PHOENIX--(BUSINESS WIRE)--Western Alliance Bancorporation (NYSE:WAL):

THIRD QUARTER 2026 FINANCIAL RESULTS

Income Statement

Net interest income totaled $807.6 million in the third quarter 2026, an increase of $10.7 million, or 1.3%, from $796.9 million in the second quarter 2026, and an increase of $57.2 million, or 7.6%, compared to $750.4 million in the third quarter 2025. The increase from the second quarter 2026 was primarily due to higher yields on interest earning assets and higher average HFI loan balances, partially offset by lower average balances in cash and other interest earning assets and an increase in average interest bearing liabilities and the related costs of these liabilities. The increase in net interest income from the third quarter 2025 was primarily driven by an increase in average interest earning asset balances of $5.5 billion and lower rates on interest bearing liabilities, partially offset by declining yields on interest earning assets.

The Company recorded a provision for credit losses of $80.0 million in the third quarter 2026, compared with $80.4 million in the second quarter 2026, and $80.0 million in the third quarter 2025. The provision for credit losses during the third quarter 2026 was primarily driven by net charge-offs totaling $45.8 million, loan growth, and proactive provisioning for macroeconomic risks associated with the higher interest rate environment. These factors increased the total allowance for credit losses to funded HFI loans ratio from 89 basis points in the prior quarter to 93 basis points.

The Company’s net interest margin increased to 3.57% in the third quarter 2026 from 3.53% in both the second quarter 2026 and the third quarter 2025. Net interest margin increased from the second quarter 2026 due to higher yields on interest earning assets, partially offset by higher costs on interest bearing liabilities. Net interest margin increased from the third quarter 2025 as an increase of $5.5 billion in average interest earning assets and lower interest bearing liability costs more than offset declining yields on interest earning assets.

Non-interest income was $206.6 million for the third quarter 2026, compared to $198.8 million for the second quarter 2026, and $187.8 million for the third quarter 2025. The increase in non-interest income of $7.8 million from the second quarter 2026 was primarily due to increases in gain on sales of investment securities of $13.8 million, partially offset by a decrease in mortgage banking revenue of $5.2 million. The increase in non-interest income of $18.8 million from the third quarter 2025 was primarily driven by increases in service charges and fees and gain on sales of investment securities, partially offset by a decrease in mortgage banking revenue.

Net revenue totaled $1.0 billion for the third quarter 2026, up $18.5 million, or 1.9%, from $995.7 million in the second quarter 2026, and $76.0 million, or 8.1%, from $938.2 million in the third quarter 2025.

Non-interest expense was $595.1 million for the third quarter 2026, compared to $583.3 million for the second quarter 2026, and $544.4 million for the third quarter 2025. The increase in non-interest expense of $11.8 million from the second quarter 2026 was primarily due to an increase in salaries and employee benefits of $21.8 million, partially offset by a decrease of $13.8 million in deposit costs driven by decreased average ECR-related deposit balances. The increase in non-interest expense of $50.7 million from the third quarter 2025 was primarily attributable to increased salaries and employee benefits of $32.6 million and increased data processing costs of $7.7 million. These increases were partially offset by decreased deposit costs of $9.7 million driven by decreased average ECR-related deposit balances.

The Company's efficiency ratio was 58.1% for the third quarter 2026, compared to 58.0% for the second quarter 2026, and 57.4% for the third quarter 2025. The Company’s efficiency ratio, adjusted for deposit costs¹, was 50.0% for the third quarter 2026, compared to 48.9% for the second quarter 2026, and 47.8% for the third quarter 2025.

Income tax expense was $61.9 million for the third quarter 2026, compared to $63.2 million for the second quarter 2026, and $53.3 million for the third quarter 2025. The decrease in income tax expense from the second quarter 2026 was primarily driven by increases in investment tax credits. The increase in income tax expense from the third quarter 2025 was primarily driven by an increase in pretax income.

Net income was $277.2 million for the third quarter 2026, an increase of $8.4 million from $268.8 million for the second quarter 2026, and an increase of $16.7 million from $260.5 million for the third quarter 2025. Earnings per share totaled $2.45 for the third quarter 2026, compared to $2.36 for the second quarter 2026, and $2.28 for the third quarter 2025.

The Company believes its pre-provision net revenue¹ ("PPNR"), which it defines as net revenue less non-interest expense, is a key metric for assessing the Company’s earnings power. For the third quarter 2026, the Company’s PPNR¹ was $419.1 million, up $6.7 million from $412.4 million in the second quarter 2026, and up $25.3 million from $393.8 million in the third quarter 2025.

Balance Sheet

HFI loans, net of deferred fees, totaled $61.5 billion at September 30, 2026, compared to $60.9 billion at June 30, 2026, and $56.6 billion at September 30, 2025. The $600 million increase from the prior quarter end primarily reflected increases of $396 million in commercial real estate non-owner occupied loans and $336 million in commercial and industrial loans, partially offset by a $111 million decrease in residential real estate loans. The $4.9 billion increase from September 30, 2025 was primarily attributable to increases of $4.4 billion in commercial and industrial loans, $286 million in residential real estate loans, $210 million in commercial real estate non-owner occupied loans, and $173 million in construction and land development loans, partially offset by a $121 million decrease in commercial real estate owner occupied loans. HFS loans totaled $4.0 billion at September 30, 2026, compared to $4.3 billion at June 30, 2026, and $3.5 billion at September 30, 2025. The $396 million decrease from the prior quarter end primarily reflected lower loan funding volume during the quarter and unfavorable fair value changes resulting from higher interest rates. The $449 million increase from September 30, 2025 was primarily attributable to higher period-end inventory levels resulting from the timing of loan production and sales activity, as well as increased early buyout activity.

The Company's allowance for credit losses on HFI loans comprises allowances for funded HFI loans and unfunded loan commitments. The allowance for loan losses as a percentage of funded HFI loans was 0.83% at September 30, 2026, 0.80% at June 30, 2026, and 0.78% at September 30, 2025. Including the allowance for unfunded loan commitments, the allowance for credit losses as a percentage of funded HFI loans was 0.93% at September 30, 2026, 0.89% at June 30, 2026, and 0.85% at September 30, 2025. Through credit linked note transactions, the Company effectively transfers a portion of the risk of losses on reference pools of loans to the purchasers of the notes. These transactions provide first-loss protection on reference pools of loans that totaled $7.6 billion, $7.8 billion, and $8.2 billion as of September 30, 2026, June 30, 2026, and September 30, 2025, respectively. However, as these note transactions are considered freestanding credit enhancements, the allowance for credit losses cannot be reduced for expected credit losses that these notes may mitigate. Accordingly, the allowance ratios include $11.6 million, $10.2 million, and $11.8 million related to these pools of loans as of September 30, 2026, June 30, 2026, and September 30, 2025, respectively. The allowance for credit losses to funded HFI loans ratio, adjusted to reduce the HFI loan balance by the amount of loans in covered reference pools, was 1.07% at September 30, 2026, 1.01% at June 30, 2026, and 1.00% at September 30, 2025.

Deposits totaled $81.8 billion at September 30, 2026, a decrease of $119 million from June 30, 2026, and an increase of $4.5 billion from $77.2 billion at September 30, 2025. The decline in deposits from the prior quarter primarily reflected a $2.1 billion decrease in non-interest bearing deposits, partially offset by increases of $871 million in interest bearing demand deposits, $754 million in certificates of deposit, and $324 million in savings and money market accounts. Deposit optimization efforts drove the decline in non-interest bearing deposits, partially offset by strong commercial banking growth in interest bearing deposits. From September 30, 2025, interest bearing demand deposits, certificates of deposit, and savings and money market accounts increased $3.7 billion, $1.1 billion, and $583 million, respectively, while non-interest bearing deposits decreased $876 million. Non-interest bearing deposits totaled $25.8 billion at September 30, 2026, compared to $27.8 billion at June 30, 2026, and $26.6 billion at September 30, 2025.

The Company’s ratio of HFI loans to deposits was 75.3% at September 30, 2026, compared to 74.4% at June 30, 2026, and 73.3% at September 30, 2025.

Borrowings totaled $5.6 billion at September 30, 2026, compared with $6.2 billion at June 30, 2026, and $3.9 billion at September 30, 2025. Borrowings decreased $623 million from June 30, 2026, reflecting declines of $515 million in short-term borrowings and $108 million in long-term borrowings. Borrowings increased $1.8 billion from September 30, 2025, as a $3.3 billion increase in short-term borrowings was partially offset by a $1.5 billion decrease in long-term borrowings.

Qualifying debt totaled $1.1 billion at both September 30, 2026 and June 30, 2026, compared with $681 million at September 30, 2025. The increase from September 30, 2025 primarily reflects the issuance of $400 million of subordinated debt during the quarter ended December 31, 2025.

Total equity was $7.9 billion at September 30, 2026, compared to $8.1 billion at June 30, 2026, and $7.7 billion at September 30, 2025. The decrease from the prior quarter was primarily due to changes in AOCI related to higher interest rates, unrealized fair value losses of $338.0 million on the Company's available-for-sale securities, which are recorded in other comprehensive loss, net of tax, the repurchase of 1.15 million shares for $92.1 million, and dividends, partially offset by net income of $277.2 million. Third quarter cash dividends paid included $45.7 million, or $0.42 per share, for common stockholders; $3.2 million, or $0.27 per depositary share, for preferred stockholders; and $7.1 million on preferred stock of the Company's REIT subsidiary. The increase in equity from September 30, 2025 was primarily driven by net income, partially offset by dividends to stockholders and share repurchases. Since inception of the share repurchase program through September 30, 2026, the Company has repurchased 2.7 million shares for $212.5 million under its $300 million authorization.

The Company's common equity tier 1 capital ratio was 10.9% at September 30, 2026, compared with 11.0% at June 30, 2026, and 11.3% at September 30, 2025. At September 30, 2026, tangible common equity, net of tax¹, was 6.9% of tangible assets¹, while total capital was 14.0% of risk-weighted assets. The Company’s tangible book value per share¹ was $62.22 at September 30, 2026, down 1.6% from $63.24 at June 30, 2026, and up 6.3% from $58.56 at September 30, 2025. The increase in tangible book value per share from September 30, 2025 was primarily attributable to net income.

Total assets were $98.1 billion at September 30, 2026, down $629 million, or 0.6%, from $98.7 billion at June 30, 2026, and up 7.8% from $91.0 billion at September 30, 2025. The decrease in total assets from the prior quarter end reflected lower cash, HFS loans, and investment securities, partially offset by higher HFI loans. The increase in total assets from September 30, 2025 was primarily driven by growth in HFI and HFS loans and investment securities.

Asset Quality

Provision for credit losses totaled $80.0 million for the third quarter 2026, compared to $80.4 million for the second quarter 2026, and $80.0 million for the third quarter 2025. Net loan charge-offs in the third quarter 2026 totaled $45.8 million, or 0.30% of average loans on an annualized basis, compared to $55.0 million, or 0.37% in the second quarter 2026, and $31.1 million, or 0.22%, in the third quarter 2025. The allowance for credit losses to funded HFI loans was 0.93% at September 30, 2026 compared to 0.89% and 0.85% at June 30, 2026 and September 30, 2025, respectively.

Nonaccrual loans decreased $77 million during the quarter and $37 million from September 30, 2025, to $485 million. The decline in nonaccrual loans, combined with the increase in the allowance for credit losses, increased coverage of nonaccrual loans to 118%, from 96% at June 30, 2026, and 92% at September 30, 2025. Loans past due 90 days and still accruing interest totaled $58 million at September 30, 2026, compared with $55 million at June 30, 2026, and $49 million at September 30, 2025 (excluding government guaranteed loans of $214 million, $248 million, and $282 million, respectively). Loans past due 30-89 days and still accruing interest totaled $138 million at September 30, 2026, compared with $122 million at June 30, 2026, and $196 million at September 30, 2025 (excluding government guaranteed loans of $101 million, $102 million, and $149 million, respectively) a year-over-year decrease of $58 million. Criticized loans totaled $1.3 billion, an increase of $5 million during the quarter and $33 million from September 30, 2025.

Repossessed assets totaled $165 million at September 30, 2026, compared to $126 million at June 30, 2026, and $130 million at September 30, 2025. Classified assets of $1.1 billion at September 30, 2026 decreased $37 million from June 30, 2026, and $38 million from September 30, 2025.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live webcast to discuss its third quarter 2026 financial results at 12:00 p.m. ET on Tuesday, October 20, 2026. Participants may access the call by dialing 1-833-461-5787 and using access code 788268041 or via live audio webcast using the website link https://events.q4inc.com/attendee/788268041. The webcast is also available via the Company’s website at www.westernalliancebancorporation.com. Participants should log in at least 15 minutes early to receive instructions. The call will be recorded, and the webcast replay will remain available for one year.

Reclassifications

Certain amounts in the Consolidated Income Statements for the prior periods have been reclassified to conform to the current presentation. Gains and losses related to the Company’s back-to-back interest rate swaps, risk participation agreements, and foreign exchange derivative contracts with customers have been reclassified to Commercial banking income and related fees in the Consolidated Income Statement. The reclassifications have no effect on net income or stockholders’ equity as previously reported.

Use of Non-GAAP Financial Information

This press release contains both financial measures based on GAAP and non-GAAP based financial measures, which are used where management believes them to be helpful in understanding the Company’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Cautionary Note Regarding Forward-Looking Statements

This release contains forward-looking statements that relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Examples of forward-looking statements include, among others, statements we make regarding our expectations with regard to our business, financial and operating results, including our deposits and deposit optimization strategy, liquidity and funding, changes in economic conditions and related impacts on the Company's business, future economic performance and dividends. The forward-looking statements contained herein reflect our current views about future events and financial performance and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from historical results and those expressed in any forward-looking statement. Some factors that could cause actual results to differ materially from historical or expected results include, among others: the risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 and the Company's subsequent Quarterly Reports on Form 10-Q, each as filed with the Securities and Exchange Commission; adverse developments in the financial services industry generally and any related impact on depositor behavior; risks related to the sufficiency of liquidity; changes in international trade policies, tariffs and treaties affecting imports and exports, trade disputes, barriers to trade or the emergence of other trade restrictions, and their related impacts on macroeconomic conditions and customer behavior; the potential adverse effects of unusual and infrequently occurring events and any governmental or societal responses thereto; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; the impact on financial markets from geopolitical conflicts; inflation, interest rate, market and monetary fluctuations; increases in competitive pressures among financial institutions and businesses offering similar products and services; higher defaults on our loan portfolio than we expect; increased foreclosures and ownership of real property; changes in management’s estimate of the adequacy of the allowance for credit losses; technological risks and developments and cyber threats, attacks or events; emerging external focus among regulators and other officials related to risks in connection with the development and use of artificial intelligence; legislative or regulatory changes or changes in accounting principles, policies or guidelines; supervisory actions by regulatory agencies which may limit our ability to pursue certain growth opportunities, including expansion through acquisitions; additional regulatory requirements resulting from our continued growth; management’s estimates and projections of interest rates and interest rate policy; the execution of our business plan; the outcome of legal proceedings, the amount of funds and/or collateral that may be available for repayment of such loans, and any adverse economic or other events impacting the collateral, borrower or guarantors with respect to such loans; and other factors affecting the financial services industry generally or the banking industry in particular.

Any forward-looking statement made by us in this release is based only on information currently available to us and speaks only as of the date on which it is made. We do not intend and disclaim any duty or obligation to update or revise any industry information or forward-looking statements, whether written or oral, that may be made from time to time, set forth in this press release to reflect new information, future events or otherwise, except to the extent required by applicable law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this press release might not occur, and you should not put undue reliance on any forward-looking statements.

About Western Alliance Bancorporation

Western Alliance Bancorporation (NYSE:WAL) is one of the country’s top-performing banking companies. Its primary subsidiary, Western Alliance Bank, Member FDIC, is a leading national bank for business that puts customers first, delivering tailored business banking solutions and consumer products backed by outstanding, personalized service and specific expertise in more than 30 industries and sectors. With more than $90 billion in assets and offices nationwide, Western Alliance has ranked as a top U.S. bank by American Banker and Bank Director since 2016. In 2025, Western Alliance Bancorporation was #2 for Best CEO, Best CFO and Best Company Board of Directors on Extel’s All-America Executive Team Midcap Banks list. For more information on offerings, subsidiaries and affiliates, visit www.westernalliancebank.com or follow Western Alliance Bank on LinkedIn.