting, equity capital allocations ranged frff om 0% to 20% durid segments based on risk is assigned to the Corpor serviced. Equity capita ate & Other segment. rr Net interest income, provision forff credit losses, and non-interest expense amounts are recorded in their respective segments to the extent that the amounts are directly attributable to those segments. Net interest income is recorded in each segment on a TEB with a corresponding increase in income tax expense, which is eliminated in the Corporate & Other segment. Further, net interest income of a reportable segment includes a funff sensitivity and maturity characteristics. Using this funff has lending/investing in excess of deposits/borrowings and a net provider of fuff nds has deposits/bor user of funff of the assets or liabilities in the portfolff interest income. ds transfer pricing process that matches assets and liabia lities with similar interest rate pricing methodology,yy liquidity is transferred between users and providers. A net user of funff ds rowings in excess of lending/investing. A segment that is a pricing, which is determined based on the average life io. Residud al fuff nds transfeff r pricing mismatches are allocaba le to the Corporate & Other segment and presented in net ds is charged for the use of funds, while a provider of fund s is credited through funds transferff ds transferff ff / The net income amount forff each reportable segment is fuff rther derived by the use of expense allocations. Certain expenses not directly attributable to a specific segment are allocated across all segments based on key metrics, such as number of employees, number of transactions processed for loans and deposits, and average loan and deposit balances. These types of expenses include inforff mation technology,yy operations, human resources, finance, risk management, credit administration, legal, and marketing. Income taxes are applied to each segment based on the effecff the aggregate effeff ctive tax rates in the segments are adjud sted in the Corpor rr ate & Other segment. tive tax rate for the geographic location of the segment. Any diffff eren ff ce in the corporate tax rate and 146 ff The follow ing is a summary of operating segment balance sheet infoff rmation: Consolidated Company Commercial Consumer Related Corporate & Other At December 31, 2022: Assets: Cash, cash equivalents, and investment securities Loans HFS Loans HFI, net of deferre d fees and costs ff Less: allowance for credit losses Net loans HFI Other assets acquired through foreclosure, net Goodwill and other intangible assets, net Other assets ToTT tal assets Liabilities: Deposits Borrowings and qualifying Other liabilities ff debt ToTT tal liabilities Allocated equity: ToTT tal liabilities and stockholders' equity Excess funds provided (used) At December 31, 2021: Assets: Cash, cash equivalents, and investment securities Loans HFS Loans HFI, net of deferre d fees and costs ff Less: allowance for credit losses Net loans HFI Other assets acquired through foreclosure, net Goodwill and other intangible assets, net Other assets ToTT tal assets Liabilities: Deposits Borrowings and qualifying Other liabilities ff debt ToTT tal liabilities Allocated equity: ToTT tal liabilities and stockholders' equity Excess funds provided (used) $ $ $ $ $ $ $ $ $ $ $ 9,803 1,184 51,862 (310) 51,552 11 680 4,504 67,734 53,644 7,192 1,542 62,378 5,356 (in millions) $ $ $ 12 — 31,414 (262) 31,152 11 293 435 31,903 29,494 27 83 29,604 2,684 — $ 1,184 20,448 (48) 20,400 — 387 2,180 24,151 18,492 340 656 19,488 1,691 $ $ 67,734 $ — 32,288 $ 385 21,179 $ (2,972) $ $ $ 8,057 5,635 39,075 (252) 38,823 12 635 2,821 55,983 47,612 2,398 1,010 51,020 4,963 $ $ $ 13 — 25,092 (226) 24,866 12 295 254 25,440 30,467 17 216 30,700 2,588 $ $ $ 82 5,635 13,983 (26) 13,957 — 340 1,278 21,292 15,363 353 138 15,854 1,597 55,983 $ — 33,288 $ 7,848 17,451 $ (3,841) 9,791 — — — — — — 1,889 11,680 5,658 6,825 803 13,286 981 14,267 2,587 7,962 — — — — — — 1,289 9,251 1,782 2,028 656 4,466 778 5,244 (4,007) 147 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(cid:6)(cid:20)(cid:16)(cid:10)(cid:12)(cid:7)(cid:1) (cid:6)(cid:13)(cid:14)(cid:18)(cid:10)(cid:19)(cid:7)(cid:1) 14(cid:27) 25. REVENUE FROM CONTRACTS WITH CUSTOMERS Revenue streams within the scope of ASC 606 include service charges and feeff service fees. ff s, interchange feeff s on credit and debit cards, success fees, and legal settlement Performan ff ce Obligations various underlying factors, such as customer deposit balances, and as such may be considered variable. The Company’s performan for these contracts are dependent ce obligations for these as the services are rendered and payment is collected on a monthly,yy quarterly,yy or semi-annual basis. For services provided at a point in are recognized at the time such services are rendered. The Company had no material unsatisfied perforff mance obligations as of December 31, 2022 or its customers are ongoing, and either party may cancel at any time. The fees Many of the services the Company perforff ms forff upon u services are satisfiedff time, fees 2021. ff ff ff Service CharCC gr es and Fees ff ges, and other ancillaryr deposit account services for its customers, which include analysis and treasuryr management services, use of safe deposit boxes, check The Company performs upchar services. The depositoryr arrangements the Company holds with its customers are considered day-to-day contracts with ongoing u renewals and optional purchases, and as such, the contract durdd ation does not extend beyond the services perfoff rmed. Due to the short-term naturt e of such contracts, the Company generally recognizes revenue for deposit related fees as services are rendered. From time to time, the Company may waive certain fees for its customers. The Company considers historical experience when recognizing revenue frff om contracts with customers, and may reduce the transaction price to account forff feeff waivers or refunds ff ff . Debit and CrCC edit rr II Cardrr Inter crr hange When a credit or debit card issued by the Company is used to purchase goods or services from a merchant, the Company earns an interchange fee. Interchange fees on credit and debit cards are included in Commercial banking related income in the Consolidated Income Statements. The Company considers the merchant to be its customer in these transactions as nightly settlement services between the payment network and the merchant are being provided to the merchant. This transmission of data and funds represents the Company’s perfoff rmance obligation and is performed nightly. As the payment network is in direct control of setting the rates, the Company acts as an agent. Interchange feff es are recorded net of expenses as the services are provided. SS Succe ss Fees ff Success fees are one-time fees detailed as part of certain loan agreements and are earned upon occurrence of a triggering event. Examples of triggering events include: a borrower obtaining its next round of fuff nding, an acquisition, or completion of a public offff eff ring. Success fees are variabla e as the transaction price can varyr and is contingent on the occurrence or non-occurrence of a triggering event. These fees are included in Income frff om equity investments in the Consolidated Income Statements. s Legal Settlement Service SS The Company provides payment services for claim administrators responsible forff Claimants access the Company's platforff m, select their preferff Company is entitled to a feeff red method of payment, and funff ds are transferred to the claimant. Upon the transferff distributing fuff nds from legal settlements, such as class action lawsuits. of fuff nds, the paid by the claim administrator. Revenue is recognized upon each transfer of funds to a claimant. Revenues within the scope of ASC 606 totaled $44.1 million, $37.6 million, and $29.9 million forff respectively. the years ended December 31, 2022, 2021, and 2020, 149 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. Item 9A. Controls and Procedures. As of the end of the period covered by this Annual Report on Form 10-K, an evaluation was carried out by the Company’s management, with the participation of its CEO and CFO, of the effeff ctiveness of the Company’s disclosure controls and procedures (as definff ed in Rule 13a-15(e), under the Exchange Act). Based upon tive as of the end of the period covered by u this report. No changes were made to the Company’s internal control over fiff nancial reporting (as defined in RulRR e 13a-15(f)ff under the Exchange Act) durd ing the ff last fiscal that evaluation, the Company’s CEO and CFO concluded that the disclosure controls and procedures were effecff quarter that materially affff eff cted, or are reasonably likely to materially affff ecff t, the Company’s internal control over financial reporting. MANANN GEMENTEE 'S REPORT ON INTNN ERTT NALNN CONOO TRONN LOO OVEREE FINANCINN ALII REPORTOO INGTT estaba lishing and maintaining adequate internal control over financial reporting. The Company’s internal control al reporting is a process designed under the supu ervision of the Company’s CEO and CFO to provide reasonaba le assurance regarding the reliability ses in accordance with U.S. generally accepted accounting cial reporting and the preparation of the Company’s fiff nancial statements for external purporr The management of WALWW is responsible forff over financi ff of finan ff principles. As of December 31, 2022, management assessed the effecff internal control over financ management determined that the Company maintained effecff ff ial reporting established in “I“ nII ternal Contrt orr l-IntII ege rg ated Framew tiveness of the Company’s internal control over financial reporting based on the criteria foff r effecff tive orkrr ” issued by the COSO in 2013. Based on this assessment, FF tive internal control over fiff nancial reporting as of December 31, 2022, based on those criteria. RSM US LLP,PP the independent registered public accounting firm that audited the Consolidated Financial Statements of the Company included in this Annual Report on Form 10-K, has audited the effff ecff tiveness of the Company’s internal control over finff ancial reporting as of December 31, 2022. Their report, which expresses an unqualified opinion on the effeff ctiveness of the Company’s internal control over fiff nancial reporting as of December 31, 2022, is included herein. 150 Report of Independent Registered Public Accounting Firm ToTT the Stockholders and Board of Directors of WeWW stern Alliance Bancorporr ration Opinion on the Internal Control Over Financial Reporting WeWW have audited WesterWW n Alliance Bancorpor rr on criteria established in Inter ll olrr —I 2013. In our opinion, the Company maintained, in all material respects, effff ecff ll criteria estaba lished in Internal ContCC rtt olrr —I FF gre ated Framew ation and its subsidiaries’ (the Company) internal control over finff ancial reporting as of December 31, 2022, based d FraFF mework issued by the Committee of Sponsoring Organizations of the TreaTT dway Commission in gg nteII ge rate tive internal control over fiff nancial reporting as of December 31, 2022, based on orkrr issued by the Committee of Sponsoring Organizations of the TrTT eadway Commission in 2013. nal ContrCC nteII II WeWW have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets as of December 31, 2022 and 2021, and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022 of the Company and our report, dated Februaryr 23, 2023, expressed an unqualifiedff opinion. Basis forff Opinion The Company’s management is responsible for maintaining effff ecff iveness of tive internal control over financial reporting and forff cial reporting in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to internal control over finan express an opinion on the Company’s internal control over financial reporting based on our audit. WeWW are a publu ic accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the apa plicaba le rules and regulations of the Securities and Exchange Commission and the PCAOB. its assessment of the effff ect ff ff the audit to obtain reasonable WeWW conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and performff assurance about whether effff ecff tive internal control over finff ancial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effff ecti veness of internal control based on the assessed risk. Our audit also included perforff ming such other procedurd es as we considered necessary in the ff circumstances. WeWW believe that our audit provides a reasonaba le basis forff our opinion. Definff ition and Limitations of Internal Control Over Financial Reporting A company’s internal control over finaff ncial reporting is a process designed to provide reasonaba le assurance regarding the reliability of finff ancial reporting and the preparation of financial statements for external purprr oses in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonaba le detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonaba le assurance that transactions are recorded as necessaryr to permit preparation of finan of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effecff cial statements in accordance with generally accepted accounting principles, and that receipts and expenditures t on the fiff nancial statements. ff t Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projeco effff ecti ff with the policies or procedures may deteriorate. tions of any evaluation of re periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance veness to futuff /s/ RSM US LLP San Francisco, Califorff nia yr 23, 2023 rr Februar 151 Item 9B. Not applicable. a Other Informat ff ion. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. a PARPP TRR III Item 10. Directors, Executive Offiff cers and Corporate Governance ion in the Company’s Definit The informat the 2023 Annual Meeting of Stockholders to be held on June 14, 2023, which ff contains information concerning this item under the captions Corporate Governance, Executive Offiff cers, Delinquent Section 16(a) Reports and Legal Proceedings, is incorporr ive Proxy Statement prepared forff rated herein by refeff rence. ff and Ethics (the “Code”) that applies to its directors, offff iceff The Company has adopted a Code of Business Conductd rs and employees and is available in the Governance Documents section of the Investor Relations page of the Company’s website at www.westernalliancebancorporation.com or, for print copies, by ate Secretary. The Company intends to provide writing to the Company at One E. WaWW shington Street, Suite 1400, Phoenix, Arizona 85004, Attention: Corpor any required disclosure of any amendment to or waiver of the Code that apa plies to its principal executive offiff cer, principal finff ancial offff icer , principal ctions, in the Governance Documents section of the Investor Relations page of the accounting offff icer Company’s website at www.westernalliancebancorprr oration.com promptly folff lowing the amendment or waiver. The infoff rmation contained on or connected to the Company’s website is not incorpora ted by referff ence in this Annual Report on Form 10-K and should not be considered part of this or any other report or document that we fileff or controller, or persons perfoff rming similar funff or fuff rnish to the SEC. rr ff ff rr Item 11. Executive Compensation ion in the Company’s Definit The informat ff contains informati ff Compensation TaTT bles, a Participation and Compensation Committee Report is incorprr orated herein by reference. the 2023 Annual Meeting of Stockholders to be held on June 14, 2023, which on concerning this item under the captions Compensation of Directors, Executive Compensation - Compensation Discussion and Analysis, CEO Pay Ratio, Potential Payments Upon TerTT mination or Change in Control, Compensation Committee Interlocks and Insider ive Proxy Statement prepared forff ff Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ion in the Company’s Definit The informat the 2023 Annual Meeting of Stockholders to be held on June 14, 2023, which ff contains information concerning this item under the caption Equity Compensation Plan Information and Security Ownership of Certain Beneficial Owners, Directors and Executive Offff icff ers, is incorpor ive Proxy Statement prepared forff ated herein by referenc e. ff ff rr Item 13. Certain Relationships and Related Trans TT actions, and Director Independence ion in the Company’s Definit the 2023 Annual Meeting of Stockholders to be held on June 14, 2023, which ff The informat contains infoff rmation concerning this item under the caption Certain TrTT ansactions with Related Parties, Policies and Procedurdd es Regarding TrTT ansactions with Related Persons and Director Independence, is incorprr orated herein by refeff rence. ive Proxy Statement prepared forff ff Item 14. Principal Accountant Fees and Services ion in the Company’s Definit the 2023 Annual Meeting of Stockholders to be held on June 14, 2023, which ff The informat contains infoff rmation concerning this item under the caption Independent Auditors - Fees and Services and Audit Committee Pre-Approval Policy,yy is rr incorpor ive Proxy Statement prepared forff ated herein by refereff nce. ff PARPP TRR IV 152 Item 15. Exhibits and Financial Statement Schedules (1) The foff llowing finan ff cial statements are incorpor rr ated by referenc ff e from Item 8 hereto: Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2022 and 2021 Consolidated Income Statements for the three years ended December 2022, 2021, and 2020 Consolidated Statements of Comprehensive Income for the three years ended December 31, 2022, 2021, and 2020 Consolidated Statements of Stockholders’ Equity for the three years ended December 31, 2022, 2021, and 2020 Consolidated Statements of Cash Flows for the three years ended December 31, 2022, 2021, and 2020 Notes to Consolidated Financial Statements (2) Financial Statement Schedules Not applicable. 70 73 74 75 76 77 79 153 EXHIBITS 1.1 1.2 1.3 3.1 3.2 3.3 3.4 3.5 3.6 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 10.1 10.2 10.3 10.4 Distribution Agreement, dated June 3, 2021, by and between Western Alliance Bancorporation and J.P. Morgan Securities LLC (incorporated by reference to Exhibit 1.1 of Western Alliance’s Form 8-K filed with the SEC on June 3, 2021). Amendment to the Distribution Agreement, dated November 18, 2021, by and between Western Alliance Bancorporation, J.P. Morgan Securities LLC and Piper Sandler & Co. (incorporated by reference to Exhibit 1.1 of Western Alliance's Form 8-K filed with the SEC on November 19. 2021). Amendment No. 2 to the Distribution Agreement, dated February 28, 2022, by and between Western Alliance Bancorporation, J.P. Morgan Securities LLC and Piper Sandler & Co. (incorporated by reference to Exhibit 1.1 of Western Alliance’s Form 8-K filed with the SEC on February 28, 2022). Amended and Restated Certificate of Incorporation of Western Alliance, effective as of May 19, 2015 (incorporated by reference to Exhibit 3.1 of Western Alliance's Form 10-K filed with the SEC on March 1, 2019). Amended and Restated Bylaws of Western Alliance, effective as of June 14, 2022 (incorporated by reference to Exhibit 3.1 of Western Alliance's Form 8-K filed with the SEC on June 16, 2022). Articles of Conversion, as filed with the Nevada Secretary of State on May 29, 2014 (incorporated by reference to Exhibit 3.1 of Western Alliance’s Form 8-K filed with the SEC on June 3, 2014). Certificate of Conversion, as filed with the Delaware Secretary of State on May 29, 2014 (incorporated by reference to Exhibit 3.2 of Western Alliance’s Form 8-K filed with the SEC on June 3, 2014). Certificate of Designation of Non-Cumulative Perpetual Preferred Stock, Series B, as filed with the Delaware Secretary of State on May 29, 2014 (incorporated by reference to Exhibit 3.4 of Western Alliance’s Form 8-K filed with the SEC on June 3, 2014). Certificate of Amendment designating the 4.250% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A, effective September 22, 2021 (incorporated by reference to Exhibit 3.1 of Western Alliance's Form 8-K filed with the SEC on September 22, 2021). Description of Securities of the Registrant (incorporated by reference to Exhibit 4.1 of Western Alliance's Form 10-K filed with the SEC on February 25, 2022). Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 of Western Alliance’s Form 8-K filed with the SEC on June 3, 2014). Form of Senior Debt Indenture (incorporated by reference to Exhibit 4.2 of Western Alliance's Form S-3 filed with the SEC on May 7, 2015). Form of Subordinated Debt Indenture (incorporated by reference to Exhibit 4.3 of Western Alliance's Form S-3 filed with the SEC on May 7, 2015). Form of 5.00% Fixed to Floating Rate Subordinated Bank Note due July 15, 2025 (incorporated by reference to Exhibit 4.1 of Western Alliance's Form 8-K filed with the SEC on July 2, 2015). Form of 5.25% Fixed to Floating Rate Subordinated Bank Note due June 1, 2030 (incorporated by reference to Exhibit 4.1 of Western Alliance's Form 8-K filed with the SEC on May 22, 2020). Subordinated Debt Indenture, dated as of June 7, 2021, by and between Western Alliance Bancorporation and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 of Western Alliance’s Form 8-K filed with the SEC on June 7, 2021). First Supplemental Indenture to the Subordinated Indenture for the 3.00% Fixed to Floating Rate Subordinated Notes due 2031, dated June 7, 2021, by and between Western Alliance Bancorporation and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 of Western Alliance’s Form 8-K filed with the SEC on June 7, 2021). Form of Global Note for the 3.00% Fixed to Floating Rate Subordinated Notes due 2031 (incorporated by reference to Exhibit 4.3 of Western Alliance’s Form 8-K filed with the SEC on June 7, 2021). Deposit Agreement (including the Form of Depositary Receipt), dated September 22, 2021, by and among Western Alliance Bancorporation, Computershare Inc. and Computershare Trust Company, N.A., and the holders from time to time of Depositary Receipts described therein (incorporated by reference to Exhibit 4.1 of Western Alliance's Form 8-K filed with the SEC on September 22, 2021). Western Alliance 2005 Stock Incentive Plan, as amended and restated (incorporated by reference to Exhibit 10.1 of Western Alliance's Form 8-K filed with the SEC on June 1, 2020). ± Bridge Capital Holdings 2006 Equity Incentive Plan (incorporated by reference to Exhibit 4.11 of Western Alliance's Form S-8 filed with the SEC on July 2, 2015). ± Form of BankWest Nevada Corporation Incentive Stock Option Plan Agreement (incorporated by reference to Exhibit 10.3 of Western Alliance’s Registration Statement on Form S-1 filed with the SEC on April 28, 2005). ± Form of Western Alliance Incentive Stock Option Plan Agreement (incorporated by reference to Exhibit 10.4 of Western Alliance’s Registration Statement on Form S-1 filed with the SEC on April 28, 2005). ± 154 10.5 10.7 10.9 10.10 10.11 10.13 10.15 10.16 21.1* 23.1* 24.1* 31.1* 31.2* 32** 101* 104* Form of Western Alliance 2002 Stock Option Plan Agreement (incorporated by reference to Exhibit 10.5 of Western Alliance’s Registration Statement on Form S-1 filed with the SEC on April 28, 2005). ± Form of Western Alliance 2002 Stock Option Plan Agreement (with double trigger acceleration clause) (incorporated by reference to Exhibit 10.6 of Western Alliance’s Registration Statement on Form S-1 filed with the SEC on April 28, 2005). ± Form of Non-Competition Agreement (incorporated by reference to Exhibit 10.8 of Western Alliance’s Registration Statement on Form S-1 filed with the SEC on April 28, 2005). ± Severance and Change in Control Plan, as amended and restated effective as of July 28, 2021 (incorporated by reference to Exhibit 10.2 of Western Alliance's Form 10-Q filed with the SEC on July 30, 2022). ± Form of Executive Participation Agreement under the Severance and Change in Control Plan (CEO) (incorporated by reference to Exhibit 10.3 of Western Alliance's Form 10-Q filed with the SEC on July 30, 2022). ± Form of Executive Participation Agreement under the Severance and Change in Control Plan (non-CEO) (incorporated by reference to Exhibit 10.4 of Western Alliance's Form 10-Q filed with the SEC on July 30, 2022). ± Form of Indemnification Agreement, by and between Western Alliance and each of Western Alliance's directors and executive officers (incorporated by reference to Exhibit 10.10 of Western Alliance's Form 10-K/A filed with the SEC on March 1, 2017). ± Letter Agreement, dated as of April 6, 2022, between Western Alliance Bancorporation and Kenneth A. Vecchione (incorporated by reference to Exhibit 10.1 of Western Alliance’s Current Report on Form 8-K filed with the SEC on April 7, 2022). ± Employment Letter Agreement, dated February 7, 2018, by and between Barbara J. Kennedy and Western Alliance (incorporated by reference to Exhibit 10.1 of Western Alliance's Form 10-Q filed with the SEC on April 30, 2019). ± Form of Performance-Based Stock Unit Agreement pursuant to the Company's 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.14 of Western Alliance's Form 10-K filed with the SEC on March 2, 2020). ± Form of Executive Restricted Stock Agreement pursuant to the Company's 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.15 of Western Alliance's Form 10-K filed with the SEC on March 2, 2020). ± Form of Amendment to Executive Restricted Stock Agreement pursuant to the Company’s 2005 Stock Incentive Plan (incorporated by referenced to Exhibit 10.1 of Western Alliance’s Form 10-Q filed with the SEC on November 1, 2022). ± List of Subsidiaries of Western Alliance. Consent of RSM US LLP. Power of Attorney (see signature page). CEO Certification Pursuant Rule 13a-14(a)/15d-14(a). CFO Certification Pursuant Rule 13a-14(a)/15d-14(a). CEO and CFO Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes Oxley Act of 2002. The following materials from WesternWW (i) the Consolidated Balance Sheets, (ii) the Consolidated Income Statements, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Stockholders’ Equity,yy (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements. Alliance’s Annual Report on Form 10-K Report for the year ended December 31, 2020, formatted in Inline XBRL: The cover page of WesterWW n Alliance's Annual Report on Form 10-K for the year ended December 31, 2021, formatted in Inline XBRL (contained in Exhibit 101). * Filed herewith. ** Furnished herewith. ± Management contract or compensatoryr arrangement. Certain instrumen 601(b)(4)(iii) of Regulation S-K. The Company hereby undertakes to fuff rnish to the SEC, upon request, copies of any such instrumen ts defining the rights of holders of AmeriHome's 6.5% senior notes (principal amount of $300 million) due 2028 are omitted pursuant to Item ts. rr rr Stockholders may obtain copies of exhibits by writing to: Dale Gibbons, WeWW stern Alliance Bancorprr oration, One East WaWW shington Street Suite 1400, Phoenix, AZ 85004. Item 16. Form 10-K Summary.yy Not applicable. a 155 SIGNATAA URES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. rr February 23, 2023 WESTERN ALLIANCE BANCORPORARR TAA ION By: /s/ Kenneth A. VeVV cchione Kenneth A. VeVV cchione Chief Executive Offiff cer ears below constitutt es and apa points Kenneth A. VeVV cchione and Dale KNOW ALL MEN BY THESE PRESENTS, that each person whose signaturt e appa ion and resubstitution, foff r him or her and in his Gibbons, and each of them, his or her truerr the same, with all or her name, place and stead, in any and all capa acities, to sign any and all amendments to this Annual Report on Form 10-K, and to fileff exhibits thereto and other documents in connection therewith the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and ff each of them, full power and authority to do and perforff m each and everyr act and thing requisite and necessary to be done in and aboa ut the premises, as fully and to all intents and purposes as he or she might or could do in person hereby ratifyiff ng and confirming all that said attorneys-in-fact and agents, or his or her substitutet and lawful attorneys-in-faff ct and agents, with full power of substu do or cause to be done by virtuet or substitutes, may lawfully hereof.ff itutt ff Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the foff llowing persons on behalf of the registrant in their listed capacities on February 23, 2023. rr 156 Name Title /s/ Kenneth A. VeVV cchione Kenneth A. VecVV chione /s/ Dale Gibbons Dale Gibbons /s/ J. Kelly Ardrey Jr. J. Kelly Ardrey Jr. /s/ Bruce D. Beach rr Bruce D. Beach /s/ Patricia Arvielo Patricia Arvielo /s/ Kevin Blakely Kevin Blakely /s/ Juan Figuereo Juan Figuereo /s/ Paul Galant Paul Galant /s/ Howard Gould Howard Gould /s/ Marianne Boyd Johnson Marianne Boyd Johnson /s/ Robert Latta Robert Latta /s/ Adriane C. McFetridge Adriane C. McFetridge /s/ Michael Patriarca Michael Patriarca /s/ Bryr an Segedi Bryan Segedi /s/ Donald D. Snyder Donald D. Snyder /s/ Sung WonWW Sohn Sung WonWW Sohn President and Chief Executive Offff icff er (Principal Executive Offff iff cer) ViVV ce Chairman and Chief Financial Officff (Principal Financial Offiff cer) er r Chief Accounting Offff iceff (Principal Accounting Offff iff cer) Board Chairman Director Director Director Director Director Director Director Director Director Director Director Director 157 WESTERN ALLIANCE BANCORPORATIOAA N LIST OF SUBSIDIARIES (As of December 31, 2022) Name Doing Business As Jurisdiction of Incorporation or Organization Exhibit 21.1 WesterWW n Alliance Bank y Pines Bank Alliance Bank of Arizona Bridge Bank First Independent Bank Bank of Nevada TorreTT Alliance Association Bank WeWW stern Alliance Corporate Finance WeWW stern Alliance Public Finance WeWW stern Alliance Resort Finance WeWW stern Alliance WarWW ehouse Lending CS Insurance Co. Las VegasVV Sunset Properties BES Comp Services Co. Not applicable Not applicable Not applicable Digital Settlement TecTT hnologies, LLC Digital Disbursements Helios Prime, Inc. WesterWW n Alliance Business TrusTT t WAWW PWI, LLC WesterWW n Alliance TrusTT t Company,yy National Association WesterWW n One, LLC LLC WesterWW n Two,TT WesterWW n Finance Company WesterWW n Alliance Mortgage Holding Company,yy LLC AmeriHome Mortgage Company,yy LLC Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable WesterWW n Alliance Equipment Finance, LLC Not applicable BW Real Estate, Inc. BankWestWW Nevada Capita a rr l TrTT ust II Intermountain First Statutory TrTT urr st I First Independent Statutoryr TrTT usrr t I WALWW TrustTT No. 1 WALWW Statutt oryr TrTT usrr t No. 2 WALWW Statutt oryr TrTT usrr t No. 3 Bridge Capital Holdings TrTT ust rr I Bridge Capital Holdings TrTT ust rr II Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Arizona Arizona Nevada Delaware Delaware Delaware Delaware Arizona Arizona Arizona Arizona Arizona Arizona Delaware Arizona Nevada Delaware Connecticut Delaware Delaware Connecticut Connecticut Delaware Delaware Consent of Independent Registered Public Accounting Firm Exhibit 23.1 WeWW consent to the incorprr oration by referff ence in the Registration Statements (Nos. 333-239570, 333-205437, 333-199727, 333-127032, 333-145548, 333- 162107, and 333-183574) on Forms S-8 and the Registration Statement (No. 333-256120) on Form S-3 of WeWW stern Alliance Bancorporat ion of our reports dated February 23, 2023, relating to the consolidated financial statements and the effeff ctiveness of internal control over fiff nancial reporting of WesWW tern Alliance rr Bancorporat ion, appearing in this Annual Report on Form 10-K of WeWW stern Alliance Bancorporation foff r the year ended December 31, 2022. rr San Francisco, Califorff nia yr 23, 2023 rr Februar /s/ RSM US LLP CERTRR IFICATAA ION OF PRINCIPALPP EXECUTIVE OFFICER Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 that: Exhibit 31.1 I, Kenneth A. Vecchio VV ne, certifyff 1. 2. 3. 4. 5. I have reviewed this Annual Report on Form 10-K of WeWW stern Alliance Bancorpor rr ation; Based on my knowledge, this report does not contain any untrue statement of a material facff to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; t or omit to state a material fact necessaryr ff Based on my knowledge, the fiff nancial statements, and other finff ancial information included in this report, fairly present in all material respects the finff ancial condition, results of operations and cash flows of the registrant as of,ff and foff r, the periods presented in this report; The registrant's other certifying establishing and maintaining disclosure controls and procedurd es (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over fiff nancial reporting (as defined in Exchange Act RulRR es 13a-15(f)ff and 15d- 15(f)) for the registrant and have: offiff cer(s) and I are responsible forff ff (a) (b) (c) (d) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supu ervision, to ensure that material information relating to the registrant, including its consolidated subsiu diaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonaba le assurance regarding the reliability of financial reporting and the preparation of finan cial statements forff external purpose s in accordance with generally accepted accounting principles; ff rr Evaluated the effeff ctiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions aboa ut the tiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and effecff Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiff scal quarter in the case of an annual report) that has materially affff ected, materially affff ecff t, the registrant's internal control over financial reporting; and or is reasonably likely to ff The registrant's other certifying registrant's auditors and the audit committee of the registrant's board of directors (or persons perfoff rming the equivalent functions): offiff cer(s) and I have disclosed, based on our most recent evaluation of internal control over fiff nancial reporting, to the ff (a) (b) All signififf cant deficff reasonably likely to adversely affeff ct the registrant's ability to record, process, summarize and report fiff nancial information; and iencies and material weaknesses in the design or operation of internal control over fiff nancial reporting which are Any fraud ff control over financial reporting. , whether or not material, that involves management or other employees who have a significan ff t role in the registrant's internal Date: rr February 23, 2023 /s/ Kenneth A. VecVV chione Kenneth A. VeccVV hione President and Chief Executive Offff icer WeWW stern Alliance Bancorprr oration ff I, Dale Gibbons, certifyff that: CERTRR IFICATAA ION OF PRINCIPALPP FINANCIAL OFFICER Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Exhibit 31.2 1. 2. 3. 4. 5. I have reviewed this Annual Report on Form 10-K of WeWW stern Alliance Bancorpor rr ation; Based on my knowledge, this report does not contain any untrue statement of a material facff to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; t or omit to state a material fact necessaryr ff Based on my knowledge, the fiff nancial statements, and other finff ancial information included in this report, fairly present in all material respects the finff ancial condition, results of operations and cash flows of the registrant as of,ff and foff r, the periods presented in this report; The registrant's other certifying establishing and maintaining disclosure controls and procedurd es (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over fiff nancial reporting (as defined in Exchange Act RulRR es 13a-15(f)ff and 15d- 15(f)) for the registrant and have: offiff cer(s) and I are responsible forff ff (a) (b) (c) (d) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supu ervision, to ensure that material information relating to the registrant, including its consolidated subsiu diaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonaba le assurance regarding the reliability of financial reporting and the preparation of finan cial statements forff external purpose s in accordance with generally accepted accounting principles; ff rr Evaluated the effeff ctiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions aboa ut the tiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and effecff Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiff scal quarter in the case of an annual report) that has materially affff ected, materially affff ecff t, the registrant's internal control over financial reporting; and or is reasonably likely to ff The registrant's other certifying registrant's auditors and the audit committee of the registrant's board of directors (or persons perfoff rming the equivalent functions): offiff cer(s) and I have disclosed, based on our most recent evaluation of internal control over fiff nancial reporting, to the ff (a) (b) All signififf cant deficff reasonably likely to adversely affeff ct the registrant's ability to record, process, summarize and report fiff nancial information; and iencies and material weaknesses in the design or operation of internal control over fiff nancial reporting which are Any fraud ff control over financial reporting. , whether or not material, that involves management or other employees who have a significan ff t role in the registrant's internal Date: rr February 23, 2023 /s/ Dale Gibbons Dale Gibbons ViceVV Chairman and Chief Financial Offff icff er WeWW stern Alliance Bancorprr oration CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Exhibit 32 This certification is given by the undersigned Chief Executive Officer and Chief Financial Officer of Western Alliance Bancorporation (the “Registrant”) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Each of the undersigned hereby certifies, with respect to the Registrant's annual report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), that, to each of their knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: February 23, 2023 Date: February 23, 2023 /s/ Kenneth A. Vecchione President and Chief Executive Officer Western Alliance Bancorporation /s/ Dale Gibbons Vice Chairman and Chief Financial Officer Western Alliance Bancorporation [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] One East Washington Street, Suite 1400 Phoenix, Arizona 85004 (602) 389-3500 | westernalliancebank.com Western Alliance Bank, Member FDIC, is the wholly-owned subsidiary of Western Alliance Bancorporation. Alliance Association Bank, Alliance Bank of Arizona, Bank of Nevada, Bridge Bank, First Independent Bank and Torrey Pines Bank are divisions of Western Alliance Bank. AmeriHome Mortgage is a subsidiary of Western Alliance Bank. ©2023 Western Alliance Bancorporation. All Rights Reserved. 

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