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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20172023
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number: 001-32550
WESTERN ALLIANCE BANCORPORATION
(Exact name of registrant as specified in its charter)
Delaware88-0365922
Delaware88-0365922
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
One E. Washington Street, Suite 1400 Phoenix, AZPhoenixArizona85004
(Address of principal executive offices)(Zip Code)
(602) 389-3500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.0001 Par ValueWALNew York Stock Exchange
6.25% Subordinated Debentures due 2056
Depositary Shares, Each Representing a 1/400th Interest in a Share of 4.250% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A
WAL PrANew York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ý☒    No  ¨☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨☐    No  ý☒
Indicate by check mark whether the registrant (1) has filed 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 for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý☒    No  ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý☒    No  ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” "accelerated filer" "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒ýAccelerated filer¨☐
Non-accelerated filer☐¨Smaller reporting company¨☐
Emerging growth company¨☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for 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 filed a report on and attestation to its management's assessment of the effectiveness 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 financial statements.☐
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 officers 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 Rule 12b-2 of the Exchange Act).    Yes  ¨☐    No  ý☒
The aggregate market value of the registrant’s voting stock held by non-affiliates was approximately $4.79$3.79 billion based on the June 30, 20172023 closing price of said stock on the New York Stock Exchange ($49.2036.47 per share).
As of February 16, 2018,21, 2024, Western Alliance Bancorporation had 105,666,960110,180,344 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement for its 20182024 Annual Meeting of Stockholders are incorporated by reference into Part III of this report.


Table of Contents
INDEX
 
Page
Forward-Looking Statements
3
Item 1.
Business
5
Item 1A.
Risk Factors
1316
Item 1B.
Unresolved Staff Comments
2329
Item 2.1C.
PropertiesCybersecurity
2429
Item 2.
Properties
31
Item 3.
Legal Proceedings
2431
Item 4.
Mine Safety Disclosures
2431
Item 5.
Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
2531
Item 6.
Selected Financial DataReserved
2732
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
2932
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
6873
Item 8.
Financial Statements and Supplementary Data
7175
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
147155
Item 9A.
Controls and Procedures
147155
Item 9B.
Other Information
149157
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
157
Item 10.
Directors, Executive Officers and Corporate Governance
150157
Item 11.
Executive Compensation
150157
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
150157
Item 13.
Certain Relationships and Related Transactions, and Director Independence
150157
Item 14.
Principal Accountant Fees and Services
150157
Item 15.
Exhibits and Financial Statement Schedules
150158
Item 16.
Form 10-K Summary
152160
153161





2
Table of Contents
PART I
Forward-Looking Statements
Certain statements contained in this Annual Report on Form 10-K for the fiscal year ended December 31, 20172023 (this “Form 10-K”) are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Statements that constitute forward-looking statements within the meaning of the Reform Act are generally identified through the inclusion of words such as “aim,” “anticipate,” “believe,” “drive,” “estimate,” “expect,” “expressed confidence,” “forecast,” “future,” “goals,” “guidance,” “intend,” “may,” “opportunity,” “plan,” “position,” “potential,” “project,” “ seek,” “should,” “strategy,” “target,” “will,” “would” or similar statements or variations of such words and other similar expressions. All statements other than statements of historical fact are “forward-looking statements” within the meaning of the Reform Act, including statements that are related to or are dependent on estimates or assumptions relating to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. These forward-looking statements reflect the Company's current views about future events and financial performance and involve certain risks, uncertainties, assumptions, and changes in circumstances that may cause the Company's actual results to differ significantly from historical results and those expressed in any forward-looking statement. Factors that may cause actual results to differ materially from those 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 results could differ from those contained in such statements, whether as a result of new information, future events or otherwise, except to the extent required by federal 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.

3
Table of Contents
GLOSSARY OF ENTITIES AND TERMS
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.10-K:
ENTITIES / DIVISIONS:
AABABAAlliance Association BankHFFHotel Franchise Finance
ABAAlliance Bank of ArizonaLVSPCompanyLas Vegas Sunset Properties
BONWestern Alliance Bancorporation and subsidiariesBank of NevadaTPBTorrey Pines Bank
BridgeBridge BankWA PWI LLCWestern Alliance Public Welfare Investments, LLC
CompanyAmeriHomeAmeriHome Mortgage Company, LLCCSICS Insurance CompanyWAB or BankWestern Alliance Bank
ArisAris Mortgage Holding Company, LLCDSTDigital Settlement Technologies LLCWABTWestern Alliance Business Trust
BONBank of NevadaFIBFirst Independent BankWAL or ParentWestern Alliance Bancorporation and subsidiaries
BridgeWAB orBridge BankTPBTorrey Pines BankWATCWestern Alliance BankTrust Company, N.A.
FIBFirst Independent BankWAL or ParentWestern Alliance BancorporationTERMS:
TERMS:ACLAllowance for Credit LossesECREarnings credit ratesLGDLoss Given Default
AFSAvailable-for-SaleFVOEGRRCPAFair Value OptionThe Economic Growth, Regulatory Relief, and Consumer Protection ActLIBORLondon Interbank Offered Rate
ALCOAsset and Liability Management CommitteeGAAPEPSU.S. Generally Accepted Accounting PrinciplesEarnings per ShareLIHTCLow-Income Housing Tax Credit
ALLLAOCIAllowance for Loan and Lease LossesGLBAGramm-Leach-Bliley Act
AOCIAccumulated Other Comprehensive IncomeGSEERMGovernment-Sponsored Enterprise Risk ManagementMBSMortgage-Backed Securities
ASCAccounting Standards CodificationHFIESGHeld for InvestmentEnvironmental, Social, and GovernanceMSAMetropolitan Statistical Area
ASUAccounting Standards UpdateHFSEVEHeld for SaleEconomic Value of EquityMSRMortgage Servicing Right
ATMAt-the-MarketHTMHeld-to-Maturity
Basel IIIBanking Supervision's December 2010 final capital frameworkICSInsured Cash Sweep Service
Basel CommitteeBasel Committee on Banking SupervisionIRCExchange ActInternal Revenue CodeSecurities Exchange Act of 1934, as AmendedNBLNational Business Lines
BHCABasel IIIBanking Supervision's December 2010 Final Capital FrameworkFASBFinancial Accounting Standards BoardNISTNational Institute of Standards and Technology
BHCABank Holding Company Act of 1956ISDAFCRAInternational Swaps and Derivatives AssociationFair Credit Reporting Act of 1971NOLNet Operating Loss
BODBoard of DirectorsLIBORFDIALondon Interbank Offered RateFederal Deposit Insurance ActNPVNet Present Value
BOLIBank Owned Life InsuranceLIHTCFDICLow-Income Housing Tax CreditFederal Deposit Insurance CorporationNYSENew York Stock Exchange
CAMELSBSBYBloomberg Short Term Bank Yield IndexFFIECFederal Financial Institutions Examination CouncilOCIOther Comprehensive Income
CAMELSCapital Adequacy, Assets, Management Capability, Earnings, Liquidity, SensitivityMBSFHAMortgage-Backed SecuritiesFederal Housing AdministrationOFACOffice of Foreign Asset Control
Capital RulesThe FRB, the OCC, and the FDIC 2013 approved final rulesApproved Final RulesMLCFHLBManagementFederal Home Loan CommitteeBankOREOOther Real Estate Owned
CDARSCBDPCommercial Banking Development ProgramFHLMCFederal Home Loan Mortgage CorporationORMCOperational Risk Management Committee
CCOChief Credit OfficerFICOThe Financing CorporationPCAOBPublic Company Accounting Oversight Board
CDARSCertificate Deposit Account Registry ServiceMOUFirst LineMemorandumFirst Line of UnderstandingDefensePCDPurchased Credit Deteriorated
CDOCECLCollateralized Debt ObligationNBLNational Business Lines
CECLCurrent Expected Credit LossNOLFNMANet Operating LossFederal National Mortgage AssociationPDProbability of Default
CEOChief Executive OfficerNPVFRAFederal Reserve ActPPNRPre-Provision Net Present ValueRevenue
CET1Common Equity Tier 1NUBILsFRBNet Unrealized Built In LossesFederal Reserve BankROURight of Use
CFOChief Financial OfficerNYSEFTCNew York StockFederal Trade CommissionSECSecurities and Exchange Commission
CFPBConsumer Financial Protection BureauOCCFVOOffice of the Comptroller of the CurrencyFair Value OptionSERPSupplemental Executive Retirement Plan
CMOCISOCollateralized Debt ObligationChief Information Security OfficerOCIGAAPOther Comprehensive IncomeU.S. Generally Accepted Accounting PrinciplesSIEMSecurity Information and Event Management
COSOCLOCollateralized Loan ObligationGLBAGramm-Leach-Bliley ActSLCSenior Loan Committee
COSOCommittee of Sponsoring Organizations of the Treadway CommissionOFACGNMAOffice of Foreign Asset ControlGovernment National Mortgage AssociationSMCSecurity Monitoring Center
CRACOVID-19Coronavirus Disease 2019GSEGovernment-Sponsored EnterpriseSOFRSecured Overnight Funding Rate
CRACommunity Reinvestment ActOREOHELOCOther Real Estate OwnedHome Equity Line of CreditTDRTroubled Debt Restructuring
CRECommercial Real EstateOTTIHFIOther-than-Temporary ImpairmentHeld for InvestmentTEBTax Equivalent Basis
DIFCSRFDIC's Deposit Insurance FundCyber Security ResponsePCIHFSPurchased Credit ImpairedHeld for SaleTSRTotal Shareholder Return
DEIDiversity, Equity, and InclusionHTMHeld-to-MaturityUPBUnpaid Principal Balance
Dodd-Frank ActThe Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010SBAHUDSmall Business AdministrationU.S. Department of Housing and Urban DevelopmentUSDAUnited States Department of Agriculture
EPSDTA or DTLEarnings per shareDeferred Tax Asset or Deferred Tax LiabilitySBICICSSmall Business Investment CompanyInsured Cash Sweep ServiceVAVeterans Affairs
EVEEADEconomic Value of EquityExposure at DefaultSBLFIRLCSmall Business Lending FundInterest Rate Lock CommitmentVIEVariable Interest Entity
Exchange ActEBOSecurities Exchange Act of 1934, as amendedEarly buyoutSECISDASecuritiesInternational Swaps and Exchange Commission
FASBDerivatives AssociationFinancial Accounting Standards BoardXBRLSERPSupplemental Executive Retirement Plan
FCRAFair Credit Reporting Act of 1971SLCSenior Loan Committee
FDIAFederal Deposit Insurance ActSSAEStatement on Standards for Attestation Engagements
FDICFederal Deposit Insurance CorporationTDRTroubled Debt Restructuring
FHLBFederal Home Loan BankTEBTax Equivalent Basis
FICOThe Financing CorporationTSRTotal Shareholder Return
FRBFederal Reserve BankXBRLeXtensible Business Reporting Language

4
Item 1.Business.
Table of Contents
Item 1.Business.
Organization Structure and Description of Services
WAL is a bank holding company headquartered in Phoenix, Arizona, incorporated under the laws of the state of Delaware. WAL provides a full spectrum of customized loan, deposit lending,and treasury management international banking,capabilities, including funds transfer and online banking products and servicesother digital payment offerings through its wholly-owned banking subsidiary, WAB.
WAB operates the following full-service banking divisions: ABA, BON and FIB, Bridge, FIB, and TPB. The Company also serves business customers through a national platformprovides an array of specialized financial services to business customers across the country, including AAB, Corporate Finance, Equity Fund Resources, HFF, Life Sciences Group, Mortgage Warehouse Lending, Publicmortgage banking services through AmeriHome, treasury management services to the homeowner's association sector, and Nonprofit Finance, Renewable Resource Group, Resort Finance, and Technology Finance.digital payment services for the class action legal industry. In addition, the Company has twothe following non-bank subsidiaries, LVSP, which holds and manages certain non-performing loans and OREO andsubsidiaries: CSI, a captive insurance company formed and licensed under the laws of the State of Arizona CS Insurance Company. CS Insurance Company wasand established as part of the Company's overall enterprise risk management strategy.strategy and WATC, which provides corporate trust services and levered loan administration solutions.
WAL also has eight unconsolidated subsidiaries used as business trusts in connection with issuance of trust-preferred securities as described in "Note 9.11. Qualifying Debt" in Item 8 of this Form 10-K.
Bank Subsidiary
At December 31, 2017,2023, WAL has the following bank subsidiary:
Bank Name
Bank Name
Bank Name Headquarters 
Number of
Locations
 Location Cities 
Total
Assets
 
Net
Loans
 DepositsHeadquartersLocation CitiesTotal
Assets		Net
Loans		Deposits
       (in millions)   (in millions)
Western Alliance Bank Phoenix,
Arizona		 47 
Arizona: Chandler, Flagstaff, Gilbert, Mesa, Phoenix, Scottsdale, and Tucson
 $20,404.0
 $14,951.1
 $17,231.5
Nevada: Carson City, Fallon, Reno, Sparks, Henderson, Las Vegas, Mesquite, and North Las Vegas
Western Alliance BankPhoenix,
Arizona
Arizona: Chandler, Flagstaff, Gilbert, Mesa, Phoenix, Scottsdale, and Tucson
$70,853 $$51,362 $$55,689 
Nevada: Carson City, Fallon, Henderson, Las Vegas, Mesquite, Reno, and Sparks
California: Beverly Hills, Carlsbad, Costa Mesa, La Mesa, Los Angeles, Menlo Park, Oakland, Palo Alto, Pleasanton, San Diego, San Francisco, and San Jose
California: Beverly Hills, Carlsbad, Costa Mesa, Irvine, La Mesa, Los Angeles, Oakland, Pleasanton, San Diego, San Francisco, San Jose, and Woodland Hills
 
Other: Atlanta, Georgia; Boston, Massachusetts; and Reston, Virginia
 
WAB also has the following significant wholly-owned subsidiaries:
Western Alliance Business Trust•WABT holds certain investment securities, municipal and non-profit loans, and leases.
•WA PWI LLC holds interests in certain limited partnerships invested primarily in low income housing tax credits and small business investment corporations.
•BW Real Estate, Inc. operates as a real estate investment trust and holds certain of WAB's real estate loans and related securities.
•Helios Prime, Inc. holds certain equity interests in renewable energy tax credit transactions.
•Western Finance Company purchases and originates equipment finance leases and provides mortgage banking services through its wholly-owned subsidiary, AmeriHome.
•DST provides digital payments services for the class action legal industry.
Market Segments
The Company’sCompany's reportable segments are aggregated primarily basedwith a focus on geographic location,products and services offered and markets served. The Company's regional segments, which include Arizona, Nevada, Southern California, and Northern California, provide full serviceconsist of three reportable segments:
•Commercial segment: provides commercial banking and relatedtreasury management products and services to their respective markets. The Company's NBL segments providesmall and middle-market businesses, specialized banking services to sophisticated commercial institutions and investors within niche markets. These NBLs are managed centrallyindustries, as well as financial services to the real estate industry.
•Consumer Related segment: offers both commercial banking services to enterprises in consumer-related sectors and are broader in geographic scope, though still predominately withinconsumer banking services, such as residential mortgage banking.
5
Table of Contents
•Corporate & Other: consists of the Company's core market areas. Theinvestment portfolio, Corporate & Other segment primarily relates to the Company's Treasury divisionborrowings and also includes other corporate-relatedrelated items, income and expense items not allocated to other reportable segments, and inter-segment eliminations.
The accounting policies of the reported segments are the same as those of the Company as described in "Note 1. Summary of Significant Accounting Policies" in Item 8. All intercompany transactions are eliminated for reporting consolidated results of operations. 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 segment based primarily on the risk profile of their assets and liabilities with a funds credit provided for the use of this equity as a funding source.liabilities. Any excess equity not allocated to segments based on risk is assigned to the Corporate & Other segment.

Net interest income, provision for 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 reportable segment includes a funds transfer pricing process that matches assets and liabilities with similar interest rate sensitivity and maturity characteristics. Using this funds transfer pricing methodology, liquidity is transferred between users and providers. Net income amounts for each reportable segment are further 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 balances, and average deposit balances. Income taxes are applied to each segment based on the effective tax rate for the geographic location of the segment. Any difference in the corporate tax rate and the aggregate effective tax rates in the segments are adjusted in the Corporate & Other segment.
Lending Activities
General
Through WAB and its banking divisions and operating subsidiaries, the Company provides a variety of financial serviceslending products to customers, including CRE loans, construction and land development loans, commercial loans, and consumer loans. The Company’s lending has focused primarily on meeting the needs of business customers.loan types discussed below.
Commercial and Industrial: Commercial and industrial loans comprise 38% and 40% of the Company's HFI loan portfolio as of December 31, 2023 and 2022, respectively. These loans include working capital lines of credit, loans to technology companies, inventory and accounts receivable lines, mortgage warehouse lines, equipment loans and leases, and other commercial loans. Loans to technology companies,Equipment loans and leases, tax-exempt municipalities, and not-for-profit organizations are also categorized as commercial and industrial loans.
Residential: Residential loans comprise 29% and 31% of the Company's loan portfolio as of December 31, 2023 and 2022, respectively. 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 conforming 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.
CRE: Loans to financefund the purchase or refinancing of CRE for investors (non-owner occupied) or owner-occupants make up the majorityowner occupants represent 23% and 21% of the Company's loan portfolio.portfolio as of December 31, 2023 and 2022, respectively. These CRE loans are secured by multi-family residential properties, professional offices, industrial facilities, retail centers, hotels, and other commercial properties. Approximately $2.4 billion, or 4.7%, of total loans HFI consisted of CRE non-owner occupied office loans as of December 31, 2023, compared to $2.4 billion, or 4.6%, as of December 31, 2022. These office loans primarily consist of shorter-term bridge loans that enable borrowers to reposition or redevelop projects with more modern standards attractive to in-office employers in today’s environment, including enhanced on-site amenities. The vast majority of these projects are located in suburban locations with central business district and midtown exposure totaling approximately 2% and 10% of office loans, respectively.
The office loan portfolio largely consists of value-add loans that require significant up-front cash equity contributions from institutional sponsors and large regional and national developers. The properties underlying these loans have stable business trends and low vacancy rates. In addition to adhering to conservative underwriting standards, asset-specific credit risk is mitigated through continued sponsor support of projects by re-appraisal rights by the Company, re-margining requirements and ongoing debt service, and debt yield covenants. To a large extent, the financing structures of these loans do not carry junior liens or mezzanine debt, which enables maximum flexibility when working with clients and sponsors.
Substantially 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, 20172023 and 2016, 36%2022, 16% of the Company's CRE loans were owner-occupied. Owner-occupiedowner occupied. Owner occupied CRE loans are loans secured by owner-occupiedowner occupied non-farm nonresidential properties for which the primary source of repayment (more than 50%) is the cash flow from the ongoing operations and activities conducted by the borrower who owns the property. Non-owner occupied CRE loans are CRE loans for which the primary source of repayment is nonaffiliated rental income associated withgenerated from the collateral property.
Construction and Land Development: Construction and land development loans includecomprise 10% and 8% of the Company's loan portfolio as of December 31, 2023 and 2022, respectively. This portfolio includes single family and multi-family residential
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projects, industrial/warehouse properties, office buildings, retail centers, medical office facilities, and residential lot developments. These loans are primarily originated to experienced local and national developers with whom the Company has a satisfactory lending history. An analysis of each construction project is performed as part of the underwriting process to determine whether the type of property, location, construction 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.
Consumer: Limited types of consumer loans are offered to meet customer demand and to respond to community needs. Examples of these consumer loans include:include home equity loans and lines of credit, home improvement loans, personal lines of credit, and loans to individuals for investment purposes. The Company also purchases residential mortgage loans originated by unaffiliated third parties, including related servicing rights and responsibilities.

At December 31, 2017,2023, the Company's HFI loan portfolio totaled $15.09$50.3 billion, or approximately 74%71% of total assets. The following table sets forth the composition of the Company's HFI loan portfolio as of the periods presented:portfolio: 
December 31,
20232022
AmountPercentAmountPercent
(dollars in millions)
Commercial and industrial$19,103 38.0 %$20,710 39.9 %
Commercial real estate - non-owner occupied9,650 19.2 9,319 18.0 
Commercial real estate - owner occupied1,810 3.6 1,818 3.5 
Construction and land development4,889 9.7 4,013 7.7 
Residential real estate14,778 29.4 15,928 30.7 
Consumer67 0.1 74 0.2 
Loans HFI, net of deferred loan fees and costs$50,297 100.0 %$51,862 100.0 %
Allowance for credit losses(337)(310)
Net loans HFI$49,960 $51,552 
  December 31,
  2017 2016
  Amount Percent Amount Percent
  (dollars in thousands)

        
Commercial and industrial $6,841,381
 45.3% $5,855,786
 44.4%
Commercial real estate - non-owner occupied 3,904,011
 25.9
 3,543,956
 26.9
Commercial real estate - owner occupied 2,241,613
 14.9
 2,013,276
 15.2
Construction and land development 1,632,204
 10.8
 1,478,114
 11.2
Residential real estate 425,940
 2.8
 259,432
 2.0
Consumer 48,786
 0.3
 38,963
 0.3
Loans, net of deferred loan fees and costs $15,093,935
 100.0% $13,189,527
 100.0%
Allowance for credit losses (140,050)   (124,704)  
Total loans HFI $14,953,885
   $13,064,823
  
The Company had no HFS loans as of December 31, 2017, compared to $18.9 million of HFS loans as of December 31, 2016. For additional information concerningregarding loans, see "Note 3.4. Loans, Leases and Allowance for Credit Losses" of the Consolidated Financial Statements contained hereinin Item 8 or "Management"Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations and Financial Condition – Loans discussions"Loans" in Item 7 of this Form 10-K.
The Company adheres to a specific set of credit standards within its banking subsidiary that are intended to ensure the properappropriate management of credit risk. Furthermore, the Bank's senior management team plays an active role in monitoring compliance with such standards.
Loan originations are subject to a process that includes the credit evaluation of borrowers, utilizing established lending limits, analysis of collateral, and procedures for continual monitoring and identification of credit deterioration. Loan officers actively monitor their individual credit relationships in order to report suspected risks and potential downgrades as early as possible. The WAB BOD approves all material changes to loan policy, as well as lending limit authorities. The Bank's lending policies generally incorporate consistent underwriting standards across all geographic regions in which the Bank operates, customized as necessary to conform to state law and local market conditions. The Bank's credit culture has enabledemphasizes timely identification of troubled credits to allow management to identify troubled credits early, allowing management to take prompt corrective action, when necessary.
Loan Approval Procedures and Authority
The Company's loan approval procedures are executed through a tiered loan limit authorization process, which is structured as follows:
•Individual Credit Authorities. The authorizationcredit approval levels for individual loandivisional and senior credit officers are set by policy and certain credit administration officers' approval authorities are established on a case-by-casedelegated basis. Generally, the more experienced a loan officer, the higher the authorization level. The maximum approval authority for any loan officer is $1.0 million. Certain members of executive management or credit administration may have higher approval authority.
•Management Loan Committees. Credits in excess of individual loan limitsdivisional or senior credit officer approval authority are submitted to the appropriate region’s MLC.divisional or NBL loan committee. The MLCsdivisional committees consist of members of the Bank's senior management team of each region. The MLCs have approval authority up to $7.0 million.
division and the NBL loan committees consist of the Bank's divisional or senior credit officers.
•Credit Administration. Credits in excess of the MLCdivisional or NBL loan committee approval authority require the additional approval of the Bank's CCO and any credits in excess of the CCO's individual approval authority are submitted to the WAB SLC. The SLC has approval authority up to established house concentration limits, which range from $15.0 million to $50.0 million, depending on risk grade. SLC approval is also required for new relationships of $12.5 million or greater to borrowers within market footprint, and $5.0 million or greater outside market footprint. TheIn addition, the SLC reviews all other loan approvals to any one new borrower in excess of $5.0 million or greater.established thresholds. The SLC is chaired by the WAB CCO and includes the Company’s CEO. Current policy states that over house
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Management and monitoring of credit risk for the Company's overall lending portfolio continues to be a high priority. As elevated focus on the evolving industry dynamics facing the CRE market have emerged during the year, the Company has been proactive in establishing enhanced monitoring policies and procedures as it relates to its CRE loans and has undertaken actions to limit exceptions require unanimous approvalgrowth of its CRE portfolio. To this end, and to drive consistency in underwriting, portfolio management, and loan monitoring metrics, in January 2024, the Company aligned its loan committee structures to a product focus, creating new CRE and C&I loan committees, which is a shift away from its former divisional or NBL focused loan committees. The Company has also undertaken efforts during the year to streamline its credit risk monitoring process to enable management to more centrally track and monitor assets. In addition, the Company's credit monitoring strategy continues to be focused on early identification and elevation of potential problem loans. These efforts include increased frequency of meetings with business line owners, early engagement of the SLC.
Company's special assets group, and inclusion of pass grade loans with a potential for downgrade in asset quality and problem loan meeting discussions.
Loans to One Borrower. In addition to the limits set forth above,below, subject to certain exceptions, state banking laws generally limit the amount of funds that a bank may lend to a single borrower. Under Arizona law, the obligations of one borrower to a

bank generally may not exceed 20% of the bank’s capital, plus an additional 10% of its capital if the additional amounts are fully secured by readily marketable collateral. Arizona law does not specifically require aggregation of loans to affiliated 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 applied to national banks by the Office of the Comptroller of the Currency.
Concentrations of Credit Risk. The Company's lending policies also establish customer and product concentration limits for its HFI and HFS loan portfolios, which are based on commitmentoutstanding amounts, to control single customer and product exposures. The Company's lending policies have several different measures to limit concentration exposures. Set forth below are the primary segmentation limits and actual measures based on outstanding amounts as of December 31, 2017:2023:
 Percent of Tier 1 Capital and ACL (1)
 Policy LimitActual
Loans HFI
CRE295 %180 %
Commercial and industrial485 299 
Construction and land development85 77 
Residential real estate300 232 
Consumer10 1 
Loans HFS
Residential real estate215 22 
  Percent of Total Capital
  Policy Limit Actual
CRE 435% 250%
Commercial and industrial 400
 278
Construction and land development 85
 66
Residential real estate 100
 17
Consumer 5
 2
(1)    ACL refers to the allowance for credit losses on funded loans.
Asset Quality
General
To measure asset quality, the Company has instituted a loan grading system consisting of nine different categories. The first five are considered “satisfactory.”satisfactory "pass" ratings. The other four "non-pass" grades range from a “special“Special mention” category to a “loss”“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 each assigned loan officer reviews the credit with his or her immediate supervisorformally reviewed on a quarterly basis as part of the Company's loan grade certification process to identify loans that may be exhibiting early-warning signs of credit stress and determine whether a change in the credit risk grade is warranted. In addition, the grading of the Company's loan portfolio is reviewed on a regular basis by its internal Loan Review Department.loan review department.
Collection Procedure
Bank personnel are responsible for monitoring activity that may indicate an increased risk rating, including, but not limited to, past-dues, overdrafts, and loan agreement covenant defaults related to its commercial borrowers. If a commercial borrower fails to make a scheduled payment on a loan, Bank personnel attempt to remedy the deficiency by contacting the borrower and seeking payment. ContactsContact is generally are made within 15 business days after the payment becomes past due. The Bank also maintains regional Special Assets Departments,a special assets department, which generally services and collects loans rated substandardSubstandard or worse. Each division is responsible for monitoring activity that may indicate an increased risk rating, including, but not limited to, past-dues, overdrafts and loan agreement covenant defaults. Loans deemed uncollectible are proposed for charge-off.charged-off.
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Nonperforming Assets
Nonperforming assets include loans past due 90 days or more and still accruing interest (that are not government guaranteed), non-accrual loans, TDRand accruing restructured loans, and repossessed assets, including OREO. In general, loans are placed on non-accrual status when the Company determines that ultimate collection of principal and interest is in doubt due to the borrower’s financial condition, collateral value, and collection efforts. In addition, the Company considers all loans rated Substandard or worse to be experiencing financial difficulty. A TDRrestructured loan is a loan on which the Company,modification for reasons related to a borrower’sborrower experiencing financial difficulties, grants a concession to the borrower that the Company would not otherwise consider.difficulty. Other repossessed assets resultedresult from loans where the Company has received title or physical possession of the borrower’s assets. The Company generally re-appraises OREO and collateral dependent impairednon-residential loans with balances greater than $0.5 million every twelve12 months. The total net gainrealized and unrealized gains and losses on sales / valuations of repossessed and other assets was $0.1 million, $0.1 million, and $2.1 million fornot significant during each of the years ended December 31, 2017, 2016,2023, 2022, and 2015, respectively. Losses2021. However, losses may be experienced in future periods.
Criticized Assets
Federal bank regulators require banks to classify itstheir assets on a regular basis. In addition, in connection with their examinations of the Bank, examiners have authority to identify problem assets and, if appropriate, re-classify them. A loan grade of six"Special Mention" from the Company's internal loan grading system is utilized to identify potential problem assets and loansloan grades seven through nineof "Substandard," "Doubtful," and "Loss" are utilized to identify actual problem assets.
The following describes the potential and actual problem assets using the Company's internal loan grading system definitions:
•"Special Mention" (Grade 6): Generally these are assets that possess potential weaknesses that warrant management's close attention. These loans may involve 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 category are usually performing as agreed, although there may be non-compliance with financial covenants.
•“Substandard” (Grade 7): These assets are characterized by well-defined credit weaknesses and carry the distinct possibility that the Company will sustain some loss if such weakness or deficiency is not corrected. The Company believes that these loans generally are adequately secured and in the event of a foreclosure action or liquidation, the Company should be protected from loss. All loans 90 days or more past due and all loans on non-accrual status are considered at least “substandard,”"Substandard," unless extraordinary circumstances would suggest otherwise.
•“Doubtful” (Grade 8): These assets have all the weaknesses inherent in those classified as "substandard""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 improbable, but because of certain known factors which may work to the advantage and strengthening of the asset (for example, capital injection, perfecting liens on additional collateral and refinancing plans), classification as an estimated loss is deferred until a more precise status may be determined.
•“Loss” (Grade 9): These assets are considered uncollectible and having such little recoverable value that it is not practical to defer writing off the asset. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practicable or desirable to defer writing off the asset, even though partial recovery may be achieved in the future.
Allowance for Credit Losses
The Company must maintain an adequate allowance for credit losses. The allowance for credit losses is established through a provision for credit losses andin each period is reflected as a reduction in earnings. Loans are charged againstearnings for that period and includes amounts related to funded loans, unfunded loan commitments, and investment securities. The provision is equal to the allowance foramount required to maintain the ACL at a level adequate to absorb estimated lifetime credit losses when management believes that collectabilityinherent in the loan and investment securities portfolios as well as off-balance sheet credit exposures. Charge-offs are recorded as a reduction to the ACL and subsequent recoveries of the contractual principal or interest is unlikely. Subsequent recoveries, if any,previously charged-off amounts are credited to the allowance.ACL. The allowance is reported at an amount believed adequate to absorb probable lossesACL on existing loans that may become uncollectable, based on evaluation of the collectability offunded loans and prior credit loss experience, together with other factors.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 PoliciesEstimates – Allowance for Credit Losses” in Item 7 of this Form 10-K.
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Investment Activities
WAB and WAL haveThe Company has an investment policy, which wasis approved by their respective BODs.the BOD on an annual basis. This policy dictates that investment decisions be made based on the safety of the investment, liquidity requirements of the Bank and holding company, potential returns, cash flow targets, and consistency with the Company's interest rate risk management. The Bank’s ALCO is responsible for making securities portfolio decisions in accordance with established policies. The CFO and Treasurer have the authority to purchase and sell securities within specified guidelines. All investment transactions for the Bank and for the holding company during the year ended December 31, 2023 were reviewed by the ALCO and BOD.
Generally, theThe Company's investment policy limits new securities investmentspurchases to certain eligible investment types and, in the aggregate, are further subject to the following: securities backed by the full faith and creditfollowing quantitative limits of the U.S. government, including U.S. treasury bills, notes, and bonds, direct obligationsBank, which are calculated as a percent of Ginnie Mae, USDA and SBA loans; MBS or CMO issued by a GSE, suchCET1, as Fannie Mae or Freddie Mac; debt securities issued by a GSE, such as Fannie Mae, Freddie Mac, and the FHLB; tax-exempt securities with a rating of “Single-A” or higher; preferred stock where the issuing company is rated “BBB” or higher; corporate debt with a rating of “Single-A” or better; investment grade corporate bond mutual funds; private label collateralized mortgage obligations with a single rating of “AA” or higher; commercial mortgage-backed securities with a rating of “AAA;” low income housing development bonds; and mandatory purchases of equity securities of the FRB and FHLB. Preferred stock holdings are limited to no more than 10% of the Bank’s Common Equity Tier 1; tax-exempt securities are limited to no more than 5% of the Bank's assets; investment grade corporate bond mutual funds are limited to no more than 5% of the Bank's Tier 1 capital; corporate debt holdings are limited to no more than 2.5% of the Bank’s assets; and commercial mortgage-backed securities are limited to an aggregate purchase limit of $50 million.December 31, 2023:
The Company no longer purchases (although it may continue to hold previously acquired) CDOs.
Securities CategoryPolicy LimitActual
Held-to-maturity
Tax-exempt low income housing development bonds35.0 %20.0 %
Available-for-sale debt and equity securities
CLO40.0 22.6 
Corporate debt securities10.0 6.6 
High quality liquid assets:
Non‐GNMA80.0 39.8 
GNMA65.0 6.1 
Private label residential MBS30.0 21.2 
Municipal securities and tax-exempt low income housing development bonds (AFS)20.0 15.2 
US treasuries (with maturities less than 1 year)No limit65.8 
US treasuries & agency notes (with maturities greater than 1 year)50.0 12.1 
CRA5.0 1.1 
Preferred stock5.0 1.7 
The Company's policies also govern the use of derivatives, and provide that the Company prudently use derivatives in accordance with applicable regulations as a risk management tool to reduce the overall exposure to interest rate risk, and not for speculative purposes.
As of December 31, 2017, the majority of theThe Company's investment securities portfolio includes debt and equity securities. Debt securities are classified as AFS or HTM pursuant to ASC Topic 320, Investments and ASC Topic 825, Financial Instruments. AFSEquity securities are reported at fair value in accordance with ASC Topic 820, Fair Value Measurements and Disclosures.

321, Equity Securities.For 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.
As of December 31, 2017,2023, the Company's investment securities portfolio totals $3.75totaled $12.7 billion, representing approximately 18.5%18% of the Company's total assets, with the majoritya 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 investmentdebt securities portfolio, is 5.34.0 years as of December 31, 2017.2023.
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The following table summarizes the carrying value of the Company's investment securities portfolio as of December 31, 2017 and 2016:securities:
December 31,December 31,
202320232022
AmountAmountPercentAmountPercent
(dollars in millions)(dollars in millions)
Debt securities
U.S. Treasury securities
U.S. Treasury securities
U.S. Treasury securities$4,853 38.2 %$— — %
Tax-exempt
Residential MBS issued by GSEs
CLO
Private label residential MBS
Commercial MBS issued by GSEs
Corporate debt securities
 December 31,
 2017 2016
Other
 Amount Percent Amount Percent
 (dollars in thousands)
CDO $21,857
 0.6% $13,490
 0.5%
Commercial MBS issued by GSEs 109,077
 2.9
 117,792
 4.4
Corporate debt securities 103,483
 2.8
 64,144
 2.4
Other
Other
Total debt securitiesTotal debt securities$12,594 99.0 %$8,381 98.1 %
Equity securities
Equity securities
Equity securities
Preferred stock
Preferred stock
Preferred stock$100 0.8 %$108 1.3 %
CRA investments 50,616
 1.3
 37,113
 1.4
Preferred stock 53,196
 1.4
 94,662
 3.5
Private label residential MBS 868,524
 23.1
 433,685
 16.0
Residential MBS issued by GSEs 1,689,295
 45.0
 1,356,258
 50.1
Tax-exempt 765,960
 20.4
 500,312
 18.5
Trust preferred securities 28,617
 0.8
 26,532
 1.0
U.S. government sponsored agency securities 61,462
 1.6
 56,022
 2.1
U.S. treasury securities 2,482
 0.1
 2,502
 0.1
Common stock
Total equity securitiesTotal equity securities$126 1.0 %$160 1.9 %
Total investment securities $3,754,569
 100.0% $2,702,512
 100.0%
Total investment securities
Total investment securities$12,720 100.0 %$8,541 100.0 %
As of December 31, 20172023 and 2016,2022, the Company has an investmentalso held investments in BOLI of $167.8$186 million and $164.5$182 million, respectively. The BOLI is used to help offset employee benefit costs. For additional information concerning investments, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations and Financial Condition – Investments” in Item 7 of this Form 10-K.
Deposit Products
The Company offers a variety of deposit products, including demand deposits, checking accounts, savings accounts, money market accounts, and other types of deposit accounts, including fixed-rate, fixed maturity certificates of deposit. The Company has historically focused on growing its lower cost core customer deposits. As of December 31, 2017,2023, the deposit portfolio was comprised of 44% non-interest bearing26% non-interest-bearing deposits and 56%74% interest-bearing deposits.
The competition for deposits in the Company's markets is strong. The Company has historically been successful in attracting and retaining deposits due to several factors, including its: 1)
•knowledgeable and empowered bankers committed to providing personalized and responsive service that translates into long-lastinglong lasting relationships; 2) 
•broad selection of cash management services offered; and 3) 
•incentives to employees for business development and retention. The Company intends to continue its focus on attracting deposits from its business lending relationships in order to maintain its low cost of funds and improve its net interest margin. The loss of low-cost deposits could negatively impact future profitability.
Deposit balances are generally influenced by national and local economic conditions, changes in prevailing interest rates, internal pricing decisions,competitiveness of offered rates, perceived stability of financial institutions, and competition. The Company’s deposits are primarily obtained from communities surrounding its offices or from established relationships. In order to attract and retain deposits, the Company relies on providing quality service and introducing new products and services that meet the needs of its customers.
In 2017, theThe Bank's deposit rates wereare 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;
local competition;•competition from other institutions;
•loan and deposit positions and forecasts, including any concentrations in either; and
•alternative borrowing costs from the FHLB advance rates and rates charged onor other funding sources.

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The following table shows the Company's deposit composition: 
December 31,
20232022
AmountPercentAmountPercent
(in millions)
Non-interest-bearing demand deposits$14,520 26.2 %$19,691 36.7 %
Interest-bearing transaction accounts15,916 28.8 9,507 17.7 
Savings and money market accounts14,791 26.7 19,397 36.2 
Time certificates of deposit ($250,000 or more) (1)1,478 2.7 1,101 2.0 
Other time deposits8,628 15.6 3,948 7.4 
Total deposits$55,333 100.0 %$53,644 100.0 %
  December 31,
  2017 2016
  Amount Percent Amount Percent
  (in thousands)
Non-interest-bearing demand deposits $7,433,962
 43.9% $5,632,926
 38.7%
Interest-bearing transaction accounts 1,586,209
 9.3
 1,346,718
 9.3
Savings and money market accounts 6,330,977
 37.3
 6,120,877
 42.0
Time certificates of deposit ($250,000 or more) 713,654
 4.2
 609,678
 4.2
Other time deposits 907,730
 5.3
 839,664
 5.8
Total deposits $16,972,532
 100.0% $14,549,863
 100.0%
(1)    Retail brokered time deposits over $250,000 of $5.8 billion and $2.7 billion as of December 31, 2023 and 2022, respectively, are included within Other time deposits as these deposits are generally participated out by brokers in shares below the FDIC insurance limit.
Although the Company does not pay interest to depositors of non-interest bearingnon-interest-bearing accounts, earnings credits and referral fees are awarded to some account holders, which offset 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 fluctuate as a result of eligible deposit balances and ECR rates on these deposit balances.
In addition to the Company's deposit base, it has access to other sources of funding, including FHLB and FRB advances, Federal funds purchased, repurchase agreements, and secured and unsecured lines of credit with other financial institutions. Previously, the Company has also accessed the capital markets through trust preferred, credit linked note, subordinated debt, and Senior Note offerings. For additional information concerning the Company's deposits, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Balance Sheet Analysis – Deposits” in Item 7 of this Form 10-K.
Other Financial Products and Services
In addition to traditional commercial banking activities, the Company offers other financial services to its customers, including:including internet banking, wire transfers, electronic bill payment and presentment, funds transfer and other digital payment offerings, lock box services, courier, and cash management services.
Customer, Product, and Geographic Concentrations
Approximately 52%Commercial and 53%industrial loans make up 38% and 40% of the Company's HFI loan portfolio as of December 31, 2023 and 2022, respectively. Residential loans comprise 29% and 31% of the Company's HFI loan portfolio as of December 31, 2023 and 2022, respectively. In addition, 33% and 29% of the Company's HFI loan portfolio at December 31, 20172023 and 2016,2022, respectively, consisted of CRE-secured loans, includingwas represented by CRE loans, and construction and land development loans. The Company’s CRE business is concentrated primarily in the Las Vegas, Los Angeles, Phoenix, Reno, San Francisco, San Jose, San DiegoCompany's core footprint states: Arizona, California, and Tucson metropolitan areas.Nevada. Consequently, the Company is dependent on the trends of these regional economies.
The Company's lending activities, including those within its NBLs, are driven in large part by the customers served in the market areas where the Company has offices in the states of Arizona, Nevada and California. The following table presents a breakout of the in-footprint and out of footprint distribution of loans:
 December 31, 2017 December 31, 2016
 In-Footprint Out-of-Footprint Total In-Footprint Out-of-Footprint Total
Arizona19.8% 2.2% 22.0% 20.7% 1.7% 22.4%
Nevada12.1
 0.1
 12.2
 13.0
 0.1
 13.1
Southern California12.7
 0.1
 12.8
 13.0
 0.4
 13.4
Northern California7.8
 0.6
 8.4
 7.9
 0.4
 8.3
HOA Services0.2
 0.9
 1.1
 0.2
 0.7
 0.9
Hotel Franchise Finance0.8
 8.0
 8.8
 1.0
 8.8
 9.8
Public & Nonprofit Finance9.5
 1.0
 10.5
 9.8
 1.2
 11.0
Technology & Innovation2.7
 4.6
 7.3
 2.8
 4.8
 7.6
Other NBLs6.2
 10.7
 16.9
 6.0
 7.5
 13.5
Total71.8% 28.2% 100.0% 74.4% 25.6% 100.0%
The Company is not dependent upon any single or limited number of customers, the loss of which would have a material adverse effect on the Company. Neither the Company nor any of its reportable segments have customer relationships that individually account for 10% or more of consolidated or segment revenues. No material portion of the Company’s business is seasonal.

Foreign Operations
The Company does not have significant foreign operations. The Company provides loans, letters of credit, foreign exchange, and other trade-related services to commercial enterprises that conduct business outside the U.S.
Competition
The financial services industry is highly competitive. Many ofcompetitive and has been significantly impacted by federal and state legislation that makes it easier for non-bank financial institutions to compete with the Company's competitors are much larger in total assets and capitalization, have greater access to capital markets, and offer a broader range of financial services than the Company can offer, and may have lower cost structures.
This increasingly competitive environment is primarily a result of long-term changes in regulation that made mergers and geographic expansion easier; changes in technology and product delivery systems and web-based tools; and the accelerating pace of consolidation among financial services providers.Company. The Company competes for loans, deposits, and customers with other banks, credit unions, brokerage companies, mortgage companies, insurance companies, finance companies, financial technology firms, and other non-bank financial services providers. This strong competition for deposit and loan products directly affects the interest rates on those products and the terms on which they are offered to consumers.
customers. In addition, many of the Company's competitors are much larger in total assets and capitalization and are able to offer a broader range of financial services than the Company can offer. Technological innovation continuesand capabilities, including changes in product delivery systems and web-based tools, also continue to contribute to greater competition in domestic and international financial services markets.markets and larger competitors may be able to allocate more resources to these technology initiatives.
Mergers between financial institutions
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Human Capital Resources
The Company’s culture is defined by its corporate values of integrity, creativity, teamwork, passion, and excellence. People, Performance, and Possibilities capture the Company's defining values and behaviors that shape our unique culture and how we do business. People are the foundation 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 first, we create strong stockholder returns. This leads to tremendous possibilities to fuel client growth and support the Company’s communities.
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 placed additional pressure on banks to consolidate their operations, reduce expenses, and increase revenues to remain competitive.volunteered more than 28,000 hours in 2023. The competitive environmentCompany is also significantly impacted by federalcommitted to providing financial support for education, affordable housing, and state legislation that makes it easier for non-bank financial institutions to compete with the Company.
Employeescommunity development lending and investments.
As of December 31, 2017,2023, the Company has 1,725employed 3,260 full-time equivalent employees.employees in its branches and loan production offices across the United States, a decrease of 3% from December 31, 2022. The Company’s employees are not represented by a union or covered by a collective bargaining agreement. Management believes
Diversity, Equity, and Inclusion
The Company is committed to improving workforce diversity at all levels of the organization and to providing equal opportunity in all aspects of employment. In 2023, the Company continued to make progress towards enhancing its ability 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 established an executive-led Opportunity Council, which guides and sponsors DEI initiatives, provides access to leadership, and evaluates organizational and best practice DEI strategies. Overall, the Opportunity Council is focused on accelerating DEI activities and results. One aspect of this work is the active support of Business Resource Groups focused on the career advancement of diverse groups within the Company, such as women, minority groups, and LGBTQIA+ employees. These groups foster opportunities to engage in programs, network with peers, and connect with Bank leadership.
The Company employs a diverse workforce that reflects its communities, which is shown in the Company's ethnic and gender diversity metrics presented in the table below:
December 31,
202320222021
(as a percentage of total employees)
Employees belonging to an ethnic minority group44 %43 %44 %
Female employees51 52 55 
As of December 31, 2023, 43% of employees that occupied roles involving supervision and management of other employees were women, compared to 44% in the prior year. In addition, at the leadership level, the Company's female and ethnic employees increased to 45% as of December 31, 2023 from 41% in the prior year.
The below table presents the ethnic and gender diversity metrics for the Company's BOD:
December 31,
202320222021
(as a percentage of total directors)
Directors belonging to an ethnic minority group15 %21 %15 %
Female directors15 21 15 
Recruiting, Retention, and Talent Development
The Company recognizes its success is highly dependent on its ability to attract, retain and develop employees. To foster this development, the Company has created three early talent identification programs, a college internship program, the CBDP, and iLead, with the goal of each program being to enhance management’s ability to promote pathways for growth of future leaders. Campus recruitment initiatives and partnerships also help expand the Company’s pipeline of talent. Within the internship program, college students and recent graduates are paired with leaders across the Company to create a valuable, immersive experience, with an objective of retaining promising interns and creating a pipeline for the CBDP or other roles. The CBDP is an 18-month, on-the-job development program to train successful credit analysts that offers progressive assignments,
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mentoring, opportunities to learn the business and various aspects of leadership, with the objective of developing future leaders of the Company. The iLead Program is an 18-month program for recent MBA graduates, designed to accelerate the development of high potential mid-career talent in sales or corporate career paths. Additionally, the Company has expanded its sales training and mentoring efforts to foster internal development within its commercial lending teams.
As a growing company, recruiting new talent to the organization is key to the Company’s success and part of that objective includes building a diverse workforce that is representative of the communities the Company serves. In 2023, 47% of WAB’s open positions were filled by external candidates belonging to an ethnic minority group compared to 48% in 2022. The Company has made a commitment to growing the share of its employee relationspopulation from diverse communities and has experienced success in recent years, although the Company believes there is still an opportunity for additional advancement in this area.
Retaining employees who have been key contributors to the Company's success story remains an important objective. The table below presents the Company's overall employee turnover rate:
Year ended December 31,
2023 (1)2022 (1)2021
Turnover Rate14 %17 %19 %
(1)Excludes the impact of reductions in workforce during the period.
For 2023 compared to 2022, the turnover rate decreased from 17% to 14%. During 2023, the Company’s workforce was reduced in conjunction with the Company's balance sheet repositioning efforts to align with current business initiatives. This reduction represented 4% of the Company’s 2023 average employees. For 2022, the Company’s residential mortgage banking workforce was reduced to align with lower residential mortgage loan production volumes, which was driven by rising interest rates through 2022.
The table below presents the Company's employee turnover rate by age group:
Year ended December 31,
Turnover Rate by Age Group2023 (1)2022 (1)2021
Under 3018 %27 %27 %
Between 30-5014 15 19 
Over 5014 15 16 
(1)Excludes the impact of reductions in workforce during the period.
In 2023, 2022 and 2021, the Company's turnover rate was highest among employees in the Under 30 age group.
The Company also offers a variety of resources to help its employees grow in their current roles and build new skills, including online development programs and workshops, mentoring programs, and internal webinars that feature speakers from across the Company, sharing information about 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 performance management process, employees are good.able to identify individual development goals and create an action plan to achieve these goals.
With the understanding that bias is a larger societal issue, the Company offers training to create awareness and understanding of everyday biases and micro-behaviors, and helps individuals to implement solutions to create a more inclusive workplace. This training is required for all employees and additional, focused trainings are required for all managers, including one specifically promoting inclusion.
Compensation and Benefits
The Company’s compensation and benefits programs are designed to attract, retain, motivate, and reward employees to deliver strong performance 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 benefits, health savings and flexible spending accounts, and various paid time off benefits. Throughout the organization, 100% of employees participate in the annual bonus plan or are eligible to receive business incentives.
Health and Wellness
The Company is committed to supporting the wellness of its people, to enable their personal and professional productivity, improve physical and mental well-being, and provide support for optimal health at work and at home. To support these efforts,
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the Company has established Wellness Committees to engage its people in well-being initiatives that provide opportunities for employees to develop healthier lifestyles by promoting habits and attitudes that support wellness.
Supervision and Regulation
The Company and its subsidiaries are extensively regulated and supervised under both federal and state laws. A summary description of the laws and regulations whichthat relate to the Company’s operations are discussed in Supervision and Regulation within Item 7 of this Form 10-K.
Additional Available Information
The Company maintains an internet website at http://www.westernalliancebancorporation.com. The Company makes available 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 free of charge, through this site, as soon as reasonably practicable after it electronically files those documents with, or otherwise furnishes them to the SEC. The SEC maintains an internet site at http://www.sec.gov, infrom which all forms filed electronically may be accessed. The Company’s internet website and the information contained therein are not incorporated ininto this Form 10-K.
In addition, copies of the Company’s annual report will be made available, free of charge, upon written request. 

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Item 1A.Risk Factors.
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Item 1A.Risk Factors.
Investing in the Company’sour common stock involves various risks, many of which are specific to the Company’sour business. The discussion below addresses the material risks and uncertainties, of which the Company iswe are currently aware, that could have a material adverse effect on the Company’sour business, results of operations, and financial condition. Other risks that the Company doeswe do not know about now, or that the Company doeswe do not currently believe are significant,material, could negatively impact the Company’sour business or the trading price of our securities. Additionally, investors should not interpret the Company’s securities.disclosure of a risk to imply that the risk has not already materialized. See additional discussions about credit, interest rate, market, and litigation risks in "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations."
Market and Economic Risks Relating to the Company's Business
The Company’sOur financial performance may be adversely affected by conditions in the financial markets, adverse developments or concerns affecting the financial services industry generally or financial institutions that are similar to us or may be viewed as being similar to us, and economic conditions generally.
The Company’sOur financial performance is highly dependent upon the business environment in the markets where the Company operateswe operate and in the U.S. as a whole. Unfavorable or uncertain economic and market conditions can be caused by declines in economic growth, business activity, or investor or business confidence, limitations on the availability or increases in the cost of credit and capital, increases in inflation or interest rates, U.S. government debt default or shutdown, the imposition of tariffs on trade, natural disasters, the emergence of widespread health emergencies or pandemics (such as the COVID-19 pandemic), terrorist attacks, acts of war (such as the military conflicts in Ukraine and the Middle East), or a combination of these or other factors.
The specific impact on us of unfavorable or uncertain economic or market conditions is difficult to predict, could be long or short term, and may be indirect, such as disruptions in our customers' supply chains or a reduction in the demand for their products or services. A worsening of business and economic conditions generally or specifically in the principal markets in which the Company conductswe conduct business could have adverse effects, including the following:
•a decrease in deposit balances or the demand for loans and other products and services the Company offers;we offer;
•an increase in the number of borrowers who become delinquent, file for protection under bankruptcy laws or default on their loans or other obligations to the Company,us, which could lead to higher levels of nonperforming assets, net charge-offs, and provisions for credit losses;
•a decrease in the value of loans and other assets secured by real estate;or in the value of collateral;
•a decrease in net interest income from the Company’sour lending and deposit gathering activities;
•an impairment of certain intangible assets such as goodwill; and
•an increase in competition resulting from the increasing consolidation ofwithin the financial services companies.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 industry, the commercial soundness of financial institutions is closely interrelated as a result of credit, trading, clearinginterrelated. Actual events involving limited liquidity, defaults, non-performance or other relationships betweenadverse developments affecting financial institutions, transactional counterparties or other companies in the institutions. As a result,financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or a default or threatened default by, one institution couldother similar events, have in the past and may in the future lead to significant market-wideerosion of customer confidence in the banking system or certain banks, deposit volatility, liquidity andissues, credit problems, losses or defaults by other institutions. Thisinstitutions, stock price volatility and other adverse developments. The bank closures in the first half of 2023 led to such disruption and volatility, including deposit outflows, at many mid-sized banks, including us, increasing the need for liquidity. Although bank regulators ensured depositors would have access to all of their money after only one business day of the first such bank closure, including funds held in uninsured deposit accounts, it is sometimes referred to as “systemic risk” andnot certain bank regulators will treat future bank failures similarly. Additionally, these types of events may adversely affect financial intermediaries, such as clearing agencies, clearing houses, banks, securities firms, and exchanges, with which the Company interactswe interact on a daily basis,basis. Any of these impacts, or any other impacts resulting from the events described above or other related or similar events, could have a material adverse effect on our liquidity and therefore could adversely affect the Company.current and/or projected business operations and financial condition and results of operations.
It is possible that the business environment in the U.S., including with respect to the financial services industry, will continue to be challenging or experience recession or additional volatility in the future. There can be no assurance that thesesuch conditions will improve in the near term or that conditions will not worsen. There also can be no assurance there will not be additional bank failures or liquidity concerns in particular segments of the financial services industry or in the U.S. financial system as a whole. Such conditions or events could adversely affect the Company’sour business, results of operations, and financial condition.
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Changes in interest rates and increased rate competition could adversely affect our profitability, business, and prospects.
Most of our assets and liabilities reprice with changes in interest rates, which subjects us to significant risks from changes in interest rates and can impact our net interest income, mortgage banking revenues, the valuation of our assets and liabilities, and our ability to effectively manage interest rate risk.
We derive a significant amount of revenue from net interest income and, therefore, our net income depends heavily on net interest margin. Net interest margin is the difference 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 slope of the interest rate curve, and monetary and fiscal policies of various governmental and regulatory authorities, including the FRB. In a rising rate 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 interest income and earnings.
Interest rates rose during 2023, resulting in certain of the rising rate environment effects described herein. Specifically, inflation and rapid interest rate increases during 2023 led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates. Any sale of investment securities held in an unrealized loss position for liquidity or other purposes will cause actual losses to be realized. Gross unrealized losses on our HTM and AFS investment securities totaled $179 million and $702 million, respectively, as of December 31, 2023. If interest rates continue to increase, our business, financial condition and results of operations may be materially and adversely affected.
Conversely, our earnings also could be adversely affected in a declining rate environment if the rates on our loans and other investments fall more quickly than those on our deposits and other liabilities. Because of our relatively high reliance on net interest income, our revenue and earnings are more sensitive to changes in market rates than other financial institutions with more diversified sources of revenue.
Loan volumes may also be affected by market interest rates on loans. Lower interest rates are typically associated with higher loan originations, but also result in higher loan refinancings which can result in lower average loan yields and the loss of future net servicing revenues on residential loans with an associated 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 affect the volume of loans available for purchase by our mortgage warehouse lending platform.
In addition to the potential effects on net interest margin and loan volumes, an increase in the general level of interest rates may affect the ability of certain borrowers to pay interest and principal on their obligations and reduces 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.
Our financial instruments expose us to certain market risks and may increase the volatility of earnings and AOCI.
We hold certain financial instruments measured at fair value. For those financial instruments measured at fair value, we are required to recognize changes in fair value in either earnings or AOCI each quarter. Therefore, any increases or decreases in the fair value of these financial instruments will have a corresponding impact on reported earnings or AOCI. Fair value can be affected by a variety of factors, many of which are beyond our control, including credit spreads, interest rate volatility, liquidity, and other economic factors. Accordingly, we are subject to mark-to-market risk and the application of fair value accounting which may cause our earnings and AOCI to be more volatile than what may be suggested by our underlying performance.
Due to the inherent risk associated with accounting estimates, our ACL may be insufficient, which could require us to raise additional capital or otherwise adversely affect our financial condition and results of operations.
Credit losses are an inherent risk in the business of making loans. Management makes various assumptions and judgments about the collectability of our loan portfolio and maintains an ACL estimated to cover expected losses over the life of the loans in our portfolio. The measurement of expected credit losses takes place at the time the financial asset is first added to the balance sheet (with periodic updates thereafter) and is based on a number of factors, including the size of the portfolio, asset classifications, economic trends, industry experience and trends, industry and geographic concentrations, estimated collateral values, management’s assessment of the credit risk inherent in the portfolio, loan underwriting policies, historical loan loss experience, and reasonable and supportable forecasts. In addition, with the exception of residential loans, we individually evaluate all loans identified as problem loans with a total commitment of $1.0 million or more, and establish an allowance based upon our estimation of the potential loss associated with those problem loans. Additions to the ACL recorded through provision for credit losses decrease our net income. If management’s assumptions and judgments are incorrect or if economic conditions worsen compared to forecast, our actual credit losses may exceed our ACL.
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At December 31, 2023, our ACL on funded loans and loss contingency on unfunded loan commitments and letters of credit totaled $336.7 million and $31.6 million, respectively. Deterioration in the real estate market or general economic conditions could affect the ability of our loan customers to service their debt, which could result in additional loan loss provisions and increases in our ACL. In addition, future volatility in the banking industry and related economic effects, like those experienced during 2023, may adversely impact the Company’s estimate of its ACL and resulting provision for credit losses. We may also 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 portfolio, changes in regulatory guidance, regulations or accounting standards, identification of additional problem loans, changes in economic outlook, and other factors, both within and outside of our management’s control. Moreover, because future events are uncertain and because we may not successfully identify all deteriorating loans in a timely manner, there may be loans that deteriorate in an accelerated time frame.
Any increases in the provision or ACL would decrease our net income and capital, and may have a material adverse effect 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 capital on acceptable terms when needed could materially and adversely affect our financial condition, results of operations, and capital.
A protracted shutdown of the United States government may result in reduced loan originations and other adverse effects that could negatively affect our financial condition and results of operations.
Increasing political polarization in the United States and its government, including disagreement around conflict-related foreign involvement and aid and other politically charged issues may increase the likelihood of a shutdown of the federal government. Any shutdown of the United States government could adversely impact our ability to originate loans, particularly through AmeriHome’s correspondent and retail operations and our small business lending program. A government shutdown could also adversely affect certain of our borrowers which may be dependent on government funding, contractual arrangements or employment, which could affect such borrowers’ ability to pay principal and interest on our loans or their ability or desire to deposit money with or borrow from our bank. Any of these effects could result in greater loan delinquencies, increases in non-performing, criticized, and classified assets, and a decline in demand for our products and services.
The markets in which we operate are subject to the risk of both natural and man-made disasters.
Many of the real and personal properties securing our loans are located in California and more generally in the southwestern portion of the United States. Substantial portions of California experience wildfires from time to time that may cause significant damage throughout the state. While these wildfires have not significantly damaged our own properties, it is possible our borrowers may experience losses in the future, which may materially impair their ability to meet the terms of their obligations. California and the southwestern United States are also prone to other natural 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 flow in the Colorado River, from which many areas in the southwest obtain water, including certain of our markets. Persistence of such conditions or additional significant natural or man-made disasters in the state of California or in our other markets could lead to damage or injury to our own properties and/or employees, declines in population in our markets, and increased risk that our borrowers may experience losses or sustained job interruption, which may materially impair their ability to maintain deposits or meet the terms of their loan obligations. Therefore, additional natural disasters, a man-made disaster or a catastrophic event, persistence of detrimental environmental conditions, or a combination of these or other factors, in any of our markets could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
Climate change, societal responses and legislative and regulatory initiatives with respect to climate change could materially affect our business and performance, including indirectly through impacts on our customers and vendors.
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 financial condition and results of operations; however, the physical effects of climate change may also impact us. In addition to the risk of more frequent and/or severe natural 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 effects of climate change may have a significant effect in our geographic markets, and could disrupt our operations, the operations of our customers or third parties on which we rely, or supply chains generally. These disruptions, including increased regulation and compliance cost for our customers and changes in consumer behaviors, could result in declines in the economic conditions in geographic markets or industries in which our customers operate and impact their ability to repay loans or maintain deposits and could affect the value of real estate and other assets that serve as collateral for loans.
Bank regulators have increasingly viewed financial 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. We may also become subject to new or heightened regulatory requirements related to climate change, such as
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requirements relating to operational resiliency or stress testing for 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 preferences and behaviors could negatively affect our growth or force us to alter our business strategies, including whether and on what terms and conditions we will engage in certain activities or offer certain products or services and which growth industries and customers we pursue. Additionally, 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 industries 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 effects and the resulting, unknown impact could have a material adverse effect on our financial condition and results of operations.
Increased scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to ESG practices may impose additional costs on the Company isor expose it to new or additional risks.
As a regulated financial institution and a publicly traded company, we are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to ESG practices and disclosure. Investor advocacy groups, investment funds, and influential investors are increasingly focused on these practices, especially as they relate to climate risk, hiring practices, 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 certain customers and business partners, and stock price. New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory or voluntary reporting, diligence, and disclosure. ESG-related costs, including with respect to compliance with any additional regulatory or disclosure requirements or expectations, could adversely impact our results of operations.
Credit Risks
We are highly dependent on real estate and events that negatively impactimpacting the real estate market will hurt the Company’sour business and earnings.
The CompanyA significant portion of our business is located in areas in which economic growth is largely dependent on the real estate market, and a majoritylarge part of the Company’sour loan portfolio is secured by or otherwise dependent on real estate. The market for real estate is cyclical and a significant change in the outlook for this sector is uncertain.real estate market that results in deterioration in the value of collateral or rental or occupancy rates could adversely affect borrowers’ ability to repay loans. Changes in the real estate market could also affect the value of foreclosed assets. A decline in real estate activity would likely cause a decline in asset and deposit growth and negatively impact the Company’sour earnings and financial condition.
In recent years, commercial real estate markets have been impacted by economic disruptions, including those resulting from the COVID-19 pandemic and the effects of increases in remote work on urban centers and changes in the characteristics of certain urban centers. CRE loans are generally viewed as having a greater risk of default than other types of loans and depend on cash flows from the owner’s business or the property’s tenants to service the debt. The Company’sborrower’s cash flows may be affected significantly by general economic conditions. Adverse conditions in the real estate market or the general business climate and economy or in occupancy rates where the property is located could increase the likelihood of default. CRE loans generally have large loan balances, and therefore, the deterioration of one or a few of these loans could cause a significant increase in the percentage of our non-performing loans. An increase in non-performing loans could result in a loss of earnings from these loans, an increase in the provision for loan losses, and an increase in charge-offs, all of which could have a material adverse effect on our financial condition and results of operations.
The banking regulatory agencies have expressed concerns about weaknesses in the current CRE market. Banking regulatory authorities typically give CRE lending greater scrutiny and may require banks with higher levels of CRE loans to implement enhanced risk management practices, including stricter underwriting, internal controls, risk management policies, more granular reporting, and portfolio stress testing, as well as possibly higher levels of allowances for losses and capital levels as a result of CRE lending growth and exposure. If our banking regulators determine that our CRE lending activities are particularly risky and are subject to heightened scrutiny, we may incur significant additional costs or be required to restrict certain of our CRE lending activities. Furthermore, failures in our risk management policies, procedures and controls could adversely affect our ability to manage this portfolio going forward and could result in an increased rate of delinquencies in, and increased losses from, this portfolio, which could have a material adverse effect on our business, financial condition and results of operations.
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Our loan portfolio consists primarily of CRE and commercial and industrial loans, which containcontains concentrations in specialtycertain business lines or product types that have unique risk characteristics and may expose the Companyus to increased lending risks.
The Company’sOur loan portfolio consists primarily of CRE and commercial and industrial, residential mortgage, and CRE loans, which contain material concentrations in specialtycertain business lines or product types, such as mortgage warehouse, real estate, corporate finance, municipal and nonprofit loans, as well as loans in otherspecific business sectors such as technology and innovation. These loan concentrations present unique risks and involve specialized underwriting and management as these loans typicallythey often involve large loan balances to a single borrowersborrower or groupsgroup of

related borrowers. Consequently, an adverse development with respect to one commercial loan or one credit relationship may adversely affect the Company.us. In addition, based on the nature of lending to these specialty markets, repayment of loans may be dependent upon borrowers receiving additional equity financing or, in some cases, a successful sale to a third party, public offering, or other form of liquidity event. Although each specialty business has dedicated teams in place with specialized skills, tools,
Our commercial and resources available to monitorindustrial, CRE, and evaluate risk specific to the industry, unforeseen adverse events, changes in regulatory policy, or a general decline in the borrower's industry may have a material adverse effect on the Company’s financial conditionconstruction and results of operations.
Due to the inherent risk associated with accounting estimates, the Company’s allowance for loan losses may be insufficient, which could require the Company to raise additional capital or otherwise adversely affect the Company’s financial condition and results of operations.
Credit lossesland development loans, are inherent in the business of making loans. Management makes various assumptions and judgments about the collectability of the Company’s consolidated loan portfolio and maintains an allowance for estimated credit losses based on a number of factors, including the size of the portfolio, asset classifications, economic trends, industry experience and trends, industry and geographic concentrations, estimated collateral values, management’s assessment of the credit risk inherent in the portfolio, historical loan loss experience, and loan underwriting policies. In addition, the Company evaluates all loans identified as problem loans and augments the allowance based upon its estimation of the potential loss associated with those problem loans. Additions to the allowance for credit losses recorded through the Company’s provision for credit losses decreases the Company’s net income. If such assumptions and judgments are incorrect, the Company’s actual credit losses may exceed the Company’s allowance for credit losses.
At December 31, 2017, the Company's allowance for credit losses is $140.1 million. Deterioration in the real estate market or general economic conditions could affect the ability of the Company’s loan customers to service their debt, which could result in additional loan provisions and increases in the Company’s allowance for credit losses. In addition, the Company may be required to record additional loan provisions or increase the Company’s allowance for credit losses based on new information regarding existing loans, input from regulators in connection with their review of the Company’s allowance, changes in regulatory guidance, regulations or accounting standards, identification of additional problem loans, and other factors, both within and outside of the Company’s management’s control. Moreover, because future events are uncertain and because the Company may not successfully identify all deteriorating loans in a timely manner, there may be loans that deteriorate in an accelerated time frame.
Any increases in the provision or allowance for credit losses will result in a decrease in the Company’s net income and, potentially, capital, and may have a material adverse effect on the Company’s financial condition and results of operations. If actual credit losses materially exceed the Company’s allowance for credit losses, the Company may be required to raise additional capital, which may not be available to the Company on acceptable terms or at all. The Company’s inability to raise additional capital on acceptable terms when needed could materially and adversely affect the Company’s financial condition, results of operations, and capital.
Recent changes to the FASB accounting standards will result in a significant change to the Company’s recognition of credit losses and may materially impact the Company’s financial condition or results of operations.
In June 2016, the FASB issued an ASU, "Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments," which replaces the current incurred loss model for recognizing credit losses with an expected loss model referred to as the CECL model, and which goes into effect for the Company on January 1, 2020. Under the incurred loss model, the Company delays recognition of losses until it is probable that a loss has been incurred. The CECL model represents a dramatic departure from the incurred loss model.  The CECL model will require the Company to present certain financial assets carried at amortized cost, such as loans held for investment and held-to-maturity debt securities, at the net amount expected to be collected. Additionally, the measurement of expected credit losses will take place at the time the financial asset is first added to the balance sheet (with periodic updates thereafter) and will be based on current conditions, information about past events, including historical experience, and reasonable and supportable forecasts that impact the collectability of the reported amount. As such, the CECL model will materially impact how the Company determines its ALLL and may require the Company to significantly increase its ALLL.  Furthermore, the Company’s ALLL may experience more fluctuations, some of which may be significant. Were the Company required to significantly increase its ALLL, it may negatively impact the Company’s business, earnings, financial condition and results of operations. The Company is currently preparing for the new CECL model and evaluating its impact on the Company’s accounting. While the Company cannot yet determine how significantly transitioning to the CECL model will impact its ALLL, consistent with regulatory expectations set forth in interagency guidance issued at the end of 2016, the Company expects the new CECL model will require the Company to recognize a one-time cumulative adjustment to the Company’s ALLL in order to fully transition from the incurred loss model to the CECL model. 

The Company could be subject to tax audits, challenges to its tax positions, or adverse changes or interpretations of tax laws.
The Company is subject to federal and applicable state income tax laws and regulations. Income tax laws and regulations are often complex and require significant judgment in determining the Company’s effective tax rate and in evaluating its tax positions. The Company’s determination of its tax liability is subject to review by applicable tax authorities. Any audits or challenges of such determinations may adversely affect the Company’s effective tax rate, tax payments or financial condition.
Recently enacted U.S. tax legislation made significant changes to federal tax law, including the taxation of corporations, by, among other things, reducing the corporate income tax rate, disallowing certain deductions that had previously been allowed, and altering the expensing of capital expenditures. The implementation and evaluation of these changes may require significant judgment and substantial planning on behalf of the Company. These judgments and plans may require the Company to take new and different tax positions that if challenged could adversely affect the Company’s effective tax rate, tax payments or financial condition.
In addition, the new tax legislation remains subject to potential amendments, technical corrections, and further regulatory guidance and interpretation, any of which could lessen or increase certain adverse impacts on the Company. Furthermore, as the new tax legislation goes into effect, future changes may occur at the federal or state level that could result in unfavorable adjustments to the Company’s tax liability.
Because of the geographic concentration of the Company’s assets, changes in local economic conditions could adversely affect the Company’s business and results of operations.
The Company’s business is primarilyalso largely concentrated in selectedselect markets in Arizona, California, and Nevada. As a result of this geographic concentration, the Company’s financial condition and results of operations depend largely upon economic conditions in these market areas. Deteriorationdeterioration in economic conditions in these markets could result in one or more of the following: an increase in loan delinquencies and charge-offs;charge-offs, an increase in problem assets and foreclosures;foreclosures, a decrease in the demand for the Company’sour products and services;services or a decrease in the value of real estate and other collateral for loans, especially real estate.
The Company’s financial instruments expose the Company to certain market risks and may increase the volatility of earnings and AOCI.
The Company holds certain financial instruments measured at fair value. For those financial instruments measured at fair value, the Company is required to recognize theloans. Unforeseen adverse events, changes in the fair value of such instrumentseconomic conditions, and changes in earningsregulatory policy affecting borrowers’ industries or AOCI each quarter. Therefore, any increases or decreases in the fair value of these financial instruments have a corresponding impact on reported earnings or AOCI. Fair value can be affected by a variety of factors, many of which are beyond the Company’s control, including the Company’s credit position, interest rate volatility, capital markets volatility, and other economic factors. Accordingly, the Company is subject to mark-to-market risk and the application of fair value accounting may cause the Company’s earnings and AOCI to be more volatile than would be suggested by the Company’s underlying performance.
If the Company loses a significant portion of its core deposits or its cost of funding deposits increases significantly, the Company's liquidity and/or profitability would be adversely impacted.
The Company’s profitability depends in part on successfully attracting and retaining a stable base of relatively low-cost deposits. The competition for these deposits in the Company's markets is strong and customers may demand higher interest rates on their deposits or seek other investments offering higher rates of return. The Company is a participant in the Promontory Interfinancial Network, and offers its reciprocal deposit products, such as CDARS and ICS, to customers seeking federal insurance for deposit amounts that exceed the applicable deposit insurance limit at a single institution. The Company also from time to time offers other credit enhancements to depositors, such as FHLB letters of credit and, for certain deposits of public monies, pledges of collateral in the form of readily marketable securities. Any event or circumstance that interferes with or limits the Company's ability to offer these products to customers that require greater security for their deposits, such as a significant regulatory enforcement action or a significant decline in capital levels at the Company's bank subsidiary, could negatively impact the Company's ability to attract and retain deposits. If the Company were to lose a significant portion of its low-cost deposits, the Company would be required to borrow from other sources at higher rates and the Company's liquidity and profitability would be adversely impacted.

From time to time, the Company has utilized borrowings from the FHLB and the FRB, and there can be no assurance these programs will be available as needed.
As of December 31, 2017, the Company has borrowings from the FHLB of San Francisco of $390.0 million and none from the FRB. In the past, the Company has utilized borrowings from the FHLB of San Francisco and the FRB to satisfy its short-term liquidity needs. The Company’s borrowing capacity is generally dependent on the value of its collateral pledged to these entities. These lenders could reduce the Company’s borrowing capacity or eliminate certain types of collateral and could otherwise modify or even terminate their loan programs. Any change or termination could have an adverse effect on the Company’s liquidity and profitability.
The business may be adversely affected by fraud.
As a financial institution, the Company is inherently exposed to operational risk in the form of theft and other fraudulent activity by employees, customers, and other third parties targeting the Company and/or the Company’s customers or data. Such activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering and other dishonest acts.
Although the Company devotes substantial resources to maintaining effective policies and internal controls to identify and prevent such incidents, given the increasing sophistication of possible perpetrators, the Company may experience financial losses or reputational harm as a result of fraud.
A failure in or breach of the Company’s operational or security systems or infrastructure, or those of the Company’s third party vendors and other service providers, including as a result of cyber-attacks, could disrupt the Company’s businesses, result in the disclosure or misuse of confidential or proprietary information, damage the Company’s reputation, increase the Company’s costs, and cause losses.
The Company’s operations rely on the secure processing, storage, and transmission of confidential and other information. Although the Company takes numerous protective measures to maintain the confidentiality, integrity, and availability of the Company’s and its customers’ information across all geographies and product lines, and endeavors to modify these protective measures as circumstances warrant, the nature of the threats continues to evolve. As a result, the Company’s computer systems, software, and networks and those of the Company’s customers and third party vendors may be vulnerable to unauthorized access, loss, or destruction of data (including confidential client information), 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 significant losses to the Company and/or its customers. These threats may originate externally from third parties, including foreign governments, organized criminal groups, and other hackers, and outsourced or infrastructure-support providers and application developers, or the threats may originate from within the Company’s organization.
The Company also faces the risk of operational disruption, failure, termination, or capacity constraints of any of the third parties that facilitate the Company’s business activities, including vendors, exchanges, clearing agents, clearing houses, or other financial intermediaries. Such parties could also be the source or cause of an attack on, or breach of, the Company’s operational systems, data or infrastructure. In addition, the Company may be at risk of an operational failure with respect to its customers’ systems. The Company’s risk and exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, the outsourcing of many of the Company’s business operations, and the continued uncertain global economic environment. As cyber threats continue to evolve, the Company may be required to expend significant additional resources to continue to modify or enhance its protective measures or to investigate and remediate any information security vulnerabilities.
The Company maintains insurance policies that it believes provide reasonable coverage at a manageable expense for an institution of the Company’s size and scope with similar technological systems. However, the Company cannot assure that these policies will afford coverage for all possible losses or would be sufficient to cover all financial losses, damages, penalties, including lost revenues, should the Company experience any one or more of its or a third party’s systems failing or experiencing an attack.
The Company relies on third parties to provide key components of its business infrastructure.
The Company relies on third parties to provide key components for its business operations, such as data processing and storage, recording and monitoring transactions, online banking interfaces and services, internet connections, and network access. While the Company selects these third-party vendors carefully, it does not control their actions. Any problems caused by these third parties, including those resulting from breakdowns or other disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher volumes, cyber-attacks and security breaches at a vendor, failure of a vendor to provide services for any reason, or poor performance by a vendor, could adversely affect the Company’s ability to deliver

products and services to its customers and otherwise conduct its business. Financial or operational difficulties of a third-party vendor could also hurt the Company’s operations if those difficulties interfere with the vendor's ability to serve the Company. Replacing these third party vendors also could create significant delays and expense. Any of these things could adversely affect the Company’s business and financial performance.
A change in the Company’s creditworthiness could increase the Company’s cost of funding or adversely affect its liquidity.
Market participants regularly evaluate the Company’s creditworthiness and the creditworthiness of the Company’s long-term debt based on a number of factors, some of which are not entirely within the Company’s control, including the Company’s financial strength and the financial services industry generally. There can be no assurance that the Company's perceived creditworthiness will remain the same. Changes could adversely affect the cost and other terms upon which the Company is able to obtain funding and its access to the capital markets, and could increase the Company’s cost of capital. Likewise, any loss of or decline in the credit rating assigned to WAB could impair its ability to attract deposits or to obtain other funding sources, or increase its cost of funding.
The Company may not be able to keep pace with its growth by improving its controls and processes, and its reporting systems and procedures, which could cause it to experience compliance and operational problems or lose customers, or incur additional expenditures beyond current projections, any one of which could adversely affect the Company’s financial results.
The Company’s future success will depend on the ability of officers and other key employees to continue to implement and improve operational, credit, financial, management and other internal risk controls and processes, and improve reporting systems and procedures, while at the same time maintaining and growing existing businesses and client relationships. The Company may not successfully implement such changes or improvements in an efficient or timely manner, or it may discover deficiencies in its existing systems and controls that adversely affect the Company’s ability to grow its existing businesses and client relationships and could require the Company to incur additional expenditures to expand its administrative and operational infrastructure. If the Company is unable to maintain and implement improvements to its controls, processes, and reporting systems and procedures, the Company may lose customers, experience compliance and operational problems or incur additional expenditures beyond current projections, any one of which could adversely affect the Company’s financial results.
The Company’s expansion strategy may not prove to be successful and its market value and profitability may suffer.
The Company continually evaluates expansion through acquisitions of banks and other financial businesses. Like previous acquisitions by the Company, any future acquisitions will be accompanied by risks commonly encountered in such transactions, including, among other things:
time and expense incurred while identifying, evaluating and negotiating potential acquisitions and transactions;
difficulty in accurately estimating the value of target companies or assets and in evaluating target companies or assets’ credit, operations, management, and market risks;
potential payment of a premium over book and market values that may cause dilution of the Company’s tangible book value or earnings per share;
exposure to unknown or contingent liabilities of the target company;
potential exposure to asset quality issues of the target company;
difficulty of integrating the operations and personnel;
potential disruption of the Company’s ongoing business;
failure to retain key personnel at the acquired business;
inability of the Company’s management to maximize its financial and strategic position by the successful implementation of uniform product offerings and the incorporation of uniform technology into the Company’s product offerings and control systems; and
failure to realize any expected revenue increases, cost savings, and other projected benefits from an acquisition.
The Company expects that competition for suitable acquisition candidates may be significant. The Company may compete with other banks or financial service companies with similar acquisition strategies, many of which are larger and have greater financial and other resources. The Company cannot assure that it will be able to successfully identify and acquire suitable

acquisition targets on acceptable terms and conditions, or that it will be able to obtain the regulatory approvals needed to complete any such transactions.
The Company cannot provide any assurance that it will be successful in overcoming these risks or any other problems encountered in connection with acquisitions. Potential regulatory enforcement actions could also adversely affect the Company's ability to engage in certain acquisition activities. The Company’s inability to overcome the risks inherent in the successful completion and integration of acquisitions could have an adverse effect on the achievement of the Company's business strategy.
There are substantial risks and uncertainties associated with the introduction or expansion of lines of business or new products and services within existing lines of business.
From time to time, the Company may implement new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. In developing and marketing new lines of business and/or new products and services, the Company may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved and price and profitability targets may not prove attainable. External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service. Furthermore, any new line of business and/or new product or service could have a significant impact on the effectiveness of the Company’s system of internal controls. Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on the Company’s business, results of operations, and financial condition.
The Company’s future success depends on its ability to compete effectively in a highly competitive market.
The Company faces substantial competition in all phases of its operations from a variety of different competitors. The Company’s competitors, including large commercial banks, community banks, thrift institutions, mutual savings banks, credit unions, finance companies, insurance companies, securities dealers, brokers, mortgage bankers, investment advisors, money market mutual funds, and other financial institutions, compete with lending and deposit-gathering services offered by the Company. Increased competition in the Company’s markets may result in reduced loans and deposits or less favorable pricing.
There is competition for financial services in the markets in which the Company conduct its businesses, including from many local commercial banks, as well as numerous national and regionally based commercial banks. In particular, the Company has experienced intense price and terms competition in some of the lending lines of business in recent years. Many of these competing institutions have much greater financial and marketing resources than the Company has. Due to their size, larger competitors can achieve economies of scale and may offer a broader range of products and services or more attractive pricing than the Company. In addition, some of the financial services organizations with which the Company competes are not subject to the same degree of regulation as is imposed on bank holding companies and federally insured depository institutions. As a result, these non-bank competitors have certain advantages over the Company in accessing funding and in providing various services.
The banking business in the Company’s primary market areas is very competitive, and the level of competition facing the Company may increase further, which may limit its asset growth and financial results. In particular, the Company's predominate source of revenue is net interest income from its loan portfolio. Therefore, if the Company is unable to compete effectively, including sustaining loan and deposit growth at its historical levels, its business and results of operations may be adversely affected.
The Company’s success is dependent upon its ability to recruit and retain qualified employees, including members of its divisional and business line leadership and management teams.
The Company’s business plan includes and is dependent upon hiring and retaining highly qualified and motivated executives and employees at every level. In particular, the Company’s relative success to date has been partly the result of its management’s ability to identify and retain highly qualified employees in both administrative support roles, as well as those with expertise in certain specialty areas, or that have long-standing relationships in their communities. These professionals bring with them valuable knowledge, specialized skills and expertise, and customer relationships and have been an integral part of the Company’s ability to attract deposits and to expand its market share.
Additionally, as part of the Company's strategy, the Company depends on divisional and business line leadership and management teams in each of its significant geographic locations. In addition to their skills and experience as bankers, these persons provide the Company with extensive ties within markets upon which the Company’s competitive strategy is based.

The Company’s ability to retain these highly qualified and motivated persons may be hindered by the fact that it has not entered into employment agreements with most of them. The Company incentivizes employee retention through its equity incentive plans; however, the Company cannot guarantee the effectiveness of its equity incentive plans in retaining these key employees and executives. Were the Company to lose key employees, it may not be able to replace them with equally qualified persons who bring the same knowledge of and ties to the communities and markets within which the Company operates. If the Company is unable to hire or retain qualified employees, it may not be able to successfully execute its business strategy or may incur additional costs to achieve its objectives.
The Company could be harmed if its succession planning is inadequate to mitigate the loss of key members of its senior management team.
The Company believes that its senior management team, including, but not limited to, Robert Sarver, Chairman and CEO, have contributed greatly to its performance. Mr. Sarver is currently in the process of transitioning to a new role as Executive Chairman, and the current President, Kenneth Vecchione, will become the CEO on April 1, 2018. In addition, the Company from time to time experiences retirements and other changes to its senior management team, including the recent appointment of James Haught as President of the Company effective April 1, 2018. The Company's future performance depends on a smooth transition of its senior management, including finding and training highly qualified replacements who are properly equipped to lead the Company. The Company has adopted retention strategies, including equity awards, from which its senior management team benefits in order to achieve its goals, and employment agreements with each of Messrs. Vecchione and Haught. However, the Company cannot assure its succession planning and retention strategies will be effective. The loss of senior management, particularly during this transition period, could have an adverse effect on the Company’s business.
The Company's risk management practices may prove to be inadequate or not fully effective.
The Company's risk management framework seeks to mitigate risk and appropriately balance risk and return. The Company has established policies and procedures intended to identify, monitor, and manage the types of risk to which it is subject, including, but not limited to, credit risk, market risk, liquidity risk, operational risk, compliance risk, and reputational risk. A BOD level risk committee approves and reviews the Company's risk management policies and oversees operation of the Company's risk management framework. Although the Company has devoted significant resources to developing its risk management policies and procedures and expects to continue to do so in the future, these policies and procedures, as well as the Company's risk management techniques, may not be fully effective. In addition, as regulations and the markets in which the Company operates continue to evolve, the Company's risk management framework may not always keep sufficient pace with those changes. If the Company's risk management framework does not effectively identify or mitigate its risks, the Company could suffer unexpected losses and could be materially adversely affected. Management of the Company's risks in some cases depends upon the use of analytical and/or forecasting models. If the models the Company uses to mitigate these risks are inadequate, or are subject to ineffective governance policies, the Company may incur increased losses. In addition, there may be risks that exist, or that develop in the future, that the Company has not appropriately anticipated, identified, or mitigated.

The Company's internal controls and procedures may fail or be circumvented and the accuracy of the Company's judgments and estimates about financial and accounting matters may impact operating results and financial condition.
The Company's management regularly reviews and updates its internal control over financial reporting, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls and procedures, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met.  Any failure or circumvention of the Company's controls and procedures or failure to comply with regulations related to controls and procedures could result in materially inaccurate reported financial statements and/or have a material adverse effect on the Company's business, results of operations, and financial condition. Similarly, the Company's management makes certain estimates and judgments in preparing the Company's financial statements.  The quality and accuracy of those estimates and judgments will impact the Company's operating results and financial condition.
If the Company is unable to understand and adapt to technological change, the Company’s business could be adversely affected.
The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology can increase efficiency and enable financial institutions to better serve customers and to reduce costs. However, some new technologies needed to compete effectively result in incremental operating costs. The Company’s future success depends, in part, upon its ability to address the needs of its customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in operations. Many of the Company’s competitors, because of their larger size and available capital, have substantially greater resources to invest in technological improvements. The Company may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to its customers. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on the Company’s business and, in turn, itsour financial condition and results of operations.
The markets inOur credit linked notes do not ensure full protection against credit losses, and as such we could still incur significant credit losses on loans for which the Company operatesrisk of loss has been transferred pursuant to these transactions.
We have entered into transactions to mitigate exposure to losses on our loan portfolio. These transactions are subject tostructured as credit linked notes, which transfer the risk of both naturalfirst losses on covered loans to these note holders. These notes have an aggregate principal amount of $459.9 million on a $9.1 billion reference pool of warehouse and manmade disasters.
Manyequity fund resource loans and residential mortgages. Pursuant to these arrangements, in the event of borrower default, the principal balance of the real and personal properties securingnotes will be reduced by the Company's loans are located in California. California recently experienced significant wildfires and mudslides causing significant damage throughoutamount of the state. While these wildfires and mudslides did not significantly damage the Company's own properties, it is possible that its borrowers may experience losses as a result of these natural disasters, which may materially impair their ability to meet the terms of their obligations. California is also prone to other natural disasters, including, but not limited to drought, earthquakes, and flooding. Moreover, due to changes in the international political climate, it has been made known that were a foreign nation, such as North Korea, to attack the United States, it would likely target the state of California. Additional significant natural or manmade disasters in the state of California or in the Company's other markets could lead to damage or injuryloss, up to the Company's own properties and/or employees, and could increase the risk that many of its borrowers may experience losses or sustained job interruption, which may materially impair their ability to meet the terms of their loan obligations. Therefore, additional natural disasters, manmade disaster or catastrophic event, or a combination of these or other factors, in anyamount of the Company's markets could have a material adverse effect onaggregate principal of the Company's business,notes. However, all residual risk over and above the first loss position is retained by us. While current estimates of future credit losses are below the first loss position, no assurances can be given that future losses will not exceed the first loss position and, if credit losses were to exceed the first loss position, our financial condition and results of operations and cash flows.
Risks Related to the Banking Industry
The Company operates in a highly regulated environment and the laws and regulations that govern the Company’s operations, corporate governance, executive compensation, and accounting principles, or changes in them, or the Company’s failure to comply with them, may adversely affect the Company.
The Company is subject to extensive regulation, supervision, and legislation that govern almost all aspects of its 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 the Company can engage, require monitoring and reporting of suspicious activity, limit the dividends or distributions that WAB can pay to the Company or that the Company can pay to its stockholders, restrict the ability of affiliates to guarantee the Company’s debt, impose certain specific accounting requirements on the Company that may be more restrictive and may result in greater or earlier charges to earnings or reductions in the Company’s capital than GAAP, among other things. Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations often impose significant additional compliance costs. To the extent the Company continues to grow larger and become more complex, regulatory oversight and risk and the cost of compliance will likely increase, which may adversely affect the Company. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Supervision and Regulation” included in this Form 10-K for a more detailed summary of the regulations and supervision to which the Company are subject.

Changes to the legal and regulatory framework governing the Company’s operations, including the passage and continued implementation of the Dodd-Frank Act, have drastically revised the laws and regulations under which the Company operates. In general, bank regulators have increased their focus on risk management and regulatory compliance, and the Company expects this focus to continue. Additional compliance requirements may be costly to implement, may require additional compliance personnel, and may limit the Company’s ability to offer competitive products to its customers.
The Company is also subject to changes in federal and state law, as well as regulations and governmental policies, income tax laws, and accounting principles. Regulations affecting banks and other financial institutions are undergoing continuous review and frequently change, and the ultimate effect of such changes cannot be predicted. Regulations and laws may be modified at any time, and new legislation may be enacted that will affect the Company, WAB, and the Company’s other subsidiaries. Any changes in any federal and state law, as well as regulations and governmental policies, income tax laws, and accounting principles, could affect the Company in substantial and unpredictable ways, including ways that may adversely affect the Company’s business, financial condition, or results of operations. Failure to appropriately comply with any such laws, regulations or principles or an alleged failure to comply, even if the Company acted in good faith or the alleged failure reflects a difference in interpretation, could result in sanctions by regulatory agencies, civil money penalties or damage to the Company’s reputation, all of which could adversely affect the Company’s business, financial condition, or results of operations.
State and federal banking agencies periodically conduct examinations of the Company’s business, including for compliance with laws and regulations, and the Company’s failure to comply with any supervisory actions to which the Company is or becomes subject as a result of such examinations may adversely affect the Company.
State and federal banking agencies periodically conduct examinations of the Company’s business, including for compliance with laws and regulations. If, as a result of an examination, an agency were to determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of any of the Company’s operations had become unsatisfactory, or that any of the Company’s banks or their management was in violation of any law or regulation, federal banking agencies may take a number of different remedial or enforcement actions it deems appropriate to remedy such a deficiency. These actions include the power to enjoin “unsafe or unsound” practices, to require affirmative actions to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in the bank’s capital, to restrict the bank’s growth, to assess civil monetary penalties against the bank’s officers or directors, to remove officers and directors and, if the FDIC concludes that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate the bank’s deposit insurance. Under Arizona law, the state banking supervisory authority has many of the same enforcement powers with respect to its state-chartered banks. Finally, the CFPB has the authority to examine the Company and has authority to take enforcement actions, including the issuance of cease-and-desist orders or civil monetary penalties against the Company if it finds that the Company offers consumer financial products and services in violation of federal consumer financial protection laws or in an unfair, deceptive, or abusive manner.
If the Company were unable to comply with regulatory directives in the future, or if the Company were unable to comply with the terms of any future supervisory requirements to which the Company may become subject, then it could become subject to a variety of supervisory actions and orders, including cease and desist orders, prompt corrective actions, MOUs, and/or other regulatory enforcement actions. If the Company’s regulators were to take such supervisory actions, then the Company could, among other things, become subject to restrictions on its ability to make acquisition and develop any new business, as well as restrictions on its existing business, and the Company could be required to raise additional capital, dispose of certain assets and liabilities within a prescribed period of time, or both. Failure to implement the measures in the time frames provided, or at all, could result in additional orders or penalties from federal and state regulators, which could result in one or more of the remedial actions described above. In the event WAB was ultimately unable to comply with the terms of a regulatory enforcement action, it could ultimately fail and be placed into receivership by the chartering agency. The terms of any such supervisory action and the consequences associated with any failure to comply therewith could have a material negative effect on the Company’s business, operating flexibility, and financial condition.
Changes in interest rates and increased rate competition could adversely affect the Company’s profitability, business, and prospects.
Most of the Company’s assets and liabilities are monetary in nature, which subjects the Company to significant risks from changes in interest rates and can impact the Company’s net income and the valuation of its assets and liabilities. Increases or decreases in prevailing interest rates could have an adverse effect on the Company’s business, asset quality, and prospects. The Company’s operating income and net income depend to a great extent on its net interest margin. Net interest margin is the difference between the interest yields the Company receives on loans, securities, and other earning assets and the interest rates the Company pays on interest bearing deposits, borrowings, and other liabilities. These rates are highly sensitive to many factors beyond the Company’s control, including competition, general economic conditions, and monetary and fiscal policies of various governmental and regulatory authorities, including the FRB. If the rate of interest the Company pays on its interest

bearing deposits, borrowings, and other liabilities increases more than the rate of interest the Company receives on loans, securities, and other earning assets increases, the Company’s net interest income, and therefore its earnings, would be adversely affected. The Company’s earnings also could be adversely affected if the rates on the Company’s loans and other investments falleffected. We may enter into more quickly than those on its deposits and other liabilities. The Company has recently experienced increased competition for loans on the basis of interest rates.
In addition, loan volumes are affected by market interest rates on loans. Rising interest rates generally are associated with a lower volume of loan originations, while lower interest rates are usually associated with higher loan originations. Conversely, in rising interest rate environments, loan repayment rates will decline and in falling interest rate environments, loan repayment rates will increase. The Company cannot guarantee that it will be able to minimize interest rate risk. In addition, an increasesuch transactions in the general level of interest rates may adversely affect the ability of certain borrowers to pay the interest on and principal of their obligations.future.
Interest rates also affect how much money the Company can lend. When interest rates rise, the cost of borrowing increases. Accordingly, changes in market interest rates could materially and adversely affect the Company’s net interest spread, asset quality, loan origination volume, business, financial condition, results of operations, and cash flows.
The Company isWe are exposed to risk of environmental liabilities with respect to properties to which the Company obtainswe obtain title.
Approximately 54%62% of the Company’sour loan portfolio at December 31, 20172023 was secured by real estate. In the course of the Company’sour business, the Companywe may foreclose on and take title to real estate, and could be subject to environmental liabilities with respect to these properties. The CompanyWe may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation, and clean-up costs incurred by these parties in connection with environmental contamination, or may be required to investigate or clean up hazardous or toxic substances, or chemical releases at a property. The costs associated with investigation or remediation activities could be substantial. In addition, if the Company iswe are the owner or former owner of a contaminated site, the Companywe may be subject 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 substantial and adversely affect the Company’sour business and prospects.
Strategic Risks Related
Our future success depends on our ability to compete effectively in a highly competitive and rapidly evolving market.
We face substantial competition in all phases of our operations from a variety of different competitors. Our competitors, including money center banks, national and regional commercial banks, community banks, thrift institutions, mutual savings banks, credit unions, finance companies, insurance companies, securities dealers, brokers, mortgage bankers, investment advisors, money market mutual funds, financial technology companies and other financial institutions, compete with lending and deposit-gathering services offered by us. Increased competition in our markets or our inability to compete effectively may result in reduced loans and deposits or less favorable pricing.
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 competing institutions have much greater financial and marketing resources than we have. Due to their size and brand recognition, larger competitors can achieve economies of scale and may offer a broader range of products and services or more attractive pricing than us. In addition, some of the financial services organizations we compete with are not subject to the Company's Common Stocksame degree of regulation as is imposed on bank holding companies and federally insured depository institutions. As a result, these non-bank competitors have certain advantages over us in accessing funding and in providing various services.
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The banking business in our primary market areas is very competitive, and the level of competition facing us may increase further, which may limit our asset growth and financial results. In particular, our predominate source of revenue is net interest income. Therefore, if we are unable to compete effectively, including sustaining loan and deposit growth at our historical levels, our business and results of operations may be adversely affected.
The financial services industry is also facing increasing competitive pressure from the introduction of disruptive new technologies such as blockchain and digital payments, often by non-traditional competitors and financial technology companies. Among other things, technology and other changes are allowing customers to complete financial transactions that historically have involved banks at one or both ends of the transaction. The elimination of banks as intermediaries for certain transactions, as well as further disruption of traditional bank businesses and products by non-banks, could result in the loss of fee income and deposits and otherwise adversely affect our business and results.
Our expansion strategy may not prove to be successful and our market value and profitability may suffer.
We continually evaluate expansion through acquisitions of banks and other financial assets and businesses. Like previous acquisitions by us such as the acquisition of AmeriHome in 2021 and DST in 2022, any future acquisitions will be accompanied by risks commonly encountered in such transactions, including, among other things:
•time and expense incurred while identifying, evaluating and negotiating potential acquisitions and transactions;
•difficulty 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 liabilities of the target company;
•potential exposure to asset quality issues of the target company;
•difficulty of integrating the operations and personnel;
•potential disruption of our ongoing business;
•failure to retain key personnel of the acquired business;
•inability of our management to maximize our financial and strategic position by the successful implementation of uniform product offerings and the incorporation of uniform technology into our product offerings and control systems; and
•failure to realize any expected revenue increases, cost savings, and other projected benefits from an acquisition.
We expect competition for suitable acquisition candidates may be significant. We may compete with other banks or financial service companies with similar acquisition strategies, many of which are larger and have greater financial and other resources. We cannot assure we will be able to successfully identify and acquire suitable acquisition targets on acceptable terms and conditions, or that we will be able to obtain the regulatory approvals needed to complete any such transactions.
We cannot provide any assurance we will be successful in overcoming these risks or any other problems encountered in connection with acquisitions. Potential regulatory enforcement actions could also adversely affect our ability to engage in certain acquisition activities. Our inability to overcome the risks inherent in the successful completion and integration of acquisitions could have an adverse effect on the achievement of our business strategy.
There are substantial risks and uncertainties associated with the introduction or expansion of lines of business or new products and services within existing lines of business.
From time to time, we may implement new lines of business, offer new products and services within existing lines of business, or offer existing products or services to new industries, geographies, or market segments. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed or industries are heavily regulated. In developing and marketing new lines of business and/or new products and services, we may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved and price and profitability targets may not prove attainable. External factors, such as compliance with laws and regulations, competitive alternatives, and shifting market preferences or government policies, may also impact the successful implementation of a new line of business, product or service or the offering of existing products and services to an emerging industry. Furthermore, any new line of business and/or new product or service could have a significant impact on the effectiveness of our system of internal controls. Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on our business, results of operations, and financial condition.
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We are pursuing digital payments initiatives which are subject to significant uncertainty and could adversely affect our business, reputation, or financial results.
We are pursuing digital payments initiatives, including our 2022 acquisition of DST, a digital payments platform for the class action legal industry, and implementation of a fully integrated digital banking platform for our customers. The digital payments products and services we offer may use or rely on blockchain-based technologies or assets. Use of blockchain-based technologies in payments are a relatively new and unproven technology, and the laws and regulations surrounding them are uncertain and evolving. Blockchain and digital payment technology has drawn significant scrutiny from governments and regulators in multiple jurisdictions and we expect that scrutiny to continue. Any changes in such laws and regulations applicable to, or scrutiny directed at, our products and services may impede or delay the offering of digital payments solutions, increase our operating costs, require significant management time and attention, or otherwise harm our business or results of operations.
In addition, market acceptance of digital payments products and services is subject to significant uncertainty. As such, there can be no assurance the digital payments products and services we offer and the technologies we have chosen to implement will be accepted and desired by customers. We do not have significant prior experience with blockchain-based technology, which may adversely affect our ability to successfully integrate and market such digital payments products and services. We also will continue to incur increased costs in connection with these efforts, and our investments may not be successful. Any of these events could adversely affect our business, reputation, or financial results.
Our success is dependent upon our ability to recruit and retain qualified employees, including members of our leadership and management teams.
Our business plan includes and is dependent upon hiring and retaining highly qualified and motivated executives and employees at every level. In particular, our relative success to date has been partly the result of our management’s ability to identify and retain highly qualified 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 markets, including with respect to our business-to-business mortgage platform. These professionals bring with them valuable knowledge, specialized skills and 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 market share. We have not entered into employment agreements with most of our employees and competition for talent in our industry is strong. The labor market is currently challenging, with high employee turnover and increased wage pressure. In addition, the proliferation of hybrid work environments, may exacerbate the challenges of attracting and retaining talented and diverse employees as job markets may be less constrained by physical geography. We incentivize employee retention through our equity incentive plans; however, we cannot guarantee the effectiveness of our equity incentive plans in retaining these key employees and executives. Were we to lose key employees, we may not be able to replace them with equally qualified persons who bring the same skills and knowledge of and ties to the communities and markets where we operate. If we are unable to retain qualified employees or hire new qualified employees to keep up with or outpace employee turnover, we may not be able to successfully execute our business strategy or may incur additional costs to achieve our objectives.
We could be harmed if our succession planning is inadequate to mitigate the loss of key members of our senior management team.
We believe our senior management team has contributed greatly to our performance. In addition, we from time to time experience retirements and other changes to our senior management team. Our future performance depends on a smooth transition of our senior management, including finding and training highly qualified replacements who are properly equipped to lead us. We have adopted retention strategies, including equity awards, from which our senior management team benefits in order to achieve our goals. However, we cannot assure our succession planning and retention strategies will be effective and the loss of senior management could have an adverse effect on our business.
Capital and Liquidity Risks
We are subject to capital adequacy standards and liquidity rules, and a failure to meet these standards could adversely affect our financial condition.
WAL and WAB are each subject to capital adequacy and liquidity rules and other regulatory requirements specifying minimum amounts and types of capital 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 guidelines and other regulatory requirements, we may be restricted in the types of activities we may conduct and may be prohibited from taking certain capital actions, such as paying executive bonuses or dividends and repurchasing or redeeming capital securities. At December 31, 2023, our CET1 ratio was 10.8%. While this ratio is above the well-capitalized regulatory ratio threshold of 6.5%, it is still below our target capital level.
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As we continue to focus on building our capital ratios, we may need to issue additional equity capital or reduce the pace at which we are growing in order to increase our CET1 and other capital ratios.
If we lose a significant portion of our core deposits or a significant deposit relationship, or our cost of funding deposits increases significantly, our liquidity and/or profitability would be adversely impacted.
Our success depends on our ability to maintain sufficient liquidity to fund our current obligations and support loan growth and, specifically, to attract and retain a stable base of relatively low-cost deposits. Shortly following the closures of Silicon Valley Bank and Signature Bank in March 2023, we and certain other banks experienced a brief period of elevated deposit withdrawals. While we cannot know for certain with respect to all withdrawals, we believe the elevated withdrawals were at least in part due to certain perceived similarities between our loan portfolio and deposit gathering activities and those of the aforementioned banks. Our deposit balances stabilized as of March 20, 2023 and from that date through December 31, 2023 deposits increased, and were up $1.7 billion, or 3.1%, from December 31, 2022. During this time, we took additional measures to ensure liquidity, strengthen our capital position and increase customer confidence, which included increasing our borrowing capacity with the FRB, selling certain assets and strengthening our insured and collateralized deposit ratio from 47% as of December 31, 2022 to 80% as of December 31, 2023. We also participated in the BTFP where the company borrowed $1.3 billion, all of which was repaid as of December 31, 2023.
Moreover, the competition for these relatively low-cost deposits in our markets is strong and customers may demand higher interest rates on their deposits or seek other investments offering higher rates of return. Additionally, we may accept brokered deposits, which may be more price sensitive than other types of deposits and may become less available if alternative investments offer higher returns. We offer reciprocal deposit products through third party networks to customers seeking federal insurance for deposit amounts exceeding the applicable deposit insurance limit at a single institution. We also from time to time offer other credit enhancements to depositors, such as FHLB letters of credit and, for certain deposits of public monies, pledges of collateral in the form of readily marketable securities. Any event or circumstance that interferes with or limits our ability to offer these products to customers that require greater security for their deposits, such as a significant regulatory enforcement action or a significant decline in capital levels at our bank subsidiary, could negatively impact our ability to attract and retain deposits.
Although our deposits have stabilized and increased since we experienced the period of elevated withdrawals, we cannot be assured similar unusual deposit withdrawal activity will not affect banks generally or us in the future. If we were to lose a significant deposit relationship or a significant portion of our low-cost deposits, our liquidity would be adversely impacted. Additionally, if the Company’s borrowings increase or remain elevated in future periods, our net interest margin and profitability may be adversely impacted.
We may be required to repurchase mortgage loans or indemnify investors under certain circumstances.
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 substitute loan and/or indemnify secondary 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. Significant indemnification or repurchase activity on securitized or sold loans without offsetting recourse to a counterparty from which the loan was purchased could have a material adverse effect on our financial condition and results of operations.
We utilize borrowings from the FHLB and the FRB, and there can be no assurance these programs will be available as needed.
As of December 31, 2023, we have $6.2 billion of borrowings from the FHLB of San Francisco and no borrowings from the FRB. We utilize borrowings from the FHLB of San Francisco and the FRB to satisfy short-term liquidity needs. Our borrowing capacity is generally dependent on the value of our collateral pledged to these entities. These lenders could reduce our borrowing capacity or eliminate certain types of collateral and could otherwise modify or terminate their loan programs. Any change to or termination of these programs could have an adverse effect on our liquidity and profitability.
A change in our creditworthiness could increase our cost of funding or adversely affect our liquidity.
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 financial services industry generally. There can be no assurance that our perceived creditworthiness will remain the same. Changes could adversely affect the cost and other terms upon which we are able to obtain funding and our access to the capital markets, and could increase our cost of capital. Likewise, any loss of or decline in the credit rating assigned to us could impair our ability to attract deposits or to obtain other funding sources, or increase our cost of funding.
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Operational and Technological Risks
A failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors and other service providers, including as a result of cyber-attacks, could disrupt our businesses, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs, and cause losses.
Our operations rely on the secure processing, storage, and transmission of confidential 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, integrity, and security of our customers’ information across all geographies and product lines, and endeavor to modify these protective measures as circumstances warrant, the nature of cyber threats continues to evolve. As a result, our computer systems, software, and networks and those of our customers and third-party vendors may be vulnerable to unauthorized payments and account access, loss or destruction of data (including confidential client information), 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 significant losses to us and/or our customers. These threats may originate externally from increasingly sophisticated third parties, including foreign governments, organized criminal groups, and other hackers, or from outsourced or infrastructure-support providers and application developers, or the threats may originate from within our organization.
We also face the risk of operational disruption, failure, termination, or capacity constraints of any of the third parties that facilitate our business activities, including vendors, exchanges, clearing agents, clearing houses, or other financial intermediaries. Such parties could also be the source or cause of an attack on, or breach of, our operational systems, data or infrastructure. The rapid evolution and increased adoption of artificial intelligence technologies has also given rise to additional vulnerabilities and potential entry points for cyber threats. In addition, we may be at risk of an operational failure with respect to our customers’ systems. Our risk and exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, the outsourcing of many of our business operations, and the continued uncertain global economic environment. As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities.
We maintain insurance policies that we believe provide reasonable coverage for an institution of our size and scope with similar technological systems. However, we cannot assure that these policies will afford coverage for all possible losses or would be sufficient to cover all financial losses, damages, or penalties, including lost revenues, should we experience any one or more of our or a third party’s systems failing or experiencing an attack.
We rely on third parties to provide key components of our business infrastructure.
We rely on third parties to provide key components for our business operations, such as data processing and storage, recording and monitoring transactions, online banking interfaces 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 disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher volumes, cyber-attacks and security breaches at a vendor, failure of a vendor to provide services for any reason, or poor performance by a vendor could adversely affect our ability to deliver products and services to our customers and otherwise conduct our business. Financial or operational difficulties of a third-party vendor could also impact our operations if those difficulties interfere with their ability to serve us. Replacing third-party vendors could create significant delays and expense and there is no guarantee that such replacement vendors will be available at comparable rates, on similar terms, or in a timely manner, if at all. Any of these things could adversely affect our business and financial performance.
Our business may be adversely affected by fraud.
As a financial institution, we are inherently exposed to a wide range of operational risks, including, but not limited to, theft and other fraudulent activity by employees, customers, and other third parties targeting us and/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.
Although we devote substantial resources to maintaining effective policies and internal controls to identify and prevent such incidents, given the persistence and increasing sophistication of possible perpetrators, we may experience financial losses or reputational harm as a result of fraud.
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Our controls and processes, our reporting systems and procedures, and our operational infrastructure may not be able to keep pace with our growth, which could cause us to experience compliance and operational problems, lose customers, or incur additional expenditures, any one of which could adversely affect our financial results.
Our future success will depend on the ability of officers and other key employees to effectively 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. We may not successfully implement such changes or improvements in an efficient or timely manner, or we may discover deficiencies in our existing systems and controls that adversely affect our ability to support and grow our existing businesses and client relationships, and could require us to incur additional expenditures to expand our administrative and operational infrastructure. If we are unable to maintain and implement improvements to our controls, processes, and reporting systems and procedures, we may lose customers, experience compliance and operational problems or incur additional expenditures beyond current projections, any one of which could adversely affect our financial results.
The discontinuation of, or substantial change to, an interest rate benchmark we use in lending, borrowing or hedging may adversely affect our business.
We use various interest rate benchmarks in our lending, borrowing and hedging activities. An interest rate benchmark we use in lending, borrowing or hedging may be discontinued or substantially changed in the future. For example, effective January 1, 2022, the administrator of LIBOR ceased the publication of one-week and two-month U.S. dollar LIBOR, and immediately after June 30, 2023, the administrator of LIBOR ceased the publications of the remaining tenors of U.S. dollar LIBOR (one, three, six, and 12-month). Additionally, on November 15, 2023, the Bloomberg Index Services Limited announced the permanent cessation of the Bloomberg Short-Term Bank Yield Index, effective November 15, 2024.
Transitioning away from an interest rate benchmark to alternative reference rates is complex and could have a range of adverse effects on our business, financial condition and results of operations. In particular, the transition could:
•adversely affect the interest rates received or paid on the value of our assets and liabilities that are based on the discontinued interest rate benchmark compared to the rate received or paid based on the alternative benchmark rates;
•adversely affect the interest rates received or paid on the value of other securities or financial arrangements;
•result in charges to the financial statements and obligation to "de-designate" certain interest rate swaps used in hedges of certain loans indexed to the discontinued interest rate benchmark;
•prompt inquiries or other actions from regulators in respect of our preparation and readiness for the replacement of the discontinued interest rate benchmark with an alternative reference rate; and
•result in disputes, litigation or other actions with borrowers or counterparties about the transition to an alternative reference rate.
The transition away from a discontinued interest rate benchmark to an alternative reference rate would require the transition to or development of appropriate systems, models and analytics to effectively transition our risk management and other processes to products based on the applicable alternative reference rate. Such an undertaking would be time consuming and costly. Despite such efforts, the manner and impact of the transition and related developments, as well as the effect of such developments on our funding costs, investment and trading securities portfolios, and business, would be uncertain and could have a material adverse impact on our profitability.
Our risk management practices may prove to be inadequate or ineffective.
Our risk management framework seeks to mitigate risk while appropriately balancing risk and return. We have established policies and procedures intended to identify, monitor, and manage the types of risk to which we are subject, 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 of our risk management framework. Although we have devoted significant resources to developing our risk management policies and procedures and expect to continue to do so in the future, these policies and procedures, as well as our risk management techniques, may be ineffective. In addition, as regulations and the markets in which we operate continue to evolve, our risk management framework may not keep sufficient pace with those changes. If our risk management framework does not effectively identify or mitigate significant or material risks, we could suffer unexpected losses or other material adverse impacts. Management of our risks in some cases depends upon the use of analytical and/or forecasting models. If the models we use to mitigate these risks are inadequate, or are subject to ineffective governance, we may incur increased losses. In addition, there may be risks that exist, or that develop in the future, that we have not appropriately anticipated, identified, or mitigated.
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Our internal controls and procedures may fail or be circumvented and the accuracy of judgments and estimates about financial and accounting matters may impact operating results and financial condition.
Our management regularly reviews and updates internal controls over financial reporting, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls and procedures, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of controls and procedures, or failure to comply with regulations related to controls and procedures, could result in materially inaccurate reported financial statements and/or have a material adverse effect on our business, results of operations, and financial condition. Similarly, our management makes certain estimates and judgments in preparing financial statements. The quality and accuracy of those estimates and judgments will impact operating results and financial condition.
If we are unable to understand and adapt to technological change and implement new technology-driven products and services, our business could be adversely affected.
The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. We expect new technologies will continue to emerge and may be superior to or render obsolete the technologies currently used in our products and services. Our future success depends in part upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies 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 incorporating them into our products and services may require significant investment, take considerable time, and ultimately may not be successful. We cannot predict which technological developments or innovations will become widely adopted or how those technologies may be regulated. We also may not be able to effectively market new technology-driven products and services to our customers. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on our business and, in turn, our financial condition and results of operations.
Legal and Compliance Risks
We operate in a highly regulated environment and the laws and regulations that govern our operations, corporate governance, executive compensation, and accounting principles, or changes in them, or our failure to comply with them, may adversely affect us.
We 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, limit the dividends or distributions that WAB can pay to WAL or that we can pay to our stockholders, restrict the ability of affiliates to guarantee our debt, impose certain specific accounting requirements on us that may be more restrictive and result in greater or earlier charges to earnings or reductions in our capital than prescribed by GAAP, among other things. Our mortgage warehouse lending operations subject 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 subject to federal, state and local laws, regulations and judicial and administrative decisions, including those designed to discourage predatory lending and regulate collections and servicing practices with respect to mortgage loans.
Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations often impose significant additional compliance costs. To the extent we continue to grow and become more complex, regulatory oversight, risk management, and the cost of compliance will likely increase, which may adversely affect us. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Supervision and Regulation” included in this Form 10-K for a more detailed summary of the regulations and supervision to which we are subject.
Changes to the legal and regulatory framework governing our operations, including the passage and continued implementation of the Dodd-Frank Act and EGRRCPA, have drastically revised the laws and regulations under which we operate. In general, bank regulators have increased their focus on risk management and regulatory compliance, and we expect this focus to continue. Additional compliance requirements may be costly to implement, may require additional compliance personnel, and may limit our ability to offer competitive products to our customers.
We are also subject to changes in federal and state law, as well as regulations and governmental policies, income tax laws, and accounting principles. Regulations affecting banks and other financial institutions are under continuous review and frequently change, and the ultimate effect of such changes cannot be predicted. Regulations and laws may be modified at any time, and
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new legislation may be enacted that will affect us, WAB, and our other subsidiaries. Any changes in federal and state law, as well as regulations and governmental policies, income tax laws, and accounting principles, could affect us in substantial and unpredictable ways, including ways that may adversely affect our business, financial condition, or results of operations. Failure to appropriately comply with any such laws, regulations or principles or an alleged failure to comply, even if we acted in good faith or the alleged failure reflects a difference in interpretation, could result in sanctions by regulatory agencies, civil money penalties or damage to our reputation, all of which could adversely affect our business, financial condition, or results of operations.
State and federal banking agencies periodically conduct examinations of our business, including compliance with laws and regulations, and our failure to comply with any supervisory actions to which we are or become subject as a result of such examinations may adversely affect us.
State and federal banking agencies, including the FRB, FDIC, and CFPB, periodically conduct examinations of our business, including for compliance with laws and regulations. If, as a result of an examination, a federal agency were to determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of our operations had become unsatisfactory, or that we or our management was in violation of any law or regulation, the agency may take a number of different remedial or enforcement actions it deems appropriate to remedy such a deficiency. These actions include the power to enjoin “unsafe or unsound” practices, to require affirmative actions to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth, and to assess civil monetary penalties against us and/or officers or directors, and to remove officers and directors. If the FDIC concludes that such conditions cannot be corrected or there is an imminent risk of loss to depositors, it may terminate WAB’s deposit insurance. Under Arizona law, the state banking supervisory authority has many of the same enforcement 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 cease-and-desist orders or civil monetary penalties against us if it finds that we offer consumer financial products and services in violation of federal consumer financial protection laws or in an unfair, deceptive, or abusive manner. Finally, our AmeriHome subsidiary needs to maintain certain state licenses and federal and government-sponsored agency approvals required to conduct its business and is subject to periodic examinations by such state and federal agencies, which can result in increases in administrative costs, substantial penalties due to compliance errors, or the loss of licenses.
If we were unable to comply with regulatory directives in the future, or if we were unable to comply with the terms of any future supervisory requirements to which we may become subject, then we could become subject to a variety of supervisory actions and orders, including cease and desist orders, prompt corrective actions, MOUs, and/or other regulatory enforcement actions. If our regulators were to take such supervisory actions, then we could, among other things, become subject to restrictions on our ability to enter into acquisitions and develop any new business, as well as restrictions on our existing business. We also could be required to raise additional capital, dispose of certain assets and liabilities, or both, within a prescribed period of time. Failure to implement the measures in the time frames provided, or at all, could result in additional orders or penalties from federal and state regulators, which could result in one or more of the remedial actions described above. In the event we were ultimately unable to comply with the terms of a regulatory enforcement action, we could fail and be placed into receivership by the FDIC or the chartering agency. The terms of any such supervisory action and the consequences associated with any failure to comply therewith could have a material negative effect on our business, operating flexibility, and financial condition.
Current and proposed regulations addressing consumer privacy and data use and security could increase our costs and impact our reputation.
We are subject to federal, state and local laws related to consumer privacy and data use and security, including information safeguard rules under the Gramm-Leach-Bliley Act and the California Consumer Protection Act. These rules require financial institutions to develop, implement, and maintain a written, comprehensive information security program containing safeguards that are appropriate to the financial institution’s size and complexity, the nature and scope of the financial institution’s activities, and the sensitivity of any customer information at issue. The United States has experienced a heightened legislative and regulatory focus on privacy and data security, including requirements as to consumer notification in the event of data breaches and certain types of security breaches. Additional regulations in these areas may increase compliance costs, which could negatively impact earnings. In addition, failure to comply with the privacy, data use and security laws and regulations to which we are subject, including by reason of inadvertent disclosure of confidential information, 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 on our results of operations and business.
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We could be subject to adverse changes or interpretations of tax laws, tax audits, or challenges to our tax positions.
We are subject to federal and applicable state income tax laws and regulations. Income tax laws and regulations are often complex and require significant judgment in determining our effective tax rate and in evaluating our tax positions. Changes in tax laws, changes in interpretations, 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 future financial performance.
In addition, our determination of our tax liability is subject to review by applicable tax authorities. In the normal course of business, we are routinely subject to examinations and challenges from federal and applicable state and local taxing authorities regarding the amount of taxes due in connection with investments we have made and the businesses in which we have engaged. Recently, federal and state and local taxing authorities have been increasingly aggressive in challenging tax positions taken by financial institutions. The challenges made by taxing authorities may result in adjustments to the timing or amount of taxable income or deductions, or the allocation of income among tax jurisdictions. Any such challenges that are not resolved in our favor may adversely affect our effective tax rate, tax payments or financial condition.
Securities-Related Risks
The price of the Company’sour common stock may fluctuate significantly in the future.
The price of the Company’sour common stock on the New York Stock Exchange constantly changes, and has increased substantially since the U.S. Presidential Election in November 2016. The Company expects that the market price of its common stock will continue to fluctuate and therechanges. There can be no assurances about the market price for itsour common stock.
The Company’sOur stock price may fluctuate as a result of a variety of factors many of which are beyond our control. For example, the Company’s control. Thesevolatility and economic disruption resulting from the bank closures in 2023 particularly impacted the price of capital stock and other securities issued by financial institutions, including us. Other factors that may cause fluctuations in our stock price include:
•actual or anticipated changes in the political climate;climate or public policy;
•changes in national and global financial markets and economies and general market conditions, such as interest or foreign exchange rates, inflation, stock, commodity or real estate valuations or volatility and other global, geopolitical, regulatory or judicial events that effect the financial markets and economy including pandemics, terrorism and war, including the military conflicts in Ukraine and the Middle East;
•sales of the Company’sour equity securities;
the Company’s•our financial condition, performance, creditworthiness, and prospects;
•quarterly variations in the Company’sour operating results or the quality of itsour assets;
•operating results that vary from the expectations of management, securities analysts, and investors;
•changes in expectations as to the Company’sour future financial performance;
•announcements of strategic developments, acquisitions, and other material events by the Companyus or itsour competitors;
•the operating and securities price performance of other companies that investors believe are comparable to the Company;us;
•the credit, mortgage, and housing markets, the markets for securities relating to mortgages or housing, and developments with respect to financial institutions generally;
•changes in nationalinterest rates and globalthe slope of the yield curve;
•events affecting the financial marketsservices industry generally or financial institutions similar to us or that may be viewed as similar to us; and economies and general market conditions, such as interest or foreign exchange rates, stock, commodity or real estate valuations or volatility and other geopolitical, regulatory or judicial events; and

the Company’s•our past and future dividend and share repurchase practices.
There may be future sales or other dilution of the Company’sour equity, which may adversely affect the market price of the Company’sour common stock or depositary shares representing preferred stock.
The Company isWe are not restricted from issuing additional common stock or preferred stock, including any securities that are convertible into or exchangeable for, or that represent the right to receive, common stock. The CompanyWe also grantsgrant a significant number of shares of common stock to employees and directors under the Company’sour Incentive Plan each year. The issuance of any additional shares of the Company’sour common stock, depositary shares, or preferred stock or securities convertible into, exchangeable for or that represent the right to receive common stock, or the exercise of such securities could be substantially dilutive to stockholders of the Company’sour common stock. Holders of the Company’sour common stock, depositary shares, and preferred stock have no preemptive rights that entitle such holders to purchase their pro rata share of any offering of shares of any class or series. Because the Company’sour decision to issue securities in anythe future offering will depend on market conditions, itsour acquisition activity, and other factors, the Companywe cannot predict or estimate the amount,
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timing, or nature of itsour future offerings. Thus, the Company’sour stockholders bear the risk of the Company’sour future offerings reducing the market price of the Company’sour common stock and diluting their stock holdings in us.
There can be no assurance that we will continue to declare cash dividends or repurchase stock as we have in the Company.past.
We have paid regular quarterly dividends on our common stock since the third quarter of 2019, subject to quarterly declarations by the BOD, and have also paid dividends on our depositary shares representing our preferred stock since the issuance of such securities in the third quarter of 2021. We have previously 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/or stock repurchase practices may change from time-to-time, and no assurance can be provided that we will continue to declare dividends in any particular amounts or at all, or institute a new stock repurchase program. Dividends and/or stock repurchases are subject to capital availability 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 preferred stock is senior to our common stock and could adversely affect our ability to declare or pay dividends or distributions on common stock. Under the terms of the Series A preferred stock, we are prohibited from paying dividends on our common stock unless all dividends for the latest dividend period on all outstanding shares of Series A preferred stock have been declared and paid in full or declared and a sum sufficient for 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 effect on our stock price.
Offerings of debt, which would be senior to the Company’sour common stock upon liquidation, and/or preferred equity securities whichthat may be senior to the Company’sour common stock for purposes of dividend distributions or upon liquidation, may adversely affect the market price of the Company’sour common stock.
The CompanyWe may from time to time issue debt securities, borrow money through other means, or issue preferred stock. From time to time the Company borrowsWe may also borrow money from the FRB, the FHLB, other financial institutions, and other lenders. At December 31, 2017, the Company2023, we had outstanding $175,000,000 of 6.25% subordinated debentures with a maturity date of July 1, 2056,debt, senior secured and WAB hadunsecured debt, and short-term borrowings. We also have outstanding $150,000,000 aggregate principal amount of 5.00% Fixed-to-Floating Rate Subordinated Notes due July 15, 2025.depositary shares representing Series A preferred stock, which is senior to our common stock. All of these securities or borrowings have priority over theour common stock in a liquidation, which could affect the market price of the Company’sour stock.
The Company’sOur 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. The Company’sOur 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, dividend rights, and preferences over the Company’sour common stock with respect to dividends or upon the Company’sour dissolution, winding-up, and liquidation and other terms. If the Company issueswe issue additional preferred stock in the future that has a preference over itsour common stock, with respect to the payment of dividends or upon the Company’s liquidation, dissolution, or winding up, or if the Company issueswe issue preferred stock with voting rights that dilute the voting power of itsour common stock and/or the rights of holders of itsour common stock, the market price of itsour common stock could be adversely affected.
Anti-takeover provisions could negatively impact the Company’sour stockholders.
Provisions of Delaware law and provisions of the Company’sour Certificate of Incorporation, as amended, and itsour Amended and Restated Bylaws could make it more difficult for a third party to acquire control of the Companyus or have the effect of discouraging a third party from attempting to acquire control of the Company.us. Additionally, the Company’sour Certificate of Incorporation, as amended, authorizes the Company’sour BOD to issue additional series of preferred stock and such preferred stock could be issued as a defensive measure in response to a takeover proposal. These provisions could make it more difficult for a third party to acquire the Companyus even if an acquisition might be in the best interest of our stockholders.
Item 1B.Unresolved Staff Comments.
None.
Item 1C.    Cybersecurity.
Cybersecurity risk management and strategy
Cybersecurity and risks associated with information security are operational risks included in the Company’s stockholders.ERM Framework. Under the ERM Framework, the Company’s Information Security Risk and Compliance departments and all employees are the First Line. Those in the First Line are each responsible for identifying and managing the information security risk associated with their activities. The Company’s Enterprise & Operational Risk Management Department is part of the independent risk oversight of information security risk along with the Company’s ORMC and ERM Committee, both of which are management
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Item 1B.Unresolved Staff Comments
None.

risk oversight committees. The Company manages the risk associated with information security in accordance with our Risk Appetite Statement, as approved by the BOD.
Item 2.Properties
At December 31, 2017,The Risk Committee of the BOD and ORMC are primarily responsible for monitoring management’s implementation of operations and technology risk controls, including those relating to cyber security and information security. The Company maintains a data protection and information security program designed to ensure adequate governance and oversight is in place while evolving to meet changes in applicable laws and regulations, and best practices. The Company’s information security controls and programs are designed to align with the NIST for cybersecurity, the FFIEC examination guidelines, Control Objectives for Information and Related Technologies and the Information Technology Infrastructure Library frameworks, along with applicable privacy laws.
Information Security is the responsibility of the officers, employees and agents of the Company with oversight by the BOD. Our investment in people is critical to maintaining an effective cyber defense, which begins by developing and maintaining a robust Information Security function within the First Line. Collectively, the Company’s senior leadership in this area have nearly 80 years of experience. The Company’s CISO has over 25 years of network architecture, information technology and cybersecurity experience, maintains Certified Information Systems Security Professional credentials and has served on the Federal Reserve Secure Payments Task Force. Each Company employee is responsible for an effective cybersecurity defense which is enforced with mandatory interactive cyber awareness training, periodic newsletters, executive security briefs and updates. Additionally, the BOD’s Risk Committee is informed about cybersecurity and the relevant risks posed to the Company via regular updates from the Company’s CISO. The BOD is regularly informed and actively oversees the data security and privacy program and its policies. The BOD also receives regular education on innovative technology, cybersecurity, information systems/data management, fintech and privacy, from internal and external experts.
Cybersecurity assessments
The Company engages external third parties to perform assessments on our adherence to the FFIEC’s recommendations on cyber preparedness and NIST Cybersecurity Framework, as well as to review for best practices for the use of cloud services, Swift and FedLine requirements. To validate the effectiveness of the Company’s overall information security controls, external third parties also perform full-scope external and internal penetration testing designed to mimic the tactics used by individual hackers or criminal hacking organizations. The Company also engages external third parties to perform ongoing adversarial simulation.
The Company conducts regular internal cybersecurity assessments intended to measure inherent risk and drive the adjustment of our security posture according to the latest threats. These assessments include alignment with the FFIEC’s recommendations on cyber preparedness, GLBA Safeguards Rule to protect user data, and Swift security control requirements. The Company performs continuous internal and external vulnerability scanning to measure and react to new vulnerabilities and seeks conformance to Center for Internet Security benchmarks for both cloud-based and on-premises technology. The Company reviews vendor and partner security practices to ensure they maintain proper information security safeguards.
Cybersecurity operational measures
Led by our CISO, the Company's data protection, information, cyber and technology services team collaborates with subject-matter experts throughout the business to identify, monitor and mitigate material risks, as well as to monitor compliance with the Company’s security polices, applicable laws and regulations. The Company’s SMC, which is part of the CISO organization, manages the security of our systems through the ingestion of multiple external threat feeds and systems logs. Through the collection and integration of security-related IT infrastructure information, external threat intelligence and the expertise of trained SMC analysts, the Company works to identify and address potential indicators of compromise. Potential security events are identified and addressed through defined IT incident response activities, the SMC’s oversight through SIEM, and with support of the Company’s CSR Plan. The CSR Plan is in place and updated regularly with the intent to reduce impacts to clients and the Company caused by a declared cyber incident, such as an event involving malicious code, unauthorized disclosure, loss of information or unauthorized use of information or systems. The CSR Plan organizes resources to manage and resolve events that harm or threaten the security of information assets. The CSR plan includes involvement of the Company’s Executive Leadership Team and BOD based on the severity of a cyber event, including the analysis of reporting requirements. The CSR plan is tested annually and includes technical and executive management in simulated crisis management cybersecurity tabletop exercises.
As of the date of this report, other than the risks discussed in “Risk Factors,” the Company knows of no risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations, or financial condition.
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Item 2.Properties.
The Company and WAB are headquartered at One E. Washington Street in Phoenix, Arizona. WAB operates 38 domestic branch locations, which includes 6include five executive and administrative offices, of which 20 of these locations are owned and 18 are leased. The Company also has 8several loan production offices.and other offices across the United States. In addition, WAB owns and occupies a 36,000 square foot operations facility in Las Vegas, Nevada. See "Item 1. Business” in this Form 10-K for location cities. For information regarding rental payments, see "Note 4. Premises and Equipment" of the Consolidated Financial Statements7. Leases" in Item 8 included in this Form 10-K.
Item 3.Legal Proceedings
Item 3.Legal Proceedings.
There are no material pending legal proceedings to which the Company is a party to 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 the “Supervision and Regulation” section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K for 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 future.
Item 4.Mine Safety Disclosures
Item 4.Mine Safety Disclosures.
Not applicable.

PART II
Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
The Company’s common stock began trading on the New York Stock Exchange under the symbol “WAL” on June 30, 2005. The Company has filed, without qualifications, its 20172023 Domestic Company Section 303A CEO Certification regarding its compliance with the NYSE’s corporate governance listing standards. The following table presents the high and low sales prices of the Company’s common stock for each quarterly period for the last two years as reported by The NASDAQ Global Select Market: 
  2017 Quarters 2016 Quarters
  Fourth Third Second First Fourth Third Second First
Range of stock prices:                
High $60.25
 $53.79
 $50.60
 $53.84
 $50.72
 $38.55
 $38.36
 $35.42
Low 51.82
 44.83
 44.64
 45.16
 35.56
 30.69
 29.72
 26.60
Holders
At December 31, 2017,February 21, 2024, there were approximately 1,4992,230 stockholders of record.record of our common stock. This number does not include stockholders who hold shares in the name of brokerage firms 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.
Dividends
WAL isDuring the fourth quarter of 2023, the Company's BOD approved a legal entity separatecash dividend of $0.37 per common share. The dividend payment to stockholders totaled $40.5 million and distinct from its subsidiaries. As a holding company with limited significant assets other than the capital stock of its subsidiaries, WAL's ability to pay dividends depends primarily upon the receipt of dividends or other capital distributions from its subsidiaries. The Company's subsidiaries ability to pay dividends to WAL is subject to, among other things, their individual earnings, financial condition, and need for funds, as well as federal and state governmental policies and regulations applicable to WAL and each of those subsidiaries, which limit the amount that may bewas paid as dividends without prior approval. See the additional discussion in the “Supervision and Regulation” section of this report for information regarding restrictions on the ability to pay cash dividends.December 1, 2023. 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 trust preferred securities are not made, WAL would be prohibited from paying cash dividends on its common stock. WAL has never paid a cash dividend of $0.27 per depository share to preferred stockholders on its common stock and currently has no plans to pay dividends in the future.December 30, 2023, totaling $3.2 million.
Share Repurchases
The following table provides information about the Company's purchases of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act for the periods indicated.indicated:
Period
Total Number of Shares
Purchased (1)(2)
Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)
Approximate Dollar Value of Shares That May Yet to be Purchased Under the Plans or Programs
October 2023841 $44.04 — $— 
November 2023161 45.87 — — 
December 202392 54.86 — — 
Total1,094 $45.22 — $— 

(1)    Shares purchased during the period were transferred to the Company from 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.

31
  (a) (b) (c) (d)
  
Total Number of Shares
Purchased (1)
 Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 
Approximate Dollar Value of Shares That May Yet to be Purchased Under the Plans or Programs(2)
10/1/2017 through 10/31/2017 1,499
 $56.25
 —
 $—
11/1/2017 through 11/30/2017 92
 53.42
 —
 —
12/1/2017 through 12/31/2017 1,361
 58.17
 —
 —
Total 2,952
 $57.05
 —
 $—
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(1)All shares purchased during the period were transferred to the Company from employees in satisfaction of minimum tax withholding obligations associated with the vesting of restricted stock awards during the period.
(2)The Company has not announced a repurchase plan relating to its common stock.


Performance Graph
The following graph summarizes a five year comparison of the cumulative total returns for the Company’s common stock, the Standard & Poor’s 500 stock index and the KBW Regional Banking Total Return Index, each of which assumes an initial value of $100.00 on December 31, 20122018 and reinvestment of dividends.
2001


Item 6.Selected Financial Data.
The following selected financial data have been derived from the Company’s consolidated financial condition
Item 6.[Reserved].

Item 7.Management's Discussion and resultsAnalysis of operations, asFinancial Condition and Results of and for the years ended December 31, 2017, 2016, 2015, 2014, and 2013, and should be read in conjunction with the Consolidated Financial Statements and the related notes included elsewhere in this report: Operations.
  Year Ended December 31,
  2017 2016 2015 2014 2013
  (in thousands)
Results of Operations:          
Interest income $845,513
 $700,506
 $525,144
 $416,379
 $362,655
Interest expense 60,849
 43,293
 32,568
 31,486
 29,760
Net interest income 784,664
 657,213
 492,576
 384,893
 332,895
Provision for credit losses 17,250
 8,000
 3,200
 4,726
 13,220
Net interest income after provision for credit losses 767,414
 649,213
 489,376
 380,167
 319,675
Non-interest income 45,344
 42,915
 29,768
 24,651
 22,197
Non-interest expense 360,941
 330,949
 260,606
 207,319
 196,216
Income from continuing operations before provision for income taxes 451,817
 361,179
 258,538
 197,499
 145,656
Income tax expense 126,325
 101,381
 64,294
 48,390
 29,830
Income from continuing operations 325,492
 259,798
 194,244
 149,109
 115,826
Loss from discontinued operations, net of tax —
 —
 —
 (1,158) (861)
Net income $325,492
 $259,798
 $194,244
 $147,951
 $114,965


  Year Ended December 31,
  2017 2016 2015 2014 2013
  (dollars in thousands, except per share data)
Per Share Data:          
Earnings per share available to common stockholders - basic $3.12
 $2.52
 $2.05
 $1.69
 $1.33
Earnings per share available to common stockholders - diluted 3.10
 2.50
 2.03
 1.67
 1.31
Earnings per share from continuing operations - basic 3.12
 2.52
 2.05
 1.70
 1.34
Earnings per share from continuing operations - diluted 3.10
 2.50
 2.03
 1.69
 1.32
Book value per common share 21.14
 18.00
 15.44
 10.49
 8.20
Tangible book value per share (1) 18.31
 15.17
 12.54
 10.21
 7.90
Shares outstanding at period end 105,487
 105,071
 103,087
 88,691
 87,186
Weighted average shares outstanding - basic 104,179
 103,042
 94,570
 86,693
 85,682
Weighted average shares outstanding - diluted 104,997
 103,843
 95,219
 87,506
 86,541
Selected Balance Sheet Data:          
Cash and cash equivalents $416,768
 $284,491
 $224,640
 $164,396
 $305,514
Investment securities and money market investments 3,754,569
 2,702,512
 1,984,126
 1,522,546
 1,659,370
Loans, net of deferred loan fees and costs 15,093,935
 13,208,436
 11,136,663
 8,398,265
 6,801,415
Allowance for credit losses 140,050
 124,704
 119,068
 110,216
 100,050
Total assets 20,329,085
 17,200,842
 14,275,089
 10,600,498
 9,307,342
Total deposits 16,972,532
 14,549,863
 12,030,624
 8,931,043
 7,838,205
Other borrowings 390,000
 80,000
 150,000
 390,263
 341,096
Qualifying debt 376,905
 367,937
 210,328
 40,437
 41,858
Total stockholders' equity 2,229,698
 1,891,529
 1,591,502
 1,000,928
 855,498
Selected Other Balance Sheet Data:          
Average assets $18,869,553
 $16,134,263
 $12,420,803
 $9,891,109
 $8,500,324
Average earning assets 17,770,939
 15,117,364
 11,621,977
 9,270,465
 7,887,584
Average stockholders' equity 2,079,287
 1,770,914
 1,323,952
 964,131
 798,497
Selected Financial and Liquidity Ratios:          
Return on average assets 1.72% 1.61% 1.56 % 1.50 % 1.35%
Return on average tangible common equity (1) 18.31
 17.71
 17.83
 18.52
 18.28
Net interest margin 4.65
 4.58
 4.51
 4.42
 4.39
Loan to deposit ratio 88.93
 90.78
 92.57
 94.03
 86.77
Capital Ratios:          
Tier 1 leverage ratio 10.3% 9.9% 9.8 % 9.7 % 9.8%
Tier 1 capital ratio 10.8
 10.5
 10.2
 10.5
 11.1
Total capital ratio 13.3
 13.2
 12.2
 11.7
 12.4
Average equity to average assets 11.0
 11.0
 10.7
 9.7
 9.4
Selected Asset Quality Ratios:          
Net charge-offs (recoveries) to average loans outstanding 0.01% 0.02%��(0.06)% (0.07)% 0.14%
Non-accrual loans to gross organic loans 0.29
 0.31
 0.44
 0.81
 1.11
Non-accrual loans and repossessed assets to total assets 0.36
 0.51
 0.65
 1.18
 1.53
Loans past due 90 days or more and still accruing to gross loans 0.00
 0.01
 0.03
 0.06
 0.02
Allowance for credit losses to gross loans 0.93
 0.95
 1.07
 1.31
 1.47
Allowance for credit losses to non-accrual loans 318.84
 309.65
 246.10
 162.90
 132.20
1 See Non-GAAP Financial Measures section beginning on page 31.


Item 7.Management's Discussions and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis is designed to provide insight on the financial condition and results of operations of Western Alliance Bancorporation and its subsidiaries and should be read in conjunction with “Item 8. Financial Statements and Supplementary Data.”Data” of this Form 10-K. This discussion and analysis contains forward-looking statements that involve risk, uncertainties, and assumptions. Certain risks, uncertainties, and other factors, including, but not limited 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 differ materially from those projected in the forward-looking statements.
For a comparison of the 2022 results to the 2021 results and other 2021 information not included herein, refer to "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 for the year ended December 31, 2022.
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Recent Banking Industry and Market Developments
Banking Industry
The bank failures in 2023 caused significant disruption in the United States banking industry, particularly among mid-sized banks, such as the Company. The closures of these banks triggered a surge in deposit outflows and stock price volatility at many mid-sized banks, including the Company.
Regulatory actions in response to these bank failures included establishment of the BTFP, which offered loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral valued at par. The Company drew $1.3 billion from the BTFP during the first quarter of 2023, all of which was repaid as of December 31, 2023.
Additionally, the Department of the Treasury, FRB, and FDIC issued a joint statement, which stated that losses to support uninsured deposits of those failed banks would be recovered via a special assessment on banks. In November 2023, the FDIC approved an annual special assessment rate of approximately 13.4 basis points. The assessment base for the special assessments is equal to an institution’s estimated uninsured deposits as of December 31, 2022, adjusted to exclude the first $5 billion of estimated uninsured deposits. The special assessments will be collected over an eight-quarter collection period, at a quarterly special assessment rate of 3.36 basis points, with the first quarterly assessment period beginning on January 1, 2024. However, the amount of the total special assessment is subject to adjustment and will not be finalized by the FDIC until after termination of the receiverships. The Company recognized a charge of $66.3 million during the year ended December 31, 2023 in connection with the special assessment.
The recent volatility in the banking industry and other recent regulatory actions have had and may continue to have a material impact on the Company's operations, as further discussed below.
Capital and liquidity
While the Company believes it has sufficient capital, funding, and access to contingent sources of liquidity, the Company has taken several actions to ensure the strength of its capital and liquidity position. These actions included disposition of selected assets, including $1.6 billion of AFS securities and $4.3 billion of loans during the year ended December 31, 2023, and increasing its borrowing capacity with the FRB. With these actions, the Company strengthened its capital position, increasing its CET1 ratio 150 basis points to 10.8%, grew high quality liquid assets1 $5.5 billion to $7.4 billion as of December 31, 2023, and reduced its loan to deposit ratio from 96.7% as of December 31, 2022 to 90.9% as of December 31, 2023.
The Company's deposit balances stabilized as of March 20, 2023 and increased $1.7 billion as of December 31, 2023 when compared to December 31, 2022. The Company also strengthened its insured deposit ratio from 45% as of December 31, 2022 to 73% as of December 31, 2023. Insured and collateralized deposits as a percentage of total deposits was 80% at December 31, 2023, compared to 47% at December 31, 2022.
Financial position and results of operations
The Company's financial position and results of operations as of and for the year ended December 31, 2023 have been impacted by this disruption. These events contributed to the $62.6 million provision for credit losses recognized during the year ended December 31, 2023, of which $17.1 million related to a charge-off of a corporate debt security from a financial institution issuer. The Company's actions to strengthen its capital and liquidity position contributed to a $116.0 million pre-tax fair value loss adjustment primarily related to the transfer of loans to HFS, a net loss of $40.8 million on sales of investment securities, partially offset by a $52.7 million gain on extinguishment of debt. The continued uncertainty regarding the severity and duration of the volatility in the banking industry and related economic effects may continue to affect the Company’s estimate of its allowance for credit losses and resulting provision for credit losses. To the extent the impact of the banking industry volatility is prolonged and economic conditions worsen or persist longer than forecast, such estimates may be insufficient and may change significantly in the future. The Company’s net interest margin also may be negatively impacted in future periods if the Company's borrowings remain elevated. These uncertainties and the economic environment will continue to affect earnings, growth, and may result in deterioration of asset quality in the Company's loan and investment portfolios.
Depositors in the technology industry were generally considered to be the most impacted by these adverse events and may have greater sensitivity to the volatility in the banking industry with potentially longer recovery periods than other types of businesses. The Company's deposit exposure to the technology industry totaled $4.4 billion, or 8.0% of total deposits, as of December 31, 2023.
1 Includes U.S. Treasury securities, U.S. government agency securities, and MBS issued by GSEs that are liquid and readily marketable.
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Asset valuation
Sustained declines in the Company's stock price and/or other liquidity related impacts, such as increases in deposit outflows, could give rise to triggering events in the future that could result in a non-cash write-down in the value of our goodwill, which could have a material adverse impact on our results of operations.
Market Developments
The Company's loan portfolio includes significant credit exposure to the CRE market, with CRE related loans comprising approximately 33% of total loans at December 31, 2023, which includes 16% of loans that were owner occupied and 4.7% of non-owner occupied office loans. As elevated focus on the evolving industry dynamics facing the CRE market have emerged during the year, the Company has been proactive in establishing enhanced monitoring policies and procedures as it relates to its CRE loans and has undertaken actions to limit growth of its CRE portfolio, as further discussed in “Item 1. Business, Lending Activities – Asset Quality” of this Form 10-K. While the Company has not incurred significant charge-offs on its CRE portfolio during the year ended December, 31, 2023, CRE market conditions may worsen, which could result in deterioration of asset quality in this portfolio.
Financial Overview and Highlights
WAL is a bank holding company headquartered in Phoenix, Arizona, incorporated under the laws of the state of Delaware. WAL provides a full spectrum of customized loan, deposit lending,and treasury management international banking,capabilities, including funds transfer and online banking products and servicesother digital payment offerings through its wholly-owned banking subsidiary, WAB.
WAB operates the following full-service banking divisions: ABA, BON and FIB, Bridge, and TPB. The Company also serves business customers through a national platformprovides an array of specialized financial services across the country, including AAB, Corporate Finance, Equity Fund Resources, HFF, Life Sciences Group, Mortgage Warehouse Lending, Publicmortgage banking services through AmeriHome, treasury management services to the homeowner's association sector, and Nonprofit Finance, Renewable Resource Group, Resort Finance, and Technology Finance.digital payment services for the class action legal industry.
2023 Financial Result Highlights of 2017
•Net income available to common stockholders of $325.5$709.6 million for 2017, compared to $259.8 million2023, a decrease from $1.0 billion for 2016
2022
•Diluted earnings per share of $3.10$6.54 for 2017, compared to $2.502023, a decrease from $9.70 per share for 20162022
•
Net operating revenue of $827.7 million, constituting year-over-year growth of 18.4%, or $128.6 million, compared to an increase in operating non-interest expenses of 13.3%, or $42.4 million1
•
Operating PPNR increased $86.2 million to $466.6 million, compared to $380.4 million in 20161
Income tax expense increased $24.9 million to $126.3•Net revenue of $2.6 billion, constituting year-over-year growth of 3.1%, or $78.7 million, compared to $101.4an increase in non-interest expenses of 40.3%, or $466.7 million
•PPNR1 decreased $388.0 million to $1.0 billion, compared to $1.4 billion in 20162022
•Effective tax rate of 22.6% for 2023, compared to 19.7% for 2022
•Total loans HFI of $15.09$50.3 billion, up $1.89down $1.6 billion from December 31, 2016
2022
•Total deposits of $16.97$55.3 billion, up $2.42$1.7 billion from December 31, 2016
2022
•Stockholders' equity of $2.23$6.1 billion, an increase of $338.2$722 million from December 31, 2016
2022
•Nonperforming assets (nonaccrual loans and repossessed assets) decreasedincreased to 0.36%0.40% of total assets, from 0.51%0.14% at December 31, 2016
2022
•Net loan charge-offs to average loans outstanding of 0.01%approximately 0.06% for 2017,2023, compared to 0.02%approximately 0.00% for 20162022
•Net interest margin of 4.65%3.63% in 2017, compared to 4.58%2023, decreased from 3.67% in 2016
2022
•Return on average assets of 1.72%1.03% for 2017,2023, compared to 1.61%1.62% for 20162022
•
Tangible common equity ratio of 9.6%, compared to 9.4% at December 31, 20161
•Tangible common equity ratio1 of 7.3%, compared to 6.5% at December 31, 2022
•Tangible book value per share, net of tax1, of $46.72, an increase of 16.1% from $40.25 at December 31, 2022
•Efficiency ratio1 of 61.1% in 2023, compared to 44.9% in 2022
•
Tangible book value per share, net of tax, of $18.31, an increase of 20.7% from $15.17 at December 31, 20161
•
Operating efficiency ratio of 41.5% in 2017, compared to 43.4% in 20161
The impact to the Company from these items, and others of both a positive and negative nature, are discussed in more detail below as they pertain to the Company’s overall comparative performance for the year ended December 31, 2017.2023.

1 See Non-GAAP Financial Measures section beginning on page 31.37.

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As a bank holding company, management focuses on key ratios in evaluating the Company's financial condition and results of operations.
Results of Operations and Financial Condition
A summary of the Company's results of operations, financial condition, and selected metrics are included in the following tables: 
Year Ended December 31,
202320222021
(dollars in millions, except per share amounts)
Net income$722.4 $1,057.3 $899.2 
Net income available to common stockholders709.6 1,044.5 895.7 
Earnings per share - basic6.55 9.74 8.72 
Earnings per share - diluted6.54 9.70 8.67 
Return on average assets1.03 %1.62 %1.83 %
Return on average equity12.6 20.7 22.3 
Return on average tangible common equity (1)14.9 25.4 26.2 
Net interest margin3.63 3.67 3.41 
  Year Ended December 31,
  2017 2016 2015
  (dollars in thousands, except per share amounts)
Net income available to common stockholders $325,492
 $259,798
 $193,494
Earnings per share available to common stockholders - basic 3.12
 2.52
 2.05
Earnings per share available to common stockholders - diluted 3.10
 2.50
 2.03
Return on average assets 1.72% 1.61% 1.56%
Return on average tangible common equity (1) 18.31
 17.71
 17.83
Net interest margin 4.65
 4.58
 4.51
Operating efficiency ratio (1) 41.51
 43.42
 45.85
  December 31,
  2017 2016
  (in thousands)
Total assets $20,329,085
 $17,200,842
Total loans, net of deferred loan fees and costs 15,093,935
 13,208,436
Securities and money market investments 3,754,569
 2,702,512
Total deposits 16,972,532
 14,549,863
Borrowings 390,000
 80,000
Qualifying debt 376,905
 367,937
Stockholders' equity 2,229,698
 1,891,529
Tangible common equity, net of tax (1) 1,931,648
 1,593,584
1 (1)See Non-GAAP Financial Measures section beginning on page 31.37.
December 31,
20232022
(in millions)
Total assets$70,862 $67,734 
Loans HFS1,402 1,184 
Loans HFI, net of deferred fees and costs50,297 51,862 
Investment securities12,720 8,541 
Total deposits55,333 53,644 
Other borrowings7,230 6,299 
Qualifying debt895 893 
Stockholders' equity6,078 5,356 
Tangible common equity, net of tax1
5,116 4,383 
(1) See Non-GAAP Financial Measures section beginning on page 37.
Asset Quality
For all banks and bank holding companies, asset quality plays a significant role in the overall financial condition of the institution and results of operations. The Company measures asset quality in terms of non-accrualnonaccrual loans as a percentage of gross loans and net charge-offs as a percentage of average loans. Net charge-offs are calculated as the difference between charged-off loans and recovery payments received on previously charged-off loans. The following table summarizes the Company's key asset quality metrics:metrics for loans HFI: 
At or for the Year Ended December 31,
202320222021
(dollars in millions)
Nonaccrual loans$273 $85 $73 
Repossessed assets8 11 12 
Non-performing assets323 98 87 
Nonaccrual loans to funded loans0.54 %0.16 %0.19 %
Nonaccrual and repossessed assets to total assets0.40 0.14 0.15 
Allowance for loan losses to funded loans0.67 0.60 0.65 
Allowance for credit losses to funded loans0.73 0.69 0.74 
Allowance for loan losses to nonaccrual loans123 364 348 
Allowance for credit losses to nonaccrual loans135 419 400 
Net charge-offs to average loans outstanding0.06 0.00 0.02 
35
  At or for the Year Ended December 31,
  2017 2016 2015
  (dollars in thousands)
Non-accrual loans $43,925
 $40,272
 $48,381
Repossessed assets 28,540
 47,815
 43,942
Non-performing assets 114,939
 142,791
 166,058
Loans past due 90 days and still accruing 43
 1,067
 3,028
Non-accrual loans to gross organic loans 0.29% 0.31% 0.44 %
Nonaccrual and repossessed assets to total assets 0.36
 0.51
 0.65
Loans past due 90 days and still accruing to gross loans 0.00
 0.01
 0.03
Allowance for credit losses to gross loans 0.93
 0.94
 1.07
Allowance for credit losses to non-accrual loans 318.84
 309.65
 246.10
Net charge-offs (recoveries) to average loans outstanding 0.01
 0.02
 (0.06)
Table of Contents

Asset and LiabilityDeposit Growth
The Company’s assets and liabilities are comprised primarily of loans and deposits. Therefore, the ability to originate new loans and attract new deposits is fundamental to the Company’s growth.
Total assets increased to $20.33$70.9 billion at December 31, 20172023 from $17.20$67.7 billion at December 31, 2016.2022. The increase in total assets of $3.13$3.1 billion, or 18.2% relates4.6%, was driven primarily by an increase in deposits and borrowings, which contributed to organic loan growthan increase in investment securities of $1.89$4.2 billion, or 48.9%, and an increase in cash and cash equivalents and investment securities of $1.18 billion resulting from increased deposits. Total$533 million. As a result of loan dispositions undertaken as part of the Company's balance sheet repositioning strategy, loans including HFS loans, increasedHFI decreased by $1.89$1.6 billion, or 14.3%3.1%, to $15.09$50.0 billion as of December 31, 2017,2023, compared to $13.21$51.9 billion as of December 31, 2016. 2022. By loan type, commercial and industrial and residential real estate loans decreased $1.6 billion and $1.2 billion, respectively, from December 31, 2022. This decrease in loans HFI was partially offset by increases in construction and land development and CRE, non-owner occupied loans of $876 million and $331 million, respectively.
Total deposits increased $2.42$1.7 billion, or 16.7%3.1%, to $16.97$55.3 billion as of December 31, 20172023 from $14.55$53.6 billion as of December 31, 2016.2022. By type, the increase in deposits from December 31, 2022 was driven by increases of $6.4 billion of interest bearing demand deposits and $5.1 billion in certificates of deposits, partially offset by decreases of $5.2 billion in non-interest bearing demand deposits and $4.6 billion in savings and money market accounts.
RESULTS OF OPERATIONS
The following table sets forth a summary financial overview for the comparable periods:  overview:
Year Ended December 31,Increase
20232022(Decrease)
(in millions, except per share amounts)
Consolidated Income Statement Data:
Interest income$4,035.3 $2,691.8 $1,343.5 
Interest expense1,696.4 475.5 1,220.9 
Net interest income2,338.9 2,216.3 122.6 
Provision for credit losses62.6 68.1 (5.5)
Net interest income after provision for credit losses2,276.3 2,148.2 128.1 
Non-interest income280.7 324.6 (43.9)
Non-interest expense1,623.4 1,156.7 466.7 
Income before provision for income taxes933.6 1,316.1 (382.5)
Income tax expense211.2 258.8 (47.6)
Net income722.4 1,057.3 (334.9)
Dividends on preferred stock12.8 12.8 — 
Net income available to common stockholders$709.6 $1,044.5 $(334.9)
Earnings per share:
Basic$6.55 $9.74 $(3.19)
Diluted$6.54 $9.70 $(3.16)


36
  Year Ended December 31, Increase Year Ended December 31, Increase
  2017 2016 (Decrease) 2016 2015 (Decrease)
  (in thousands, except per share amounts)
Consolidated Income Statement Data:          
Interest income $845,513
 $700,506
 $145,007
 $700,506
 $525,144
 $175,362
Interest expense 60,849
 43,293
 17,556
 43,293
 32,568
 10,725
Net interest income 784,664
 657,213
 127,451
 657,213
 492,576
 164,637
Provision for credit losses 17,250
 8,000
 9,250
 8,000
 3,200
 4,800
Net interest income after provision for credit losses 767,414
 649,213
 118,201
 649,213
 489,376
 159,837
Non-interest income 45,344
 42,915
 2,429
 42,915
 29,768
 13,147
Non-interest expense 360,941
 330,949
 29,992
 330,949
 260,606
 70,343
Income before provision for income taxes 451,817
 361,179
 90,638
 361,179
 258,538
 102,641
Income tax expense 126,325
 101,381
 24,944
 101,381
 64,294
 37,087
Net income 325,492
 259,798
 65,694
 259,798
 194,244
 65,554
Net income available to common stockholders $325,492
 $259,798
 $65,694
 $259,798
 $193,494
 $66,304
Earnings per share available to common stockholders - basic $3.12
 $2.52
 $0.60
 $2.52
 $2.05
 $0.47
Earnings per share available to common stockholders - diluted $3.10
 $2.50
 $0.60
 $2.50
 $2.03
 $0.47
Table of Contents
Non-GAAP Financial Measures
The following discussion and analysis contains financial information determined by methods other than those prescribed by GAAP. The Company's management uses these non-GAAP financial measures in their analysis of the Company's performance. These measurements typically adjust GAAP performance measures to exclude the effects of certain significant activities or transactions that, in management's opinion, do not reflect recurring period-to-period comparisons of the Company's performance. Management believes presentation of these non-GAAP financial measures provides useful supplemental information that is essential to a complete understanding of the operating results of the Company's core businesses.Company. Since the presentation of these non-GAAP performance measures and their impact differ between companies, these non-GAAP 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.
Operating Pre-Provision Net Revenue
Operating PPNR is defined by the Federal Reserve in SR 14-3, which requires companies subject to the rule to project PPNR over the planning horizon for each of the economic scenarios defined annually by the regulators. Banking regulations define PPNR as the sum of net interest income plusand non-interest income less non-interest expense.expenses before adjusting for loss provisions. Management has further adjusted this metric to exclude any non-recurring or non-operational elements of non-interest income or non-interest expense, which are outlined in the table below. Management feels thatbelieves this is an important metric as it illustrates the underlying performance of the Company, it enables investors and others to assess the Company's ability to generate capital to cover credit losses through the credit cycle, and provides consistent reporting with a key metric used by bank regulatory agencies.

The following table shows the components used in the calculation of PPNR:
Year Ended December 31,
202320222021
(in millions)
Net interest income$2,338.9 $2,216.3 $1,548.8 
Total non-interest income280.7 324.6 404.2 
Net revenue$2,619.6 $2,540.9 $1,953.0 
Total non-interest expense1,623.4 1,156.7 851.4 
Pre-provision net revenue$996.2 $1,384.2 $1,101.6 
Less:
Provision for credit losses62.6 68.1 (21.4)
Income tax expense211.2 258.8 223.8 
Net income$722.4 $1,057.3 $899.2 
Efficiency Ratio
The following table shows the components used in the calculation of operating PPNRthe efficiency ratio, which management uses as a metric for assessing cost efficiency:
Year Ended December 31,
202320222021
(dollars in millions)
Total non-interest expense$1,623.4 $1,156.7 $851.4 
Divided by:
Total net interest income2,338.9 2,216.3 1,548.8 
Plus:
Tax equivalent interest adjustment35.5 33.7 33.3 
Total non-interest income280.7 324.6 404.2 
$2,655.1 $2,574.6 $1,986.3 
Efficiency ratio - tax equivalent basis61.1 %44.9 %42.9 %
37
Table of Contents
Earnings Per Share, Adjusted
The Company's earnings for the yearsyear ended December 31, 2017, 2016,2023 were impacted broadly by the bank failures in 2023 and 2015:
  Year Ended December 31,
  2017 2016 2015
  (in thousands)
Total non-interest income $45,344
 $42,915
 $29,768
Less:      
Gain (loss) on sales of investment securities, net (1) 2,343
 1,059
 615
Unrealized (losses) gains on assets and liabilities measured at fair value, net (1) (1) 8
 47
(Loss) on extinguishment of debt (1) —
 —
 (81)
Total operating non-interest income 43,002
 41,848
 29,187
Plus: net interest income 784,664
 657,213
 492,576
Net operating revenue $827,666
 $699,061
 $521,763
       
Total non-interest expense $360,941
 $330,949
 $260,606
Less:      
Net (gain) loss on sales / valuations of repossessed and other assets (1) (80) (125) (2,070)
Acquisition / restructure expense (1) —
 12,412
 8,836
Total operating non-interest expense $361,021
 $318,662
 $253,840
       
Operating pre-provision net revenue (2) $466,645
 $380,399
 $267,923
Plus:      
Non-operating revenue adjustments 2,342
 1,067
 581
Less:      
Provision for credit losses 17,250
 8,000
 3,200
Non-operating expense adjustments (80) 12,287
 6,766
Income before provision for income taxes 451,817
 361,179
 258,538
Income tax expense 126,325
 101,381
 64,294
Net income $325,492
 $259,798
 $194,244

(1)The operating PPNR non-GAAP performance metric is adjusted to exclude the effects of this non-operational item.
(2)    There were no adjustments maderesulting actions undertaken by the Company to reposition its balance sheet to ensure the strength of its capital and liquidity position. The following table shows the components used in the calculation of earnings per share for non-recurring items during the yearsyear ended December 31, 2017, 2016,2023, adjusted to exclude certain items, which management believes is more comparable to historical earnings trends:
Year Ended December 31, 2023(in millions)
Net income$722.4
Adjusted for:
Fair value loss adjustments, net116.0
Loss on sales of investment securities40.8
FDIC special assessment66.3
Gain on extinguishment of debt(52.7)
Tax effect of adjustments(38.5)
Net income, adjusted$854.3
Dividends on preferred stock12.8
Net income available to common stockholders, adjusted$841.5
Weighted average number of common shares outstanding:
Basic$108.3
Diluted108.5
Earnings per share, adjusted:
Basic, adjusted$7.77
Diluted, adjusted7.76
Tangible Common Equity and 2015.


Return on Average Tangible Common Equity
The following table presentstables present financial measures related to tangible common equity. Tangible common equity represents total stockholders' equity less identifiablereduced by goodwill and intangible assets and goodwill.preferred stock. Management believes that tangible common equity financial measures are useful in evaluating the Company's capital strength, financial condition, and ability to manage potential losses. In addition, management believes that these measures improve comparability to other institutions that have not engaged in acquisitions that resulted in recorded goodwill and other intangible assets.
December 31,
20232022
(dollars and shares in millions)
Total stockholders' equity$6,078 $5,356 
Less:
Goodwill and intangible assets669 680 
Preferred stock295 295 
Total tangible common stockholders' equity5,114 4,381 
Plus: deferred tax - attributed to intangible assets2 2 
Total tangible common equity, net of tax$5,116 $4,383 
Total assets$70,862 $67,734 
Less: goodwill and intangible assets, net669 680 
Tangible assets70,193 67,054 
Plus: deferred tax - attributed to intangible assets2 2 
Total tangible assets, net of tax$70,195 $67,056 
Tangible common equity ratio7.3 %6.5 %
Common shares outstanding109.5 108.9 
Book value per common share$52.81 $46.47 
Tangible book value per common share, net of tax46.72 40.25 
38
Table of Contents
 December 31,
 2017 2016
 (dollars and shares in thousands)
Total stockholders' equity$2,229,698
 $1,891,529
Less: goodwill and intangible assets300,748
 302,894
Total tangible stockholders' equity1,928,950
 1,588,635
Plus: deferred tax - attributed to intangible assets2,698
 4,949
Total tangible common equity, net of tax$1,931,648
 $1,593,584
    
Total assets$20,329,085
 $17,200,842
Less: goodwill and intangible assets, net300,748
 302,894
Tangible assets20,028,337
 16,897,948
Plus: deferred tax - attributed to intangible assets2,698
 4,949
Total tangible assets, net of tax$20,031,035
 $16,902,897
  �� 
Tangible equity ratio9.6% 9.4%
Tangible common equity ratio9.6
 9.4
Common shares outstanding105,487
 105,071
Tangible book value per share, net of tax$18.31
 $15.17
Year Ended December 31,
202320222021
(dollars in millions)
Net income available to common stockholders$709.6 $1,044.5 $895.7 
Divided by:
Average stockholders' equity5,719 5,099 4,034 
Less:
Average goodwill and intangible assets675 688 529 
Average preferred stock294 294 81 
Average tangible common equity$4,750 $4,117 $3,424 
Return on average tangible common equity14.9 %25.4 %26.2 %
Operating Efficiency Ratio
The following table shows the components used in the calculation of the operating efficiency ratio, which management uses as a metric for assessing cost efficiency:
39
 Year Ended December 31,
 2017 2016 2015
 (dollars in thousands)
Total operating non-interest expense$361,021
 $318,662
 $253,840
      
Divided by:     
Total net interest income$784,664
 $657,213
 $492,576
Plus:     
Tax equivalent interest adjustment41,989
 34,902
 31,883
Operating non-interest income43,002
 41,848
 29,187
Net operating revenue - TEB$869,655
 $733,963
 $553,646
      
Operating efficiency ratio - TEB41.5% 43.4% 45.8%
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Regulatory Capital
The following table presents certain financial measures related to regulatory capital under Basel III, which includes Common Equity Tier 1CET1 and total capital. The FRB and other banking regulators use Common Equity Tier 1CET1 and total capital as a basis for assessing a bank's capital adequacy; therefore, management believes it is useful to assess financial condition and capital adequacy using this same basis. Specifically, the total capital ratio takes into consideration the risk levels of assets and off-balance sheet financial instruments. In addition, management believes that the classified assets to Common Equity Tier 1CET1 plus allowance measure is an important regulatory metric for assessing asset quality.
As permitted by the regulatory capital rules, the Company elected the CECL transition option that delayed the estimated impact on regulatory capital resulting from the adoption of CECL over a five-year transition period ending December 31, 2024. Accordingly, capital ratios and amounts for 2022 include a 25% reduction to the capital benefit that resulted from the increased ACL related to the adoption of ASC 326, which has increased to include a 50% reduction beginning in 2023.
December 31,
20232022
(dollars in millions)
Common equity tier 1:
Common equity$5,807 $5,097 
Less:
Non-qualifying goodwill and intangibles658 672 
Disallowed deferred tax asset3 12 
AOCI related adjustments(516)(664)
Unrealized gain on changes in fair value liabilities3 4 
Common equity tier 1$5,659 $5,073 
Divided by: Risk-weighted assets$52,517 $54,461 
Common equity tier 1 ratio10.8 %9.3 %
Common equity tier 1$5,659 $5,073 
Plus: Preferred stock and trust preferred securities376 376 
Tier 1 capital$6,035 $5,449 
Divided by: Tangible average assets$70,295 $69,814 
Tier 1 leverage ratio8.6 %7.8 %
Total capital:
Tier 1 capital$6,035 $5,449 
Plus:
Subordinated debt818 817 
Adjusted allowances for credit losses348 320 
Tier 2 capital$1,166 $1,137 
Total capital$7,201 $6,586 
Total capital ratio13.7 %12.1 %
Classified assets to tier 1 capital plus allowance:
Classified assets$673 $393 
Divided by: Tier 1 capital6,035 5,449 
Plus: Adjusted allowances for credit losses348 320 
Total Tier 1 capital plus adjusted allowances for credit losses$6,383 $5,769 
Classified assets to tier 1 capital plus allowance10.5 %6.8 %

40
 December 31,
 2017 2016
 (dollars in thousands)
Common Equity Tier 1:   
Common Equity$2,229,698
 $1,891,529
Less:   
Non-qualifying goodwill and intangibles296,421
 294,754
Disallowed deferred tax asset638
 1,400
AOCI related adjustments(9,496) (13,460)
Unrealized gain on changes in fair value liabilities7,785
 8,118
Common Equity Tier 1$1,934,350
 $1,600,717
Divided by: Risk-weighted assets$18,569,608
 $15,980,092
Common Equity Tier 1 ratio10.4% 10.0%
    
Common Equity Tier 1$1,934,350
 $1,600,717
Plus:   
Trust preferred securities81,500
 81,500
Less:   
Disallowed deferred tax asset159
 934
Unrealized gain on changes in fair value liabilities1,947
 5,412
Tier 1 capital$2,013,744
 $1,675,871
Divided by: Tangible average assets$19,624,517
 $16,868,674
Tier 1 leverage ratio10.3% 9.9%
    
Total Capital:   
Tier 1 capital$2,013,744
 $1,675,871
Plus:   
Subordinated debt301,020
 299,927
Qualifying allowance for credit losses140,050
 124,704
Other6,174
 6,978
Less: Tier 2 qualifying capital deductions—
 —
Tier 2 capital$447,244
 $431,609
    
Total capital$2,460,988
 $2,107,480
    
Total capital ratio13.3% 13.2%
    
Classified assets to Tier 1 capital plus allowance for credit losses:   
Classified assets$222,004
 $211,782
Divided by:   
Tier 1 capital2,013,744
 1,675,871
Plus: Allowance for credit losses140,050
 124,704
Total Tier 1 capital plus allowance for credit losses$2,153,794
 $1,800,575
    
Classified assets to Tier 1 capital plus allowance10.3% 11.8%
Table of Contents

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 from 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:
Year Ended December 31,
20232022
Average
Balance		InterestAverage
Yield / Cost		Average
Balance		InterestAverage
Yield / Cost
(dollars in millions)
Interest earning assets
Loans HFS$3,347 $213.4 6.38 %$4,364 $180.3 4.13 %
Loans HFI:
Commercial and industrial17,886 1,337.9 7.54 20,083 1,002.8 5.05 
CRE - non-owner occupied9,736 734.8 7.56 7,769 416.4 5.37 
CRE - owner occupied1,800 102.3 5.79 1,841 93.2 5.16 
Construction and land development4,498 419.7 9.33 3,426 229.1 6.69 
Residential real estate15,126 596.4 3.94 13,771 468.5 3.40 
Consumer72 5.2 7.23 61 3.1 5.07 
Total loans HFI (1), (2), (3)49,118 3,196.3 6.53 46,951 2,213.1 4.74 
Securities:
Securities - taxable8,002 381.3 4.76 6,325 195.3 3.09 
Securities - tax-exempt2,097 86.2 5.15 2,067 77.3 4.68 
Total securities (1)10,099 467.5 4.84 8,392 272.6 3.48 
Other2,848 158.1 5.55 1,574 25.8 1.64 
Total interest earning assets65,412 4,035.3 6.22 61,281 2,691.8 4.45 
Non-interest earning assets
Cash and due from banks273 260 
Allowance for credit losses(326)(280)
Bank owned life insurance183 180 
Other assets4,581 3,948 
Total assets$70,123 $65,389 
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts$12,422 $352.0 2.83 %$8,331 $78.8 0.95 %
Savings and money market accounts14,903 428.1 2.87 18,518 158.6 0.86 
Certificates of deposit7,945 362.5 4.56 2,772 39.0 1.40 
Total interest-bearing deposits35,270 1,142.6 3.24 29,621 276.4 0.93 
Short-term borrowings7,800 434.6 5.57 3,424 92.1 2.69 
Long-term debt862 81.3 9.43 1,008 72.0 7.14 
Qualifying debt892 37.9 4.25 893 35.0 3.92 
Total interest-bearing liabilities44,824 1,696.4 3.78 34,946 475.5 1.36 
Interest cost of funding earning assets2.59 0.78 
Non-interest-bearing liabilities
Non-interest-bearing demand deposits18,293 24,133 
Other liabilities1,287 1,211 
Stockholders’ equity5,719 5,099 
Total liabilities and stockholders' equity$70,123 $65,389 
Net interest income and margin (4)$2,338.9 3.63 %$2,216.3 3.67 %
(1)Yields on loans and securities have been adjusted to a TEB. The taxable-equivalent adjustment was $35.5 million and $33.7 million for the year ended December 31, 2023 and 2022, respectively.
(2)Included in the yield computation are net loan fees of $131.2 million and $132.2 million for the year ended December 31, 2023 and 2022, respectively.
(3)Includes non-accrual loans.
(4)Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis.
41
  Year Ended December 31,
  2017 2016
  Average
Balance		 Interest Average
Yield / Cost		 Average
Balance		 Interest Average
Yield / Cost
  (dollars in thousands)
Interest earning assets            
Loans:            
Commercial and industrial $6,188,473
 $311,375
 5.52% $5,426,053
 $252,209
 5.14%
Commercial real estate 5,663,411
 318,399
 5.62
 5,228,944
 286,149
 5.47
Construction and land development 1,603,328
 99,427
 6.20
 1,307,895
 83,206
 6.36
Residential real estate 339,285
 16,066
 4.74
 289,181
 13,374
 4.62
Consumer 46,033
 2,243
 4.87
 35,821
 1,658
 4.63
Total loans (1), (2), (3) 13,840,530
 747,510
 5.62
 12,287,894
 636,596
 5.40
Securities:            
Securities - taxable 2,579,585
 64,043
 2.48
 1,789,806
 39,772
 2.22
Securities - tax-exempt 670,321
 24,596
 5.45
 507,103
 18,768
 5.34
Total securities (1) 3,249,906
 88,639
 3.10
 2,296,909
 58,540
 2.91
Other 680,503
 9,364
 1.38
 532,561
 5,370
 1.01
Total interest earning assets 17,770,939
 845,513
 4.99
 15,117,364
 700,506
 4.86
Non-interest earning assets            
Cash and due from banks 137,537
     141,789
    
Allowance for credit losses (131,954)     (122,048)    
Bank owned life insurance 166,054
     163,596
    
Other assets 926,977
     833,562
    
Total assets $18,869,553
     $16,134,263
    
Interest-bearing liabilities            
Interest-bearing deposits:            
Interest-bearing transaction accounts $1,467,231
 $3,974
 0.27% $1,217,344
 $2,231
 0.18%
Savings and money market accounts 6,208,057
 26,086
 0.42
 5,827,549
 19,368
 0.33
Time certificates of deposit 1,560,896
 11,905
 0.76
 1,615,502
 8,123
 0.50
Total interest-bearing deposits 9,236,184
 41,965
 0.45
 8,660,395
 29,722
 0.34
Short-term borrowings 63,623
 611
 0.96
 80,727
 573
 0.71
Qualifying debt 371,311
 18,273
 4.92
 290,779
 12,998
 4.47
Total interest-bearing liabilities 9,671,118
 60,849
 0.63
 9,031,901
 43,293
 0.48
Non-interest-bearing liabilities            
Non-interest-bearing demand deposits 6,788,783
     5,062,319
    
Other liabilities 330,365
     269,129
    
Stockholders’ equity 2,079,287
     1,770,914
    
Total liabilities and stockholders' equity $18,869,553
     $16,134,263
    
Net interest income and margin (4)   $784,664
 4.65%   $657,213
 4.58%
(1)Yields on loans and securities have been adjusted to a TEB. The taxable-equivalent adjustment was $42.0 million and $34.9 million for 2017 and 2016, respectively.
(2)Included in the yield computation are net loan fees of $37.0 million and accretion on acquired loans of $28.2 million for 2017, compared to $28.5 million and $29.2 million for 2016, respectively.
(3)Includes non-accrual loans.
(4)Net interest margin is computed by dividing net interest income by total average earning assets.

Year Ended December 31,
2023 versus 2022
Increase (Decrease) Due to Changes in (1)
VolumeRateTotal
(in millions)
Interest income:
Loans HFS$(64.8)$97.9 $33.1 
Loans HFI:
Commercial and industrial(164.4)499.5 335.1 
CRE - non-owner occupied148.4 170.0 318.4 
CRE - owner occupied(2.3)11.4 9.1 
Construction and land development100.1 90.6 190.7 
Residential real estate53.4 74.5 127.9 
Consumer0.8 1.3 2.1 
Total loans HFI136.0 847.3 983.3 
Securities:
Securities - taxable79.9 106.1 186.0 
Securities - tax-exempt1.2 7.7 8.9 
Total securities81.1 113.8 194.9 
Other70.7 61.6 132.3 
Total interest income223.0 1,120.6 1,343.6 
Interest expense:
Interest-bearing transaction accounts$115.9 $157.3 $273.2 
Savings and money market accounts(103.9)373.4 269.5 
Time certificates of deposit236.0 87.5 323.5 
Short-term borrowings243.8 98.7 342.5 
Long-term debt(13.7)23.0 9.3 
Qualifying debt— 2.9 2.9 
Total interest expense478.2 742.7 1,220.9 
Net change$(255.2)$377.9 $122.7 
(1)Changes attributable to both volume and rate are designated as volume changes.
  Year Ended December 31,
  2016 2015
  Average
Balance		 Interest Average
Yield / Cost		 Average
Balance		 Interest Average
Yield / Cost
  (dollars in thousands)
Interest earning assets            
Loans:            
Commercial and industrial $5,426,053
 $252,209
 5.14% $4,255,046
 $186,148
 4.97%
Commercial real estate 5,228,944
 286,149
 5.47
 4,123,848
 217,841
 5.28
Construction and land development 1,307,895
 83,206
 6.36
 961,910
 55,909
 5.81
Residential real estate 289,181
 13,374
 4.62
 306,948
 15,077
 4.91
Consumer 35,821
 1,658
 4.63
 26,482
 1,442
 5.45
Total loans (1), (2), (3) 12,287,894
 636,596
 5.40
 9,674,234
 476,417
 5.18
Securities:            
Securities - taxable 1,789,806
 39,772
 2.22
 1,268,755
 28,525
 2.25
Securities - tax-exempt 507,103
 18,768
 5.34
 407,012
 15,032
 5.41
Total securities (1) 2,296,909
 58,540
 2.91
 1,675,767
 43,557
 3.02
Other 532,561
 5,370
 1.01
 271,976
 5,170
 1.90
Total interest earning assets 15,117,364
 700,506
 4.86
 11,621,977
 525,144
 4.79
Non-interest earning assets            
Cash and due from banks 141,789
     137,923
    
Allowance for credit losses (122,048)     (115,033)    
Bank owned life insurance 163,596
     152,288
    
Other assets 833,562
     623,648
    
Total assets $16,134,263
     $12,420,803
    
Interest-bearing liabilities            
Interest-bearing deposits:            
Interest-bearing transaction accounts $1,217,344
 $2,231
 0.18% $983,889
 $1,736
 0.18%
Savings and money market accounts 5,827,549
 19,368
 0.33
 4,470,189
 12,544
 0.28
Time certificates of deposit 1,615,502
 8,123
 0.50
 1,808,120
 7,515
 0.42
Total interest-bearing deposits 8,660,395
 29,722
 0.34
 7,262,198
 21,795
 0.30
Short-term borrowings 80,727
 573
 0.71
 185,173
 4,965
 2.68
Long-term debt —
 —
 —
 76,655
 801
 1.04
Qualifying debt 290,779
 12,998
 4.47
 120,191
 5,007
 4.17
Total interest-bearing liabilities 9,031,901
 43,293
 0.48
 7,644,217
 32,568
 0.43
Non-interest-bearing liabilities            
Non-interest-bearing demand deposits 5,062,319
     3,273,138
    
Other liabilities 269,129
     179,496
    
Stockholders’ equity 1,770,914
     1,323,952
    
Total liabilities and stockholders' equity $16,134,263
     $12,420,803
    
Net interest income and margin (4)   $657,213
 4.58%   $492,576
 4.51%
(1)Yields on loans and securities have been adjusted to a TEB. The taxable-equivalent adjustment was $34.9 million and $31.9 million for 2016 and 2015, respectively.
(2)Included in the yield computation are net loan fees of $28.5 million and accretion on acquired loans of $29.2 million for 2016, compared to $16.9 million and $17.1 million for 2015, respectively.
(3)Includes non-accrual loans.
(4)Net interest margin is computed by dividing net interest income by total average earning assets.

  Year Ended December 31, Year Ended December 31,
  2017 versus 2016 2016 versus 2015
  Increase (Decrease) Due to Changes in (1) Increase (Decrease) Due to Changes in (1)
  Volume Rate Total Volume Rate Total
  (in thousands)
Interest income:            
Loans:            
Commercial and industrial $38,362
 $20,804
 $59,166
 $54,430
 $11,631
 $66,061
Commercial real estate 24,426
 7,824
 32,250
 60,475
 7,833
 68,308
Construction and land development 18,320
 (2,099) 16,221
 22,011
 5,286
 27,297
Residential real estate 2,373
 319
 2,692
 (822) (881) (1,703)
Consumer 498
 87
 585
 432
 (216) 216
Total loans 83,979
 26,935
 110,914
 136,526
 23,653
 160,179
Securities:            
Securities - taxable 19,608
 4,663
 24,271
 11,579
 (332) 11,247
Securities - tax-exempt 5,989
 (161) 5,828
 3,704
 32
 3,736
Total securities 25,597
 4,502
 30,099
 15,283
 (300) 14,983
Other 2,036
 1,958
 3,994
 2,628
 (2,428) 200
Total interest income 111,612
 33,395
 145,007
 154,437
 20,925
 175,362
             
Interest expense:            
Interest bearing transaction accounts $677
 $1,066
 $1,743
 $428
 $67
 $495
Savings and money market 1,600
 5,118
 6,718
 4,511
 2,313
 6,824
Time certificates of deposit (416) 4,198
 3,782
 (969) 1,577
 608
Short-term borrowings (165) 203
 38
 (741) (3,651) (4,392)
Long-term debt —
 —
 —
 —
 (801) (801)
Qualifying debt 3,963
 1,312
 5,275
 7,625
 366
 7,991
Total interest expense 5,659
 11,897
 17,556
 10,854
 (129) 10,725
             
Net increase $105,953
 $21,498
 $127,451
 $143,583
 $21,054
 $164,637
(1)Changes due to both volume and rate have been allocated to volume changes.
Comparison of interest income, interest expense and net interest margin
The Company's primary source of revenue is interest income. For the year ended December 31, 2017,2023, interest income was $845.5 million,$4.0 billion, an increase of 20.7%$1.3 billion, or 49.9%, compared to $700.5 million$2.7 billion for the year ended December 31, 2016.2022. This increase was primarily the result of a $1.55 billion$983.3 million increase in interest income from loans HFI, driven by higher yields and to a lesser extent an increase in the average HFI loan balance which, together with the effect of the rising rate environment and inclusion of a full year of HFF results, drove a $110.9 million increase in loan interest income$2.2 billion for the year ended December 31, 2017.2023. Interest income from investment securities also increased by $30.1$194.9 million for the comparable period primarily due to anincreased investment yields and a $1.7 billion increase in the average investment balance of $953.0 million from December 31, 2016 as well as an increase in interest rates.balances. Average yield on interest earning assets increased to 4.99%6.22% for the year ended December 31, 2017,2023, compared to 4.86%4.45% for the same period in 2016,2022, which was primarily the result of increased yields on loans and investment securities resulting from rising interest rates during 2017.a higher rate environment.
For the year ended December 31, 2017,2023, interest expense was $60.8 million,$1.7 billion, compared to $43.3$475.5 million for the year ended December 31, 2016.2022. Interest expense on deposits increased $12.2$866.2 million for the same period as average interest bearing deposits increased $575.8 million which, togetherdue to increasing deposit rates, coupled with the effect of the rising rate environment, drove an 11 basis pointa $5.6 billion increase in average cost of interest bearinginterest-bearing deposits. Interest expense on qualifying debtshort-term borrowings increased by $5.3$342.5 million as a result of an $80.5 million increase in average qualifying debt for the year ended December 31, 20172023 compared to the same period in 2016. The increase in interest expense on qualifying debt is the2022 as a result of inclusionan increase of a full year of interest expense on$4.4 billion in the Parent's $175.0 million of subordinated debentures in 2017 results, compared to only six months in 2016.average balance.
For the year ended December 31, 2017,2023, net interest income was $784.7 million,$2.3 billion, compared to $657.2 million$2.2 billion for the year ended December 31, 2016.2022. The increase in net interest income reflectswas driven by a $2.65$4.1 billion increase in average interest earning assets, partially offset by a $639.2 millionan increase of $9.9 billion in average interest-bearing liabilities. The increasedecrease in net interest margin of 74 basis points

compared to 20162022 is also the result of an increase in average yieldhigher funding costs on loansdeposits and securities due to the rising interest rate environment,borrowings, partially offset by higher depositloan and funding costs.investment security yields during 2023.
Interest income for the year ended December 31, 2016 was $700.5 million, an increase
42
Table of 33.4%, compared to $525.1 million for the year ended December 31, 2015. This increase was primarily the result of a $2.61 billion increase in the average loan balance, which drove a $160.2 million increase in loan interest income for the year ended December 31, 2016. The acquisition of the HFF loan portfolio increased the 2016 average loan balance by $904.8 million. The remaining increase in the average loan balance from the prior year is attributable to organic loan growth and inclusion of a full year of Bridge loans in the average loan balances, compared to only six months in 2015. Interest income from investment securities increased by $15.0 million for the comparable period primarily due to an increase in the average investment balance of $621.1 million from December 31, 2015. Average yield on interest earning assets increased to 4.86% for the year ended December 31, 2016, compared to 4.79% for the same period in 2015, which was primarily the result of increased yields on loans, primarily as a result the HFF portfolio.Contents
Interest expense for the year ended December 31, 2016 was $43.3 million, compared to $32.6 million for the year ended December 31, 2015, an increase of $10.7 million, or 3.4%. Interest expense on deposits increased $7.9 million for the same period as average interest bearing deposits increased $1.40 billion, which is a 4 basis point increase in average cost of interest bearing deposits. Interest expense on short-term and long-term borrowings decreased by $5.2 million as a result of a $181.1 million decrease in average short-term and long-term borrowings for the year ended December 31, 2016, compared to the same period in 2015. The decrease in average short-term borrowings relates primarily to the payoff of the Company's 10% Senior Notes during 2015, as well as a decrease in average FHLB overnight advances. Average long-term borrowings decreased from the prior year as the Company paid off $200.0 million of FHLB advances classified as long-term during 2015.
Net interest income was $657.2 million for the year ended December 31, 2016, compared to $492.6 million for the year ended December 31, 2015, an increase of $164.6 million, or 33.4%. The increase in net interest income reflects a $3.50 billion increase in average interest earning assets, offset by a $1.39 billion increase in average interest-bearing liabilities. The increase in net interest margin of 7 basis points is the result of an increase in the average loan balance and average yield on loans compared to the same period in 2015, slightly offset by higher deposit costs.
Provision for Credit Losses
The provision for credit losses in each period is reflected as a reduction in earnings infor that period.period and includes amounts related to funded loans, unfunded loan commitments, and investment securities. The provision is equal to the amount required to maintain the allowance for credit lossesACL at a level that is adequate to absorb probableestimated lifetime credit losses inherent in the loan portfolio.and investment securities portfolios based on remaining contractual maturity, adjusted for estimated prepayments as of each period end. The Company's CECL models incorporate historical experience, current conditions, and reasonable and supportable forecasts in measuring expected credit losses. For the year ended December 31, 2017,2023 and 2022, the Company recorded a provision for credit losses of $62.6 million and $68.1 million, respectively. The decrease in the provision for credit losses was $17.3 million, compared to $8.0 million forfrom the year ended December 31, 2016. The provision increase was primarily2022 is due to organica significant decline in loan growth during 2023, offset by heightened economic uncertainty, particularly in total loans of $1.89 billion and minimal net charge-offs in 2017. For the year ended December 31, 2016, the provision for credit losses was $8.0 million, compared to $3.2 million for the year ended December 31, 2015. The provision increase was primarily due to an increase in total organic loans, as well as increased net charge-offs for 2016, compared to net recoveries for 2015. The Company may establish an additional allowance for credit losses for PCI loans through provision for credit losses when impairment is determined as a result of lower than expected cash flows. As of December 31, 2017 and 2016, the allowance for credit losses on PCI loans was $1.6 million and $1.8 million, respectively.

commercial real estate market.
Non-interest Income
The following table presents a summary of non-interest income for the periods presented:income: 
  Year Ended December 31,
  2017 2016 Increase (Decrease) 2016 2015 Increase (Decrease)
  (in thousands)
Service charges and fees $20,346
 $18,824
 $1,522
 $18,824
 $14,782
 $4,042
Card income 6,313
 5,226
 1,087
 5,226
 4,718
 508
Income from equity investments 4,496
 2,664
 1,832
 2,664
 564
 2,100
Income from bank owned life insurance 3,861
 3,762
 99
 3,762
 3,899
 (137)
Foreign currency income 3,536
 3,419
 117
 3,419
 1,535
 1,884
Lending related income and gains (losses) on sale of loans, net 2,212
 5,295
 (3,083) 5,295
 1,390
 3,905
Gain (loss) on sales of investment securities, net 2,343
 1,059
 1,284
 1,059
 615
 444
(Loss) on extinguishment of debt —
 —
 —
 —
 (81) 81
Other income 2,237
 2,666
 (429) 2,666
 2,346
 320
Total non-interest income $45,344
 $42,915
 $2,429
 $42,915
 $29,768
 $13,147
Year Ended December 31,Increase (Decrease)
20232022
(in millions)
Net gain on loan origination and sale activities$193.5 $104.0 $89.5 
Net loan servicing revenue102.3 130.9 (28.6)
Service charges and fees76.3 27.0 49.3 
Commercial banking related income23.7 21.5 2.2 
Income from equity investments15.7 17.8 (2.1)
(Loss) gain on recovery from credit guarantees(2.2)14.7 (16.9)
(Loss) gain on sales of investment securities(40.8)6.8 (47.6)
Fair value loss adjustments, net(116.0)(28.6)(87.4)
Other income28.2 30.5 (2.3)
Total non-interest income$280.7 $324.6 $(43.9)
Total non-interest income for the year ended December 31, 20172023 compared to 2016, increasedthe same period in 2022 decreased by $2.4 million, or 5.7%.$43.9 million. The increase isdecrease in non-interest income was primarily due to income from equity investments and service charges and fees. The increase in income from equity investments is attributable todriven by an increase in both warrantfair value loss adjustments, a net loss on sales of investment securities, and SBIC income.a decrease in loan servicing revenue. Fair value loss adjustments and the net loss on sales of investment securities during the year ended December 31, 2023 were driven by balance sheet repositioning charges incurred primarily during the first quarter following execution of the Company's balance sheet repositioning strategy, which included sales of select loans and investment securities. The decrease in net loan servicing revenue of $28.6 million is primarily related to lower MSR valuations, partially offset by a reduction in MSR hedging losses and an increase in base service fee revenue. These decreases were offset in part by an increase in net gain on loan origination and sale activities of $89.5 million from higher spreads and an increase in service charges and fees is due to continued growth in the Company's deposit base, which increased $2.42 billion from December 31, 2016. These increases were offset by a decrease in lending related income and net gains on sale of loans largely as a result$49.3 million.

43
Total non-interest income for the year ended December 31, 2016 compared to 2015, increased by $13.1 million, or 44.2%. The increase is primarily due to service charges and fees, lending related income and net gains on sale of loans, and income from equity investments. The increase in service charges and fees is due to the growth of the Company's deposit base, which increased $2.52 billion from December 31, 2015, as well as inclusion of a full year of Bridge's results, compared to only six months of income in 2015. The increase in lending related income and net gains on sale of loans relates to increases in total gains on sale of loans and letters of credit fees. Income from equity investments increased largely as a result of warrant income.
Non-interest Expense
The following table presents a summary of non-interest expense for the periods presented:expense:
Year Ended December 31,
Year Ended December 31,
Year Ended December 31,
2023
2023
2023
(in millions)
(in millions)
(in millions)
Salaries and employee benefits
Salaries and employee benefits
Salaries and employee benefits
Deposit costs
Deposit costs
Deposit costs
Insurance
Insurance
Insurance
Data processing
Data processing
Data processing
Legal, professional, and directors' fees
Legal, professional, and directors' fees
Legal, professional, and directors' fees
Occupancy
Occupancy
Occupancy
Loan servicing expenses
Loan servicing expenses
Loan servicing expenses
Business development and marketing
Business development and marketing
Business development and marketing
Loan acquisition and origination expenses
Loan acquisition and origination expenses
Loan acquisition and origination expenses
Acquisition and restructure expenses
Year Ended December 31,
2017 2016 Increase (Decrease) 2016 2015 Increase (Decrease)
Acquisition and restructure expenses
(in thousands)
Salaries and employee benefits$214,344
 $188,810
 $25,534
 $188,810
 $149,828
 $38,982
Legal, professional, and directors' fees29,814
 24,610
 5,204
 24,610
 18,548
 6,062
Occupancy27,860
 27,303
 557
 27,303
 22,180
 5,123
Data processing19,225
 19,657
 (432) 19,657
 15,830
 3,827
Insurance14,042
 12,898
 1,144
 12,898
 11,003
 1,895
Deposit costs9,731
 4,983
 4,748
 4,983
 907
 4,076
Loan and repossessed asset expenses4,617
 2,999
 1,618
 2,999
 4,377
 (1,378)
Marketing3,804
 3,596
 208
 3,596
 2,885
 711
Card expense3,413
 1,939
 1,474
 1,939
 1,710
 229
Intangible amortization2,074
 2,788
 (714) 2,788
 1,970
 818
Net (gain) loss on sales / valuations of repossessed and other assets(80) (125) 45
 (125) (2,070) 1,945
Acquisition / restructure expense—
 12,412
 (12,412) 12,412
 8,836
 3,576
Acquisition and restructure expenses
Gain on extinguishment of debt
Gain on extinguishment of debt
Gain on extinguishment of debt
Other expense
Other expense
Other expense32,097
 29,079
 3,018
 29,079
 24,602
 4,477
Total non-interest expense$360,941
 $330,949
 $29,992
 $330,949
 $260,606
 $70,343
Total non-interest expense
Total non-interest expense
Total non-interest expense for the year ended December 31, 2017,2023 increased $466.7 million compared to 2016,the same period in 2022. The increase in non-interest expense was primarily driven by increased $30.0deposit costs, insurance, data processing, and salaries and employee benefits. The increase in deposits costs of $270.9 million or 9.1%. This increase primarily relates to salarieshigher earnings credit deposit balances and employee benefits, legal, professional,rates, as ECR related deposits increased $5.0 billion to $17.8 billion as of December 31, 2023. Insurance costs increased $159.3 million due to elevated insured and directors' fees,brokered deposit levels and depositthe FDIC special assessment of $66.3 million. The increase in data processing of $39.0 million was driven by an increase in software licensing costs. Salaries and employee benefits and legal, professional, and directors' fees have increased as the Company continues to build out its infrastructure to support its continued growth. Full-time equivalent employees increased 13.9% from 1,514 at December 31, 2016, compared to 1,725 at December 31, 2017. Deposit costs consist of fees to Promontory Interfinancial Network and others for reciprocal deposits as well as earnings credit on select non-interest bearing deposits. The increase in deposit costs for 2017 compared to 2016 primarily relates$26.8 million due to an increase in deposit earnings credits paid to account holders. These increases to non-interest expense werebase salary and a reduction in deferred origination costs from lower loan origination volume during the year, partially offset by a decrease of $12.4 millionreduction in acquisition / restructure expense relate to the HFF acquisition and restructure costs for the system conversion that occurred in the fourth quarter of 2016.corporate bonuses.
Total non-interest expense for the year ended December 31, 2016, compared to 2015, increased $70.3 million, or 27.0%. This increase primarily relates to salaries and employee benefits, legal, professional, and directors' fees, data processing, occupancy, acquisition / restructure expense, and other non-interest expense. The rise in salaries and employee benefits, legal, professional, and directors' fees, data processing, occupancy, and other non-interest expense is primarily attributable to the addition of Bridge as 2016 includes a full year of Bridge's expenses, compared to only six months of expenses in 2015. These expenses also increased as a result of the acquisition of the HFF loan portfolio in April 2016. The increase in acquisition / restructure expense in 2016 was driven by the core system conversion that occurred in the last quarter of 2016, as well as costs associated with the acquisition of the HFF loan portfolio.
Income Taxes
TheFor the years ended December 31, 2023 and 2022, the Company's effective tax rate for the year ended December 31, 2017 was 27.96%22.6% and 19.7%, compared to 28.07% for the year ended December 31, 2016, and 24.87% for the year ended December 31, 2015. There was not a significant change in the effective tax rate from 2017 compared to 2016.respectively. The increase in the effective tax rate from 2015 compared2022 to 20162023 is primarily due primarily to the increasea decrease in pre-taxpretax book income, without proportionaldecreases in investment tax credits and increases to favorable tax rate items for the year ended December 31, 2016 compared to 2015.in nondeductible insurance premium expenses during 2023.

44
Business Segment Results
The Company's reportable segments are aggregated primarily basedwith a focus on geographic location,products and services offered and markets served. The Company's regional segments, which include Arizona, Nevada, Southern California, and Northern California, provide full serviceconsist of three reportable segments:
•Commercial: provides commercial banking and relatedtreasury management products and services to their respective markets. The Company's NBL segments, which include HOA services, Public & Nonprofit Finance, Technology & Innovation, HFF,small and Other NBLs, providemiddle-market businesses, specialized banking services to sophisticated commercial institutions and investors within niche markets. These NBLs are managed centrallyindustries, as well as financial services to the real estate industry.
•Consumer Related: offers both commercial banking services to enterprises in consumer-related sectors and are broader in geographic scope thanconsumer banking services, such as residential mortgage banking.
•Corporate & Other: consists of the Company's investment portfolio, Corporate borrowings and other segments, though still predominately located within the Company's core market areas. The Corporate & Other segment consists of corporate-relatedrelated items, income and expense items not allocated to the Company's other reportable segments, and inter-segment eliminations.
The following tables present selected operatingreportable segment information for the periods presented:information:
Consolidated CompanyCommercialConsumer RelatedCorporate & Other
December 31, 2023(in millions)
Loans HFI, net of deferred loan fees and costs$50,297 $29,136 $21,161 $— 
Deposits55,333 23,897 24,925 6,511 
December 31, 2022
Loans HFI, net of deferred loan fees and costs$51,862 $31,414 $20,448 $— 
Deposits53,644 29,494 18,492 5,658 
    Regional Segments
  Consolidated Company Arizona Nevada Southern California Northern California
December 31, 2017 (in millions)
Loans, net of deferred loan fees and costs $15,093.9
 $3,323.7
 $1,844.8
 $1,934.7
 $1,275.5
Deposits 16,972.5
 4,841.3
 3,951.4
 2,461.1
 1,681.7
           
December 31, 2016          
Loans, net of deferred loan fees and costs $13,208.5
 $2,955.9
 $1,725.5
 $1,766.8
 $1,095.4
Deposits 14,549.8
 3,843.4
 3,731.5
 2,382.6
 1,543.6
Year Ended December 31, 2023
Income (loss) before provision for income taxes$933.6 $745.2 $258.0 $(69.6)
Year Ended December 31, 2022
Income (loss) before provision for income taxes$1,316.1 $1,095.3 $450.1 $(229.3)
Year Ended December 31, 2017 (in thousands)
Income (loss) before income taxes $451,817
 $126,108
 $97,794
 $60,665
 $42,398
           
Year Ended December 31, 2016          
Income (loss) before income taxes $361,179
 $104,082
 $88,896
 $61,029
 $42,924

  National Business Lines  
  HOA Services Public & Nonprofit Finance Technology & Innovation HFF  Other NBL Corporate & Other
December 31, 2017 (in millions)
Loans, net of deferred loan fees and costs $162.1
 $1,580.4
 $1,097.9
 $1,327.7
 $2,543.0
 $4.1
Deposits 2,230.4
 —
 1,737.6
 —
 —
 69.0
             
December 31, 2016            
Loans, net of deferred loan fees and costs $116.8
 $1,454.3
 $1,011.4
 $1,292.1
 $1,776.9
 $13.4
Deposits 1,890.3
 —
 1,038.2
 —
 —
 120.2
Year Ended December 31, 2017 (in thousands)
Income (loss) before income taxes $26,030
 $19,370
 $51,348
 42,354
 $37,401
 $(51,651)
             
Year Ended December 31, 2016            
Income (loss) before income taxes $17,724
 $13,206
 $46,226
 30,039
 $32,804
 $(75,751)
BALANCE SHEET ANALYSIS
Total assets increased $3.13 billion, or 18.2%, to $20.33$70.9 billion at December 31, 2017, compared to $17.202023 from $67.7 billion at December 31, 2016.2022. The increase in total assets relates primarily to organic loan growth andof $3.1 billion, or 4.6%, was driven by an increase in cash and cash equivalents and investment securities resulting from increased deposits. Loans increased $1.89of $4.2 billion as the Company has focused on increasing its holdings of high quality liquid assets. As a result of loan dispositions undertaken as part of the Company's balance sheet repositioning strategy, loans HFI decreased by $1.6 billion, or 14.3%3.0%, to $15.09$50.3 billion as of December 31, 2023, compared to $51.9 billion as of December 31, 2022. By loan type, commercial and industrial and residential real estate loans decreased $1.6 billion and $1.2 billion, respectively, from December 31, 2022, partially offset by increases in construction and land development and CRE, non-owner occupied loans of $876 million and $331 million, respectively during the same period. In addition, loans HFS increased $218 million at December 31, 2023, up from $1.2 billion as of December 31, 2022.
Total liabilities increased $2.4 billion, or 3.9%, to $64.8 billion at December 31, 2017,2023, compared to $13.21$62.4 billion at December 31, 2016.
Total liabilities increased $2.79 billion, or 18.2%, to $18.10 billion at December 31, 2017, compared to $15.31 billion at December 31, 2016.2022. The increase in liabilities is due primarily to an increase in total deposits and FHLB advances.borrowings. Total deposits increased $2.42$1.7 billion, or 16.7%3.1%, to $16.97$55.3 billion at December 31, 2017, all of which is attributable to organic deposit growth. FHLB advances increased $310.0 million2023. The increase in deposits from December 31, 2016.2022 was driven by increases in interest-bearing demand deposits of $6.4 billion and certificates of deposit of $5.1 billion, partially offset by decreases in non-interest-bearing demand deposits of $5.2 billion and savings and money market accounts of $4.6 billion. Other borrowings also increased $931 million due to an increase in overnight borrowings, partially offset by decreases in long-term borrowings.
Total stockholders’ equity increased by $338.2$722 million, or 17.9%13.5%, to $2.23$6.1 billion at December 31, 2017,2023, compared to $1.89$5.4 billion at December 31, 2016.2022. The increase in stockholders' equity relatesis primarily toa function of net income for the year ended December 31, 2017.and unrealized fair value gains on AFS securities recorded net of tax in other comprehensive income, offset by dividends to common and preferred stockholders.
45
Investment securities
InvestmentDebt securities are classified at the time of acquisition as either HTM, AFS, or measured at fair valuetrading based upon various factors, including asset/liability management strategies, liquidity and profitability objectives, and regulatory requirements. HTM securities are carried at amortized cost, adjusted for amortization of premiums or accretion of discounts. AFS securities are debt securities that may be sold prior to maturity based upon asset/liability management decisions. Investment securities classified as AFS are carried at fair value. Unrealizedvalue with unrealized gains or losses on AFSthese securities are recorded as part ofin AOCI in stockholders’ equity. However, effective January 1, 2018, the amendments within ASU 2016-01, Recognition and Measurementequity, net of Financial Assets and Financial Liabilities, require that equity investments be measured at fair value with changes in fair value recognized in net income. As of December 31, 2017, the Company's equity securities consist of $53.2 million in preferred stock.tax. Amortization of premiums or accretion of discounts on MBS is periodically adjusted for estimated prepayments. InvestmentTrading securities measured at fair value are reported at fair value, with unrealized gains and losses on these securities included in current period earnings.

The Company's investment securities portfolio is utilized as collateral for borrowings, required collateral for public deposits and customer repurchase agreements, and to manage liquidity, capital, and interest rate risk.
The following table summarizes the carrying value of the Company's investment securities portfolio: 
December 31,Increase
(Decrease)
20232022
(in millions)
Debt securities
U.S. Treasury securities$4,853 $— $4,853 
Tax-exempt2,101 1,982 119 
Residential MBS issued by GSEs1,972 1,740 232 
CLO1,399 2,706 (1,307)
Private label residential MBS1,303 1,397 (94)
Commercial MBS issued by GSEs530 97 433 
Corporate debt securities367 390 (23)
Other69 69 — 
Total debt securities$12,594 $8,381 $4,213 
Equity securities
Preferred stock$100 $108 $(8)
CRA investments26 49 (23)
Common stock— 3 (3)
Total equity securities$126 $160 $(34)
The carrying value of debt securities increased $4.2 billion, or 50.3%, from December 31, 2022. The increase in investment securities is largely attributable to purchases of U.S. Treasury securities, offset by sales of CLOs, MBS, and tax-exempt securities. The Company increased its investment in U.S. Treasury securities during 2023 as part of its balance sheet repositioning efforts and to hold additional high quality liquid assets. The Company's U.S. Treasury security portfolio for eachconsists primarily of the periods below: U.S. Treasury bills maturing in one year or less.
46
  At December 31,
  2017 2016 2015 2014 2013
  (in thousands)
CDO $21,857
 $13,490
 $10,060
 $11,445
 $50
Commercial MBS issued by GSEs 109,077
 117,792
 19,114
 2,147
 —
Corporate debt securities 103,483
 64,144
 13,251
 52,489
 97,777
CRA investments 50,616
 37,113
 34,685
 24,332
 24,882
Mutual funds —
 —
 —
 37,702
 36,532
Preferred stock 53,196
 94,662
 111,236
 82,612
 61,484
Private label commercial MBS —
 —
 4,691
 5,149
 5,433
Private label residential MBS 868,524
 433,685
 257,128
 70,243
 36,099
Residential MBS issued by GSEs 1,689,295
 1,356,258
 1,171,702
 893,047
 1,024,457
Tax-exempt 765,960
 500,312
 334,830
 299,037
 299,244
Trust preferred securities 28,617
 26,532
 24,314
 25,546
 23,805
U.S. government sponsored agency securities 61,462
 56,022
 —
 18,346
 46,975
U.S. treasury securities 2,482
 2,502
 2,993
 —
 —
Total investment securities $3,754,569
 $2,702,512
 $1,984,004
 $1,522,095
 $1,656,738
WeightedThe weighted average yield on investment securities is calculated by dividing income within each maturity range by the outstanding amount of the related investment and has not been tax-effected on tax-exempt obligations.investment. For purposes of calculating the weighted average yield, AFS and securities measured at fair value are carried at amortized cost in the table below.below and tax-exempt obligations have not been tax-effected. The maturity distribution and weighted average yield of the Company's investment security portfolios at December 31, 20172023 are summarized in the table below: 
Due Under 1 YearDue 1-5 YearsDue 5-10 YearsDue Over 10 YearsTotal
AmountYieldAmountYieldAmountYieldAmountYieldAmountYield
(dollars in millions)
Held-to-maturity
Tax-exempt bonds$17 5.35 %$20 6.68 %$86 3.99 %$1,120 4.59 %$1,243 4.60 %
Private label residential MBS (1)— — — — — — 186 2.20 186 2.20 
Total HTM securities$17 5.35 %$20 6.68 %$86 3.99 %$1,306 4.25 %$1,429 4.29 %
Available-for-sale
U.S. Treasury securities$4,099 4.97 %$754 4.51 %$— — %$— — %$4,853 4.90 %
Residential MBS issued by GSEs (1)— — — — 6 2.65 2,322 2.70 2,328 2.70 
CLO— — — — 277 7.44 1,130 7.49 1,407 7.48 
Private label residential MBS (1)— — — — 23 4.45 1,297 2.49 1,320 2.53 
Tax-exempt— — 1 8.63 19 2.78 905 2.88 925 2.88 
Commercial MBS issued by GSEs (1)12 3.14 149 5.16 260 5.77 110 4.29 531 5.23 
Corporate debt securities— — 157 4.49 249 3.81 5 3.70 411 4.07 
Other— — 9 2.61 11 4.54 54 5.42 74 4.94 
Total AFS securities$4,111 4.96 %$1,070 4.58 %$845 5.60 %$5,823 3.67 %$11,849 4.34 %
  December 31, 2017
  Due Under 1 Year Due 1-5 Years Due 5-10 Years Due Over 10 Years Total
  Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
  (dollars in thousands)
Held-to-maturity                    
Tax-exempt $—
 —% $11,300
 4.48% $14,979
 2.97% $228,771
 4.67% $255,050
 4.56%
Available-for-sale                    
CDO $—
 —% $—
 —% $—
 —% $50
 —% $50
 —%
Commercial MBS issued by GSEs (1) —
 —
 —
 —
 23,608
 1.81
 89,461
 2.25
 113,069
 2.16
Corporate debt securities —
 —
 5,044
 4.30
 100,000
 3.90
 —
 —
 105,044
 3.92
CRA investments 31,366
 2.01
 15,762
 4.20
 4,005
 2.75
 —
 —
 51,133
 2.75
Preferred stock —
 —
 —
 —
 —
 —
 52,172
 6.52
 52,172
 6.52
Private label residential MBS (1) 289
 4.65
 558
 4.88
 —
 —
 873,414
 3.10
 874,261
 3.10
Residential MBS issued by GSEs (1) 1
 4.89
 2,505
 2.45
 15,966
 2.49
 1,700,716
 2.54
 1,719,188
 2.53
Tax-exempt 2,541
 2.78
 9,954
 3.27
 93,495
 3.53
 395,998
 2.85
 501,988
 2.99
Trust preferred securities —
 —
 —
 —
 —
 —
 32,000
 2.39
 32,000
 2.39
U.S. government sponsored agency securities —
 —
 —
 —
 64,000
 2.44
 —
 —
 64,000
 2.44
U.S. treasury securities 501
 1.28
 1,995
 1.50
 —
 —
 —
 —
 2,496
 1.45
Total AFS securities $34,698
 2.08% $35,818
 3.69% $301,074
 3.22% $3,143,811
 2.79% $3,515,401
 2.83%
(1)MBS are comprised of pools of loans with varying maturities, the majority of which are due after 10 years.
(1)MBS are comprised of pools of loans with varying maturities, the majority of which are due after 10 years.
The Company does not ownhold any subprime MBS in its investment portfolio. The majorityApproximately 65% of its MBS are GSE issued. The remaining MBS that are not GSE issued consist primarily of $809.2investment grade securities, including $1.1 billion rated AAA and $26 million rated AAA, $55.2 million rated AA, $1.4 million rated A, $0.9 million rated BBB, and $1.8 million are non-investment grade.

AA.
Gross unrealized losses on the Company's AFS securities at December 31, 2017 are2023 relate primarily caused byto changes in interest rate fluctuationsrates and credit spread widening in applicable markets.other market conditions not considered to be credit-related issues. The Company has reviewed its securities on which there is an unrealized loss in accordance with its accountingACL policy for OTTI securities described in "Note 2. Investment Securities"1. Summary of Significant Accounting Policies" in Item 8 of this Form 10-K. Based on the analysis performed, management determined an ACL of $1 million on the Company's AFS securities was required at December 31, 2023.
The credit loss model applicable to HTM securities, requires recognition of lifetime expected credit losses through an allowance account at the Consolidated Financial Statements contained herein. There were no impairment charges recorded duringtime the yearssecurity is purchased. For the year ended December 31, 2017, 2016,2023, the Company recognized $2.6 million provision for credit losses on HTM securities, compared to no provision of credit losses of for the same period in 2022, resulting in a total allowance of $7.8 million and 2015.
The Company does not consider any securities to be other-than-temporarily impaired$5.2 million as of December 31, 2017, 2016,2023 and 2015.2022, respectively.
47
Loans HFS
The Company purchases and originates residential mortgage loans through its AmeriHome mortgage banking business channel that are held for sale or securitization. These loans have historically made up substantially all of the balance of loans HFS. However, as part of the Company's balance sheet repositioning strategy, the Company cannot guarantee that OTTI will not occurtransferred $6.6 billion of loans, net of a fair value loss adjustment (primarily commercial and industrial loans) to HFS during the year ended December 31, 2023. The Company completed loan dispositions from this transferred loan pool totaling $4.3 billion through September 30, 2023 and transferred all remaining HFS loans back to HFI at the end of the period as a result of a change in future periods.management's intentions. At December 31, 2017,2023, the Company had the intent and abilityloans HFS balance totaled $1.4 billion, compared to retain its investments for a period of time sufficient$1.2 billion at December 31, 2022. The increase in loans HFS from December 31, 2022 relates to allow for any anticipated recovery in fair value.agency conforming loans.
Loans HFI
The table below summarizes the distribution of the Company’s held for investment loan portfolioportfolio: 
December 31,Increase
(Decrease)
20232022
(in millions)
Warehouse lending$6,618 $5,561 $1,057 
Municipal & nonprofit1,554 1,524 30 
Tech & innovation2,808 2,293 515 
Equity fund resources845 3,717 (2,872)
Other commercial and industrial7,452 7,793 (341)
CRE - owner occupied1,658 1,656 2 
Hotel franchise finance3,855 3,807 48 
Other CRE - non-owner occupied5,974 5,457 517 
Residential13,287 13,996 (709)
Residential - EBO1,223 1,884 (661)
Construction and land development4,862 3,995 867 
Other161 179 (18)
Total loans HFI50,297 51,862 (1,565)
Allowance for credit losses(337)(310)(27)
Total loans HFI, net of allowance$49,960 $51,552 $(1,592)
Loans classified as HFI are stated at the endamount of each of the periods indicated: 
  December 31,
  2017 2016 2015 2014 2013
  (in thousands)
Loans, held for investment          
Commercial and industrial $6,841,247
 $5,859,446
 $5,264,856
 $3,531,899
 $2,472,708
Commercial real estate - non-owner occupied 3,911,313
 3,549,876
 2,289,480
 2,058,620
 1,843,415
Commercial real estate - owner occupied 2,245,060
 2,015,671
 2,085,738
 1,734,617
 1,561,862
Construction and land development 1,647,726
 1,489,488
 1,143,228
 754,154
 537,231
Residential real estate 425,291
 258,734
 322,265
 298,872
 350,312
Consumer 48,583
 38,572
 26,474
 32,633
 45,153
Deferred loan fees and costs (25,285) (22,260) (19,187) (12,530) (9,266)
Loans, net of deferred loan fees and costs 15,093,935
 13,189,527
 11,112,854
 8,398,265
 6,801,415
Allowance for credit losses (140,050) (124,704) (119,068) (110,216) (100,050)
Total loans HFI $14,953,885
 $13,064,823
 $10,993,786
 $8,288,049
 $6,701,365
unpaid principal, adjusted for net deferred fees and costs, premiums and discounts on acquired and purchased loans, and an ACL. Net deferred loan fees and costs as of December 31, 2017 and 2016 total $25.3$108 million and $22.3$141 million respectively, which is a reduction inreduced the carrying value of loans. Net unamortized purchase discounts on secondary market loan purchases total $8.5 million and $5.2 million as of December 31, 2017 and 2016, respectively. Total loans held for investment are also net of interest rate and credit marks on acquired loans, which are a net reduction in the carrying value of loans. Interest rate marks were $14.1 million and $22.2 million as of December 31, 2017 and 2016, respectively. Credit marks were $27.0 million and $47.3 million as of December 31, 2017 and 2016, respectively.
The Company had no HFS loans as of December 31, 20172023 and $18.92022, respectively. Net unamortized purchase premiums on acquired and purchased loans of $177 million and $195 million increased the carrying value of HFS loans as of December 31, 2016.2023 and 2022, respectively.


48
The following table sets forth the amount of loans outstanding by type of loan as of December 31, 20172023 that were contractually due in under one year, or less, more than one year and less thanthrough five years, after five through 15 years, and more than five15 years based on remaining scheduled repayments of principal. Lines of credit or other loans having no stated final maturity and no stated schedule of repayments are reported as due in one year or less. The table also presents an analysis of the rate structure for loans within the same maturity time periods. Actual cash flows from these loans may differ materially from contractual maturities due to prepayment, refinancing, or other factors.
Due Under 1 YearDue 1 - 5 YearsDue 5 - 15 YearsDue Over 15 YearsTotal
(in millions)
Warehouse lending
Variable rate$3,554 $2,712 $— $— $6,266 
Fixed rate3 349 — — 352 
Municipal & nonprofit
Variable rate2 65 349 10 426 
Fixed rate126 59 672 271 1,128 
Tech & innovation
Variable rate315 2,261 30 — 2,606 
Fixed rate11 188 3 — 202 
Equity fund resources
Variable rate638 40 7 — 685 
Fixed rate47 113 — — 160 
Other commercial and industrial
Variable rate1,279 3,190 1,121 10 5,600 
Fixed rate277 1,111 464 — 1,852 
CRE - owner occupied
Variable rate106 341 338 80 865 
Fixed rate26 337 397 33 793 
Hotel franchise finance
Variable rate549 2,419 79 — 3,047 
Fixed rate196 433 179 — 808 
Other CRE - non-owner occupied
Variable rate1,361 2,583 354 23 4,321 
Fixed rate236 1,141 276 — 1,653 
Residential
Variable rate7 4 3 760 774 
Fixed rate18 2 44 12,449 12,513 
Residential - EBO
Variable rate— — — — — 
Fixed rate— — 1 1,222 1,223 
Construction and land development
Variable rate1,731 2,784 76 — 4,591 
Fixed rate62 192 17 — 271 
Other
Variable rate95 15 13 2 125 
Fixed rate4 15 17 — 36 
Total$10,643 $20,354 $4,440 $14,860 $50,297 
  Due in one year or less Due after one year to five years Due after five years Total
  (in thousands)
Commercial and industrial        
Floating rate $1,543,967
 $2,202,641
 $909,452
 $4,656,060
Fixed rate 61,635
 603,319
 1,520,367
 2,185,321
Commercial real estate — non-owner occupied        
Floating rate 340,823
 1,594,339
 515,130
 2,450,292
Fixed rate 162,448
 869,577
 421,694
 1,453,719
Commercial real estate — owner occupied        
Floating rate 52,198
 163,885
 969,816
 1,185,899
Fixed rate 57,120
 287,126
 711,468
 1,055,714
Construction and land development        
Floating rate 712,953
 718,719
 83,949
 1,515,621
Fixed rate 32,735
 41,825
 42,023
 116,583
Residential real estate        
Floating rate 17,916
 51,189
 144,126
 213,231
Fixed rate 8,391
 15,974
 188,344
 212,709
Consumer        
Floating rate 32,201
 2,399
 3,556
 38,156
Fixed rate 2,252
 2,382
 5,996
 10,630
Total $3,024,639
 $6,553,375
 $5,515,921
 $15,093,935
At December 31, 2023, total loans consisted of 58.3% with variable rates and 41.7% with fixed rates, compared to 55.9% with variable rates and 44.1% with fixed rates at December 31, 2022. As of December 31, 2017,2023, approximately $6.88$22.3 billion, or 68.4%76.2%, of total variable rate loans were subject to rate floors with a weighted average interest rate of 4.7%4.6%. At December 31, 2016,2022, approximately $6.32$21.6 billion, or 71.9%74.5% of total variable rate loans were subject to rate floors with a weighted average interest rate of 4.7%4.1%. At December 31, 2017, total loans consisted
49
Concentrations of Lending Activities
The Company monitors concentrations within four broad categories:of lending activities at the product collateral, geography, and industry. The Company’sborrower relationship level. As of December 31, 2023 and 2022, no borrower relationships at both the commitment and funded loan level exceeded 5% of total loans HFI.
Commercial and industrial loans made up 38% and 40% of the Company's HFI loan portfolio as of December 31, 2023 and 2022, respectively.
In addition, the Company's loan portfolio includes significant credit exposure to the CRE market. At December 31, 2017 and 2016,market as CRE related loans accounted for approximately 52%33% and 53%29% of total loans at December 31, 2023 and 2022 respectively. Substantially allNon-owner occupied CRE loans are CRE loans for which the primary source of theserepayment is rental income generated from the collateral property. Owner occupied CRE loans are loans secured by owner occupied non-farm nonresidential properties for which the primary source of repayment (more than 50%) is the cash flow from the ongoing operations and activities conducted by the borrower who owns the property. These CRE loans are secured by firstmulti-family residential properties, professional offices, industrial facilities, retail centers, hotels, and other commercial properties.
The following table presents the composition by property type and weighted average LTV of the Company’s CRE non-owner occupied loans:
December 31, 2023
AmountPercent of CRE-Non OOPercent of Total HFI LoansWeighted Average LTV (1)
(dollars in millions)
Hotel$4,235 43.9 %8.4 %48.1 %
Office2,358 24.4 4.7 58.8 
Retail753 7.8 1.5 61.0 
Multifamily566 5.9 1.1 49.7 
Industrial565 5.8 1.1 50.4 
Time share378 3.9 0.8 34.9 
Senior care160 1.7 0.3 41.8 
Medical124 1.3 0.2 51.2 
Other511 5.3 1.0 43.4 
Total CRE - non-owner occupied$9,650 100.0 %19.2 %51.1 %
(1)    The weighted average LTVs in the above table are based on the most recent available information, if current appraisals are not available.
The following table presents the Company’s CRE non-owner occupied loans by origination year as of December 31, 2023:
(in millions)
2023$927 
20223,223 
20211,661 
2020897 
20191,218 
Prior1,724 
Total$9,650 
The following table presents the scheduled maturities of the Company’s CRE non-owner occupied loans as of December 31, 2023:
(in millions)
2024$2,206 
20251,696 
20262,073 
20271,876 
2028834 
Thereafter965 
Total$9,650 
Approximately $2.4 billion, or 4.7%, of total loans HFI consisted of CRE non-owner occupied office loans as of December 31, 2023, compared to $2.4 billion, or 4.6%, as of December 31, 2022. Of the non-owner occupied office loan balance as of
50
December 31, 2023, $477 million is scheduled to mature in 2024. These office loans primarily consist of shorter-term bridge loans that enable borrowers to reposition or redevelop projects with more modern standards attractive to in-office employers in today’s environment, including enhanced on-site amenities. The vast majority of these projects are located in suburban locations in the Company's core footprint states (Arizona, California, and Nevada), with central business district and midtown exposure totaling approximately 2% and 10% of office loans as of December 31, 2023, respectively.
The office loan portfolio largely consists of value-add loans that require significant up-front cash equity contributions from institutional sponsors and large regional and national developers. The properties underlying these loans have stable business trends and low vacancy rates. To a large extent, the financing structures of these loans do not carry junior liens or mezzanine debt, which enables maximum flexibility when working with an initial loanclients and sponsors. In addition to value ratioadhering to conservative underwriting standards, asset-specific credit risk is mitigated through continued sponsor support of generally not more than 75%. Approximately 36%projects by re-appraisal rights of thesethe Company, re-margining requirements and ongoing debt service, and debt yield covenants. For additional discussion of the Company’s credit risk monitoring practices, see “Business – Lending Activities – Asset Quality” in Item 1 of this Form 10-K.
As of December 31, 2023 and 2022, 16% of the Company's CRE loans, excluding construction and land loans, were owner-occupiedowner occupied, with substantially all of these loans secured by first liens and had an initial loan-to-value ratio of generally not more than 75%.
Non-performing Assets
Total non-performing loans increased by $323 million at eachDecember 31, 2023 to $410 million from $87 million at December 31, 2022.
December 31,
20232022
(dollars in millions)
Total nonaccrual loans (1)$273 $85 
Loans past due 90 days or more on accrual status (2)42 — 
Accruing restructured loans95 2 
Total nonperforming loans410 87 
Other assets acquired through foreclosure, net$8 $11 
Nonaccrual loans to funded loans HFI0.54 %0.16 %
Loans past due 90 days or more on accrual status to funded loans HFI0.08 — 
(1)Includes loan modifications and borrowers experiencing financial difficulty of $111 million and TDR loans of $12 million at December 31, 2023 and 2022, respectively.
(2)Excludes government guaranteed residential mortgage loans of $399 million and $582 million at December 31, 2023 and 2022, respectively.
Interest income that would have been recorded under the periodsoriginal terms of nonaccrual loans was $12.3 million, $4.7 million, and $5.3 million for the years ended December 31, 20172023, 2022, and 2016.2021, respectively.
Interest ReservesThe composition of nonaccrual loans HFI by loan portfolio segment were as follows: 
Interest reserves
December 31, 2023
Nonaccrual
Balance		Percent of Nonaccrual BalancePercent of
Total Loans HFI
(dollars in millions)
Municipal & nonprofit$6 2.2 %0.01 %
Tech & innovation33 12.1 0.06 
Other commercial and industrial53 19.4 0.11 
CRE - owner occupied9 3.3 0.02 
Other CRE - non-owner occupied83 30.4 0.16 
Residential70 25.6 0.14 
Construction and land development19 7.0 0.04 
Total non-accrual loans$273 100.0 %0.54 %
51
December 31, 2022
Nonaccrual
Balance		Percent of Nonaccrual BalancePercent of
Total Loans HFI
(dollars in millions)
Municipal & nonprofit$7 8.2 %0.01 %
Tech & innovation1 1.2 0.00 
Other commercial and industrial24 28.2 0.04 
CRE - owner occupied12 14.1 0.02 
Hotel franchise finance10 11.8 0.02 
Other CRE - non-owner occupied8 9.4 0.02 
Residential19 22.4 0.04 
Construction and land development4 4.7 0.01 
Total non-accrual loans$85 100.0 %0.16 %
Restructurings for Borrowers Experiencing Financial Difficulty
The Company adopted the amendments in ASU 2022-02, which eliminated the accounting guidance on TDR loans for creditors and requires enhanced disclosures for loan modifications to borrowers experiencing financial difficulty made on or after January 1, 2023.
The following table presents the amortized cost of loans HFI that were modified during the period by loan portfolio segment:
Amortized Cost Basis at December 31, 2023
Payment Delay and Term ExtensionTerm ExtensionPayment DelayTotal% of Total Class of Financing Receivable
(dollars in millions)
Tech & innovation$1 $6 $8 $15 0.5 %
Other commercial and industrial— 23 8 31 0.4 
CRE - owner occupied— 3 — 3 0.2 
Hotel franchise finance— 37 — 37 1.0 
Other CRE - non-owner occupied— 119 — 119 2.0 
Residential— — 1 1 0.0 
Total$1 $188 $17 $206 0.4 %
The performance of these modified loans is monitored for 12 months following the modification. As of December 31, 2023, modified loans on nonaccrual status totaled $111 million and the remaining $95 million were current with contractual payments.
In the normal course of business, the Company also modifies EBO loans, which are generally established atdelinquent FHA, VA, or USDA insured or guaranteed loans repurchased under the timeterms of the loan origination for constructionGNMA MBS program and land development loans. The Company’s practice is to monitorcan be repooled or resold when loans are brought current. During the construction, sales and/or leasing progress to determine the feasibility of ongoing construction and development projects. The Company discontinues the use of the interest reserve when a project is determined not to be viable and may take appropriate action to protect its collateral position via renegotiation and/or legal action as deemed appropriate. Atyear ended December 31, 2017,2023, the Company had 45completed modifications of EBO loans with an outstanding balanceamortized cost of $180.0 million with available interest reserves$225 million. These modifications were largely payment delays and term extensions, or both.
52
Troubled Debt Restructured Loans
Prior to the adoption of ASU 2022-02, the Company had 31 loans with an outstanding principal balance of $118.6 million and available interest reserve amounts of $3.6 million.

Impaired loans
A loan is identified as impaired when it is no longer probable that interest and principal will be collected accordingaccounted for a modification to the contractual terms of the original loan agreement. Generally, impaired loans are classified as non-accrual. However, in certain instances, impaired loans may continue on an accrual basis if full repayment of all principal and interest is expected and the loan is both well-secured and in the process of collection. Impaired loans are measured for reserve requirements in accordance with ASC 310 based on the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral less applicable disposition costs if the loan is collateral dependent. The amount of an impairment reserve, if any, and any subsequent changes are charged against the allowance for credit losses.
In addition to the Company's own internal loan review process, regulators may from time to time direct the Company to modify loan grades, loan impairment calculations, or loan impairment methodology.
Total non-performing loans decreased by $8.6 million, or 9.0%, at December 31, 2017 to $86.4 million from $95.0 million at December 31, 2016. 
  December 31,
  2017 2016 2015 2014 2013
  (dollars in thousands)
Total non-accrual loans (1) $43,925
 $40,272
 $48,381
 $67,659
 $75,680
Loans past due 90 days or more on accrual status (2) 43
 1,067
 3,028
 5,132
 1,534
Accruing troubled debt restructured loans 42,431
 53,637
 70,707
 84,720
 89,576
Total nonperforming loans, excluding loans acquired with deteriorated credit quality 86,399
 94,976
 122,116
 157,511
 166,790
Other impaired loans 12,155
 4,233
 6,758
 9,239
 11,587
Total impaired loans $98,554
 $99,209
 $128,874
 $166,750
 $178,377
Other assets acquired through foreclosure, net $28,540
 $47,815
 $43,942
 $57,150
 $66,719
Non-accrual loans to gross loans held for investment 0.29% 0.31% 0.44% 0.81% 1.11%
Loans past due 90 days or more on accrual status to gross loans held for investment 0.00
 0.01
 0.03
 0.06
 0.02
Interest income received on non-accrual loans $1,614
 $1,254
 $1,634
 $2,536
 $1,916
Interest income that would have been recorded under the original terms of non-accrual loans 2,444
 2,045
 2,549
 3,758
 5,405

(1)Includes non-accrual TDR loans of $10.1 million and $7.1 million at December 31, 2017 and 2016, respectively.
(2)Includes less than $0.1 million from loans acquired with deteriorated credit quality at each of the periods ended December 31, 2017 and 2016.
The composition of non-accrual loans by loan type and by segment were as follows: 
  December 31, 2017 December 31, 2016
  Non-accrual
Balance		 Percent of Non-Accrual Balance Percent of
Total HFI
Loans		 Non-accrual
Balance		 Percent of Non-Accrual Balance Percent of
Total HFI
Loans
  (dollars in thousands)
Commercial and industrial $22,026
 50.14% 0.15% $16,967
 42.13% 0.13%
Commercial real estate 7,721
 17.58
 0.05
 16,666
 41.39
 0.13
Construction and land development 5,979
 13.61
 0.04
 1,284
 3.19
 0.01
Residential real estate 8,117
 18.48
 0.05
 5,192
 12.89
 0.04
Consumer 82
 0.19
 0.00
 163
 0.40
 0.00
Total non-accrual loans $43,925
 100.00% 0.29% $40,272
 100.00% 0.31%

  December 31, 2017 December 31, 2016
  Nonaccrual Loans Percent of Segment's Total HFI Loans Nonaccrual Loans Percent of Segment's Total HFI Loans
  (dollars in thousands)
Arizona $4,520
 0.14% $10,424
 0.35%
Nevada 8,189
 0.44
 10,407
 0.60
Southern California 8,140
 0.42
 2,891
 0.16
Northern California 14,489
 1.14
 4,408
 0.41
Technology and Innovation 7,389
 0.67
 8,813
 0.87
Other NBLS 51
 0.00
 166
 0.01
Corporate & Other (1) 1,147
 28.09
 3,163
 23.22
Total non-accrual loans $43,925
 0.29% $40,272
 0.31%
(1)    The Corporate & Other segment manages certain legacy non-performing loans and OREO.
Troubled Debt Restructured Loans
A TDR loan is a loan that is grantedresulted in granting a concession for reasons related to a borrower’sborrower experiencing financial difficulties that the lender would not otherwise consider.as a TDR. The loan terms that have beenwere modified or restructured due to a borrower’s financial situation include,included, but arewere not limited to, a 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 amount of the debt, a reduction in the accrued interest, or deferral of interest payments. The majority of the Company's modifications were extensions deferrals, renewals, and rewrites. Ain terms or deferral of payments which result in no lost principal or interest. Consistent with regulatory guidance, a TDR loan is also considered impaired. Generally, a loan that issubsequently modified at an effective market rate of interest is no longer disclosedin another restructuring agreement but had shown sustained performance and classification as a TDR, in years subsequent towas removed from TDR status provided that the restructuring if it is performing based onmodified terms were market-based at the terms specified by the restructuring agreement. However, such loans continue to be considered impaired.time of modification.
The following table presents TDR loans:
December 31, 2022
Number of LoansRecorded Investment
Other commercial and industrial4 $2 
CRE - owner occupied1 1 
Hotel franchise finance1 10 
Other CRE - non-owner occupied1 1 
Total7 $14 
As of December 31, 2017 and 2016,2022, the aggregate amount ofACL on TDR loans classified as impaired was $98.6totaled $4 million and $99.2 million, respectively, a net decrease of 0.7%. The total specific allowance for credit losses related to these loans was $5.6 million and $4.2 million at December 31, 2017 and 2016, respectively. The Company had $42.4 million and $53.6 million in loans classified as accruing restructured loan at December 31, 2017 and 2016, respectively.
Impaired loans by segment at December 31, 2017 and 2016there were as follows:
  December 31,
  2017 2016
  (in thousands)
Arizona $10,468
 $19,180
Nevada 46,730
 48,348
Southern California 8,465
 2,888
Northern California 14,489
 4,024
Technology & Innovation 16,449
 8,461
Other NBLs 51
 163
Corporate & Other 1,902
 16,145
Total impaired loans $98,554
 $99,209

The following tables present a breakdown of total impaired loans and the related specific reserves for the periods indicated: 
  December 31, 2017
  Impaired
Balance		 Percent of Impaired Balance Percent of
Total HFI Loans		 Reserve
Balance		 Percent of Reserve Balance Percent of
Total Allowance
  (dollars in thousands)
Commercial and industrial $34,156
 34.66% 0.23% $5,606
 100.00% 4.00%
Commercial real estate 31,681
 32.15
 0.21
 —
 —
 —
Construction and land development 15,426
 15.65
 0.10
 —
 —
 —
Residential real estate 17,170
 17.42
 0.11
 —
 —
 —
Consumer 121
 0.12
 0.00
 —
 —
 —
Total impaired loans $98,554
 100.00% 0.65% $5,606
 100.00% 4.00%
  December 31, 2016
  Impaired
Balance		 Percent of Impaired Balance Percent of
Total HFI Loans		 Reserve
Balance		 Percent of Reserve Balance Percent of
Total Allowance
  (dollars in thousands)
Commercial and industrial $21,462
 21.63% 0.16% $3,301
 77.88% 2.65%
Commercial real estate 46,272
 46.64
 0.36
 937
 22.10
 0.75
Construction and land development 14,838
 14.96
 0.11
 —
 —
 —
Residential real estate 16,391
 16.52
 0.12
 —
 —
 —
Consumer 246
 0.25
 0.00
 1
 0.02
 0.00
Total impaired loans $99,209
 100.00% 0.75% $4,239
 100.00% 3.40%
The amount of interest income recognizedno outstanding commitments on impaired loans for the years ended December 31, 2017, 2016, and 2015 was approximately $4.0 million, $4.2 million, and $4.8 million, respectively.

TDR loans.
Allowance for Credit Losses on Loans HFI
The following table summarizesACL consists of the activity inACL on loans and an ACL on unfunded loan commitments. The ACL on HTM securities is estimated separately from loans and is discussed within the Company's allowance for credit losses for the period indicated: 
  Year Ended December 31,
  2017 2016 2015 2014 2013
  (dollars in thousands)
Allowance for credit losses:          
Balance at beginning of period $124,704
 $119,068
 $110,216
 $100,050
 $95,427
Provision charged to operating expense:          
Commercial and industrial 14,268
 10,638
 18,411
 14,551
 5,760
Commercial real estate 5,347
 (2,449) (9,762) (6,176) 2,972
Construction and land development (2,805) 1,732
 (1,454) 1,966
 3,443
Residential real estate 318
 (2,137) (3,539) (4,352) 228
Consumer 122
 216
 (456) (1,263) 817
Total Provision 17,250
 8,000
 3,200
 4,726
 13,220
Recoveries of loans previously charged-off:          
Commercial and industrial (3,112) (3,991) (3,754) (4,728) (5,037)
Commercial real estate (2,897) (5,690) (4,139) (3,859) (2,758)
Construction and land development (1,229) (485) (1,872) (2,160) (2,060)
Residential real estate (1,778) (875) (2,181) (1,896) (2,097)
Consumer (84) (144) (203) (459) (930)
Total recoveries (9,100) (11,185) (12,149) (13,102) (12,882)
Loans charged-off:          
Commercial and industrial 8,186
 12,477
 5,550
 4,370
 4,000
Commercial real estate 2,269
 728
 —
 964
 8,648
Construction and land development —
 18
 —
 87
 1,538
Residential real estate 447
 165
 820
 1,728
 5,922
Consumer 102
 161
 127
 513
 1,371
Total charged-off 11,004
 13,549
 6,497
 7,662
 21,479
Net charge-offs (recoveries) 1,904
 2,364
 (5,652) (5,440) 8,597
Balance at end of period $140,050
 $124,704
 $119,068
 $110,216
 $100,050
Net charge-offs (recoveries) to average loans outstanding 0.01% 0.02% (0.06)% (0.07)% 0.14%
Allowance for credit losses to gross loans 0.93
 0.95
 1.07
 1.31
 1.47
Allowance for credit losses to gross organic loans 1.03
 1.11
 1.23
 1.36
 1.75

Investment Securities section.
The following table summarizes the allocation of the allowance for credit lossesACL on loans HFI by loan type. However,portfolio segment:
December 31, 2023December 31, 2022
Allowance for credit lossesPercent of total allowance for credit lossesPercent of loan type to total loans HFIAllowance for credit lossesPercent of total allowance for credit lossesPercent of loan type to total loans HFI
(dollars in millions)
Warehouse lending$5.8 1.7 %13.2 %$8.4 2.7 %10.7 %
Municipal & nonprofit14.7 4.4 3.1 15.9 5.1 3.0 
Tech & innovation42.1 12.5 5.6 30.8 10.0 4.4 
Equity fund resources1.3 0.4 1.7 6.4 2.1 7.2 
Other commercial and industrial81.4 24.2 14.8 85.9 27.7 15.0 
CRE - owner occupied6.0 1.8 3.3 7.1 2.3 3.2 
Hotel franchise finance33.4 9.9 7.6 46.9 15.2 7.4 
Other CRE - non-owner occupied96.0 28.5 11.9 47.4 15.3 10.5 
Residential23.1 6.9 26.4 30.4 9.8 27.0 
Residential - EBO— — 2.4 — — 3.6 
Construction and land development30.4 9.0 9.6 27.4 8.8 7.7 
Other2.5 0.7 0.4 3.1 1.0 0.3 
Total$336.7 100.0 %100.0 %$309.7 100.0 %100.0 %
During the allocationyears ended December 31, 2023 and 2022, net loan charge-offs to average loans outstanding were 0.06% and approximately 0.00%, respectively.
In addition to the ACL on funded loans HFI, the Company maintains a separate ACL related to off-balance sheet credit exposures, including unfunded loan commitments. This allowance balance totaled $31.6 million and $47.0 million at December 31, 2023 and 2022, respectively, and is included in Other liabilities on the Consolidated Balance Sheets. The decrease in the ACL related to off-balance sheet credit exposures is due to lower unfunded loan commitments at December 31, 2023 compared to December 31, 2022.

53
  Commercial and Industrial Commercial Real Estate Construction and Land Development Residential Real Estate Consumer Total
  (dollars in thousands)
December 31, 2017            
Allowance for Credit Losses $82,527
 $31,648
 $19,599
 $5,500
 $776
 $140,050
Percent of Total Allowance for Credit Losses 58.9% 22.6% 14.0% 3.9% 0.6% 100.0%
Percent of Gross Loans to Total Gross HFI Loans 45.2
 40.8
 10.9
 2.8
 0.3
 100.0
December 31, 2016            
Allowance for Credit Losses $73,333
 $25,673
 $21,175
 $3,851
 $672
 $124,704
Percent of Total Allowance for Credit Losses 58.8% 20.6% 17.0% 3.1% 0.5% 100.0%
Percent of Gross Loans to Total Gross HFI Loans 44.3
 42.1
 11.3
 2.0
 0.3
 100.0
December 31, 2015            
Allowance for Credit Losses $71,181
 $23,160
 $18,976
 $5,278
 $473
 $119,068
Percent of Total Allowance for Credit Losses 59.8% 19.5% 15.9% 4.4% 0.4% 100.0%
Percent of Gross Loans to Total Gross HFI Loans 47.4
 39.3
 10.2
 2.9
 0.2
 100.0
December 31, 2014            
Allowance for Credit Losses $54,566
 $28,783
 $18,558
 $7,456
 $853
 $110,216
Percent of Total Allowance for Credit Losses 49.5% 26.1% 16.8% 6.8% 0.8% 100.0%
Percent of Gross Loans to Total Gross HFI Loans 42.0
 45.0
 9.0
 3.6
 0.4
 100.0
December 31, 2013            
Allowance for Credit Losses $39,657
 $32,064
 $14,519
 $11,640
 $2,170
 $100,050
Percent of Total Allowance for Credit Losses 39.7% 32.0% 14.5% 11.6% 2.2% 100.0%
Percent of Gross Loans to Total Gross HFI Loans 36.3
 50.0
 7.9
 5.1
 0.7
 100.0


Problem Loans
The Company classifies loans consistent with federal banking regulations using a nine category grading system. These loan grades are described in further detail in "Item 1. Business” of this Form 10-K. The following table presents information regarding potential and actual problem loans, consisting of loans graded as Special Mention, Substandard, Doubtful, and Loss, but which are still performing,performing: 
December 31, 2023
Number of LoansProblem Loan BalancePercent of Problem Loan BalancePercent of Total Loans HFI
(dollars in millions)
Warehouse lending1 $26 3.6 %0.05 %
Municipal & nonprofit2 18 2.5 0.04 
Tech & innovation14 49 6.8 0.10 
Other commercial and industrial50 95 13.2 0.19 
CRE - owner occupied9 3 0.4 0.01 
Hotel franchise finance9 203 28.3 0.40 
Other CRE - non-owner occupied15 251 35.0 0.50 
Residential143 72 10.0 0.14 
Construction and land development1 1 0.1 0.00 
Other20 1 0.1 0.00 
Total264 $719 100.0 %1.43 %
December 31, 2022
Number of LoansProblem Loan BalancePercent of Problem Loan BalancePercent of Total Loans HFI
(dollars in millions)
Warehouse lending1 $43 11.3 %0.08 %
Tech & innovation27 81 21.4 0.16 
Other commercial and industrial50 36 9.5 0.07 
CRE - owner occupied8 4 1.0 0.01 
Hotel franchise finance2 26 6.9 0.05 
Other CRE - non-owner occupied9 55 14.5 0.10 
Residential39 20 5.3 0.04 
Construction and land development2 98 25.9 0.19 
Other18 16 4.2 0.03 
Total156 $379 100.0 %0.73 %
Mortgage Servicing Rights
The fair value of the Company's MSRs related to residential mortgage loans totaled $1.1 billion as of December 31, 2023 and excluding acquired loans: 
  December 31, 2017
  Number of Loans Loan Balance Percent of Loan Balance Percent of Total HFI Loan Balance
  (dollars in thousands)
Commercial and industrial 166
 $127,015
 51.63% 0.84%
Commercial real estate 48
 90,653
 36.85
 0.60
Construction and land development 5
 18,471
 7.51
 0.12
Residential real estate 3
 8,971
 3.65
 0.06
Consumer 10
 880
 0.36
 0.01
Total 232
 $245,990
 100.00% 1.63%
  December 31, 2016
  Number of Loans Loan Balance Percent of Loan Balance Percent of Total HFI Loan Balance
  (dollars in thousands)
Commercial and industrial 96
 $92,019
 51.65% 0.70%
Commercial real estate 41
 71,900
 40.36
 0.55
Construction and land development 7
 12,297
 6.90
 0.09
Residential real estate 9
 1,831
 1.03
 0.01
Consumer 9
 103
 0.06
 —
Total 162
 $178,150
 100.00% 1.35%


Other Assets Acquired Through Foreclosure2022.
The following table represents the changes in other assets acquired through foreclosure: 
  Year Ended December 31,
  2017
  Gross Balance Valuation Allowance Net Balance
  (in thousands)
Balance, beginning of period $54,138
 $(6,323) $47,815
Transfers to other assets acquired through foreclosure, net 1,812
 —
 1,812
Proceeds from sale of other real estate owned and repossessed assets, net (23,626) 2,431
 (21,195)
Valuation adjustments, net —
 (120) (120)
(Losses) gains, net (1) 228
 —
 228
Balance, end of period $32,552
 $(4,012) $28,540
       
  2016
Balance, beginning of period $52,984
 $(9,042) $43,942
Transfers to other assets acquired through foreclosure, net 13,110
 —
 13,110
Proceeds from sale of other real estate owned and repossessed assets, net (11,584) 2,451
 (9,133)
Valuation adjustments, net —
 268
 268
Gains (losses), net (1) (372) —
 (372)
Balance, end of period $54,138
 $(6,323) $47,815
       
  2015
Balance, beginning of period $71,421
 $(14,271) $57,150
Transfers to other assets acquired through foreclosure, net 28,566
 —
 28,566
Additions from acquisition 1,407
 —
 1,407
Proceeds from sale of other real estate owned and repossessed assets, net (51,038) 5,411
 (45,627)
Valuation adjustments, net —
 (182) (182)
Gains (losses), net (1) 2,628
 —
 2,628
Balance, end of period $52,984
 $(9,042) $43,942
(1)Includes net gains related to initial transfers to other assets of $0.1 million, $0.4 million, and $0.9 million during the years ended December 31, 2017, 2016, and 2015, respectively.
Other assets acquired through foreclosure consist primarily of properties acquired asis a result of, or in-lieu-of, foreclosure. OREO and other repossessed property are reported at the lower of carrying value or fair value less estimated costs to sell the property. Costs relating to the development or improvementsummary of the assets are capitalized and costs relating to holdingUPB of loans underlying the assets are charged to expense. The Company has $28.5 million, $47.8 million, and $43.9 millionCompany's MSR portfolio by type:
December 31,
20232022
(in millions)
FNMA and FHLMC$46,840 $38,113 
GNMA19,848 31,046 
Non-agency1,959 1,690 
Total unpaid principal balance of loans$68,647 $70,849 
54
At December 31, 2017, the Company held 19 OREO properties, compared to 31 at December 31, 2016.
Goodwill and Other Intangible 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 andthat are determined to have an indefinite useful life are not subject to amortization, but are subsequently evaluated for impairment at least annually. The Company'sCompany has goodwill totals $289.9totaling $527 million as of December 31, 2017, of which $23.2 million relates to the Nevada operating segment, $149.7 million relates to the Northern California segment, $116.9 million relates to the Technology & Innovation segment,2023 and $0.1 million relates to the HFF segment. Intangible assets total $10.9 million at December 31, 2017. See "Note 20. Mergers, Acquisitions and Dispositions" to the Consolidated Financial Statements for further discussion of the HFF and Bridge acquisitions and the allocation of goodwill and intangible assets acquired.2022.
The Company performs 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. During the year ended December 31, 2023, the Company performed an interim Step 0 goodwill impairment assessment as of each interim quarter end date, based on the industry disruption from the bank failures in 2023. The Step 0 assessment included assessing the financial performance of the Company and analyzing qualitative factors applicable to the Company. As of each interim testing date, the Company did not believe these events or circumstances significantly altered the long-term financial performance of the Company. Accordingly, it was determined that it was more likely than not the fair value of the Company and its reporting units exceeded their respective carrying values. The Company elected to perform a Step 1 goodwill impairment assessment as of October 1, 2023 and determined the fair value of the Company and its reporting units exceeded their respective carrying values and therefore, no goodwill impairment was recorded as a result of the evaluation.
During the years ended December 31, 2017, 2016,2022 and 2015,2021, there were no events or circumstances that indicated an interim impairment test of goodwill or other intangible assets

was necessary and, based on the Company's annual goodwill and intangibles impairment tests as of October 1 of each of these years, it was determined that goodwill and intangible assets are not impaired.
The fair value of assets acquired and liabilities assumed are subject to adjustment during the first twelve months after the acquisition date if additional information becomes available to indicate a more accurate or appropriate value for an asset or liability. The Company recognized initial goodwill of $0.2 million related to the HFF loan portfolio purchase, which closed on April 20, 2016. During the year ended December 31, 2017, the Company recognized measurement period adjustments related to the HFF acquisition that totaled $0.1 million for tax related items. The measurement period for the HFF acquisition ended on April 20, 2017, and therefore, the fair values of these assets acquired and liabilities assumed were considered final effective as of that date.necessary.
The following is a summary of acquired intangible assets:
  December 31, 2017 December 31, 2016
  Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
  (in thousands)
Subject to amortization            
Core deposit intangibles $14,647
 $4,144
 $10,503
 $40,804
 $28,227
 $12,577
             
  December 31, 2017 December 31, 2016
  Gross Carrying Amount Impairment Net Carrying Amount Gross Carrying Amount Impairment Net Carrying Amount
  (in thousands)
Not subject to amortization            
Trade name $350
 $—
 $350
 $350
 $—
 $350
December 31, 2023December 31, 2022
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
(in millions)
Subject to amortization
Core deposits$14 $12 $2 $14 $11 $3 
Correspondent customer relationships76 10 66 76 7 69 
Customer relationships18 6 12 18 3 15 
Developed technology4 2 2 4 1 3 
Operating licenses56 4 52 56 2 54 
Trade names10 2 8 10 1 9 
$178 $36 $142 $178 $25 $153 
Deferred Tax Assets
For the year endedAs of December 31, 2017,2023, the net deferred tax asset decreased $89.4DTA balance totaled $287 million, to $5.8 million.a decrease of $24 million from $311 million as of December 31, 2022. This overall decrease in the net deferred tax asset was primarily the result of deferring taxable incomeincreases in the fair market value of AFS securities and decreases to future periods and accelerating deductions whichcredit carryforwards that were only partiallynot fully offset by the creationdecrease to MSR DTLs.
As of NOL and tax credit carryovers and the revaluation of deferred taxes under the 2017 Tax Cuts and Jobs Act.
At each of the periods ended December 31, 20172023 and 2016,2022, the Company had no deferred tax valuation allowance.
Deposits
Deposits are the primary source for funding the Company's asset growth. Total deposits increased to $16.97$55.3 billion at December 31, 2017,2023 from $14.55$53.6 billion at December 31, 2016,2022, an increase of $2.42$1.7 billion, or 16.7%3.1%. TheBy deposit type, the increase in deposits is attributable to organic deposit growth. Non-interest-bearingincreases in interest-bearing demand deposits increasedof $6.4 billion and certificates of deposit of $5.1 billion, partially offset by $1.80decreases in non-interest-bearing demand deposits of $5.2 billion from December 31, 2016. Savingsand savings and money market deposits increased $210.1 million from December 31, 2016.accounts of $4.6 billion.
WAB is a participant in the Promontory InterfinancialIntraFi Network, a network that offers deposit placement services such as CDARS and ICS, which offer products that qualify large deposits for FDIC insurance. At December 31, 2017,2023, the Company has $401.4 millionhad $13.3 billion of CDARS deposits and $617.9 million of ICSthese reciprocal deposits, compared to $413.9 million of CDARS deposits and $607.5 million of ICS deposits$2.8 billion at December 31, 2016.2022. At December 31, 20172023 and 2016,2022, the Company also has $67.3 million and $136.2 million, respectively, ofhad wholesale brokered deposits. deposits of $6.6 billion and $4.8 billion, respectively.
In addition, non-interest bearing deposits for which the Company provides account holders with earnings credits or referral fees totaled $1.85$17.8 billion and $1.10$12.9 billion at December 31, 20172023 and 2016,2022, respectively. The Company incurred $8.7$422.5 million and $4.0$162.8 million in deposit related costs on these deposits during the year ended December 31, 20172023 and 2016,2022, respectively. These costs are

55

reported as Deposit costs in non-interest expense. The increase in these costs from the prior year is due to an increase in earnings credit rates as well as an increase in average deposit balances eligible for earnings credits or referral fees.
The average balances and weighted average rates paid on deposits are presented below:
Year Ended December 31,
202320222021
Average BalanceRateAverage BalanceRateAverage BalanceRate
(dollars in millions)
Interest-bearing transaction accounts$12,422 2.83 %$8,331 0.95 %$4,751 0.13 %
Savings and money market accounts14,903 2.87 18,518 0.86 15,814 0.21 
Certificates of deposit7,945 4.56 2,772 1.40 1,850 0.46 
Total interest-bearing deposits35,270 3.24 29,621 0.93 22,415 0.21 
Non-interest-bearing demand deposits18,293 — 24,133 — 19,416 — 
Total deposits$53,563 2.13 %$53,754 0.51 %$41,831 0.11 %
  Year Ended December 31,
  2017 2016 2015
  Average Balance Rate Average Balance Rate Average Balance Rate
  (dollars in thousands)
Interest-bearing transaction accounts $1,467,231
 0.27% $1,217,344
 0.18% $983,889
 0.18%
Savings and money market accounts 6,208,057
 0.42
 5,827,549
 0.33
 4,470,189
 0.28
Time certificates of deposit 1,560,896
 0.76
 1,615,502
 0.50
 1,808,120
 0.42
Total interest-bearing deposits 9,236,184
 0.45
 8,660,395
 0.34
 7,262,198
 0.30
Non-interest-bearing demand deposits 6,788,783
 —
 5,062,319
 —
 3,273,138
 —
Total deposits $16,024,967
 0.26% $13,722,714
 0.22% $10,535,336
 0.21%
AlthoughAt December 31, 2023 and 2022, the Company does not pay interest to depositorshad total uninsured deposits of non-interest bearing accounts, earnings credits are awarded to some account holders, which offset charges incurred by account holders for other services.
Certificates$15.2 billion and $29.5 billion, respectively. Total U.S. time deposits in excess of Deposit of $100,000 or Morethe FDIC insurance limit were $1.0 billion and $1.1 billion at December 31, 2023 and 2022, respectively.
The table below discloses the remaining maturity for certificatesestimated uninsured time deposits as of December 31, 2023: 
(in millions)
3 months or less$611
3 to 6 months407
6 to 12 months264
Over 12 months42
Total$1,324
Uninsured deposit information presented herein is estimated using the same methodologies utilized for regulatory reporting, where applicable. Specific 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 applied to maturity groupings on a pro-rata basis, based on the depositor's total amount of $100,000 or more: 
  December 31,
  2017 2016
  (in thousands)
3 months or less $536,116
 $453,260
3 to 6 months 440,732
 465,089
6 to 12 months 329,026
 274,323
Over 12 months 142,161
 99,258
Total $1,448,035
 $1,291,930
time deposits.
Other Borrowings
Short-Term Borrowings
The Company from time to time utilizes short-term borrowed funds to support short-term liquidity needs generally created by increased loan demand.needs. The majority of these short-term borrowed funds consist of warehouse borrowings, advances from the FHLB, the BTFP, repurchase agreements, and customer repurchase agreements.federal funds purchased from correspondent banks or the FHLB. The Company’s borrowing capacity with the FHLB is determined based on collateral pledged, generally consisting of securities and loans. In addition, the Company has borrowing capacity from other sources,repurchase facilities, collateralized by securities and EBO loans, including securitiesassets sold under agreements to repurchase, which are reflected at the amount of cash received in connection with the transaction, and may require additional collateral based on the fair value of the underlying securities.assets. Total short-term borrowings increased $1.8 billion to $6.8 billion at December 31, 2023 from $5.0 billion at December 31, 2022. The increase was driven by increases in FHLB advances of $1.9 billion and warehouse borrowings of $376 million, partially offset by a decrease in Federal funds purchased of $465 million.
Long-Term Borrowings
The Company's long-term borrowings consist of credit linked notes, inclusive of issuance costs and fair market value adjustments related to the AmeriHome Senior Notes that were redeemed during the year. At December 31, 2017, total short-term borrowed funds consist2023, the carrying value of customer repurchase agreements of $26.0long-term borrowings was $446 million, and FHLB overnight advances of $390.0 million. Atcompared to $1.3 billion at December 31, 2016, total short-term borrowed funds consisted of customer repurchase agreements of $41.7 million and FHLB advances of $80.0 million.
At2022. The decrease in long-term borrowings from December 31, 20172022 primarily relates to the payoff of credit linked notes on the Company's mortgage warehouse and 2016,equity fund resource loans and the Company does not have any borrowings classified as long-term.AmeriHome senior notes during the year ended December 31, 2023.

56
Qualifying Debt
Qualifying debt consists of subordinated debt and junior subordinated debt, inclusive of issuance costs and fair market value adjustments. At December 31, 2017,2023, the carrying value of all subordinatedqualifying debt issuances, which includes the fair value of related hedges, was $308.6$895 million, compared to $305.8$893 million at December 31, 2016.2022.
The junior subordinated debt has contractual balances and maturity dates as follows:
    December 31,
Name of Trust Maturity 2017 2016
At fair value   (in thousands)
BankWest Nevada Capital Trust II 2033 $15,464
 $15,464
Intermountain First Statutory Trust I 2034 10,310
 10,310
First Independent Statutory Trust I 2035 7,217
 7,217
WAL Trust No. 1 2036 20,619
 20,619
WAL Statutory Trust No. 2 2037 5,155
 5,155
WAL Statutory Trust No. 3 2037 7,732
 7,732
Total contractual balance   66,497
 66,497
FVO on junior subordinated debt   (10,263) (16,087)
Junior subordinated debt, at fair value   $56,234
 $50,410
At amortized cost      
Bridge Capital Holdings Trust I 2035 $12,372
 $12,372
Bridge Capital Holdings Trust II 2036 5,155
 5,155
Total contractual balance   17,527
 17,527
Purchase accounting adjustment, net of accretion (1)   (5,465) (5,776)
Junior subordinated debt, at amortized cost   $12,062
 $11,751
       
Total junior subordinated debt   $68,296
 $62,161
(1)The purchase accounting adjustment is being amortized over the remaining life of the trusts, pursuant to accounting guidance.
The weighted average interest rate of all junior subordinated debt as of December 31, 2017 was 4.03%, which is three-month LIBOR plus the contractual spread of 2.34%, compared to a weighted average interest rate of 3.34% at December 31, 2016.


Capital Resources
The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements could trigger certain mandatory or discretionary actions that, if undertaken, could have a direct material effect on the Company’s business and financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance sheet items (discussed in "Note 15.17. Commitments and Contingencies" to the Consolidated Financial Statements)in Item 8 of this Form 10-K) as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
Under the Basel III final rules, a capital conservation buffer, comprised of Common Equity Tier 1 capital, was established aboveAs permitted by the regulatory minimum capital requirements. Thisrules, the Company elected the CECL transition option that delayed the estimated impact on regulatory capital conservation buffer began being phasedresulting from the adoption of CECL over a five-year transition period ending December 31, 2024. Accordingly, capital ratios and amounts for 2022 include a 25% reduction to the capital benefit that resulted from the increased ACL related to the adoption of ASC 326, which has increased to include a 50% reduction beginning in on January 1, 2016 at 0.625% of risk-weighted assets and will increase each subsequent year by an additional 0.625% until reaching its final level of 2.5% on January 1, 2019.2023.
As of December 31, 20172023 and 2016,2022, the Company and the Bank exceeded the capital levels necessary to be classified as well-capitalized, as defined by the various banking agencies. The actual capital amounts and ratios for the Company and the Bank are presented in the following tables as of the periods indicated:tables:
  Total Capital Tier 1 Capital Risk-Weighted Assets Tangible Average Assets Total Capital Ratio Tier 1 Capital Ratio Tier 1 Leverage Ratio Common Equity
Tier 1
  (dollars in thousands)

                
December 31, 2017                
WAL $2,460,988
 $2,013,744
 $18,569,608
 $19,624,517
 13.3% 10.8% 10.3% 10.4%
WAB 2,299,919
 2,003,745
 18,664,200
 19,541,990
 12.3
 10.7
 10.3
 10.7
Well-capitalized ratios         10.0
 8.0
 5.0
 6.5
Minimum capital ratios         8.0
 6.0
 4.0
 4.5

                
December 31, 2016                
WAL $2,107,480
 $1,675,871
 $15,980,092
 $16,868,674
 13.2% 10.5% 9.9% 10.0%
WAB 2,001,081
 1,720,072
 15,888,346
 16,764,327
 12.6
 10.8
 10.3
 10.8
Well-capitalized ratios         10.0
 8.0
 5.0
 6.5
Minimum capital ratios         8.0
 6.0
 4.0
 4.5
Contractual Obligations and Off-Balance Sheet Arrangements
Total CapitalTier 1 CapitalRisk-Weighted AssetsTangible Average AssetsTotal Capital RatioTier 1 Capital RatioTier 1 Leverage RatioCommon Equity
Tier 1
(dollars in millions)
December 31, 2023
WAL$7,201 $6,035 $52,517 $70,295 13.7 %11.5 %8.6 %10.8 %
WAB6,802 6,229 52,508 70,347 13.0 11.9 8.9 11.9 
Well-capitalized ratios10.0 8.0 5.0 6.5 
Minimum capital ratios8.0 6.0 4.0 4.5 
December 31, 2022
WAL$6,586 $5,449 $54,461 $69,814 12.1 %10.0 %7.8 %9.3 %
WAB6,280 5,737 54,411 69,762 11.5 10.5 8.2 10.5 
Well-capitalized ratios10.0 8.0 5.0 6.5 
Minimum capital ratios8.0 6.0 4.0 4.5 
The Company enters into contracts for services inand the ordinary course of business that may require payment for servicesBank are also subject to be provided inliquidity and other regulatory requirements as administered by the futurefederal banking agencies. These agencies have broad powers and may contain penalty clauses for early termination of the contracts. To meet the financing needs of customers, the Company has financial instruments with off-balance sheet risk, including commitments to extend credit and standby letters of credit. The Company has also committed to irrevocably and unconditionally guarantee the paymentsat their discretion, could limit or distributions with respect to the holders of preferred securities ofprohibit the Company's eight statutory business trusts topayment of dividends, payment of certain debt service and issuance of capital stock and debt as they deem appropriate and as such, actions by the extent that the trustsagencies could have not made such payments or distributions: 1) accrued and unpaid 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 distributions and the amount of assets of the trust remaining available for distribution. The Company does not believe that these off-balance sheet arrangements have or are reasonably likely to have adirect material effect on itsthe Company’s business and financial condition, changesstatements.
The Company is also required to maintain specified levels of capital to remain in financial condition, revenues or expenses, resultsgood standing with certain federal government agencies, including FNMA, FHLMC, GNMA, and HUD. These capital requirements are generally tied to the unpaid balances of operations, liquidity, capital expenditures, or capital resources. However, there can be no assurance that such arrangements will not have a future effect.

The following table sets forthloans included in the Company's significant contractual obligationsservicing portfolio or loan production volume. Noncompliance with these capital requirements can result in 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 it is in compliance with these requirements as of December 31, 2017:2023.
57
  Payments Due by Period
  Total Less Than 1 Year 1-3 Years 3-5 Years After 5 Years
  (in thousands)
Time deposit maturities $1,621,384
 $1,457,335
 $156,939
 $6,904
 $206
Qualifying debt 409,024
 —
 —
 —
 409,024
Other borrowings 390,000
 390,000
 —
 —
 —
Operating lease obligations 40,475
 10,962
 17,552
 7,902
 4,059
Purchase obligations 66,590
 24,817
 24,915
 16,858
 —
Total $2,527,473
 $1,883,114
 $199,406
 $31,664
 $413,289
Purchase obligations primarily relate to contracts for software licensing and maintenance and outsourced service providers.
    Amount of Commitment Expiration per Period
  Total Amounts Committed Less Than 1 Year 1-3 Years 3-5 Years After 5 Years
  (in thousands)
Commitments to extend credit $5,851,158
 $2,348,898
 $1,998,695
 $500,392
 $1,003,173
Credit card commitments and financial guarantees 153,752
 153,752
 —
 —
 —
Standby letters of credit 161,966
 133,297
 27,426
 1,243
 —
Total $6,166,876
 $2,635,947
 $2,026,121
 $501,635
 $1,003,173
The following table sets forth certain information regarding short-term borrowings as of December 31, 2017 and the respective prior year end balances for customer repurchase agreements, lines of credit, and FHLB advances: 
  December 31,
  2017 2016 2015
  (dollars in thousands)
Customer Repurchase Accounts:      
Maximum month-end balance $41,153
 $50,332
 $53,709
Balance at end of year 26,017
 41,728
 38,155
Average balance 33,842
 41,623
 49,924
Lines of Credit:      
Maximum month-end balance —
 5,000
 —
Balance at end of year —
 —
 —
Average balance —
 562
 1,740
FHLB Advances:      
Maximum month-end balance 440,000
 490,000
 330,000
Balance at end of year 390,000
 80,000
 150,000
Average balance 29,781
 58,750
 66,493
Total Short-Term Borrowed Funds $416,017
 $121,728
 $188,155
Weighted average interest rate at end of year 1.33% 0.42% 1.75%
Weighted average interest rate during year 0.53
 0.44
 2.26


Critical Accounting PoliciesEstimates
The Notes to the Consolidated Financial Statements contain a discussion of the Company's significant accounting policies, including information 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 financial transactions, are important to have a complete understanding of the Company's financial position. In addition, these estimates require management to make complex and subjective judgments, many of which include matters with a high degree of uncertainty. The following is a summary of these critical accounting policies and significant estimates.
Allowance for credit losses
Credit riskThe ACL guidance requires an organization to measure all expected credit losses for financial assets held at the reporting date, including off-balance sheet credit exposures, based on historical experience, current conditions, and reasonable and supportable forecasts. Determining the appropriateness of the allowance is inherentcomplex and requires judgment by management about the effect of matters that are inherently uncertain. In future periods, evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the business of extending loansACL and leases to borrowers, for which the Company must maintain an adequate allowance for credit losses.loss expense in those future periods. The allowance forlevel is influenced by loan volumes and mix, average remaining maturities, loan performance metrics, asset quality characteristics, delinquency status, historical credit losses is established throughloss experience, and other conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions. During the year ended December 31, 2023, the allowance level was most impacted by the bank failures in 2023 and heightened economic uncertainty, particularly in the commercial real estate market, which resulted in recognition of a provision for credit losses recorded to expense. Loans are charged against the allowance for credit losses when management believes that the contractual principal or interest will not be collected. Subsequent recoveries, if any, are creditedof $62.6 million. Changes to the allowance. assumptions in the model in future periods could have a material impact on the Company's Consolidated Financial Statements. See "Note 1. Summary of Significant Accounting Policies" in Item 8 of this Form 10-K for a detailed discussion of the Company's methodologies for estimating expected credit losses.
Fair value of financial instruments
The allowanceCompany uses fair value measurements to recognize certain financial instruments at fair value. The Company holds financial instruments, including loans HFS, MSRs, and derivative instruments, that are recorded at fair value and require management to make significant judgments in estimating the fair value of these financial instruments. The degree of management judgment involved in determining the fair value of a financial instrument is an amount believed adequatedependent upon the availability of quoted market prices or observable market inputs. For financial instruments that are actively traded and have quoted market prices or observable market inputs, there is minimal subjectivity involved in measuring fair value. However, when quoted market prices or observable market inputs are not fully available, significant management judgment may be necessary to absorb estimated probable losses on existing loans that may become uncollectable,estimate the fair value of these financial instruments. The fair value of MSRs is determined using a discounted cash flow model based on evaluationcertain unobservable inputs. Assumptions used to value the Company’s MSRs represent management’s best estimate of assumptions market participants would use to value this asset and may require significant judgment. The primary risk of material changes to the value of the collectability of loansMSRs resides in the potential volatility and prior credit loss experience, together with other factors. The Company formally re-evaluatesjudgment in the assumptions used, specifically prepayment speeds, option adjusted spreads, and establishes the appropriate level of the allowance for credit losses on a quarterly basis.
The allowance consists of specific and general components. The specific allowance relates to impaired loans. For impaired collateral dependent loans, the reserve is calculated based on collateral value, net of estimated disposition costs. Generally, the Company obtains independent collateral valuation analysis for each loan every twelve months. Loans not collateral dependent are evaluated based on the expected future cash flows discounted at the original contractual interest rate. The Company's impairment analysis also incorporates various valuation considerations, including loan type, loss experience, and geographic criteria.
The general allowance covers all non-impaired loans and incorporates several quantitative and qualitative factors. Quantitative factors include company-specific, ten-year historical net charge-offs stratified by loans with similar characteristics. Qualitative factors include: 1) levels of and trends in delinquencies and impaired loans; 2) levels of and trends in charge-offs and recoveries; 3) trends in volume and terms of loans; 4) changes in underwriting standards or lending policies; 5) experience, ability, depth of lending staff; 6) national and local economic trends and conditions; 7) changes in credit concentrations; 8) out-of-market exposures; 9) changes in quality of loan review system; and 10)discount rates. Hypothetical changes in the value of underlying collateral.MSRs based on assumed immediate changes in certain inputs are disclosed in “Note 5. Mortgage Servicing Rights” in Item 8 of this Form 10-K.
DueGoodwill impairment
The Company performs its annual goodwill impairment test as of October 1 each year, or more often if events or circumstances indicate the carrying value may not be recoverable. As described in "Note 1. Summary of Significant Accounting Policies” in Item 8 of this Form 10-K, the Company may first elect to assess, through qualitative factors, whether it is more likely than not goodwill is impaired. This qualitative assessment includes consideration of relevant events and circumstances, such as macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, other events specific to the credit concentrationCompany, significant events affecting a reporting unit, and a sustained decrease in stock price. If, after assessing all relevant events or circumstances, the qualitative assessment indicates potential impairment, a quantitative impairment test is performed. A quantitative valuation involves determining the fair value of each reporting unit and comparing the fair value to its corresponding carrying amount. If, based on the quantitative test, a reporting unit's carrying amount exceeds its fair value, a goodwill impairment charge for this difference is recorded to current period earnings as non-interest expense.
After considering the economic uncertainty and market volatility resulting from the rising rate environment and the industry disruption from the bank failures in 2023 which impacted the Company's loan portfolio in real estate secured loans, the value of collateral is heavily dependent on real estate values in Nevada, Arizona,stock price and California. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in economic or other conditions. In addition, regulators, as an integral part of their examination processes, periodically review the Bank's allowances for credit losses, and may require the Bank to make additions to the allowance based on their judgment about information available to them at the time of their examination. Management regularly reviews the assumptions and formulae used in determining the allowance and makes adjustments if required to reflect the current risk profile of the portfolio.
Loans acquired with deteriorated credit quality
ASC 310-30, Accounting for Certain Loans or Debt Securities Acquired in a Transfer, applies to a loan with evidence of deterioration of credit quality since its origination, and for which it is probable, at acquisition, that the investor will be unable to collect all contractually required payments receivable. For these loans accounted for under ASC 310-30, management determines the value of the loan portfolio based, in part, on work provided by an appraiser. Factors considered in the valuation are projected cash flows for the loans, type of loan and related collateral, loan grade, delinquency, and loan to value. Loans are grouped together according to similar characteristics and are treated in the aggregate when applying various valuation techniques. Loans are first evaluated individually to determine if there has been credit deterioration since origination. Once acquired loans are determined to have deteriorated credit quality,market capitalization, the Company evaluates such loanselected to perform a quantitative valuation to assess goodwill impairment for common risk characteristics and aggregation into one or more pools. Common risk characteristics for pooling acquired loans may include credit ratings, loan type, collateral type, delinquency status, geographic location, loan to value, or combinations thereof. Management also estimates the amounteach of credit losses that are expected to be realized for individual loans by estimating the probabilityits reporting units as of default and the loss given default. These estimates are subjective.October 1, 2023. The accretiondetermination of the fair value adjustments attributableof a reporting unit is a subjective process that involves the use of estimates and judgments, particularly related to interest rates on loans acquired with deteriorated credit quality is recorded in interest income in the Consolidated Income Statements over the estimated life of the pool. The fair value adjustment attributable to credit losses on these loans is non-accretable. When a loan is sold, paid off or transferred to OREO and liquidated, any remaining non-accretable yield is recorded in interest income.

Adjustments to these loan values in future periods may occur based on management's expectation of futureforecasted cash flows, to be collected over the livesappropriate discount rates and an applicable control premium. The determination of the loans. Estimating cash flows is performed at a pool level and incorporates analysis of historical cash flows, delinquencies, and charge-offs, as well as assumptions about future cash flows. Performance can vary from period to period, causing changes in estimates of the expected cash flows. If, based on the review of a pool of loans, it is probable that a significant increase or improvement in cash flows previously expected to be collected, any valuation allowance established for the pool of loans is first reduced for the increase in the present value of cash flows expected to be collected, and any remaining increase in estimated cash flows increases the accretable yield and is recognized over the remaining estimated life of the loan pool. If based on the review of a pool of loans, it is probable that a decrease or impairment in cash flows previously expected to be collected or if actual cash flows are less than cash flows previously expected, the allowance for credit losses is increased for the decrease in the present value of the cash flows expected to be collected.
Business Combinations
Business combinations are accounted for 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 liabilities at their estimated fair values as of the date of acquisition. Any excess of the purchase price over the fair value of net assetsthe Company’s reporting units as of October 1, 2023 employed both an income and other identifiable intangible assets acquireda market approach. The income approach utilizes the reporting unit’s forecasted cash flows (including a terminal value approach to
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estimate cash flows beyond the final year of the forecast) and the reporting unit’s estimated cost of equity as the discount rate to estimate value. Significant management judgment is recordednecessary in the preparation of each reporting unit’s forecasted cash flows as goodwill. Toit relates to expectations for earnings projections, growth, and credit loss expectations and actual results may differ from forecasted results. The market approach relies upon valuation multiples derived from stock prices and enterprise values of publicly traded companies and also incorporates a control premium to develop an estimate of value. The selection of comparable companies and an appropriate control premium under this approach is subjective. Changes to any of these assumptions or judgments, either individually or collectively, may have a significant effect on the extentestimated fair value of the Company’s reporting units as calculated under both these approaches. Based on the results of the Company’s annual goodwill impairment test, the fair value of net assets acquired,each of the Company’s reporting units with goodwill exceeded its carrying value. The Company monitored events and circumstances during the period from October 1, 2023 through December 31, 2023, including identified intangible assets, exceeds the purchase price, a bargain purchase gain is recognized. Assets acquiredmacroeconomic conditions, industry and liabilities assumed from contingencies are also recognized at fair value ifmarket events and Company-specific performance indicators, and concluded it was not more likely than not the fair value can be determinedof each of the Company's reporting units was below its respective carrying value as of December 31, 2023. Therefore, no impairment charges were recorded during the measurement period. Resultsyear ended December 31, 2023. The carrying value of operationsgoodwill by reporting unit is disclosed in "Note 8. Goodwill and Other Intangible Assets" in Item 8 of an acquired business are included in the Consolidated Income Statement from the date of acquisition. Acquisition-related costs, including conversion and restructuring charges, are expensed as incurred.this Form 10-K.
Income taxes
The Company’s income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management’s best estimate of current and future taxes to be paid. The Company is subject to federal and state income taxes in the United States. Significant judgments and estimates are required in the determination of the consolidated income tax expense.
Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities 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 deferred tax assetsDTAs in the jurisdictions from which they arise, all available positive and negative evidence is considered, including scheduled reversals of deferred tax liabilities, tax planning strategies, projected future taxable income, and recent operating results. The assumptions about future taxable income require the use of significant judgment and are consistent with the plans and estimates used to manage the underlying business.

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Liquidity
Liquidity is the ongoing ability to accommodate liability maturities and deposit withdrawals, fund asset growth and business operations, and meet contractual obligations through unconstrained access to funding at reasonable market rates. Liquidity management involves forecasting funding requirements and maintaining sufficient capacity to meet the needs and accommodate fluctuations in asset and liability levels due to changes in the Company's business operations or unanticipated events.
The ability to have readily available funds sufficient to repay fully maturing liabilities is of primary importance to depositors, creditors, and regulators. The Company's liquidity, represented by cash and amounts due from banks, federal funds sold, loans HFS, and non-pledged marketable securities, is a result of the Company's operating, investing, and financing activities and related cash flows. In order to ensure funds are available when necessary,The Company actively monitors and manages liquidity, and no less than quarterly will estimate probable liquidity needs on at least a quarterly basis, the Company projects the amount of funds that will be required over a twelve month period and it also strives to maintain relationships with a diversified customer base.12-month horizon. Liquidity requirementsneeds can also be met through short-term borrowings or the disposition of short-term assets.

The following table presents the available and outstanding balances ofon the Company's lines of credit:credit as of December 31, 2023:
  December 31, 2017
  Available
Balance		 Outstanding Balance
  (in millions)
Unsecured fed funds credit lines at correspondent banks $100.0
 $—
Other lines with correspondent banks:    
Secured other lines with correspondent banks 22.5
 —
Unsecured other lines with correspondent banks 45.0
 —
Total other lines with correspondent banks $167.5
 $—
Available
Balance		Outstanding Balance
(in millions)
Unsecured fed funds credit lines at correspondent banks$1,120 $175 
In addition to lines of credit, the Company has borrowing capacity with the FHLB and FRB from pledged loans and securities.securities and warehouse borrowing lines of credit. The borrowing capacity, outstanding borrowings, and available credit as of December 31, 20172023 are presented in the following table:
(in millions)
FHLB:
Borrowing capacity$12,436
Outstanding borrowings6,200
Letters of credit147
Total available credit$6,089
FRB:
Borrowing capacity$16,741
Outstanding borrowings—
Total available credit$16,741
Warehouse borrowings:
Borrowing capacity$3,000
Outstanding borrowings376
Total available credit$2,624
The Company also plans for potential funding needs related to operating expenses, which in some cases involve contracts that contain penalties for early termination. Further, the Company has entered into certain letters of credit or other commitments to extend credit to customers of the Bank.
The following table sets forth the Company's significant contractual obligations as of December 31, 2023:
Payments Due by Period
TotalLess Than 1 Year1-3 Years3-5 YearsAfter 5 Years
(in millions)
Time deposit maturities$10,106 $9,092 $1,013 $1 $— 
Qualifying debt909 — — — 909 
Other borrowings7,544 6,837 93 73 541 
Operating lease obligations199 31 62 51 55 
Total$18,758 $15,960 $1,168 $125 $1,505 
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  December 31, 2017
  (in millions)
FHLB:  
Borrowing capacity $2,644.5
Outstanding borrowings 390.0
Letters of credit 343.0
Total available credit $1,911.5
   
FRB:  
Borrowing capacity $1,110.6
Outstanding borrowings —
Total available credit $1,110.6
Off-balance sheet commitments associated with outstanding letters of credit, commitments to extend credit, and credit card guarantees as of December 31, 2023 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 future cash funding requirements. 
Amount of Commitment Expiration per Period
Total Amounts CommittedLess Than 1 Year1-3 Years3-5 YearsAfter 5 Years
(in millions)
Commitments to extend credit$13,291 $3,860 $5,637 $2,195 $1,599 
Credit card commitments and financial guarantees418 418 — — — 
Letters of credit222 166 6 50 — 
Total$13,931 $4,444 $5,643 $2,245 $1,599 
The following table sets forth certain information regarding short-term borrowings: 
December 31,
202320222021
(dollars in millions)
Repurchase Agreements:
Maximum month-end balance$2,614 $523 $22 
Balance at end of year6 27 17 
Average balance1,076 76 20 
Federal Funds Purchased
Maximum month-end balance745 1,860 2,283 
Balance at end of year175 640 675 
Average balance127 568 419 
FHLB Advances:
Maximum month-end balance11,000 6,000 4,200 
Balance at end of year6,200 4,300 — 
Average balance3,732 2,526 393 
FRB Advances:
Maximum month-end balance1,300 — — 
Balance at end of year— — — 
Average balance1,962 — — 
Warehouse borrowings:
Maximum month-end balance2,101 160 820 
Balance at end of year376 — — 
Average balance855 201 442 
Total Short-Term Borrowed Funds$6,757 $4,967 $692 
Weighted average interest rate at end of year5.72 %4.64 %0.16 %
Weighted average interest rate during year5.58 2.28 0.67 
The Company has also committed to irrevocably and unconditionally guarantee the payments or distributions with respect to the holders of preferred securities of the Company's eight statutory business trusts to the extent the trusts have not made such payments or distributions, including: 1) accrued and unpaid 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 distributions and the amount of assets of the trust remaining available for distribution. The Company does not believe these off-balance sheet arrangements 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, capital expenditures, or capital resources. However, there can be no assurance such arrangements will not have a future effect.
The Company has a formal liquidity policy and, in the opinion of management, its liquid assets are considered adequate to meet cash flow needs for loan fundingfinancial obligations and deposit cash withdrawals for the next 90-120 days.support client activity during normal and stressed operating conditions. At December 31, 2017,2023, there is $2.89were $6.9 billion in liquid assets, comprised of $416.8$785 million in cash cash equivalents,on deposit at the FRB and money market investments and $2.48$6.1 billion in liquid securities not currently used as collateral for borrowings or other purposes. The Company had $3.3 billion in unpledged marketable securities. Atsecurities at December 31, 2016, the Company maintained $2.00 billion in liquid assets, comprised2023.
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The Parent maintains liquidity that would be sufficient to fund its operations and certain non-bank affiliate operations for an extended period should funding from normal sources be disrupted. Since deposits are taken by WAB and not by the Parent, Parent liquidity is not dependent on the Bank's deposit balances. In the Company's analysis of Parent liquidity, it is assumed that the Parent is unable to generate funds from additional debt or equity issuances, receives no dividend income from subsidiaries and does not pay dividends to stockholders, while continuing to make nondiscretionarynon-discretionary payments needed to maintain operations and repayment of contractual principal and interest payments owed by the Parent and affiliated companies. Under this scenario, the amount of time the Parent and its non-bank subsidiariessubsidiary can operate and meet all obligations before the current liquid assets are exhausted is considered as part of the Parent liquidity analysis. Management believes the Parent maintains adequate liquidity capacity to operate without additional funding from new sources for over twelve months.
WAB maintains sufficient funding capacity to address large increases in funding requirements, such as deposit outflows. This capacity is comprised of liquidity derived from a reduction in asset levels and various secured funding sources. On a long-term basis, the Company’s liquidity will be met by changing the relative distribution of its asset portfolios (for 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/or borrowing from correspondent banks, the FHLB of San Francisco, and the FRB. At December 31, 2017,2023, 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 flows from investment payments and maturities, and investment sales, if necessary.
The Company’s liquidity is comprised of three primary classifications: 1) cash flows provided by operating activities; 2) cash flows 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, adjusted for changes in certain other asset and liability accounts and certain non-cash income and expense items, such as the provision for credit losses, investment and other amortization and depreciation. For the years ended December 31, 2017, 2016,2023, 2022, and 2015,2021, net cash (used in) provided by operating activities was $383.8$(329) million, $280.6 million,$2.2 billion, and $220.4 million,$(2.7) billion, 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 influenced by its loan and securities activities. TheDuring the year ended December 31, 2023, the Company's cash balance increased by $1.1 billion as a result of a net decrease in loans, compared to a reduction in cash of $11.2 billion during the year ended December 31, 2022 primarily from a net increase in loansloans. A net increase in investment securities of $3.7 billion and $1.8 billion for the years ended December 31, 2017, 2016,2023 and 2015, was $1.87 billion, $810.5 million, and $1.27 billion, respectively. There was a net2022, respectively, partially offset the increase in investment securities forto the Company's cash balance during the year ended December 31, 2017 of $1.05 billion, compared2023 and contributed to a net increase of $771.9 million forthe reduction during the year ended December 31, 2016, and net decrease of $420.2 million for the year ended December 31, 2015.2022.
Net cash provided by financing activities has been impacted significantly by increased deposit levels. During the years ended December 31, 2017, 2016,2023, 2022, and 2015,2021, net deposits increased $2.42$1.7 billion, $2.52$6.0 billion, and $1.36$15.7 billion, respectively.
Fluctuations in core deposit levels may increase the Company's need for liquidity as certificates of deposit mature or are withdrawn before maturity, and as non-maturity deposits, such as checking and savings account balances, are withdrawn. Additionally, the Company is exposed to the risk that customers with large deposit balances will withdraw all or a portion of such deposits, due in part to the FDIC limitations on the amount of insurance coverage provided to depositors. To mitigate the uninsured deposit risk, the Company participates in the CDARS and ICS programs, which allow an individual customer to invest up to $50.0 million and $110.0$225.0 million, respectively, through one participating financial institution or, a combined total of $150.0$275.0 million per individual customer, with the entire amount being covered by FDIC insurance. As of December 31, 2017,2023, the Company has $401.4 million$1.5 billion of CDARS and $617.9 million$9.8 billion of ICS deposits.
As of December 31, 2017,2023, the Company has $67.3 million$6.6 billion of wholesale brokered deposits outstanding. Brokered deposits are generally considered to be deposits that have been received from 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 offering the highest interest rate available. Federal banking laws and regulations place restrictions on depository 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 offering a higher interest rate, thus posing liquidity risk for institutions that gather brokered deposits in significant amounts.
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 WAB to the Parent would be prohibited if the effect thereof would cause the Bank’s capital to be reduced below applicable minimum capital requirements. During the year ended December 31, 2017, the Parent contributed $11.3 million to2023, WAB and WAB and LVSPCSI paid dividends to the Parent of $70.0$230.0 million and $27.3$100.0 million, respectively. Subsequent to December 31, 2017,2023, WAB paid dividends to the Parent of $10.0$60.0 million.
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Recent accounting pronouncements
See "Note 1. Summary of Significant Accounting Policies," of the Notes to Consolidated Financial Statements contained in Item 8. Financial Statements and Supplementary Data8 of this Form 10-K for information on recent and recently adopted accounting pronouncements and their expected impact, if any, on the Company's consolidated financial statements.Consolidated Financial Statements.

SUPERVISION AND REGULATION
WAL, WAB, and certain of its non-banking subsidiaries are subject to comprehensive regulation under federal and state laws. The regulatory framework applicable to bank holding companies and their subsidiary banks is intended to protect depositors, the DIF, and the U.S. banking system as a whole. This system is not designed to protect equity investors in bank holding companies such as WAL.
Set forth below is a summary of the significant laws and regulations applicable to WAL and its subsidiaries. The description that follows is qualified in its entirety by reference to the full text of the statutes, regulations, and policies that are described. Such statutes, regulations, and policies are subject to ongoing review by Congress and state legislatures and federal and state regulatory agencies. A change in any of the statutes, regulations, or regulatory policies applicable to WAL and its subsidiaries could have a material effect on the results of the Company.
Overview
WAL is a separate and distinct legal entity from WAB and its other subsidiaries. As a registered bank holding company, WAL is subject to inspection, examination, and supervision by the FRB, and is regulated under the BHCA. WAL is also under the jurisdiction of the SEC and is subject to the disclosure and 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 “WAL” and the Company is subject to the rules of the NYSE for listed companies. The Company is a financial institution holding company within the meaning of Arizona law. WAL provides a full spectrum of deposit, lending, treasury management, and online banking products and services through WAB, its wholly-owned banking subsidiary. WAB is an Arizona chartered bank and a member of the Federal Reserve System. WAB operates the following full-service banking divisions: ABA, , BON, Bridge, FIB, and TPB. WAB is subject to the supervision of, and to regular examination by, the Arizona Department of Financial Institutions, the FRB as its primary federal regulator, as well as byand the FDIC as its deposit insurer. WAB'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 platform of specialized financial services providers including AAB, Corporate Finance, Equity Fund Resources, HFF, Life Sciences Group, Mortgage Warehouse Lending, Publicservices.
WAB is subject to the supervision of, and Nonprofit Finance, Renewable Resource Group, Resort Finance,to regular examination by, the Arizona Department of Financial Institutions, the FRB as its primary federal regulator, and Technology Finance.the FDIC as its deposit insurer.
WAL and WAB are also supervised by the CFPB for compliance with federal consumer financial protection laws. The Company’s non-bank subsidiaries are subject to federal and state laws and regulations, including regulations of the FRB.
The Dodd-Frank Act significantly changed the financial regulatory regime in the United States. Since the enactment of the Dodd-Frank Act, U.S. banks and financial services firms have been subject to enhanced regulation and oversight. Several provisions of the Dodd-Frank Act are subject to further rulemaking, guidance, and interpretation by the federal banking agencies. While
Enacted in 2018, the current administrationEGRRCPA, among other things, amended certain provisions of the Dodd-Frank Act. The EGRRCPA provides limited regulatory relief to certain financial institutions while preserving the existing framework under which U.S. financial institutions are regulated. The EGRRCPA relieves bank holding companies with less than $100 billion in assets from the enhanced prudential standards imposed under Section 165 of the Dodd-Frank Act (including, but not limited to, resolution planning and its appointeesenhanced liquidity and risk management requirements).
Supervision, Regulation and Licensing of AmeriHome
AmeriHome is a residential mortgage producer and servicer that operates in a heavily regulated industry. In addition to supervision by the federal banking agencies have expressed interestwith primary jurisdiction over the Company and WAB, AmeriHome is subject to the rules, regulations and oversight of certain federal, state and local governmental authorities, including the CFPB, HUD, and GNMA, and government-sponsored enterprises in reviewing, revising,the mortgage industry such as FHLMC and perhaps repealing portionsFNMA.
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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 Dodd-Franksettlement process and prohibit specific practices related thereto;
•the Truth In Lending Act and certainRegulation Z, which require disclosures and timely information on the nature and costs of the residential mortgages and the real estate settlement process;
•the Secure and Fair Enforcement for Mortgage Licensing Act, which applies to businesses and individuals engaging in the residential mortgage loan business;
•the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Fair Debt Collection Practices Act, the Federal Trade Commission Act, and the rules and regulations of the FTC and CFPB that prohibit unfair, abusive or deceptive acts or practices;
•the Fair Credit Reporting Act (as amended by the Fair and Accurate Credit Transactions Act) and Regulation V, which address the accuracy, fairness, and privacy of information in the files of consumer reporting agencies; and
•the Equal Credit Opportunity 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 conducting residential lending and mortgage servicing.
The CFPB as well as the FTC have rulemaking authority with respect to many of the federal consumer protection laws applicable to mortgage lenders and servicers, and their rulemaking and regulatory agendas relating to the residential mortgage industry continues to evolve. In particular, as part of its implementingenforcement authority, the CFPB can order, among other things, rescission or reformation of contracts, the refund of moneys or the return of real property, restitution, disgorgement or compensation for unjust enrichment, the payment of damages or other monetary relief, public notifications regarding violations, remediation of practices, external compliance monitoring and civil money penalties.
AmeriHome is also subject to state and local laws, rules and regulations and oversight by various state agencies that license and oversee consumer protection, loan servicing, origination and collection activities of mortgage industry participants. Despite the fact that AmeriHome is the operating subsidiary of a depository institution, it must comply with regulatory and licensing requirements in certain states in order to conduct its business, and does (and will continue to) incur significant costs to comply with these requirements. These laws, rules and regulations may change as statutes and regulations are enacted, promulgated, amended, interpreted and enforced.
Supervision and Regulation of WATC
WATC is an OCC-chartered, non-depository national trust bank. WATC offers levered loan facility administration, loan administration, and securities custody products. As a national trust bank, the ability of WATC to engage in fiduciary activities is governed by federal law at 12 U.S.C. § 92a and the OCC regulations at 12 C.F.R. Part 9, as well as certain state laws to the extent not preempted by federal law and regulation. WATC may engage in any of the enumerated activities or roles permitted for national trust banks listed in federal statutes and regulations as well as any other capacity that the OCC authorizes pursuant to federal law. As a non-depository national trust bank, WATC may not accept deposits and is not clear whether any such legislation orsubject to legal requirements to maintain FDIC deposit insurance.
The OCC has primary supervisory and regulatory changes will be enacted or, if enacted, whatauthority over the effectoperations of WATC. As part of this authority, WATC is required to file periodic reports with the OCC and is subject to supervision and periodic examination by the OCC. To support its supervisory function, the OCC has the authority to assess and charge fees on the Company would be. all national banks, including non-depository national trust banks like WATC.
Bank Holding Company Regulation
WAL 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 are therefore appropriate for bank holding companies and their affiliates to engage in, include securities brokerage services, investment advisory services, fiduciary services, and certain management advisory and data processing services, among others. Bank holding companies that have elected to become financial holding companies may engage in any activity, or acquire and retain the shares of a company engaged in any activity that is eithereither: (i) financial in nature or incidental to such financial activity (as
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(as determined by the FRB in consultation with the Secretary of the Treasury) or (ii) complementary to a financial activity, and that does not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally (as solely determined by the FRB). Activities that are financial in nature include securities underwriting and dealing, insurance underwriting, and making merchant banking investments.

Mergers and Acquisitions
The BHCA, the Bank Merger Act, and other federal and state statutes regulate the direct and indirect acquisition of depository institutions. The BHCA requires the prior FRB approval for a bank holding company to acquire, directly or indirectly, 5% or more of any class of voting securities of a commercial bank or its parent holding company and for a company, other than a bank holding company, to acquire 25% or more of any class of voting securities of a bank or bank holding company. In April 2020, the Federal Reserve adopted a final rule codifying the presumptions used in determinations of whether a company has the ability to exercise a controlling influence over another company for purposes of the BHCA, and providing greater transparency on the types of relationships the Federal Reserve generally views as supporting a determination of control. Under the Change in Bank Control Act, any person, including a company, may not acquire, directly or indirectly, control of a bank without providing 60 days’ prior notice and receiving a non-objection from the appropriate federal banking agency.
Under the Bank Merger Act, the prior approval of the appropriate federal banking agency is required for insured depository institutions to merge or enter into purchase and assumption transactions. In reviewing applications seeking approval of merger and purchase and assumption transactions, the federal banking agencies will consider, among other things, the competitive effecteffects and public benefits of the transactions, the capital position of the combined banking organization, the applicant's performance record under the CRA, and the effectiveness of the subject organizations in combating money laundering activities. For further information relating to the CRA, see the Sectionsection titled “Community Reinvestment Act and Fair Lending Laws.”
Under Section 6-142 of the Arizona Revised Statutes, no person may acquire control of a company that controls an Arizona bank without the prior approval of the Arizona Superintendent of Financial Institutions, or Arizona Superintendent. 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.
Enhanced Prudential Standards
Section 165 of the Dodd-Frank Act imposes enhanced prudential standards on larger banking organizations, with certain of these standards applicable to banking organizations over $10 billion, including WAL and WAB, asWAB.
As a result of passage 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 andEGRRCPA, bank holding companies with $10 billion to $50less than $100 billion in total consolidated assets to conduct an annual company-run stress test. WAL and WAB conducted a company-run capital stress test as required byare exempt from the enhanced prudential standards imposed under Section 165 of the Dodd-Frank Act in 2017 and provided the results(including, but not limited to, the FRB. WAL foundresolution planning and enhanced liquidity and risk management requirements therein). Notwithstanding these changes, the capital planning and risk management practices of the Company would have sufficient capitaland the Bank will continue to maintain regulatory capital levels throughout an economic downturn.
In February 2014,be reviewed through the FRB issued a rule furtherregular supervisory processes of the FRB. Further, in connection with the FRB’s rules implementing the enhanced prudential standards required by the Dodd-Frank Act. Although most(and as subsequently modified by application of the standards apply only toEGRRCPA’s higher consolidated asset thresholds for bank holding companies with more than $50 billion in assets, as directed bycompanies), the Dodd-Frank Act, the rule contains certain standards that apply to bank holding companies with more than $10 billion in assets, including a requirement to establishCompany has established a risk committee of the Company's BOD to manage enterprise-wide risk. The Company meets these requirements.risk and has retained its separate risk committee of independent directors.
Volcker Rule
Section 619 of the Dodd-Frank Act, commonly known as the Volcker Rule, restricts the ability of banking entities, such as the Company and WAB, from: (i) engaging in “proprietary trading” and (ii) investing in or sponsoring certain covered funds, subject to certain limited exceptions. Under the Volcker Rule, the 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 CDOcollateralized debt obligation securities. There are also several exemptions from the definition of covered fund, including, among other things, loan securitizations, joint ventures, certain types of foreign funds, entities issuing asset-backed commercial paper, and registered investment companies. Further, the final rules permit banking entities, subject to certain conditions and limitations, to invest in or sponsor a covered fund in connection with 1)with: (1) organizing and offering the covered fund; 2)(2) certain risk-mitigating hedging activities; and 3) (3) de minimis investments in covered funds. Compliance
The EGRRCPA and subsequent promulgation of inter-agency final rules have aimed at simplifying and tailoring requirements related to the Volcker Rule, including by eliminating collection of certain metrics and reducing the compliance burdens associated with other metrics for banks with less than $20 billion in average trading assets and liabilities. In June 2020, the Federal Reserve and other regulatory agencies issued a final rule modifying the Volcker Rule’s prohibition on banking entities investing in or sponsoring covered funds by: (1) streamlining the covered funds portion of the rule; (2) addressing the extraterritorial treatment of certain foreign funds; and (3) permitting banking entities to offer financial services and engage in
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other activities that do not raise concerns the Volcker Rule was intended to address. The Company believes it is fully compliant with the Volcker Rule, was requiredincluding as modified by July 21, 2017 and the Company is fully compliant.EGRRCPA rule.
Dividends
The Company has never declared or paid cashregular quarterly dividends on its common stock. Thesince the third quarter of 2019. Whether the Company currently intends to retain any future earnings for future growth and does not anticipate paying any cash dividends in the foreseeable future. Any determination in the futurecontinues to pay quarterly dividends and the amount of any such dividends will be at the discretion of WAL's BOD and will depend on the Company’s earnings, financial condition, results of operations, business prospects, capital requirements, regulatory restrictions, contractual restrictions, and other factors that the BOD may deem relevant.
The Company’s ability to pay dividends is subject to the regulatory authority of the FRB. The supervisory concern of the FRB focuses on a bank holding company’s capital position, its ability to meet its financial obligations as they come due, and its capacity to act as a source of financial strength to its insured depository institution subsidiaries. In addition, FRB policy discourages the payment of dividends by a bank holding company that is not supported by current operating earnings.

As a Delaware corporation, the Company is also subject to limitations under Delaware law on the payment of dividends. Under the Delaware General Corporation Law, dividends may only be paid out of surplus or out of net profits for the year in which the dividend is declared or the preceding year, and no dividends may be paid on common stock at any time during which the capital of outstanding preferred stock or preference stock exceeds the Company's net assets.

From time to time, the Company may become a party to financing agreements and other contractual obligations that have the effect of limiting or prohibiting the declaration or payment of dividends such as the Series B Preferred Stock it issued pursuant to the SBLF (which has subsequently been redeemed).under certain circumstances. Holding company expenses and obligations with respect to its outstanding preferred stock, trust preferred securities and corresponding subordinated debt also may limit or impair the Company’s ability to declare and pay dividends.
Since the Company has no significant assets other than the voting stock of its subsidiaries, it currently depends on dividends from WAB and, to a lesser extent, its non-bank subsidiaries, for a substantial portion of its revenue and as the primary sources of its cash flow. The ability of a state member bank, such as WAB, to pay cash dividends is restrictedsubject to restrictions by the FRB and the stateState 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 two years. Further, without receiving prior approval from both the FRB and two thirdstwo-thirds of its shareholders,stockholders, a bank cannot declare or pay a dividend that would exceed its undivided profits or withdraw any portion of its permanent capital.
Under Section 6-187 of the Arizona Revised Statutes, WAB may pay dividends on the same basis as any other Arizona corporation, except that cash dividends paid out of capital 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 corporation 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 surplus without the approval of the Arizona Superintendent.
Federal Reserve System
As a member of the Federal Reserve System, WAB ishas historically been required by law to maintain reserves against its transaction deposits. The reserves mustdeposits, 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 effective on March 26, 2020.
Additionally, on June 4, 2021, the Federal Reserve adopted amendments to Regulation D (Reserve Requirements of Depository 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 reference to a single “interest on reserve balances” rate. The amendments also simplified the formula used to calculate the amount of interest paid on balances maintained by or on behalf of eligible institutions in master accounts at Federal Reserve Banks, are permittedand to made other conforming amendments. The rule became effective on July 29, 2021.
Bank Term Funding Program
In response to the bank failures that occurred earlier in 2023, the Federal Reserve System has established the BTFP, which is intended to provide additional funding to eligible depository institutions to help ensure banks have the ability to meet this requirementthe needs of all their depositors. The BTFP functions similarly to the Federal Reserve’s traditional discount window, offering loans of up to one year in length to eligible depository institutions pledging any collateral eligible for purchase by maintaining the specified amountFederal Reserve Banks in open market operations (for example, U.S. Treasuries, U.S. agency securities, and U.S. agency mortgage-backed securities), which are valued at par. The U.S. Department of the Treasury will provide $25 billion as credit protection to the Federal Reserve Banks in connection with the BTFP. The BTFP's goal is to be an average balance over a two-week period.additional source of liquidity against high-
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quality securities, eliminating an institution’s need to quickly sell those securities in times of stress. The totalCompany borrowed $1.3 billion under the BTFP, all of reserve balanceswhich was approximately $105.5 million and $43.7 million,repaid as of December 31, 2017 and 2016, respectively.2023.
Source of Strength Doctrine
FRB policy requires bank holding companies to act as a source of financial and managerial strength to their subsidiary banks. Section 616 of the Dodd-Frank Act codified the requirement that bank holding companies act as a source of financial strength. As a result, the Company is expected to commit resources to support WAB, including at times when the Company may not be in a financial position to provide such resources. Any capital loans by a bank holding company to any of its subsidiary banks are subordinate in right of payment to deposits and to certain other indebtedness of such subsidiary banks. The U.S. Bankruptcy Code provides that, in the event of a bank holding company's bankruptcy, any commitment by the bank holding company to a federal banking agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment.
Capital Adequacy and Prompt Corrective Action
The Capital Rules established a comprehensive capital framework for U.S. banking organizations. The Capital Rules generally implement the Basel Committee's Basel III final capital framework for strengthening international capital standards. The Capital Rules revise the definitions and the components of regulatory capital, as well as address other issues affecting the numerator in banking institutions’ regulatory capital ratios. The Capital Rules also address asset risk weights and other matters affecting the denominator in banking institutions’ regulatory capital ratios and replacereplaced the existing general risk-weighting approach with a more risk-sensitive approach.
The Capital Rules: (i) include CET1 and the related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify 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 be made to CET1 and not to the other components of capital; and (iv) expand the scope of the deductions from and adjustments to capital as compared to existing regulations. Under the Capital Rules, for most banking organizations, including the Company, the most common form of Additional Tier 1 capital is non-cumulative perpetual preferred stock, and the most common forms of Tier 2 capital are subordinated notes and a portion of the allocation for loan and lease losses, in each case, subject to the Capital Rules’ specific requirements.

Pursuant to the Capital Rules, the minimum capital ratios are as follows:
•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% Total capital (that is, Tier 1 capital 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”).
The Capital Rules also include a “capital conservation buffer,” composed entirely of CET1, in addition to these minimum risk-weighted asset ratios. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET1 to risk-weighted assets above the minimum but below the capital conservation buffer will face constraints on dividends, equity, and other capital instrument repurchases and compensation based on the amount of the shortfall. Thus, when fully phased-in on January 1, 2019, the capital standards applicable to the Company will include an additional capital conservation buffer of 2.5% of CET1, effectively resulting in minimum ratios inclusive of the capital conservation buffer of (i) CET1 to risk-weighted assets of at least 7%, (ii) Tier 1 capital to risk-weighted assets of at least 8.5%, and (iii) Total capital to risk-weighted assets of at least 10.5%.
The Capital Rules provide for a number of deductions from and adjustments to CET1. These include, for example, the requirement that mortgage servicing assets, deferred tax assetsDTAs arising from temporary differences that could not be realized through net operating loss carrybacks, and significant investments in non-consolidated financial entities be deducted from CET1 to the extent that any one such category exceeds 10% of CET1 or all such items, in the aggregate, exceed 15% of CET1. The deductions and adjustments will be incrementally phased in between January 1, 2015 and January 1, 2019.
In addition, under the current general risk-based capital rules,Capital Rules further prescribe that the effects of accumulated other comprehensive income or loss items reported as a component of stockholders’ equity be included in shareholders’ equity (for example, mark-to-market of securities held in the available-for-sale portfolio) under U.S. generally accepted accounting principles are reversed for the purposes of determining regulatory capital ratios. Pursuant to the Capital Rules, the effects of certain of these items are not excluded;CET1 capital; however, non-advanced approaches banking organizations may make a one-time permanent election to continue to exclude these items. The Company, as a non-advanced approaches institution, has made this one-time election to exclude these items from its regulatory capital ratios.election.
The Capital Rules also preclude certain hybrid securities, such as trust preferred securities, issued on or after May 19, 2010 from inclusion in bank holding companies’ Tier 1 capital. The Company has used trust preferred securities in the past as a tool for raising additional Tier 1 capital and otherwise improving its regulatory capital ratios. Although the Company may continue
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to include its existing trust preferred securities as Tier 1 capital, the prohibition on the use of these securities as Tier 1 capital going forward may limit the Company’s ability to raise capital in the future.
Implementation of the deductions and other adjustments to CET1 began on January 1, 2015 and will be phased in over a 4-year period (beginning at 40% on January 1, 2015 and an additional 20% per year thereafter). The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and increases by 0.625% on each subsequent January 1, until it reaches 2.5% on January 1, 2019. The risk-weighting categories in the Capital Rules are standardized and include a risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities, to 600% for certain equity exposures, and resulting in higherup to 1,250% risk weights for a variety of higher risk asset classes.
In September 2017, the federal banking agencies proposedAs of April 1, 2020, final rules became effective simplifying the Capital Rules. The proposal would apply primarily to non-advanced approaches institutions, such as the Company. The proposal would simplify and clarify a number of the more complex aspects of the Capital Rules, including thecapital treatment for certain acquisition, development, and construction loans, mortgage servicing assets, certain deferred tax assets,DTAs, investments in the capital instruments of unconsolidated financial institutions, and minority interests. In November 2017, the FRB finalized a rule extending the currently applicable capital rules for non-advanced approaches institutions, including the treatment of mortgage servicing assets. That rule is in effect pending the comment period and review of the general proposal to simplify the Capital Rules for non-advanced approaches institutions.
interest. Management believes the Company is in compliance, and will continue to be in compliance, with the targeted capital ratios as such requirements are phased in.ratios.

In response to the COVID-19 pandemic, the federal bank regulatory agencies issued a final rule in late August 2020 that allows institutions that adopted the CECL accounting standard in 2020 to mitigate CECL’s estimated effects on regulatory capital for two years, followed by a three-year transition period. The Company has elected this capital relief option.
Prompt Corrective Action and Safety and Soundness
Pursuant to Section 38 of the FDIA, federal banking agencies are required to take “prompt corrective action” should a depository institution fail to meet certain capital adequacy standards. At each successive lower capital category, an insured depository institution is subject 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 depository institution is classified in one of the undercapitalized categories, it is required to submit a capital restoration plan to the appropriate federal banking agency, and the holding company must guarantee the performance of that plan. Based upon its capital levels, a bank that is classified as well-capitalized, adequately capitalized, or undercapitalized may be treated as though it were in the next lower capital category if the appropriate federal banking agency, after notice and opportunity for hearing, determines that an unsafe or unsound condition, or an unsafe or unsound practice, warrants such treatment.
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 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 capitalized, a bank must have a total risk based capital ratio of at least 8%, a Tier 1 risk based capital ratio of at least 6%, a CET1 risk based capital 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 capital ratio of less than 3%, and a Tier 1 leverage ratio of less than 3%; (v) critically undercapitalized, a bank would have a ratio of tangible equity to total assets that is less than or equal to 2%.
Bank holding companies and insured banks also may be subject to potential enforcement actions of varying levels of severity by the federal banking agencies for unsafe or unsound practices in conducting their business, or for violation of any law, rule, regulation, condition imposed in writing by the agency or term of a written agreement with the agency. In more serious cases, enforcement actions may includeinclude: (i) the issuance of directives to increase capital; (ii) the issuance of formal and informal agreements; (iii) the imposition of civil monetary penalties; (iv) the issuance of a cease and desist order that can be judicially enforced; (v) the issuance of removal and prohibition orders against officers, directors, and other institution−affiliatedinstitution-affiliated parties; (vi) the termination of the bank’s deposit insurance; (vii) the appointment of a conservator or receiver for the bank; and (viii) the enforcement of such actions through injunctions or restraining orders based upon a judicial determination that the agency would be harmed if such equitable relief was not granted.
Transactions with Affiliates and Insiders
Under federal law, transactions between insured depository institutions and their affiliates are governed by Sections 23A and 23B of the FRA and implementing Regulation W. 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, are affiliates of the bank. Generally, Sections 23A and 23B of the FRA are intended to protect insured depository institutions from losses arising from transactions with non-insured affiliates by limiting the extent to which a bank or its subsidiaries may engage in covered transactions with any one affiliate and with all affiliates of the bank in the aggregate, and requiring that such transactions be on terms consistent with safe and sound banking practices.
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Further, Section 22(h) of the FRA and its implementing Regulation O restricts loans to directors, executive officers, and principal stockholders (“insiders”). Under Section 22(h), loans to insiders and their related interests may not exceed, together with all other outstanding loans to such persons and affiliated entities, the institution's total capital and surplus. Loans to insiders above specified amounts must receive the prior approval of the BOD. Further, under Section 22(h) of the FRA, loans to directors, executive officers, and principal stockholders must be made on terms substantially the same as offered in comparable 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 preference to the insider over the employees. Section 22(g) of the FRA places additional limitations on loans to executive officers.
Lending Limits
In addition to the requirements set forth above, state banking law generally limits the amount of funds 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 fully secured by readily marketable collateral.

Brokered Deposits
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 capitalized” or, with the FDIC’s approval, “adequately capitalized.” On December 15, 2020, the FDIC issued rules to revise brokered deposit regulations in light of modern deposit-taking methods. The rules established a new framework for certain provisions of the “deposit broker” definition and amended the FDIC’s interest rate methodology calculating rates and rate caps. The rules became effective on April 1, 2021 and, to date, there has been no material impact to either the Company or the Bank from the rules.
Consumer Protection and CFPB Supervision
The Dodd-Frank Act centralized responsibility for consumer financial protection by creating the CFPB, an independent agency charged with responsibility for implementing, enforcing, and examining compliance with federal consumer financial 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 Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection Procedures Act, the Truth in Lending Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Practices Act, various state law counterparts, 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 financial products and potential enforcement actions could also adversely affect the Company’s business, financial condition, or operations.
Depositor Preference
The FDIA provides that, in the event of the “liquidation or other resolution” of an insured depository institution, the claims of depositors of the institution, including the claims of the FDIC as subrogee of insured depositors, and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution. If an insured depository institution 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, with respect to any extensions of credit they have made to such insured depository institution.
Federal Deposit Insurance
Substantially all of the deposits of WAB are insured up to applicable limits by the FDIC’s DIF andDIF. The basic limit on FDIC deposit insurance is $250,000 per depositor. WAB is subject 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 different risk categories distinguished by capital levels and supervisory ratings. As a result of the Dodd-Frank Act, the base for insurance assessments is now consolidated average assets less average tangible equity. Assessment rates are calculated using formulas that take into account the risk of the institution being assessed. WAB is classified as, and subject to the scorecard for, a large and highly complex institution to determine its total base assessment rate.
The Dodd-Frank Act requires that the FDIC raise the minimum reserve ratio of the DIF from 1.15% to 1.35%, and that the FDIC offset the effect of this increase on insured depository institutions with total consolidated assets of less than $10 billion. In March 2016, the FDIC finalized a rule to impose a surcharge of 4.5 cents per $100 of their assessment base on deposit insurance assessment rates paid by insured depository institutions with total consolidated assets of more than $10 billion. As of June 30, 2016, the minimum reserve ratio reached 1.17% and as such, WAB was subject to the surcharge beginning July 1, 2016. The FDIC also has authority to further increase deposit insurance assessments. FDIC deposit insurance expense also includes FICO assessments related to outstanding FICO bonds.
Under the FDIA, the FDIC may terminate deposit insurance upon a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, 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.
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To recover the loss to the Deposit Insurance Fund arising from the bank failures that occurred earlier in 2023, the FDIC approved an annual special assessment rate of approximately 13.4 basis points. The assessment base for the special assessments would be equal to an institution’s estimated uninsured deposits as of December 31, 2022, adjusted to exclude the first $5 billion of estimated uninsured deposits. The special assessments will be collected over an eight-quarter collection period, at a quarterly special assessment rate of 3.35 basis points, with the first quarterly assessment period beginning on January 1, 2024. However, the amount of the total special assessment is subject to adjustment and will not be finalized by the FDIC until after termination of the receiverships. In connection with the special assessment, the Company recognized a charge of $66.3 million during the year ended December 31, 2023.
Financial Privacy and Data Security
The Company is subject to federal laws, including the GLBA, and certain state laws containing consumer privacy protection provisions. These provisions limit the ability of banks and other financial institutions to disclose non-public information about consumers to affiliated and non-affiliated third parties and limit the reuse of certain consumer information received from non-affiliated institutions. These provisionprovisions require notice of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to affiliates or non-affiliated third parties by means of “opt out” or “opt in” authorizations.
For example, in August 2018, the CFPB published its final rule 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. To qualify, a financial institution must not share nonpublic personal information about customers except as described in certain statutory exceptions that do not trigger a customer’s statutory opt-out right. In addition, the financial institution must not have changed its disclosure policies and practices from those disclosed in its most recent privacy notice. The rule sets forth timing requirements for delivery of annual privacy notices in the event a financial institution that qualified for the annual notice exemption later changes its policies or practices in such a way that it no longer qualifies for the exemption.
The GLBA also requires that financial institutions to implement comprehensive written information security programs that include administrative, technical, and physical safeguards to protect consumer information. Further, pursuant to interpretive guidance issued under the GLBA and certain state laws, financial institutions are required to notify customers of security breaches that resultresulting in unauthorized access to their nonpublic personal information.
For example, under California law, every business that owns or licenses personal information about a California resident must maintain reasonable security procedures and policies to protect that information and comply with specific requirements relating to the destruction of records containing personal information and disclosure of breaches to customers, and restrictions on the use of customer information unless the customer "opts in." Other states, including Arizona and Nevada where WAB has branches,

may also have applicable laws requiring businesses that retain consumer personal information to develop reasonable security policies and procedures, notify consumers of a security breach, or provide disclosures about the use and sharing of consumer personal information.
The federal banking agencies, including the FRB, through the Federal Financial Institutions Examination Council,regulators have adopted guidelines for establishing information security standards and cybersecurity programs for implementing safeguards under the supervision of a financial institution’s board of directors. These guidelines, along with related regulatory materials, increasingly focus on risk management and processes related to encourageinformation technology and the use of third parties in the provision of financial products and services. The federal banking agencies expect financial institutions to establish lines of defense and ensure that their risk management processes also address the risk posed by compromised customer credentials, and also expect financial institutions to maintain sufficient business continuity planning processes to ensure rapid recovery, resumption and maintenance of the institution’s operations after a cyber-attack. In addition, all federal and state banking regulators continue to increase focus on cybersecurity programs and risks as part of regular supervisory exams.
On November 18, 2021, the federal bank regulatory agencies issued a final rule to improve the sharing of information about cyber incidents that may affect the U.S. banking system. The rule requires a banking organization to notify its primary federal regulator of any significant computer-security incident as soon as possible and identify, assess,no later than 36 hours after the banking organization determines a cyber incident has occurred. Notification is required for incidents that have materially affected—or are reasonably likely to materially affect—the viability of a banking organization’s operations, its ability to deliver banking products and mitigate these risks, both internally and at critical third party services, providers.or the stability of the financial sector. In addition, the rule requires a bank service provider to notify affected banking organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has materially affected or is reasonably likely to materially affect banking organization customers for four or more hours. The rule became effective May 1, 2022.
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Community Reinvestment Act and Fair Lending Laws
WAB has a responsibility under the CRA to help meet the credit needs of its communities, including low and moderate-incomemoderate income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution's discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA.
On October 24, 2023, the federal bank regulatory agencies jointly issued a final rule to modernize CRA regulations consistent with the following key goals: (1) to encourage banks to expand access to credit, investment, and banking services in low to moderate income communities; (2) to adapt to changes in the banking industry, including internet and mobile banking and the growth of non-branch delivery systems; (3) to provide greater clarity and consistency in the application of the CRA regulations, including adoption of a new metrics-based approach to evaluating bank retail lending and community development financing; and (4) to tailor CRA evaluations and data collection to bank size and type, recognizing differences in bank size and business models may impact CRA evaluations and qualifying activities. Most of the final CRA rule’s requirements will be applicable beginning January 1, 2026, with certain requirements, including the data reporting requirements, applicable as of January 1, 2027. WAB is currently evaluating the impact of the modified CRA regulations, but does not anticipate any resulting material impact to its operations or compliance objectives.
In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit discrimination in lending practices on the basis of characteristics specified in those statutes. WAB’s failure to comply with the provisions of the CRA could, at a minimum, result in regulatory restrictions on its activities and the activities of the Company. WAB’s failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions. WAB received a rating of “Satisfactory” in its most recent CRA examination, in November 2015.April 2022.
Federal Home Loan Bank of San Francisco
WAB is a member of the FHLB of San Francisco, which is one of 12 regional FHLBs that provide funding to their members to support residential lending, as well as affordable housing and community development loans. Each FHLB serves as a reserve, or central bank, for 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, WAB must purchase and maintain stock in the FHLB of San Francisco. At December 31, 2023, WAB’s total investment in FHLB stock was $189 million.
Incentive Compensation
The Dodd-Frank Act requires the federal banking agencies and the SEC to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at specified regulated entities, including the Company and WAB, with at least $1 billion in total consolidated assets, that encourage inappropriate risks by providing an executive officer, employee, director, or principal shareholderstockholder with excessive compensation, fees, or benefits 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 form initially proposed, they will restrict the manner in which executive compensation is structured.
The Dodd-Frank Act also requires publicly traded companies to give stockholders a non-binding vote on executive compensation at least every three years and on so-called “golden parachute” payments in connection with approvals of mergers and acquisitions. WAL gives stockholders a non-binding vote on executive compensation annually.
Preventing Suspicious Activity
Under Title III of the USA PATRIOT Act, all financial institutions are required to take certain measures to identify their customers, prevent money laundering, monitor customer transactions, and report suspicious activity to U.S. law enforcement agencies. Financial institutions are also are required to respond to requests for information from federal banking agencies and law enforcement agencies. Information sharing among financial institutions for the above purposes is encouraged by an exemption granted to complying financial institutions from the privacy provisions of the GLBA and other privacy laws. Financial institutions that hold correspondent accounts for foreign banks or provide private banking services to foreign individuals are required to take measures to avoid dealing with certain foreign individuals or entities, including foreign banks with profiles that raise money laundering concerns, and are prohibited from dealing with foreign “shell banks” and persons from jurisdictions of particular concern. The primary federal banking agencies and the Secretary of the Treasury have adopted regulations to implement several of these provisions. On May 11, 2018, WAB must comply with the new Customer Due Diligence Rule, which clarified and strengthened the existing obligations for identifying new and existing customers and explicitly include risk-based procedures for conducting ongoing customer due diligence. All financial institutions are also are required to establish internal anti-money laundering programs. The effectiveness of a financial institution in combating money laundering activities is a factor to be considered in any application submitted by the financial institution under the Bank Merger Act. The Company has a Bank Secrecy Act and
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USA PATRIOT Act Board-approvedBOD-approved compliance program and engages in relatively few transactions with foreign financial institutions or foreign persons.
The FCRA’s Red Flags Rule requires financial 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 procedures to detect suspicious patterns or practices that indicate the possibility of identity theft, such as inconsistencies in personal information or changes in account activity.
Office of Foreign Assets Control Regulation
The United States has imposed economic sanctions that affect transactions with designated foreign countries, nationals, and others. These are typically known as the OFAC rules based on their administration by the OFAC. The OFAC-administered sanctions

targeting countries take many different forms. Generally, they contain one or more of the following elements: (i) restrictions on trade with or investment in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned country 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 country; and (ii) a blocking of assets in which the government or specially designated nationals of the sanctioned country have an interest, by prohibiting transfers of property subject to U.S. jurisdiction (including property in the possession or control of U.S. persons). Blocked assets (property and bank deposits) cannot be paid out, withdrawn, set off, or transferred in any manner without a license from OFAC. Failure to comply with these sanctions could have serious legal and reputational consequences.
Future Legislative Initiatives
Federal and state legislatures may introduce legislation that will impact the financial services industry. In addition, federal banking agencies may introduce regulatory initiatives that are likely to impact the financial services industry, generally. However it is not clear whether such changes will be enacted or, if enacted, what their effect on the Company will be. New legislation could change banking statutes and the operating environment of the Company in substantial and unpredictable ways. If enacted, such legislation could increase or decrease the cost of doing business, limit or expand permissible activities, or affect the competitive balance among banks, savings associations, credit unions, and other financial institutions. The Company cannot predict whether any such legislation will be enacted, and, if enacted, the effect that it or any implementing regulations would have on the financial condition or results of operations of the Company. A change in statutes, regulations, or regulatory policies applicable to WAL or any of its subsidiaries could have a material effect on the business of the Company.
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Item 7A.Quantitative and Qualitative Disclosures about Market Risk.
Item 7A.Quantitative and Qualitative Disclosures about Market Risk.
Market risk is the risk of loss in a financial instrument arising from adverse changes in market prices interestand 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. To 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 opportunities on its earning assets to those on its funding liabilities.
Management uses various asset/liability strategies to manage the re-pricing characteristics of the Company's assets and liabilities, all of which are designed to ensure that exposure to interest rate fluctuations is limited to within the Company's guidelines of acceptable levels of risk-taking. Hedging strategies, including 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 portfolio assets and their funding sources. Derivatives in a hedging relationship are also used to minimize the Company's exposure to changes in benchmark interest rates and volatility of net interest income and EVE to interest rate fluctuations, with their impact reflected in the model results discussed below.
Interest rate risk is addressed by the 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 from potential changes in interest rates and considers the impact of alternative strategies or changes in balance sheet structure. The Company manages its balance sheet in part to maintainkeep the potential impact on EVE and net interest income within acceptable ranges despite changes in interest rates.
The Company's exposure to interest rate risk is reviewed at least quarterly by the 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 established by the BOD the BOD may direct management toor, ALCO determines that interest rate exposures should be reduced, ALCO will either take hedging actions or adjust the asset and liability mix to bring interest rate risk within Board-approvedBOD-approved limits or in line with ALCO's proposed reduction. ALCO may also decide the best course of action for a limit breach is to accept the breach and present justification to the BOD. If the BOD does not agree to accept the limit breach, it will direct ALCO to remediate the breach. The Company's net interest income and EVE exposure limits are approved by the BOD on an annual basis, or more often if market conditions warrant. During the year ended December 31, 2023, there have been no changes to the Company's exposure limits.
Net Interest Income Simulation. In order to To measure interest rate risk at December 31, 2017,2023, the Company usesused a simulation model to project changes in net interest income that result from forecasted changes in interest rates. This analysis calculates the difference between a baseline net interest income forecast using current yield curves, that do not take into consideration any future anticipated rate hikes, compared to forecasted net income resulting from an immediate parallel shift in rates upward or downward, along with other scenarios directed by ALCO. The income simulation model includes various assumptions regarding the re-pricing relationships for each of the Company's products. Many of the Company's assets are floatingvariable rate loans, which are assumed to re-price immediatelyat the next rate re-set period and, proportional to the change in market rates, depending on their contracted index, including the impact of caps or floors. Some loans and investments contain contractual prepayment features (embedded options) and, accordingly, the simulation model incorporates prepayment assumptions. The Company's non-term deposit products re-price more slowly, usually changing less thanwith a certain beta to underlying market rate changes. The Company regularly conducts sensitivity analysis for this assumption to determine the change inimpact on the interest rate risk position. These betas are derived separately by deposit product and are based on both observed and projected market ratesrate and at the Company's discretion.balance trends. Current deposit beta assumptions range between 20% to 90%, depending on product, with an average interest bearing deposit beta of 59%.
This analysis indicates the impact of changes in net interest income for the given set of rate changes and assumptions. It assumes the balance sheet remainsloan and deposit balances remain static and that its structure doesdo not change over the course of the year. It does not account

for all factors that could impact the Company's results, including changes by management to mitigate interest rate changes or secondary factors, such as changes to the Company's credit risk profile as interest rates change.
The results also will be impacted by seasonality in the balance sheet. Furthermore, loan prepayment rate estimates and spread relationships change regularly. Interest rate changes create changes in actual loan prepayment speeds that will differ from the market estimates incorporated in this analysis. ChangesThese assumptions are inherently uncertain and as a result, actual results may differ from simulated results due to factors such as timing, magnitude and frequency of interest rate changes as well as changes in market conditions, customer behavior and management strategies, and changes that vary significantly from the modeled assumptions may have a significant effectseffect on the Company's actual net interest income.
73
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 over a twelve-month period. Atrates. A Down 200 scenario in this simulation model is also being presented as of December 31, 2017,2023 as current projections of future market rates include consideration of rate decreases in the Company's net interest income exposure forcurrent high rate environment. The Company will continue to evaluate the next twelve months related to these hypothetical changes in marketscenarios that are presented as interest rates was within the Company's current guidelines for all up-rate scenarios. The Company’s net interest income exposure in the down-ratechange and will update these scenario was not within the Company’s guideline of (5.0)%. The breach is the result of an increase in short interest rates over the past two years, resulting from fed funds rate increases, anddisclosures as floating-rate asset yields improved, the Company’s deposit costs have not increased materially; thus in a current down-rate scenario, the Company will not see the full impact of a rate decrease on its deposit costs while it will see that impact on floating-rate assets. The Board and management have accepted the breach and believe that as deposit costs increase over time, interest expense will be more sensitive in a down-rate scenario dampening the Company’s overall net interest income sensitivityappropriate.
Sensitivity of Net Interest Income
Down 200Down 100Up 100Up 200
(change in basis points from Base)
Parallel Shift Scenario(7.1)%(3.4)%3.2 %6.4 %
Interest Rate Ramp Scenario(3.1)(1.5)1.5 3.0 
  Interest Rate Scenario (change in basis points from Base)
  Down 100 Base Up 100 Up 200 Up 300 Up 400 Short Rates Up 100
  (in thousands)
Interest Income $841,402
 $936,625
 $1,036,383
 $1,135,598
 $1,234,954
 $1,334,322
 $1,027,085
Interest Expense 41,418
 77,659
 121,782
 165,559
 209,224
 252,823
 121,191
Net Interest Income 799,984
 858,966
 914,601
 970,039
 1,025,730
 1,081,499
 905,894
% Change (6.9)%   6.5% 12.9% 19.4% 25.9% 5.5%
At December 31, 2023, our net interest income exposure for the next twelve months related to these hypothetical changes in market interest rates was within our current guidelines.
Economic Value of Equity. The Company measures the impact of market interest rate changes on the NPV of estimated cash flows from its assets, liabilities, and off-balance sheet items, defined as EVE, using a simulation model. The Company's simulation model focuses on parallel interest rate shocks and takes into account assumptions related to loan prepayment trends that are sourced using a combination of third-party prepayment models and internal historical experience, terminal maturity for non-maturity deposits, decay attrition, and pricing sensitivity derived from the Company's data and other internally-developed analysis and models. These assumptions are reviewed at least annually and are adjusted periodically to reflect changes in market conditions and the Company's balance sheet composition. As simulated model results are based on a number of assumptions outlined above, including forecasted market conditions, actual amounts may differ significantly from the projections set forth below should market conditions vary from the underlying assumptions. The Company's EVE model assumptions have not changed from the assumptions used in its December 31, 2022 simulation.
This simulation model assesses the changes in the market value of interest rate sensitive financial instruments that would occur in response to an instantaneous and sustained increase or decrease (shock) in market interest rates. The Company will continue to evaluate the scenarios that are presented as interest rates change and will update these scenario disclosures as appropriate.
The following table shows the Company's projected change in EVE for this set of rate shocks at December 31, 2023:
Economic Value of Equity
Interest Rate Scenario
Down 200Down 100Up 100Up 200
(change in basis points from Base)
% Change15.3 %8.1 %(7.2)%(13.2)%
At December 31, 2017,2023, the Company's EVE exposure related to these hypothetical changes in market interest rates was within the Company's current guidelines. The following table shows the Company's projected change in EVE for this set of rate shocks at December 31, 2017:
Economic Value of Equity
  Interest Rate Scenario (change in basis points from Base)
  Down 100 Base Up 100 Up 200 Up 300 Up 400 Short Rates Up 100
  (in thousands)
Assets $20,617,688
 $20,324,036
 $19,913,761
 $19,532,027
 $19,146,168
 $18,779,398
 $20,262,355
Liabilities 17,248,406
 16,849,438
 16,514,818
 16,231,134
 15,988,058
 15,778,595
 16,893,307
Net Present Value 3,369,282
 3,474,598
 3,398,943
 3,300,893
 3,158,110
 3,000,803
 3,369,048
% Change (3.0)%   (2.2)% (5.0)% (9.1)% (13.6)% (3.0)%
The computation of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates, asset prepayments, and deposit decay, and should not be relied upon as indicative of actual results. Further, the computations do not contemplate any actions the Company may undertake in response to changes in interest rates. Actual amounts may differ from the projections set forth above should market conditions vary from the underlying assumptions.

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 summarizesFor additional discussion on how derivatives in a hedging relationship (fair value hedges) are used to manage the aggregate notional amounts, market values,Company's interest rate risk, see "Note 14. Derivatives and termsHedging Activities" in Item 8 of the Company’s derivative positions asthis Form 10-K.
74
Item 8.Financial Statements and 2016:Supplementary Data.
Outstanding Derivatives Positions
December 31, 2017 December 31, 2016
Notional Net Value Weighted Average Term (Years) Notional Net Value Weighted Average Term (Years)
(dollars in thousands)
$1,116,341
 $(51,715) 16.0
 $1,011,906
 $(61,478) 17.9

Item 8.Financial Statements and Supplementary Data
The Company's Consolidated Financial Statements and Supplementary Data included in this Annual Report is immediately following the Index to Consolidated Financial Statements page to this Annual Report.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
PAGE
7276
7379
7480
7681
7782
7883
8085

75

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of
Western Alliance Bancorporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Western Alliance Bancorporation and Subsidiariessubsidiaries (the Company) as of December 31, 20172023 and 2016,2022, the related consolidated statements of income, comprehensive income, stockholders'stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2017,2023, and the related notes to the consolidated financial statements (collectively, the financial statements).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20172023 and 2016,2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017,2023, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company'sCompany’s internal control over financial reporting as of December 31, 2017,2023, based on criteria established in Internal Control - Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report, dated February 26, 2018,27, 2024, expressed an unqualified opinion on the effectiveness of the Company'sCompany’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on the Company'sCompany’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures 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 significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters
 /s/The critical audit matters communicated below are matters arising from 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 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, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Allowance for Credit Losses – Loans Held for Investment
As described in Notes 1 and 4 to the financial statements, the Company’s allowance for credit losses for loans held for investment and unfunded loan commitments totaled $336.7 million and $31.6 million as of December 31, 2023, respectively. The allowance for credit losses on loans held for investment and unfunded loan commitments is calculated under the expected credit loss model and is an estimate of life-of-loan losses for the Company’s loans held for investment and unfunded loan commitments.
The allowance for credit losses for loans held for investment consists of an asset-specific component for estimating credit losses for individual loans that do not share risk characteristics with other loans and a pooled component for estimating credit losses for pools of loans that share similar risk characteristics. The allowance for credit losses on unfunded loan commitments consists of a pooled component for estimating credit losses for pools of loans that share similar risk characteristics and includes consideration of the likelihood that estimated funding levels will occur. The allowance for the pooled component for the allowance for credit losses on loans held for investment and the allowance for credit losses on unfunded loan commitments is
76
derived from an estimate of expected credit losses primarily using an expected loss methodology that incorporates risk parameters (probability of default, loss given default and exposure at default) which are derived from various vendor models, internally developed statistical models or nonstatistical estimation approaches.
The quantitative estimates of expected credit losses on loans held for investment and unfunded commitments derived from the probability of default, loss given default and exposure at default are adjusted by management to incorporate consideration of different probability weighted economic scenarios, current trends and conditions that are not captured in the quantitative credit loss estimates through the use of qualitative and/or environmental factors, which requires management to apply a significant amount of judgment and involves a high degree of estimation.
We identified management’s adjustments to quantitative estimates of expected credit losses on loans held for investment and unfunded commitments related to the incorporation of different probability weighted economic scenarios, current trends and conditions as a critical audit matter because auditing management’s judgments involved a high degree of complexity and auditor judgment given the high degree of subjectivity exercised by management in developing the adjustments.
Our audit procedures related to management’s adjustments to quantitative estimates of expected credit losses on loans held for investment and unfunded commitments related to the incorporation of different probability weighted economic scenarios, current trends and conditions included the following, among others:
•We obtained an understanding of the relevant controls related to management’s adjustments to quantitative estimates of expected credit losses on loans held for investment and unfunded commitments related to the incorporation of different probability weighted economic scenarios, current trends and conditions and tested such controls for design and operating effectiveness.
•We evaluated the appropriateness of management’s adjustments to quantitative estimates of expected credit losses on loans held for investment and unfunded commitments related to the incorporation of different probability weighted economic scenarios, current trends and conditions by performing the following procedures:
◦We tested the completeness and accuracy of the data used by management to determine management’s adjustments to quantitative estimates of expected credit losses on loans held for investment and unfunded commitments related to the incorporation of different probability weighted economic scenarios, current trends and conditions.
◦We evaluated management’s considerations of data utilized as a basis for management’s adjustments to quantitative estimates of expected credit losses on loans held for investment and unfunded commitments related to the incorporation of different probability weighted economic scenarios, current trends and conditions.
◦We evaluated management’s support of adjustments to quantitative estimates of expected credit losses on loans held for investment and unfunded commitments related to the incorporation of different probability weighted economic scenarios, current trends and conditions.
◦We agreed management’s adjustments to quantitative estimates of expected credit losses on loans held for investment and unfunded commitments related to the incorporation of different probability weighted economic scenarios, current trends and conditions to the allowance for credit losses on loans held for investment and unfunded commitments calculations.
Valuation of Mortgage Servicing Rights
As described in Notes 1 and 5 to the financial statements, the Company’s mortgage servicing rights totaled $1,124 million as of December 31, 2023. When the Company sells mortgage loans in the secondary 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 for performing the servicing activities. Mortgage servicing rights represent the then-current fair value of future net cash flows expected to be realized from performing servicing activities. The Company has elected to subsequently measure mortgage servicing rights at fair value. The Company estimates the fair value of mortgage servicing rights using a discounted cash flow model that incorporates assumptions that market participants would use in estimating the fair value of servicing rights, including, but not limited to, option adjusted spread, conditional prepayment rate and cost to service.
We identified the option adjusted spread and conditional prepayment rate assumptions used in the valuation of mortgage servicing rights as a critical audit 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 effort as there was
77
limited observable market information and the calculated fair value of the mortgage servicing rights is sensitive to changes in these key assumptions.
Our audit procedures related to the valuation of mortgage servicing rights as of December 31, 2023 included, among others, testing management’s process for determining the fair value, including:
•We obtained an understanding of the relevant controls related to the establishment of the option adjusted spread and conditional prepayment assumptions used in the valuation of mortgage servicing rights and tested such controls for design and operating effectiveness.
•We evaluated the appropriateness of the valuation model and methodology.
•We tested the completeness and accuracy of the data used in the model.
•We utilized internal valuation specialists to assist with evaluating the reasonableness of the option adjusted spread and conditional prepayment rate assumptions by considering the consistency with available external market and industry data.
Goodwill Impairment
As described in Notes 1 and 8 to the financial statements, the Company’s goodwill totaled $527 million as of December 31, 2023. The Company performs its annual goodwill impairment test as of October 1 each year, or more often if events or circumstances indicate the carrying amount of goodwill may not be recoverable. The Company performed an annual quantitative goodwill impairment assessment as of October 1, 2023, and concluded that goodwill was not impaired, by determining the fair value of each of the Company’s reporting units and comparing the fair value to each reporting unit’s carrying amount.
The Company’s determination of the fair value of the Company’s reporting units as of October 1, 2023 employed both an income and a market approach. The income approach utilized each reporting unit’s forecasted cash flows and each reporting unit’s estimated cost of equity as the discount rate to estimate the fair value of each reporting unit. The enterprise approach utilized valuation multiples derived from stock prices and enterprise values of comparable publicly traded companies and also incorporated a control premium to develop an estimate of value for each reporting unit.
We identified the forecasted cash flows, estimated cost of equity and determination of control premiums utilized to estimate the fair value of the Company's commercial banking and mortgage banking reporting units as a critical audit matter due to the significant, subjective judgment required by management in determining these assumptions. Auditing management’s judgments involved a high degree of complexity and auditor judgment given the high degree of subjectivity exercised by management in developing the assumptions.
Our audit procedures related to management’s annual goodwill impairment assessment included the following, among others:
•We obtained an understanding of the relevant controls related to the development of forecasted cash flows, estimated cost of equity and determination of control premiums utilized to estimate the fair value of the Company’s commercial banking and mortgage banking reporting units and tested such controls for design and operating effectiveness.
•We evaluated the reasonableness of management’s cash flow projections for the Company’s commercial banking and mortgage banking reporting units by comparing to industry forecasts and information included in industry analyst reports and considering the impact of changes in the competitive and regulatory environment on management’s forecasts.
•We utilized internal valuation specialists to assist in evaluating the estimated cost of equity and determination of control premiums for the Company’s commercial banking and mortgage banking reporting units, including evaluating the reasonableness of market-based source information underlying management’s development of the cost of equity and control premiums, the reasonableness of management’s method and the mathematical accuracy of the analysis for the Company’s commercial banking and mortgage banking reporting units.
/s/ RSM US LLP
We have served as the Company'sCompany’s auditor since 1994.

Phoenix, ArizonaSan Francisco, California
February 26, 201827, 2024

78

WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 December 31,
 2017 2016
 (in thousands,
except shares and per share amounts)
December 31,December 31,
202320232022
(in millions,
except shares and per share amounts)		(in millions,
except shares and per share amounts)
Assets:    
Cash and due from banks $181,191
 $168,066
Cash and due from banks
Cash and due from banks
Interest-bearing deposits in other financial institutions 235,577
 116,425
Interest-bearing deposits in other financial institutions
Interest-bearing deposits in other financial institutions
Cash and cash equivalents 416,768
 284,491
Investment securities - measured at fair value; amortized cost of $1,055 at December 31, 2016 —
 1,053
Investment securities - AFS, at fair value; amortized cost of $3,515,401 at December 31, 2017 and $2,633,298 at December 31, 2016 3,499,519
 2,609,380
Investment securities - HTM, at amortized cost; fair value of $256,314 at December 31, 2017 and $91,966 at December 31, 2016 255,050
 92,079
Cash and cash equivalents
Cash and cash equivalents
Investment securities - AFS, at fair value; amortized cost of $11,849 and $7,973 at December 31, 2023 and 2022, respectively (ACL of $1 and $0 at December 31, 2023 and 2022, respectively)
Investment securities - AFS, at fair value; amortized cost of $11,849 and $7,973 at December 31, 2023 and 2022, respectively (ACL of $1 and $0 at December 31, 2023 and 2022, respectively)
Investment securities - AFS, at fair value; amortized cost of $11,849 and $7,973 at December 31, 2023 and 2022, respectively (ACL of $1 and $0 at December 31, 2023 and 2022, respectively)
Investment securities - HTM, at amortized cost and net of allowance for credit losses of $8 and $5 (fair value of $1,251 and $1,112) at December 31, 2023 and 2022, respectively
Investment securities - equity
Investments in restricted stock, at cost 65,785
 65,249
Loans - HFS —
 18,909
Loans - HFI, net of deferred loan fees and costs 15,093,935
 13,189,527
Loans HFS
Loans HFI, net of deferred fees and costs
Less: allowance for credit losses (140,050) (124,704)
Net loans held for investment 14,953,885
 13,064,823
Mortgage servicing rights
Premises and equipment, net 118,719
 119,833
Other assets acquired through foreclosure, net 28,540
 47,815
Operating lease right of use asset
Bank owned life insurance 167,764
 164,510
Goodwill 289,895
 289,967
Other intangible assets, net 10,853
 12,927
Goodwill and intangible assets, net
Deferred tax assets, net 5,780
 95,194
Investments in LIHTC 267,023
 187,378
Investments in LIHTC and renewable energy
Investments in LIHTC and renewable energy
Investments in LIHTC and renewable energy
Other assets 249,504
 147,234
Total assets $20,329,085
 $17,200,842
Liabilities:    
Deposits:    
Deposits:
Deposits:
Non-interest-bearing demand
Non-interest-bearing demand
Non-interest-bearing demand $7,433,962
 $5,632,926
Interest-bearing 9,538,570
 8,916,937
Total deposits 16,972,532
 14,549,863
Customer repurchase agreements 26,017
 41,728
Other borrowings
Other borrowings
Other borrowings 390,000
 80,000
Qualifying debt 376,905
 367,937
Operating lease liability
Other liabilities 333,933
 269,785
Total liabilities 18,099,387
 15,309,313
Commitments and contingencies (Note 15) 
 
Commitments and contingencies (Note 17)Commitments and contingencies (Note 17)
Stockholders’ equity:    
Common stock - par value $0.0001; 200,000,000 authorized; 107,057,520 shares issued at December 31, 2017 and 106,371,093 at December 31, 2016 10
 10
Treasury stock, at cost (1,570,155 shares at December 31, 2017 and 1,300,232 shares at December 31, 2016) (40,173) (26,362)
Additional paid in capital 1,424,540
 1,400,140
Accumulated other comprehensive (loss) (3,145) (4,695)
Preferred stock (par value $0.0001 and liquidation value per share of $25; 20,000,000 authorized; 12,000,000 depositary shares issued and outstanding at December 31, 2023 and 2022)
Preferred stock (par value $0.0001 and liquidation value per share of $25; 20,000,000 authorized; 12,000,000 depositary shares issued and outstanding at December 31, 2023 and 2022)
Preferred stock (par value $0.0001 and liquidation value per share of $25; 20,000,000 authorized; 12,000,000 depositary shares issued and outstanding at December 31, 2023 and 2022)
Common stock (par value $0.0001; 200,000,000 authorized; 112,169,523 and 111,465,292 shares issued at December 31, 2023 and 2022, respectively) and additional paid in capital
Treasury stock, at cost (2,703,218 and 2,550,766 shares at December 31, 2023 and 2022, respectively)
Accumulated other comprehensive loss
Retained earnings 848,466
 522,436
Total stockholders’ equity 2,229,698
 1,891,529
Total liabilities and stockholders’ equity $20,329,085
 $17,200,842
See accompanying Notes to Consolidated Financial Statements.

79
WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
Year Ended December 31,
202320222021
(in millions, except per share amounts)
Interest income:
Loans, including fees$3,409.7 $2,393.4 $1,488.8 
Investment securities459.9 265.6 158.6 
Dividends and other165.7 32.8 11.3 
Total interest income4,035.3 2,691.8 1,658.7 
Interest expense:
Deposits1,142.6 276.4 47.5 
Qualifying debt37.9 35.0 33.1 
Other borrowings515.9 164.1 29.3 
Total interest expense1,696.4 475.5 109.9 
Net interest income2,338.9 2,216.3 1,548.8 
Provision for (recovery of) credit losses62.6 68.1 (21.4)
Net interest income after provision for credit losses2,276.3 2,148.2 1,570.2 
Non-interest income:
Net gain on loan origination and sale activities193.5 104.0 326.2 
Net loan servicing revenue (expense)102.3 130.9 (16.3)
Service charges and fees76.3 27.0 28.3 
Commercial banking related income23.7 21.5 17.4 
Income from equity investments15.7 17.8 22.1 
(Loss) gain on recovery from credit guarantees(2.2)14.7 7.2 
(Loss) gain on sales of investment securities(40.8)6.8 8.3 
Fair value loss adjustments, net(116.0)(28.6)(1.3)
Other income28.2 30.5 12.3 
Total non-interest income280.7 324.6 404.2 
Non-interest expense:
Salaries and employee benefits566.3 539.5 466.7 
Deposit costs436.7 165.8 29.8 
Insurance190.4 31.1 23.0 
Data processing122.0 83.0 58.2 
Legal, professional, and directors' fees107.2 99.9 58.6 
Occupancy65.6 55.5 43.8 
Loan servicing expenses58.8 55.5 53.5 
Business development and marketing21.8 22.1 13.5 
Loan acquisition and origination expenses20.4 23.1 28.8 
Acquisition and restructure expenses— 0.4 15.3 
(Gain) loss on extinguishment of debt(52.7)— 5.9 
Other expense86.9 80.8 54.3 
Total non-interest expense1,623.4 1,156.7 851.4 
Income before provision for income taxes933.6 1,316.1 1,123.0 
Income tax expense211.2 258.8 223.8 
Net income722.4 1,057.3 899.2 
Dividends on preferred stock12.8 12.8 3.5 
Net income available to common stockholders$709.6 $1,044.5 $895.7 
  Year Ended December 31,
  2017 2016 2015
  (in thousands, except per share amounts)
Interest income:      
Loans, including fees $747,510
 $636,596
 $476,417
Investment securities 83,354
 52,570
 37,888
Dividends 7,740
 9,002
 10,317
Other 6,909
 2,338
 522
Total interest income 845,513
 700,506
 525,144
Interest expense:      
Deposits 41,965
 29,722
 21,795
Other borrowings 561
 508
 5,678
Qualifying debt 18,273
 12,998
 5,007
Other 50
 65
 88
Total interest expense 60,849
 43,293
 32,568
Net interest income 784,664
 657,213
 492,576
Provision for credit losses 17,250
 8,000
 3,200
Net interest income after provision for credit losses 767,414
 649,213
 489,376
Non-interest income:      
Service charges and fees 20,346
 18,824
 14,782
Card income 6,313
 5,226
 4,718
Income from equity investments 4,496
 2,664
 564
Income from bank owned life insurance 3,861
 3,762
 3,899
Foreign currency income 3,536
 3,419
 1,535
Lending related income and gains (losses) on sale of loans, net 2,212
 5,295
 1,390
Gain (loss) on sales of investment securities, net 2,343
 1,059
 615
(Loss) on extinguishment of debt —
 —
 (81)
Other income 2,237
 2,666
 2,346
Total non-interest income 45,344
 42,915
 29,768
Non-interest expense:      
Salaries and employee benefits 214,344
 188,810
 149,828
Legal, professional, and directors' fees 29,814
 24,610
 18,548
Occupancy 27,860
 27,303
 22,180
Data processing 19,225
 19,657
 15,830
Insurance 14,042
 12,898
 11,003
Deposit costs 9,731
 4,983
 907
Loan and repossessed asset expenses 4,617
 2,999
 4,377
Marketing 3,804
 3,596
 2,885
Card expense 3,413
 1,939
 1,710
Intangible amortization 2,074
 2,788
 1,970
Net (gain) loss on sales / valuations of repossessed and other assets (80) (125) (2,070)
Acquisition / restructure expense —
 12,412
 8,836
Other expense 32,097
 29,079
 24,602
Total non-interest expense 360,941
 330,949
 260,606
Income before provision for income taxes 451,817
 361,179
 258,538
Income tax expense 126,325
 101,381
 64,294
Net income 325,492
 259,798
 194,244
Dividends on preferred stock —
 —
 750
Net income available to common stockholders $325,492
 $259,798
 $193,494
       

 Year Ended December 31,
 2017 2016 2015
Earnings per share:
 (in thousands, except per share amounts)
Earnings per share available to common stockholders:      
Earnings per share:
Earnings per share:
Basic
Basic
Basic $3.12
 $2.52
 $2.05
Diluted 3.10
 2.50
 2.03
Weighted average number of common shares outstanding:      
Basic 104,179
 103,042
 94,570
Basic
Basic
Diluted 104,997
 103,843
 95,219
Dividends declared per common share
See accompanying Notes to Consolidated Financial Statements.

80
WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 Year Ended December 31,
 2017 2016 2015
 (in thousands)
Year Ended December 31,Year Ended December 31,
2023202320222021
(in millions)(in millions)
Net income $325,492
 $259,798
 $194,244
Other comprehensive income (loss), net:      
Unrealized gain (loss) on AFS securities, net of tax effect of $(3,973), $15,099, and $3,922, respectively 6,334
 (24,254) (6,117)
Unrealized gain on SERP, net of tax effect of $(79), $(18) and $(52), respectively 264
 31
 90
Unrealized (loss) on junior subordinated debt, net of tax effect of $2,220, $1,405 and $2,679, respectively (3,604) (2,077) (4,276)
Realized (gain) on sale of AFS securities included in income, net of tax effect of $899, $404, and $230, respectively (1,444) (655) (385)
Unrealized gain (loss) on AFS securities, net of tax effect of $(41.4), $225.3, and $22.4, respectively
Unrealized gain (loss) on AFS securities, net of tax effect of $(41.4), $225.3, and $22.4, respectively
Unrealized gain (loss) on AFS securities, net of tax effect of $(41.4), $225.3, and $22.4, respectively
Unrealized (loss) gain on junior subordinated debt, net of tax effect of $0.1, $(1.2), and $0.3, respectively
Unrealized (loss) gain on junior subordinated debt, net of tax effect of $0.1, $(1.2), and $0.3, respectively
Unrealized (loss) gain on junior subordinated debt, net of tax effect of $0.1, $(1.2), and $0.3, respectively
Realized loss (gain) on sale of AFS securities included in income, net of tax effect of $(10.2), $1.9, and $2.1, respectively
Realized loss on impairment of AFS securities included in income, net of tax effect of $(0.4), $0.0, and $0.0 respectively
Net other comprehensive income (loss) 1,550
 (26,955) (10,688)
Comprehensive income $327,042
 $232,843
 $183,556
See accompanying Notes to Consolidated Financial Statements.

81
WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
 Preferred StockCommon StockAdditional Paid in CapitalTreasury StockAccumulated Other Comprehensive Income (Loss)Retained EarningsTotal Stockholders’ Equity
 SharesAmountSharesAmount
Balance, December 31, 2020— $— 100.8 $— $1,390.9 $(71.1)$92.3 $2,001.4 $3,413.5 
Net income— — — — — — — 899.2 899.2 
Restricted stock, performance stock units, and other grants, net— — 0.6 — 35.0 — — — 35.0 
Restricted stock surrendered (1)— — (0.2)— — (15.7)— — (15.7)
Preferred stock issuance, net12.0 294.5 — — — — — — 294.5 
Common stock issuance, net— — 5.4 — 540.3 — — — 540.3 
Dividends paid to preferred stockholders— — — — — — — (3.5)(3.5)
Dividends paid to common stockholders— — — — — — — (124.1)(124.1)
Other comprehensive loss, net— — — — — — (76.6)— (76.6)
Balance, December 31, 202112.0 $294.5 106.6 $— $1,966.2 $(86.8)$15.7 $2,773.0 $4,962.6 
Net income— — — — — — — 1,057.3 1,057.3 
Restricted stock, performance stock unit, and other grants, net— — 0.6 — 39.8 — — — 39.8 
Restricted stock surrendered (1)— — (0.2)— — (18.5)— — (18.5)
Common stock issuance, net— — 1.9 — 157.7 — — — 157.7 
Dividends paid to preferred stockholders— — — — — — — (12.8)(12.8)
Dividends paid to common stockholders— — — — — — — (153.4)(153.4)
Other comprehensive loss, net— — — — — — (676.7)— (676.7)
Balance, December 31, 202212.0 $294.5 108.9 $— $2,163.7 $(105.3)$(661.0)$3,664.1 $5,356.0 
Net income— — — — — — — 722.4 722.4 
Restricted stock, performance stock unit, and other grants, net— — 0.7 — 34.4 — — — 34.4 
Restricted stock surrendered (1)— — (0.2)— — (11.0)— — (11.0)
Dividends paid to preferred stockholders— — — — — — — (12.8)(12.8)
Dividends paid to common stockholders— — — — — — — (158.7)(158.7)
Other comprehensive income, net— — — — — — 148.1 — 148.1 
Balance, December 31, 202312.0 $294.5 109.4 $— $2,198.1 $(116.3)$(512.9)$4,215.0 $6,078.4 
 Preferred Stock Common Stock Additional Paid in Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Stockholders’ Equity
 Shares Amount Shares Amount     
 (in thousands)
Balance, Dec 31, 201471
 $70,500
 88,691
 $9
 $837,603
 $(9,276) $16,639
 $85,453
 $1,000,928
Balance, Jan 1, 2015 (1)71
 70,500
 88,691
 9
 837,603
 (9,276) 32,948
 69,144
 1,000,928
Net income—
 —
 —
 —
 —
 —
 —
 194,244
 194,244
Exercise of stock options—
 —
 182
 —
 1,935
 —
 —
 —
 1,935
Restricted stock, performance stock units, and other grants, net—
 —
 732
 —
 24,617
 —
 —
 —
 24,617
Restricted stock surrendered—
 —
 (275) —
 —
 (7,603) —
 —
 (7,603)
Issuance of common stock in acquisition of Bridge (2)—
 —
 12,997
 1
 431,030
 —
 —
 —
 431,031
ATM common stock issuance, net—
 —
 760
 —
 28,288
 —
 —
 —
 28,288
Preferred stock redemption(71) (70,500)   —
 —
 —
 —
 —
 (70,500)
Dividends on preferred stock—
 —
 —
 —
 —
 —
 —
 (750) (750)
Other comprehensive loss, net—
 —
 —
 —
 —
 —
 (10,688) —
 (10,688)
Balance, Dec 31, 2015—
 $—
 103,087
 $10
 $1,323,473
 $(16,879) $22,260
 $262,638
 $1,591,502
Net income—
 —
 —
 —
 —
 —
 —
 259,798
 259,798
Exercise of stock options—
 —
 77
 —
 1,070
 —
 —
 —
 1,070
Restricted stock, performance stock units, and other grants, net—
 —
 662
 —
 19,812
 —
 —
 —
 19,812
Restricted stock surrendered—
 —
 (305) —
 —
 (9,483) —
 —
 (9,483)
ATM common stock issuance, net—
 —
 1,550
 —
 55,785
 —
 —
 —
 55,785
Other comprehensive loss, net—
 —
 —
 —
 —
 —
 (26,955) —
 (26,955)
Balance, Dec 31, 2016—
 $—
 105,071
 $10
 $1,400,140
 $(26,362) $(4,695) $522,436
 $1,891,529
Balance, Jan 1, 2017 (3)—
 —
 105,071
 10
 1,400,140
 (26,362) (4,695) 522,974
 1,892,067
Net income—
 —
 —
 —
 —
 —
 —
 325,492
 325,492
Exercise of stock options—
 —
 38
 —
 846
 —
 —
 —
 846
Restricted stock, performance stock unit, and other grants, net—
 —
 648
 —
 23,554
 —
 —
 —
 23,554
Restricted stock surrendered—
 —
 (270) —
 —
 (13,811) —
 —
 (13,811)
Other comprehensive income, net—
 —
 —
 —
 —
 —
 1,550
 —
 1,550
Balance, Dec 31, 2017—
 $—
 105,487
 $10
 $1,424,540
 $(40,173) $(3,145) $848,466
 $2,229,698
(1)Share amounts represent treasury shares, see "Note 1. Summary of Significant Accounting Policies" for further discussion.
(1)As adjusted, due to the Company's election to early adopt an element of ASU 2016-01 issued by the FASB in January 2016. The cumulative effect of adoption of this guidance at January 1, 2015 resulted in a decrease to retained earnings of $16.3 million and a corresponding increase to accumulated other comprehensive income.
(2)Includes value of certain share-based awards replaced in connection with the acquisition.
(3)As adjusted, due to the Company's election to early adopt ASU 2017-12 issued by the FASB in August 2017. The cumulative effect of adoption of this guidance at January 1, 2017 resulted in an increase to retained earnings of $0.5 million and a corresponding increase to loans for the fair market value adjustment on the swaps.
See accompanying Notes to Consolidated Financial Statements.

82
WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31,
202320222021
(in millions)
Cash flows from operating activities:
Net income$722.4 $1,057.3 $899.2 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Provision for (recovery of) credit losses62.6 68.1 (21.4)
Depreciation and amortization63.0 52.4 33.7 
Stock-based compensation34.3 39.8 35.1 
Deferred income taxes(24.9)(68.6)42.0 
Amortization of net (discounts) premiums for investment securities(84.0)21.1 39.8 
Amortization of tax credit investments64.3 63.2 49.5 
Amortization of operating lease right of use asset23.5 22.2 16.3 
Amortization of net deferred loan fees and net purchase premiums(84.0)(73.6)(66.3)
Purchases and originations of loans HFS(42,720.9)(45,407.0)(59,569.6)
Proceeds from sales and payments on loans HFS42,168.1 47,285.0 56,647.7 
Mortgage servicing rights capitalized upon sale of mortgage loans(864.5)(719.7)(763.8)
Net (gains) losses on:
Change in fair value of loans HFS, mortgage servicing rights, and related derivatives87.8 (73.9)177.7 
Fair value adjustments122.0 22.3 1.3 
Sale of investment securities40.8 (6.8)(8.4)
Extinguishment of debt(52.7)— 5.9 
Other(1.1)2.2 (15.1)
Other assets and liabilities, net114.7 (38.7)(157.6)
Net cash (used in) provided by operating activities$(328.6)$2,245.3 $(2,654.0)
Cash flows from investing activities:
Investment securities - AFS
Purchases$(15,144.7)$(2,396.3)$(3,248.4)
Principal pay downs and maturities10,036.3 604.2 1,634.1 
Proceeds from sales1,532.6 177.0 164.5 
Investment securities - HTM
Purchases(201.6)(281.9)(595.6)
Principal pay downs and maturities62.1 100.6 54.9 
Equity securities carried at fair value
Purchases(0.6)(36.2)(36.2)
Redemptions9.0 6.9 21.0 
Proceeds from sales1.5 14.1 4.4 
Proceeds from sale of mortgage servicing rights and related holdbacks, net798.2 391.9 1,182.8 
Purchase of other investments(245.1)(346.6)(134.6)
Proceeds from bank owned life insurance, net0.7 — — 
Net decrease (increase) in loans HFI1,106.8 (11,172.8)(12,665.0)
Purchase of premises, equipment, and other assets, net(114.3)(141.0)(69.4)
Cash consideration paid for acquisitions, net of cash acquired— (50.0)(1,024.4)
Net cash used in investing activities$(2,159.1)$(13,130.1)$(14,711.9)
83
  Year Ended December 31,
  2017 2016 2015
  (in thousands)
Cash flows from operating activities:      
Net income $325,492
 $259,798
 $194,244
Adjustments to reconcile net income to cash provided by operating activities:      
Provision for credit losses 17,250
 8,000
 3,200
Depreciation and amortization 13,393
 12,494
 8,466
Stock-based compensation 23,554
 20,338
 25,533
Excess tax benefit of stock-based compensation (6,608) (4,075) (5,874)
Deferred income taxes 88,471
 7,644
 3,254
Amortization of net premiums for investment securities 16,938
 13,790
 9,775
Amortization of tax credit investments 25,355
 17,336
 14,437
Accretion of fair market value adjustments on loans acquired from business combinations (28,235) (29,209) (17,144)
Accretion and amortization of fair market value adjustments on other assets and liabilities acquired from business combinations 2,385
 3,098
 1,279
Income from bank owned life insurance (3,861) (3,762) (3,899)
(Gains) / Losses on:      
Sales of investment securities (2,343) (1,059) (615)
Sale of loans (945) (2,492) (517)
Extinguishment of debt —
 —
 81
Other assets acquired through foreclosure, net (228) 372
 (2,628)
Valuation adjustments of other repossessed assets, net 120
 (268) 182
Sale of premises, equipment, and other assets, net 28
 21
 376
Changes in, net of acquisitions:      
Other assets (105,293) (19,047) (23,966)
Other liabilities 18,338
 (2,334) 14,231
Net cash provided by operating activities 383,811
 280,645
 220,415
Cash flows from investing activities:      
Investment securities - measured at fair value      
Principal pay downs and maturities —
 395
 347
Proceeds from sales 994
 —
 —
Investment securities - AFS      
Purchases (1,429,434) (1,205,057) (827,002)
Principal pay downs and maturities 430,934
 499,541
 273,950
Proceeds from sales 110,104
 25,504
 132,546
Investment securities - HTM      
Purchases (169,400) (92,384) —
Principal pay downs and maturities 6,174
 94
 —
Purchase of investment tax credits (38,098) (28,847) (29,437)
Purchase of SBIC investments (5,819) —
 —
Sale (purchase) of money market investments, net —
 121
 330
Proceeds from bank owned life insurance 607
 1,710
 797
(Purchase) liquidation of restricted stock (535) (7,139) (25,821)
Loan fundings and principal collections, net (1,873,387) (810,543) (1,269,351)
Purchase of premises, equipment, and other assets, net (8,862) (10,574) (10,856)
Proceeds from sale of other real estate owned and repossessed assets, net 21,195
 9,133
 45,627
Cash and cash equivalents (used) acquired in acquisitions, net —
 (1,272,187) 342,427
Net cash used in investing activities (2,955,527) (2,890,233) (1,366,443)
       
December 31,
202320222021
(in millions)
Cash flows from financing activities:
Net increase in deposits$1,688.9 $6,032.1 $15,681.5 
Net proceeds from issuance of long-term debt9.9 578.4 1,055.7 
Payments on long-term debt(818.1)(30.7)(475.9)
Net increase (decrease) in short-term borrowings2,341.3 4,859.0 (1,742.1)
Net proceeds from repurchase obligations2,661.8 — — 
Payments on repurchase obligations(2,681.0)— — 
Cash paid for tax withholding on vested restricted stock and other(11.0)(18.5)(15.8)
Cash dividends paid on common stock and preferred stock(171.5)(166.2)(127.6)
Proceeds from issuance of common stock, net0.1 157.7 540.3 
Proceeds from issuance of preferred stock, net— — 294.5 
Net cash provided by financing activities$3,020.4 $11,411.8 $15,210.6 
Net increase (decrease) in cash and cash equivalents532.7 527.0 (2,155.3)
Cash, cash equivalents, and restricted cash at beginning of period1,043.4 516.4 2,671.7 
Cash, cash equivalents, and restricted cash at end of period$1,576.1 $1,043.4 $516.4 
Supplemental disclosure:
Cash paid during the period for:
Interest$1,581.0 $452.9 $111.6 
Income taxes, net63.6 197.6 175.7 
Non-cash activities:
Net increase in unfunded commitments and obligations$77.1 $259.3 $294.1 
Transfers of securitized loans HFS to AFS securities276.5 205.0 144.5 
Transfer of EBO loans previously classified as HFS to HFI— 1,638.1 — 
Transfers of loans HFI to HFS, net of fair value loss adjustment (1)6,646.8 — — 
Transfers of loans HFS to HFI, at amortized cost2,357.2 780.0 — 
Transfers of mortgage-backed securities in settlement of secured borrowings557.3 610.5 640.6 

(1)    Excludes $531.6 million of loans transferred with an original designation of HFS, whose sales activity was classified as operating cash flows.
  Year Ended December 31,
  2017 2016 2015
  (in thousands)
Cash flows from financing activities:      
Net increase (decrease) in deposits $2,422,669
 $2,519,239
 $1,357,855
Proceeds from issuance of subordinated debt —
 169,256
 148,211
Net increase (decrease) in borrowings 294,289
 (66,428) (257,038)
Proceeds from exercise of common stock options 846
 1,070
 1,935
Cash paid for tax withholding on vested restricted stock (13,811) (9,483) (7,603)
Redemption of preferred stock —
 —
 (70,500)
Excess tax benefit of stock-based compensation —
 —
 5,874
Cash dividends paid on preferred stock —
 —
 (750)
Proceeds from issuance of stock in offerings, net —
 55,785
 28,288
Net cash provided by financing activities 2,703,993
 2,669,439
 1,206,272
Net increase (decrease) in cash and cash equivalents 132,277
 59,851
 60,244
Cash and cash equivalents at beginning of period 284,491
 224,640
 164,396
Cash and cash equivalents at end of period $416,768
 $284,491
 $224,640
Supplemental disclosure:      
Cash paid during the period for:      
Interest $59,838
 $41,565
 $28,831
Income taxes 99,430
 61,281
 54,590
Non-cash investing and financing activity:      
Transfers to other assets acquired through foreclosure, net 1,812
 13,110
 28,566
Unfunded commitments originated 123,012
 56,479
 39,617
Non-cash assets acquired in acquisition —
 1,284,557
 1,587,186
Non-cash liabilities acquired in acquisition —
 12,559
 1,764,996
Change in unrealized gain (loss) on AFS securities, net of tax 6,334
 (24,254) (6,117)
Change in unrealized (loss) gain on junior subordinated debt, net of tax (3,604) (2,077) (4,276)

See accompanying Notes to Consolidated Financial Statements.

84
WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of operationoperations
WAL is a bank holding company headquartered in Phoenix, Arizona, incorporated under the laws of the state of Delaware. WAL provides a full spectrum of customized loan, deposit lending,and treasury management international banking,capabilities, including funds transfer and online banking products and servicesother digital payment offerings through its wholly-owned banking subsidiary, WAB.
WAB operates the following full-service banking divisions: ABA, BON, FIB, Bridge, and TPB. The Company also serves business customers through a national platform of specialized financial services, including AAB, Corporate Finance, Equity Fund Resources, HFF, Life Sciences Group, Mortgage Warehouse Lending, Publicmortgage banking services through AmeriHome and Nonprofit Finance, Renewable Resource Group, Resort Finance, and Technology Finance.digital payment services for the class action legal industry through DST. In addition, the Company has twothe following non-bank subsidiaries, LVSP, which holds and manages certain non-performing loans and OREO andsubsidiaries: CSI, a captive insurance company formed and licensed under the laws of the Statestate of Arizona CS Insurance Company. CS Insurance Company wasand established as part of the Company's overall enterprise risk management strategy.strategy, and WATC, which provides corporate trust services and levered loan administration solutions.
Basis of presentation
The accounting and reporting policies of the Company are in accordance with GAAP and conform to practices within the financial services industry. The accounts of the Company and its consolidated subsidiaries are included in the Consolidated Financial Statements.
Recent accounting pronouncements
Improvements to Income Tax Disclosures
In December 2023, the FASB issued guidance within ASU 2023-09, Income Taxes (Topic 740). The amendments in this update are intended to increase visibility into various income tax components that affect the reconciliation of the effective tax rate to the statutory rate, as well as the qualitative and quantitative aspects of those components. Public business entities will be required to disclose on an annual basis, specific categories in the rate reconciliation and provide additional information for reconciling items that meet or exceed a five percent threshold (computed by multiplying pretax income by the applicable statutory income tax rate) and include disclosure of state and local jurisdictions that make up the majority of the state and local income tax category in the rate reconciliation. Additional disclosure items include disaggregation of income taxes paid to and income tax expense from federal, state, and foreign jurisdictions as well as disaggregation of income taxes paid to individual jurisdictions in which income taxes paid are equal to or greater than five percent of total income taxes paid.
The amendments in this update are effective for fiscal years beginning after December 15, 2024 and interim periods within fiscal years beginning after December 15, 2025 and may be applied on a prospective or retrospective basis. The Company is currently evaluating the impact these amendments will have on its Consolidated Financial Statements.
Accounting for and Disclosure of Crypto Assets
In December 2023, the FASB issued guidance within ASU 2023-08, Intangibles — Goodwill and Other — Crypto Assets (Topic 350). The amendments in this update require entities that hold certain crypto assets to measure such assets at fair value and recognize any changes in fair value in net income in each reporting period. Entities will also be required to present crypto assets measured at fair value separately from other intangible assets on the balance sheet and changes from the remeasurement of crypto assets separately from changes in the carrying amounts of other intangible assets in the income statement. Other disclosure items include the name, cost basis, fair value, and number of units for each significant crypto asset holding and the aggregate fair values and cost bases of crypto asset holdings that are not individually significant along with a rollforward of activity in the reporting period and disclosure of the method for determining the cost basis of the crypto assets.
The amendments in this update are effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years and are applied through a cumulative-effect adjustment to the opening balance of retained earnings (as of the beginning of the annual reporting period of adoption). As the Company does not currently hold any crypto assets meeting the criteria outlined in the update, the adoption of this guidance is not expected to have an impact on the Company's Consolidated Financial Statements.
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Improvements to Reportable Segment Disclosures
In November 2023, the FASB issued guidance within ASU 2023-07, Segment Reporting (Topic 280). The amendments in this update are intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures related to significant segment expenses. The amendments do not change how an entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments and all existing segment disclosure requirements in ASC 280 and other Codification topics remain unchanged. The amendments in this update are incremental and require public entities that report segment information to disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss as well as other segment items. Annual disclosure of the title and position of the chief operating decision maker and how the reported measures of segment profit or loss are used to assess performance and allocation of resources is also required.
The amendments in this update are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024 and are applied on a retrospective basis. The Company is currently evaluating the impact these amendments will have on its Consolidated Financial Statements.
Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method
In March 2023, the FASB issued guidance within ASU 2023-02, Investments — Equity Method and Joint Ventures (Topic 323). The amendments in this update permit entities to elect to account for tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. Previously this option was only permitted for LIHTC investments. Additionally, the amendments in this update require all tax equity investments accounted for using the proportional amortization method apply the delayed equity contribution guidance in Subtopic 323-740 and disclosure of the nature of an entity's tax equity investments and their effect on an entity's financial position and results of operations.
The amendments in this update are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years and are applied on a modified retrospective or a retrospective basis. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated Financial Statements.
Recently adopted accounting guidance
Troubled Debt Restructurings and Vintage Disclosures
In March 2022, the FASB issued guidance within ASU 2022-02, Financial Instruments—Credit Losses (Topic 326). The amendments in this update eliminate the accounting guidance and related disclosures for TDRs by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty and requiring an entity to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost.
The Company adopted this accounting guidance prospectively on January 1, 2023. The adoption of this guidance did not have a material impact on the Company's Consolidated Financial Statements.
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial 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 reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities, as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. Actual results may differ from those estimates and assumptions used in the Consolidated Financial Statements and related notes. Material estimates that are particularly susceptible to significant changes in the near term, relate toto: 1) the determination of the allowance for credit losses; estimated cash flows related to PCI loans; fair value determinations related to acquisitions andACL; 2) certain assets and liabilities carried at fair value; 3) goodwill impairment and 4) accounting for income taxes.
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Principles of consolidation
As of December 31, 2017,2023, WAL has the following significant wholly-owned subsidiaries: WAB and eight unconsolidated subsidiaries used as business trusts in connection with the issuance of trust-preferred securities.
The BankWAB has the following significant wholly-owned subsidiaries: 1) WABT, which holdholds certain investment securities, municipal and nonprofit loans, and leases; 2) WA PWI, LLC, which holds interests in certain limited partnerships invested primarily in low income housing tax credits and small business investment corporations; and3) Helios Prime, which holds interests in certain limited partnerships invested in renewable energy projects; 4) BW Real Estate, Inc., which operates as a real estate investment trust and holds certain of WAB's real estate loans and related securities.securities; and 5) Western Finance Company, which purchases and originates equipment finance leases and provides mortgage banking services through its wholly-owned subsidiary, AmeriHome.
The Company does not have any other significant entities that should be considered for consolidation.consolidated. All significant intercompany balances and transactions have been eliminated in consolidation.
Reclassifications
Certain amounts reported in prior periods may have been reclassified in the Consolidated FinancialIncome Statements for the prior periods have been reclassified to conform to the current presentation. The reclassifications havehad no effect on net income or stockholders’ equity as previously reported.

Cash and cash equivalents
For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks (including cash items in process of clearing), interest-bearing balances due from correspondent banks and the FRB, and federal funds sold.
Business combinations
Business combinations are accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations.Combinations. Under the acquisition method, the acquiring entity in a business combination recognizes all of the acquired assets and assumed liabilities at their estimated fair values as of the date of acquisition. Any excess of the purchase price over the fair value of net assets and other identifiable intangible assets acquired is recorded as goodwill. To the extent the fair value of net assets acquired, including identified intangible assets, exceeds the purchase price, a bargain purchase gain is recognized. Changes to estimatedAssets acquired and liabilities assumed from contingencies are also recognized at fair values from a business combination are recognized as an adjustment to goodwillvalue if the fair value can be determined during the measurement period and are recognized in the proper reporting period in which the adjustment amounts are determined.period. Results of operations of an acquired business are included in the Consolidated Income Statement from the date of acquisition. Acquisition-related costs, including conversion and restructuring charges, are expensed as incurred.
Cash and cash equivalents
For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks (including cash items in process of clearing), and federal funds sold. Cash flows from loans originated by the Company and customer deposit accounts are reported net.
The Company maintains amounts due from banks, which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts.
Cash reserve requirements
Depository institutions are required by law to maintain reserves against their transaction deposits. The reserves must be held in cash or with the FRB. Banks are permitted to meet this requirement by maintaining the specified amount as an average balance over a two-week period. The total of reserve balances was approximately $105.5 million and $43.7 million as of December 31, 2017 and 2016, respectively.
Investment securities
Investment securities include debt and equity securities. Debt securities may be classified as HTM, AFS, or measured at fair value.trading. The appropriate classification is initially decided at the time of purchase. Securities classified as HTM are those debt securities that the Company has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs, or general economic conditions. These securities are carried at amortized cost. The sale of aan HTM security within three months of its maturity date or after the majority of the principal outstanding has been collected is considered a maturity for purposes of classification and disclosure.
In May 2014, management reassessed its intent to hold certain CDOs classified as HTM, which necessitated a reclassification of all of the Company's HTM securities to AFS at the date of the transfer. As an extended period of time has passed since this reclassification was made, beginning in 2016, management believes that the Company is again able to assert that it has both the intent and ability to hold certain securities classified as HTM to maturity. See "Note 2. Investment Securities" of these Notes to Consolidated Financial Statements for additional detail related to HTM securities.
Securities classified as AFS or trading securities measured at fair value are reported as an asset in the Consolidated Balance Sheet at their estimated fair value. As the fair value of AFS securities changes, the changes are reported net of income tax as an element of OCI, except for other-than-temporarily-impaired securities. When AFS securities are sold, the unrealized gain or loss is reclassified from OCI to non-interest income. The changes in the fair values of trading securities are reported in non-interest income. Securities classified as AFS are both equity and debt securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as AFS would be based on various factors, including significant movements in interest rates or market conditions, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, decline in credit quality, and regulatory capital considerations.
HTM securities are carried at amortized cost. AFS securities are carried at their estimated fair 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 reclassified from OCI to non-interest income. Trading securities are carried at their estimated fair value, with changes in fair value reported in earnings as non-interest income.
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, increased by accretion of discounts earned or decreased byfor HTM and AFS securities, includes the amortization of purchase premiums paidand the accretion of purchase discounts. Premiums and discounts on investment securities are generally amortized or accreted over the contractual life of the security adjusted for prepayment estimates, using the interest method. For the Company's mortgage-backed securities, amortization or accretion of premiums or discounts are adjusted for anticipated prepayments. Gains and losses on the sale of investment securities are recorded on the trade date and determined using the specific identification method.
In estimating
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A debt security is placed on nonaccrual status at the time its principal or interest payments become 90 days past due. Interest accrued but not received for a security placed on nonaccrual is reversed through interest income.
Allowance for credit losses on investment securities
The credit loss model under ASC 326-20, applicable to HTM debt securities, requires recognition of lifetime 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, expected credit losses on HTM securities are estimated using the same models and approaches 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 default and severity of loss in the event of default is derived or obtained from internal and external sources and adjusted for the expected effects of reasonable and supportable forecasts over the expected lives of the securities on those historical losses. Accrued interest receivable on HTM securities, which is included in Other assets on the Consolidated Balance Sheet, is excluded from the estimate of expected credit losses.
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 from credit deterioration of the issuer or collateral underlying the security. An assessment to determine whether there are any OTTI losses, management considersa decline in fair value resulted from a credit loss is performed at the individual security level. Among other factors, the Company considers: 1) length of time and the extent to which the fair value has beenis less than the amortized cost;cost basis; 2) the financial condition and near term prospects of the issuer, including consideration of relevant financial metrics or ratios of the issuer; 3) impactany adverse conditions related to an industry 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 from the issuer. If an assessment of the above factors indicates a credit loss exists, the Company records an ACL for the excess of the amortized cost basis over the present value of cash flows expected to be collected, limited to the amount that the security's fair value is less than its amortized cost basis. Subsequent changes in marketthe ACL are recorded as a provision for (or recovery of) credit loss expense. Interest accruals and amortization and accretion of premiums and discounts are suspended when a credit loss is recognized in earnings. Any interest rates; and 4)received after the security has been placed on nonaccrual status is recognized on a cash basis. Accrued interest receivable on AFS debt securities, which is included in Other assets on the Consolidated Balance Sheet, is excluded from the estimate of expected credit losses.
For each AFS security in an unrealized loss position, the Company also considers: 1) its intent and abilityto retain the security until anticipated recovery of the Company to retain its investment for a period of time sufficient to allow for any anticipated recovery insecurity's fair valuevalue; and 2) whether it is not more likely thanmore-likely-than not the Company would be required to sell the security.

Declines in the fair value of individual AFS debt securities that are deemed to be other-than-temporary are reflected in earnings when identified. The fair value of the debt security then becomes the new cost basis. For individual debt securities where the Company does not intend to sell the security and it is not more likely than not that the Company will be required to sell the security before recovery 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 fair value and the write-down is charged against the ACL with any incremental impairment recorded in earnings.
Charge-offs are made through reversal of the ACL and a direct charge to the amortized cost basis of the other-than-temporary declineAFS security. The Company considers the following events to be indicators that a charge-off should be taken: 1) bankruptcy of the issuer; 2) significant adverse event(s) affecting the issuer in fairwhich it is improbable for the issuer to make its remaining payments on the security; and 3) significant loss of value of the debt security related to 1) credit loss is recognized in earnings; and 2) interest rate, market, or other factors is recognized in other comprehensive income or loss.
For individualunderlying collateral behind a security. Recoveries on debt securities, whereif any, are recorded in the Company either intends to sell the security or more likely than not will not recover all of its amortized cost, the OTTI is recognized in earnings equal to the entire difference between the security's cost basis and its fair value at the balance sheet date. For individual debt securities for which a credit loss has been recognized in earnings, interest accruals and amortization and accretion of premiums and discounts are suspended when the credit loss is recognized. Interest received after accruals have been suspended is recognized on a cash basis.period received.
Restricted stock
WAB 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, WAB is a member of the FHLB system and, accordingly, maintains an investment in the capital stock of the FHLB based on the borrowing capacity used. The Bank also maintains an investment in its primary correspondent bank. All of theseThese investments are considered equity securities with no actively traded market. Therefore, 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. The dividendDividend 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
Loans, held for saleThe Company's loans HFS primarily consist of SBApurchased and originated 1-4 family residential mortgage loans that the Company originates (or acquires) and intends to sell.be sold or securitized through its mortgage banking business. These loans are carriedreported at either fair value, or the lower of cost or fair value, depending on the acquisition source, as further described below.
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The Company has elected to record loans purchased from correspondent sellers or originated directly to consumers at fair value to more timely reflect the Company's performance. Changes in fair value of loans HFS are reported in current period income as a component of Net gain on loan origination and sale activities in the Consolidated Income Statement. Alternatively, delinquent loans repurchased under the terms of the GNMA MBS program, referred to as EBO loans, are reported at the lower of aggregate cost or fair value. FairFor EBO loans, the amount by which cost exceeds fair value is determined basedaccounted for as a valuation allowance and any changes in the valuation allowance are included in Net gain on available market data for similar assets, expected cash flows,loan origination and appraisalssale activities in the Consolidated Income Statement.
The Company recognizes a transfer of underlying collateralloans as a sale when it surrenders control over the transferred loans. Control is considered to be surrendered when the transferred loans have been legally isolated from the Company, the transferee has the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred loans, and the Company does not maintain effective control over the transferred loans through either an agreement that entitles or obligates the Company to repurchase or redeem the loans before their maturity or the credit quality ofability to unilaterally cause the borrower. Gains and losses onholder to return loans. If the saletransfer of loans qualifies as a sale, the Company derecognizes such loans. If the transfer of loans does not qualify as a sale, the proceeds from the transfer are accounted for as secured borrowings.
Loan acquisition and origination fees on loans HFS consist of fees earned by the Company for purchasing and originating loans and are recognized pursuant to ASC 860, Transfersat the time the loans are purchased or originated. These fees generally represent flat, per loan fee amounts and Servicing. Interest income of these loans is accrued daily andare included as Net gain on loan origination fees and costs are deferred and includedsale activities in the Consolidated Income Statement.
Recognition of interest income on non-government guaranteed or uninsured loans HFS is suspended and accrued unpaid interest receivable is reversed through interest income when loans become 90 days delinquent or when recovery of income and principal becomes doubtful. Loans return to accrual status when the principal and interest become current and it is probable the amounts are fully 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 for probability of default for FHA loans and at the note rate for VA and USDA loans.
At times, the Company may also transfer loans from its HFI portfolio to HFS. Loans transferred from HFI to HFS will be transferred at the lower of amortized cost basis (adjusted for any charge-offs) or fair value. If the amortized cost basis of the loan.transferred loan exceeds its fair value, a valuation allowance equal to the difference in these amounts will be established on the transfer date and any subsequent changes in the valuation allowance will be recognized in earnings. Any ACL previously recorded on transferred loans will be reversed and recognized in earnings at the time of the transfer.
If management determines it no longer intends to sell loans classified as HFS, such loans will be transferred to loans HFI. Loans transferred from HFS to HFI are transferred at amortized cost and any valuation allowance previously recorded is reversed and recognized in earnings at the time of the transfer. The Company issues various representations and warranties associated with these loan sales. The Company has not experienced any losses as a result of these representations and warranties.loans are then subject to ACL measurement.
Loans held for investment
The Company generally holdsLoans HFI are loans for investment andmanagement has the intent and ability to hold loansfor the foreseeable future or until their maturity. Therefore, theymaturity or payoff and are reported at book value. Net loans are stated atamortized cost. Amortized cost is the amount of unpaid principal, adjusted for unamortized net deferred fees and costs, purchase accounting fair value adjustments,premiums and an allowance for credit losses.discounts, and charge-offs. In addition, the book valueamortized cost basis of loans that are subject to a fair value hedge ishedges are adjusted for changes in value attributable to the effective portion of the hedged benchmark interest rate risk.
The Company may also purchase loans or acquire loans through a business combination. These acquiredAt the purchase or acquisition date, loans are recorded at estimated fair value on the date of purchase, which is comprised of unpaid principal adjusted for estimated credit losses and interest rate fair value adjustments. Loans are evaluated individually at the acquisition date to determine ifwhether there has been more than insignificant credit deterioration since origination. Such loans may then be aggregated and accounted forLoans that have experienced more than insignificant credit deterioration since origination are referred to as PCD loans. In its evaluation of whether a pool of loans based on common characteristics. Whenloan has experienced more than insignificant deterioration in credit quality since origination, the Company acquires such loans, the yield that may be accreted (accretable yield) is limitedtakes into consideration loan grades, past due and nonaccrual status, and loan modifications to the excess of the Company’s estimate of undiscounted cash flows expected to be collected over the Company’s initial investment in the loan. The excess of contractual cash flows over the cash flows expected to be collected may not be recognized as an adjustment to yield, loss, or a valuation allowance. Subsequent increases in cash flows expected to be collected generally are recognized prospectively through adjustment of the loan’s yield over the remaining life. Subsequent decreases to cash flows expected to be collected are recognized as impairment.borrowers experiencing financial difficulty. The Company may not carry overalso consider external credit rating agency ratings for borrowers and for non-commercial loans, FICO score or create a valuation allowance inband, probability of default levels, and number of times past due. 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 accountingmeasurement 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 difference 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 loans acquired under these circumstances.credit losses. For purchased loans that are not deemed impaired atto have experienced more than insignificant credit deterioration since origination and are therefore not deemed PCD, any discounts or premiums included in the acquisition date, fair value adjustments attributable to both credit and interest ratespurchase price are accreted (or amortized) over the contractual life of the individual loan. For additional information, see "Note 3.4. Loans, Leases and Allowance for Credit Losses" of these Notes to Consolidated Financial Statements.
Loan
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In applying the effective yield method to loans, the Company generally applies the contractual method whereby loan fees collected for the origination of loans less direct loan origination costs (net deferred loan fees), as well as premiums and discounts and certain purchase accounting adjustments, are amortized over the contractual life of the loan through interest income. If thea loan has scheduled payments, the amortization of the net deferred loan feefees is calculated using the interest method over the contractual life of the loan. If thea loan does not have scheduled payments, such as a line of credit, the net deferred loan fee isfees are recognized as interest income on a straight-line basis over the

contractual life 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 deferred fees are recognized as interest income.
Non-accrual loans: The Company considers a loan past due when the borrower fails to make a schedule payment on the loan. Nonaccrual loans
When a borrower discontinues making payments as contractually required by the note, the Company must determine whether it is appropriate to continue to accrue interest. The Company ceases accruing interest income when thea loan has becomebecomes delinquent by more than 90 days or when management determines that the full repayment of principal and collection of interest according to contractual terms is no longer likely. Past due status is based on the contractual terms of the loan. The Company may decide to continue to accrue 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 for FHA loans, and at the note rate for VA and USDA loans.
For all loan types,loans HFI, when a loan is placed on non-accrualnonaccrual status, all interest accrued but uncollected is reversed against interest income in the period in which the status is changed, and the Company makes a loan-level decision to apply either the cash basis or cost recovery method. The Company recognizesmay recognize income on a cash basis only for those non-accrual loans for whichwhen a payment is received on a nonaccrual loan provided the collection of the remaining principal balancerecorded investment in the loan is not in doubt.deemed to be fully collectible. Under the cost recovery method, subsequent payments received from the customer are applied to principal and generally no further interest income is recognized until the loan principal has been paid in full or until circumstances have changed such that payments are again consistently received as contractually required.
Impaired loans: A loan is identified as impaired Loans are returned to accrual status when it is no longer probable that interest and principal will be collected according to the contractual termsall of the original loan agreement. Generally, impaired loans are classified as non-accrual. However, in certain instances, impaired loans may continue on an accrual basis, if full repayment of all principal and interest is expectedamounts contractually due are brought current and future payments are reasonably assured.
Modifications of Loans to Borrowers Experiencing Financial Difficulty
The Company may agree to modify the terms of a loan is both well securedto a borrower experiencing financial difficulty. Loans graded Substandard or worse are often characterized by inadequate paying capacity of the borrower and in the processtherefore, modifications of collection. Impairedthese loans are measured for reserve requirements in accordance with ASC 310, Receivables, based on the present value of expected future cash flows discounted at the loan's effectiveconsidered to be made to borrowers experiencing financial difficulty. The loan terms that may be modified or restructured due to a borrower’s financial situation include principal forgiveness, an interest rate reduction, an other than-insignificant payment delay, a term extension, or as a practical expedient, at the loan's observable market price or the fair valuecombination of the collateral less applicable disposition costs if the loan is collateral dependent. The amount of an impairment reserve, if any, and any subsequent changes are recorded as a provision for credit losses. Losses are recorded as a charge-off when losses are confirmed. In addition to management's internal loan review process, regulators may from time to time direct the Company to modify loan grades, loan impairment calculations, or loan impairment methodology.these terms.
Troubled Debt Restructured Loans: A TDR loan is a loan on which
Prior to the adoption of ASU 2022-02, Financial Instruments—Credit Losses (Topic 326), if the Company, for reasons related to a borrower’s financial difficulties, grantsgranted a concession to the borrower that the Company would not otherwise consider.consider, the modified loan was considered a TDR loan. In order to determine whether a borrower was experiencing financial difficulty, an evaluation was performed to assess the probability the borrower would be in payment default on any of its debt in the foreseeable future without the modification. The evaluation was performed in accordance with the Company's internal underwriting policy. The loan terms that have beenwere modified or restructured due to a borrower’s financial situation include,included, but arewere not limited to, a 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 amount of the debt, a reduction in the accrued interest, or deferral of interest payments. A TDR loan is also considered impaired. A TDR loan may bewas returned to accrual status when the loan iswas brought current, has performedwas performing in accordance with the contractual restructured terms for a reasonable period of time (generally six months), and the ultimate collectability of the total contractual restructured principal and interest iswas no longer in doubt. However, such loans continue to be considered impaired. Consistent with regulatory guidance, a TDR loan that is subsequently modified in another restructuring agreement but hashad shown sustained performance and classification as a TDR, will bewas removed from TDR status provided that the modified terms were market-based at the time of modification.
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Credit quality indicators
Loans are regularly reviewed to assess credit quality indicators and to determine appropriate loan classification and grading in accordance with applicable bank regulations. The Company’s risk rating methodology assigns risk ratings ranging from 1 to 9, where a higher rating represents higher risk. The Company differentiates 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 for loans:
"Pass" (grades 1 through 5): TheCompany has five pass risk ratings, which represent a level of credit quality that ranges from having no well-defined deficiency or weakness to some noted weakness; however, the risk of default on any loan classified as pass is expected to be remote. The five pass risk ratings are described below:
Minimal risk. Consist of loans that are fully secured either with cash held in a deposit account at the Bank or by readily marketable securities with an acceptable margin based on the type of security pledged.
Low risk. 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 sufficient to fully cover the debt as a tertiary source of repayment. Debt of the borrower is low relative to borrower’s financial strength and ability to pay.
Average risk. Consist of loans where the credit facility meets or exceeds all policy requirements or with policy exceptions that are appropriately mitigated. A secondary source of repayment is available 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. Consist of loans with an acceptable primary source of repayment but a less than preferable secondary source of repayment. Cash flow is adequate to service debt but there is minimal excess cash flow. Leverage is moderate or high.
"Special mention"(grade 6): These are generally assets that possess potential weaknesses that warrant management's close attention. These loans may involve 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 category are usually performing as agreed, although there may be non-compliance with financial covenants.
"Substandard" (grade 7): These assets are characterized by well-defined credit weaknesses and carry the distinct possibility the Company will sustain some loss if such weakness or deficiency is not corrected. All loans 90 days or more past due and all loans on nonaccrual status are considered at least "Substandard," unless extraordinary circumstances would suggest otherwise.
"Doubtful"(grade 8): These assets have all the weaknesses inherent in those classified 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 improbable, but because of certain known factors that may work to the advantage and strengthening of the asset (for example, capital injection, perfecting liens on additional collateral and refinancing plans), classification as an estimated loss is deferred until a more precise status may be determined. Due to the high probability of loss, loans classified as "Doubtful" are placed on nonaccrual status.
"Loss"(grade 9): These assets are considered uncollectible and having such little recoverable value, it is not practical to defer writing off the asset. This classification does not mean the loan has absolutely no recovery or salvage value, but rather it is not practicable or desirable to defer writing off the asset, even though partial recovery may be achieved in the future.
Allowance for credit losses on loans HFI
Credit risk is inherent in the business of extending loans and leases to borrowers and is continuously monitored by management and reflected within the ACL. The ACL is an estimate of life-of-loan losses for which the Company must maintain an adequate allowance for credit losses.Company's loans HFI. The allowance forACL is a valuation account that is deducted from 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 is established through a provisionexcludes accrued interest receivable on these loans, except for credit losses recorded to expense. Loans are charged against the allowance for credit losses when management believes that the contractual principal oraccrued interest will not be collected. Subsequent recoveries, if any, are creditedrelated to the allowance.Residential-EBO loan pool. Accrued interest receivable, net of an ACL on the Residential-EBO loan pool, is included in Other assets on the Consolidated Balance Sheet. The allowance isACL on loans HFI includes an amount believed adequate to absorb estimated probable losses on existing loans that may become uncollectable, based on evaluationestimate of the collectabilityfuture net charge-offs as well as an offset for expected recoveries of loans and prior credit loss experience, together with other factors.amounts previously charged-off. The Company formally re-evaluates and establishes the appropriate level of the allowance for credit lossesACL on a quarterly basis.
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Determining the appropriateness of the allowance is complex and requires judgment by management about the effects of matters that are inherently uncertain. In future periods, evaluations of the overall loan portfolio or particular segments of the loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the ACL and credit loss expense in those future periods. The allowance level is influenced by loan volumes and mix, average remaining maturities, loan performance metrics, asset quality characteristics, delinquency status, historical credit loss experience, and other conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions. The methodology for estimating the amount of expected credit losses reported in the ACL has two basic components: first, an asset-specific component involving individual 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 for estimated expected credit losses for loans that share similar risk characteristics.
Loans that do not share risk characteristics with other loans
Loans that do not share risk characteristics with other loans are evaluated on an individual basis. Loans evaluated individually are not included in the collective evaluation. These loans consist of loans with unique features or loans that no longer share risk characteristics with other pooled loans. The process for determining whether a loan should be evaluated on an individual basis begins with a determination of credit rating. With the exception of residential loans, all accruing 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 allowance is based primarily on the fair value of the underlying collateral, utilizing independent third-party appraisals, and assessment of borrower guarantees.
Loans that share similar risk characteristics with other loans
In estimating the component of the ACL for loans that share similar risk characteristics, loans are segregated into loan segments with shared risk characteristics. The Company's primary portfolio segments align with the methodology applied in estimating the ACL under CECL. Loans are designated and pooled into loan segments based on product 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 incorporates risk parameters (PD, LGD, and EAD), which are derived from various vendor models, internally-developed statistical models, or non-statistical estimation approaches. Probability of default is projected in these models or estimation approaches using a single economic scenario and were developed to incorporate relevant information about past events, current conditions, and reasonable and supportable forecasts. With the exception of the Company's residential loan segment, the Company's PD models define default as loans that are 90 days past due, on nonaccrual status, have a charge-off, or obligor bankruptcy. Input reversion is used for all loan segment models, except for the commercial and industrial and CRE, owner-occupied loan segments. Output reversion is used for the commercial and industrial and CRE, owner-occupied loan segments by incorporating, after the forecast period, a one-year linear reversion to the long-term reversion rate in year three through the remaining life of the loans within the respective segments. LGDs are typically derived from the Company's historical loss experience. However, for 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 downturn, certain non-modeled methodologies are employed to estimate LGD. Factors utilized in calculating average LGD vary for each loan segment and are further described below. EAD refers to the Company's exposure to loss at the time of borrower default. For revolving lines of credit, the Company incorporates an expectation of increased line utilization for a higher EAD on defaulted loans based on historical experience. For term loans, EAD is calculated using an amortization schedule based on contractual loan terms, adjusted for a prepayment rate assumption. Prepayment trends are sensitive to interest rates and the macroeconomic environment. Fixed rate loans are more influenced by interest rates, whereas variable rate loans are more influenced by the macroeconomic environment. After the quantitative expected loss estimates are calculated, management then adjusts these estimates to incorporate consideration of different probability weighted economic scenarios, current trends and conditions not captured in the quantitative loss estimates, through the use of qualitative and/or environmental factors.
The following provides credit quality indicators and risk elements most relevant in monitoring and measuring the ACL on loans for each of the loan portfolio segments identified:
Warehouse lending
The warehouse lending portfolio segment consists of specificmortgage warehouse lines, MSR financing facilities, and note finance loans, which have a monitored borrowing base to mortgage companies and similar lenders and are primarily structured as commercial and industrial loans. The collateral for these loans is primarily comprised of residential whole loans and MSRs, with the borrowing base of these loans tightly monitored and controlled by the Company. The primary support for these loans takes the form of pledged collateral, with secondary support provided by the capacity of the financial institution. The collateral-driven nature of these loans distinguish them from traditional commercial and industrial loans. These loans are impacted by
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interest rate shocks, residential lending rates, prepayment assumptions, and general components. real estate stress. As a result of the unique loan characteristics, limited historical default and loss experience, and the collateral nature of this loan portfolio segment, the Company uses a non-modeled approach to estimate expected credit losses, leveraging grade information, grade migration history, and management judgment.
Municipal and nonprofit
The municipal and nonprofit portfolio segment consists of loans to local governments, government-operated utilities, special assessment districts, hospitals, schools and other nonprofits. These loans are generally, but not exclusively, entered into for the purpose of financing real estate investment or for refinancing existing debt and are primarily structured as commercial and industrial loans. Loans are supported by taxes or utility fees, and in some cases tax liens on real estate, operating revenue of the institution, or other collateral types. While unemployment rates and the market valuation of residential properties have an effect on the tax revenues supporting these loans, these loans tend to be less cyclical in comparison to similar commercial loans due to reliance on diversified tax bases. The Company uses a non-modeled approach to estimate expected credit losses for this portfolio segment, leveraging grade information and historical municipal default rates.
Tech & innovation
The tech & innovation portfolio segment is comprised of commercial loans 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 generated from the business or contributions from ownership to sustain the business's growth model. Expected credit losses for this loan segment are estimated using internally-developed models. These models incorporate market level and company-specific factors such as financial statement variables, adjusted for the current stage of the credit cycle and for the Company's loan performance data such as delinquency, utilization, maturity, and size of the loan commitment under specific allowance appliesmacroeconomic scenarios to impairedproduce a probability of default. Macroeconomic variables include average investment to GDP and treasury yields. LGD and the prepayment rate assumption for EAD are driven by unemployment levels for this loan segment.
Equity fund resources
The equity fund resources portfolio segment is comprised of commercial loans to private equity and venture capital funds. The primary source of repayment of these loans is typically uncalled capital commitments from institutional investors and high net worth individuals. The Company uses a non-modeled approach to estimate expected credit losses for this portfolio segment, leveraging loan grade information.
Other commercial and industrial
The other commercial and industrial segment is comprised primarily of commercial and industrial loans to middle market companies and large corporations that are not collateralized by real estate. The models used to estimate expected credit losses for middle market companies are the same as those used for the tech & innovation portfolio segment, whereas a vendor model is used to estimate expected credit losses for loans to large corporations.
Commercial real estate, owner-occupied
The CRE, owner-occupied portfolio segment is comprised of commercial loans collateralized by real estate, where the borrower has a business that occupies the property. These loans are typically entered into for the purpose of providing real estate finance or improvement. The primary source of repayment of these loans is the income generated by the business and where rental or sale of the property may provide secondary support for 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 for this loan segment is driven by property appreciation and the prepayment rate assumption for EAD is driven by unemployment levels.
Hotel franchise finance
The hotel franchise finance segment is comprised of loans originated within this business line and are collateralized by real estate, where the owner is not the primary tenant. These loans are typically entered into for the purpose of financing or the improvement of commercial investment properties. The primary source of repayment of these loans are the rents paid by tenants and where the sale of the property may provide secondary support for 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 for this loan segment projects PD and EAD based on multiple macroeconomic scenarios by modeling how macroeconomic conditions affect 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 commercial property price changes for each specific property type. The model then incorporates loan and property-level characteristics including debt coverage, leverage, collateral size, seasoning,
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and property type. LGD for this loan segment is derived from a non-modeled approach that is driven by property appreciation and the prepayment rate assumption for EAD is driven by the property appreciation for fixed rate loans and unemployment levels for variable rate loans. For impaired collateral dependent
Other commercial real estate, non-owner occupied
The other commercial real estate, non-owner occupied segment is comprised of loans collateralized by real estate where the reserveowner is not the primary 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 for the hotel franchise finance portfolio segment.
Residential
The residential loan portfolio segment is comprised of loans collateralized primarily by first liens on 1-4 residential family properties and home equity lines of credit collateralized by either first liens or junior liens on residential properties. The primary 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, prepayment rate, and EAD to calculate expected losses. The model is intended to capture the borrower's payment behavior during the lifetime of the residential loan by incorporating 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 for residential loans is defined as 60 days or more past due, with property appreciation as the driver for LGD results. The prepayment rate assumption for EAD for residential loans is based on industry prepayment history.
PD for HELOCs is derived from an internally-developed model that incorporates loan level information such as delinquency status, loan term, and FICO score and macroeconomic conditions such as property appreciation. LGD for this loan segment is driven by property appreciation and lien position. EAD for HELOCs is calculated based on the collateral value, net of estimated disposition costs. Generally, the Company obtains independent collateral valuation analysis for each loan every twelve months. Loans not collateral dependent are evaluated based on the expected future cash flows discounted at the original contractual interest rate.utilization rate assumptions using a non-modeled approach and also incorporates management judgment.
Residential - EBO
The general allowance covers all non-impaired loans and incorporates several quantitative and qualitative factors, which are used for all of the Company's portfolio segments. Quantitative factors include company-specific, ten-year historical net charge-offs stratified by loans with similar characteristics. Qualitative factors include: 1) levels of and trends in delinquencies and impaired loans; 2) levels of and trends in charge-offs and recoveries; 3) trends in volume and terms of loans; 4) changes in underwriting standards or lending policies; 5) experience, ability, depth of lending staff; 6) national and local economic trends

and conditions; 7) changes in credit concentrations; 8) out-of-market exposures; 9) changes in quality of loan review system; and 10) changes in the value of underlying collateral.
Due to the credit concentration of the Company'sresidential EBO loan portfolio in real estate securedsegment is comprised of government guaranteed or insured loans the value of collateral is heavily dependentcollateralized primarily by first liens on real estate values in Nevada, Arizona, and California. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in economic or other conditions. In addition, regulators, as an integral part of their examination processes, periodically review the Bank's allowance for credit losses, and may require the Bank to make additions to the allowance based on their judgment about information available to them1-4 residential family properties purchased from GNMA pools, which were at least three months delinquent at the time of their examination. Management regularly reviewspurchase. These loans differ from the assumptionsresidential loans included in the Company's Residential loan portfolio segment as the principal balance of these loans are government guaranteed or insured. The Company has not recognized an ACL on this portfolio segment as management's expectation of nonpayment of the amortized cost basis, based on historical losses, adjusted for current and formulaeforecasted conditions, is zero.
The estimate of expected credit losses related to accrued interest and other fees for the Residential-EBO loan pool is based on an expected loss methodology that incorporates risk parameters, PD and LGD, which are derived from an internally-developed statistical model. PD is derived from delinquency transition rates based on historical data and LGD is derived from historical losses.
Construction and land development
The construction and land portfolio segment is comprised of loans collateralized by land or real estate, which are entered into for the purpose of real estate development. The primary source of repayment of these loans is the eventual sale or refinance of the completed project and where claims on the property provide secondary support for the loan. These loans are impacted by the market valuation of CRE and residential properties and general economic conditions that have a higher sensitivity to real estate markets compared to other real estate loans. Default risk of a property is driven by loan-specific drivers, including loan-to-value, maturity, origination date, and the MSA in which the property is located, among other factors. The variables used in determining the allowanceinternally-developed model include loan level drivers such as origination loan-to-value, loan maturity, and makes adjustments if required to reflectmacroeconomic drivers such as property appreciation, MSA level unemployment rate, and national GDP growth. LGD for this loan segment is driven by property appreciation. The prepayment rate assumption for EAD is driven by the current risk profileproperty appreciation for fixed rate loans and unemployment levels for variable rate loans.
Other
The other portfolio consists of loans not already captured in one of the portfolio.aforementioned loan portfolio segments, which include, but may not be limited to, overdraft lines for treasury services, credit cards, consumer loans not collateralized by real estate, and small business loans collateralized by residential real estate. The consumer and small business loans are supported by the capacity of the borrower and the valuation of any collateral. General economic factors such as unemployment will have an
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effect on these loans. The Company uses a non-modeled approach to estimate expected credit losses, leveraging average historical default rates. LGD for this loan segment is driven by unemployment levels and lien position. The prepayment rate assumption for EAD is driven by the BBB corporate spread for fixed rate loans and unemployment levels for variable rate loans.
Transfers of financial assets
TransfersA transfer of a financial assets areasset is accounted for as salesa sale when control over the assetsasset has been surrendered. Control over a transferred assetsasset is deemed surrendered when thethe: 1) assets haveasset has been isolated from the Company; 2) transferee obtains the right to pledge or exchange the transferred assets;asset; and 3) Company no longer maintains effective control over the transferred assetsasset through an agreement to repurchase the transferred assetsasset before maturity. If a transfer of a financial asset does not qualify as a sale, the proceeds from the transfer are accounted for as a secured borrowing.
Premises and equipment
Premises and equipment amounts are stated at cost less accumulated depreciation and amortization. Depreciation is computed principally byusing the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the term of the lease or the estimated life of the improvement, whichever is shorter. Depreciation and amortization isare computed using the following estimated lives: 
Years
Years
Bank premises31
Furniture, fixtures, and equipment3 - 10
Leasehold improvements (1)3 - 10
Software
(1)Depreciation is recorded over the lesser of 3 to 10 years or the term of the lease.1 - 8
Management periodically reviews premises and equipment in order to determine ifwhether facts and circumstances suggest that the value of an asset is not recoverable.
Off-balance sheet credit exposures, including unfunded loan commitments
The Company maintains a separate ACL on off-balance-sheet credit exposures, including unfunded loan commitments, financial guarantees, and letters of credit, which is classified in Other liabilities on the Consolidated Balance Sheet. The ACL on off-balance sheet credit exposures is adjusted 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 derived from utilization rate assumptions using a non-modeled approach, and PD and LGD estimates derived from the same models and approaches for 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 off-balance sheet credit exposures that are unconditionally cancellable 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 from its mortgage banking business. When the Company sells mortgage loans in the secondary 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 for performing the servicing activities. MSRs represent the then-current fair value of future net cash flows expected to be realized from performing servicing activities. The Company has elected to subsequently measure MSRs at fair value and report changes in fair value in current period income as a component of Net loan servicing revenue in the Consolidated Income Statement.
The Company may in the ordinary course of business sell MSRs and will recognize, as of the trade date, a gain or loss on the sale equal to the difference between the carrying value of the transferred MSRs and the estimated proceeds to be received as consideration. The Company subsequently derecognizes MSRs when substantially all of the risks and rewards of ownership are irrevocably passed to the transferee 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 liability for retained protection provisions as of the trade date, with any changes in the estimated liability recorded in earnings. In addition, fees to transfer 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 transfer fees are included in Net loan servicing revenue in the Consolidated Income Statement.
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Leases (lessee)
At inception, contracts are evaluated to determine whether the contract constitutes a lease agreement. For contracts that are determined to be an operating lease, a corresponding ROU asset and operating lease liability 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 liability represents the Company’s commitment to make contractually obligated lease payments. Operating lease ROU assets and liabilities 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. Variable 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 expense in the Consolidated Income Statements.
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 applicable FHLB collateralized borrowing rates and is based on the information available 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 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 for 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. Variable 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 identifiable net assets acquired in accordance with applicable guidance. The Company performs 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 canmay first 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 performed. If, based on the Company will proceed with the two-step process. The first step testsquantitative test, a reporting unit's carrying amount exceeds its fair value, a goodwill impairment charge for impairment, while the second step, if necessary, measures the impairment. The resulting impairment amount, if any,this difference is chargedrecorded to current period earnings as non-interest expense.
The Company’s intangible assets consist primarily of correspondent relationships, operating licenses, tradenames, core deposit intangibleintangibles, customer relationships, and developed technology assets that are being amortized over periods ranging from 5of five to 10 years. 40 years. See "Note 25. Mergers, Acquisitions and Dispositions" of these Notes to Consolidated Financial Statements for discussion of the intangible assets acquired in the DST acquisition.
The Company considers the remaining useful lives of its core deposit intangible assets each reporting period, as required by ASC 350, Intangibles—Goodwill and Other, to determine whether events and circumstances warrant a revision to the remaining period of amortization. If the estimate of an intangible asset’s remaining useful life has changed, the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. The Company has not revised its estimates of the useful lives of its core deposit intangiblesintangible assets during the years ended December 31, 2017, 2016,2023, 2022, or 2015.
Other assets acquired through foreclosure
Other assets acquired through foreclosure consist primarily of properties acquired as a result of, or in-lieu-of, foreclosure. Properties or other assets (primarily repossessed assets formerly leased) are classified as OREO and other repossessed property and are initially reported at fair value of the asset less estimated selling costs. Subsequent adjustments are based on the lower of carrying value or fair value less estimated costs to sell the property. Costs related to the development or improvement of the assets are capitalized and costs related to holding the assets are charged to non-interest expense. Property is evaluated regularly to ensure the recorded amount is supported by its current fair value and valuation allowances.

2021.
Low income housing and renewable energy tax credits
The Company investsholds ownership interests in Limited Partnerships formed for the purpose of investinglimited partnerships and limited liability companies that invest in low incomeaffordable housing projects, which qualify for federal LIHTC.and renewable energy projects. These investments are expecteddesigned to generate a return primarily through the realization of federal tax credits over a ten-year period.and deductions, which may be subject to recapture by taxing authorities if compliance requirements are not met. The Company accounts for theseits low income housing investments using the proportional amortization method. Renewable energy projects are accounted for under the deferral method, whereby the investment tax credits are reflected as an immediate reduction in income taxes payable and the carrying value of the asset in the period that the investment tax credits are claimed. See "Note 16. Income Taxes" of these Notes to Consolidated Financial Statements for further discussion.
The Company evaluates its interests in these entities to determine whether it has a variable interest and whether it is required to consolidate these entities. A variable interest is an investment or other interest that will absorb portions of an entity's expected losses or receive portions of the entity's expected residual returns. If the Company determines it has a variable interest in an entity, it evaluates whether such interest is in a VIE. A VIE is broadly defined as an entity where either: 1) the equity investors
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as a group, if any, lack the power through voting or similar rights to direct the activities of an entity that most significantly impact the entity's economic performance or 2) the equity investment at risk is insufficient to finance that entity's activities without additional subordinated financial support. The Company is required to consolidate any VIE when it is determined to be the primary beneficiary of the VIE's operations.
A variable interest holder is considered to be the primary beneficiary of a VIE if it has both the power to direct the activities of a VIE that most significantly impact the entity's economic performance and has the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE. The Company’s assessment of whether it is the primary beneficiary of a VIE includes consideration of various factors such as: 1) the Company's ability to direct the activities that most significantly impact the entity's economic performance; 2) its form of ownership interest; 3) its representation on the entity's governing body; 4) the size and seniority of its investment; and 5) its ability and the rights of other investors to participate in policy making decisions and to replace the manager of and/or liquidate the entity. The Company is required to 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 qualified affordable housing and renewable energy projects meet the definition of a VIE as the entities are structured 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 significantly impact the economic performance of the entities and the obligation to absorb losses or the right to receive benefits that could be significant to the entities. Accordingly, as a limited partner, the Company is not the primary beneficiary and is not required to consolidate these entities.
Bank owned life insurance
BOLI is carried at its cash surrender value with changes recorded in other non-interest income in the Consolidated Income Statements.Statement. The face amount of the underlying life insurance policies including death benefits was $360.0$452 million and $360.3$456 million as of December 31, 20172023 and 2016,2022, respectively. There are no loans offset against cash surrender values, and there are no restrictions as to the use of proceeds.
Customer repurchase agreementsCredit linked notes
The Company enters into repurchase agreements with customers, whereby it pledges securities against overnight investments made fromCredit linked notes are structured to effectively transfer the customer’s excess collected funds. The Company records theserisk of first losses on a reference pool of loans and are considered to be free standing credit enhancements. These notes are recorded at the amount of cashthe 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 connectionaccordance with ASC 326 is not reduced by the transaction.credit guarantee. Rather, a contra debt balance equal to the estimated ACL on the reference pool of loans is recorded, which reduces the carrying value of the notes. The initial contra debt balance and subsequent adjustments are recorded with a corresponding gain or loss on recovery from credit guarantees recognized in earnings.
Stock compensation plans
The Company has an incentive plan that gives the Incentive Plan, as amended, which is described more fully in "Note 10. Stockholders' Equity"BOD the authority to grant stock awards, consisting of these Notes to Consolidated Financial Statements.unrestricted stock, stock units, dividend equivalent rights, stock options (incentive and non-qualified), stock appreciation rights, restricted stock, and performance and annual incentive awards. Compensation expense for stock options andon non-vested restricted stock awards is based on the fair value of the award on the measurement date which, for the Company, is the date of the grant and is recognized ratably over the service period of the award. The Company utilizesForfeitures are estimated at the Black-Scholes option-pricing model to calculatetime of the fair value of stock options.award grant and revised in subsequent periods if actual forfeitures differ from those estimates. The fair value of non-vested restricted stock awards is the market price of the Company’s stock on the date of grant.
The Company's performance stock units have a cumulative EPS target and a TSR performance measure component. The TSR component is a market-based performance 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 metric, which simulates potential TSR outcomes over the performance 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 subsequently revised based on actual performance. Compensation expense related to the EPS component for these awards is based on the fair 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 10.12. Stockholders' Equity" of these Notes to Consolidated Financial Statements for further discussion of stock optionsawards.
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Dividends
WAL is a legal entity separate and restricteddistinct from its subsidiaries. As a holding company with limited significant assets other than the capital stock awards.of its subsidiaries, WAL's ability to pay dividends depends primarily upon the receipt of dividends or other capital distributions from its subsidiaries. The Company's subsidiaries' ability to pay dividends to WAL is subject to, among other things, their individual earnings, financial condition, and need for funds, as well as federal and state governmental policies and regulations applicable to WAL and each of those subsidiaries, 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 trust preferred securities are not made, WAL would be prohibited from paying cash dividends on its common stock.
Preferred stock
On September 22, 2021, the Company issued 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 Perpetual Preferred Shares, Series A, par value $0.0001 per share, with a liquidation preference of $25 per Depositary Share (equivalent to $10,000 per share of Series A preferred stock). The Company's Series A preferred stock is perpetual preferred stock that is not subject to any mandatory redemption, resulting in classification as permanent equity. Dividends on preferred stock are recognized on the declaration date and are recorded as a reduction of retained earnings.
Treasury Sharesshares
The Company separately presents treasury shares, which represent shares surrendered to the Company equal in value to the statutory payroll tax withholding obligations arising from the vesting of employee restricted stock awards. Treasury shares are carried at cost.
Sales of common stock under ATM program
The Company has a distribution agency agreement with J.P. 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 mutually agreed rate, not to exceed 2% of the gross offering 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. See "Note 12. Stockholders' Equity" of these Notes to Consolidated Financial Statements for further discussion of this program.
Derivative financial instruments
Derivative instruments are contracts between two or more parties that have a notional amount and an underlying variable, require a small or no initial investment, and allow for 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 variable is a specified interest rate, security price, commodity price, foreign exchange rate, index, or other variable. The Company uses interest-rate swapsinteraction between the notional amount and the underlying variable determines the number of units to mitigate interest-rate risk associated with changes to 1)be exchanged between the parties and influences the fair value of certain fixed-rate financial instruments (fair value hedges) and 2) certain cash flows related to future interest payments on variable rate financial instruments (cash flow hedges).the derivative contract.
The Company recognizes derivatives as assets or liabilities inon the Consolidated Balance Sheet at their fair value in accordance with ASC 815, Derivatives and Hedging. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. On the date the derivative contract is entered into, the Company designates the derivative as a fair value hedge or cash flow hedge. 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 fair value hedges. Derivative instruments designated in a hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.
Changes in the fair value of a derivative that is designated and qualifies as a fair value hedge, along with changes in the fair value of the hedged asset or liability that are attributable to the hedged risk are recorded in current-period earnings. For a cash flow hedge, the effective portion of the change in the fair value of the derivative is recorded in AOCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Any ineffective portion of the change in fair value of a cash flow hedge is recognized immediately in non-interest income in the Consolidated Income Statement. Under both the fair value and cash flow hedge scenarios, changes in the fair value of derivatives not considered to be highly effective in hedging the change in fair value or the expected cash flows of the hedged item are recognized in earnings as non-interest income during the period of the change.

The Company documents its hedge relationships, including identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction at the timeafter the derivative contract is executed. Both atAt inception, and at least quarterly thereafter, the Company assessesperforms a quantitative assessment to determine whether the derivatives used in hedging transactions are highly effective (as defined in the guidance) in offsetting changes in either the fair value or cash flows of the hedged item. Retroactive effectiveness is assessed, as well as the continued expectation that the hedge will remain effective prospectively. After the initial quantitative assessment is performed, on a quarterly basis, the Company performs a qualitative hedge effectiveness assessment. This assessment takes into consideration any adverse developments related to the counterparty's risk of default and any negative events or circumstances that affect the factors that originally enabled the Company to assess that it could reasonably support, qualitatively, an expectation the hedging relationship was and will continue to be highly effective. The Company discontinues hedge accounting prospectively when it is determined that a hedge is no longer highly effective. When hedge accounting is discontinued on a fair value hedge that no longer qualifies as an effective hedge, the derivative instrument continues to be reported at fair value inon the Consolidated Balance Sheet, but the carrying amount of the hedged item is no
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longer adjusted for future changes in fair value. The adjustment to the carrying amount of the hedged item that existed at the date hedge accounting is discontinued is amortized over the remaining life of the hedged item into earnings.
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 hedges). Changes in the fair value of a derivative that is designated and qualifies as a fair value hedge, along with changes in the fair value of the hedged asset or liability attributable to the hedged risk, are recorded in the same line item as the offsetting loss or gain on the related interest rate contracts during the period of change. 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.
Derivative instruments that are not designated as hedges, so called free-standing derivatives, are reported inon the Consolidated Balance Sheet at fair 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, qualify as derivative instruments, except those that are originated rather than purchased, and intended for HFI classification. Changes in fair value associated with changes in interest rates are economically hedged by utilizing forward sale commitments, interest rate futures, and interest rate swaps. These hedging instruments are typically entered into contemporaneously with IRLCs. Loans that have been or will be purchased or originated may be used to satisfy the Company's forward sale commitments. In addition, derivative financial instruments are also used to economically hedge the Company's MSR portfolio. Changes in the fair value of derivative financial instruments that hedge IRLCs and loans HFS are included in Net gain on loan origination and sale activities in the Consolidated Income Statement. Changes in the fair value of derivative financial instruments that hedge MSRs are included in Net loan servicing revenue in the Consolidated Income Statement.
The Company may in the normal course of business purchase a financial 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 financial instrument (i.e., the host contract) and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When it is determined that the embedded derivative 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 qualify as a derivative instrument, the embedded derivative is separated from the host contract and carried at fair value. However, in cases where the host contract is measured at fair value, with changes in fair value reported in current earnings, or the Company is unable to reliably identify and measure an embedded derivative for separation from its host contract, the entire contract is carried inon the Consolidated Balance Sheet at fair value and is not designated as a hedging instrument.
Income taxes
The Company is subject to income taxes in the United States and files a consolidated federal income tax return with all of its subsidiaries, with the exception of BW Real Estate, Inc. Deferred income taxes are recorded to reflect the effects of temporary differences between the financial reporting carrying amounts of assets and liabilities and their income tax bases using enacted tax rates that are expected to be in effect when the taxes are actually paid or recovered. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.
Net deferred tax assets are recorded to the extent that these assets will more-likely-than-not be realized. In making these determinations, all available positive and negative evidence is considered, including scheduled reversals of deferred tax liabilities, tax planning strategies, projected future taxable income, and recent operating results. If it is determined that deferred income tax assets to be realized in the future are in excess of their net recorded amount, an adjustment to the valuation allowance will be recorded, which will reduce the Company's provision for income taxes.
A tax benefit from an unrecognized tax benefit may be recognized when it is more-likely-than-not that the position will be sustained upon examination, including related appeals or litigation, based on technical merits. Income tax benefits must meet a more-likely-than-not recognition threshold at the effective date to be recognized.
Interest and penalties related to unrecognized tax benefits are recognized as part of the provision for income taxes in the Consolidated Income Statement. Accrued interest and penalties are included in the related tax liability line with other liabilities in the Consolidated Balance Sheet. See "Note 14. Income Taxes" of these Notes to Consolidated Financial Statements for further discussion on income taxes.
The Tax Cuts and Jobs Act, enacted on December 22, 2017, reduced the U.S. federal corporate tax rate from 35 percent to 21 percent. Also on December 22, 2017, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118, which provides guidance on accounting for tax effects of the Act. Specifically, Staff Accounting Bulletin 118 provides a measurement period of up to one year from the enactment date to revise estimates used to measure the related tax impacts. Based on the information available and current interpretation of the rules, the Company has made reasonable estimates of the impact of the reduction in the corporate tax rate and remeasurement of its deferred tax assets and liabilities. However, the final impact of the Act may differ from these estimates as a result of changes in management's interpretations and assumptions, as well as new guidance that may be issued by the IRS.

Off-balance sheet instruments
In the ordinary course of business, the Company has enteredenters into off-balance sheet financial instrument arrangements consisting of commitments to extend credit and standby letters of credit. Such financial instruments are recorded in the Consolidated Financial StatementsBalance Sheets when they are funded. They involve,These off-balance sheet financial instruments impact, to varying degrees, elements of credit risk in excess of amounts recognized inon the Consolidated Balance Sheet. Losses wouldcould be experienced when the Company is contractually obligated to make a payment under these instruments and must seek repayment from 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 established in the contract.contract and, in certain instances, may be unconditionally cancellable. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company enters into credit arrangements that generally provide 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 being drawn upon, the total commitment amounts do not necessarily represent future 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 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.
As with outstanding loans, the Company applies qualitative factors and utilization rates to its off-balance sheet obligations in determining an estimate of losses inherent in these contractual obligations. The estimate for credit losses on off-balance sheet instruments is included in other liabilities and the charge to income that establishes this liability is included in non-interest expense.
The Company also has off-balance sheet arrangements related to its derivative instruments. Derivative instruments are recognized in the Consolidated Financial StatementsBalance Sheets at fair value and their notional values are carried off-balance sheet. See "Note 12.14. Derivatives and Hedging Activities" of these Notes to Consolidated Financial Statements for further discussion.
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Fair values of financial instruments
The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities. ASC 820, Fair Value Measurement, establishes a framework for measuring fair value and a three-level valuation hierarchy for disclosure of fair value measurement, as well as enhancesand also sets forth disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The Company uses various valuation approaches, including market, income, and/or cost approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used 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 reflect the Company’s assumptions about the factors market participants would consider in pricing the asset or liability and are developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs, as follows:
•Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
•Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, inputs other than quoted prices that are observable for 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, in the market.
•Level 3 - Valuation is generated from model-based techniques where one or more significant inputs are not observable, either directly or indirectly, in the market. These unobservable assumptions reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques may include use of matrix pricing, discounted cash flow models, and similar techniques.
The availability of observable inputs varies based on the nature of the specific financial instrument. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, forFor disclosure purposes, the lowest level input that is significant to the fair value measurement determines the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Fair value is a market-based measure considered from the perspective of a market participant who may purchase the asset or assume the liability, rather than an entity-specific measure. When market assumptions are available, ASC 820 requires the Company to make assumptions regardingconsider the assumptions that market participants would use to estimate the fair value of the financial instrument at the measurement date.
ASC 825, Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized inon the balance sheet, for which it is practicable to estimate that value.
Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction at December 31, 20172023 and 2016.2022. The estimated fair value amounts for December 31, 20172023 and 20162022 have been measured as of period-end and have not been re-evaluated or updated for purposes of these Consolidated Financial Statements subsequent to those dates. As such, the estimated fair values of these financial instruments subsequent to the reporting date may be different than the amounts reported at period-end.
The information in "Note 16.18. Fair Value Accounting" inof these Notes to Consolidated Financial Statements should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only required for a limited portion of the Company’s assets and liabilities.
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 meaningful.
The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:
Cash, and cash equivalents, and restricted cash
The carrying amounts reported inon the Consolidated Balance SheetsSheet for cash and due from banks approximate their fair value.
Money market investments
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The carrying amounts reported in the Consolidated Balance Sheets for money market investments approximate their fair value.
Investment securities
The fair values of U.S. Treasury and certain other debt securities as well as publicly-traded CRA investments and exchange-listed common and preferred stock and certain corporate debt securities are based on quoted market prices and are categorized as Level 1 in the fair value hierarchy.
The fair values of other investmentdebt securities werenot classified as Level 1 are primarily determined based on matrix pricing. Matrix pricing is a mathematical technique that utilizes observable market inputs including, for example, yield curves, credit ratings, and prepayment speeds. Fair values determined using matrix pricing are generally categorized as Level 2 in the fair value hierarchy.
During the year ended December 31, 2016, the Company's CDO securities were transferred from Level 3 In addition to Level 2 as a result of an increase in the availability and reliability of the observable inputs utilized in the securities' fair value measurement. Previously, quoted prices and quoted prices for similar assets were not available. Therefore,matrix pricing, the Company would engage a third partyuses other pricing sources, including observed prices on publicly traded securities and dealer quotes, to estimate the future cash flows and discount rate using third party quotes adjusted based on assumptions a market participant would assume necessary for each specific security, which resulted in fair values for these securities being categorized as Level 3 in the fair value hierarchy.
Restricted stock
WAB is a member of the Federal Reserve System and the FHLB and, accordingly, maintains investments in the capital stock of the FRB and the FHLB. WABdebt securities, which are also maintains an investment in its primary correspondent bank. These investments are carried at cost since no ready market exists for them, and they have no quoted market value. The Company conducts a periodic review and evaluation of its restricted stock to determine if any impairment exists. The fair values of these investments have been categorized as Level 2 in the fair value hierarchy.
Loans HFS
Government-insured or guaranteed and agency-conforming loans HFS are salable into active markets. Accordingly, 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 fair value hierarchy.
The fair value of non-agency loans HFS as well as certain loans that become nonsalable into active markets due to the identification of a defect is determined based on valuation techniques that utilize Level 3 inputs.
Loans HFI
The fair value of loans HFI is estimated based on discounted cash flows using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality and adjustments that the Company believes a market participant would consider in determining fair value based on a third partythird-party independent valuation. As a result, the fair value for loans HFI is categorized as Level 23 in the fair value hierarchy, excluding impaired loans which arehierarchy.
Mortgage servicing rights
The fair value of MSRs is estimated using a discounted cash flow model that incorporates assumptions a market participant would use in estimating the 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.

3 in the fair value hierarchy.
Accrued interest receivable and payable
The carrying amounts reported inon the Consolidated Balance SheetsSheet for accrued interest receivable and payable approximate their fair value.values.
Derivative financial instruments
All derivatives are recognized inon the Consolidated Balance Sheets at their fair value. The fair value for derivatives is determined based on market prices, broker-dealer quotations on similar products, or other related input parameters. As a result, the fair values have been categorized as Level 2 invaluation methodologies used to estimate the fair value hierarchy.of derivative instruments varies by type. Interest rate contracts, foreign currency contracts, and 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. 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 adjustment specific to each loan. The base value is then adjusted for the pull-through rate. The pull-through rate and servicing fee multiple are unobservable inputs based on historical experience.
Deposits
The fair value disclosed for demand and savings deposits is by definition equal to the amount payable on demand at theirthe reporting date (that is, their carrying amount), which the Company believesas these deposits do not have a market participant would consider in determining fair value.contractual term. The carrying amount for variable-ratevariable rate deposit accounts approximates their fair value. Fair values for fixed-ratefixed rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on these deposits. The fair value measurement of the deposit liabilities is categorized as Level 2 in the fair value hierarchy.
FHLB advances and customer repurchase agreements
The fair values of the Company’s borrowings are estimated using discounted cash flow analyses, based on the market rates for similar types of borrowing arrangements. The carrying value of FHLB advances and customer repurchase agreements approximate their
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fair values due to their short durations and have been categorized as Level 2 in the fair value hierarchy due to their short durations.hierarchy.
Credit linked notes
The fair value of credit linked notes is based on observable inputs, when available, and as such credit linked notes are categorized as Level 2 liabilities.
Subordinated 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 32 in the fair value hierarchy.
Junior subordinated debt
Junior subordinated debt is valued based on a discounted cash flow model which uses as inputsthe Treasury Bond rates and the 'BB' and 'BBB' rated financial index.indexes as inputs. Junior subordinated debt has been categorized as Level 3 in the fair value hierarchy.
Off-balance sheet instrumentsIncome taxes
The fair valueCompany is subject to income taxes in the United States and files a consolidated federal income tax return with all of its subsidiaries, with the Company’s off-balance sheet instruments (lending commitmentsexception of BW Real Estate, Inc. Deferred income taxes are recorded to reflect the effects of temporary differences between the financial reporting carrying amounts of assets and standby lettersliabilities and their income tax bases using enacted tax rates expected to be in effect when the taxes are actually paid or recovered. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.
Net DTAs are recorded to the extent these assets will more-likely-than-not be realized. In making these determinations, all available positive and negative evidence is considered, including scheduled reversals of credit)deferred tax liabilities, tax planning strategies, projected future taxable income, and recent operating results. If it is determined that deferred income tax assets to be realized in the future are in excess of their net recorded amount, an adjustment to the valuation allowance will be recorded, which will reduce the Company's provision for income taxes.
A tax benefit from an unrecognized tax benefit may be recognized when it is more-likely-than-not the position will be sustained upon examination, including related appeals or litigation, based on quoted fees currently chargedtechnical merits. Income tax benefits must meet a more-likely-than-not recognition threshold at the effective date to enter into similar agreements, taking into account the remaining termsbe recognized.
Interest and penalties on income taxes are recognized as part of the agreements,interest income or expense and the counterparties’ credit standing.
Recent accounting pronouncements
In May 2014, the FASB issued guidance within ASU 2014-09, Revenue from Contracts with Customers. The amendments in ASU 2014-09 to Topic 606, Revenue from Contracts with Customers, creates a common revenue standard and clarifies the principles for recognizing revenue that can be applied consistently across various transactions, industries, and capital markets. The amendmentsnon-interest expense, respectively, in the ASU clarify that an entity should recognizeConsolidated Income Statement. See "Note 16. Income Taxes" of these Notes to Consolidated Financial Statements for further discussion on income taxes.
Non-interest income
Non-interest income includes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. As part of that principle, the entity should identify the contract(s)associated with the customer, identify the performance obligation(s) of the contract, determine the transaction price, allocate that transaction price to the performance obligation(s) of the contract,mortgage banking and then recognize revenue when or as the entity satisfies the performance obligation(s). In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date, which deferred the original effective date of ASU No. 2014-09 by one year. Accordingly, the amendments in ASU No. 2014-09 will be effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. The amendments will be applied through the election of one of two retrospective methods. Substantially all of the Company's revenue is generated from interest income related to loans andcommercial banking activities, investment securities, equity investments, and BOLI. These non-interest income streams are primarily generated by different types of financial instruments held by the Company for which there is specific accounting guidance and therefore, are not within the scope of this guidance. The contracts thatASC 606, Revenue from Contracts with Customers.
Non-interest income amounts within the scope of ASC 606 include service charges and fees, success fees related to equity investments, debit and credit card interchange fees, and legal settlement services fees. Service charges and fees consist of fees earned from performance of account analysis, general account services, and other deposit account services. These fees are recognized as the related services are provided. Success fees are one-time fees detailed as part of certain loan agreements and are earned immediately upon occurrence of a triggering event. Card income includes fees earned from customer use of debit and credit cards, interchange income from merchants, and international charges. Card income is generally within the scope of ASC 310, Receivables; however, certain processing transactions for merchants, such as interchange fees, are within the scope of this guidance include service charges and fees on deposit accounts and warrant related income.ASC 606. The Company has completedgenerally receives payment for its reviewservices 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 settlement service fees relate to payment services provided for the distribution of contractsfunds from legal settlements and other agreements that are recognized upon transfer of funds to a claimant. See "Note 24. Revenue from Contracts with Customers" of these Notes to Consolidated Financial Statements for further details related to the nature and timing of revenue recognition for non-interest income revenue streams within the scope of this guidance and did not identify any material changes to the timingstandard.
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In January 2016, the FASB issued guidance within ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in ASU 2016-01 to Subtopic 825-10, Financial Instruments, contain the following elements: 1) requires equity investments to be measured at fair value with changes in fair value recognized in net income; 2) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; 3) eliminates the requirement for public entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; 4) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; 5) requires an entity to present separately in OCI the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; 6) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or accompanying notes to the financial statements; and 7) clarifies that the entity should evaluate the need for a valuation allowance on a deferred tax asset related to AFS securities in combination with the entity's other deferred tax assets. The amendments are effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. Except for the early application of the amendment noted in item 5) above, which the Company elected to early adopt effective January 1, 2015 as discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2015, early adoption of the amendments in this Update is not permitted. As discussed in item 1) above, changes in the fair value of the Company's equity investments, which consist of preferred stock of $53.2 million at December 31, 2017, will be recognized in net income, rather than in AOCI. As a result, there may be greater volatility in earnings each reporting period related to fair value changes. Upon adoption of this guidance, on January 1, 2018, the Company recorded a cumulative-effect adjustment of $0.4 million to decrease accumulated other comprehensive income with a corresponding increase to opening retained earnings.
In February 2016, the FASB issued guidance within ASU 2016-02, Leases. The amendments in ASU 2016-02 to Topic 842, Leases, require lessees to recognize the lease assets and lease liabilities arising from operating leases in the statement of financial position. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. Management is in the early stages of its implementation assessment, which includes identifying the population of the Company's leases that are within the scope of the new guidance, gathering all key lease data, and considering new lease software options that will facilitate application of the new accounting requirements.
In June 2016, the FASB issued guidance within ASU 2016-13, Measurement of Credit Losses on Financial Instruments. The amendments in ASU 2016-13 to Topic 326, Financial Instruments - Credit Losses, require that an organization measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The ASU also requires enhanced disclosures, including qualitative and quantitative disclosures that provide additional information about the amounts recorded in the financial statements. Additionally, the ASU amends the accounting for credit losses on AFS debt securities and purchased financial assets with credit deterioration. The amendments in this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Management has formed a Steering Committee and established an implementation team made up of subject matter experts across different functions within the Company, including Finance, Risk, Credit, and IT, that will facilitate all phases of planning and implementation of the new guidance. The team is working with certain external consultants and has completed its gap assessment. The team has also made initial decisions related to loan stratification for model selection and development, which is expected to consist of a combination of vendor models and proprietary internally-developed models. Further, the team is in the process of evaluating its control framework to identify risks resulting from new processes, judgments, and data.
In August 2016, the FASB issued guidance within ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. The amendments in ASU 2016-15 to Topic 230, Statement of Cash Flows, provide guidance on eight specific cash flow classification issues: 1) debt prepayment or debt extinguishment costs; 2) settlement of zero-coupon debt instruments; 3) contingent consideration payments made after a business combination; 4) proceeds from the settlement of insurance claims; 5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; 6) distributions received from equity method investments; 7) beneficial interest in securitization transactions; and 8) separately identifiable cash flows and the application of the predominance principle. The amendments in this Update are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The amendments in this Update should be applied using a retrospective transition method to each period presented. The adoption of this guidance is not expected to have a significant impact on the Company's Consolidated Statement of Cash Flows.
In January 2017, the FASB issued guidance within ASU 2017-01, Clarifying the Definition of a Business. The amendments in ASU 2017-01 to Topic 805, Business Combinations, clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this Update should be applied prospectively and are effective for annual periods beginning after

December 31, 2017, including interim periods within those periods. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated Financial Statements.
In January 2017, the FASB issued guidance within ASU 2017-04, Simplifying the Test for Goodwill Impairment. The amendments in ASU 2017-04 to Topic 350, Intangibles - Goodwill and Other, modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. Accordingly, the amendments eliminate Step 2 from the goodwill impairment test because goodwill impairment will no longer be determined by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendments in this Update should be applied on a prospective basis and are effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated Financial Statements.
In February 2017, the FASB issued guidance within ASU 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. The amendments in ASU 2017-05 to Subtopic 610-20, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets, clarify the scope of Subtopic 610-20 and add guidance for partial sales of nonfinancial assets, including partial sales of real estate. Under current GAAP, there are several different accounting models to evaluate whether the transfer of certain assets qualify for sale treatment. The new standard reduces the number of potential accounting models that might apply and clarifies which model does apply in various circumstances. An entity may elect to apply the amendments in this Update either retrospectively to each period presented in the financial statements or, retrospectively with a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The amendments in this Update are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted for annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated Financial Statements.
In March 2017, the FASB issued guidance within ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities. The amendments in ASU 2017-08 to Subtopic 310-20, Receivables-Nonrefundable Fees and Other Costs, shorten the amortization period for certain purchased callable debt securities held at a premium to the earliest call date, which more closely align the amortization period of premiums and discounts to expectations incorporated in market pricing on the underlying securities. Under current GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The amendments in this Update should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated Financial Statements.
In May 2017, the FASB issued guidance within ASU 2017-09, Scope of Modification Accounting. The amendments in ASU 2017-09 to Topic 718, Compensation - Stock Compensation, provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity should account for the effects of a modification unless all of the following conditions are met: the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified; the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments in this Update should be applied prospectively to an award modified on or after the adoption date. The amendments in this Update are effective for annual periods, and interim periods within those annual periods, beginning after December 31, 2017. Early adoption is permitted, including adoption in any interim period. The adoption of this guidance is not expected to have a material impact on the Company's Consolidated Financial Statements.
In February 2018, the FASB issued guidance within ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. Under current GAAP, the effect of a change in tax laws or rates on deferred tax liabilities and assets are included in income from continuing operations even in situations in which the related income tax effects of items in AOCI were originally recognized in comprehensive income. Accordingly, as the adjustment of deferred taxes due to the reduction of the historical corporate income tax rate to the newly enacted corporate income tax rate is required to be included in income from continuing operations, the tax effects of items within AOCI do not reflect the current tax rate. The amendments in ASU 2018-02 to Topic 220, Income Statement - Reporting Comprehensive Income, allow a reclassification from AOCI to

retained earnings from tax effects resulting from the Tax Cuts and Jobs Act. The amendments in this Update can be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period. If the Company elects to reclassify the income tax effects of the Tax Cuts and Jobs Act, AOCI would increase by approximately $1.0 million with a corresponding decrease to retained earnings. However, management is still in the process of evaluating the full effects that this Update is expected to have on the Company's Consolidated Financial Statements and related disclosures.
Recently adopted accounting guidance
In November 2015, the FASB issued guidance within ASU 2015-17, Income Taxes. The amendments in ASU 2015-17 to Topic 740, Income Taxes, changes the presentation of deferred income tax liabilities and assets, from previously bifurcated current and noncurrent, to a single noncurrent amount on the classified statement of financial position. The amendment was effective for the annual period ending after December 15, 2016, and for and interim periods within those annual periods. The adoption of this guidance did not have a material impact on the Company's Consolidated Financial Statements.
In March 2016, the FASB issued guidance within ASU 2016-05, Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships. The amendments in ASU 2016-05 to Topic 815, Derivatives and Hedging, clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815 does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The amendments in this Update were effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The adoption of this guidance did not have a material impact on the Company's Consolidated Financial Statements.
In August 2017, the FASB issued guidance within ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities. The amendments in ASU 2017-12 to Topic 815, Derivatives and Hedging, is intended to more closely align hedge accounting with companies' risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. The guidance also amends the presentation and disclosure requirements and changes how companies assess effectiveness. Under the new guidance, public companies will have until the end of the first quarter in which a hedge is designated to perform an initial assessment of a hedge's effectiveness. After initial qualification, the new guidance permits a qualitative effectiveness assessment for certain hedges instead of a quantitative test if the company can reasonably support an expectation of high effectiveness throughout the term of the hedge. Additional disclosures include cumulative basis adjustments for fair value hedges and the effect of hedging on individual income statement line items. The amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim period within those fiscal years. Early adoption is permitted in any interim period after issuance of the Update. Effective January 1, 2017, the Company elected early adoption of the amended guidance within ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities. As a result of adoption, the Company recognized a cumulative adjustment to increase retained earnings by $0.5 million as of January 1, 2017 and adjusted its 2017 earnings to exclude the effects of prior period hedge ineffectiveness, which totaled less than $0.1 million for 2017. See "Note 12. Derivatives and Hedging Activities " to the Consolidated Financial Statements for additional detail and amended disclosures from adoption of this new accounting guidance.


2. INVESTMENT SECURITIES
The carrying amounts and fair values of investment securities at December 31, 20172023 and 20162022 are summarized as follows: 
December 31, 2023
Amortized CostGross Unrealized GainsGross Unrealized (Losses)Fair Value
(in millions)
Held-to-maturity
Tax-exempt$1,243 $1 $(140)$1,104 
Private label residential MBS186 — (39)147 
Total HTM securities$1,429 $1 $(179)$1,251 
Available-for-sale debt securities
U.S. Treasury securities$4,853 $1 $(1)$4,853 
Residential MBS issued by GSEs2,328 3 (359)1,972 
CLO1,407 1 (9)1,399 
Private label residential MBS1,320 1 (204)1,117 
Tax-exempt925 — (67)858 
Commercial MBS issued by GSEs531 8 (9)530 
Corporate debt securities411 — (44)367 
Other74 4 (9)69 
Total AFS debt securities$11,849 $18 $(702)$11,165 
  December 31, 2017
  Amortized Cost Gross Unrealized Gains Gross Unrealized (Losses) Fair Value
  (in thousands)
Held-to-maturity        
Tax-exempt $255,050
 $4,514
 $(3,250) $256,314
         
Available-for-sale        
CDO $50
 $21,807
 $—
 $21,857
Commercial MBS issued by GSEs 113,069
 46
 (4,038) 109,077
Corporate debt securities 105,044
 261
 (1,822) 103,483
CRA investments 51,133
 —
 (517) 50,616
Preferred stock 52,172
 1,160
 (136) 53,196
Private label residential MBS 874,261
 756
 (6,493) 868,524
Residential MBS issued by GSEs 1,719,188
 810
 (30,703) 1,689,295
Tax-exempt 501,988
 10,893
 (1,971) 510,910
Trust preferred securities 32,000
 —
 (3,383) 28,617
U.S. government sponsored agency securities 64,000
 —
 (2,538) 61,462
U.S. treasury securities 2,496
 —
 (14) 2,482
Total AFS securities $3,515,401
 $35,733
 $(51,615) $3,499,519
December 31, 2022
Amortized CostGross Unrealized GainsGross Unrealized (Losses)Fair Value
(in millions)
Held-to-maturity
Tax-exempt$1,091 $— $(138)$953 
Private label residential MBS198 — (39)159 
Total HTM securities$1,289 $— $(177)$1,112 
Available-for-sale debt securities
CLO$2,796 $— $(90)$2,706 
Residential MBS issued by GSEs2,123 — (383)1,740 
Private label residential MBS1,442 — (243)1,199 
Tax-exempt1,004 2 (115)891 
Corporate debt securities429 — (39)390 
Commercial MBS issued by GSEs104 1 (8)97 
Other75 6 (12)69 
Total AFS debt securities$7,973 $9 $(890)$7,092 
  December 31, 2016
  Amortized Cost Gross Unrealized Gains Gross Unrealized (Losses) Fair Value
  (in thousands)
Held-to-maturity        
Tax-exempt $92,079
 $433
 $(546) $91,966
         
Available-for-sale        
CDO $50
 $13,440
 $—
 $13,490
Commercial MBS issued by GSEs 121,742
 —
 (3,950) 117,792
Corporate debt securities 65,058
 371
 (1,285) 64,144
CRA investments 37,627
 —
 (514) 37,113
Preferred stock 96,071
 833
 (2,242) 94,662
Private label residential MBS 440,272
 182
 (6,769) 433,685
Residential MBS issued by GSEs 1,369,289
 3,046
 (17,130) 1,355,205
Tax-exempt 409,693
 8,477
 (9,937) 408,233
Trust preferred securities 32,000
 —
 (5,468) 26,532
U.S. government sponsored agency securities 59,000
 —
 (2,978) 56,022
U.S. treasury securities 2,496
 6
 —
 2,502
Total AFS securities $2,633,298
 $26,355
 $(50,273) $2,609,380
         
Securities measured at fair value        
Residential MBS issued by GSEs       $1,053
DuringIn addition, the year endedCompany held equity securities, which primarily consisted of preferred stock and CRA investments, with a fair value of $126 million and $160 million at December 31, 2017, the Company sold all of its investment securities measured at fair value. No significant gain or loss was recognized upon sale of these securities. For additional information2023 and 2022, respectively. Unrealized losses on the fair value changes of securities measured at fair value, see the trading securities table in "Note 16. Fair Value Accounting" of these Notes to Consolidated Financial Statements.

The Company conducts an OTTI analysis on a quarterly basis. The initial indication of OTTI for both debt and equity securities is a decline in the market value below the amount recorded for an investment,of $1.3 million and taking into account the severity and duration of the decline. Another potential indication of OTTI is a downgrade below investment grade. In determining whether an impairment is OTTI, the Company considers the length of time and the extent to which the market value has been below cost, recent events specific to the issuer, including investment downgrades by rating agencies and economic conditions of its industry, and the Company’s ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery. For marketable equity securities, the Company also considers the issuer’s financial condition, capital strength, and near-term prospects.
For debt securities, for the purpose of an OTTI analysis, the Company also considers the cause of the price decline (general level of interest rates, credit spreads, and industry and issuer-specific factors), the issuer’s financial condition, near-term prospects, and current ability to make future payments in a timely manner, as well as the issuer’s ability to service debt, and any change in agencies’ ratings at the evaluation date from the acquisition date and any likely imminent action.
The Company has reviewed securities for which there is an unrealized loss in accordance with its accounting policy for OTTI described above and determined that there are no impairment charges$22.3 million for the years ended December 31, 2017, 2016,2023 and 2015. The Company does not consider any securities to be other-than-temporarily impaired2022, respectively, were recognized in earnings as a component of December 31, 2017Fair value loss adjustments, net.
Securities with carrying amounts of approximately $7.7 billion and 2016. No assurance can be made that OTTI will not occur in future periods.
Information pertaining to securities with gross unrealized losses$1.7 billion at December 31, 20172023 and 2016,2022, respectively, were pledged for various purposes as required or permitted by law.
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The following tables summarize the Company's AFS debt securities in an unrealized loss position, aggregated by investment categorymajor security type and length of time that individual securities have been in a continuous unrealized loss position follows: position:
December 31, 2023
Less Than Twelve MonthsMore Than Twelve MonthsTotal
Gross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair Value
(in millions)
Available-for-sale debt securities
U.S. Treasury securities$1 $2,208 $— $— $1 $2,208 
Residential MBS issued by GSEs3 174 356 1,551 359 1,725 
Private label residential MBS— — 204 1,020 204 1,020 
CLO— — 9 845 9 845 
Tax-exempt3 67 64 773 67 840 
Corporate debt securities (1)— — 44 359 44 359 
Commercial MBS issued by GSEs— — 9 53 9 53 
Other— — 9 54 9 54 
Total AFS securities$7 $2,449 $695 $4,655 $702 $7,104 
 December 31, 2017
 Less Than Twelve Months More Than Twelve Months Total
 Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value
 (in thousands)
Held-to-maturity           
Tax-exempt$3,250
 $107,921
 $—
 $—
 $3,250
 $107,921
Available-for-sale           
Commercial MBS issued by GSEs$161
 $13,565
 $3,877
 $93,641
 $4,038
 $107,206
Corporate debt securities1,398
 78,602
 424
 19,576
 1,822
 98,178
CRA investments—
 —
 517
 50,616
 517
 50,616
Preferred stock136
 7,357
 —
 —
 136
 7,357
Private label residential MBS3,115
 480,885
 3,378
 188,710
 6,493
 669,595
Residential MBS issued by GSEs13,875
 999,478
 16,828
 523,270
 30,703
 1,522,748
Tax-exempt17
 6,159
 1,954
 69,674
 1,971
 75,833
Trust preferred securities—
 —
 3,383
 28,617
 3,383
 28,617
U.S. government sponsored agency securities14
 4,986
 2,524
 56,476
 2,538
 61,462
U.S. treasury securities14
 2,482
 —
 —
 14
 2,482
Total AFS securities$18,730
 $1,593,514
 $32,885
 $1,030,580
 $51,615
 $2,624,094

 December 31, 2016
 Less Than Twelve Months More Than Twelve Months Total
 Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value
 (in thousands)
Held-to-maturity           
Tax-exempt$546
 $30,364
 $—
 $—
 $546
 $30,364
            
Available-for-sale           
Commercial MBS issued by GSEs$3,950
 $117,792
 $—
 $—
 $3,950
 $117,792
Corporate debt securities1,285
 38,716
 —
 —
 1,285
 38,716
CRA investments514
 37,113
 —
 —
 514
 37,113
Preferred stock2,188
 63,151
 54
 1,471
 2,242
 64,622
Private label residential MBS6,170
 377,638
 599
 16,969
 6,769
 394,607
Residential MBS issued by GSEs16,990
 950,480
 140
 5,326
 17,130
 955,806
Tax-exempt9,937
 148,780
 —
 —
 9,937
 148,780
Trust preferred securities—
 —
 5,468
 26,532
 5,468
 26,532
U.S. government sponsored agency securities2,978
 56,022
 —
 —
 2,978
 56,022
Total AFS securities$44,012
 $1,789,692
 $6,261
 $50,298
 $50,273
 $1,839,990
At December 31, 2017(1)Includes securities with an ACL that have a fair value of $54 million and 2016, the Company’s unrealized losses relate primarily to market interest rate increases since the securities' original purchase date. of $8 million.
December 31, 2022
Less Than Twelve MonthsMore Than Twelve MonthsTotal
Gross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair Value
(in millions)
Available-for-sale debt securities
CLO$81 $2,467 $9 $216 $90 $2,683 
Residential MBS issued by GSEs82 600 301 1,101 383 1,701 
Private label residential MBS27 279 216 912 243 1,191 
Tax-exempt93 752 22 78 115 830 
Corporate debt securities28 263 11 120 39 383 
Commercial MBS issued by GSEs4 46 4 14 8 60 
Other4 26 8 26 12 52 
Total AFS securities$319 $4,433 $571 $2,467 $890 $6,900 
The total number of AFS debt securities in an unrealized loss position at December 31, 20172023 is 302,708, compared to 244832 at December 31, 2016. In analyzing2022.
On a quarterly basis, the Company performs an issuer’s financial condition, management considers whether the securities are issued by the federal government orimpairment analysis on its agencies, whether downgrades by bond rating agencies have occurred, and industry analysis reports. Since material downgrades have not occurred and management does not intend to sell theAFS debt securities 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.
Government Issued Securities
U.S. Treasury securities and 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, and 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 Securities
Qualitative factors used in the foreseeable future, noneCompany'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 specific security, industry, or geographic region of its securities, any credit ratings below investment grade, the payment structure of the securities describedsecurity and the likelihood of the issuer to be able to make payments that increase in the above tablefuture, and failure of the issuer to make any scheduled principal or interest payments.
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 this paragraphcash between reporting periods, and consideration of any breach in covenant requirements. The Company's corporate debt securities are deemedprimarily investment grade, issuers continue to make timely principal and interest payments, and the unrealized losses on these security portfolios primarily
104
relate to changes in interest rates and other market conditions not considered to be OTTI.credit-related issues. The Company continues to receive timely principal and interest payments on its tax-exempt securities and the majority of these issuers have revenues pledged for payment of debt service prior to payment of other types of expenses.
In consideration of the continued effects from the bank failures in 2023, the Company performed a targeted impairment analysis on its AFS debt securities issued by regional banks held in its corporate debt securities portfolio. The Company considered the issuers' credit ratings, probability of default, and other factors. As a result of the analysis, an $18.5 million provision for credit losses was recognized during the year ended December 31, 2023. The provision for credit losses for the year ended December 31, 2023 included recognition of a $17.1 million charge-off for one debt security issued by a regional bank that was sold. The Company does not intend to sell and it is more likely than not the Company will not be required to sell the remainder of these regional bank debt securities prior to their anticipated recovery, therefore, no additional credit losses on the Company's remaining portfolio have been recognized during the year ended December 31, 2023.
For the Company's private label residential MBS, which consist of non-agency collateralized mortgage obligations secured by pools of residential mortgage loans, the Company also considers metrics such as securitization risk weight factor, current credit support, whether there were any mortgage principal losses resulting from defaults in payments on the underlying mortgage collateral, and the credit default rate over the last twelve months. These securities primarily carry investment grade credit ratings, principal and interest payments on these securities continue to be made on a timely basis, and credit support for these securities is considered adequate.
The Company's CLO portfolio consists of highly rated securitization tranches, containing pools of medium to large-sized corporate, high yield loans. These are variable rate securities that have an investment grade rating of Single-A or better. Unrealized losses on these securities are primarily a function of the differential from the offer price and the valuation mid-market price as well as changes in interest rates.
Unrealized losses on the Company's other securities portfolio relate to taxable municipal and trust preferred securities. The Company is continuing to receive timely principal and interest payments on its taxable municipal securities, these securities continue to be highly rated, and the number of days of cash on hand is strong. The Company's trust preferred securities are investment grade and the issuers continue to make timely principal and interest payments.
The following table presents a rollforward by major security type of the ACL on the Company's AFS debt securities:
Year Ended December 31, 2023
Balance,
December 31, 2022		Provision for Credit LossesCharge-offsRecoveriesBalance,
December 31, 2023
(in millions)
Available for sale securities
Corporate debt securities$— $18.5 $(17.1)$— $1.4 
There were no credit losses recognized on AFS securities during the year ended December 31, 2022.
The credit loss model under ASC 326-20, applicable to HTM debt securities, requires recognition of lifetime expected credit losses through an allowance account at the time the security is purchased.
The following table presents a rollforward by major security type of the ACL on the Company's HTM debt securities:
Year Ended December 31, 2023
Balance,
December 31, 2022		Provision for Credit LossesCharge-offsRecoveriesBalance,
December 31, 2023
(in millions)
Held-to-maturity debt securities
Tax-exempt$5.2 $2.6 $— $— $7.8 
Year Ended December 31, 2022:
Balance,
December 31, 2021		Provision for Credit LossesCharge-offsRecoveriesBalance
December 31, 2022
(in millions)
Held-to-maturity debt securities
Tax-exempt$5.2 $— $— $— $5.2 
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No allowance has been recognized on the Company's HTM private label residential MBS as losses are not expected due to the Company holding a senior position in these securities.
Accrued interest receivable on HTM securities totaled $5 million and $4 million at December 31, 2023 and 2022, respectively, and is excluded from the estimate of expected credit losses.
The following tables summarize the carrying amount of the Company’s investment ratings position as of December 31, 2023 and 2022, which are updated quarterly and used to monitor the credit quality of the Company's securities: 
December 31, 2023
AAASplit-rated AAA/AA+AA+ to AA-A+ to A-BBB+ to BBB-BB+ and belowUnratedTotals
(in millions)
Held-to-maturity
Tax-exempt$— $— $— $— $— $— $1,243 $1,243 
Private label residential MBS— — — — — — 186 186 
Total HTM securities (1)$— $— $— $— $— $— $1,429 $1,429 
Available-for-sale debt securities
U.S. Treasury securities$— $4,853 $— $— $— $— $— $4,853 
Residential MBS issued by GSEs— 1,972 — — — — — 1,972 
CLO79 — 1,265 55 — — — 1,399 
Private label residential MBS1,090 — 26 — — 1 — 1,117 
Tax-exempt9 16 361 386 — — 86 858 
Commercial MBS issued by GSEs— 530 — — — — — 530 
Corporate debt securities— — — 76 211 80 — 367 
Other— — 9 11 28 4 17 69 
Total AFS securities (1)$1,178 $7,371 $1,661 $528 $239 $85 $103 $11,165 
Equity securities
Preferred stock$— $— $— $— $54 $35 $11 $100 
CRA investments— 26 — — — — — 26 
Total equity securities (1)$— $26 $— $— $54 $35 $11 $126 
(1)For rated securities, if ratings differ, the Company uses an average of the available ratings by major credit agencies.
December 31, 2022
AAASplit-rated AAA/AA+AA+ to AA-A+ to A-BBB+ to BBB-BB+ and belowUnratedTotals
(in millions)
Held-to-maturity
Tax-exempt$— $— $— $— $— $— $1,091 $1,091 
Private label residential MBS— — — — — — 198 198 
Total HTM securities (1)$— $— $— $— $— $— $1,289 $1,289 
Available-for-sale debt securities
CLO$310 $— $2,121 $275 $— $— $— $2,706 
Residential MBS issued by GSEs— 1,740 — — — — — 1,740 
Private label residential MBS1,158 — 41 — — — — 1,199 
Tax-exempt11 15 392 425 — — 48 891 
Corporate debt securities— — — 74 316 — — 390 
Commercial MBS issued by GSEs— 97 — — — — — 97 
Other— — 9 9 27 6 18 69 
Total AFS securities (1)$1,479 $1,852 $2,563 $783 $343 $6 $66 $7,092 
Equity securities
Preferred stock$— $— $— $— $82 $17 $9 $108 
CRA investments— 24 — — — — 25 49 
Common stock— — — — — — 3 3 
Total equity securities (1)$— $24 $— $— $82 $17 $37 $160 
(1)For rated securities, if ratings differ, the Company uses an average of the available ratings by major credit agencies.
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A security is considered to be past due once it is 30 days contractually past due under the terms of the agreement. As of December 31, 2023, the Company did not have a significant amount of investment securities that were past due or on nonaccrual status.
The amortized cost and fair value of the Company's debt securities as of December 31, 2017,2023, by contractual maturities, are shown below. MBS are shown separately as individual MBS are comprised of pools of loans with varying maturities. Therefore, these securities are listed separately in the maturity summary.
  December 31, 2017
  Amortized Cost Estimated Fair Value
  (in thousands)
Held-to-maturity    
After one year through five years $11,300
 $11,377
After five years through ten years 14,979
 14,860
After ten years 228,771
 230,077
Total HTM securities $255,050
 $256,314
     
Available-for-sale    
Due in one year or less $54,175
 $53,679
After one year through five years 16,992
 17,464
After five years through ten years 257,495
 256,147
After ten years 480,220
 505,335
Mortgage-backed securities 2,706,519
 2,666,894
Total AFS securities $3,515,401
 $3,499,519

The following tables summarize the carrying amount of the Company’s investment ratings position as of December 31, 2017 and 2016: 
  December 31, 2017
  AAA Split-rated AAA/AA+ AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Unrated Totals
  (in thousands)
Held-to-maturity                
Tax-exempt $—
 $—
 $—
 $—
 $—
 $—
 $255,050
 $255,050
                 
Available-for-sale                
CDO $—
 $—
 $—
 $—
 $—
 $21,857
 $—
 $21,857
Commercial MBS issued by GSEs —
 109,077
 —
 —
 —
 —
 —
 109,077
Corporate debt securities —
 —
 —
 74,293
 29,190
 —
 —
 103,483
CRA investments —
 25,349
 —
 —
 —
 —
 25,267
 50,616
Preferred stock —
 —
 —
 10,388
 23,822
 4,104
 14,882
 53,196
Private label residential MBS 809,242
 —
 55,161
 1,350
 931
 1,840
 —
 868,524
Residential MBS issued by GSEs —
 1,689,295
 —
 —
 —
 —
 —
 1,689,295
Tax-exempt 64,893
 25,280
 249,200
 167,994
 —
 —
 3,543
 510,910
Trust preferred securities —
 —
 —
 —
 28,617
 —
 —
 28,617
U.S. government sponsored agency securities —
 61,462
 —
 —
 —
 —
 —
 61,462
U.S. treasury securities —
 2,482
 —
 —
 —
 —
 —
 2,482
Total AFS securities (1) $874,135
 $1,912,945

$304,361

$254,025

$82,560

$27,801

$43,692

$3,499,519
(1)Where ratings differ, the Company uses an average of the available ratings by S&P, Moody’s, and/or Fitch.
  December 31, 2016
  AAA Split-rated AAA/AA+ AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Unrated Totals
  (in thousands)
Held-to-maturity                
Tax-exempt $—
 $—
 $—
 $—
 $—
 $—
 $92,079
 $92,079
                 
Available-for-sale                
CDO $—
 $—
 $—
 $—
 $—
 $13,490
 $—
 $13,490
Commercial MBS issued by GSEs —
 117,792
 —
 —
 —
 —
 —
 117,792
Corporate debt securities —
 —
 5,429
 38,715
 20,000
 —
 —
 64,144
CRA investments —
 —
 —
 —
 —
 —
 37,113
 37,113
Preferred stock —
 —
 —
 —
 64,486
 14,658
 15,518
 94,662
Private label residential MBS 399,013
 —
 29,921
 2,117
 2,634
 —
 —
 433,685
Residential MBS issued by GSEs —
 1,355,205
 —
 —
 —
 —
 —
 1,355,205
Tax-exempt 80,862
 —
 268,249
 59,122
 —
 —
 —
 408,233
Trust preferred securities —
 —
 —
 —
 26,532
 —
 —
 26,532
U.S. government sponsored agency securities —
 56,022
 —
 —
 —
 —
 —
 56,022
U.S. treasury securities —
 2,502
 —
 —
 —
 —
 —
 2,502
Total AFS securities (1) $479,875

$1,531,521

$303,599

$99,954

$113,652

$28,148
 $52,631
 $2,609,380
                 
Securities measured at fair value                
Residential MBS issued by GSEs $—
 $1,053
 $—
 $—
 $—
 $—
 $—
 $1,053
(1)Where ratings differ, the Company uses an average of the available ratings by S&P, Moody’s, and/or Fitch.

Securities with carrying amounts of approximately $913.7 million and $763.0 million at December 31, 2017 and 2016, respectively, were pledged for various purposes as required or permitted by law.
December 31, 2023
Amortized CostEstimated Fair Value
(in millions)
Held-to-maturity
Due in one year or less$17 $17 
After one year through five years20 20 
After five years through ten years86 76 
After ten years1,120 991 
Mortgage-backed securities186 147 
Total HTM securities$1,429 $1,251 
Available-for-sale
Due in one year or less$4,099 $4,099 
After one year through five years921 912 
After five years through ten years556 518 
After ten years2,094 2,017 
Mortgage-backed securities4,179 3,619 
Total AFS securities$11,849 $11,165 
The following table presents gross gains and losses on sales of investment securities: 
Year Ended December 31,
202320222021
(in millions)
Available-for-sale securities
Gross gains$4.0 $7.6 $8.4 
Gross losses(44.4)(0.2)— 
Net gains (losses) on AFS securities$(40.4)$7.4 $8.4 
Equity securities
Gross gains$— $— $0.1 
Gross losses(0.4)(0.5)(0.2)
Net losses on equity securities$(0.4)$(0.5)$(0.1)
During the years ended December 31, 2023, 2022, and 2021, the Company sold AFS securities with a carrying value of $1.6 billion, $170 million and $161 million, respectively, and recognized a net loss of $40.4 million and net gains of $7.4 million and $8.4 million, respectively. During the year ended December 31, 2023, gross losses on AFS securities sales relate primarily to sales of CLO securities that were executed as part of the Company's balance sheet repositioning strategy. Gross gains on AFS securities sales during the year ended December 31, 2023 are attributable to sales of MBS and tax-exempt municipal securities that were completed to secure gains.

107
  Year Ended December 31,
  2017 2016 2015
  (in thousands)
Gross gains $3,204
 $2,115
 $1,144
Gross losses (861) (1,056) (529)
Net gains on sales of investment securities $2,343
 $1,059
 $615
3. LOANS HELD FOR SALE

The Company purchases and originates residential mortgage loans through its AmeriHome mortgage banking business channel that are held for sale or securitization. In addition, as part of the Company's balance sheet repositioning strategy, the Company transferred $5.9 billion of loans, net of a fair value loss adjustment (primarily commercial and industrial loans) to HFS as of March 31, 2023. The Company completed loan dispositions from this transferred loan pool totaling $4.3 billion and transferred all remaining HFS loans back to HFI as a result of a change in management intent. As of December 31, 2023 and 2022, loans HFS consist of residential mortgage loans held for sale or securitization.
3.The following is a summary of loans HFS by type:
December 31,
20232022
(in millions)
Government-insured or guaranteed:
EBO (1)$2 $— 
Non-EBO498 591 
Total government-insured or guaranteed500 591 
Agency-conforming899 593 
Non-agency3 — 
Total loans HFS$1,402 $1,184 
(1)    EBO loans are delinquent FHA, VA, or USDA loans purchased from GNMA pools under the terms of the GNMA MBS program that can be repooled when loans are brought current either through the borrower's reperformance or through completion of a loan modification.
The following is a summary of the net gain on loan purchase, origination, and sale activities on residential mortgage loans to be sold or securitized:
Year Ended December 31,
20232022
(in millions)
Mortgage servicing rights capitalized upon sale of loans$864.5 $719.7 
Net proceeds from sale of loans (1)(785.6)(1,076.6)
Provision for and change in estimate of liability for losses under representations and warranties, net5.2 1.7 
Change in fair value15.0 (6.8)
Change in fair value of derivatives:
Unrealized loss on derivatives(18.4)(5.9)
Realized gain on derivatives55.4 408.0 
Total change in fair value of derivatives37.0 402.1 
Net gain on residential mortgage loans HFS$136.1 $40.1 
Loan acquisition and origination fees57.4 63.9 
Net gain on loan origination and sale activities$193.5 $104.0 
(1)     Represents the difference between cash proceeds received upon settlement and loan basis.
108
4. LOANS, LEASES AND ALLOWANCE FOR CREDIT LOSSES
The composition of the Company’s held for investmentCompany's HFI loan portfolio is as follows:
December 31,
20232022
(in millions)
Warehouse lending$6,618 $5,561 
Municipal & nonprofit1,554 1,524 
Tech & innovation2,808 2,293 
Equity fund resources845 3,717 
Other commercial and industrial7,452 7,793 
CRE - owner occupied1,658 1,656 
Hotel franchise finance3,855 3,807 
Other CRE - non-owner occupied5,974 5,457 
Residential13,287 13,996 
Residential - EBO1,223 1,884 
Construction and land development4,862 3,995 
Other161 179 
Total loans HFI50,297 51,862 
Allowance for credit losses(337)(310)
Total loans HFI, net of allowance$49,960 $51,552 
  December 31,
  2017 2016
  (in thousands)
Commercial and industrial $6,841,381
 $5,855,786
Commercial real estate - non-owner occupied 3,904,011
 3,543,956
Commercial real estate - owner occupied 2,241,613
 2,013,276
Construction and land development 1,632,204
 1,478,114
Residential real estate 425,940
 259,432
Consumer 48,786
 38,963
Loans, net of deferred loan fees and costs 15,093,935
 13,189,527
Allowance for credit losses (140,050) (124,704)
Total loans HFI $14,953,885
 $13,064,823
Loans classified as HFI are stated at the amount of unpaid principal, adjusted for net deferred fees and costs, premiums and discounts on acquired and purchased loans, and an ACL. Net deferred loan fees and costs as of December 31, 2017 and 2016 total $25.3$108 million and $22.3$141 million respectively, which is a reduction inreduced the carrying value of loans. Net unamortized purchase discounts on secondary market loan purchases total $8.5 million and $5.2 million as of December 31, 2017 and 2016, respectively. Total loans held for investment are also net of interest rate and credit marks on acquired loans, which are a net reduction in the carrying value of loans. Interest rate marks were $14.1 million and $22.2 million as of December 31, 2017 and 2016, respectively. Credit marks were $27.0 million and $47.3 million as of December 31, 2017 and 2016, respectively.
The Company had no HFS loans as of December 31, 20172023 and $18.92022, respectively. Net unamortized purchase premiums on acquired and purchased loans of $177 million and $195 million increased the carrying value of HFS loans as of December 31, 2016.2023 and 2022, respectively.
Nonaccrual and Past Due Loans
Loans are placed on nonaccrual status when management determines the full repayment of principal and collection of interest according to contractual terms is no longer likely, generally when the loan becomes 90 days or more past due.
The following table presents the contractual aging of the recorded investment in past due loans held for investmenttables present nonperforming loan balances by class of loans:loan portfolio segment:
December 31, 2023
Nonaccrual with No Allowance for Credit LossNonaccrual with an Allowance for Credit LossTotal NonaccrualLoans Past Due 90 Days or More and Still Accruing
(in millions)
Municipal & nonprofit$— $6 $6 $— 
Tech & innovation23 10 33 — 
Other commercial and industrial19 34 53 — 
CRE - owner occupied8 1 9 — 
Other CRE - non-owner occupied82 1 83 — 
Residential— 70 70 — 
Residential - EBO— — — 399 
Construction and land development19 — 19 42 
Total$151 $122 $273 $441 
  December 31, 2017
  Current 30-59 Days
Past Due		 60-89 Days
Past Due		 Over 90 Days Past Due Total
Past Due		 Total
  (in thousands)
Commercial and industrial $6,835,385
 $2,245
 $669
 $3,082
 $5,996
 $6,841,381
Commercial real estate            
Owner occupied 2,240,457
 1,026
 —
 130
 1,156
 2,241,613
Non-owner occupied 3,696,729
 2,993
 —
 2,847
 5,840
 3,702,569
Multi-family 201,442
 —
 —
 —
 —
 201,442
Construction and land development            
Construction 1,090,176
 —
 —
 —
 —
 1,090,176
Land 536,917
 —
 —
 5,111
 5,111
 542,028
Residential real estate 411,857
 6,874
 1,487
 5,722
 14,083
 425,940
Consumer 48,408
 83
 213
 82
 378
 48,786
Total loans $15,061,371
 $13,221
 $2,369
 $16,974
 $32,564
 $15,093,935

  December 31, 2016
  Current 30-59 Days
Past Due		 60-89 Days
Past Due		 Over 90 days
Past Due		 Total
Past Due		 Total
  (in thousands)
Commercial and industrial $5,848,129
 $549
 $584
 $6,524
 $7,657
 $5,855,786
Commercial real estate            
Owner occupied 2,009,728
 71
 —
 3,477
 3,548
 2,013,276
Non-owner occupied 3,339,121
 672
 2
 —
 674
 3,339,795
Multi-family 204,161
 —
 —
 —
 —
 204,161
Construction and land development            
Construction 973,242
 —
 —
 —
 —
 973,242
Land 503,588
 —
 —
 1,284
 1,284
 504,872
Residential real estate 249,726
 4,333
 281
 5,092
 9,706
 259,432
Consumer 38,765
 26
 2
 170
 198
 38,963
Total loans $13,166,460
 $5,651
 $869
 $16,547
 $23,067
 $13,189,527
The following table presents the recorded investment in non-accrual loans and loans past due ninetyLoans contractually delinquent by 90 days or more and still accruing interesttotaled $441 million at December 31, 2023 and consisted of government guaranteed EBO residential loans and construction and land development loans.

109
December 31, 2022
Nonaccrual with No Allowance for Credit LossNonaccrual with an Allowance for Credit LossTotal NonaccrualLoans Past Due 90 Days or More and Still Accruing
(in millions)
Municipal & nonprofit$— $7 $7 $— 
Tech & innovation— 1 1 — 
Other commercial and industrial1 23 24 — 
CRE - owner occupied10 2 12 — 
Hotel franchise finance— 10 10 — 
Other CRE - non-owner occupied5 3 8 — 
Residential— 19 19 — 
Residential - EBO— — — 582 
Construction and land development4 — 4 — 
Total$20 $65 $85 $582 
Loans contractually delinquent by class90 days or more and still accruing totaled $582 million at December 31, 2022 and consisted entirely of loans: 
  December 31, 2017 December 31, 2016
  Non-accrual loans Loans past due 90 days or more and still accruing Non-accrual loans Loans past due 90 days or more and still accruing
  Current Past Due/
Delinquent		 Total
Non-accrual		  Current Past Due/
Delinquent		 Total
Non-accrual		 
  (in thousands)
Commercial and industrial $17,913
 $4,113
 $22,026
 $43
 $10,921
 $6,046
 $16,967
 $775
Commercial real estate                
Owner occupied 1,089
 792
 1,881
 —
 5,084
 3,264
 8,348
 285
Non-owner occupied —
 5,840
 5,840
 —
 8,317
 1
 8,318
 —
Multi-family —
 —
 —
 —
 —
 —
 —
 —
Construction and land development              
Construction —
 —
 —
 —
 —
 —
 —
 —
Land 868
 5,111
 5,979
 —
 —
 1,284
 1,284
 —
Residential real estate 2,039
 6,078
 8,117
 —
 99
 5,093
 5,192
 —
Consumer —
 82
 82
 —
 —
 163
 163
 7
Total $21,909
 $22,016
 $43,925
 $43
 $24,421
 $15,851
 $40,272
 $1,067
government guaranteed EBO residential loans.
The reduction in interest income associated with loans on non-accrualnonaccrual status was approximately $2.4$12.3 million, $2.0$4.7 million, and $2.5$5.3 million for the years ended December 31, 2017, 2016,2023, 2022, and 2015,2021, respectively.
The Company utilizes an internal asset classification system as a means of reporting problem and potential problem loans. Under the Company’s risk rating system, the Company classifies problem and potential problem loans as Special Mention, Substandard, Doubtful, and Loss. Substandard loans include those characterized by well-defined weaknesses and carry the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful, or risk rated eight, have all the weaknesses inherent in those classified 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 improbable. The final rating of Loss covers loans considered uncollectible and having such little recoverable value that it is not practical to defer writing off the asset. Loans that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses that warrant management’s close attention, are deemed to be Special Mention. Risk ratings are updated, at a minimum, quarterly.

The following tables present gross loans by risk rating: 
  December 31, 2017
  Pass Special Mention Substandard Doubtful Loss Total
  (in thousands)
Commercial and industrial $6,675,574
 $85,781
 $76,328
 $3,698
 $—
 $6,841,381
Commercial real estate            
Owner occupied 2,149,465
 43,122
 48,397
 629
 —
 2,241,613
Non-owner occupied 3,676,711
 11,166
 14,692
 —
 —
 3,702,569
Multi-family 201,442
 —
 —
 —
 —
 201,442
Construction and land development         
  
Construction 1,072,342
 4,477
 13,357
 —
 —
 1,090,176
Land 535,412
 637
 5,979
 —
 —
 542,028
Residential real estate 408,527
 8,971
 8,442
 —
 —
 425,940
Consumer 47,824
 878
 84
 —
 —
 48,786
Total $14,767,297
 $155,032
 $167,279
 $4,327
 $—
 $15,093,935
  December 31, 2017
  Pass Special Mention Substandard Doubtful Loss Total
  (in thousands)
Current (up to 29 days past due) $14,758,149
 $154,295
 $145,934
 $2,993
 $—
 $15,061,371
Past due 30 - 59 days 7,966
 518
 4,737
 —
 —
 13,221
Past due 60 - 89 days 1,182
 219
 968
 —
 —
 2,369
Past due 90 days or more —
 —
 15,640
 1,334
 —
 16,974
Total $14,767,297
 $155,032
 $167,279
 $4,327
 $—
 $15,093,935
  December 31, 2016
  Pass Special Mention Substandard Doubtful Loss Total
  (in thousands)
Commercial and industrial $5,722,185
 $70,011
 $58,590
 $5,000
 $—
 $5,855,786
Commercial real estate            
Owner occupied 1,935,322
 53,634
 22,090
 2,230
 —
 2,013,276
Non-owner occupied 3,278,090
 22,972
 38,733
 —
 —
 3,339,795
Multi-family 203,964
 197
 —
 —
 —
 204,161
Construction and land development            
Construction 961,290
 —
 11,952
 —
 —
 973,242
Land 501,569
 337
 2,966
 —
 —
 504,872
Residential real estate 252,304
 929
 6,199
 —
 —
 259,432
Consumer 38,698
 64
 201
 —
 —
 38,963
Total $12,893,422
 $148,144
 $140,731
 $7,230
 $—
 $13,189,527

  December 31, 2016
  Pass Special Mention Substandard Doubtful Loss Total
  (in thousands)
Current (up to 29 days past due) $12,887,308
 $147,838
 $124,084
 $7,230
 $—
 $13,166,460
Past due 30 - 59 days 5,433
 96
 122
 —
 —
 5,651
Past due 60 - 89 days 410
 210
 249
 —
 —
 869
Past due 90 days or more 271
 —
 16,276
 —
 —
 16,547
Total $12,893,422
 $148,144
 $140,731
 $7,230
 $—
 $13,189,527
The table below reflects the recorded investment in loans classified as impaired: 
  December 31,
  2017 2016
  (in thousands)
Impaired loans with a specific valuation allowance under ASC 310 (1) $19,315
 $10,909
Impaired loans without a specific valuation allowance under ASC 310 (2) 79,239
 88,300
Total impaired loans $98,554
 $99,209
Valuation allowance related to impaired loans (3) $(5,606) $(4,239)

(1)Includes TDR loans of $3.7 million and $2.5 million at December 31, 2017 and 2016, respectively.
(2)Includes TDR loans of $48.8 million and $58.3 million at December 31, 2017 and 2016, respectively.
(3)Includes valuation allowance related to TDR loans of $1.2 million and $0.6 million at December 31, 2017 and 2016, respectively.
The following table presents impairedan aging analysis of past due loans by class: loan portfolio segment:
December 31, 2023
Current30-59 Days
Past Due		60-89 Days
Past Due		Over 90 days
Past Due		Total
Past Due		Total
(in millions)
Warehouse lending$6,618 $— $— $— $— $6,618 
Municipal & nonprofit1,554 — — — — 1,554 
Tech & innovation2,808 — — — — 2,808 
Equity fund resources845 — — — — 845 
Other commercial and industrial7,439 13 — — 13 7,452 
CRE - owner occupied1,627 — 31 — 31 1,658 
Hotel franchise finance3,824 15 16 — 31 3,855 
Other CRE - non-owner occupied5,974 — — — — 5,974 
Residential13,199 68 20 — 88 13,287 
Residential - EBO545 173 106 399 678 1,223 
Construction and land development4,820 — — 42 42 4,862 
Other160 1 — — 1 161 
Total loans$49,413 $270 $173 $441 $884 $50,297 
December 31, 2022
Current30-59 Days
Past Due		60-89 Days
Past Due		Over 90 days
Past Due		Total
Past Due		Total
(in millions)
Warehouse lending$5,561 $— $— $— $— $5,561 
Municipal & nonprofit1,524 — — — — 1,524 
Tech & innovation2,270 23 — — 23 2,293 
Equity fund resources3,717 — — — — 3,717 
Other commercial and industrial7,791 2 — — 2 7,793 
CRE - owner occupied1,656 — — — — 1,656 
Hotel franchise finance3,807 — — — — 3,807 
Other CRE - non-owner occupied5,454 3 — — 3 5,457 
Residential13,955 37 4 — 41 13,996 
Residential - EBO969 217 116 582 915 1,884 
Construction and land development3,995 — — — — 3,995 
Other178 1 — — 1 179 
Total loans$50,877 $283 $120 $582 $985 $51,862 

110
  December 31,
  2017 2016
  (in thousands)
Commercial and industrial $34,156
 $21,462
Commercial real estate    
Owner occupied 10,430
 20,748
Non-owner occupied 21,251
 25,524
Multi-family —
 —
Construction and land development    
Construction —
 —
Land 15,426
 14,838
Residential real estate 17,170
 16,391
Consumer 121
 246
Total $98,554
 $99,209
Credit Quality Indicators
A valuation allowanceThe Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually to classify the loans as to credit risk. This analysis is establishedperformed on a quarterly basis. The risk rating categories are described in "Note 1. Summary of Significant Accounting Policies" of these Notes to Consolidated Financial Statements. The following tables present risk ratings by loan portfolio segment and origination year. The origination year is the year of origination or renewal.
Term Loan Amortized Cost Basis by Origination YearRevolving Loans Amortized Cost BasisTotal
As of and for the year ended December 31, 202320232022202120202019Prior
(in millions)
Warehouse lending
Pass$582 $323 $7 $289 $— $— $5,391 $6,592 
Special mention— — — — — — 26 26 
Classified— — — — — — — — 
Total$582 $323 $7 $289 $— $— $5,417 $6,618 
Current period gross charge-offs$— $— $— $— $— $— $— $— 
Municipal & nonprofit
Pass$102 $167 $176 $169 $68 $848 $— $1,530 
Special mention— 7 — 11 — — — 18 
Classified— — — — 6 — — 6 
Total$102 $174 $176 $180 $74 $848 $— $1,554 
Current period gross charge-offs$— $— $— $— $— $— $— $— 
Tech & innovation
Pass$758 $774 $206 $22 $66 $38 $816 $2,680 
Special mention5 30 12 — — — 1 48 
Classified15 52 1 5 — — 7 80 
Total$778 $856 $219 $27 $66 $38 $824 $2,808 
Current period gross charge-offs$1.7 $1.1 $0.6 $3.5 $— $— $— $6.9 
Equity fund resources
Pass$154 $62 $21 $3 $1 $— $604 $845 
Special mention— — — — — — — — 
Classified— — — — — — — — 
Total$154 $62 $21 $3 $1 $— $604 $845 
Current period gross charge-offs$— $— $— $— $— $— $— $— 
Other commercial and industrial
Pass$1,610 $1,454 $559 $185 $77 $196 $3,186 $7,267 
Special mention90 1 1 — — — 1 93 
Classified1 25 59 2 4 — 1 92 
Total$1,701 $1,480 $619 $187 $81 $196 $3,188 $7,452 
Current period gross charge-offs$0.8 $3.4 $13.2 $3.9 $0.3 $0.2 $0.9 $22.7 
CRE - owner occupied
Pass$165 $344 $322 $163 $132 $444 $40 $1,610 
Special mention— — — — — 1 — 1 
Classified2 1 4 1 1 38 — 47 
Total$167 $345 $326 $164 $133 $483 $40 $1,658 
Current period gross charge-offs$— $— $— $— $— $— $— $— 
Hotel franchise finance
Pass$593 $1,535 $566 $95 $419 $165 $132 $3,505 
Special mention34 — 66 — 35 68 — 203 
Classified24 8 48 — 43 24 — 147 
Total$651 $1,543 $680 $95 $497 $257 $132 $3,855 
Current period gross charge-offs$— $— $— $— $— $— $— $— 
111
Term Loan Amortized Cost Basis by Origination YearRevolving Loans Amortized Cost BasisTotal
As of and for the year ended December 31, 202320232022202120202019Prior
(in millions)
Other CRE - non-owner occupied
Pass$1,832 $1,784 $754 $457 $166 $206 $387 $5,586 
Special mention164 — 16 43 28 — — 251 
Classified28 — 93 1 14 1 — 137 
Total$2,024 $1,784 $863 $501 $208 $207 $387 $5,974 
Current period gross charge-offs$— $— $5.1 $— $— $0.1 $— $5.2 
Residential
Pass$324 $3,577 $7,999 $820 $270 $207 $20 $13,217 
Special mention— — — — — — — — 
Classified1 26 33 4 4 2 — 70 
Total$325 $3,603 $8,032 $824 $274 $209 $20 $13,287 
Current period gross charge-offs$— $— $— $— $— $— $— $— 
Residential - EBO
Pass$2 $8 $227 $534 $231 $221 $— $1,223 
Special mention— — — — — — — — 
Classified— — — — — — — — 
Total$2 $8 $227 $534 $231 $221 $— $1,223 
Current period gross charge-offs$— $— $— $— $— $— $— $— 
Construction and land development
Pass$1,013 $2,231 $385 $10 $— $— $1,151 $4,790 
Special mention— — — — — — — — 
Classified1 19 — 52 — — — 72 
Total$1,014 $2,250 $385 $62 $— $— $1,151 $4,862 
Current period gross charge-offs$— $— $— $— $— $— $— $— 
Other
Pass$4 $10 $3 $11 $3 $62 $66 $159 
Special mention— — — — — 1 — 1 
Classified— — — — — 1 — 1 
Total$4 $10 $3 $11 $3 $64 $66 $161 
Current period gross charge-offs$— $0.2 $— $— $— $0.2 $— $0.4 
Total by Risk Category
Pass$7,139 $12,269 $11,225 $2,758 $1,433 $2,387 $11,793 $49,004 
Special mention293 38 95 54 63 70 28 641 
Classified72 131 238 65 72 66 8 652 
Total$7,504 $12,438 $11,558 $2,877 $1,568 $2,523 $11,829 $50,297 
Current period gross charge-offs$2.5 $4.7 $18.9 $7.4 $0.3 $0.5 $0.9 $35.2 

112
Term Loan Amortized Cost Basis by Origination YearRevolving Loans Amortized Cost BasisTotal
December 31, 202220222021202020192018Prior
(in millions)
Warehouse lending
Pass$397 $41 $152 $— $— $— $4,928 $5,518 
Special mention43 — — — — — — 43 
Classified— — — — — — — — 
Total$440 $41 $152 $— $— $— $4,928 $5,561 
Municipal & nonprofit
Pass$107 $185 $187 $78 $43 $917 $— $1,517 
Special mention— — — — — — — — 
Classified— — — — — 7 — 7 
Total$107 $185 $187 $78 $43 $924 $— $1,524 
Tech & innovation
Pass$813 $374 $87 $66 $4 $1 $853 $2,198 
Special mention36 22 3 — — — 20 81 
Classified2 12 — — — — — 14 
Total$851 $408 $90 $66 $4 $1 $873 $2,293 
Equity fund resources
Pass$1,020 $1,189 $191 $16 $— $— $1,301 $3,717 
Special mention— — — — — — — — 
Classified— — — — — — — — 
Total$1,020 $1,189 $191 $16 $— $— $1,301 $3,717 
Other commercial and industrial
Pass$2,968 $1,272 $262 $277 $312 $206 $2,406 $7,703 
Special mention— 44 — — — — 3 47 
Classified3 21 10 3 3 1 2 43 
Total$2,971 $1,337 $272 $280 $315 $207 $2,411 $7,793 
CRE - owner occupied
Pass$338 $359 $174 $157 $211 $339 $29 $1,607 
Special mention— — — — — 1 — 1 
Classified— 14 7 1 5 10 11 48 
Total$338 $373 $181 $158 $216 $350 $40 $1,656 
Hotel franchise finance
Pass$1,762 $726 $54 $528 $290 $103 $118 $3,581 
Special mention— — 26 — — — — 26 
Classified18 20 — 117 45 — — 200 
Total$1,780 $746 $80 $645 $335 $103 $118 $3,807 
Other CRE - non-owner occupied
Pass$2,344 $1,201 $870 $264 $160 $218 $315 $5,372 
Special mention3 38 — 12 — — 1 54 
Classified— 4 — 12 10 5 — 31 
Total$2,347 $1,243 $870 $288 $170 $223 $316 $5,457 
Residential
Pass$4,041 $8,474 $878 $308 $150 $90 $36 $13,977 
Special mention— — — — — — — — 
Classified6 9 — 3 1 — — 19 
Total$4,047 $8,483 $878 $311 $151 $90 $36 $13,996 
Residential - EBO
Pass$3 $268 $712 $454 $191 $256 $— $1,884 
Special mention— — — — — — — — 
Classified— — — — — — — — 
Total$3 $268 $712 $454 $191 $256 $— $1,884 
113
Term Loan Amortized Cost Basis by Origination YearRevolving Loans Amortized Cost BasisTotal
December 31, 202220222021202020192018Prior
(in millions)
Construction and land development
Pass$1,533 $815 $273 $14 $— $— $1,258 $3,893 
Special mention— — 98 — — — — 98 
Classified— — — 4 — — — 4 
Total$1,533 $815 $371 $18 $— $— $1,258 $3,995 
Other
Pass$23 $10 $13 $5 $2 $61 $64 $178 
Special mention— — — — — 1 — 1 
Classified— — — — — — — — 
Total$23 $10 $13 $5 $2 $62 $64 $179 
Total by Risk Category
Pass$15,349 $14,914 $3,853 $2,167 $1,363 $2,191 $11,308 $51,145 
Special mention82 104 127 12 — 2 24 351 
Classified29 80 17 140 64 23 13 366 
Total$15,460 $15,098 $3,997 $2,319 $1,427 $2,216 $11,345 $51,862 
Restructurings for an impairedBorrowers Experiencing Financial Difficulty
The Company adopted the amendments in ASU 2022-02, which eliminated accounting guidance on TDR loans for creditors and requires enhanced disclosures for loan when the fair valuemodifications to borrowers experiencing financial difficulty made on or after January 1, 2023. See “Note 1. Summary of Significant Accounting Policies” of these Notes to Consolidated Financial Statements for further discussion of the loan is less than the recorded investment. In certain cases, portions of impaired loans are charged-off to realizable value instead of establishing a valuation allowance and are included, when applicable,amendments in the table above as “Impaired loans without a specific valuation allowance under ASC 310.” However, before concluding that an impaired loan needs no associated valuation allowance, an assessment is made to consider all available and relevant information for the method used to evaluate impairment and the type of loan being assessed. The valuation allowance disclosed above is included in the allowance for credit losses reported in the Consolidated Balance Sheets as of December 31, 2017 and 2016.

this update.
The following table presents the average investment in impairedamortized cost basis of loans and income recognized on impaired loans: 
  Year Ended December 31,
  2017 2016 2015
  (in thousands)
Average balance on impaired loans $104,866
 $109,461
 $150,151
Interest income recognized on impaired loans 4,046
 4,167
 4,794
Interest recognized on non-accrual loans, cash basis 1,614
 1,254
 1,634
The following table presents average investment in impaired loans by loan class: 
  Year Ended December 31,
  2017 2016 2015
  (in thousands)
Commercial and industrial $33,519
 $26,577
 $20,482
Commercial real estate      
Owner occupied 18,692
 18,865
 34,912
Non-owner occupied 22,000
 30,633
 56,360
Multi-family —
 —
 —
Construction and land development      
Construction —
 —
 —
Land 13,558
 17,006
 19,561
Residential real estate 16,893
 16,096
 18,453
Consumer 204
 284
 383
Total $104,866
 $109,461
 $150,151
The average investment in TDR loans included inHFI that were modified during the average investment in impaired loans table above for the yearsyear ended December 31, 2017, 2016, and 2015 was $55.5 million, $68.8 million, and $113.9 million, respectively.
The following table presents interest income on impaired loans by class: 
  Year Ended December 31,
  2017 2016 2015
  (in thousands)
Commercial and industrial $1,077
 $727
 $288
Commercial real estate      
Owner occupied 677
 849
 1,575
Non-owner occupied 1,074
 1,196
 1,560
Multi-family —
 —
 —
Construction and land development      
Construction —
 —
 —
Land 699
 830
 785
Residential real estate 516
 560
 579
Consumer 3
 5
 7
Total $4,046
 $4,167
 $4,794
The Company is not committed to lend significant additional funds on these impaired loans.

The following table summarizes nonperforming assets: 
  December 31,
  2017 2016
  (in thousands)
Non-accrual loans (1) $43,925
 $40,272
Loans past due 90 days or more on accrual status (2) 43
 1,067
Accruing troubled debt restructured loans 42,431
 53,637
Total nonperforming loans 86,399
 94,976
Other assets acquired through foreclosure, net 28,540
 47,815
Total nonperforming assets $114,939
 $142,791

(1)Includes non-accrual TDR loans of $10.1 million and $7.1 million at December 31, 2017 and 2016, respectively.
(2)Includes less than $0.1 million from loans acquired with deteriorated credit quality at each of the periods ended December 31, 2017 and 2016.
Loans Acquired with Deteriorated Credit Quality
Changes in the accretable yield for loans acquired with deteriorated credit quality are as follows:  
  Year Ended December 31,
  2017 2016 2015
  (in thousands)
Balance, at beginning of period $15,177
 $15,925
 $19,156
Additions due to acquisition —
 4,301
 857
Measurement period adjustments —
 —
 38
Reclassifications from non-accretable to accretable yield (1) 2,086
 1,892
 1,747
Accretion to interest income (2,797) (3,439) (3,996)
Reversal of fair value adjustments upon disposition of loans (5,142) (3,502) (1,877)
Balance, at end of period $9,324
 $15,177
 $15,925
(1)The primary drivers of reclassification from non-accretable to accretable yield resulted from changes in estimated cash flows.

Allowance for Credit Losses
The following table summarizes the changes in the allowance for credit losses by portfolio type: 
  Year Ended December 31,
  Construction and Land Development Commercial Real Estate Residential Real Estate Commercial and Industrial Consumer Total
  (in thousands)
2017            
Beginning Balance $21,175
 $25,673
 $3,851
 $73,333
 $672
 $124,704
Charge-offs —
 2,269
 447
 8,186
 102
 11,004
Recoveries (1,229) (2,897) (1,778) (3,112) (84) (9,100)
Provision (2,805) 5,347
 318
 14,268
 122
 17,250
Ending balance $19,599
 $31,648
 $5,500
 $82,527
 $776
 $140,050
2016            
Beginning Balance $18,976
 $23,160
 $5,278
 $71,181
 $473
 $119,068
Charge-offs 18
 728
 165
 12,477
 161
 13,549
Recoveries (485) (5,690) (875) (3,991) (144) (11,185)
Provision 1,732
 (2,449) (2,137) 10,638
 216
 8,000
Ending balance $21,175
 $25,673
 $3,851
 $73,333
 $672
 $124,704
2015            
Beginning Balance $18,558
 $28,783
 $7,456
 $54,566
 $853
 $110,216
Charge-offs —
 —
 820
 5,550
 127
 6,497
Recoveries (1,872) (4,139) (2,181) (3,754) (203) (12,149)
Provision (1,454) (9,762) (3,539) 18,411
 (456) 3,200
Ending balance $18,976
 $23,160
 $5,278
 $71,181
 $473
 $119,068

The following table presents impairment method information related to loans and allowance for credit losses2023 by loan portfolio segment:
Amortized Cost Basis at December 31, 2023
Payment Delay and Term ExtensionTerm ExtensionPayment DelayTotal% of Total Class of Financing Receivable
(dollars in millions)
Tech & innovation$1 $6 $8 $15 0.5 %
Other commercial and industrial— 23 8 31 0.4 %
CRE - owner occupied— 3 — 3 0.2 %
Hotel franchise finance— 37 — 37 1.0 %
Other CRE - non-owner occupied— 119 — 119 2.0 %
Residential— — 1 1 0.0 %
Total$1 $188 $17 $206 0.4 %
  Commercial Real Estate-Owner Occupied Commercial Real Estate-Non-Owner Occupied Commercial and Industrial Residential Real Estate Construction and Land Development Consumer Total Loans
  (in thousands)
Loans as of December 31, 2017            
Recorded Investment              
Impaired loans with an allowance recorded $—
 $—
 $19,315
 $—
 $—
 $—
 $19,315
Impaired loans with no allowance recorded 10,430
 21,250
 14,842
 17,170
 15,426
 121
 79,239
Total loans individually evaluated for impairment 10,430
 21,250
 34,157
 17,170
 15,426
 121
 98,554
Loans collectively evaluated for impairment 2,221,614
 3,777,219
 6,807,181
 408,169
 1,616,778
 48,665
 14,879,626
Loans acquired with deteriorated credit quality 9,569
 105,542
 43
 601
 —
 —
 115,755
Total recorded investment $2,241,613
 $3,904,011
 $6,841,381
 $425,940
 $1,632,204
 $48,786
 $15,093,935
Unpaid Principal Balance            
Impaired loans with an allowance recorded $—
 $—
 $20,795
 $—
 $—
 $—
 $20,795
Impaired loans with no allowance recorded 17,459
 28,028
 42,261
 26,057
 32,289
 10,695
 156,789
Total loans individually evaluated for impairment 17,459
 28,028
 63,056
 26,057
 32,289
 10,695
 177,584
Loans collectively evaluated for impairment 2,221,614
 3,777,219
 6,807,181
 408,169
 1,616,778
 48,665
 14,879,626
Loans acquired with deteriorated credit quality 12,619
 128,440
 3,146
 720
 —
 —
 144,925
Total unpaid principal balance $2,251,692
 $3,933,687
 $6,873,383
 $434,946
 $1,649,067
 $59,360
 $15,202,135
Related Allowance for Credit Losses            
Impaired loans with an allowance recorded $—
 $—
 $5,606
 $—
 $—
 $—
 $5,606
Impaired loans with no allowance recorded —
 —
 —
 —
 —
 —
 —
Total loans individually evaluated for impairment —
 —
 5,606
 —
 —
 —
 5,606
Loans collectively evaluated for impairment 13,884
 16,135
 76,919
 5,500
 19,599
 776
 132,813
Loans acquired with deteriorated credit quality —
 1,629
 2
 —
 —
 —
 1,631
Total allowance for credit losses $13,884
 $17,764
 $82,527
 $5,500
 $19,599
 $776
 $140,050
The performance of these modified loans is monitored for 12 months following the modification. As of December 31, 2023, modified loans on nonaccrual status totaled $111 million and the remaining $95 million were current with contractual payments.

  Commercial Real Estate-Owner Occupied Commercial Real Estate-Non-Owner Occupied Commercial and Industrial Residential Real Estate Construction and Land Development Consumer Total Loans
  (in thousands)
Loans as of December 31, 2016            
Recorded Investment              
Impaired loans with an allowance recorded $3,125
 $—
 $7,766
 $—
 $—
 $18
 $10,909
Impaired loans with no allowance recorded 17,624
 25,524
 13,695
 16,391
 14,838
 228
 88,300
Total loans individually evaluated for impairment 20,749
 25,524
 21,461
 16,391
 14,838
 246
 99,209
Loans collectively evaluated for impairment 1,981,176
 3,383,585
 5,834,325
 242,409
 1,443,952
 38,717
 12,924,164
Loans acquired with deteriorated credit quality 11,351
 134,847
 —
 632
 19,324
 —
 166,154
Total recorded investment $2,013,276
 $3,543,956
 $5,855,786
 $259,432
 $1,478,114
 $38,963
 $13,189,527
Unpaid Principal Balance              
Impaired loans with an allowance recorded $3,125
 $—
 $8,019
 $—
 $—
 $18
 $11,162
Impaired loans with no allowance recorded 26,336
 33,632
 43,683
 26,225
 33,487
 1,358
 164,721
Total loans individually evaluated for impairment 29,461
 33,632
 51,702
 26,225
 33,487
 1,376
 175,883
Loans collectively evaluated for impairment 1,981,176
 3,383,585
 5,834,325
 242,409
 1,443,952
 38,717
 12,924,164
Loans acquired with deteriorated credit quality 14,878
 165,275
 925
 738
 19,858
 —
 201,674
Total unpaid principal balance $2,025,515
 $3,582,492
 $5,886,952
 $269,372
 $1,497,297
 $40,093
 $13,301,721
Related Allowance for Credit Losses            
Impaired loans with an allowance recorded $937
 $—
 $3,301
 $—
 $—
 $1
 $4,239
Impaired loans with no allowance recorded —
 —
 —
 —
 —
 —
 —
Total loans individually evaluated for impairment 937
 —
 3,301
 —
 —
 1
 4,239
Loans collectively evaluated for impairment 11,403
 12,646
 69,673
 3,851
 20,398
 671
 118,642
Loans acquired with deteriorated credit quality —
 687
 359
 —
 777
 —
 1,823
Total allowance for credit losses $12,340
 $13,333
 $73,333
 $3,851
 $21,175
 $672
 $124,704

In the normal course of business, the Company also modifies EBO loans, which are delinquent FHA, VA, or USDA insured or guaranteed loans repurchased under the terms of the GNMA MBS program and can be repooled or resold when loans are brought current. During the year ended December 31, 2023, the Company completed modifications of EBO loans with an amortized cost of $225 million. These modifications were largely payment delays and term extensions, or both.
Troubled Debt Restructurings
A TDR loan isPrior to the adoption of ASU 2022-02, the Company accounted for a modification to the contractual terms of a loan on which the Company, for reasons related to a borrower’s financial difficulties, grantsthat resulted in granting a concession to thea borrower that the Company would not otherwise consider.experiencing financial difficulties as a TDR. The loan terms that have beenwere modified or restructured due to a borrower’s financial situation include,included, but arewere not limited to, a 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 amount of the debt, a reduction in the accrued interest, or deferral of interest payments. The majority of the Company's modifications arewere extensions in terms or deferral of payments which resultresulted in no lost principal or interest followed by reductions in interest rates or accrued interest. A TDR loan is also considered impaired. Consistent with regulatory guidance,
114
a TDR loan that iswas subsequently modified in another restructuring agreement but hashad shown sustained performance and classification as a TDR, will bewas removed from TDR status provided that the modified terms were market-based at the time of modification.
The following table presents information on the financial effects of TDR loans by class for the periods presented:loan portfolio segment:
  Year Ended December 31, 2017
  Number of Loans Pre-Modification Outstanding Recorded Investment Forgiven Principal Balance Lost Interest Income Post-Modification Outstanding Recorded Investment Waived Fees and Other Expenses
  (dollars in thousands)
Commercial and industrial 11
 $3,513
 $—
 $—
 $3,513
 $—
Commercial real estate 

 

 

 

 

 

Owner occupied —
 —
 —
 —
 —
 —
Non-owner occupied 3
 2,993
 —
 —
 2,993
 —
Multi-family —
 —
 —
 —
 —
 —
Construction and land development            
Construction —
 —
 —
 —
 —
 —
Land —
 —
 —
 —
 —
 —
Residential real estate 1
 122
 —
 —
 122
 —
Consumer —
 —
 —
 —
 —
 —
Total 15
 $6,628
 $—
 $—
 $6,628
 $—
  Year Ended December 31, 2016
  Number of Loans Pre-Modification Outstanding Recorded Investment Forgiven Principal Balance Lost Interest Income Post-Modification Outstanding Recorded Investment Waived Fees and Other Expenses
  (dollars in thousands)
Commercial and industrial 2
 $2,405
 $—
 $—
 $2,405
 $—
Commercial real estate            
Owner occupied —
 —
 —
 —
 —
 —
Non-owner occupied —
 —
 —
 —
 —
 —
Multi-family —
 —
 —
 —
 —
 —
Construction and land development            
Construction —
 —
 —
 —
 —
 —
Land —
 —
 —
 —
 —
 —
Residential real estate —
 —
 —
 —
 —
 —
Consumer —
 —
 —
 —
 —
 —
Total 2
 $2,405
 $—
 $—
 $2,405
 $—

  Year Ended December 31, 2015
  Number of Loans Pre-Modification Outstanding Recorded Investment Forgiven Principal Balance Lost Interest Income Post-Modification Outstanding Recorded Investment Waived Fees and Other Expenses
  (dollars in thousands)
Commercial and industrial 1
 $256
 $—
 $—
 $256
 $—
Commercial real estate            
Owner occupied —
 —
 —
 —
 —
 —
Non-owner occupied 1
 193
 —
 —
 193
 —
Multi-family —
 —
 —
 —
 —
 —
Construction and land development            
Construction —
 —
 —
 —
 —
 —
Land —
 —
 —
 —
 —
 —
Residential real estate 1
 81
 —
 3
 78
 4
Consumer —
 —
 —
 —
 —
 —
Total 3
 $530
 $—
 $3
 $527
 $4
December 31, 2022
Number of LoansRecorded Investment
(dollars in millions)
Other commercial and industrial4 $2 
CRE - owner occupied1 1 
Hotel franchise finance1 10 
Other CRE - non-owner occupied1 1 
Total7 $14 
The following table presentsACL on TDR loans by class for whichtotaled $4 million as of December 31, 2022. There were no outstanding commitments on TDR loans as of December 31, 2022.
During the year ended December 31, 2022, the Company had three new TDR loans with a recorded investment of $11 million. No principal amounts were forgiven and there was a payment default during the period: 
  Year Ended December 31,
  2017 2016 2015
  Number of Loans Recorded Investment Number of Loans Recorded Investment Number of Loans Recorded Investment
  (dollars in thousands)
Commercial and industrial 1
 $87
 —
 $—
 —
 $—
Commercial real estate            
Owner occupied 1
 135
 —
 —
 —
 —
Non-owner occupied 1
 308
 1
 5,381
 —
 —
Multi-family —
 —
 —
 —
 —
 —
Construction and land development            
Construction 2
 1,119
 —
 —
 1
 137
Land —
 —
 —
 —
 —
 —
Residential real estate 1
 48
 2
 408
 3
 1,047
Consumer —
 —
 —
 —
 —
 —
Total 6
 $1,697
 3
 $5,789
 4
 $1,184
were no waived fees or other expenses that resulted from these TDR loans.
A TDR loan iswas deemed to have a payment default when it becomesbecame past due 90 days goesunder the modified terms, went on non-accrual,nonaccrual status, or iswas restructured again. Payment defaults, along with other qualitative indicators, arewere considered by management in the determination of the allowance for credit losses.
At December 31, 2017 and 2016, there were no loan commitments outstanding on TDR loans.
Loan Purchases and Sales
In the normal course of business, one of the Company’s Other NBLs routinely purchases and sells commercial and industrial loans.ACL. During the year ended December 31, 2017, purchases2022, there were no loans for which there was a payment default within 12 months following the modification.
Collateral-Dependent Loans
The following table presents the amortized cost basis of collateral-dependent loans by loan portfolio segment:
December 31,
2023December 31, 2022
Real Estate CollateralOther CollateralTotalReal Estate CollateralOther CollateralTotal
(in millions)
Municipal & nonprofit$— $6 $6 $— $7 $7 
Tech & innovation— — — — 6 6 
Other commercial and industrial— 29 29 — 30 30 
CRE - owner occupied43 — 43 42 — 42 
Hotel franchise finance104 — 104 186 — 186 
Other CRE - non-owner occupied136 — 136 27 — 27 
Construction and land development71 — 71 4 — 4 
Total$354 $35 $389 $259 $43 $302 
The Company did not identify any significant changes in the extent to which collateral secures its collateral dependent loans, whether in the form of general deterioration or from other factors during the year ended December 31, 2023.
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Allowance for Credit Losses
The ACL consists of the ACL on funded loans HFI and salesan ACL on unfunded loan commitments. The ACL on HTM securities is estimated separately from loans, see "Note 2. Investment Securities" of these Notes to Consolidated Financial Statements for further discussion. Management considers the level of ACL to be a reasonable and supportable estimate of expected credit losses inherent within the Company's HFI loan portfolio as of December 31, 2023.
The below tables reflect the activity in the ACL on loans HFI by loan portfolio segment, which includes an estimate of future recoveries:
Year Ended December 31, 2023
Balance,
December 31, 2022		Provision for (Recovery of) Credit LossesCharge-offsRecoveriesBalance,
December 31, 2023
(in millions)
Warehouse lending$8.4 $(2.6)$— $— $5.8 
Municipal & nonprofit15.9 (1.2)— — 14.7 
Tech & innovation30.8 18.2 6.9 — 42.1 
Equity fund resources6.4 (5.1)— — 1.3 
Other commercial and industrial85.9 13.2 22.7 (5.0)81.4 
CRE - owner occupied7.1 (1.1)— — 6.0 
Hotel franchise finance46.9 (13.5)— — 33.4 
Other CRE - non-owner occupied47.4 53.8 5.2 — 96.0 
Residential30.4 (7.4)— (0.1)23.1 
Residential - EBO— — — — — 
Construction and land development27.4 3.0 — — 30.4 
Other3.1 (0.4)0.4 (0.2)2.5 
Total$309.7 $56.9 $35.2 $(5.3)$336.7 
Year Ended December 31, 2022
Balance,
December 31, 2021		Provision for (Recovery of) Credit LossesCharge-offsRecoveriesBalance,
December 31, 2022
(in millions)
Warehouse lending$3.0 $5.4 $— $— $8.4 
Municipal & nonprofit13.7 2.2 — — 15.9 
Tech & innovation25.7 3.0 — (2.1)30.8 
Equity fund resources9.6 (3.2)— — 6.4 
Other commercial and industrial103.6 (14.4)8.5 (5.2)85.9 
CRE - owner occupied10.6 (3.6)— (0.1)7.1 
Hotel franchise finance41.5 5.4 — — 46.9 
Other CRE - non-owner occupied16.9 30.4 — (0.1)47.4 
Residential12.5 17.8 — (0.1)30.4 
Residential - EBO— — — — — 
Construction and land development12.5 15.3 0.5 (0.1)27.4 
Other2.9 0.4 0.3 (0.1)3.1 
Total$252.5 $58.7 $9.3 $(7.8)$309.7 
Accrued interest receivable of $281 million and $304 million at December 31, 2023 and 2022, respectively, was excluded from the estimate of credit losses. Whereas, accrued interest receivable related to this business line totaled $694.7the Company's Residential-EBO loan portfolio segment was included in the estimate of credit losses and had an allowance of $4 million and $154.3$9 million as of December 31, 2023 and 2022, respectively. The increase in this business line,Accrued interest receivable, net of dispositionsany allowance, is included in Other assets on the Consolidated Balance Sheet.

116
In addition to the ACL on funded loans HFI, the Company maintains a separate ACL related to off-balance sheet credit exposures, including unfunded loan commitments. This allowance is included in Other liabilities on the Consolidated Balance Sheets.
The below table reflects the activity in the ACL on unfunded loan commitments:
Year Ended December 31,
20232022
(in millions)
Balance, beginning of period$47.0 $37.6 
(Recovery of) provision for credit losses(15.4)9.4 
Balance, end of period$31.6 $47.0 
The following tables disaggregate the Company's ACL on funded loans HFI and payoffs, was $239.5 million for 2017,loan balances by measurement methodology:
December 31, 2023
LoansAllowance
Collectively Evaluated for Credit LossIndividually Evaluated for Credit LossTotalCollectively Evaluated for Credit LossIndividually Evaluated for Credit LossTotal
(in millions)
Warehouse lending$6,618 $— $6,618 $5.8 $— $5.8 
Municipal & nonprofit1,548 6 1,554 13.7 1.0 14.7 
Tech & innovation2,729 79 2,808 38.3 3.8 42.1 
Equity fund resources845 — 845 1.3 — 1.3 
Other commercial and industrial7,362 90 7,452 64.6 16.8 81.4 
CRE - owner occupied1,613 45 1,658 6.0 — 6.0 
Hotel franchise finance3,708 147 3,855 33.4 — 33.4 
Other CRE - non-owner occupied5,838 136 5,974 96.0 — 96.0 
Residential13,287 — 13,287 23.1 — 23.1 
Residential EBO1,223 — 1,223 — — — 
Construction and land development4,791 71 4,862 30.4 — 30.4 
Other161 — 161 2.5 — 2.5 
Total$49,723 $574 $50,297 $315.1 $21.6 $336.7 
December 31, 2022
LoansAllowance
Collectively Evaluated for Credit LossIndividually Evaluated for Credit LossTotalCollectively Evaluated for Credit LossIndividually Evaluated for Credit LossTotal
(in millions)
Warehouse lending$5,561 $— $5,561 $8.4 $— $8.4 
Municipal & nonprofit1,517 7 1,524 13.4 2.5 15.9 
Tech & innovation2,280 13 2,293 30.3 0.5 30.8 
Equity fund resources3,717 — 3,717 6.4 — 6.4 
Other commercial and industrial7,754 39 7,793 80.4 5.5 85.9 
CRE - owner occupied1,612 44 1,656 7.1 — 7.1 
Hotel franchise finance3,607 200 3,807 44.7 2.2 46.9 
Other CRE - non-owner occupied5,428 29 5,457 47.4 — 47.4 
Residential13,996 — 13,996 30.4 — 30.4 
Residential EBO1,884 — 1,884 — — — 
Construction and land development3,991 4 3,995 27.4 — 27.4 
Other179 — 179 3.1 — 3.1 
Total$51,526 $336 $51,862 $299.0 $10.7 $309.7 
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Loan Purchases and Sales
Loan purchases during the year ended December 31, 2023 totaled $1.6 billion, which primarily consisted of commercial and industrial and residential loans, compared to $114.1 million for 2016.
Total secondary market$8.8 billion during the year ended December 31, 2022, which primarily consisted of residential loan purchasespurchases. There were no loans purchased with more-than-insignificant deterioration in credit quality during the years ended December 31, 20172023 and 2016, inclusive of the purchases from the Company's Other NBL noted above, totaled $908.1 million and $340.6 million, respectively. For 2017, total purchased loans also included of $1.9 million of commercial and industrial loans and $211.5 million of residential real estate loans. For 2016, these purchased loans consisted of $340.0 million of commercial and industrial loans and $0.6 million of commercial real estate loans.2022.
During the year ended December 31, 2017,2023, the Company soldtransferred $6.7 billion of loans inclusiveHFI (primarily commercial and industrial loans) to HFS as part of the salesits balance sheet repositioning strategy. The loans were transferred to HFS net of a fair value loss adjustment of $122.5 million. The Company completed loan dispositions from the Company's Other NBL noted above, withthis HFS loan pool totaling $4.3 billion through December 31, 2023 and transferred all remaining loans in this pool back to HFI as a carrying valueresult of $170.9 million and recognized a gain of $0.9 million on the sales.change in management intent. During the year ended

December 31, 2016,2022, the Company sold loans, which consisted primarily of CRE and SBA loans with a carrying value of $39.3$780 million and recognized a gainnet loss of $2.5$8.4 million on thethese loan sales.
4.5. MORTGAGE SERVICING RIGHTS
The following table presents the changes in fair value of the Company's MSR portfolio related to its mortgage banking business and other information related to its servicing portfolio:
Year Ended December 31,
20232022
(in millions)
Balance, beginning of period$1,148 $698 
Additions from loans sold with servicing rights retained865 720 
Carrying value of MSRs sold(800)(350)
Change in fair value11 192 
Mark to market adjustments4 — 
Realization of cash flows(104)(112)
Balance, end of period$1,124 $1,148 
Unpaid principal balance of mortgage loans serviced for others$68,647 $70,849 
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 capital ratios, the Company sells certain MSRs and related servicing advances in the normal course of business. The Company may also sell excess servicing spread related to certain mortgage loans serviced by the Company. During the year ended December 31, 2023, MSR sales had an aggregate net sales price of $800 million and the UPB of loans underlying these sales totaled $60.1 billion. During the year ended December 31, 2022, the Company completed sales of MSRs and related servicing advances with an aggregate net sales price of $350 million and UPB of loans underlying these sales of $24.1 billion. As of December 31, 2023 and 2022, the Company had a remaining receivable balance of $41 million and $39 million, respectively, related to holdbacks on MSR sales for servicing transfers, which are recorded in Other assets on the Consolidated Balance Sheet.
The Company receives loan servicing fees, net of subservicing costs, based on the UPB of the underlying loans. Loan servicing fees are collected from payments made by borrowers. The Company may receive other remuneration from rights to various borrower contracted fees, such as late charges, collateral reconveyance charges, and non-sufficient funds fees. Contractually specified servicing fees, late fees, and ancillary income associated with the Company's MSR portfolio totaled $233.7 million and $194.5 million for the year ended December 31, 2023 and 2022, respectively, which are recorded as Net loan servicing revenue in the Consolidated Income Statement.
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 insufficient 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 from borrowers of reinstated and performing loans, from the proceeds of liquidated properties or from the government agency or GSE guarantor of charged-off loans. Servicing advances are charged-off when they are deemed to be uncollectible. As of December 31, 2023 and 2022, net servicing advances totaled $87 million and $102 million, respectively, which are recorded as Other assets on the Consolidated Balance Sheet.

118
The following table presents the effect of hypothetical changes in the fair value of MSRs caused by assumed immediate changes in interest rates, discount rates, and prepayment speeds that are used to determine fair value:
December 31, 2023
(in millions)
Fair value of mortgage servicing rights$1,124
Increase (decrease) in fair value resulting from:
Interest rate change of 50 basis points
Adverse change(67)
Favorable change62
Discount rate change of 50 basis points
Increase(21)
Decrease22
Conditional prepayment rate change of 1%
Increase(32)
Decrease35
Cost to service change of 10%
Increase(14)
Decrease14
Sensitivities are hypothetical changes in fair value and cannot be extrapolated because the relationship of changes in assumptions to changes in fair value may not be linear. In addition, the offsetting effect of hedging activities are not contemplated in these results and further, the effect of a variation in a particular assumption is calculated without changing any other assumptions, whereas a change in one factor may result in changes to another. Accordingly, no assurance can be given that actual results would be consistent with the results of these estimates. As a result, actual future changes in MSR values may differ significantly from those reported.
6. PREMISES AND EQUIPMENT
 The following is a summary of the major categories of premises and equipment:
 December 31,
 20232022
 (in millions)
Bank premises$96 $95 
Construction in progress82 60 
Furniture, fixtures, and equipment108 97 
Land and improvements32 32 
Leasehold improvements85 66 
Software142 83 
Total545 433 
Accumulated depreciation and amortization(206)(157)
Premises and equipment, net$339 $276 
Depreciation and amortization expense totaled $49.5 million, $31.8 million, and $20.7 million for the years ended December 31, 2023, 2022, and 2021, respectively.
119
  December 31,
  2017 2016
  (in thousands)
Bank premises $89,411
 $83,285
Land and improvements 32,953
 33,309
Furniture, fixtures, and equipment 37,098
 45,676
Leasehold improvements 23,707
 22,709
Construction in progress 1,415
 4,840
Total 184,584
 189,819
Accumulated depreciation and amortization (65,865) (69,986)
Premises and equipment, net $118,719
 $119,833
Lease Obligations7. LEASES
The Company leases certain premises and equipment under non-cancelablehas operating leases expiring through 2027. under which it leases its branch offices, corporate headquarters, and other offices. As of December 31, 2023, and 2022, the Company's operating lease ROU asset totaled $145 million and $163 million, respectively, and operating lease liability totaled $179 million and $185 million, respectively. A weighted average discount rate of 2.96%, 2.81%, and 2.14% was used in the measurement of the ROU asset and lease liability as of December 31, 2023, 2022, and 2021 respectively.
The Company's leases have remaining lease terms of one to 10 years, with a weighted average lease term of 6.6 years, 7.4 years, and 7.5 years at December 31, 2023, 2022, 2021, 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. The Company has no leases for which the option to renew is reasonably certain and therefore, options to renew were not factored into the calculation of its ROU asset and lease liability as of December 31, 2023.
The following is a schedule of future minimum rental payments under these leases atthe Company's operating lease liabilities by contractual maturity as of December 31, 2017: 2023:
  (in thousands)
2018 $10,962
2019 9,658
2020 7,894
2021 4,589
2022 3,313
Thereafter 4,059
Total future minimum rental payments $40,475
(in millions)
2024$31 
202533 
202629 
202726 
202825 
Thereafter55 
Total lease payments$199 
Less: imputed interest20 
Total present value of lease liabilities$179 
The Company has no additional operating leases certain office locations and manythat will commence within the next 12 months.
Total operating lease costs of these leases contain multiple renewal options and provisions for increased rents. Total rent expense of $10.4 million, $11.0$28.8 million and $8.1other lease costs of $4.9 million, iswhich include common area maintenance, parking, and taxes during the year ended December 31, 2023, were included as part of Occupancy expense in occupancy expensethe Consolidated Income Statement. For the year ended December 31, 2022, operating lease costs and other lease costs totaled $25.4 million and $4.0 million, respectively, and for the year ended December 31, 2021, totaled $18.8 million and $3.8 million, respectively. Short-term lease costs were not material for the years ended December 31, 2017, 2016,2023, 2022, and 2015, respectively. Total depreciation expense of $9.9 million, $9.2 million, and $7.7 million is included in occupancy expense for the years ended December 31, 2017, 2016, and 2015, respectively.

5. OTHER ASSETS ACQUIRED THROUGH FORECLOSURE2021.
The followingbelow table representsshows the changes in other assets acquired through foreclosure: supplemental cash flow information related to the Company's operating leases:
Year Ended December 31,
202320222021
(in millions)
Cash paid for amounts included in the measurement of operating lease liabilities$19.3 $15.1 $16.3 
Right-of-use assets obtained in exchange for new operating lease liabilities6.3 51.6 76.7 
  Year Ended December 31,
  2017
  Gross Balance Valuation Allowance Net Balance
  (in thousands)
Balance, beginning of period $54,138
 $(6,323) $47,815
Transfers to other assets acquired through foreclosure, net 1,812
 —
 1,812
Proceeds from sale of other real estate owned and repossessed assets, net (23,626) 2,431
 (21,195)
Valuation adjustments, net —
 (120) (120)
(Losses) gains, net (1) 228
 —
 228
Balance, end of period $32,552
 $(4,012) $28,540
       
  2016
Balance, beginning of period $52,984
 $(9,042) $43,942
Transfers to other assets acquired through foreclosure, net 13,110
 —
 13,110
Proceeds from sale of other real estate owned and repossessed assets, net (11,584) 2,451
 (9,133)
Valuation adjustments, net —
 268
 268
Gains (losses), net (1) (372) —
 (372)
Balance, end of period $54,138
 $(6,323) $47,815
       
  2015
Balance, beginning of period $71,421
 $(14,271) $57,150
Transfers to other assets acquired through foreclosure, net 28,566
 —
 28,566
Additions from acquisition 1,407
 —
 1,407
Proceeds from sale of other real estate owned and repossessed assets, net (51,038) 5,411
 (45,627)
Valuation adjustments, net —
 (182) (182)
Gains (losses), net (1) 2,628
 —
 2,628
Balance, end of period $52,984
 $(9,042) $43,942
(1)
Includes net gains related to initial transfers to other assets of $0.1 million, $0.4 million, and $0.9 million during the years ended December 31, 2017, 2016, and 2015, respectively.
At December 31, 2017, 2016, and 2015, the majority of the Company’s repossessed assets consisted of properties located in Nevada and California. The Company held 19 properties at December 31, 2017, compared to 31 at December 31, 2016.

6.8. GOODWILL AND OTHER INTANGIBLE 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 andthat are determined to have an indefinite useful life are not subject to amortization, but are subsequently evaluated for impairment at least annually. The Company's goodwill totals $289.9 million as of December 31, 2017, of which $23.2 million relates to the Nevada operating segment, $149.7 million relates to the Northern California segment, $116.9 million relates to the Technology & Innovation segment, and $0.1 million relates to the HFF segment.
The Company performs 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.
During the yearsyear ended December 31, 2017, 2016,2023, the Company performed an interim Step 0 goodwill impairment assessment as of each interim quarter end date, based on the industry disruption from the bank failures in 2023. The Step 0 assessment included assessing the financial performance of the Company and 2015, there were noanalyzing qualitative factors applicable to the Company. As of each interim assessment date, management concluded that the long-term financial performance of the Company was not significantly altered as a result of these events or circumstancescircumstances. Accordingly, it was determined that indicatedit was more likely than not the fair value of the Company and its reporting units exceeded their respective carrying values as of each interim assessment date.
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The Company elected to perform a Step 1 goodwill impairment assessment as of October 1, 2023, which involved the determination of the fair value of the Company’s reporting units by employing both an interimincome and a market approach. The income approach utilized the reporting units’ forecasted cash flows (including a terminal value approach to estimate cash flows beyond the final year of the forecast) and the reporting units’ estimated cost of equity as the discount rate to estimate value. Forecasted cash flows included estimates of earnings projections, growth, and credit loss expectations. The market approach relied upon valuation multiples derived from stock prices and enterprise values of publicly traded companies and also incorporated a control premium to develop an estimate of value. Based on the results of the Company's goodwill impairment testassessment as of goodwill or otherOctober 1, 2023, the Company determined the fair value of its reporting units exceeded their respective carrying values. In addition, the Company's annual intangibles impairment assessment also indicated intangible assets was necessarywere not impaired. Therefore, no impairment charges related to the Company's goodwill and basedintangible assets were recorded during the year ended December 31, 2023. Based on the Company's annual goodwill and intangibles impairment tests as of October 1 of each of theseduring the years ended December 31, 2022, and 2021, it was determined that goodwill and intangible assets arewere not impaired.
The fair valueBelow is a summary of assets acquiredthe Company's goodwill by reporting unit:
December 31,
20232022
(in millions)
Commercial banking (1)$290 $290 
Mortgage banking (2)200 200 
Legal banking (3)37 37 
Total$527 $527 
(1)    This reporting unit offers a standard suite of commercial banking products and liabilities assumed are subjectservices through its traditional branch network, working together with the Company's national platform to adjustment duringprovide specialized financial services, and is included within the first twelve months afterCompany's Commercial reportable segment.
(2)    This reporting unit offers mortgage lending products and services and is included within the acquisition date if additional information becomes availableCompany's Consumer Related reportable segment.
(3)    This reporting unit provides specialized banking services to indicate a more accurate or appropriate value for an asset or liability. The Company recognized initial goodwill of $0.2 million related tolaw firms and claims administrators, including settlement payment solutions, and is included within the HFF loan portfolio purchase, which closed on April 20, 2016. During the year ended December 31, 2017, the Company recognized measurement period adjustments related to the HFF acquisition that totaled $0.1 million for tax related items. The measurement period for the HFF acquisition ended on April 20, 2017, and therefore, the fair values of these assets acquired and liabilities assumed were considered final effective as of that date.Company's Consumer Related reportable segment.
The following is a summary of the Company's acquired intangible assets:
  December 31, 2017 December 31, 2016
  Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
  (in thousands)
Subject to amortization            
Core deposit intangibles $14,647
 $4,144
 $10,503
 $40,804
 $28,227
 $12,577
             
  December 31, 2017 December 31, 2016
  Gross Carrying Amount Impairment Net Carrying Amount Gross Carrying Amount Impairment Net Carrying Amount
  (in thousands)
Not subject to amortization            
Trade name $350
 $—
 $350
 $350
 $—
 $350
December 31, 2023December 31, 2022
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
(in millions)
Subject to amortization
Core deposits$14 $12 $2 $14 $11 $3 
Correspondent customer relationships76 10 66 76 7 69 
Customer relationships18 6 12 18 3 15 
Developed technology4 2 2 4 1 3 
Operating licenses56 4 52 56 2 54 
Trade names10 2 8 10 1 9 
Total intangible assets subject to amortization$178 $36 $142 $178 $25 $153 
As of December 31, 2017,2023, the Company's core deposit intangible assets had a weighted average estimated useful life of 7.5 years. The Company's core deposit intangibles assets related to FIB and BON were being amortized on a straight-line basis and were fully amortized as of December 31, 2017. The core deposit intangible assets acquired in the acquisition of Bridge are being amortized using an accelerated amortization method over a period of 1023.7 years. Amortization expense recognized on all amortizable intangibles totaled $2.1$10.5 million, $2.8$10.4 million, and $2.0$6.1 million for the years ended December 31, 2017, 2016,2023, 2022, and 2015,2021, respectively.
Below is a summary of future estimated aggregate amortization expense:expense as of December 31, 2023:

 (in millions)
2024$10 
202510 
20269 
20278 
20288 
Thereafter97 
Total$142 
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  Year Ended December 31,
  (in thousands)
2018 $1,594
2019 1,547
2020 1,494
2021 1,433
2022 1,364
Thereafter 3,071
Total $10,503
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7.9. DEPOSITS
The table below summarizes deposits by type: 
 December 31,
 20232022
 (in millions)
Non-interest-bearing demand deposits$14,520 $19,691 
Interest-bearing transaction accounts15,916 9,507 
Savings and money market accounts14,791 19,397 
Time certificates of deposit ($250,000 or more) (1)1,478 1,101 
Other time deposits8,628 3,948 
Total deposits$55,333 $53,644 
  December 31,
  2017 2016
  (in thousands)
Non-interest-bearing demand deposits $7,433,962
 $5,632,926
Interest-bearing transaction accounts 1,586,209
 1,346,718
Savings and money market accounts 6,330,977
 6,120,877
Time certificates of deposit ($250,000 or more) 713,654
 609,678
Other time deposits 907,730
 839,664
Total deposits $16,972,532
 $14,549,863
(1)    Retail brokered time deposits over $250,000 of $5.8 billion and $2.7 billion as of December 31, 2023 and 2022, respectively, are included within Other time deposits as these deposits are generally participated out by brokers in shares below the FDIC insurance limit.
The summary of the contractual maturities for all time deposits as of December 31, 20172023 is as follows: 
(in millions)
2024$9,092 
20251,007 
20266 
20271 
Total$10,106 
  December 31,
  (in thousands)
2018 $1,457,335
2019 144,303
2020 12,636
2021 5,249
2022 1,655
Thereafter 206
Total $1,621,384
Brokered deposits provide an additional source of deposits and are placed with the Bank through third-party brokers. At December 31, 2023 and 2022, the Company held wholesale brokered deposits of $6.6 billion and $4.8 billion, respectively, excluding reciprocal deposits. In addition, WAB is a participant in the Promontory InterfinancialIntraFi Network, a network that offers deposit placement services such as CDARS and ICS, and other reciprocal deposit networks which offer products that qualify large deposits for FDIC insurance. Federal banking law and regulation places restrictions on depository 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 for institutions that gather brokered deposits in significant amounts. At December 31, 2017 and 2016,2023, the Company had $401.4 million and $413.9 million, respectively,$13.3 billion of reciprocal CDARS deposits, and $617.9 million and $607.5 million, respectively, of ICS deposits. Atcompared to $2.8 billion at December 31, 20172022. These reciprocal deposit structures offer protection to depositors by fulling insuring deposits with other network banks and 2016,also provides the Company had $67.3 millionwith funding stability and $136.2 million, respectively, of wholesale brokered deposits. drove the increase in the Company's insured deposit ratio from December 31, 2022.
In addition, non-interest bearing deposits for which the Company provides account holders with earnings credits totaled $1.85or referral fees totaled $17.8 billion and $1.10and $12.9 billion at December 31, 20172023 and 2016,2022, respectively. The Company incurred $8.7$422.5 million, $162.8 million, and $4.0$27.4 million in deposit related costs on these deposits during the yearyears ended December 31, 20172023, 2022, and 2016,2021, respectively. These costs are reported as Deposit costs in non-interest expense in the Consolidated Income Statement. The increase in these costs from the prior years is due to an increase in average earnings credit rates as well as an increase in average deposit balances eligible for earnings credits or referral fees.

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8.
10. OTHER BORROWINGS
The following table summarizes the Company’s borrowings by type: 
December 31,
20232022
(in millions)
Short-Term:
Federal funds purchased$175 $640 
FHLB advances6,200 4,300 
Warehouse borrowings376 — 
Repurchase agreements6 27 
Secured borrowings27 25 
Total short-term borrowings$6,784 $4,992 
Long-Term:
AmeriHome senior notes, net of fair value adjustment$— $315 
Credit linked notes, net446 992 
Total long-term borrowings$446 $1,307 
Total other borrowings$7,230 $6,299 
Short-Term Borrowings
Federal Funds Lines of Credit
The Company maintains overnight federal fund lines of credit totaling $1.1 billion as of December 31, 2017 and 2016: 
  December 31,
  2017 2016
  (in thousands)
Short-Term:    
FHLB advances $390,000
 $80,000
Total short-term borrowings $390,000
 $80,000
The Company maintains other lines of credit with correspondent banks totaling $167.5 million, of2023, which $22.5 million is secured by pledged securities and has a floating interest rate of one-month or three-month LIBOR plus 1.50%. The remaining $145.0 million is unsecured, of which $45.0 million has a floating interest rate of one-month LIBOR plus 3.25% and $100.0 million has a rate equivalenthave rates comparable to the federal funds effective rate. As of December 31, 2017rate plus 0.10% to 0.20%.
FHLB and 2016, there are no outstanding balances on the Company's lines of credit.FRB Advances
The Company also maintains secured overnight lines of credit with the FHLB and the FRB. The Company’s borrowing capacity is determined based on collateral pledged, generally consisting of investment securities and loans, at the time of the borrowing. At December 31, 2017, the Company has $390.0 million in short-term FHLB overnight advances, with a weighted average interest rate of 1.41%. At December 31, 2016, short-term FHLB advances of $80.0 million had a weighted average interest rate of 0.55%.
As of December 31, 20172023 and 2016,2022, the Company had additional available credit with the FHLB of approximately $1.91$6.1 billion and $2.15$6.8 billion, respectively,respectively. The weighted average rate on FHLB advances was 5.67% and 4.70% as of December 31, 2023 and 2022, respectively.
In March 2023, the FRB established the BTFP which offered loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral valued at par. The rate for BTFP advances was the one-year overnight index swap rate plus 10 basis points and is fixed for the term of the advance. The Company drew $1.3 billion from the BTFP during the first quarter of 2023, all of which was repaid as of December 31, 2023. Total available credit with the FRB of approximately $1.11totaled $16.7 billion and $997$5.2 billion as of December 31, 2023 and 2022, respectively.
Warehouse Borrowings
Warehouse borrowing lines of credit are used to finance the acquisition of loans through the use of repurchase agreements. Repurchase agreements operate as financings under which the Company transfers 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 transferred loans and will receive the loans from the lender upon full repayment of the borrowing. The repurchase agreements may require the Company to transfer additional assets to the lender in the event the estimated fair value of the existing transferred loans declines.
As of December 31, 2023, the Company had access to approximately $3.0 billion in uncommitted warehouse funding, of which $376 million was drawn at a weighted average borrowing rate of 6.72%. There were no warehouse borrowings outstanding at December 31, 2022.
Repurchase Agreements
Other repurchase facilities include CLO securities, EBO loan, and customer repurchase agreements. The total carrying value of repurchase agreements was $6 million and $27 million as of December 31, 2023 and 2022, respectively.
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9.Secured Borrowings
Secured borrowings consist of transfers of loans HFS not qualifying for sales accounting treatment. The weighted average interest rate on secured borrowings was 6.10% and 6.39% as of December 31, 2023 and 2022, respectively.
Long-Term Borrowings
AmeriHome Senior 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 accrued interest at a rate of 6.50% per annum, paid semiannually. The carrying amount of the senior notes included a fair value adjustment (premium) of $19.3 million recognized as of the acquisition date that was being amortized over the term of the notes.
The senior notes contained provisions that allowed for early redemption of the notes at a premium to the outstanding principal amount. This early redemption premium was not imposed as part of the Company's payoff of these notes during the year ended December 31, 2023 and the Company recognized a gain on extinguishment of debt of $39.3 million related to the payoff.
Credit Linked Notes
The Company entered into credit linked note transactions that effectively transferred the risk of first losses on certain pools of the Company’s warehouse and equity fund resource loans to the purchasers of these notes. In the event of a failure to pay by the relevant obligor, insolvency of the relevant obligor, or restructuring of such loans that results in a loss on a loan included in any of the reference 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 reference loan in the event of obligor default. There have been no historical losses on the warehouse lines of credit and equity fund resource loans.
The Company also entered into credit linked note transactions that effectively transfer the risk of first 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 payable on these notes may be reduced 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 loan following a liquidation of the loan or certain other events, or (ii) a modification of the loan resulting in a reduction in payments. The aggregate losses, if any, for each payment date will be allocated to reduce the class principal amount and (for modifications) the current interest of the notes in reverse order of class priority. Losses on residential mortgages have not generally been significant.
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The Company's outstanding credit linked note issuances are detailed in the tables below:
December 31, 2023
DescriptionIssuance DateMaturity DateInterest RatePrincipalDebt Issuance Costs
(in millions)
Residential mortgage loans (1)December 12, 2022October 25, 2052SOFR + 7.80%$90 $2 
Residential mortgage loans (2)June 30, 2022April 25, 2052SOFR + 6.00%179 3 
Residential mortgage loans (4)December 29, 2021July 25, 2059SOFR + 4.67%191 3 
Total$460 $8 
December 31, 2022
DescriptionIssuance DateMaturity DateInterest RatePrincipalDebt Issuance Costs
(in millions)
Residential mortgage loans (1)December 12, 2022October 25, 2052SOFR + 7.80%$95 $2 
Residential mortgage loans (2)June 30, 2022April 25, 2052SOFR + 6.00%189 3 
Equity fund resource loans (3)June 23, 2022June 30, 2028SOFR + 6.75%300 4 
Residential mortgage loans (4)December 29, 2021July 25, 2059SOFR + 4.67%202 3 
Warehouse loans (5)June 28, 2021December 30, 2024LIBOR + 5.50%242 2 
Total$1,028 $14 
(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 $1.8 billion and $1.9 billion as of December 31, 2023 and 2022, respectively.
(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 reference pool balance of $3.6 billion and $3.8 billion as of December 31, 2023 and 2022, respectively.
(3)    These notes had a reference 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 from 3.15% to 8.50% (or, a weighted average spread of 4.67%) on a reference pool balance of $3.8 billion and $4.0 billion as of December 31, 2023 and 2022, respectively.
(5)    These notes had a reference pool balance of $689 million as of December 31, 2022.
During the year ended December 31, 2023, the Company recognized a gain on extinguishment of debt of $13.4 million related to the payoff of the credit linked notes on its warehouse and equity fund resource loans.

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11. QUALIFYING DEBT
Subordinated Debt
The Parent has $175.0 million ofCompany's subordinated debentures, which was recorded net of debt issuance costs of $5.5 million, and matures July 1, 2056. Beginning on or after July 1, 2021,issuances are detailed in the Company may redeem the debentures,tables below:
December 31, 2023
DescriptionIssuance DateMaturity DateInterest RatePrincipalDebt Issuance Costs
(in millions)
WAL fixed-to-variable-rate (1)June 2021June 15, 20313.00 %$600 $6 
WAB fixed-to-variable-rate (2)May 2020June 1, 20305.25 %225 1 
Total$825 $7 
December 31, 2022
DescriptionIssuance DateMaturity DateInterest RatePrincipalDebt Issuance Costs
(in millions)
WAL fixed-to-variable-rate (1)June 2021June 15, 20313.00 %$600 $7 
WAB fixed-to-variable-rate (2)May 2020June 1, 20305.25 %225 1 
Total$825 $8 
(1)    Notes are redeemable, in whole or in part, beginning on June 15, 2026 at their principal amount plus any accrued and unpaid interest. The debentures have a fixed interest rate of 6.25% per annum.
WAB has $150.0 million of subordinated debt, which was recorded net of debt issuance costs of $1.8 million, and matures July 15, 2025. The subordinated debt has a fixed interest rate of 5.00%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 after June 1, 2025 at its principal amount plus accrued and unpaid interest and has a fixed interest rate of 5.25% through June 30, 20201, 2025 and then converts to a variable rate of 3.20%per annum equal to three-month SOFR plus three-month LIBOR through maturity.
To hedge the interest rate risk on the Company's subordinated debt issuances, the Company entered into fair value interest rate hedges with receive fixed/pay variable swaps.512 basis points.
The carrying value of all subordinated debt issuances which includes the fair value of related hedges, totals $308.6totaled $818 million and $305.8$817 million at December 31, 20172023 and 2016,2022, respectively.

Junior Subordinated Debt
The Company has formed, or acquired through acquisition, eight statutory business trusts which exist for the exclusive purpose of issuing Cumulative Trust Preferred Securities.
The Company's junior subordinated debt has contractual balances and maturity dates as follows: 
    December 31,
Name of Trust Maturity 2017 2016
At fair value   (in thousands)
BankWest Nevada Capital Trust II 2033 $15,464
 $15,464
Intermountain First Statutory Trust I 2034 10,310
 10,310
First Independent Statutory Trust I 2035 7,217
 7,217
WAL Trust No. 1 2036 20,619
 20,619
WAL Statutory Trust No. 2 2037 5,155
 5,155
WAL Statutory Trust No. 3 2037 7,732
 7,732
Total contractual balance   66,497
 66,497
FVO on junior subordinated debt   (10,263) (16,087)
Junior subordinated debt, at fair value   $56,234
 $50,410
At amortized cost      
Bridge Capital Holdings Trust I 2035 $12,372
 $12,372
Bridge Capital Holdings Trust II 2036 5,155
 5,155
Total contractual balance   17,527
 17,527
Purchase accounting adjustment, net of accretion (1)   (5,465) (5,776)
Junior subordinated debt, at amortized cost   $12,062
 $11,751
       
Total junior subordinated debt   $68,296
 $62,161
(1)The purchase accounting adjustment is being accreted over the remaining life of the trusts, pursuant to accounting guidance.
With the exception of debt issued by Bridge Capital Trust I and Bridge Capital Trust II, junior subordinated debt is recorded at fair value at each reporting date due to the FVO election made by the Company under ASC 825. The Company did not make the FVO election for the junior subordinated debt acquired as part ofin the Bridge acquisition. Accordingly, the carrying value of these trusts does not reflect the current fair value of the debt and includes a fair market value adjustment established at acquisition that is being accreted over the remaining life of the trusts.
The carrying value of junior subordinated debt was $77 million and $76 million as of December 31, 2023 and 2022, respectively, with maturity dates ranging from 2033 through 2037. The weighted average interest rate of all junior subordinated debt as of December 31, 20172023 was 4.03%7.93%, which is equal to three-month LIBORTerm SOFR plus an adjustment of 0.26% and the contractual spread of 2.34%, compared to a weighted average interest rate of 3.34%7.11% at December 31, 2016.2022, which was based on three-month LIBOR.
In the event of certain changes or amendments to regulatory requirements or federal tax rules, the debt is redeemable in whole. The obligations under these instruments are fully and unconditionally guaranteed by the Company and rank subordinate and junior in right of payment to all other liabilities of the Company. Based on guidance issued by the FRB, the Company's securities continue to qualify as Tier 1 Capital.

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10.
12. STOCKHOLDERS' EQUITY
Stock-Based Compensation
Restricted Stock Awards
The Incentive Plan, as amended, gives the BOD the authority to grant up to 10.514.6 million in stock awards consisting of unrestricted stock, stock units, dividend equivalent rights, stock options (incentive and non-qualified), stock appreciation rights, restricted stock, and performance 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. In March 2017, the BOD adopted an amendment to the Incentive Plan limitingyear 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, 20172023 were 3.24.9 million.
Restricted stock awards granted to employees in 2017 and 2016 generally vest over a 3-year period. Stockperiod and stock grants made to non-employee WAL directors during 2017 became fully vested at June 30, 2017.generally vest over six months. The Company estimates the compensation cost for stock grants based upon the grant date fair value. Stock compensation costexpense is recognized on a straight-line basis over the requisite service period for the entire award. For the year ended December 31, 2017, the Company recognized $14.3 million in stock-based compensation expense related to these stock grants, compared to $10.7 million in 2016. Stock compensation expense related to restricted stock awards and stock options granted to employees areis included in Salaries and employee benefits in the Consolidated Income Statement. For restricted stock awards granted to WAL directors, the related stock compensation expense is included in Legal, professional, and directors' feesfees. For the year ended December 31, 2023, the Company recognized $32.7 million in stock-based compensation expense related to these stock grants, compared to $28.7 million and $22.9 million for the Consolidated Income Statement.years ended December 31, 2022 and 2021, respectively.
In addition, in 2015 to 2017, the Company previously granted shares of restricted stock to certain members of executive management that hadwith both performance and service conditions that affectaffected vesting. During the year ended December 31, 2017, the Company granted 144,906 sharesThe last of these performance-based restricted stock awards. The performance condition is based on achieving an EPS target for calendar year 2017. This EPS target has been met asgrants was made in 2017, however expense was still being recognized through June 30, 2021, the end of December 31, 2017 and therefore the restricted stock awards will vest over the remaining servicevesting period. The grant date fair value of these awards was $7.2 million. For the year ended December 31, 2017, the Company recognized $2.3$0.6 million in stock-based compensation expense related to these performance-based restricted stock grants compared to $1.1 million in 2016.2021.
A summary of the status of the Company’s unvested shares of restricted stock and changes during the years then ended is presented below: 
 December 31, December 31,
 2017 2016 20232022
 Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value SharesWeighted Average Grant Date Fair ValueSharesWeighted Average Grant Date Fair Value
 (in thousands, except per share amounts) (in millions, except per share amounts)
Balance, beginning of period 1,278
 $26.02
 1,492
 $20.46
Granted 531
 49.06
 478
 32.00
Vested (575) 23.14
 (571) 16.95
Forfeited (92) 34.51
 (121) 23.65
Balance, end of period 1,142
 $36.96
 1,278
 $26.02
The total weighted average grant date fair value of all stock awards including the performance-based restricted stock awards, granted during the years ended December 31, 2017, 2016,2023, 2022, and 20152021 was $26.1$45.5 million, $15.3$42.8 million, and $14.0$35.4 million, respectively. The total fair value of restricted stock that vested during the years ended December 31, 2017, 2016,2023, 2022, and 20152021 was $29.1$22.9 million, $18.3$35.8 million, and $14.6$34.2 million, respectively.
As of December 31, 2017,2023, there was $20.3$39.0 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 2.211.8 years.

Performance Stock Units
The Company grants performance stock units to members of its executive management committee performance stock units that do not vest unless the Company achieves a specified cumulative EPS target and a TSR performance measure over a three-year performance period. In 2017, there is also a TSR performance measure. The number of shares issued will vary based on the cumulative EPS target that is achieved and if applicable,relative TSR relative to an established peer group.performance factor achieved. The Company estimates the cost of performance stock units based upon the grant date fair value and expected vesting percentage over the three-year performance period. For the year ended December 31, 2017,2023, the Company recognized $6.5$1.6 million in stock-based compensation expense related to these performance stock units, compared to $5.7$11.1 million and $4.8$11.2 million in stock-based compensation expense for such units during the years ended December 31, 2022 and 2021, respectively. The decrease in 2016 and 2015, respectively.stock-based compensation for these units for the year ended December 31, 2023 related to revised performance expectations on the outstanding awards.
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The three-year performance period for the 20142021 grant ended on December 31, 2016,2023, and based on the Company's cumulative EPS and TSR performance measure for the performance period, these shares vested at 168% of the target award under the terms of the grant. As a result, 133,220 shares became fully vested and will be distributed to executive management in the first quarter of 2024.
The three-year performance period for the 2020 grant ended on December 31, 2022, and based on the Company's cumulative EPS and TSR performance measure for the performance period, these shares vested at 180% of the target award under the terms of the grant. As a result, 157,784 shares became fully vested and distributed to executive management in the first quarter of 2023.
The three-year performance period for the 2019 grant ended on December 31, 2021, and the Company's cumulative EPS and TSR performance measure for the performance period exceeded the level required for a maximum award under the terms of the grant. As a result, on February 28, 2017, executive management committee members were granted a total of 206,050 of fully vested common shares.
The three-year performance period for the 2015 grant ended on December 31, 2017, and the Company's cumulative EPS for the performance period exceeded the level required for a maximum award under the terms of the grant. As a result, 198,062203,646 shares will becomebecame fully vested and be paid outwere distributed to executive management committee members in the first quarter of 2018.2022.
AsPreferred Stock
The Company has 12,000,000 depositary shares outstanding, each representing a 1/400th ownership interest in a share of the Company’s 4.250% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Shares, Series A, par value $0.0001 per share, with a liquidation preference of $25 per depositary share (equivalent to $10,000 per share of Series A preferred stock). During each of the years ended December 31, 2023 and 2022, the Company declared and paid a quarterly cash dividend of $0.27 per depositary share, for a total dividend payment to preferred stockholders of $12.8 million. The Company paid a dividend of $3.5 million to preferred stockholders during the year ended December 31, 2021.
Common Stock Issuances
Pursuant to ATM Distribution Agreement
During the years ended December 31, 2022 and 2021, the Company sold 1.9 million and 3.1 million shares, respectively, under the ATM program for gross proceeds of $158.7 million (weighted-average selling price of $83.89 per share) and $333.4 million (weighted-average selling price of $106.41 per share), respectively. Related offering costs totaled $1.0 million and $2.3 million for the year ended December 31, 2022 and 2021, respectively, substantially all of which related to compensation costs paid to the distribution agents. There were no sales under the ATM program during the year ended December 31, 2023 and the remaining number of shares that can be sold under this agreement totaled 1,107,769 as of December 31, 2017, outstanding performance stock unit grants made in 2016 and 2017 are expected to pay out at the maximum award amount, or 197,337 and 169,778 common shares, in 2019 and 2020, respectively.2023.
Common Stock IssuanceRegistered Direct Offering
Under ATM Distribution Agreement
On June 4, 2014, theThe Company entered into a distribution agency agreement with Credit Suisse Securities (USA) LLC, under which the Company could sellsold 2.3 million shares of its common stock up to an aggregatein a registered direct offering price of $100.0 million in an offering registered with the SEC. The parties executed an Amended and Restated Distribution Agency Agreement on October 30, 2014. The Company agreed to pay Credit Suisse Securities (USA) LLC a mutually agreed rate, not to exceed 2% of the gross offering proceeds of the shares. The common stock would be sold at prevailing market prices at the time of the sale or at negotiated prices and, as a result, prices will vary.
As the Company completed $100.0 million in aggregate sales under the ATM offering, the Company's ATM offering expired and the Amended and Restated Distribution Agency Agreement was terminated as of June 30, 2016. Duringduring the year ended December 31, 2016, the Company2021. The shares were sold 1.6 million shares under the ATM offering at a weighted-average selling price of $36.63for $91.00 per share for grossaggregate net proceeds of $56.8 million. Total related offering costs were $1.0 million, of which $0.9 million relates to compensation costs paid to Credit Suisse Securities (USA) LLC. During the year ended December 31, 2015, the Company sold 760,376 shares under the ATM offering at a weighted-average selling price of $38.13 per share for gross proceeds of $29.0 million. Total related offering costs were $0.7 million, of which $0.5 million relates to compensation costs paid to Credit Suisse Securities (USA) LLC.
Preferred Stock
On September 27, 2011 the Company received $141.0 million from the issuance of 141,000 shares of non-cumulative perpetual preferred stock, Series B, par value of $0.0001 per share and a liquidation preference of $1,000 per share, to the U.S. Treasury Department under the SBLF. On December 31, 2014, the Company redeemed 70,500 of its 141,000 shares of non-cumulative perpetual preferred stock, Series B. The shares were redeemed at their liquidation value of $1,000 per share plus accrued dividends for a total redemption price of $70.7 million. On December 18, 2015, the Company redeemed its remaining 70,500 shares of non-cumulative perpetual preferred stock, Series B. The shares were redeemed at their liquidation value of $1,000 per share plus accrued dividends for a total redemption price of $70.7$209.2 million.
TreasuryCash Dividend on Common Shares
During the year ended December 31, 2017,2023, the Company declared and paid quarterly cash dividends of $0.36 per share for the first three quarters of the year and increased the quarterly cash dividend to $0.37 per share in the fourth quarter, for a total dividend payment to stockholders of $158.7 million. During the year ended December 31, 2022, the Company declared and paid a quarterly cash dividend of $0.35 per share for the first two quarters of the year and increased the quarterly cash dividend to $0.36 per share for the last two quarters of the year, for a total dividend payment to stockholders 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 for the first two quarters of the year and increased the quarterly cash dividend to $0.35 per share for the last two quarters of the year, for a total dividend payment to stockholders of $124.1 million.
Treasury Shares
Treasury share purchases represent shares surrendered to the Company equal in value to the statutory payroll tax withholding obligations arising from the vesting of employee restricted stock awards. During the year ended December 31, 2023, the Company purchased treasury shares of 269,835152,452 at a weighted average price of $51.16$72.27 per share, compared to 305,046200,745 shares at a weighted average price per share of $31.09$92.21 in 2016.

2022, and 180,607 shares at a weighted average price per share of $86.63 in 2021.
11.
128

13. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table summarizes the changes in accumulated other comprehensive income (loss) by component, net of tax, for the periods indicated:tax: 
Unrealized holding gains (losses) on AFS securitiesUnrealized holding losses on SERPUnrealized holding gains (losses) on junior subordinated debtImpairment loss on securitiesTotal
(in millions)
Balance, December 31, 2020$92.1 $(0.3)$(0.5)$— $92.3 
Other comprehensive loss before reclassifications(69.0)— (1.2)— (70.2)
Amounts reclassified from AOCI(6.4)— — — (6.4)
Net current-period other comprehensive (loss) income(75.4)— (1.2)— 76.6 
Balance, December 31, 2021$16.7 $(0.3)$(0.7)$— $15.7 
Other comprehensive (loss) income before reclassifications(674.9)— 3.7 — (671.2)
Amounts reclassified from AOCI(5.5)— — — (5.5)
Net current-period other comprehensive (loss) income(680.4)— 3.7 — (676.7)
Balance, December 31, 2022$(663.7)$(0.3)$3.0 $— $(661.0)
Other comprehensive income (loss) before reclassifications116.9 — (0.2)1.2 117.9 
Amounts reclassified from AOCI30.2 — — — 30.2 
Net current-period other comprehensive income (loss)147.1 — (0.2)1.2 148.1 
Balance, December 31, 2023$(516.6)$(0.3)$2.8 $1.2 $(512.9)
  Unrealized holding gains (losses) on AFS Unrealized holding gains on SERP Unrealized holding gains (losses) on junior subordinated debt Impairment loss on securities Total
  (in thousands)
Balance, December 31, 2014 $16,495
 $—
 $—
 $144
 $16,639
Balance January 1, 2015 (1) 16,495
 —
 16,309
 144
 32,948
Other comprehensive (loss) income before reclassifications (6,117) 90
 (4,276) —
 (10,303)
Amounts reclassified from accumulated other comprehensive income (385) —
 —
 —
 (385)
Net current-period other comprehensive (loss) income (6,502) 90
 (4,276) —
 (10,688)
Balance, December 31, 2015 $9,993
 $90
 $12,033
 $144
 $22,260
Other comprehensive (loss) income before reclassifications (24,254) 31
 (2,077) —
 (26,300)
Amounts reclassified from accumulated other comprehensive income (655) —
 —
 —
 (655)
Net current-period other comprehensive (loss) income (24,909) 31
 (2,077) —
 (26,955)
Balance, December 31, 2016 $(14,916) $121
 $9,956
 $144
 $(4,695)
Other comprehensive income (loss) before reclassifications 6,334
 264
 (3,604) —
 2,994
Amounts reclassified from accumulated other comprehensive income (1,444) —
 —
 —
 (1,444)
Net current-period other comprehensive income (loss) 4,890
 264
 (3,604) —
 1,550
Balance, December 31, 2017 $(10,026) $385
 $6,352
 $144
 $(3,145)
(1)As adjusted, due to the Company's election to early adopt an element of ASU 2016-01 issued by the FASB in January 2016. The cumulative effect of adoption of this guidance at January 1, 2015 resulted in a decrease to retained earnings of $16.3 million and a corresponding increase to accumulated other comprehensive income.
The following table presents reclassifications out of accumulated other comprehensive income:AOCI: 
Year Ended December 31,
Income Statement Classification202320222021
(in millions)
(Loss) gain on sales of AFS debt securities, net$(40.4)$7.4 $8.5 
Income tax benefit (expense)10.2 (1.9)(2.1)
Net of tax$(30.2)$5.5 $6.4 
129
  Year Ended December 31,
Income Statement Classification 2017 2016 2015
  (in thousands)
Gain on sales of investment securities, net $2,343
 $1,059
 $615
Income tax expense (899) (404) (230)
Net of tax $1,444
 $655
 $385
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12.14. DERIVATIVES AND HEDGING ACTIVITIES
The Company is a party to various derivative instruments. Derivative instruments are contracts between two or more parties that have a notional amount and an underlying variable, require a small or no initial investment, and allow for 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 variable 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 variable determines the number of units to be exchanged between the parties and influences the fair value of the derivative contract.
The primary typetypes of derivatives that the Company uses are interest rate swaps.contracts, forward purchase and sale commitments, and interest rate futures. Generally, these instruments are used to help manage the Company's exposure to interest rate risk related to IRLCs and its inventory of loans HFS and MSRs and also to meet client financing and hedging needs.
Derivatives are recorded at fair value inon the Consolidated Balance Sheets,Sheet, after taking into account the effects of bilateral collateral and master netting agreements. These agreements allow the Company to settle all derivative contracts held with the same counterparty on a net basis, and to offset net derivative positions with related cash collateral, where applicable.
As of December 31, 2017, 2016,2023, 2022, and 2015,2021, the Company doesdid not have significantany outstanding cash flow hedges or free-standing derivatives.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, which reduces asset sensitivity and volatility of net interest income and EVE to interest rate fluctuations.fluctuations, such that interest rate risk falls within Board approved limits. The primary derivative instruments used to manage interest rate risk are interest rate swaps, which convert the contractual interest rate index of agreed-upon amounts of assets and liabilities (i.e., notional amounts) from either a fixed rate to another interesta variable rate, index.or from a variable rate to a fixed rate.
The Company has entered into pay fixed/receive variable interest rate swaps designated as fair value hedges of certain fixed rate loans. As a result, the Company receives variable-rate interest payments in exchange for making fixed-rate payments over the lives of the contracts without exchanging the notional amounts. The variable-rate interest payments were based on LIBOR and were converted to SOFR plus a spread adjustment upon the discontinuation of LIBOR in June 2023.
The Company also has also entered into pay fixed/receive fixed/pay variable interest rate swaps, designated as fair value hedges on itsusing the portfolio layer method to manage the exposure to changes in fair value associated with pools of fixed rate subordinated debt offerings. As a result,loans, resulting from changes in the designated benchmark interest rate (federal funds rate). These portfolio layer hedges provide the Company is payingthe ability to execute a floating rate of three month LIBOR plus 3.16% and is receiving semi-annual fixed payments of 5.00% to match the payments on the $150.0 million subordinated debt. For the fair value hedge of the interest rate risk associated with a portfolio of similar prepayable assets whereby the last dollar amount estimated to remain in the portfolio of assets was identified as the hedged item. Under these interest rate swap contracts, the Company received a variable rate and paid a fixed rate on the Company's $175.0 million subordinated debentures issuedoutstanding notional amount.
The Company also had pay fixed/receive variable interest rate swaps, designated as fair value hedges using the last-of-layer method. Upon termination of these last-of-layer hedges in 2022, the cumulative basis adjustment on June 16, 2016,these hedges was allocated across the Company is paying a floating rate of three month LIBOR plus 3.25%remaining loan pool and is receiving quarterly fixed payments of 6.25% to matchbeing amortized over the paymentsremaining term. At December 31, 2023, the remaining cumulative basis adjustment on the debt.terminated last-of-layer hedges totaled $9 million.
Derivatives Not Designated in Hedge Relationships
Management also enters into certain foreign exchange derivative contracts, back-to-back interest rate contracts, and risk participation agreements which are not designated as accounting hedges. TheseForeign exchange derivative contracts include spot, forward, and forward window, and swap contracts. The purpose of these derivative contracts is to mitigate foreign currency risk on transactions entered into, or on behalf of customers. Contracts with customers, along with the related derivative trades the Company places, are both remeasured at fair value, and are referred to as economic hedges since they economically offset the Company's exposure. ForThe 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 years ended December 31, 2017risk of default on interest rate swaps on the participated loan.
The Company also uses derivative financial instruments to manage exposure to interest rate risk within its mortgage banking business related to IRLCs and 2016,its inventory of loans HFS and MSRs. The Company economically hedges the changes in the fair value related to these derivative contracts totaled $3.5 millionassociated with changes in interest rates generally by utilizing forward sale commitments, interest rate futures and $1.8 million, respectively, and are included in Other non-interest income on the Consolidated Income Statements.interest rate swaps.

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Adoption of ASU 2017-12
The Company elected early adoption of the amendments within ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities. The guidance is effective as of January 1, 2017 and, upon adoption, the Company recorded a cumulative adjustment to opening retained earnings of $0.5 million and adjusted its 2017 earnings to exclude the effects of prior period hedge ineffectiveness, which totaled less than $0.1 million for 2017.Fair Value Hedges
As of December 31, 2017,2023 and 2022, the following amounts are reflected inon the Consolidated Balance Sheet related to cumulative basis adjustments for outstanding fair value hedges:
December 31, 2023December 31, 2022
Carrying Value of Hedged Assets/(Liabilities)Cumulative Fair Value Hedging Adjustment (1)Carrying Value of Hedged Assets/(Liabilities)Cumulative Fair Value Hedging Adjustment (1)
(in millions)
Loans HFI, net of deferred loan fees and costs (2)$3,875 $(6)$447 $17 
  Carrying Amount of the Hedged Assets/(Liabilities) Cumulative Amount of the Fair Value Hedging Adjustment (1)
  (in thousands)
Loans - HFI, net of deferred loan fees and costs $699,452
 $41,919
Qualifying debt (308,608) 9,959
(1)    Included in the carrying value of the hedged assets/(liabilities).
(1)Included in the carrying amount of the hedged assets/(liabilities)
(2)    As of December 31, 2023, included portfolio layer method derivative instruments with $3.5 billion designated as the hedged amount (from a closed portfolio of prepayable fixed rate loans with a carrying value of $6.7 billion). The cumulative basis adjustment included in the carrying value of these hedged items totaled $19 million.
For the Company's derivative instruments that are designated and qualify as a fair value hedges, the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earningsperiod earnings. The loss or gain on the hedged item is recognized in the same line item as the offsetting loss or gain on the related interest rate swaps. For loans, the gain or loss on the hedged itemsitem is included in interest income, as shown in the table below.
Year Ended December 31,
202320222021
Income Statement ClassificationGain/(Loss) on SwapsGain/(Loss) on Hedged ItemGain/(Loss) on SwapsGain/(Loss) on Hedged ItemGain/(Loss) on SwapsGain/(Loss) on Hedged Item
(in millions)
Interest income$(22.8)$23.8 $71.7 $(71.6)$44.8 $(45.6)
Interest expense— — — — (2.7)2.7 
In addition to the gains and for subordinated debt, the gain or losslosses on the hedged items is includedCompany's outstanding fair value hedges presented in the above table, the Company recognized $11.8 million and $9.9 million in interest expense.income related to the amortization of the cumulative basis adjustment on its discontinued last-of-layer hedges during the years ended December 31, 2023 and 2022, respectively.
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Fair Values, Volume of Activity, and Gain/Loss Information Related to Derivative Instruments
The following table summarizes the fair valuesvalue of the Company's derivative instruments on a gross basis as of December 31, 2017, 2016,2023, 2022, and 2015.2021. The change in the notional amounts of these derivatives from December 31, 20152021 to December 31, 20172023 indicates the volume of the Company's derivative transaction activity during these periods. The derivative asset and liability balances are presented on a gross basis, prior to the application of bilateral collateral and master netting agreements. Total derivative assets and liabilities are adjusted to take into account the impact of legally enforceable master netting agreements that allow the Company to settle all derivative contracts with the same counterparty on a net basis and to offset the net derivative position with the related cash collateral. Where master netting agreements are not in effect or are not enforceable under bankruptcy laws, the Company does not adjust those derivative amounts with counterparties.
 December 31, 2023December 31, 2022December 31, 2021
 Fair ValueFair ValueFair Value
Notional
Amount		Derivative AssetsDerivative LiabilitiesNotional
Amount		Derivative AssetsDerivative LiabilitiesNotional
Amount		Derivative AssetsDerivative Liabilities
(in millions)
Derivatives designated as hedging instruments:
Fair value hedges
Interest rate contracts$3,895 $19 $24 $476 $18 $— $1,383 $14 $55 
Total$3,895 $19 $24 $476 $18 $— $1,383 $14 $55 
Derivatives not designated as hedging instruments (1):
Foreign currency contracts$135 $1 $1 $250 $1 $9 $180 $— $1 
Forward purchase contracts5,544 26 — 2,709 1 13 11,714 8 18 
Forward sales contracts7,626 1 55 4,985 16 8 17,358 16 18 
Futures purchase contracts (2), (3)124 — — — — — 949 — — 
Futures sales contracts (2), (3)10,906 — — 8,706 — — 11,935 — — 
Interest rate lock commitments1,822 18 — 1,459 5 3 3,033 11 2 
Interest rate contracts3,628 19 20 1,538 6 6 4 — — 
Risk participation agreements72 — — 48 — — — — — 
Total$29,857 $65 $76 $19,695 $29 $39 $45,173 $35 $39 
Margin— 202 (9)— 4 1 — 1 6 
Total, including margin$29,857 $267 $67 $19,695 $33 $40 $45,173 $36 $45 
(1)Relate to economic hedging arrangements.
(2)The Company enters into futures purchase and sales contracts that are subject to daily remargining and almost all of which are based on three-month SOFR to hedge against its MSR valuation exposure. The notional amount on these contracts is substantial as these contracts have a short duration and are intended to cover the longer duration of MSR hedges.
(3)The notional amounts previously reported for December 31, 2022 and 2021 have been adjusted to account for the impact of offsetting contracts. To close a futures contract prior to settlement, the Company purchases an offsetting future with the same terms as the original contract and these contracts no longer require settlement.

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The fair value of derivative contracts, after taking into account the effects of master netting agreements, is included in otherOther assets or otherOther liabilities inon the Consolidated Balance Sheets,Sheet, as indicatedsummarized in the following table:table below:
December 31, 2023December 31, 2022December 31, 2021
Gross amount of recognized assets (liabilities)Gross offsetNet assets (liabilities)Gross amount of recognized assets (liabilities)Gross offsetNet assets (liabilities)Gross amount of recognized assets (liabilities)Gross offsetNet assets (liabilities)
(in millions)
Derivatives subject to master netting arrangements:
Assets
Forward purchase contracts$26 $— $26 $1 $— $1 $8 $— $8 
Forward sales contracts1 — 1 13 — 13 15 — 15 
Interest rate contracts31 — 31 18 — 18 14 — 14 
Margin202 — 202 4 — 4 1 — 1 
Netting— (67)(67)— (17)(17)— (28)(28)
$260 $(67)$193 $36 $(17)$19 $38 $(28)$10 
Liabilities
Foreign currency contracts$(1)$— $(1)$— $— $— $— $— $— 
Forward purchase contracts— — — (12)— (12)(18)— (18)
Forward sales contracts(55)— (55)(8)— (8)(18)— (18)
Interest rate contracts(31)— (31)— — — (54)— (54)
Margin9 — 9 (1)— (1)(6)— (6)
Netting— 67 67 — 17 17 — 28 28 
$(78)$67 $(11)$(21)$17 $(4)$(96)$28 $(68)
Derivatives not subject to master netting arrangements:
Assets
Foreign currency contracts$1 $— $1 $1 $— $1 $— $— $— 
Forward sales contracts— — — 3 — 3 1 — 1 
Interest rate lock commitments18 — 18 5 — 5 11 — 11 
Interest rate contracts7 — 7 6 — 6 — — — 
$26 $— $26 $15 $— $15 $12 $— $12 
Liabilities
Foreign currency contracts$— $— $— $(9)$— $(9)$(2)$— $(2)
Forward purchase contracts— — — (1)— (1)— — — 
Interest rate lock commitments— — — (3)— (3)(2)— (2)
Interest rate contracts(13)— (13)(6)— (6)— — — 
$(13)$— $(13)$(19)$— $(19)$(4)$— $(4)
Total derivatives and margin
Assets$286 $(67)$219 $51 $(17)$34 $50 $(28)$22 
Liabilities$(91)$67 $(24)$(40)$17 $(23)$(100)$28 $(72)
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 December 31, 2017 December 31, 2016 December 31, 2015
   Fair Value   Fair Value   Fair Value
 Notional
Amount		 Derivative Assets Derivative Liabilities Notional
Amount		 Derivative Assets Derivative Liabilities Notional
Amount		 Derivative Assets Derivative Liabilities
 (in thousands)
Derivatives designated as hedging instruments:              
Fair value hedges                 
Interest rate swaps$993,432
 $1,703
 $53,581
 $993,485
 $4,220
 $65,749
 $800,478
 $3,569
 $64,785
Total993,432
 1,703
 53,581
 993,485
 4,220
 65,749
 800,478
 3,569
 64,785
Netting adjustments (1)—
 896
 896
 —
 1,869
 1,869
 —
 —
 —
Net derivatives in the balance sheet$993,432
 $807
 $52,685
 $993,485
 $2,351
 $63,880
 $800,478
 $3,569
 $64,785
                  
Derivatives not designated as hedging instruments              
Foreign currency contracts$85,940
 $42,749
 $42,586
 $18,421
 $9,236
 $9,185
 $66,364
 $33,274
 $33,090
Interest rate swaps36,969
 776
 776
 —
 —
 —
 —
 —
 —
Total$122,909
 $43,525
 $43,362
 $18,421
 $9,236
 $9,185
 $66,364
 $33,274
 $33,090
(1)Netting adjustments represent the amounts recorded to convert the Company's derivative balances from a gross basis to a net basis in accordance with the applicable accounting guidance.

The following table summarizes the gains (losses)net gain (loss) on fair value hedges for the years ended December 31, 2016, and 2015 all of which were recordedderivatives included in non-interest income.
income:
 Year Ended December 31,
 2016 2015
 (in thousands)
Hedge of Fixed Rate Loans (1)   
Gain (loss) on "pay fixed" swap$15,582
 $(6,965)
Gain (loss) on receive fixed rate loans(15,519) 7,044
Net ineffectiveness$63
 $79
Hedge of Fixed Rate Subordinated Debt Issuances (1)   
Gain (loss) on "receive fixed" swap$(15,894) $3,569
Gain (loss) on subordinated debt15,894
 (3,569)
Net ineffectiveness$—
 $—
Year Ended December 31,
20232022
(in millions)
Net gain (loss) on loan origination and sale activities:
Forward contracts$29.0 $425.6 
Interest rate lock commitments15.9 (7.4)
Interest rate swaps(8.9)(8.4)
Other contracts1.0 (7.6)
Total gain$37.0 $402.2 
Net loan servicing revenue:
Interest rate swaps$(32.4)$(54.6)
Forward contracts(15.4)(62.4)
Futures contracts4.5 (36.2)
Total loss$(43.3)$(153.2)
(1)The fair value of derivatives contracts are carried as other assets and other liabilities in the Consolidated Balance Sheets. The effective portion of hedging gains (losses) is recorded as basis adjustments to the underlying hedged asset or liability. For 2016 and 2015, gains and losses on both the hedging derivative and hedged item are recorded through non-interest income with a resulting net income impact for the amount of ineffectiveness. Due to adoption of ASU 2017-12, effective January 1, 2017, there were no amounts recorded in net income related to hedge ineffectiveness in 2017.
Counterparty Credit Risk
Like other financial instruments, derivatives contain an element of credit risk. This risk is measured as the expected positive replacement value of the contracts. Management generally enters into bilateral collateral and master netting agreements that provide for the net settlement of all contracts with the same counterparty. Additionally, management monitors counterparty credit risk exposure on each contract to determine appropriate limits on the Company's total credit exposure across all product types. In general,types, which may require the Company hasto post collateral to counterparties when these contracts are in a zero credit threshold with regardnet liability position and conversely, for counterparties to derivative exposure with counterparties.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 counterparties in accordance with standard ISDA documentation and other related agreements. The Company generally posts or holds collateral in the form of cash deposits or highly rated securities issued by the U.S. Treasury or government-sponsored enterprises such as GNMA, FNMA,(FNMA and FHLMC. The total collateral netted against net derivative liabilities totaled $53.6 million atFHLMC), or guaranteed by GNMA. At December 31, 2017, $65.7 million at December 31, 2016,2023, and $61.7 million at December 31, 2015.
The following table summarizes the Company's largest exposure to an individual counterparty at the dates indicated:
  December 31,
  2017 2016 2015
  (in thousands)
Largest gross exposure (derivative asset) to an individual counterparty $893
 $2,351
 $3,569
Collateral posted by this counterparty —
 1,691
 4,680
Derivative liability with this counterparty 40,340
 —
 —
Collateral pledged to this counterparty 60,476
 —
 1,340
Net exposure after netting adjustments and collateral $—
 $660
 $229
Credit Risk Contingent Features
Management has entered into certain derivative contracts that require2022 collateral pledged by the Company to post collateral to the counterparties when these contracts are in a net liability position. Conversely, the counterparties may be required to post collateral when these contracts are in a net asset position. The amount of collateral to be posted is based on the amount of the net liability and exposure thresholds. As of December 31, 2017, 2016, and 2015 the aggregate fair value of all derivative contracts with credit risk contingent features (i.e., those containing collateral posting provisions) held by the Company that were in a net liability positionfor its derivatives totaled $52.7 million, $63.9$216 million and $64.8$11 million, respectively. As of December 31, 2017, the Company was in an over-collateralized net position of $25.0 million after considering $78.6 million of collateral held in the form of cash and securities. As of December 31, 2016 and 2015, the Company was in an over-collateralized position of $24.3 million and $15.5 million, respectively.

13.
15. EARNINGS PER SHARE
Diluted EPS is based oncalculated using the weighted average outstanding common shares during eachthe period, including common stock equivalents. Basic EPS is based oncalculated using the weighted average outstanding common shares during the period.
The following table presents the calculation of basic and diluted EPS: 
 Year Ended December 31,
 202320222021
 (in millions, except per share amounts)
Weighted average shares - basic108.3 107.2 102.7 
Dilutive effect of stock awards0.2 0.4 0.6 
Weighted average shares - diluted108.5 107.6 103.3 
Net income available to common stockholders$709.6 $1,044.5 $895.7 
Earnings per common share:
Basic$6.55 $9.74 $8.72 
Diluted6.54 9.70 8.67 
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  Year Ended December 31,
  2017 2016 2015
  (in thousands, except per share amounts)
Weighted average shares - basic 104,179
 103,042
 94,570
Dilutive effect of stock awards 818
 801
 649
Weighted average shares - diluted 104,997
 103,843
 95,219
Net income available to common stockholders $325,492
 $259,798
 $193,494
Earnings per share - basic 3.12
 2.52
 2.05
Earnings per share - diluted 3.10
 2.50
 2.03
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The Company had no anti-dilutive stock options outstanding as of December 31, 2017 and 2016.

14.16. INCOME TAXES
The provision for income taxes charged to operationstax expense consists of the following:following components: 
 Year Ended December 31, Year Ended December 31,
 2017 2016 2015 202320222021
 (in thousands) (in millions)
Current $37,854
 $93,737
 $61,040
Deferred 88,471
 7,644
 3,254
Total tax provision $126,325
 $101,381
 $64,294
Total tax expense
The following table presents a reconciliation between the statutory federal income tax rate and the Company’s effective tax rate are summarized as follows:rate: 
  Year Ended December 31,
  2017 2016 2015
  (in thousands)
Income tax at statutory rate $158,136
 $126,413
 $90,489
Increase (decrease) resulting from:      
State income taxes, net of federal benefits 9,765
 8,046
 5,783
Bank owned life insurance (1,351) (1,317) (1,365)
Tax-exempt income (26,403) (22,425) (20,226)
Change in federal rate applied to deferred items (10,411) —
 —
Excise tax 9,689
 —
 —
Deferred tax asset valuation allowance —
 —
 (2,290)
Low income housing tax credits (7,361) (6,153) (5,223)
Other, net (5,739) (3,183) (2,874)
Total tax provision $126,325
 $101,381
 $64,294
Year Ended December 31,
202320222021
(in millions)
Income tax at statutory rate$196.1 $276.4 $235.8 
Increase (decrease) resulting from:
State income taxes, net of federal benefits35.0 45.4 35.8 
Non-deductible insurance premiums24.1 5.2 3.5 
Tax-exempt income(28.3)(26.0)(25.6)
Investment tax credits(13.2)(32.1)(15.9)
Other, net(2.5)(10.1)(9.8)
Total tax expense$211.2 $258.8 $223.8 
Effective tax rate22.6 %19.7 %19.9 %
The increase in the effective tax rate for the year ended December 31, 2017 was 27.96%, comparedfrom 2022 to 28.07% for the year ended December 31, 2016,2023 is primarily due to a decrease in pretax book income, decreases in investment tax credits, and 24.87% for the year ended December 31, 2015.increases in nondeductible insurance premium expenses during 2023. There was not a significant change in the effective tax rate from 2017 compared2021 to 2016. The increase in the effective tax rate from 2015 compared to 2016 is due primarily to the increase in pre-tax income without proportional increases to favorable tax rate items for the year ended December 31, 2016 compared to 2015.2022.
The 2017 Tax Cuts and Jobs Act significantly changes how the United States taxes corporations. This new legislation lowered the statutory corporate tax rate from 35% to 21%, but it also limited or eliminated certain deductions. The Company has analyzed and interpreted the current and future impacts
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Table of the Act and recorded the effects in its financial statements as of December 31, 2017. However, the legislation remains subject to potential amendments, technical corrections and further guidance at both the federal and state levels. Further, in connection with the filing of its tax return, the Company has the ability to change some of the elections it has applied in the calculation of the year-end tax provision, such as NOL carryback/carryovers and depreciation. If a material adjustment is needed for any of these items, it will be included in the provision for income taxes in the period in which the change occurs.Contents


The cumulative tax effects of the primary temporary differences are shown in the following table:
December 31,
20232022
(in millions)
Deferred tax assets:
Unrealized loss on AFS securities$170 $221 
Allowance for credit losses96 93 
Lease liability46 47 
Research and experimentation costs32 1 
FDIC special assessment17 — 
Accrued expenses7 21 
Passthrough income6 19 
Tax credit carryovers5 24 
Premises and equipment— 13 
Other40 44 
Total gross deferred tax assets419 483 
Deferred tax asset valuation allowance— — 
Total deferred tax assets419 483 
Deferred tax liabilities:
Right of use asset(37)(41)
Premises and equipment(19)— 
Unearned premiums(15)(6)
Mortgage servicing rights(11)(56)
Deferred loan costs(11)(16)
Leasing basis differences(11)(13)
Goodwill(9)(5)
Deferred REIT dividend— (11)
Other(19)(24)
Total deferred tax liabilities(132)(172)
Deferred tax assets, net$287 $311 
  December 31,
  2017 2016
  (in thousands)
Deferred tax assets:  
Allowance for credit losses $37,851
 $50,860
Fair market value adjustment related to acquired loans —
 7,941
Stock-based compensation 8,335
 12,302
Net operating loss carryovers 34,710
 9,024
Tax credit carryovers 24,171
 —
Startup costs and other amortization 2,495
 4,216
Allowance for other assets acquired through foreclosure, net 1,459
 3,230
Section 382 limited NUBILs —
 3,251
Premises and equipment 1,428
 —
Unrealized loss on AFS securities 4,117
 9,149
Other 10,239
 13,679
Total gross deferred tax assets 124,805
 113,652
Deferred tax liabilities:    
Deferred income (68,799) —
Unrealized gain on debt instruments measured at fair value (2,661) (6,132)
Deferred loan costs (6,594) (3,212)
Insurance premiums (35,789) —
Core deposit intangible (2,809) (4,949)
Premises and equipment —
 (449)
Unrealized gains on financial instruments measured at fair value (1,396) (2,200)
Other (977) (1,516)
Total deferred tax liabilities (119,025) (18,458)
Deferred tax assets, net $5,780
 $95,194
Deferred tax assets and liabilities are included in the Consolidated Financial Statements at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be reversed. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.
For the year endedAt December 31, 2017,2023, the net deferred tax assets decreased $89.4DTA balance totaled $287 million, to $5.8 million. This overalla decrease of $24 million from $311 million at December 31, 2022. The decrease in the net deferred tax assetDTA was primarily the result of deferring taxable incomeincreases in the fair value of AFS securities and decreases to future periods and accelerating deductions whichcredit carryforwards that were only partiallynot fully offset by the creation of NOL and tax credit carryovers and the revaluation of deferred taxes under the 2017 Tax Cuts and Jobs Act.
decrease to MSR DTLs. Although realization is not assured, the Company believes that the realization of the recognized deferred tax assetnet DTA of $5.8$287 million at December 31, 20172023 is more-likely-than-not based on expectations as to future taxable income and based on available tax planning strategies within the meaning of ASC 740, Income Taxes, that could be implemented if necessary to prevent a carryover from expiring.
At each of the periods ended December 31, 2017 and 2016, theThe Company had no deferred tax valuation allowance.allowance as of December 31, 2023 and 2022.
As of December 31, 2017,2023, the Company’s gross federal NOL carryovers, a portionall of which are subject to limitations under Section 382 of the IRC, totaled approximately $169.5$38 million, for which a deferred tax assetDTA of $31.1$4 million has been recorded, reflecting the expected benefit of these federal NOL carryovers.carryovers remaining after application of the Section 382 limitation. The Company also has varying gross amountsgenerated a total of state NOL carryovers with California$79 million NOLs in the states of Arizona, Tennessee, and Arizona being the most significant. The ending gross California and Arizona NOL carryovers totaled approximately $25.0 million and $17.3 million, respectively. A deferred tax assetVirginia during 2023, for which a DTA of $3.6$3 million has been recorded to reflect the expected benefit of all state NOL carryovers. If not utilized, a portion of the federal and state NOL carryovers will begin to expire in 2028 and 2023, respectively. As of December 31, 2017, the Company’s federal and state tax credit carryovers totaled $23.1 million and $1.1 million, respectively. If not utilized, a portion of the federal and state tax credit carryovers will begin to expire in 2038 and 2023, respectively. In management’s opinion, it is more-likely-than-not that the results of future operations will generate sufficient taxable income to realize all of the deferred tax benefits related to these NOL and tax credit carryovers.

recorded. The Company files income tax returns in the U.S. federal jurisdiction and in various states. With few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations by tax authorities for years before 2013.2019.
When tax returns are filed, it is highly certain that somemost positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would ultimately be ultimately sustained. The benefit of a tax position is recognized in the Consolidated Financial Statements in the period in which, based on all available evidence, management believes it is more-likely-than-not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax 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 applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above would beis reflected as a liability for unrecognized tax benefits inon the accompanying Consolidated Balance Sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
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The total gross activity of unrecognized tax benefits related to the Company's uncertain tax positions are shown in the following table:
December 31,
20232022
(in millions)
Beginning balance$6.6 $6.4 
Gross increases
Tax positions in prior periods0.4 — 
Current period tax positions0.9 0.8 
Gross decreases
Tax positions in prior periods— (0.6)
Ending balance$7.9 $6.6 
 December 31,
 2017 2016
 (in thousands)
Beginning balance$1,038
 $1,038
Gross Increases   
Tax positions in prior periods—
 —
Current period tax positions—
 —
Gross decreases   
Tax positions in prior periods—
 —
Settlements—
 —
Lapse of statute of limitations—
 —
Ending balance$1,038
 $1,038
As ofDuring the year ended December 31, 20172023, the Company added a new position, which resulted in a tax detriment of $0.9 million.
At December 31, 2023 and 2016, the total amount of2022, unrecognized tax benefits, net of associated deferred tax benefit,benefits, totaled $6.9 million and $5.3 million, respectively, that, if recognized, would favorably impact the effective tax rate, if recognized, is $0.7 million.rate. The Company anticipates that approximately $0.4 milliondoes not anticipate resolution of theany unrecognized tax benefits will be resolved within the next twelve12 months.
During the years ended December 31, 20172023, 2022, and 2016, the Company recognized2021, no amounts were recognized for interest and penalties. During the year ended December 31, 2015, the Company recognized $0.1 million in penalties as it relates to uncertain tax positions and no amounts for interest.
Asas of December 31, 20172023 and 2016, the Company has accrued a total liability of $0.1 million2022, there was no accrual for penalties and $0.1 million for interest.
LIHTC and renewable energy projects
The Company investsholds ownership interests in LIHTC fundslimited partnerships and limited liability companies that invest in affordable housing and renewable energy projects. These investments are designed to generate a return primarily through the realization of federal tax credits.credits and deductions.
Investments in LIHTC and unfunded LIHTC obligations are included as part of other assets and other liabilities, respectively, in the Consolidated Balance Sheets and total $267.0renewable energy totaled $573 million and $151.3 million, respectively, as of December 31, 2017, compared to $187.4 million and $84.4$624 million as of December 31, 2016.2023 and 2022, respectively. Unfunded LIHTC and renewable energy obligations are included in Other liabilities on the Consolidated Balance Sheet and totaled $322 million and $398 million as of December 31, 2023 and 2022, respectively. For the years ended December 31, 2017, 2016,2023, 2022, and 2015, $25.42021, $64.3 million, $17.3$63.2 million, and $14.4$49.5 million of amortization related to LIHTC investments was recognized as a component of income tax expense, respectively.

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15.
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17. COMMITMENTS AND CONTINGENCIES
Unfunded Commitments and Letters of Credit
The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. They involve, to varying degrees, elements of credit risk in excess of amounts recognized inon the Consolidated Balance Sheets.
Lines of credit are obligations to lend money to a borrower. Credit risk arises when the borrower's current financial condition may indicate less ability to pay than when the commitment was originally made. In the case of standby letters of credit, the risk arises from 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 standby letter of credit to pay for completion of the contract and the Company would look to its customer to repay these funds with interest. To minimize the risk, the Company uses the same credit policies in making commitments and conditional obligations as it would for a loan to that customer.
Standby lettersLetters 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. Typically, letters of credit issued have expiration dates within one year.
A summary of the contractual amounts for unfunded commitments and letters of credit are as follows: 
December 31,December 31,
20232022
(in millions)
 December 31,
 2017 2016
 (in thousands)
Commitments to extend credit, including unsecured loan commitments of $364,638 at December 31, 2017 and $360,840 at December 31, 2016 $5,851,158
 $4,428,495
Commitments to extend credit, including unsecured loan commitments of $989 and $1,209 at December 31, 2023 and 2022, respectively
Credit card commitments and financial guarantees 153,752
 115,536
Standby letters of credit, including unsecured letters of credit of $11,664 at December 31, 2017 and $6,431 at December 31, 2016 161,966
 78,576
Letters of credit, including unsecured letters of credit of $4 and $7 at December 31, 2023 and 2022, respectively
Total $6,166,876
 $4,622,607
The following table represents the contractual commitments for lines and letters of credit by maturity at December 31, 2017:2023: 
   Amount of Commitment Expiration per Period
 Total Amounts Committed Less Than 1 Year 1-3 Years 3-5 Years After 5 Years
 (in thousands)
Amount of Commitment Expiration per PeriodAmount of Commitment Expiration per Period
Total Amounts CommittedTotal Amounts CommittedLess Than 1 Year1-3 Years3-5 YearsAfter 5 Years
(in millions)(in millions)
Commitments to extend credit $5,851,158
 $2,348,898
 $1,998,695
 $500,392
 $1,003,173
Credit card commitments and financial guarantees 153,752
 153,752
 —
 —
 —
Standby letters of credit 161,966
 133,297
 27,426
 1,243
 —
Letters of credit
Total $6,166,876
 $2,635,947
 $2,026,121
 $501,635
 $1,003,173
Commitments to extend credit are agreements to lend to a customer provided that there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company enters into credit arrangements that generally provide 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 being drawn upon, the total commitment amounts do not necessarily represent future 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 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.
The Company has exposure to credit losses from unfunded commitments and letters of credit. As funds have not been disbursed on these commitments, they are not reported as loans outstanding. Credit losses related to these commitments are included in otherOther liabilities as a separate loss contingency and are not included in the allowance for credit lossesACL reported in "Note 3.4. Loans, Leases and Allowance for Credit Losses" of these Consolidated Financial Statements. This loss contingency for unfunded loan commitments and letters of credit was $6.2$32 millionand $7.0$47 million as of December 31, 20172023 and 2016,2022, respectively. Changes to this liability are adjusted through other expensethe provision for credit losses in the Consolidated Income Statement.

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Commitments to Invest in Renewable Energy Projects
The Company has off-balance sheet commitments to invest in renewable energy projects, as described in "Note 16. Income Taxes" of these Consolidated Financial Statements, subject to the underlying project meeting certain milestones. These conditional commitments totaled $32 million and $117 million as of December 31, 2023 and 2022, respectively.
Concentrations of Lending Activities
The Company’s lending activities are driven in large part by the customers served in the market areas where the Company has branch offices in the states of Arizona, Nevada, and California. Despite the geographic concentration of lending activities, the Company does not have a single external customer from which it derives 10% or more of its revenues. The Company monitors concentrations within four broad categories: geography, industry,of lending activities at the product and collateral.borrower relationship level. Commercial and industrial loans made up 38% and 40% of the Company's HFI loan portfolio as of December 31, 2023 and December 31, 2022, respectively. The Company's loan portfolio includes significant credit exposure to the CRE market. As of December 31, 20172023 and 2016,2022, CRE related loans accounted for approximately 52%33% and 53%29% of total loans, respectively. Substantially all of these loans are secured by first liens with an initial loan to value ratio of generally not more than 75%. Approximately 36%16% of these CRE loans, excluding construction and land loans, were owner-occupied at eachas of the periods ended December 31, 20172023 and 2016.2022. No borrower relationships at both the commitment and funded loan level exceeded 5% of total loans HFI as of December 31, 2023 and December 31, 2022.
Contingencies
The Company is involved in various lawsuits of a routine nature that are being handled and defended 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 resolution of these lawsuits and associated defense costs will not have a material impact on the Company’s financial position, results of operations, or cash flows.
Lease Commitments
The Company leases the majority of its office locations and many of these leases contain multiple renewal options and
provisions for increased rents. For the years ended December 31, 2017, 2016, and 2015, total rent expense was
$10.4 million, $11.0 million and $8.1 million, respectively.
16.18. FAIR VALUE ACCOUNTING
The fair value of an asset or liability is the price that would be received to sell thatthe asset or paid to transfer thatthe liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, the income approach, and/or the cost approach. 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 unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair 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 available, fair value is based upon internally developedinternally-developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty 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 realizable value or reflective of future fair values. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Furthermore, the reported fair value amounts have not been comprehensively revalued since the presentation dates, and therefore, estimates of fair value after the balance sheet date may differ significantly from the amounts presented herein. A more detailed description of the valuation methodologies used for assets and liabilities measured at fair value is set forth below. Transfers between levels in the fair value hierarchy are recognized as of the end of the month following the event or change in circumstances that caused the transfer.
Under ASC 825, the Company elected the FVO treatment for junior subordinated debt issued by WAL. This election is irrevocable and results in the recognition of unrealized gains and losses on these itemsthe debt at each reporting date. Due to the Company's election to early adopt an element of ASU 2016-01, effective January 1, 2015, theseThese unrealized gains and losses are recognized as part of other comprehensive incomein OCI rather than earnings. The Company did not elect FVO treatment for the junior subordinated debt assumed in the Bridge Capital Holdings acquisition in 2015.acquisition.
All securities for which the fair value measurement option had been elected are included in a separate line item in the Consolidated Balance Sheets as securities measured at fair value. During the year ended December 31, 2017, the Company sold all
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Table of its investment securities measured at fair value. No significant gain or loss was recognized upon sale of these securities.Contents

For the years ended December 31, 2017, 2016, and 2015,The following table presents unrealized gains and losses from fair value changes on securities and junior subordinated debt were as follows:debt:
  Changes in Fair Values for Items Measured at Fair Value
Pursuant to Election of the Fair Value Option
  Unrealized Gain/(Loss) on Assets and Liabilities Measured at Fair Value, Net Interest Income on Securities Interest Expense on Junior Subordinated Debt Total Changes Included in Current-Period Earnings Total Changes Included in OCI
  (in thousands)
Year Ended December 31, 2017          
Securities measured at fair value $—
 $9
 $—
 $9
 $—
Junior subordinated debt (5,824) —
 (3,221) (3,221) (3,604)
Total $(5,824) $9

$(3,221)
$(3,212)
$(3,604)
Year Ended December 31, 2016          
Securities measured at fair value $(18) $41
 $—
 $23
 $—
Junior subordinated debt (3,482) —
 (2,828) (2,828) (2,077)
Total $(3,500)
$41

$(2,828)
$(2,805)
$(2,077)
Year Ended December 31, 2015          
Securities measured at fair value $(32) $54
 $—
 $22
 $—
Junior subordinated debt (6,491) —
 (2,151) (2,151) (4,276)
Total $(6,523)
$54

$(2,151)
$(2,129)
$(4,276)
Interest income on securities measured at fair value is accounted for similarly to those classified as AFS. Any premiums or discounts are recognized in interest income over the term of the securities. Interest expense on junior subordinated debt is determined under a constant yield calculation.
Year Ended December 31,
202320222021
(in millions)
Unrealized (losses) gains$(0.3)$4.9 $(1.5)
Changes included in OCI, net of tax(0.2)3.7 (1.2)
Fair value on a recurring basis
Financial assets and financial liabilities measured at fair value on a recurring basis include the following:
AFS debt securities:Securities measured at fair value: All of the Company’s securities measured at fair value, which consisted of MBS, were reported at fair value utilizing Level 2 inputsclassified as of December 31, 2016 in the same manner as described below for AFS securities.
AFS securities: Preferred stock, CRA investments, and certain corporate debt securities are reported at fair value utilizing Level 1 inputs. Other securities classified as AFS are reported at fair value utilizingand 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 markets, dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the bond’s terms and conditions, among other things.
Equity securities: Preferred and common stock and CRA investments are reported at fair value primarily utilizing Level 1 inputs.
Independent pricing service: The Company's independent pricing service provides pricing information on the majority of the Company's Level 1 and Level 2 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 fair value measurements received from the Company's third partythird-party pricing service through multiple review steps. First, management reviews what has transpired in the marketplace with respect to interest rates, credit spreads, volatility, and mortgage rates, among other things, and develops an expectation of changes to the securities' valuations from the previous quarter. Then, management obtains market values from additional sources. The pricing service provides management with observable market data including interest rate curves and mortgage prepayment speed grids, as well as dealer quote sheets, new bond offering sheets, and historical trade documentation. Management reviews the assumptions and decides whether they are reasonable. Management may compare interest rates, credit spreads, and prepayments speeds used as part of the assumptions to those that management believes are reasonable.
Management may price securities using the provided assumptions to determine whether they can develop similar prices on like securities. Any discrepancies between management’s review and the prices provided by the vendor are discussed with the vendor and the Company’s other valuation advisors. Last, management selects a sample of investment securities and compares the values provided by its primary third partythird-party pricing service to the market values obtained from secondary sources, including other pricing services and safekeeping statements, and evaluates those with notable variances. In instances where there are discrepancies in pricing from 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 information from 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.
Annually,Loans HFS: Government-insured or guaranteed and agency-conforming 1-4 family residential loans HFS are salable into active markets. Accordingly, the fair value of these loans is based primarily on quoted market or contracted selling prices or a market price equivalent, which are categorized as Level 2 in the fair value hierarchy.
Mortgage servicing rights: MSRs are measured based on valuation techniques using Level 3 inputs. The Company receives an SSAE 16 report from its independent pricing service attestinguses a discounted cash flow model that incorporates assumptions market participants would use in estimating the fair value of servicing rights, including, but not limited to, the controls placedoption adjusted spread, conditional prepayment rate, servicing fee rate, recapture rate, and cost to service.
Derivative financial instruments: Forward purchase and sales contracts are measured based on the operations of the service from its auditor.

valuation techniques using Level 2 inputs, such as quoted market prices, contracted selling prices, or a market price equivalent. Interest rate swaps: Interest rate swapsand foreign currency contracts are reported at fair value utilizing Level 2 inputs. The Company obtains dealer quotations to value its interest rate swaps.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 adjustment specific to each loan. The base value is then adjusted for estimated pull-through rates. The pull-through rate and servicing fee multiple are unobservable inputs based on historical experience.
Junior subordinated debt: The Company estimates the fair value of its junior subordinated debt using a discounted cash flow model which incorporates the effect of the Company’s own credit risk in the fair value of the liabilities (Level 3). The Company’s cash flow assumptions are based on contractual cash flows as the Company anticipates that it will pay the debt according to its contractual terms.
As
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Table of December 31, 2017, the Company estimates the discount rate at 5.61%, which represents an implied credit spread of 3.92% plus three-month LIBOR (1.69%). As of December 31, 2016, the Company estimated the discount rate at 5.66%, which was a 4.66% credit spread plus three-month LIBOR (1.00%).Contents
The fair value of assets and liabilities measured at fair value on a recurring basis was determined using the following inputsinputs: 
Fair Value Measurements at the End of the Reporting Period Using:
Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		Fair Value
(in millions)
December 31, 2023
Available-for-sale debt securities
U.S. Treasury securities$4,853 $— $— $4,853 
Residential MBS issued by GSEs— 1,972 — 1,972 
CLO— 1,399 — 1,399 
Private label residential MBS— 1,117 — 1,117 
Tax-exempt— 858 — 858 
Commercial MBS issued by GSEs— 530 — 530 
Corporate debt securities— 367 — 367 
Other28 41 — 69 
Total AFS debt securities$4,881 $6,284 $— $11,165 
Equity securities
Preferred stock$100 $— $— $100 
CRA investments26 — — 26 
Total equity securities$126 $— $— $126 
Loans HFS (2)$— $1,377 $3 $1,380 
MSRs— — 1,124 1,124 
Derivative assets (1)— 66 18 84 
Liabilities:
Junior subordinated debt (3)$— $— $63 $63 
Derivative liabilities (1)— 100 — 100 
(1)See "Note 14. Derivatives and Hedging Activities." In addition, the carrying value of loans is increased by $6 million as of the periods presented: 
  Fair Value Measurements at the End of the Reporting Period Using:
  Quoted Prices in Active Markets for Identical Assets
(Level 1)		 Significant Other Observable Inputs
(Level 2)		 Significant Unobservable Inputs
(Level 3)		 Fair Value
  (in thousands)
December 31, 2017        
Assets:        
Available-for-sale        
CDO $—
 $21,857
 $—
 $21,857
Commercial MBS issued by GSEs —
 109,077
 —
 109,077
Corporate debt securities —
 103,483
 —
 103,483
CRA investments 50,616
 —
 —
 50,616
Preferred stock 53,196
 —
 —
 53,196
Private label residential MBS —
 868,524
 —
 868,524
Residential MBS issued by GSEs —
 1,689,295
 —
 1,689,295
Tax-exempt —
 510,910
 —
 510,910
Trust preferred securities —
 28,617
 —
 28,617
U.S. government sponsored agency securities —
 61,462
 —
 61,462
U.S. treasury securities —
 2,482
 —
 2,482
Total AFS securities $103,812
 $3,395,707
 $—
 $3,499,519
Derivative assets (1) $—
 $45,228
 $—
 $45,228
Liabilities:        
Junior subordinated debt (2) $—
 $—
 $56,234
 $56,234
Derivative liabilities (1) —
 96,943
 —
 96,943

(1)Derivative assets and liabilities relate to interest rate swaps and foreign currency contracts, see "Note 12. Derivatives and Hedging Activities." In addition, the carrying value of loans is increased by $41,919 and the net carrying value of subordinated debt is decreased by $9,959 as of December 31, 2017, which relates to the fair value of the hedges put in place to mitigate against fluctuations in interest rates.
(2)Includes only the portion of junior subordinated debt that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.

  Fair Value Measurements at the End of the Reporting Period Using:
  
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
Fair
Value
  (in thousands)
December 31, 2016        
Assets:        
Measured at fair value        
Residential MBS issued by GSEs $—
 $1,053
 $—
 $1,053
Available-for-sale        
Collateralized debt obligations $—
 $13,490
 $—
 $13,490
Commercial MBS issued by GSEs —
 117,792
 —
 117,792
Corporate debt securities 20,000
 44,144
 —
 64,144
CRA investments 37,113
 —
 —
 37,113
Preferred stock 94,662
 —
 —
 94,662
Private label residential MBS —
 433,685
 —
 433,685
Residential MBS issued by GSEs —
 1,355,205
 —
 1,355,205
Tax-exempt —
 408,233
 —
 408,233
Trust preferred securities —
 26,532
 —
 26,532
U.S. government sponsored agency securities —
 56,022
 —
 56,022
U.S. treasury securities —
 2,502
 —
 2,502
Total AFS securities $151,775
 $2,457,605
 $—
 $2,609,380
Loans - HFS $—
 $18,909
 $—
 $18,909
Derivative assets (1) —
 13,456
 —
 13,456
Liabilities:        
Junior subordinated debt (2) $—
 $—
 $50,410
 $50,410
Derivative liabilities (1) —
 74,934
 —
 74,934
(1)Derivative assets and liabilities relate to interest rate swaps and foreign currency contracts, see "Note 12. Derivatives and Hedging Activities." In addition, the carrying value of loans is increased by $48,161 and the net carrying value of subordinated debt is decreased by $12,325 as of December 31, 2016, which relates to the effective portion of the hedges put in place to mitigate against fluctuations in interest rates.
(2)Includes only the portion of junior subordinated debt that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.
For the years ended December 31, 2017, 2016,2023 for the effective portion of the hedge, which relates to the fair value of the hedges put in place to mitigate against fluctuations in interest rates. Derivative assets and 2015,liabilities exclude margin of $202 million and $(9) million, respectively.
(2)Includes only the portion of loans HFS that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.
(3)Includes only the portion of junior subordinated debt that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.

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 Fair Value Measurements at the End of the Reporting Period Using:
Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		Fair
Value
 (in millions)
December 31, 2022
Assets:
Available-for-sale debt securities
CLO$— $2,706 $— $2,706 
Residential MBS issued by GSEs— 1,740 — 1,740 
Private label residential MBS— 1,199 — 1,199 
Tax-exempt— 891 — 891 
Corporate debt securities— 390 — 390 
Commercial MBS issued by GSEs— 97 — 97 
Other24 45 — 69 
Total AFS debt securities$24 $7,068 $— $7,092 
Equity securities
Preferred stock$108 $— $— $108 
CRA investments24 25 — 49 
Common stock3 — — 3 
Total equity securities$135 $25 $— $160 
Loans - HFS (2)$— $1,172 $1 $1,173 
Mortgage servicing rights— — 1,148 1,148 
Derivative assets (1)— 42 5 47 
Liabilities:
Junior subordinated debt (3)$— $— $63 $63 
Derivative liabilities (1)— 36 3 39 
(1)See "Note 14. Derivatives and Hedging Activities." In addition, the carrying value of loans is increased by $17 million as of December 31, 2022 for the effective portion of the hedge, which relates to the fair value of the hedges put in place to mitigate against fluctuations in interest rates. Derivative assets and liabilities exclude margin of $4 million and $1 million, respectively.
(2)Includes only the portion of loans HFS that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.
(3)Includes only the portion of junior subordinated debt that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.
The change in Level 3 assets and liabilities measured at fair value on a recurring basis included in OCI was as follows: 
  Junior Subordinated Debt
  Year Ended December 31,
  2017 2016 2015
  (in thousands)
Beginning balance $(50,410) $(46,928) $(40,437)
Transfers into Level 3 —
 —
 —
Total gains (losses) for the period      
Included in other comprehensive income (1) (5,824) (3,482) (6,491)
Ending balance $(56,234) $(50,410) $(46,928)
(1)Due to the Company's election to early adopt an element of ASU 2016-01, changes in the fair value of junior subordinated debt are presented as part of OCI rather than earnings effective January 1, 2015. Accordingly, total losses for 2015 are included in the other comprehensive income line, Unrealized gain (loss) on junior subordinated debt, which is net of tax. The above amount represents the gross loss from changes in fair value of junior subordinated debt.

Junior Subordinated Debt
Year Ended December 31,
202320222021
(in millions)
Beginning balance$(62.5)$(67.4)$(65.9)
Change in fair value (1)(0.3)4.9 (1.5)
Ending balance$(62.8)$(62.5)$(67.4)
  CDO Securities
  Year Ended December 31,
  2016 2015
  (in thousands)
Beginning balance $10,060
 $11,445
Transfers into Level 3 —
 —
Transfers out of Level 3 (11,274) —
Total gains (losses) for the period    
Included in other comprehensive income (1) 1,214
 (1,385)
Ending balance $—
 $10,060
(1)Total gains (losses) for the period are included in the other comprehensive income line, Unrealized gain (loss) on AFS securities.
The Company transferred all CDO securities from Level 3(1)Unrealized (losses) gains attributable to Level 2 during the year ended December 31, 2016 as a result of an increase in the availability and reliability of the observable inputs utilized in the securities' fair value measurement. The Company recognized this transfer between levels on October 31, 2016, in accordance with its policy to recognize transfers between levelschanges in the fair value hierarchy as of junior subordinated debt are recorded in OCI, net of tax, and totaled $(0.2) million, $3.7 million, and $(1.2) million for the end of the month following the event or change in circumstance that caused the transfer.
For Level 3 assets and liabilities measured at fair value on a recurring basis as ofyears ended December 31, 20172023, 2022, and 2016, the2021, respectively.
The significant unobservable inputs used in the fair value measurements of these Level 3 liabilities were as follows: 
December 31, 2023Valuation TechniqueSignificant Unobservable InputsInput Value
(in millions)
Junior subordinated debt$63 Discounted cash flowImplied credit rating of the Company8.92 %
  December 31, 2017 Valuation Technique Significant Unobservable Inputs Input Value
  (in thousands)      
Junior subordinated debt $56,234
 Discounted cash flow Implied credit rating of the Company 5.61%
  December 31, 2016 Valuation Technique Significant Unobservable Inputs Input Value
  (in thousands)      
Junior subordinated debt $50,410
 Discounted cash flow Implied credit rating of the Company 5.66%
December 31, 2022Valuation TechniqueSignificant Unobservable InputsInput Value
(in millions)
Junior subordinated debt$63 Discounted cash flowImplied credit rating of the Company8.13 %
The significant unobservable inputs used in the fair value measurement of the Company’s junior subordinated debt as of December 31, 20172023 and 20162022 was the implied credit risk for the Company,Company. The implied credit risk spread as of December 31, 2023 was calculated as the difference between the 20-yearaverage of the 10 and 15-year 'BB' rated financial indexindexes over the
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corresponding swap indexes. As of December 31, 2022, the implied credit risk spread was calculated as the difference between the average of the 15-year 'BB' and 'BBB' rated financial indexes over the corresponding swap index.

As of December 31, 2023, the Company estimates the discount rate at 8.92%, which represents an implied credit spread of 3.59% plus three-month SOFR (5.33%). As of December 31, 2022, the Company estimated the discount rate at 8.13%, which was a 3.36% credit spread plus three-month LIBOR (4.77%).
The change in Level 3 assets and liabilities measured at fair value on a recurring basis included in income was as follows:
Year Ended December 31, 2023
20232022
MSRsIRLCs (1)MSRsIRLCs (1)
(in millions)
Balance, beginning of period$1,148 $2 $698 $9 
Purchases and additions865 15,434 720 19,513 
Sales and payments(800)— (350)— 
Settlement of IRLCs upon acquisition or origination of loans HFS— (15,420)— (19,481)
Change in fair value11 2 192 (39)
Mark to market adjustments4 — — — 
Realization of cash flows(104)— (112)— 
Balance, end of period$1,124 $18 $1,148 $2 
Changes in unrealized gains (losses) for the period (2)$19 $(18)$135 $2 
(1)    IRLC asset and liability positions are presented net.
(2)    Amounts recognized as part of non-interest income.

The significant unobservable inputs used in the fair value measurements of these Level 3 assets and liabilities were as follows:
December 31, 2023
Asset/liabilityKey inputsRangeWeighted average
MSRs:Option adjusted spread (in basis points)29 - 253213
Conditional prepayment rate (1)9.5% - 23.9%17.4%
Recapture rate20.0% - 20.0%20.0%
Servicing fee rate (in basis points)25.0 - 56.535.6
Cost to service$93 - $100$95
IRLCs:Servicing fee multiple3.2 - 5.44.3
Pull-through rate68% - 100%89%
December 31, 2022
Asset/liabilityKey inputsRangeWeighted average
MSRs:Option adjusted spread (in basis points)190 - 621378
Conditional prepayment rate (1)8.5% - 18.5%13.4%
Recapture rate20.0% - 20.0%20.0%
Servicing fee rate (in basis points)25.0 - 56.533.2
Cost to service$87 - $94$90
IRLCs:Servicing fee multiple2.9 - 5.54.3
Pull-through rate69% - 100%89%
(1)    Lifetime total prepayment speed annualized.
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The following is a summary of the difference between the aggregate fair value and the aggregate UPB of loans HFS for which the FVO has been elected:
December 31,
20232022
Fair valueUPBDifferenceFair valueUPBDifference
(in millions)
Loans HFS:
Current through 89 days delinquent$1,379 $1,319 $60 $1,172 $1,138 $34 
90 days or more delinquent1 2 (1)1 1 — 
Total$1,380 $1,321 $59 $1,173 $1,139 $34 
Fair value on a nonrecurring basis
Certain assets are measured at fair value on a nonrecurring basis. That is, the assets are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment)credit deterioration). The following table presents such assets carried on the balance sheetConsolidated Balance Sheet by caption and by level within the ASC 825 hierarchy:
 Fair Value Measurements at the End of the Reporting Period Using
 TotalQuoted Prices in Active Markets for Identical Assets
(Level 1)		Active Markets for Similar Assets
(Level 2)		Unobservable Inputs
(Level 3)
 (in millions)
As of December 31, 2023
Loans HFI$379 $— $— $379 
Other assets acquired through foreclosure8 — — 8 
As of December 31, 2022
Loans HFI$295 $— $— $295 
Other assets acquired through foreclosure11 — — 11 
  Fair Value Measurements at the End of the Reporting Period Using
  Total 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Active Markets for Similar Assets
(Level 2)
 
Unobservable Inputs
(Level 3)
  (in thousands)
As of December 31, 2017:        
Impaired loans with specific valuation allowance $13,709
 $—
 $—
 $13,709
Impaired loans without specific valuation allowance (1) 63,607
 —
 —
 63,607
Other assets acquired through foreclosure 28,540
 —
 —
 28,540
As of December 31, 2016:        
Impaired loans with specific valuation allowance $6,670
 $—
 $—
 $6,670
Impaired loans without specific valuation allowance (1) 60,738
 —
 —
 60,738
Other assets acquired through foreclosure 47,815
 —
 —
 47,815
(1)Net of loan balances with charge-offs of $15.6 million and $27.6 million as of December 31, 2017 and 2016, respectively.
For Level 3 assets measured at fair value on a nonrecurring basis as of December 31, 2017 and 2016,period end, the significant unobservable inputs used in the fair value measurements were as follows:
December 31, 2023Valuation Technique(s)Significant Unobservable InputsRange
(in millions)
Loans HFI$379Collateral methodThird party appraisalCosts to sell6.0% to 10.0%
Discounted cash flow methodDiscount rateContractual loan rate3.0% to 8.0%
Scheduled cash collectionsProbability of default0% to 20.0%
Proceeds from non-real estate collateralLoss given default0% to 70.0%
Other assets acquired through foreclosure8Collateral methodThird party appraisalCosts to sell4.0% to 10.0%
December 31, 2022Valuation Technique(s)Significant Unobservable InputsRange
(in millions)
Loans HFI$295 Collateral methodThird party appraisalCosts to sell6.0% to 10.0%
Discounted cash flow methodDiscount rateContractual loan rate3.0% to 8.0%
Scheduled cash collectionsProbability of default0% to 20.0%
Proceeds from non-real estate collateralLoss given default0% to 70.0%
Other assets acquired through foreclosure11 Collateral methodThird party appraisalCosts to sell4.0% to 10.0%
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 December 31, 2017 Valuation Technique(s) Significant Unobservable Inputs Range
 (in thousands)        
Impaired loans$77,316
 Collateral method Third party appraisal Costs to sell 4.0% to 10.0%
 Discounted cash flow method Discount rate Contractual loan rate 4.0% to 7.0%
  Scheduled cash collections Loss given default 0% to 20.0%
  Proceeds from non-real estate collateral Loss given default 0% to 70.0%
Other assets acquired through foreclosure28,540
 Collateral method Third party appraisal Costs to sell 4.0% to 10.0%
 December 31, 2016 Valuation Technique(s) Significant Unobservable Inputs Range
 (in thousands)        
Impaired loans$67,408
 Collateral method Third party appraisal Costs to sell 4.0% to 10.0%
 Discounted cash flow method Discount rate Contractual loan rate 4.0% to 7.0%
  Scheduled cash collections Loss given default 0% to 20.0%
  Proceeds from non-real estate collateral Loss given default 0% to 70.0%
Other assets acquired through foreclosure47,815
 Collateral method Third party appraisal Costs to sell 4.0% to 10.0%


Impaired loans:Loans HFI: Loans measured at fair value on a nonrecurring basis include collateral dependent loans. The specific reserves for collateral dependent impairedthese loans are based on collateral value, net of estimated disposition costs and other identified quantitative inputs. Collateral value is determined based on independent third-party appraisals or internally-developed discounted cash flow analyses. Appraisals may utilize a single valuation approach or a combination of approaches, including comparable sales and the income approach. Fair value is determined, where possible, using market prices derived from an appraisal or evaluation, which are considered to be Level 2. However, certain assumptions and unobservable inputs are often used by the appraiser, therefore qualifying the assets as Level 3 in the fair value hierarchy. In addition, when adjustments are made to an appraised value to reflect various factors such as the age of the appraisal or known changes in the market or the collateral, such valuation inputs are considered unobservable and the fair value measurement is categorized as a Level 3 measurement. Internal discounted cash flow analyses are also utilized to estimate the fair value of impairedthese loans, which considers internally-developed, unobservable inputs such as discount rates, default rates, and loss severity.
Total Level 3 impairedcollateral dependent loans had an estimated fair value of $77.3$379 million and $67.4$295 million at December 31, 20172023 and 2016, respectively. Impaired loans with2022, respectively, net of a specific valuation allowance had a gross estimated fair valueACL of $19.3$10 million and $10.9$7 million at December 31, 20172023 and 2016, respectively, which was reduced by a specific valuation allowance of $5.6 million and $4.2 million,2022, respectively.
Other assets acquired through foreclosure: Other assets acquired through foreclosure consist of properties acquired as a result of, or in-lieu-of, foreclosure. These assets are initially reported at the fair value determined by independent appraisals using appraised value less estimated cost to sell. Such properties are generally re-appraised every twelve12 months. There is risk for subsequent volatility. 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 assumptions and unobservable inputs are often used by the appraiser, therefore qualifying the assets as Level 3 in the fair value hierarchy. When significant 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 further impaired below the appraised value and there is no observable market price, the resulting fair value measurement has been categorized as a Level 3 measurement. The Company had $28.5$8 million and $47.8$11 million of such assets at December 31, 20172023 and 2016,2022, respectively.
Credit vs. non-credit losses
Under the provisionsFair Value of ASC 320, Investments-Debt and Equity Securities, OTTI is separated into the amount of total impairment related to the credit loss and the amount of the total impairment related to all other factors. The amount of the total OTTI related to the credit loss is recognized in earnings. The amount of the total impairment related to all other factors is recognized in OCI.
For the years ended December 31, 2017, 2016, and 2015, the Company determined that no securities experienced credit losses.
There is no OTTI balance recognized in comprehensive income as of December 31, 2017 and 2016.

FAIR VALUE OF FINANCIAL INSTRUMENTSFinancial Instruments
The estimated fair value of the Company’s financial instruments is as follows: 
December 31, 2023
Carrying AmountFair Value
Level 1Level 2Level 3Total
(in millions)
Financial assets:
Investment securities:
HTM$1,429 $— $1,251 $— $1,251 
AFS11,165 4,881 6,284 — 11,165 
Equity securities126 126 — — 126 
Derivative assets (1)84 — 66 18 84 
Loans HFS1,402 — 1,379 23 1,402 
Loans HFI, net49,960 — — 46,877 46,877 
Mortgage servicing rights1,124 — — 1,124 1,124 
Accrued interest receivable370 — 370 — 370 
Financial liabilities:
Deposits$55,333 $— $55,379 $— $55,379 
Other borrowings7,230 — 7,192 — 7,192 
Qualifying debt895 — 734 76 810 
Derivative liabilities (1)100 — 100 — 100 
Accrued interest payable151 — 151 — 151 
(1)    Derivative assets and liabilities exclude margin of $202 million and $(9) million, respectively.
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 December 31, 2017
 Carrying Amount Fair Value
 Level 1 Level 2 Level 3 Total
 (in thousands)
December 31, 2022December 31, 2022
Carrying AmountCarrying AmountFair Value
Level 1Level 1Level 2Level 3Total
(in millions)(in millions)
Financial assets:          
Investment securities:          
Investment securities:
Investment securities:
HTM
HTM
HTM $255,050
 $—
 $256,314
 $—
 $256,314
AFS 3,499,519
 103,812
 3,395,707
 —
 3,499,519
Derivative assets 45,228
 —
 45,228
 —
 45,228
Loans, net 14,953,885
 —
 14,577,010
 77,316
 14,654,326
Equity securities
Derivative assets (1)
Loans HFS
Loans HFI, net
Mortgage servicing rights
Accrued interest receivable 85,517
 —
 85,517
 —
 85,517
Financial liabilities:          
Deposits $16,972,532
 $—
 $16,980,066
 $—
 $16,980,066
Customer repurchase agreements 26,017
 —
 26,017
 —
 26,017
FHLB advances 390,000
 —
 390,000
 —
 390,000
Deposits
Deposits
Other borrowings
Other borrowings
Other borrowings
Qualifying debt 376,905
 —
 336,803
 67,210
 404,013
Derivative liabilities(1) 96,943
 —
 96,943
 —
 96,943
Accrued interest payable 16,366
 —
 16,366
 —
 16,366
As(1)    Derivative assets and liabilities exclude margin of December 31, 2017, the Company utilized Level 2 inputs to measure the the fair value of the Company's subordinated debt issuances, compared to Level 3 inputs as of December 31, 2016, due to an increase in the availability$4 million and reliability of the observable inputs.$1 million, respectively.
  December 31, 2016
  Carrying Amount Fair Value
   Level 1 Level 2 Level 3 Total
  (in thousands)
Financial assets:          
Investment securities:          
HTM $92,079
 $—
 $91,966
 $—
 $91,966
AFS 2,609,380
 151,775
 2,457,605
 —
 2,609,380
Trading 1,053
 —
 1,053
 —
 1,053
Derivative assets 13,456
 —
 13,456
 —
 13,456
Loans, net 13,083,732
 —
 12,736,336
 67,408
 12,803,744
Accrued interest receivable 70,320
 —
 70,320
 —
 70,320
Financial liabilities:          
Deposits $14,549,863
 $—
 $14,553,931
 $—
 $14,553,931
Customer repurchase agreements 41,728
 —
 41,728
 —
 41,728
FHLB advances 80,000
 —
 80,000
 —
 80,000
Qualifying debt 367,937
 —
 

 375,626
 375,626
Derivative liabilities 74,934
 —
 74,934
 —
 74,934
Accrued interest payable 15,354
 —
 15,354
 —
 15,354

Interest rate risk
The Company assumes interest rate risk (the risk to the Company’s earnings and capital from changes in interest rate levels) as a result of its normal operations. As a result, the fair values of the Company’s financial instruments, as well as its future net interest income, will change when interest rate levels change and that change may be either favorable or unfavorable to the Company.
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 from hypothetical interest rate changes are not within the limits established by the BOD, the BOD may direct management to adjust the asset and liability mix to bring interest rate risk within BOD-approved limits.
WAB has an ALCO charged with managing interest rate risk within the BOD-approved limits. Limits are structured to prohibitpreclude an interest rate risk profile that does not conform to both management and BOD risk tolerances. Theretolerances without BOD and ALCO approval. Interest rate risk is also ALCO reportingevaluated at the Parent company level, for reviewing interest rate risk for the Company, which getsis reported to the BOD and its Finance and Investment Committee.
Fair value of commitments
The estimated fair value of standby letters of credit outstanding at December 31, 20172023 and 2016 is insignificant.2022 approximates zero as there have been no significant changes in borrower creditworthiness. Loan commitments on which the committed interest rates are less than the current market rate are also insignificant at December 31, 20172023 and 2016.2022.
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19. REGULATORY CAPITAL REQUIREMENTS
The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements could trigger certain mandatory or discretionary actions that, if undertaken, could have a direct material effect on the Company’s business and financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
Under the Basel III final rules, a capital conservation buffer, comprised of Common Equity Tier 1 capital, was established aboveAs permitted by the regulatory minimum capital requirements. Thisrules, the Company elected the CECL transition option that delayed the estimated impact on regulatory capital conservation buffer began being phasedresulting from the adoption of CECL over a five-year transition period ending December 31, 2024. Accordingly, capital ratios and amounts for 2022 include a 25% reduction to the capital benefit that resulted from the increased ACL related to the adoption of ASC 326, which has increased to include a 50% reduction beginning in on January 1, 2016 at 0.625% of risk-weighted assets and will increase each subsequent year by an additional 0.625% until reaching its final level of 2.5% on January 1, 2019.2023.
As of December 31, 20172023 and 2016,2022, the Company and the Bank exceeded the capital levels necessary to be classified as well-capitalized, as defined by the federalvarious banking agencies. The actual capital amounts and ratios for the Company and the Bank are presented in the following tablestables:
Total CapitalTier 1 CapitalRisk-Weighted AssetsTangible Average AssetsTotal Capital RatioTier 1 Capital RatioTier 1 Leverage RatioCommon Equity
Tier 1
(dollars in millions)
December 31, 2023
WAL$7,201 $6,035 $52,517 $70,295 13.7 %11.5 %8.6 %10.8 %
WAB6,802 6,229 52,508 70,347 13.0 11.9 8.9 11.9 
Well-capitalized ratios10.0 8.0 5.0 6.5 
Minimum capital ratios8.0 6.0 4.0 4.5 
December 31, 2022
WAL$6,586 $5,449 $54,461 $69,814 12.1 %10.0 %7.8 %9.3 %
WAB6,280 5,737 54,411 69,762 11.5 10.5 8.2 10.5 
Well-capitalized ratios10.0 8.0 5.0 6.5 
Minimum capital ratios8.0 6.0 4.0 4.5 
The Company and the Bank are also subject to liquidity and other regulatory requirements as administered by the federal banking agencies. These agencies have broad powers and at their discretion, could limit or prohibit the Company's payment of dividends, payment of certain debt service and issuance of capital stock and debt as they deem appropriate and as such, actions by the agencies could have a direct material effect on the Company’s business and financial statements.
The Company is also required to maintain specified levels of capital 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 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 it is in compliance with these requirements as of the periods indicated:December 31, 2023.
147
  Total Capital Tier 1 Capital Risk-Weighted Assets Tangible Average Assets Total Capital Ratio Tier 1 Capital Ratio Tier 1 Leverage Ratio Common Equity
Tier 1
  (dollars in thousands)

                
December 31, 2017                
WAL $2,460,988
 $2,013,744
 $18,569,608
 $19,624,517
 13.3% 10.8% 10.3% 10.4%
WAB 2,299,919
 2,003,745
 18,664,200
 19,541,990
 12.3
 10.7
 10.3
 10.7
Well-capitalized ratios         10.0
 8.0
 5.0
 6.5
Minimum capital ratios         8.0
 6.0
 4.0
 4.5

                
December 31, 2016                
WAL $2,107,480
 $1,675,871
 $15,980,092
 $16,868,674
 13.2% 10.5% 9.9% 10.0%
WAB 2,001,081
 1,720,072
 15,888,346
 16,764,327
 12.6
 10.8
 10.3
 10.8
Well-capitalized ratios         10.0
 8.0
 5.0
 6.5
Minimum capital ratios         8.0
 6.0
 4.0
 4.5
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18.20. EMPLOYEE BENEFIT PLANS
The Company has a qualified 401(k) employee benefit plan for all eligible employees. Participants are able to defer between 1% and 75% (up to a maximum of $18,000$22,500 for those under 50 years of age and up to a maximum of $24,000$30,000 for those over 50 years of age in 2017)2023) of their annual compensation. The Company may elect to match a discretionary amount each year, which is 50%was 100% of the first 6%5% of the participant’s compensation deferred into the plan.plan during the year ended December 31, 2023. The Company’s contributions to this plan total $3.1totaled $17.7 million, $2.7$15.9 million, and $2.2$12.0 million for the years ended December 31, 2017, 2016,2023, 2022, and 2015,2021, respectively.
In addition, the Company maintainshas a non-qualified 401(k) restoration plan for the benefit of executives of the Company and certain affiliates. Participants are able to defer a portion of their annual salary and receive a matching contribution based

primarily on the contribution structure in effect under the Company’s 401(k) plan, but without regard to certain statutory limitations applicable under the 401(k) plan. The Company’s total contribution to the restoration plan was $131,000, $117,000, and $68,000 for the years ended December 31, 2017, 2016, and 2015, respectively.
In connection with the Bridge acquisition, the Company assumed Bridge's SERP, which is an unfunded noncontributory defined benefit pension plan. The SERP provides retirement benefits to certain Bridge officers based on years of service and final average salary. The Company uses a December 31st measurement date for this plan.
The following table reflects the accumulatedprojected benefit obligation was $14 million as of December 31, 2023 and funded status2022, all of the SERP:
  December 31,
  2017 2016
  (in thousands)
Change in benefit obligation    
Benefit obligation at beginning of period $8,394
 $7,444
Service cost 580
 680
Interest cost 454
 425
Actuarial (gains)/losses (470) (88)
Expected benefits paid (67) (67)
Projected benefit obligation at end of year $8,891
 $8,394
Unfunded projected/accumulated benefit obligation (8,891) (8,394)
Additional liability $—
 $—
     
Weighted average assumptions to determine benefit obligation    
Discount rate 5.75% 5.75%
Rate of compensation increase 3.00% 4.00%
The components of netwhich was unfunded. Net periodic benefit cost recognizedtotaled $1.0 million, $1.0 million, and $1.1 million for the yearyears ended December 31, 20172023, 2022 and 2016 and the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost during 2018 are as follows:2021 respectively.
  Year Ended December 31,
  2018 2017 2016
  (in thousands)
Components of net periodic benefit cost      
Service cost $566
 $580
 $614
Interest cost 509
 454
 425
Amortization of prior service cost 103
 103
 101
Amortization of actuarial (gains)/losses (165) (114) (100)
Net periodic benefit cost $1,013
 $1,023
 $1,040
       
Other comprehensive income (cost) $(62) $(11) $1

19.21. RELATED PARTY TRANSACTIONS
Principal stockholders, directors, and executive officers of the Company, their immediate family members, and companies they control or own more than a 10% interest in, are considered to be related parties. In the ordinary course of business, the Company engages in various related party transactions, including extending credit and bank service transactions. All related party transactions are subject to review and approval pursuant to the Company's Related Party Transactionsrelated party transactions policy. The decrease in related party transactions during the year ended December 31, 2023 is due to changes in composition of the BOD.
Federal banking regulations require that any extensions of credit to insiders and their related interests not be offered on terms more favorable than would be offered to non-related borrowers of similar creditworthiness. The following table summarizes the aggregate activity infor such loans for the periods indicated:loans:
 Year Ended December 31,
 2017 2016
 (in thousands)
Year Ended December 31,Year Ended December 31,
202320232022
(in millions)(in millions)
Balance, beginning $16,874
 $74,381
New loans —
 637
Advances 1,532
 1,980
Repayments and other (12,488) (60,124)
Balance, ending $5,918
 $16,874
None of these loans arewere past due, on non-accrual status or have been restructured during the year ended December 31, 2023 to provide a reduction or deferral of interest or principal because of deterioration in the financial position of the borrower. There were no loans to a related party that were considered classified loans at December 31, 20172023 or 2016. The interest income associated2022. Loan repayments and other of $629 million during the year ended December 31, 2023 related entirely to loan amounts with these loans was approximately $0.5 million, $0.6 milliona former Director and $2.7 million fortheir related interests. For the years ended December 31, 2017, 2016,2023, 2022, and 2015,2021, interest income associated with related party loans was approximately $1.6 million, $2.5 million and $0.1 million, respectively. In addition, during the years ended December 31, 2023 and 2022, the Company purchased $27 million and $914 million of residential loans from related parties, respectively. There were no such related party loan purchases during the year ended December 31, 2021.
Loan commitments outstanding with related parties totaled approximately $31.2$2 million and $46.6$476 million at December 31, 20172023 and 2016,2022, respectively.
The Company also accepts deposits from related parties, which totaled $100.5$62 million and $97.3$398 million at December 31, 20172023 and 2016,2022, respectively, with related interest expense totaling less thanof approximately $1.1 million during the year ended December 31, 2023 and $0.2 million during each of the years ended December 31, 2017, 2016,2022 and 2015.
On April 1, 2017, the Company hired an executive officer who was previously the Managing Partner of an external consulting firm that the Company actively uses for risk management services. Prior to joining the Company, the executive officer sold his interest in this external consulting firm2021. Earnings credits on deposits from related parties totaled $2.6 million and was paid with a combination of cash and a $1.0 million note that will be paid in equal installments ending in 2019. Expenses to this external consulting firm totaled $1.9 million $1.6for the years ended December 31, 2023 and 2022, respectively, with no earnings credits on deposits from related parties for the year ended December 31, 2021.
There were no long-term borrowings with related parties at December 31, 2023, compared to $1 million at December 31, 2022.
Loan servicing fees paid to related parties totaled $0.6 million and less than $0.1$1.5 million during the years ended December 31, 2017, 2016,2023 and 2015. In addition,2022, respectively, with no loan servicing fees paid to related parties for the year ended December 31, 2021. There were no loans serviced by related parties at December 31, 2023 and 2021 and $2.1 billion of residential loans serviced by related parties at December 31, 2022. Donations, sponsorships, donations and other servicespayments to related parties totaled less than $1.0 million during each of the years ended December 31, 2017, 2016,2023, 2022, and 2015.
20. MERGERS, ACQUISITIONS AND DISPOSITIONS
Acquisition of GE Capital US Holdings, Inc. Loan Portfolio
On April 20, 2016, WAB completed its acquisition of GE Capital US Holdings, Inc.'s domestic select-service hotel franchise finance loan portfolio, paying cash of $1.27 billion. The acquisition was undertaken, in part, to expand the Company's national reach and diversify the Company's loan portfolio.
Effective April 20, 2016, the results of the acquired loan portfolio are reflected in the Company's HFF NBL operating segment. There were no acquisition / restructure expenses related to the acquisition recognized during the year ended December 31, 2017. For the year ended December 31, 2016, acquisition / restructure expenses related to the acquisition totaled $4.3 million, of which approximately $0.6 million are acquisition related costs as defined by ASC 805. The transaction was accounted for under the acquisition method of accounting in accordance with ASC 805. Assets purchased and liabilities assumed were recorded at their respective acquisition date estimated fair values. The fair values of assets acquired and liabilities assumed are subject to adjustment during the first twelve months after the acquisition date if additional information becomes available to indicate a more accurate or appropriate value for an asset or liability. During the year ended December 31, 2017, the Company recognized measurement period adjustments totaling $0.1 million for tax related items. The measurement period for the HFF acquisition ended on April 20, 2017, and therefore, the fair values of these assets acquired and liabilities assumed were considered final as of that date.

The recognized amounts of identifiable assets acquired and liabilities assumed are as follows:2021.
148
 April 20, 2016
 (in thousands)
Assets: 
Loans$1,280,997
Other assets3,632
Total assets$1,284,629
Liabilities: 
Other liabilities$12,559
Total liabilities12,559
Net assets acquired$1,272,070
Consideration paid 
Cash$1,272,187
Goodwill$117
Loans acquired consist
Table of loans that are not considered impaired (non-PCI loans) and loans that have shown evidence of credit deterioration since origination (PCI loans) as of the acquisition date. All loans were recorded net of fair value adjustments (interest rate and credit marks), which were determined using discounted contractual cash flow models. The fair value of non-PCI loans acquired totaled $1.19 billion, which was net of interest and credit marks of $43.3 million. The fair value of PCI loans totaled $93.3 million, which is net of interest and credit marks of $17.0 million. See "Note 3. Loans, Leases and Allowance for Credit Losses" of these Notes to Consolidated Financial Statements for additional detail of the acquired loans.
The following table presents pro forma information as if the acquisition was completed on January 1, 2015. The pro forma information includes adjustments for interest income on loans acquired and excludes acquisition / restructure expense. The pro forma information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed dates.
Contents
  Year Ended December 31,
  2016 2015
  (in thousands)
Interest income $707,620
 $593,057
Non-interest income 42,915
 29,768
Net income available to common stockholders 265,731
 231,528
Earnings per share - basic 2.59
 2.51
Earnings per share - diluted 2.57
 2.49

21.22. PARENT COMPANY FINANCIAL INFORMATION
The condensed financial statements of the holding company are presented in the following tables:
WESTERN ALLIANCE BANCORPORATION
Condensed Balance Sheets
 December 31, December 31,
 2017 2016 20232022
 (in thousands) (in millions)
ASSETS:  
Cash and cash equivalents $56,554
 $11,409
Investment securities - AFS 34,698
 34,562
Investment in bank subsidiaries 2,291,166
 2,003,550
Investment in non-bank subsidiaries 77,457
 46,140
Cash and cash equivalents
Cash and cash equivalents
Investment securities - equity
Investment securities - equity
Investment securities - equity
Investment in subsidiaries
Other assets
Other assets
Other assets 24,378
 29,400
Total assets $2,484,253
 $2,125,061
LIABILITIES AND STOCKHOLDERS' EQUITY:    
Qualifying debt
Qualifying debt
Qualifying debt $226,993
 $216,838
Accrued interest and other liabilities 27,562
 16,694
Total liabilities 254,555
 233,532
Total stockholders’ equity 2,229,698
 1,891,529
Total liabilities and stockholders’ equity $2,484,253
 $2,125,061
WESTERN ALLIANCE BANCORPORATION
Condensed Income Statements
 Year Ended December 31,
 202320222021
 (in millions)
Income:
Dividends from subsidiaries$330.0 $261.8 $50.0 
Interest income2.9 3.8 3.2 
Non-interest income (loss)1.5 (0.9)13.4 
Total income334.4 264.7 66.6 
Expense:
Interest expense25.4 22.6 19.5 
Non-interest expense29.3 26.5 31.9 
Total expense54.7 49.1 51.4 
Income before income taxes and equity in undistributed earnings of subsidiaries279.7 215.6 15.2 
Income tax benefit10.3 11.0 7.4 
Income before equity in undistributed earnings of subsidiaries290.0 226.6 22.6 
Equity in undistributed earnings of subsidiaries432.4 830.7 876.6 
Net income722.4 1,057.3 899.2 
Dividends on preferred stock12.8 12.8 3.5 
Net income available to common stockholders$709.6 $1,044.5 $895.7 
149
  Year Ended December 31,
  2017 2016 2015
  (in thousands)
Income:      
Dividends from subsidiaries $97,264
 $12,795
 $140,900
Interest income 2,547
 3,327
 4,593
Non-interest income 2,470
 2,445
 586
Total income 102,281
 18,567
 146,079
Expense:      
Interest expense 11,459
 6,975
 6,671
Non-interest expense 16,293
 9,221
 11,397
Total expense 27,752
 16,196
 18,068
Income before income taxes and equity in undistributed earnings of subsidiaries 74,529
 2,371
 128,011
Income tax benefit 5,229
 4,399
 5,876
Income before equity in undistributed earnings of subsidiaries 79,758
 6,770
 133,887
Equity in undistributed earnings of subsidiaries 245,734
 253,028
 60,357
Net income 325,492
 259,798
 194,244
Dividends on preferred stock —
 —
 750
Net income available to common stockholders $325,492
 $259,798
 $193,494
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Western Alliance Bancorporation
Condensed Statements of Cash Flows
Year Ended December 31,
202320222021
(in millions)
Cash flows from operating activities:
Net income$722.4 $1,057.3 $899.2 
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net undistributed earnings of subsidiaries(432.4)(830.7)(876.6)
Change in fair value of assets and liabilities measured at fair value(3.4)8.7 (0.1)
Loss on extinguishment of debt— — 5.9 
Other operating activities, net(1.8)(16.8)(1.4)
Net cash provided by operating activities284.8 218.5 27.0 
Cash flows from investing activities:
Purchases of securities(153.9)(0.4)(16.0)
Principal pay downs, calls, maturities, and sales proceeds of securities155.5 1.8 28.6 
Capital contributions to subsidiaries(50.0)(193.0)(1,139.3)
Other investing activities, net(10.0)(12.1)— 
Net cash used in investing activities(58.4)(203.7)(1,126.7)
Cash flows from financing activities:
Net proceeds from issuance of subordinated debt— — 591.9 
Redemption of subordinated debt— — (176.0)
Proceeds from issuance of common stock, net0.1 157.7 540.3 
Cash dividends paid on common and preferred stock(171.5)(166.2)(127.6)
Proceeds from issuance of preferred stock, net— — 294.5 
Other financing activities, net— — 0.1 
Net cash (used in) provided by financing activities(171.4)(8.5)1,123.2 
Net increase in cash and cash equivalents55.0 6.3 23.5 
Cash and cash equivalents at beginning of year85.3 79.0 55.5 
Cash and cash equivalents at end of year$140.3 $85.3 $79.0 
 Year Ended December 31,
 2017 2016 2015
 (in thousands)
Cash flows from operating activities:     
Net income$325,492
 $259,798
 $194,244
Adjustments to reconcile net income to net cash (used in) provided by operating activities:     
Equity in net undistributed earnings of subsidiaries(245,734) (253,028) (60,357)
Excess tax benefit of stock-based compensation(7) (359) (1,945)
Other operating activities, net16,928
 (9,521) 2,869
Net cash (used in) provided by operating activities96,679
 (3,110) 134,811
Cash flows from investing activities:     
Purchases of securities(11,765) (20,148) —
Principal pay downs, calls, maturities, and sales proceeds of securities, net23,196
 34,390
 2,358
Proceeds from sale of other repossessed assets, net—
 —
 4,138
Capital contributions to subsidiaries(50,000) (226,869) —
Loans purchases, fundings, and principal collections, net—
 2,770
 3,704
Sale (purchase) of money market investments, net—
 121
 330
Net cash and cash equivalents (used) in acquisition (1)—
 —
 (19,440)
Net cash (used in) provided by investing activities(38,569) (209,736) (8,910)
Cash flows from financing activities:     
Proceeds from issuance of subordinated debt—
 169,256
 —
Cash paid for tax withholding on vested restricted stock(13,811) (9,483) (7,603)
Excess tax benefit of stock-based compensation—
 —
 1,945
Repayments on other borrowings—
 —
 (83,444)
Proceeds from issuance of common stock—
 55,785
 28,288
Proceeds from exercise of stock options846
 1,070
 1,935
Redemption of preferred stock—
 —
 (70,500)
Cash dividends paid on preferred stock—
 —
 (750)
Net cash (used in) provided by financing activities(12,965) 216,628
 (130,129)
Net increase (decrease) in cash and cash equivalents45,145
 3,782
 (4,228)
Cash and cash equivalents at beginning of year11,409
 7,627
 11,855
Cash and cash equivalents at end of year$56,554
 $11,409
 $7,627
Supplemental disclosure:     
Cash paid during the year for:     
Interest$11,182
 $5,165
 $4,235
Income taxes97,781
 70,131
 54,590
Non-cash investing and financing activity:     
Change in unrealized gain (loss) on AFS securities, net of tax759
 (1,984) 1,199
Change in unrealized (loss) gain on junior subordinated debt, net of tax(3,604) (2,077) (4,276)
Loan and OREO contributions to subsidiaries11,264
 50,773
 183
(1)
Cash acquired, less cash consideration paid of $36.5 million, resulted in a net $19.4 million use of cash and cash equivalents in the acquisition.


22.23. SEGMENTS
The Company's reportable segments are aggregated based primarilywith a focus on geographic location,products and services offered and markets served. The Company's regional segments, which include Arizona, Nevada, Southern California, and Northern California, provide full serviceconsist of three reportable segments:
•Commercial: provides commercial banking and relatedtreasury management products and services to their respective markets. The operations from the regional segments correspond to the following banking divisions: ABA in Arizona, BONsmall and FIB in Nevada, TPB in Southern California, and Bridge in Northern California.
The Company's NBL segments providemiddle-market businesses, specialized banking services to sophisticated commercial institutions and investors within niche markets. The Company's NBL reportable segments include HOA Services, Publicindustries, as well as financial services to the real estate industry.
•Consumer Related: offers both commercial banking services to enterprises in consumer-related sectors and consumer banking services, such as residential mortgage banking.
•Corporate & Nonprofit Finance, Technology & Innovation, HFF, and Other NBLs. These NBLs are managed centrally and are broader in geographic scope thanOther: consists of the Company's investment portfolio, Corporate borrowings and other segments, though still predominately located within the Company's core market areas. The HOA Services NBL corresponds to the AAB division. The operations of Public and Nonprofit Finance are combined into one reportable segment. The Technology & Innovation NBL includes the operations of Equity Fund Resources, Life Sciences Group, Renewable Resource Group, and Technology Finance. The HFF NBL includes the hotel franchise loan portfolio acquired from GE Capital US Holdings, Inc. on April 20, 2016. The Other NBLs segment consists of Corporate Finance, Mortgage Warehouse Lending, and Resort Finance.
The Corporate & Other segment consists of corporate-relatedrelated items, income and expense items not allocated to the Company's other reportable segments, and inter-segment eliminations.
The Company's segment reporting process begins with the assignment of all loan and deposit accounts directly to the segments where these products are originated and/or serviced. Equity capital is assigned to each segment based on the risk profile of their assets and liabilities. With the exception of goodwill, which is assigned a 100% weighting, equity capital allocations ranged from 0% to 12%20% during the year, with a funds credit provided for the use of this equity as a funding source.year. Any excess or deficient equity not allocated to segments based on risk is assigned to the Corporate & Other segment.
Net interest income, provision for credit losses, and non-interest expense amounts are recorded in their respective segmentsegments 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 funds transfer pricing process that matches assets and liabilities with similar interest rate sensitivity and maturityestimated duration characteristics. Using this funds transfer pricing methodology, liquidity is transferred between users and providers. A net user of funds has lending/investing in excess of deposits/borrowings and a net provider of funds has deposits/borrowings in excess of lending/investing. A segment that is a user of funds is charged
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for the use of funds, while a provider of funds is credited through funds transfer pricing, which is determined based on the average estimated life of the assets or liabilities in the portfolio. Residual funds transfer pricing mismatches are allocable to the Corporate & Other segment and presented in net interest income.
NetThe net income amountsamount for each reportable segment is further 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 balances, and average deposit balances. These types of expenses include information technology, operations, human resources, finance, risk management, credit administration, legal, and marketing.
Income taxes are applied to each segment based on theestimated effective tax rate for the geographic location of the segment.rates. Any difference in the corporate tax rate and the aggregate effective tax rates in the segments are adjusted in the Corporate & Other segment.

The following is a summary of reportable segment balance sheet information:
Consolidated CompanyCommercialConsumer RelatedCorporate & Other
At December 31, 2023:(in millions)
Assets:
Cash, cash equivalents, and investment securities$14,569 $13 $125 $14,431 
Loans HFS1,402 — 1,402 — 
Loans HFI, net of deferred fees and costs50,297 29,136 21,161 — 
Less: allowance for credit losses(337)(284)(53)— 
Net loans HFI49,960 28,852 21,108 — 
Other assets acquired through foreclosure, net8 8 — — 
Goodwill and other intangible assets, net669 292 377 — 
Other assets4,254 390 1,826 2,038 
Total assets$70,862 $29,555 $24,838 $16,469 
Liabilities:
Deposits$55,333 $23,897 $24,925 $6,511 
Borrowings and qualifying debt8,125 7 402 7,716 
Other liabilities1,326 109 338 879 
Total liabilities64,784 24,013 25,665 15,106 
Allocated equity:6,078 2,555 1,790 1,733 
Total liabilities and stockholders' equity$70,862 $26,568 $27,455 $16,839 
Excess funds provided (used)— (2,987)2,617 370 
At December 31, 2022:
Assets:
Cash, cash equivalents, and investment securities$9,803 $12 $— $9,791 
Loans HFS1,184 — 1,184 — 
Loans HFI, net of deferred fees and costs51,862 31,414 20,448 — 
Less: allowance for credit losses(310)(262)(48)— 
Net loans HFI51,552 31,152 20,400 — 
Other assets acquired through foreclosure, net11 11 — — 
Goodwill and other intangible assets, net680 293 387 — 
Other assets4,504 435 2,180 1,889 
Total assets$67,734 $31,903 $24,151 $11,680 
Liabilities:
Deposits$53,644 $29,494 $18,492 $5,658 
Borrowings and qualifying debt7,192 27 340 6,825 
Other liabilities1,542 83 656 803 
Total liabilities62,378 29,604 19,488 13,286 
Allocated equity:5,356 2,684 1,691 981 
Total liabilities and stockholders' equity$67,734 $32,288 $21,179 $14,267 
Excess funds provided (used)— 385 (2,972)2,587 
151
Table of Contents
The following is a summary of operating segment balance sheet information for the periods indicated:
    Regional Segments

 Consolidated Company Arizona Nevada Southern California Northern California
At December 31, 2017 (in millions)
Assets:          
Cash, cash equivalents, and investment securities $4,237.1
 $2.1
 $8.2
 $2.1
 $1.7
Loans, net of deferred loan fees and costs 15,093.9
 3,323.7
 1,844.8
 1,934.7
 1,275.5
Less: allowance for credit losses (140.0) (31.5) (18.1) (19.5) (13.2)
Total loans 14,953.9
 3,292.2
 1,826.7
 1,915.2
 1,262.3
Other assets acquired through foreclosure, net 28.5
 2.3
 13.3
 —
 0.2
Goodwill and other intangible assets, net 300.7
 —
 23.2
 —
 156.5
Other assets 808.9
 46.3
 58.8
 14.4
 15.1
Total assets $20,329.1
 $3,342.9
 $1,930.2
 $1,931.7
 $1,435.8
Liabilities:          
Deposits $16,972.5
 $4,841.3
 $3,951.4
 $2,461.1
 $1,681.7
Borrowings and qualifying debt 766.9
 —
 —
 —
 —
Other liabilities 360.0
 11.6
 20.9
 3.2
 11.9
Total liabilities 18,099.4
 4,852.9
 3,972.3
 2,464.3
 1,693.6
Allocated equity: 2,229.7
 396.5
 263.7
 221.8
 303.1
Total liabilities and stockholders' equity $20,329.1
 $5,249.4
 $4,236.0
 $2,686.1
 $1,996.7
Excess funds provided (used) —
 1,906.5
 2,305.8
 754.4
 560.9
  National Business Lines  
  HOA Services Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance  Other NBL Corporate & Other
Assets: (in millions)
Cash, cash equivalents, and investment securities $—
 $—
 $—
 $—
 $—
 $4,223.0
Loans, net of deferred loan fees and costs 162.1
 1,580.4
 1,097.9
 1,327.7
 2,543.0
 4.1
Less: allowance for credit losses (1.6) (15.6) (11.4) (4.0) (25.0) (0.1)
Total loans 160.5
 1,564.8
 1,086.5
 1,323.7
 2,518.0
 4.0
Other assets acquired through foreclosure, net —
 —
 —
 —
 —
 12.7
Goodwill and other intangible assets, net —
 —
 120.9
 0.1
 —
 —
Other assets 0.9
 17.9
 6.0
 5.9
 15.5
 628.1
Total assets $161.4
 $1,582.7
 $1,213.4
 $1,329.7
 $2,533.5
 $4,867.8
Liabilities:            
Deposits $2,230.4
 $—
 $1,737.6
 $—
 $—
 $69.0
Borrowings and qualifying debt —
 —
 —
 —
 —
 766.9
Other liabilities 1.2
 42.4
 0.8
 0.4
 5.5
 262.1
Total liabilities 2,231.6
 42.4
 1,738.4
 0.4
 5.5
 1,098.0
Allocated equity: 59.4
 126.5
 244.1
 108.3
 206.0
 300.3
Total liabilities and stockholders' equity $2,291.0
 $168.9
 $1,982.5
 $108.7
 $211.5
 $1,398.3
Excess funds provided (used) 2,129.6
 (1,413.8) 769.1
 (1,221.0) (2,322.0) (3,469.5)




    Regional Segments

 Consolidated Company Arizona Nevada Southern California Northern California
At December 31, 2016 (in millions)
Assets:          
Cash, cash equivalents, and investment securities $3,052.3
 $1.9
 $10.1
 $2.1
 $1.9
Loans, net of deferred loan fees and costs 13,208.5
 2,955.9
 1,725.5
 1,766.8
 1,095.4
Less: allowance for credit losses (124.7) (30.1) (18.5) (19.4) (8.8)
Total loans 13,083.8
 2,925.8
 1,707.0
 1,747.4
 1,086.6
Other assets acquired through foreclosure, net 47.8
 6.2
 18.0
 —
 0.3
Goodwill and other intangible assets, net 302.9
 —
 23.7
 —
 157.5
Other assets 714.0
 42.9
 58.8
 14.5
 14.3
Total assets $17,200.8
 $2,976.8
 $1,817.6
 $1,764.0
 $1,260.6
Liabilities:          
Deposits $14,549.8
 $3,843.4
 $3,731.5
 $2,382.6
 $1,543.6
Borrowings and qualifying debt 447.9
 —
 —
 —
 —
Other liabilities 311.6
 12.8
 28.3
 12.9
 12.4
Total liabilities 15,309.3
 3,856.2
 3,759.8
 2,395.5
 1,556.0
Allocated equity: 1,891.5
 346.6
 250.7
 201.6
 283.7
Total liabilities and stockholders' equity $17,200.8
 $4,202.8
 $4,010.5
 $2,597.1
 $1,839.7
Excess funds provided (used) —
 1,226.0
 2,192.9
 833.1
 579.1
  National Business Lines  
  HOA Services Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance  Other NBLs Corporate & Other
Assets: (in millions)
Cash, cash equivalents, and investment securities $—
 $—
 $—
 $—
 $—
 $3,036.3
Loans, net of deferred loan fees and costs 116.8
 1,454.3
 1,011.4
 1,292.1
 1,776.9
 13.4
Less: allowance for credit losses (1.3) (15.6) (10.6) (0.8) (19.0) (0.6)
Total loans 115.5
 1,438.7
 1,000.8
 1,291.3
 1,757.9
 12.8
Other assets acquired through foreclosure, net —
 —
 —
 —
 —
 23.3
Goodwill and other intangible assets, net —
 —
 121.5
 0.2
 —
 —
Other assets 0.3
 15.6
 7.2
 5.3
 11.1
 544.0
Total assets $115.8
 $1,454.3
 $1,129.5
 $1,296.8
 $1,769.0
 $3,616.4
Liabilities:            
Deposits $1,890.3
 $—
 $1,038.2
 $—
 $—
 $120.2
Borrowings and qualifying debt —
 —
 —
 —
 —
 447.9
Other liabilities 0.7
 50.5
 2.0
 1.4
 17.5
 173.1
Total liabilities 1,891.0
 50.5
 1,040.2
 1.4
 17.5
 741.2
Allocated equity: 65.6
 117.1
 224.1
 107.1
 145.5
 149.5
Total liabilities and stockholders' equity $1,956.6
 $167.6
 $1,264.3
 $108.5
 $163.0
 $890.7
Excess funds provided (used) 1,840.8
 (1,286.7) 134.8
 (1,188.3) (1,606.0) (2,725.7)

The following is a summary of operatingreportable segment income statement informationinformation:
Consolidated CompanyCommercialConsumer RelatedCorporate & Other
Year Ended December 31, 2023:(in millions)
Net interest income$2,338.9 $1,387.4 $898.9 $52.6 
Provision for credit losses62.6 38.3 3.3 21.0 
Net interest income after provision for credit losses2,276.3 1,349.1 895.6 31.6 
Non-interest income280.7 (23.3)286.9 17.1 
Non-interest expense1,623.4 580.6 924.5 118.3 
Income (loss) before provision for income taxes933.6 745.2 258.0 (69.6)
Income tax expense (benefit)211.2 174.8 59.2 (22.8)
Net income (loss)$722.4 $570.4 $198.8 $(46.8)
Year Ended December 31, 2022:
Net interest income$2,216.3 $1,546.3 $854.1 $(184.1)
Provision for (recovery of) credit losses68.1 47.2 21.1 (0.2)
Net interest income (expense) after provision for credit losses2,148.2 1,499.1 833.0 (183.9)
Non-interest income324.6 59.7 247.2 17.7 
Non-interest expense1,156.7 463.5 630.1 63.1 
Income (loss) before income taxes1,316.1 1,095.3 450.1 (229.3)
Income tax expense (benefit)258.8 260.5 107.1 (108.8)
Net income (loss)$1,057.3 $834.8 $343.0 $(120.5)
Year Ended December 31, 2021:
Net interest income$1,548.8 $1,181.7 $603.4 $(236.3)
Provision for (recovery of) credit losses(21.4)(30.6)11.0 (1.8)
Net interest income (expense) after provision for credit losses1,570.2 1,212.3 592.4 (234.5)
Non-interest income404.2 65.1 317.6 21.5 
Non-interest expense851.4 415.9 413.9 21.6 
Income (loss) before provision for income taxes1,123.0 861.5 496.1 (234.6)
Income tax expense (benefit)223.8 206.6 120.1 (102.9)
Net income (loss)$899.2 $654.9 $376.0 $(131.7)
24. REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue streams within the scope of ASC 606 include service charges and fees, interchange fees on credit and debit cards, success fees, and legal settlement service fees. These revenues totaled $98.6 million, $44.1 million, and $37.6 million for the periods indicated:years ended December 31, 2023, 2022, and 2021, respectively. The Company had no material unsatisfied performance obligations as of December 31, 2023 or 2022.
152
    Regional Segments

 Consolidated Company Arizona Nevada Southern California Northern California
Year Ended December 31, 2017 (in thousands)
Net interest income (expense) $784,664
 $198,622
 $145,001
 $109,177
 $85,360
Provision for (recovery of) credit losses 17,250
 1,153
 (4,724) 100
 4,575
Net interest income (expense) after provision for credit losses 767,414
 197,469
 149,725
 109,077
 80,785
Non-interest income 45,344
 4,757
 9,135
 3,396
 10,000
Non-interest expense (360,941) (76,118) (61,066) (51,808) (48,387)
Income (loss) before income taxes 451,817
 126,108
 97,794
 60,665
 42,398
Income tax expense (benefit) 126,325
 49,317
 34,133
 25,529
 17,591
Net income (loss) $325,492
 $76,791
 $63,661
 $35,136
 $24,807
Table of Contents
  National Business Lines  
  HOA
Services		 Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance Other NBLs Corporate & Other
  (in thousands)
Net interest income (expense) $54,102
 $28,485
 $82,473
 $56,961
 $65,908
 $(41,425)
Provision for (recovery of) credit losses 341
 593
 2,821
 4,493
 9,729
 (1,831)
Net interest income (expense) after provision for credit losses 53,761
 27,892
 79,652
 52,468
 56,179
 (39,594)
Non-interest income 558
 —
 8,422
 52
 1,772
 7,252
Non-interest expense (28,289) (8,522) (36,726) (10,166) (20,550) (19,309)
Income (loss) before income taxes 26,030
 19,370
 51,348
 42,354
 37,401
 (51,651)
Income tax expense (benefit) 9,676
 6,317
 19,255
 15,883
 14,000
 (65,376)
Net income (loss) $16,354
 $13,053
 $32,093
 $26,471
 $23,401
 $13,725
25. MERGERS, ACQUISITIONS AND DISPOSITIONS
    Regional Segments

 Consolidated Company Arizona Nevada Southern California Northern California
Year Ended December 31, 2016 (in thousands)
Net interest income (expense) $657,213
 $170,513
 $137,507
 $103,542
 $88,162
Provision for (recovery of) credit losses 8,000
 9,912
 (3,337) (580) 2,587
Net interest income (expense) after provision for credit losses 649,213
 160,601
 140,844
 104,122
 85,575
Non-interest income 42,915
 6,887
 8,622
 2,550
 10,422
Non-interest expense (330,949) (63,406) (60,570) (45,643) (53,073)
Income (loss) before income taxes 361,179
 104,082
 88,896
 61,029
 42,924
Income tax expense (benefit) 101,381
 40,832
 31,113
 25,663
 18,049
Net income (loss) $259,798
 $63,250
 $57,783
 $35,366
 $24,875
Acquisition of Digital Disbursements
  National Business Lines  
  HOA
Services		 Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance Other NBLs Corporate & Other
  (in thousands)
Net interest income (expense) $41,539
 $20,900
 $69,143
 $38,583
 $49,893
 $(62,569)
Provision for (recovery of) credit losses 256
 (183) (1,626) —
 4,200
 (3,229)
Net interest income (expense) after provision for credit losses 41,283
 21,083
 70,769
 38,583
 45,693
 (59,340)
Non-interest income 460
 59
 6,728
 —
 2,315
 4,872
Non-interest expense (24,019) (7,936) (31,271) (8,544) (15,204) (21,283)
Income (loss) before income taxes 17,724
 13,206
 46,226
 30,039
 32,804
 (75,751)
Income tax expense (benefit) 6,647
 4,952
 17,335
 11,265
 12,302
 (66,777)
Net income (loss) $11,077
 $8,254
 $28,891
 $18,774
 $20,502
 $(8,974)
On January 25, 2022, the Company completed its acquisition of DST, doing business as Digital Disbursements, a digital payments platform for the class action legal industry. The acquisition of DST extended the Company's digital payment efforts by providing a digital payments platform for the class action market and broader legal industry.

This transaction was accounted for as a business combination under the acquisition method of accounting. Assets purchased and liabilities assumed were recorded at their respective acquisition date estimated fair values, which were final as of December 31, 2022.
    Regional Segments
  Consolidated Company Arizona Nevada Southern California Northern California
Year Ended December 31, 2015 (in thousands)
Net interest income (expense) $492,576
 $129,914
 $122,082
 $94,585
 $56,698
Provision for (recovery of) credit losses 3,200
 3,099
 (6,887) 152
 3,038
Net interest income (expense) after provision for credit losses 489,376
 126,815
 128,969
 94,433
 53,660
Non-interest income 29,768
 4,204
 9,202
 2,697
 5,161
Non-interest expense (260,606) (59,917) (59,553) (47,549) (30,161)
Income (loss) before income taxes 258,538
 71,102
 78,618
 49,581
 28,660
Income tax expense (benefit) 64,294
 27,893
 27,516
 20,849
 12,051
Net income $194,244
 $43,209
 $51,102
 $28,732
 $16,609
Total 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 arrangement based on performance for the three year period subsequent to the acquisition. There is no required minimum or maximum payment amount specified under the terms of the contingent consideration agreement. The fair value of the contingent consideration recognized on the acquisition date was estimated using a discounted cash flow approach.
  National Business Lines  
  HOA
Services		 Public & Nonprofit Finance Technology & Innovation (1) Other NBLs Corporate & Other
  (in thousands)
Net interest income (expense) $25,572
 $19,988
 $30,137
 $48,525
 $(34,925)
Provision for (recovery of) credit losses 232
 2,655
 2,264
 (1,234) (119)
Net interest income (expense) after provision for credit losses 25,340
 17,333
 27,873
 49,759
 (34,806)
Non-interest income 322
 687
 2,252
 849
 4,394
Non-interest expense (18,059) (5,675) (7,596) (14,501) (17,595)
Income (loss) before income taxes 7,603
 12,345
 22,529
 36,107
 (48,007)
Income tax expense (benefit) 2,851
 4,630
 8,448
 13,540
 (53,484)
Net income $4,752
 $7,715
 $14,081
 $22,567
 $5,477
DST’s results of operations have been included in the Company's results beginning January 25, 2022 and are reported as part of the Consumer Related segment. Acquisition and restructure expenses of $0.4 million for the year ended December 31, 2022, were included as a component of non-interest expense in the Consolidated Income Statement, all of which were acquisition related costs as defined by ASC 805.
The fair value amounts of identifiable assets acquired and liabilities assumed in the DST acquisition are as follows:
January 25, 2022
(1)As the Bridge acquisition was completed on June 30, 2015, the results of operations of Bridge are included (in the Company's Consolidated Income Statements beginning July 1, 2015.


23. QUARTERLY FINANCIAL DATA (UNAUDITED)
  Year Ended December 31, 2017
  Fourth Quarter Third Quarter Second Quarter First Quarter
  (in thousands, except per share amounts)
Interest income $228,459
 $217,836
 $206,953
 $192,265
Interest expense 17,430
 16,253
 14,210
 12,956
Net interest income 211,029
 201,583
 192,743
 179,309
Provision for credit losses 5,000
 5,000
 3,000
 4,250
Net interest income after provision for credit losses 206,029
 196,583
 189,743
 175,059
Non-interest income 13,688
 10,456
 10,601
 10,599
Non-interest expense (95,398) (89,296) (88,420) (87,827)
Income before provision for income taxes 124,319
 117,743
 111,924
 97,831
Income tax expense 34,973
 34,899
 31,964
 24,489
Net income available to common stockholders $89,346
 $82,844
 $79,960
 $73,342
Earnings per share:        
Basic $0.86
 $0.79
 $0.77
 $0.71
Diluted $0.85
 $0.79
 $0.76
 $0.70
  Year Ended December 31, 2016
  Fourth Quarter Third Quarter Second Quarter First Quarter
  (in thousands, except per share amounts)
Interest income $187,411
 $184,750
 $174,089
 $154,256
Interest expense 12,142
 12,203
 10,403
 8,545
Net interest income 175,269
 172,547
 163,686
 145,711
Provision for credit losses 1,000
 2,000
 2,500
 2,500
Net interest income after provision for credit losses 174,269
 170,547
 161,186
 143,211
Non-interest income 10,540
 10,683
 8,559
 13,133
Non-interest expense (88,645) (85,007) (81,804) (75,493)
Income before provision for income taxes 96,164
 96,223
 87,941
 80,851
Income tax expense 26,364
 29,171
 26,327
 19,519
Net income available to common stockholders $69,800
 $67,052
 $61,614
 $61,332
Earnings per share:        
Basic $0.67
 $0.65
 $0.60
 $0.60
Diluted $0.67
 $0.64
 $0.60
 $0.60



millions)
Item 9.Assets acquired:Changes in
Cash and Disagreements with Accountants on Accounting and Financial Disclosurecash equivalents$0.6 
Identified intangible assets20.1 
Other assets0.1 
Total assets$20.8 
Liabilities assumed:
Other liabilities$0.4 
Total liabilities0.4 
Net assets acquired$20.4 
Consideration paid
Cash$50.6 
Contingent consideration6.4 
Total consideration$57.0 
Goodwill$36.6 
In connection with the acquisition, the Company acquired identifiable intangible assets totaling $20.1 million, as detailed in the table below:
Acquisition Date Fair ValueEstimated Useful Life
(in millions)(in years)
Customer relationships$15.7 7
Developed technology4.1 5
Trade name0.3 10
Total$20.1 
Goodwill in the amount of $36.6 million was recognized, of which $31.8 million is expected to be deductible for tax purposes. Goodwill was allocated entirely to the Consumer Related segment and represents the strategic, operational, and financial benefits expected from the acquisition, including expansion of the Company's settlement services offerings, diversification of its revenue sources, and post-acquisition synergies from integrating Digital Disbursements, as well as the value of the acquired workforce.
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Acquisition of AmeriHome
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 subsidiary of WAB. As a result of the merger, AmeriHome is a wholly-owned indirect subsidiary of the Company and continues to operate as AmeriHome Mortgage, a Western 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 franchise that allows the Company to expand mortgage-related offerings to existing clients and diversifies the Company’s revenue profile by expanding sources of non-interest income.
Total 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 restructure expenses related to the AmeriHome acquisition, which included $3.4 million of acquisition related costs, as defined by ASC 805.
This transaction was accounted for as a business combination under the acquisition method of accounting. Assets purchased and liabilities assumed were recorded at their respective acquisition date estimated fair values, which were considered final as of March 31, 2022.
The following table presents pro forma information as if the AmeriHome acquisition was completed on January 1, 2020. The pro forma information includes adjustments for interest income and interest expense on existing loan agreements between WAL and AmeriHome prior to acquisition, the impact of MSR sales contemplated in connection with the acquisition, amortization of intangible assets arising from the acquisition, recognition of stock compensation expense for awards issued to certain AmeriHome executives, transaction costs, and related income tax effects. The pro forma information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed dates.
December 31,
2021
Interest income$1,679.9
Non-interest income470.5
Net income909.7
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Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A.Controls and Procedures.
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 effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e), under the Exchange Act.Act). Based upon that evaluation, the Company’s Chief Executive OfficerCEO and Chief Financial OfficerCFO concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report. No changes were made to the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
MANAGEMENTSMANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of WAL is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s CEO and CFO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
As of December 31, 2017,2023, management assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in “Internal Control-Integrated Framework” issued by the COSO in 2013. Based on this assessment, management determined that the Company maintained effective internal control over financial reporting as of December 31, 2017,2023, based on those criteria.
RSM US LLP, 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 effectiveness of the Company’s internal control over financial reporting as of December 31, 2017.2023. Their report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017,2023, is included herein.

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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Western Alliance Bancorporation
Opinion on the Internal Control Over Financial Reporting
We have audited Western Alliance Bancorporation and Subsidiaries’its subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2017,2023, based on criteria established in Internal Control - Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2023, based on criteria established in Internal Control - Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
We 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, 20172023 and 2016,2022, 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, 20172023 of the Company and our report, dated February 26, 2018,27, 2024, expressed an unqualified opinion.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public 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 applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial 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 effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company'scompany’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company'scompany’s internal control over financial reporting includes those policies and procedures thatthat: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures 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'scompany’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ RSM US LLP

San Francisco, California
Phoenix, ArizonaFebruary 27, 2024
February 26, 2018
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Item 9B.Other Information
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Item 9B.Other Information.

Insider Adoption of Termination of Trading Arrangements
During the quarter ended December 31, 2023, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company informed us of the adoption or termination of any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408 of Regulation S-K).

Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.


PART III
Item 10.Directors, Executive Officers and Corporate Governance
Item 10.Directors, Executive Officers and Corporate Governance
The information required by this item is incorporated by reference fromin the Company’s Definitive Proxy Statement prepared for the 20182024 Annual Meeting of Stockholders to be held on June 12, 2018.2024, which contains information concerning this item under the captions Corporate Governance, Executive Officers, Delinquent Section 16(a) Reports (if applicable) and Legal Proceedings, is incorporated herein by reference.
The Company has adopted a Code of Business Conduct and Ethics applicable(the “Code”) that applies to all of its directors, officers and employees includingand 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 writing to the Company at One E. Washington Street, Suite 1400, Phoenix, Arizona 85004, Attention: Corporate Secretary. The Company intends to provide any required disclosure of any amendment to or waiver of the Code that applies to its principal executive officer, principal financial officer, and principal accounting officer. A copyofficer or controller, or persons performing similar functions, in the Governance Documents section of the CodeInvestor Relations page of Business Conduct and Ethics is available on the Company’s website at www.westernalliancebancorporation.com.
Item 11.Executive Compensation
promptly following the amendment or waiver. The information required by this itemcontained on or connected to the Company’s website is not incorporated by reference fromin this Annual Report on Form 10-K and should not be considered part of this or any other report or document that we file or furnish to the SEC.
Item 11.Executive Compensation
The information in the Company’s Definitive Proxy Statement prepared for the 20182024 Annual Meeting of Stockholders to be held on June 12, 2018.2024, which contains information concerning this item under the captions Compensation of Directors, Executive Compensation - Compensation Discussion and Analysis, Compensation Tables, CEO Pay Ratio, Potential Payments Upon Termination or Change in Control, Compensation Committee Interlocks and Insider Participation and Compensation Committee Report is incorporated herein by reference.
Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is incorporated by reference fromin the Company’s Definitive Proxy Statement prepared for the 20182024 Annual Meeting of Stockholders to be held on June 12, 2018.2024, which contains information concerning this item under the caption Equity Compensation Plan Information and Security Ownership of Certain Beneficial Owners, Directors and Executive Officers, is incorporated herein by reference.
Item 13.Certain Relationships and Related Transactions, and Director Independence
Item 13.Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated by reference fromin the Company’s Definitive Proxy Statement prepared for the 20182024 Annual Meeting of Stockholders to be held on June 12, 2018.2024, which contains information concerning this item under the caption Certain Transactions with Related Parties, Policies and Procedures Regarding Transactions with Related Persons and Director Independence, is incorporated herein by reference.
Item 14.Principal Accountant Fees and Services
Item 14.Principal Accountant Fees and Services
The information required by this item is incorporated by reference fromin the Company’s Definitive Proxy Statement prepared for the 20182024 Annual Meeting of Stockholders to be held on June 12, 2018.2024, which contains information concerning this item under the caption Independent Auditors - Fees and Services and Audit Committee Pre-Approval Policy, is incorporated herein by reference.

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PART IV
Item 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(1)The following financial statements are incorporated by reference from Item 8 hereto:
Item 15.Exhibits and Financial Statement Schedules
(1)The following financial statements are incorporated by reference from Item 8 hereto:
7276
7379
7480
7681
7782
7883
8085
(2)Financial Statement Schedules
(2)Financial Statement Schedules
Not applicable.
On the Exhibit Index, a “±” identifies each management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report.

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EXHIBITS
1.1
1.2
3.1
1.3
3.1
3.2
3.3
3.23.4
3.33.5
3.4
Amended and Restated Bylaws of Western Alliance, effective as of May 19, 2015 (incorporated by reference to Exhibit 3.2 of Western Alliance's Form 8-K filed with the SEC on May 22, 2015).
3.5
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).
3.6
4.1
4.1
4.2
4.24.3
4.3
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).
4.4
4.5
4.6
4.7
4.8
4.9
4.10
10.1
4.810.2
10.1
Western Alliance 2005 Stock Incentive Plan, as amended (incorporated by reference to Appendix G of the Registrant's definitive Proxy Statement on Schedule 14A filed with the Commission on April 2, 2014). ±
10.2
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). ±
10.3
10.4
10.5
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10.6
10.7
10.8
10.9
10.9
10.10
10.11

10.12
10.10
10.11
Employment Letter Agreement, dated February 17, 2017, byas of April 6, 2022, between Western Alliance Bancorporation and between James C. Haught and Western AllianceKenneth A. Vecchione (incorporated by reference to Exhibit 10.1 of Western Alliance’s Current Report on Form 8-K filed with the SEC on December 15, 2017)April 7, 2022). ±
10.13
10.14*
21.1*
10.15*
10.16*
21.1*
23.1*
24.1*
31.1*
31.2*
32**
97.1*
101.INS*
101*XBRL Instance Document.The following materials from Western Alliance’s Annual Report on Form 10-K Report for the year ended December 31, 2023, formatted in Inline XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Income Statements, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.
101.SCH*104*The cover page of Western Alliance's Annual Report on Form 10-K for the year ended December 31, 2023, formatted in Inline XBRL Taxonomy Extension Schema Document.
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document.
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB*XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document.(contained in Exhibit 101).

*     Filed herewith.
**    Furnished herewith.
±     Management contract or compensatory arrangement.

Stockholders may obtain copies of exhibits by writing to: Dale Gibbons, Western Alliance Bancorporation, One East Washington Street Suite 1400, Phoenix, AZ 85004.

Item 16.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
None.Item 16.Form 10-K Summary.

Not applicable.
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SIGNATURES
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.
WESTERN ALLIANCE BANCORPORATION
February 27, 2024By:/s/ Kenneth A. Vecchione
February 26, 2018By:/s/ Robert SarverKenneth A. Vecchione
Robert Sarver
Chairman of the Board and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Robert SarverKenneth A. Vecchione and Dale Gibbons, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully and to all intents and purposes as he or she might or could do in person hereby ratifying and confirming all that said attorneys-in-fact and agents, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant in their listed capacities on February 26, 2018.27, 2024.


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NameTitle
NameTitle
/s/ Robert SarverKenneth A. VecchioneChairman of the BoardPresident and Chief Executive Officer
Robert SarverKenneth A. Vecchione(Principal Executive Officer)
/s/ Kenneth A. VecchionePresident and Director
Kenneth A. Vecchione
/s/ Dale GibbonsExecutive Vice PresidentChairman and Chief Financial Officer
Dale GibbonsOfficer (Principal(Principal Financial Officer)
/s/ J. Kelly Ardrey Jr.Senior Vice President and Chief Accounting Officer
J. Kelly Ardrey Jr.(Principal Accounting Officer)
/s/ Bruce D. BeachDirectorBoard Chairman
Bruce D. Beach
/s/ Kevin BlakelyDirector
Kevin Blakely
/s/ Juan FiguereoDirector
Juan Figuereo
/s/ William S. BoydPaul GalantDirector
William S. BoydPaul Galant
/s/ Howard GouldDirector
Howard Gould
/s/ Steven J. HiltonDirector
Steven J. Hilton
/s/ Marianne Boyd JohnsonDirector
Marianne Boyd Johnson
/s/ Mary Tuuk KurasDirector
Mary Tuuk Kuras
/s/ Robert LattaDirector
Robert Latta
/s/ Anthony MeolaDirector
Anthony Meola
/s/ Bryan SegediDirector
/s/ Cary MackBryan SegediDirector
Cary Mack
/s/ Todd MarshallDirector
Todd Marshall
/s/ James NaveDirector
James Nave
/s/ Michael PatriarcaDirector
Michael Patriarca
/s/ Donald D. SnyderDirector
Donald D. Snyder
/s/ Sung Won SohnDirector
Sung Won Sohn




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