Western Alliance Bancorporation

STABLE.

RELIABLE.

READY.

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Kenneth A. Vecchione

Dear Fellow Shareholders,

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1

National Bank, 
Regional Footprint 

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$61.3B

(cid:37)(cid:90)(cid:73)(cid:86)(cid:69)(cid:75)(cid:73)(cid:4)
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Assets 2022

$46.4B

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2

| EXECUTIVE PERSPECTIVES

Consistent Performance 
Makes Us a Bank  
for All Seasons

Dale M. Gibbons 
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| EXECUTIVE PERSPECTIVES

Delivering on Specialized 
Expertise

Stephen R. Curley 
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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

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(cid:45)(cid:82)(cid:71)(cid:83)(cid:81)(cid:73)(cid:4)(cid:22)(cid:20)(cid:22)(cid:22)

$1.5B

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(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. Bruckner
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| EXECUTIVE PERSPECTIVES

Meeting Customers 
Where They Are: 
Online and In Person

Tim Boothe 
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sauce(cid:393)(cid:4)(cid:70)(cid:73)(cid:76)(cid:77)(cid:82)(cid:72)(cid:4)(cid:83)(cid:89)(cid:86)(cid:4)(cid:72)(cid:77)(cid:75)(cid:77)(cid:88)(cid:69)(cid:80)(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:86)(cid:69)(cid:82)(cid:87)(cid:74)(cid:83)(cid:86)(cid:81)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:4)(cid:88)(cid:76)(cid:69)(cid:88)(cid:4)(cid:73)(cid:82)(cid:69)(cid:70)(cid:80)(cid:73)(cid:87)(cid:4)(cid:76)(cid:89)(cid:81)(cid:69)(cid:82)(cid:17)(cid:74)(cid:83)(cid:71)(cid:89)(cid:87)(cid:73)(cid:72)(cid:4)
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Western Alliance’s ongoing 
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businesses is an essential 
element of our national 
commercial bank strategy.”

3.41%

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(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:49)(cid:69)(cid:86)(cid:75)(cid:77)(cid:82)(cid:4)(cid:22)(cid:20)(cid:22)(cid:22)

9

Deliberate Business 
Transformation Delivers Results

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(cid:56)(cid:76)(cid:86)(cid:83)(cid:89)(cid:75)(cid:76)(cid:83)(cid:89)(cid:88)(cid:4)(cid:22)(cid:20)(cid:22)(cid:22)(cid:16)(cid:4)(cid:91)(cid:73)(cid:4)(cid:74)(cid:89)(cid:86)(cid:88)(cid:76)(cid:73)(cid:86)(cid:4)(cid:73)(cid:92)(cid:73)(cid:71)(cid:89)(cid:88)(cid:73)(cid:72)(cid:4)(cid:83)(cid:82)(cid:4)(cid:83)(cid:89)(cid:86)(cid:4)(cid:87)(cid:88)(cid:86)(cid:69)(cid:88)(cid:73)(cid:75)(cid:93)(cid:4)(cid:83)(cid:74)(cid:4)(cid:71)(cid:83)(cid:82)(cid:87)(cid:73)(cid:86)(cid:90)(cid:69)(cid:88)(cid:77)(cid:90)(cid:73)(cid:80)(cid:93)(cid:4)

(cid:84)(cid:83)(cid:87)(cid:77)(cid:88)(cid:77)(cid:83)(cid:82)(cid:77)(cid:82)(cid:75)(cid:4)(cid:83)(cid:89)(cid:86)(cid:4)(cid:80)(cid:83)(cid:69)(cid:82)(cid:4)(cid:84)(cid:83)(cid:86)(cid:88)(cid:74)(cid:83)(cid:80)(cid:77)(cid:83)(cid:16)(cid:4)(cid:74)(cid:83)(cid:71)(cid:89)(cid:87)(cid:77)(cid:82)(cid:75)(cid:4)(cid:83)(cid:89)(cid:86)(cid:4)(cid:75)(cid:86)(cid:83)(cid:91)(cid:88)(cid:76)(cid:4)(cid:83)(cid:82)(cid:4)(cid:77)(cid:82)(cid:87)(cid:89)(cid:86)(cid:73)(cid:72)(cid:4)(cid:69)(cid:82)(cid:72)

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(cid:51)(cid:89)(cid:86)(cid:4)(cid:70)(cid:69)(cid:80)(cid:69)(cid:82)(cid:71)(cid:73)(cid:4)(cid:87)(cid:76)(cid:73)(cid:73)(cid:88)(cid:4)(cid:88)(cid:83)(cid:72)(cid:69)(cid:93)(cid:4)(cid:77)(cid:87)(cid:4)(cid:91)(cid:73)(cid:80)(cid:80)(cid:17)(cid:84)(cid:83)(cid:87)(cid:77)(cid:88)(cid:77)(cid:83)(cid:82)(cid:73)(cid:72)(cid:4)(cid:88)(cid:83)(cid:4)(cid:91)(cid:73)(cid:69)(cid:88)(cid:76)(cid:73)(cid:86)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:81)(cid:83)(cid:86)(cid:73)(cid:4)(cid:72)(cid:77)(cid:446)(cid:71)(cid:89)(cid:80)(cid:88)

(cid:73)(cid:71)(cid:83)(cid:82)(cid:83)(cid:81)(cid:77)(cid:71)(cid:4)(cid:73)(cid:82)(cid:90)(cid:77)(cid:86)(cid:83)(cid:82)(cid:81)(cid:73)(cid:82)(cid:88)(cid:4)(cid:73)(cid:92)(cid:84)(cid:73)(cid:71)(cid:88)(cid:73)(cid:72)(cid:4)(cid:77)(cid:82)(cid:4)(cid:22)(cid:20)(cid:22)(cid:23)(cid:16)(cid:4)(cid:91)(cid:77)(cid:88)(cid:76)(cid:4)(cid:69)(cid:4)(cid:80)(cid:69)(cid:86)(cid:75)(cid:73)(cid:4)(cid:84)(cid:73)(cid:86)(cid:71)(cid:73)(cid:82)(cid:88)(cid:69)(cid:75)(cid:73)(cid:4)(cid:83)(cid:74)(cid:4)

(cid:80)(cid:83)(cid:69)(cid:82)(cid:87)(cid:4)(cid:77)(cid:82)(cid:4)(cid:76)(cid:77)(cid:87)(cid:88)(cid:83)(cid:86)(cid:77)(cid:71)(cid:69)(cid:80)(cid:80)(cid:93)(cid:4)(cid:80)(cid:83)(cid:91)(cid:17)(cid:88)(cid:83)(cid:17)(cid:82)(cid:83)(cid:17)(cid:80)(cid:83)(cid:87)(cid:87)(cid:4)(cid:71)(cid:69)(cid:88)(cid:73)(cid:75)(cid:83)(cid:86)(cid:77)(cid:73)(cid:87)(cid:18)(cid:4)(cid:4)

44.9%

(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: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 
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| EXECUTIVE PERSPECTIVES

Corporate Responsibility 
Helps Build a Better Bank 

Jessica Jarvi 
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Demonstrated Conservative 
Credit Culture

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Well-Prepared for the Future

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(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:84)(cid:86)(cid:83)(cid:90)(cid:77)(cid:72)(cid:73)(cid:87)(cid:4)(cid:74)(cid:83)(cid:71)(cid:89)(cid:87)(cid:73)(cid:72)(cid:4)(cid:80)(cid:73)(cid:69)(cid:72)(cid:73)(cid:86)(cid:87)(cid:76)(cid:77)(cid:84)(cid:4)(cid:88)(cid:83)(cid:4)(cid:87)(cid:89)

(cid:72)(cid:77)(cid:72)(cid:77)(cid:90)(cid:73)(cid:86)(cid:87)(cid:77)(cid:74)(cid:77)(cid:73)(cid:72)(cid:4)(cid:71)(cid:83)(cid:81)(cid:81)(cid:73)(cid:86)(cid:71)(cid:77)(cid:69)(cid:80)(cid:4)(cid:70)(cid:69)(cid:82)(cid:79)(cid:4)(cid:87)(cid:88)(cid:86)(cid:69)(cid:88)(cid:73)(cid:75)(cid:93)(cid:18)

$67.7B

(cid:56)(cid:83)(cid:88)(cid:69)(cid:80)(cid:4)(cid:69)(cid:87)(cid:87)(cid:73)(cid:88)(cid:87)(cid:4)
2022 

$56.0B

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13

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(cid:69)(cid:82)(cid:72)(cid:4)(cid:87)(cid:89)(cid:84)(cid:84)(cid:83)(cid:86)(cid:88)(cid:4)(cid:69)(cid:87)(cid:4)(cid:91)(cid:73)(cid:4)(cid:71)(cid:83)(cid:82)(cid:88)(cid:77)(cid:82)(cid:89)(cid:73)(cid:4)(cid:88)(cid:83)(cid:4)(cid:73)(cid:92)(cid:73)(cid:71)(cid:89)(cid:88)(cid:73)(cid:4)(cid:83)(cid:89)(cid:86)(cid:4)(cid:87)(cid:88)(cid:86)(cid:69)(cid:88)(cid:73)(cid:75)(cid:77)(cid:71)(cid:4)(cid:84)(cid:80)(cid:69)(cid:82)(cid:87)(cid:18)(cid:4)(cid:37)(cid:82)(cid:72)(cid:16)(cid:4)(cid:83)(cid:82)(cid:4)(cid:70)(cid:73)(cid:76)(cid:69)(cid:80)(cid:74)(cid:4)(cid:83)(cid:74)(cid:4)

(cid:73)(cid:90)(cid:73)(cid:86)(cid:93)(cid:83)(cid:82)(cid:73)(cid:4)(cid:69)(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:4)(cid:38)(cid:69)(cid:82)(cid:79)(cid:16)(cid:4)(cid:45)(cid:4)(cid:91)(cid:69)(cid:82)(cid:88)(cid:4)(cid:88)(cid:83)(cid:4)(cid:73)(cid:92)(cid:84)(cid:86)(cid:73)(cid:87)(cid:87)(cid:4)(cid:88)(cid:86)(cid:73)(cid:81)(cid:73)(cid:82)(cid:72)(cid:83)(cid:89)(cid:87)(cid:4)(cid:75)(cid:86)(cid:69)(cid:88)(cid:77)(cid:88)(cid:89)(cid:72)(cid:73)(cid:4)(cid:88)(cid:83)

(cid:83)(cid:89)(cid:86)(cid:4)(cid:87)(cid:76)(cid:69)(cid:86)(cid:73)(cid:76)(cid:83)(cid:80)(cid:72)(cid:73)(cid:86)(cid:87)(cid:4)(cid:74)(cid:83)(cid:86)(cid:4)(cid:93)(cid:83)(cid:89)(cid:86)(cid:4)(cid:87)(cid:88)(cid:73)(cid:69)(cid:72)(cid:74)(cid:69)(cid:87)(cid:88)(cid:4)(cid:71)(cid:83)(cid:81)(cid:81)(cid:77)(cid:88)(cid:81)(cid:73)(cid:82)(cid:88)(cid:4)(cid:88)(cid:83)(cid:4)(cid:83)(cid:89)(cid:86)(cid:4)(cid:83)(cid:86)(cid:75)(cid:69)(cid:82)(cid:77)(cid:94)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:18)(cid:4)

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: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:91)(cid:76)(cid:77)(cid:71)(cid:76)(cid:4)(cid:80)(cid:73)(cid:69)(cid:72)(cid:87)(cid:4)(cid:88)(cid:83)(cid:4)(cid:72)(cid:73)(cid:71)(cid:77)(cid:87)(cid:77)(cid:83)(cid:82)(cid:17)(cid:81)(cid:69)(cid:79)(cid:77)(cid:82)(cid:75)(cid:4)(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:87)(cid:4)(cid:87)(cid:89)(cid:71)(cid:71)(cid:73)(cid:87)(cid:87)(cid:4)(cid:77)(cid:82)(cid:4)(cid:83)(cid:89)(cid:86)(cid:4)(cid:74)(cid:69)(cid:87)(cid:88)(cid:17)(cid:81)(cid:83)(cid:90)(cid:77)(cid:82)(cid:75)(cid:4)
(cid:83)(cid:86)(cid:75)(cid:69)(cid:82)(cid:77)(cid:94)(cid:69)(cid:88)(cid:77)(cid:83)(cid:82)(cid:18)(cid:4)

(cid:45)(cid:82)(cid:4)(cid:22)(cid:20)(cid:22)(cid:22)(cid:4)(cid:69)(cid:82)(cid:72)(cid:4)(cid:77)(cid:82)(cid:88)(cid:83)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:84)(cid:86)(cid:73)(cid:87)(cid:73)(cid:82)(cid:88)(cid:16)(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:86)(cid:73)(cid:81)(cid:69)(cid:77)(cid:82)(cid:87)(cid:4)(cid:87)(cid:76)(cid:69)(cid:86)(cid:84)(cid:80)(cid:93)(cid:4)(cid:74)(cid:83)(cid:71)(cid:89)(cid:87)(cid:73)(cid:72)(cid:4)(cid:83)(cid:82)(cid:4)
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(cid:70)(cid:73)(cid:80)(cid:83)(cid:91)(cid:4)(cid:88)(cid:76)(cid:73)(cid:4)(cid:444)(cid:82)(cid:69)(cid:82)(cid:71)(cid:77)(cid:69)(cid:80)(cid:4)(cid:87)(cid:73)(cid:86)(cid:90)(cid:77)(cid:71)(cid:73)(cid:87)(cid:4)(cid:77)(cid:82)(cid:72)(cid:89)(cid:87)(cid:88)(cid:86)(cid:93)(cid:4)(cid:69)(cid:90)(cid:73)(cid:86)(cid:69)(cid:75)(cid:73)(cid:16)(cid:4)(cid:69)(cid:4)(cid:88)(cid:73)(cid:87)(cid:88)(cid:69)(cid:81)(cid:73)(cid:82)(cid:88)(cid:4)(cid:88)(cid:83)(cid:4)(cid:83)(cid:89)(cid:86)(cid:4)(cid:87)(cid:89)(cid:71)(cid:71)(cid:73)(cid:87)(cid:87)(cid:74)(cid:89)(cid:80)(cid:4)
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(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:17)(cid:12)(cid:12)(cid:8)(cid:9)(cid:1)
(cid:11)(cid:13)(cid:16)(cid:8)(cid:11)(cid:1)

(cid:15)(cid:12)(cid:9)(cid:8)(cid:10)(cid:1)

(cid:13)(cid:14)(cid:9)(cid:8)(cid:10)(cid:1)

(cid:10)(cid:9)(cid:16)(cid:8)(cid:10)(cid:1)

(cid:10)(cid:7)(cid:9)(cid:14)(cid:16)(cid:8)(cid:12)(cid:1) (cid:2)(cid:1)

(cid:17)(cid:12)(cid:13)(cid:8)(cid:17)(cid:1) (cid:2)(cid:1)

(cid:12)(cid:13)(cid:12)(cid:8)(cid:9)(cid:1) (cid:2)(cid:1)

(cid:13)(cid:8)(cid:17)(cid:16)(cid:20)(cid:10)(cid:20)(cid:1) (cid:2)(cid:1)

(cid:13)(cid:8)(cid:13)(cid:20)(cid:13)(cid:10)(cid:19)(cid:1) (cid:2)(cid:1)

(cid:18)(cid:12)(cid:15)(cid:10)(cid:16)(cid:1) (cid:2)(cid:1)

(cid:6)(cid:14)(cid:13)(cid:10)(cid:16)(cid:7)(cid:1)
(cid:13)(cid:8)(cid:17)(cid:19)(cid:12)(cid:10)(cid:14)(cid:1)

(cid:16)(cid:12)(cid:16)(cid:10)(cid:14)(cid:1)

(cid:20)(cid:17)(cid:13)(cid:10)(cid:16)(cid:1)

(cid:13)(cid:8)(cid:13)(cid:14)(cid:15)(cid:10)(cid:12)(cid:1)

(cid:6)(cid:15)(cid:12)(cid:10)(cid:18)(cid:7)(cid:1)
(cid:13)(cid:8)(cid:14)(cid:13)(cid:14)(cid:10)(cid:15)(cid:1)

(cid:18)(cid:17)(cid:10)(cid:13)(cid:1)

(cid:16)(cid:13)(cid:17)(cid:10)(cid:21)(cid:1)

(cid:20)(cid:18)(cid:13)(cid:10)(cid:17)(cid:1)

(cid:13)(cid:13)(cid:10)(cid:12)(cid:1)
(cid:17)(cid:21)(cid:14)(cid:10)(cid:16)(cid:1)

(cid:15)(cid:13)(cid:19)(cid:10)(cid:18)(cid:1)

(cid:16)(cid:13)(cid:15)(cid:10)(cid:21)(cid:1)

(cid:16)(cid:21)(cid:18)(cid:10)(cid:13)(cid:1)

(cid:14)(cid:14)(cid:15)(cid:10)(cid:20)(cid:1)
(cid:20)(cid:21)(cid:21)(cid:10)(cid:14)(cid:1) (cid:2)(cid:1)

(cid:14)(cid:12)(cid:18)(cid:10)(cid:18)(cid:1)
(cid:18)(cid:17)(cid:16)(cid:10)(cid:21)(cid:1) (cid:2)(cid:1)

(cid:13)(cid:14)(cid:12)(cid:10)(cid:13)(cid:1)
(cid:15)(cid:19)(cid:18)(cid:10)(cid:12)(cid:1) (cid:2)(cid:1)

(cid:13)(cid:8)(cid:13)(cid:18)(cid:18)(cid:10)(cid:21)(cid:1) (cid:2)(cid:1)

(cid:21)(cid:21)(cid:21)(cid:10)(cid:19)(cid:1) (cid:2)(cid:1)

(cid:15)(cid:12)(cid:14)(cid:10)(cid:17)(cid:1) (cid:2)(cid:1)

(cid:13)(cid:14)(cid:15)(cid:10)(cid:18)(cid:1)

(cid:13)(cid:8)(cid:12)(cid:16)(cid:15)(cid:10)(cid:15)(cid:1)

(cid:19)(cid:12)(cid:10)(cid:20)(cid:1)
(cid:16)(cid:21)(cid:13)(cid:10)(cid:18)(cid:1)

(cid:18)(cid:14)(cid:14)(cid:10)(cid:17)(cid:1)

(cid:13)(cid:14)(cid:20)(cid:10)(cid:18)(cid:1)

(cid:20)(cid:19)(cid:13)(cid:10)(cid:13)(cid:1)

(cid:17)(cid:12)(cid:10)(cid:17)(cid:1)
(cid:15)(cid:12)(cid:20)(cid:10)(cid:21)(cid:1)

(cid:18)(cid:13)(cid:14)(cid:10)(cid:19)(cid:1)

(cid:13)(cid:13)(cid:17)(cid:10)(cid:21)(cid:1)
(cid:17)(cid:12)(cid:18)(cid:10)(cid:18)(cid:1) (cid:2)(cid:1)

(cid:13)(cid:16)(cid:19)(cid:10)(cid:18)(cid:1)
(cid:16)(cid:18)(cid:17)(cid:10)(cid:13)(cid:1) (cid:2)(cid:1)

(cid:6)(cid:21)(cid:10)(cid:12)(cid:7)(cid:1)

(cid:15)(cid:13)(cid:13)(cid:10)(cid:17)(cid:1)

(cid:13)(cid:10)(cid:18)(cid:1)
(cid:21)(cid:14)(cid:10)(cid:18)(cid:1)

(cid:14)(cid:14)(cid:12)(cid:10)(cid:17)(cid:1)

(cid:17)(cid:14)(cid:10)(cid:15)(cid:1)
(cid:13)(cid:18)(cid:20)(cid:10)(cid:14)(cid:1) (cid:2)(cid:1)

(cid:5)(cid:10)(cid:17)(cid:13)(cid:8)(cid:10)(cid:6)(cid:1)
(cid:5)(cid:9)(cid:8)(cid:11)(cid:6)(cid:1)

(cid:5)(cid:10)(cid:17)(cid:12)(cid:8)(cid:18)(cid:6)(cid:1)
(cid:10)(cid:16)(cid:8)(cid:16)(cid:1)

(cid:15)(cid:12)(cid:8)(cid:10)(cid:1)

(cid:5)(cid:11)(cid:11)(cid:18)(cid:8)(cid:12)(cid:6)(cid:1)

(cid:5)(cid:10)(cid:9)(cid:17)(cid:8)(cid:17)(cid:6)(cid:1)

(cid:5)(cid:10)(cid:11)(cid:9)(cid:8)(cid:14)(cid:6)(cid:1)

(cid:6)(cid:14)(cid:15)(cid:18)(cid:10)(cid:15)(cid:7)(cid:1)

(cid:6)(cid:13)(cid:10)(cid:20)(cid:7)(cid:1)
(cid:6)(cid:14)(cid:15)(cid:16)(cid:10)(cid:17)(cid:7)(cid:1)

(cid:14)(cid:13)(cid:10)(cid:17)(cid:1)

(cid:14)(cid:13)(cid:10)(cid:18)(cid:1)

(cid:6)(cid:14)(cid:15)(cid:16)(cid:10)(cid:18)(cid:7)(cid:1)

(cid:6)(cid:13)(cid:12)(cid:14)(cid:10)(cid:21)(cid:7)(cid:1)
(cid:6)(cid:13)(cid:15)(cid:13)(cid:10)(cid:19)(cid:7)(cid:1)

(cid:6)(cid:13)(cid:15)(cid:17)(cid:10)(cid:15)(cid:7)(cid:1)

(cid:16)(cid:10)(cid:12)(cid:1)

(cid:6)(cid:13)(cid:15)(cid:21)(cid:10)(cid:15)(cid:7)(cid:1)

(cid:13)(cid:20)(cid:10)(cid:19)(cid:1)
(cid:21)(cid:12)(cid:10)(cid:13)(cid:1)

(cid:6)(cid:14)(cid:13)(cid:12)(cid:10)(cid:19)(cid:7)(cid:1)

(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

 
 
 
 
 
 
 
 
 
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[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.