UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



☒						Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September 30, 2020~~March 31, 2021


☐						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)


Delaware						88-0365922
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

One E. Washington Street, Suite 1400

Phoenix

Arizona

85004

(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 class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 Par Value

WAL

New York Stock Exchange

6.25% Subordinated Debentures due 2056

WALA

New York Stock Exchange

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 every Interactive Data File required to be submitted 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 such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an 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

☒

Accelerated 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October~~April 26, ~~2020,~~2021, Western Alliance Bancorporation had ~~100,829,164~~103,474,792 shares of common stock outstanding.

Table of Contents

INDEX

Table of Contents

PART I

GLOSSARY OF ENTITIES AND TERMS

The acronyms and abbreviations identified below are used in various sections of this Form 10-Q, including "Management's Discussion and Analysis of Financial Condition and Results of Operations," in Item 2 and the Consolidated Financial Statements and the Notes to Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q.


ENTITIES / DIVISIONS:
ABA	Alliance Bank of Arizona	~~HOA Services~~FIB	~~Homeowner Associations Services~~First Independent Bank
~~BON~~AHM	~~Bank of Nevada~~AmeriHome Mortgage Company, LLC	LVSP	Las Vegas Sunset Properties
~~Bridge~~Aris	~~Bridge Bank~~Aris Mortgage Holding Company, LLC	TPB	Torrey Pines Bank
~~Company~~BON	~~Western Alliance Bancorporation and subsidiaries~~Bank of Nevada	WA PWI	Western Alliance Public Welfare Investments, LLC
~~CSI~~Bridge	~~CS Insurance Company~~Bridge Bank	WAB or Bank	Western Alliance Bank
~~FIB~~Company	~~First Independent Bank~~Western Alliance Bancorporation and subsidiaries	WABT	Western Alliance Business Trust
~~HFF~~CSI	~~Hotel Franchise Finance~~CS Insurance Company	WAL or Parent	Western Alliance Bancorporation
TERMS:
AFS	Available-for-Sale	~~HELOC~~GSE	~~Home Equity Line of Credit~~Government-Sponsored Enterprise
ALCO	Asset and Liability Management Committee	~~HFI~~HELOC	~~Held for Investment~~Home Equity Line of Credit
AOCI	Accumulated Other Comprehensive Income	~~HTM~~HFI	~~Held-to-Maturity~~Held for Investment
APIC	Additional paid in capital	~~ICS~~HTM	~~Insured Cash Sweep Service~~Held-to-Maturity
ASC	Accounting Standards Codification	~~IRC~~HUD	~~Internal Revenue Code~~U.S. Department of Housing and Urban Development
ASU	Accounting Standards Update	~~ISDA~~ICS	~~International Swaps and Derivatives Association~~Insured Cash Sweep Service
Basel III	Banking Supervision's December 2010 final capital framework	~~LGD~~IRC	~~Loss Given Default~~Internal Revenue Code
BOD	Board of Directors	~~LIBOR~~ISDA	~~London Interbank Offered Rate~~
~~BSA~~	~~Bank Secrecy Act~~	~~LIHTC~~	~~Low-Income Housing Tax Credit~~International Swaps and Derivatives Association
CARES Act	Coronavirus Aid, Relief and Economic Security Act	~~MBS~~LGD	~~Mortgage-Backed Securities~~Loss Given Default
CBOE	Chicago Board Options Exchange	LIBOR	London Interbank Offered Rate
CDARS	Certificate Deposit Account Registry Service	~~MSLP~~LIHTC	~~Main Street Lending Program~~
~~CDO~~	~~Collateralized Debt Obligation~~	~~NBL~~	~~National Business Lines~~Low-Income Housing Tax Credit
CECL	Current Expected Credit Losses	MBS	Mortgage-Backed Securities
CEO	Chief Executive Officer	MSA	Metropolitan Statistical Area
CET1	Common Equity Tier 1	NOL	Net Operating Loss
~~CEO~~CFPB	~~Chief Executive Officer~~Consumer Financial Protection Bureau	NPV	Net Present Value
CFO	Chief Financial Officer	OCI	Other Comprehensive Income
~~COVID-19~~CLO	~~Coronavirus Disease 2019~~Collateralized Loan Obligation	OREO	Other Real Estate Owned
COVID-19	Coronavirus Disease 2019	OTTI	Other-than-Temporary Impairment
CRA	Community Reinvestment Act	~~OTTI~~PCD	~~Other-than-Temporary Impairment~~Purchased Credit Deteriorated
CRE	Commercial Real Estate	~~PCI~~PD	~~Purchased Credit Impaired~~Probability of Default
EAD	Exposure at Default	PDPPNR	~~Probability of Default~~Pre-Provision Net Revenue
EPS	Earnings per share	~~PPNR~~PPP	~~Pre-Provision Net Revenue~~Paycheck Protection Program
EVE	Economic Value of Equity	~~PPP~~ROU	~~Paycheck Protection Program~~Right of use
Exchange Act	Securities Exchange Act of 1934, as amended	~~PPPFA~~SBA	~~Paycheck Protection Program Flexibility Act~~Small Business Administration
FASB	Financial Accounting Standards Board	~~REIT~~SBIC	~~Real Estate~~Small Business Investment ~~Trust~~Company
FDIC	Federal Deposit Insurance Corporation	~~ROU~~SEC	~~Right of use~~Securities and Exchange Commission
FHLB	Federal Home Loan Bank	~~SBA~~SERP	~~Small Business Administration~~Supplemental Executive Retirement Plan
FHLMC	Federal Home Loan Mortgage Corporation	~~SBIC~~SOFR	~~Small Business Investment Company~~Secured Overnight Financing Rate
~~FinCEN~~FICO	~~Financial Crimes Enforcement Network~~The Financing Corporation	~~SEC~~SR	~~Securities~~Supervision and ~~Exchange Commission~~Regulation Letters
FNMA	Federal National Mortgage Association	~~SERP~~TDR	~~Supplemental Executive Retirement Plan~~
~~FOMC~~	~~Federal Open Market Committee~~	~~SOFR~~	~~Secured Overnight Financing Rate~~Troubled Debt Restructuring
FRB	Federal Reserve Bank	SRTEB	~~Supervision and Regulation Letters~~Tax Equivalent Basis
FTC	Federal Trade Commission	TSR	Total Shareholder Return
FVO	Fair Value Option	~~TDR~~VIE	~~Troubled Debt Restructuring~~Variable Interest Entity
GAAP	U.S. Generally Accepted Accounting Principles	~~TEB~~XBRL	~~Tax Equivalent Basis~~eXtensible Business Reporting Language
GNMA	Government National Mortgage Association	~~TSR~~	~~Total Shareholder Return~~
~~GSE~~	~~Government-Sponsored Enterprise~~	~~XBRL~~	~~eXtensible Business Reporting Language~~

Table of Contents

Item 1.Financial Statements

WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(Unaudited)					(Unaudited)

		(in thousands, except shares and per share amounts)					(in millions, except shares and per share amounts)
Assets:	Assets:					Assets:
Cash and due from banks	Cash and due from banks	$	163,893	$	185,977	Cash and due from banks	$	215.3	$	174.2

Interest-bearing deposits in other financial institutions	Interest-bearing deposits in other financial institutions	1,254,842		248,619		Interest-bearing deposits in other financial institutions	5,131.2		2,497.5

Cash, cash equivalents, and restricted cash		1,418,735		434,596
Cash, cash equivalents and restricted cash						Cash, cash equivalents and restricted cash	5,346.5		2,671.7

Investment securities - AFS, at fair value; amortized cost of $3,876,586 at September 30, 2020 and $3,317,928 at December 31, 2019		3,975,225		3,346,310
Investment securities - HTM, at amortized cost; fair value of $548,140 at September 30, 2020 and $516,261 at December 31, 2019		504,477		485,107
Less: allowance for credit losses		(5,964)		0
Net HTM investment securities		498,513		485,107
Investment securities - AFS, at fair value; amortized cost of $6,913.3 at March 31, 2021 and $4,586.4 at December 31, 2020						Investment securities - AFS, at fair value; amortized cost of $6,913.3 at March 31, 2021 and $4,586.4 at December 31, 2020	6,939.9		4,708.5
Investment securities - HTM, at amortized cost and net of allowance for credit losses of $9.2 and $6.8 (fair value of $740.4 and $611.8) at March 31, 2021 and December 31, 2020, respectively						Investment securities - HTM, at amortized cost and net of allowance for credit losses of $9.2 and $6.8 (fair value of $740.4 and $611.8) at March 31, 2021 and December 31, 2020, respectively	688.8		562.0

Investment securities - equity	Investment securities - equity	160,561		138,701		Investment securities - equity	192.9		167.3
Investments in restricted stock, at cost	Investments in restricted stock, at cost	66,843		66,509		Investments in restricted stock, at cost	67.2		67.0
Loans - HFS		20,764		21,803

Loans, net of deferred loan fees and costs	Loans, net of deferred loan fees and costs	25,993,254		21,101,493		Loans, net of deferred loan fees and costs	28,711.0		27,053.0
Less: allowance for credit losses	Less: allowance for credit losses	(310,560)		(167,797)		Less: allowance for credit losses	(247.1)		(278.9)
Net loans held for investment	Net loans held for investment	25,682,694		20,933,696		Net loans held for investment	28,463.9		26,774.1
Premises and equipment, net	Premises and equipment, net	128,256		125,838		Premises and equipment, net	138.4		134.1
Operating lease right of use asset	Operating lease right of use asset	71,393		72,558		Operating lease right of use asset	77.0		72.5
Bank owned life insurance	Bank owned life insurance	175,478		174,046		Bank owned life insurance	177.3		176.3
Goodwill and intangible assets, net	Goodwill and intangible assets, net	298,987		297,608		Goodwill and intangible assets, net	298.0		298.5
Deferred tax assets, net	Deferred tax assets, net	46,645		18,025		Deferred tax assets, net	49.8		31.3
Investments in LIHTC and renewable energy	Investments in LIHTC and renewable energy	414,305		409,365		Investments in LIHTC and renewable energy	487.9		405.6

Other assets	Other assets	377,107		297,786		Other assets	469.4		392.1
Total assets	Total assets	$	33,335,506	$	26,821,948	Total assets	$	43,397.0	$	36,461.0
Liabilities:	Liabilities:					Liabilities:
Deposits:	Deposits:					Deposits:
Non-interest-bearing demand	Non-interest-bearing demand	$	13,013,014	$	8,537,905	Non-interest-bearing demand	$	17,542.8	$	13,463.3
Interest-bearing	Interest-bearing	15,830,382		14,258,588		Interest-bearing	20,850.3		18,467.2
Total deposits	Total deposits	28,843,396		22,796,493		Total deposits	38,393.1		31,930.5
Customer repurchase agreements	Customer repurchase agreements	19,688		16,675		Customer repurchase agreements	15.9		16.0

Other borrowings	Other borrowings	10,000		0		Other borrowings	5.0		5.0
Qualifying debt	Qualifying debt	618,772		393,563		Qualifying debt	543.7		548.7
Operating lease liability	Operating lease liability	78,613		78,112		Operating lease liability	84.6		79.9
Other liabilities	Other liabilities	540,991		520,357		Other liabilities	642.0		467.4
Total liabilities	Total liabilities	30,111,460		23,805,200		Total liabilities	39,684.3		33,047.5
Commitments and contingencies (Note 11)	Commitments and contingencies (Note 11)					Commitments and contingencies (Note 11)	0		0
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Common stock - par value $0.0001; 200,000,000 authorized; 102,993,777 shares issued at September 30, 2020 and 104,527,544 at December 31, 2019		10		10
Treasury stock, at cost (2,168,437 shares at September 30, 2020 and 2,003,873 shares at December 31, 2019)		(71,098)		(62,728)
Additional paid in capital		1,383,537		1,374,141
Common stock (par value $0.0001; 200,000,000 authorized; 105,771,103 shares issued at March 31, 2021 and 103,013,290 at December 31, 2020) and additional paid in capital						Common stock (par value $0.0001; 200,000,000 authorized; 105,771,103 shares issued at March 31, 2021 and 103,013,290 at December 31, 2020) and additional paid in capital	1,608.2		1,390.9
Treasury stock, at cost (2,323,560 shares at March 31, 2021 and 2,169,397 shares at December 31, 2020)						Treasury stock, at cost (2,323,560 shares at March 31, 2021 and 2,169,397 shares at December 31, 2020)	(84.0)		(71.1)
Accumulated other comprehensive income	Accumulated other comprehensive income	78,585		25,008		Accumulated other comprehensive income	19.9		92.3
Retained earnings	Retained earnings	1,833,012		1,680,317		Retained earnings	2,168.6		2,001.4
Total stockholders’ equity	Total stockholders’ equity	3,224,046		3,016,748		Total stockholders’ equity	3,712.7		3,413.5
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	33,335,506	$	26,821,948	Total liabilities and stockholders’ equity	$	43,397.0	$	36,461.0

See accompanying Notes to Unaudited Consolidated Financial Statements.

Table of Contents

WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
		(in thousands, except per share amounts)									(in millions, except per share amounts)
Interest income:	Interest income:									Interest income:
Loans, including fees	Loans, including fees	$	276,623	$	278,932	$	843,085	$	808,099	Loans, including fees	$	298.4	$	276.9
Investment securities	Investment securities	26,323		28,928		79,778		84,929		Investment securities	32.8		26.3
Dividends		1,397		1,289		4,305		4,452
Other		500		6,459		3,129		12,144
Dividends and other										Dividends and other	2.9		4.0

Total interest income	Total interest income	304,843		315,608		930,297		909,624		Total interest income	334.1		307.2
Interest expense:	Interest expense:									Interest expense:
Deposits	Deposits	12,215		43,354		59,736		121,030		Deposits	10.8		32.5
Other borrowings		5		34		75		1,344
Qualifying debt	Qualifying debt	7,872		5,785		17,833		17,898		Qualifying debt	5.9		5.3
Other		13		13		495		913
Other short-term borrowings										Other short-term borrowings	0.1		0.4
Total interest expense	Total interest expense	20,105		49,186		78,139		141,185		Total interest expense	16.8		38.2
Net interest income	Net interest income	284,738		266,422		852,158		768,439		Net interest income	317.3		269.0
Provision for credit losses		14,661		3,803		157,837		15,303
Net interest income after provision for credit losses		270,077		262,619		694,321		753,136
(Recovery of) provision for credit losses										(Recovery of) provision for credit losses	(32.4)		51.2
Net interest income after (recovery of) provision for credit losses										Net interest income after (recovery of) provision for credit losses	349.7		217.8
Non-interest income:	Non-interest income:									Non-interest income:
Income from equity investments										Income from equity investments	7.6		3.8
Service charges and fees	Service charges and fees	5,913		5,888		17,447		17,121		Service charges and fees	6.7		6.4
Foreign currency income										Foreign currency income	2.2		1.3
Card income	Card income	1,873		1,729		4,768		5,195		Card income	1.6		1.7
Foreign currency income		1,755		1,321		4,242		3,564
Income from bank owned life insurance	Income from bank owned life insurance	1,345		979		8,977		2,938		Income from bank owned life insurance	1.0		1.0
Income from equity investments		1,186		3,742		6,263		6,619
Lending related income and gains on sale of loans, net		705		539		2,072		1,343
Gain on sales of investment securities, net		0		3,152		230		3,152
Fair value gain (loss) adjustments on assets measured at fair value, net		5,882		222		(986)		4,628
Lending related income and gains (losses) on sale of loans, net										Lending related income and gains (losses) on sale of loans, net	(0.1)		0.6
Fair value losses on assets measured at fair value, net										Fair value losses on assets measured at fair value, net	(1.5)		(11.3)

Other income	Other income	1,947		1,869		3,972		4,509		Other income	2.2		1.6
Total non-interest income	Total non-interest income	20,606		19,441		46,985		49,069		Total non-interest income	19.7		5.1
Non-interest expense:	Non-interest expense:									Non-interest expense:
Salaries and employee benefits	Salaries and employee benefits	78,757		70,978		220,455		205,328		Salaries and employee benefits	83.7		72.1
Legal, professional, and directors' fees	Legal, professional, and directors' fees	10,034		8,248		31,105		26,885		Legal, professional, and directors' fees	10.1		10.4
Data processing										Data processing	9.9		8.6
Occupancy	Occupancy	9,426		8,263		25,752		24,251		Occupancy	8.6		8.2
Data processing		8,864		7,095		26,044		20,563
Deposit costs	Deposit costs	3,246		11,537		14,098		24,930		Deposit costs	6.3		7.3
Insurance	Insurance	3,064		3,071		9,506		8,691		Insurance	4.2		3.0
Loan and repossessed asset expenses	Loan and repossessed asset expenses	1,771		1,953		5,280		5,419		Loan and repossessed asset expenses	2.2		1.5
Business development	Business development	950		1,443		4,062		4,972		Business development	0.8		2.3
Marketing	Marketing	848		842		2,621		2,640		Marketing	0.6		0.9
Card expense	Card expense	505		548		1,631		1,892		Card expense	0.6		0.7
Intangible amortization	Intangible amortization	373		387		1,120		1,161		Intangible amortization	0.5		0.4
Net loss (gain) on sales / valuations of repossessed and other assets		123		3,379		(1,335)		2,856

Net gain on sales / valuations of repossessed and other assets										Net gain on sales / valuations of repossessed and other assets	(0.3)		(1.4)
Acquisition related expense										Acquisition related expense	0.4		0

Other expense	Other expense	6,131		8,408		19,033		22,691		Other expense	7.4		6.5
Total non-interest expense	Total non-interest expense	124,092		126,152		359,372		352,279		Total non-interest expense	135.0		120.5
Income before provision for income taxes	Income before provision for income taxes	166,591		155,908		381,934		449,926		Income before provision for income taxes	234.4		102.4
Income tax expense	Income tax expense	30,822		28,533		68,929		78,819		Income tax expense	41.9		18.5
Net income	Net income	$	135,769	$	127,375	$	313,005	$	371,107	Net income	$	192.5	$	83.9

Earnings per share:										Earnings per share:
Basic										Basic	$	1.91	$	0.83
Diluted										Diluted	1.90		0.83
Weighted average number of common shares outstanding:										Weighted average number of common shares outstanding:
Basic										Basic	100.8		101.3
Diluted										Diluted	101.4		101.7

See accompanying Notes to Unaudited Consolidated Financial Statements.

Table of Contents

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(in thousands, except per share amounts)
Earnings per share:
Basic $ 1.36 $ 1.25 $ 3.12 $ 3.60
Diluted 1.36 1.24 3.11 3.59
Weighted average number of common shares outstanding:
Basic 99,850 102,041 100,322 103,024
Diluted 100,059 102,451 100,574 103,468
Dividends declared per common share $ 0.25 $ 0.25 $ 0.75 $ 0.25
WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Three Months Ended March 31,
	2021		2020
	(in millions)
Net income	$	192.5	$	83.9
Other comprehensive (loss) income, net:
Unrealized (loss) gain on AFS securities, net of tax effect of $23.5 and $(2.0), respectively	(72.0)		6.3
Unrealized (loss) on SERP, net of tax effect of $0.0 and $0.1, respectively	0		(0.3)
Unrealized (loss) gain on junior subordinated debt, net of tax effect of $0.1 and $(2.1), respectively	(0.3)		6.6
Realized (gain) on sale of AFS securities included in income, net of tax effect of $0.0 and $0.0, respectively	(0.1)		(0.1)
Net other comprehensive (loss) income	(72.4)		12.5
Comprehensive income	$	120.1	$	96.4

See accompanying Notes to Unaudited Consolidated Financial Statements.

Table of Contents

WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE INCOME~~

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(in thousands)
Net income $ 135,769 $ 127,375 $ 313,005 $ 371,107
Other comprehensive income, net:
Unrealized gain on AFS securities, net of tax effect of $(2,520), $(3,592), $(17,310), $(25,523), respectively 7,592 11,014 53,176 78,314
Unrealized (loss) on SERP, net of tax effect of $1, $6, $94, $18, respectively (3) (18) (296) (53)
Unrealized (loss) gain on junior subordinated debt, net of tax effect of $874, $(196)$, $(285), $2,173, respectively (2,681) 598 871 (6,664)
Realized (gain) on sale of AFS securities included in income, net of tax effect of $0, $776, $56, $776, respectively 0 (2,376) (174) (2,376)
Net other comprehensive income 4,908 9,218 53,577 69,221
Comprehensive income $ 140,677 $ 136,593 $ 366,582 $ 440,328

~~See accompanying Notes to Unaudited Consolidated Financial Statements.~~

~~Table of Contents~~

~~WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF~~ STOCKHOLDERS’ EQUITY


		Three Months Ended September 30,
		Common Stock			Additional Paid in Capital				Treasury Stock		Accumulated Other Comprehensive Income (Loss)			Retained Earnings					Total Stockholders’ Equity				Common Stock								Additional Paid in Capital				Treasury Stock				Accumulated Other Comprehensive Income (Loss)				Retained Earnings				Total Stockholders’ Equity
		Shares	Amount										Shares									Amount
		(in thousands)																					(in millions)
Balance, June 30, 2019		103,654	$	10			$	1,372,037			$	(61,134)				$	26,381				$	1,513,970				$	2,851,264
Balance, December 31, 2019																						Balance, December 31, 2019	102.5					$	0				$	1,374.1			$	(62.7)			$	25.0			$	1,680.3			$	3,016.7
Balance, January 1, 2020 (2)																						Balance, January 1, 2020 (2)	102.5					$	0		$	1,374.1			$	(62.7)			$	25.0			$	1,655.4			$	2,991.8
Net income	Net income	—	—		—				—		—			127,375					127,375			Net income	—					—			—				—				—				83.9				83.9
Exercise of stock options		1	—		19				—		—			—					19
Restricted stock, performance stock units, and other grants, net		17	—		6,060				—		—			—					6,060

Restricted stock, performance stock unit, and other grants, net																						Restricted stock, performance stock unit, and other grants, net	0.5					—			7.0				—				—				—				7.0
Restricted stock surrendered (1)	Restricted stock surrendered (1)	(33)	—		—				(1,531)		—			—					(1,531)			Restricted stock surrendered (1)	(0.1)					—			—				(7.5)				—				—				(7.5)
Stock repurchase	Stock repurchase	(1,000)	—		(9,925)				—		—			(33,733)					(43,658)			Stock repurchase	(1.8)					—			(10.6)				—				—				(51.9)				(62.5)
Dividends paid	Dividends paid	—	—		—				—		—			(25,684)					(25,684)			Dividends paid	—					—			—				—				—				(25.6)				(25.6)
Other comprehensive income, net	Other comprehensive income, net	—	—		—				—		9,218			—					9,218			Other comprehensive income, net	—					—			—				—				12.5				—				12.5
Balance, September 30, 2019		102,639	$	10	$	1,368,191			$	(62,665)	$	35,599		$	1,581,928				$	2,923,063
Balance, March 31, 2020																						Balance, March 31, 2020	101.1					$	0		$	1,370.5			$	(70.2)			$	37.5			$	1,661.8			$	2,999.6

Balance, June 30, 2020		100,849	$	10	$	1,376,859			$	(70,583)	$	73,677		$	1,722,451				$	3,102,414
Balance, December 31, 2020																						Balance, December 31, 2020	100.8					$	0		$	1,390.9			$	(71.1)			$	92.3			$	2,001.4			$	3,413.5
Net income	Net income	—	—		—				—		—			135,769					135,769			Net income	—					—			—				—				—				192.5				192.5
Exercise of stock options		2	—		73				—		—			—					73

Restricted stock, performance stock unit, and other grants, net	Restricted stock, performance stock unit, and other grants, net	(12)	—		6,605				—		—			—					6,605			Restricted stock, performance stock unit, and other grants, net	0.5					—			8.1				—				—				—				8.1
Restricted stock surrendered (1)	Restricted stock surrendered (1)	(14)	—		—				(515)		—			—					(515)			Restricted stock surrendered (1)	(0.2)					—			—				(12.9)				—				—				(12.9)

Issuance from registered direct common stock offering, net																						Issuance from registered direct common stock offering, net	2.3					—			209.2				—				—				—				209.2
Dividends paid	Dividends paid	—	—		—				—		—			(25,208)					(25,208)			Dividends paid	—					—			—				—				—				(25.3)				(25.3)
Other comprehensive income, net	Other comprehensive income, net	—	—		—				—		4,908			—					4,908			Other comprehensive income, net	—					—			—				—				(72.4)				—				(72.4)
Balance, September 30, 2020		100,825	$	10	$	1,383,537			$	(71,098)	$	78,585		$	1,833,012				$	3,224,046
Balance, March 31, 2021																						Balance, March 31, 2021	103.4					$	0		$	1,608.2			$	(84.0)			$	19.9			$	2,168.6			$	3,712.7

		Nine Months Ended September 30,
		Common Stock			Additional Paid in Capital				Treasury Stock		Accumulated Other Comprehensive (Loss) Income			Retained Earnings					Total Stockholders’ Equity
		Shares	Amount
		(in thousands)
Balance, December 31, 2018		104,949	$	10			$	1,417,724			$	(53,083)					$	(33,622)						$	1,282,705				$	2,613,734
Net income		—	—		—				—		—			371,107					371,107
Exercise of stock options		2	—		55				—		—			—					55
Restricted stock, performance stock unit, and other grants, net		631	—		19,783				—		—			—					19,783
Restricted stock surrendered (1)		(209)	—		—				(9,582)		—			—					(9,582)
Stock repurchase		(2,734)	—		(69,371)				—		—			(46,200)					(115,571)
Dividends paid		—	—		—				—		—			(25,684)					(25,684)
Other comprehensive income, net		—	—		—				—		69,221			—					69,221
Balance, September 30, 2019		102,639	$	10	$	1,368,191			$	(62,665)	$	35,599		$	1,581,928				$	2,923,063

Balance, December 31, 2019		102,524	$	10	$	1,374,141			$	(62,728)	$	25,008		$	1,680,317				$	3,016,748
Balance, January 1, 2020 (2)		102,524	10		1,374,141				(62,728)		25,008			1,655,370					2,991,801
Net income		—	—		—				—		—			313,005					313,005
Exercise of stock options		9	—		170				—		—			—					170
Restricted stock, performance stock units, and other grants, net		523	—		21,560				—		—			—					21,560
Restricted stock surrendered (1)		(165)	—		—				(8,370)		—			—					(8,370)
Stock repurchase		(2,066)	—		(12,334)				—		—			(59,335)					(71,669)
Dividends paid		—	—		—				—		—			(76,028)					(76,028)
Other comprehensive income, net		—	—		—				—		53,577			—					53,577
Balance, September 30, 2020		100,825	$	10	$	1,383,537			$	(71,098)	$	78,585		$	1,833,012				$	3,224,046

(1)Share amounts represent Treasury Shares, see "Note 1. Summary of Significant Accounting Policies" for further discussion.

(2)As adjusted for adoption of ASU 2016-13, Measurement of Credit Losses on Financial Instruments. The cumulative effect of adoption of this guidance at January 1, 2020 resulted in a decrease to retained earnings of $24.9 million due to an increase in the allowance for credit losses. See "Note 1. Summary of Significant Accounting Policies for further discussion."

See accompanying Notes to Unaudited Consolidated Financial Statements.

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WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,
2020 2019
(in thousands)
Cash flows from operating activities:
Net income $ 313,005 $ 371,107
Adjustments to reconcile net income to cash provided by operating activities:
Provision for credit losses 157,837 15,303
Depreciation and amortization 17,122 14,904
Stock-based compensation 21,560 19,783
Deferred income taxes (37,414) 5,757
Amortization of net premiums for investment securities 19,015 11,031
Amortization of tax credit investments 34,244 33,551
Amortization of operating lease right of use asset 8,874 7,704
Amortization of net deferred loan fees and net purchase premiums (34,085) (31,838)
Income from bank owned life insurance (3,370) (2,938)
(Gains) / Losses on:
Sales of investment securities (230) (3,152)
Assets measured at fair value, net 986 (4,628)
Sale of loans 0 530
BOLI (5,607) 0
Sales / valuations of repossessed and other assets, net (1,335) 2,856
Changes in other assets and liabilities, net (40,486) 94,535
Net cash provided by operating activities $ 450,116 $ 534,505
Cash flows from investing activities:
Investment securities - AFS
Purchases $ (1,720,604) $ (746,445)
Principal pay downs and maturities 1,014,380 453,307
Proceeds from sales 156,629 150,377
Investment securities - HTM
Purchases (106,772) (100,460)
Principal pay downs and maturities 16,894 18,206
Proceeds from sales 0 10,000
Equity securities carried at fair value
Purchases (31,075) (10,662)
Redemption of principal (reinvestment of dividends) 7,003 4,535
Purchase of investment tax credits (103,365) (88,074)
Proceeds from (purchase of) SBIC investments 1,463 (5,298)
Purchase of money market investments, net 0 7
Proceeds from bank owned life insurance, net 6,011 0
Purchase of restricted stock (334) (244)
Net increase in loans (4,806,138) (2,445,769)
Purchase of premises, equipment, and other assets, net (33,103) (15,282)
Proceeds from sale of other real estate owned and repossessed assets, net 7,073 628
Net cash used in investing activities $ (5,591,938) $ (2,775,174)

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		Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019			2021		2020
		(in thousands)					(in millions)
Cash flows from operating activities:						Cash flows from operating activities:
Net income						Net income	$	192.5	$	83.9
Adjustments to reconcile net income to cash provided by operating activities:						Adjustments to reconcile net income to cash provided by operating activities:
(Recovery of) provision for credit losses						(Recovery of) provision for credit losses	(32.4)		51.2
Depreciation and amortization						Depreciation and amortization	6.0		5.4
Stock-based compensation						Stock-based compensation	8.0		6.9
Deferred income taxes						Deferred income taxes	5.1		(4.8)
Amortization of net premiums for investment securities						Amortization of net premiums for investment securities	10.7		5.6
Amortization of tax credit investments						Amortization of tax credit investments	15.5		7.4
Amortization of operating lease right of use asset						Amortization of operating lease right of use asset	3.0		2.8
Amortization of net deferred loan fees and net purchase premiums						Amortization of net deferred loan fees and net purchase premiums	(19.2)		(4.1)
Income from bank owned life insurance						Income from bank owned life insurance	(1.0)		(1.0)
Net (gains) losses on:						Net (gains) losses on:
Sale and valuation of investment securities and other assets						Sale and valuation of investment securities and other assets	1.1		9.7
Sale of loans						Sale of loans	0.7		0
Changes in other assets and liabilities, net						Changes in other assets and liabilities, net	(89.9)		(39.0)
Net cash provided by operating activities						Net cash provided by operating activities	$	100.1	$	124.0
Cash flows from investing activities:						Cash flows from investing activities:
Investment securities - AFS						Investment securities - AFS
Purchases						Purchases	$	(2,748.5)	$	(654.5)
Principal pay downs and maturities						Principal pay downs and maturities	493.6		264.6
Proceeds from sales						Proceeds from sales	0		62.3
Investment securities - HTM						Investment securities - HTM
Purchases						Purchases	(131.6)		(24.2)
Principal pay downs and maturities						Principal pay downs and maturities	0.7		1.3
Equity securities carried at fair value						Equity securities carried at fair value
Purchases						Purchases	(28.3)		(7.5)
Redemptions						Redemptions	0.4		4.2
Proceeds from sales						Proceeds from sales	0.6		0
Purchase of investment tax credits						Purchase of investment tax credits	(22.6)		(37.4)
Purchase of other investments						Purchase of other investments	(1.7)		(2.1)

Net increase in loans						Net increase in loans	(1,611.1)		(1,991.1)
Purchase of premises, equipment, and other assets, net						Purchase of premises, equipment, and other assets, net	(10.4)		(11.5)

Net cash used in investing activities						Net cash used in investing activities	$	(4,058.9)	$	(2,395.9)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Net increase in deposits	Net increase in deposits	$	6,046,903	$	3,263,367	Net increase in deposits	$	6,462.6	$	2,034.2
Net proceeds from issuance of subordinated debt		221,942		0
Net increase (decrease) in borrowings		13,013		(498,429)

Proceeds from exercise of common stock options		170		55
Cash paid for tax withholding on vested restricted stock		(8,370)		(9,582)
Net (decrease) increase in other borrowings						Net (decrease) increase in other borrowings	(0.1)		314.3

Cash paid for tax withholding on vested restricted stock and other						Cash paid for tax withholding on vested restricted stock and other	(12.8)		(7.4)
Common stock repurchases	Common stock repurchases	(71,669)		(115,571)		Common stock repurchases	0		(62.5)

Cash dividends paid on common stock	Cash dividends paid on common stock	(76,028)		(25,684)		Cash dividends paid on common stock	(25.3)		(25.6)

Proceeds from issuance of stock in offerings, net						Proceeds from issuance of stock in offerings, net	209.2		0
Net cash provided by financing activities	Net cash provided by financing activities	$	6,125,961	$	2,614,156	Net cash provided by financing activities	$	6,633.6	$	2,253.0
Net increase in cash, cash equivalents, and restricted cash		984,139		373,487
Net increase (decrease) in cash, cash equivalents, and restricted cash						Net increase (decrease) in cash, cash equivalents, and restricted cash	2,674.8		(18.9)
Cash, cash equivalents, and restricted cash at beginning of period	Cash, cash equivalents, and restricted cash at beginning of period	434,596		498,572		Cash, cash equivalents, and restricted cash at beginning of period	2,671.7		434.6
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	1,418,735	$	872,059	Cash, cash equivalents, and restricted cash at end of period	$	5,346.5	$	415.7
Supplemental disclosure:	Supplemental disclosure:					Supplemental disclosure:
Cash paid (received) during the period for:
Cash paid during the period for:						Cash paid during the period for:
Interest	Interest	$	87,134	$	144,680	Interest	$	15.0	$	46.3
Income taxes, net of refunds		37,069		(26,228)

Income taxes, net						Income taxes, net	30.8		1.3

See accompanying Notes to Unaudited Consolidated Financial Statements.

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WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of operation

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 deposit, lending, treasury management, international banking, and online banking products and services 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. In addition, the Company has 2 non-bank ~~subsidiaries:~~subsidiaries, which are LVSP, which held and managed certain OREO properties, and CSI, a captive insurance company formed and licensed under the laws of the State of Arizona and established as part of the Company's overall enterprise risk management strategy.

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

Convertible Debt and Derivatives and Hedging

In August 2020, the FASB issued guidance within ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). The amendments in this update affect entities that issue convertible instruments and/or contracts indexed to and potentially settled in an entity’s own equity. The new ASU simplifies the convertible accounting framework through elimination of the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The amendments to Subtopics 470 and 815 are effective for interim and annual reporting periods beginning after December 15, 2021 and are not expected to have a material impact on the Company’s Consolidated Financial Statements.

~~Income Taxes~~

~~In December 2019, the FASB issued guidance within ASU 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.~~ The amendments in ASU 2019-12 are intended to reduce the cost and complexity of applying ASC 740. The amendments that are applicable to the Company address: 1) franchise and other taxes partially based on income; 2) step-up in basis of goodwill in a business combination; 3) allocation of tax expense in separate entity financial statements; and 4) interim recognition of enactment of tax laws or rate changes. The amendments to Topic 740 are effective for interim and annual reporting periods beginning after December 15, 2020 and are not expected to have a material impact on the Company’s Consolidated Financial Statements.

~~Recently adopted accounting guidance~~

~~Measurement of Credit Losses on Financial Instruments~~

~~In June 2016, the FASB issued guidance within ASU 2016-13,~~ ~~Measurement of Credit Losses on Financial Instruments~~. The new standard significantly changes the impairment model for most financial assets that are measured at amortized cost, including off-balance sheet credit exposures, from an incurred loss model to an expected loss model. 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 Company adopted the amendments within ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. The Company's financial results for reporting periods

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beginning after January 1, 2020 are presented in accordance with ASC 326, while prior-period amounts continue to be reported in accordance with legacy GAAP. The Company recorded a cumulative effect adjustment to retained earnings, which resulted in a total decrease to retained earnings of $24.9 million as of January 1, 2020. This adjustment was due primarily to expected total losses under the new model in the Company's loan portfolio and, to a lesser extent, its off-balance sheet credit exposures.

The Company applied the prospective transition approach for loans purchased with credit deterioration that were previously classified as purchased credit impaired and previously accounted for under ASC 310-30. In accordance with the new standard, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. As of January 1, 2020, the amortized cost basis of the PCD loans was adjusted to reflect an allowance for credit losses of $3.3 million. The remaining noncredit discount (based on the adjusted amortized cost basis) related to PCD loans of $1.1 million will be accreted into interest income at the loan's effective interest rate as of January 1, 2020. The Company has elected not to maintain its pools of loans accounted for under ASC 310-30.

The Company applied the prospective transition approach for debt securities for which other-than-temporary impairment had been recognized prior to January 1, 2020. As a result, the amortized cost basis remains the same before and after the effective date. The effective interest rate on these debt securities was not changed. Recoveries of amounts previously written off relating to improvements in cash flows after January 1, 2020 will be recorded in earnings when received.

The following table summarizes the estimated allowance for credit losses related to financial assets and off-balance sheet credit exposures and the corresponding impacts on the deferred tax asset and retained earnings upon adoption of ASC 326:

January 1, 2020
Pre-ASC 326 Adoption Post-ASC 326 Adoption Impact of ASC 326 Adoption
(in thousands)
Assets:
Allowance for credit losses on HTM securities $ 0 $ 2,646 $ 2,646
Allowance for credit losses on loans 167,797 186,925 19,128
Deferred tax asset 18,025 26,675 8,650
Liabilities:
Off-balance sheet credit exposures $ 8,955 $ 24,044 $ 15,089
Equity:
Retained earnings $ 1,680,317 $ 1,655,370 $ (24,947)

Management has elected to take advantage of the capital relief option that delays the estimated impact of the adoption of ASC 326 on regulatory capital by up to two years, with a three-year transition period to phase out the cumulative benefit to regulatory capital provided during the two-year delay.

~~In April 2019, the FASB issued guidance within ASU 2019-04,~~ ~~Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments~~. The amendments in ASU 2019-04 clarify or correct the guidance in these Topics. With respect to Topic 326, ASU 2019-04 addresses a number of issues as it relates to the CECL standard including consideration of accrued interest, recoveries, variable-rate financial instruments, prepayments, and extension and renewal options, among other things, in the measurement of expected credit losses. The amendments to Topic 326 were adopted concurrently with ASU 2016-13 and did not have a significant impact on the Company’s Consolidated Financial Statements. With respect to Topic 815, ~~Derivatives and Hedging~~, ASU 2019-04 clarifies issues related to partial-term hedges, hedged debt securities, and transitioning from a quantitative method of assessing hedge effectiveness to a more simplified method. The Company does not have partial-term hedges or any hedged debt securities and the transition issues discussed in the ASU 2019-04 are not applicable to the Company. Accordingly, the amendments to Topic 815 did not have an impact on the Company's Consolidated Financial Statements. With respect to Topic 825, ~~Financial Instruments,~~ on recognizing and measuring financial instruments, ASU 2019-04 addresses: 1) the scope of the guidance; 2) the requirement for remeasurement under ASC 820 when using the measurement alternative for equity securities without readily determinable fair values; 3) certain disclosure requirements; and 4) which equity securities have to be remeasured at historical exchange rates. The amendments to Topic 825 were effective January 1, 2020 and did not have a material impact on the Company’s Consolidated Financial Statements.

~~In May 2019, the FASB issued guidance within ASU 2019-05,~~ ~~Financial Instruments - Credit Losses~~, to provide entities with an option to irrevocably elect the fair value option for eligible financial assets measured at amortized cost. The election is to be applied on an instrument-by-instrument basis upon adoption of Topic 326 and is not available for either AFS or HTM debt securities. The amendments in ASU 2019-05 should be applied on a modified-retrospective basis through a cumulative-effect

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adjustment to the opening balance of retained earnings as of the date that an entity adopts the amendments in ASU 2016-13. The Company did not elect this fair value option as part of its adoption of ASU 2016-13 on January 1, 2020.

~~In November 2019, the FASB issued guidance within ASU 2019-11,~~ ~~Codification Improvements to Topic 326, Financial Instruments—Credit Losses.~~ The amendments in ASU 2019-11 clarify or address specific issues about certain aspects of the amendments in ASU 2016-13. These issues include measurement and reporting requirements related to: 1) the allowance for credit losses for purchased assets with credit deterioration; 2) prepayment assumptions on existing troubled debt restructurings; 3) extension of disclosure relief for accrued interest receivable balances; and 4) expected credit losses on collateralized financial assets. The adoption of ASU 2019-11 is concurrent with ASU 2016-13 and, adoption of these amendments on January 1, 2020, did not have a significant impact on the Company's Consolidated Financial Statements.

~~Fair Value Measurements~~

~~In August 2018, the FASB issued guidance within ASU 2018-13,~~ ~~Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement~~. The amendments within ASU 2018-13 remove, modify, and supplement the disclosure requirements for fair value measurements. Disclosure requirements that were removed include: 1) the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; 2) the policy for timing of transfers between levels; and 3) the valuation processes for Level 3 fair value measurements. The amendments clarify that the measurement uncertainty disclosure is intended to communicate information about the uncertainty in measurement as of the reporting date. Additional disclosure requirements include: 1) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and 2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. With the exception of the above additional disclosure requirements, which will be applied prospectively, all other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments in this ASU did not have a significant impact on the Company's Consolidated Financial Statements.

~~Internal-Use Software~~

~~In August 2018, the FASB issued guidance within ASU 2018-15,~~ ~~Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)~~. The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Accordingly, the amendments in this Update require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The amendments in this Update also require that the capitalized implementation costs of a hosting arrangement that is a service contract be expensed over the term of the hosting arrangement. Presentation requirements include: 1) expense related to the capitalized implementation costs should be presented in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement; 2) payments for capitalized implementation costs in the statement of cash flows should be classified in the same manner as payments made for fees associated with the hosting element; and 3) capitalized implementation costs in the statement of financial position should be presented in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented. The adoption of this guidance did not have a significant impact on the Company's Consolidated Financial Statements.

Reference Rate Reform

In March 2020, the FASB issued guidance within ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, in response to the scheduled discontinuation of LIBOR on December 31, ~~2021~~2021. Since the issuance of this guidance, the publication cessation of U.S. dollar LIBOR has been extended to June 30, 2023. The amendments in this Update provide optional guidance designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, borrowings) necessitated by reference rate reform.

The following optional expedients for applying the requirements of certain Topics or Industry Subtopics in the Codification are permitted for contracts that are modified because of reference rate reform and that meet certain scope guidance: 1) modifications of contracts within the scope of Topics 310, Receivables, and 470, Debt, should be accounted for by prospectively adjusting the effective interest rate; 2) modifications of contracts within the scope of Topic 842, Leases, should be accounted for as a continuation of the existing contracts with no reassessments of the lease classification and the discount rate or remeasurements of lease payments that otherwise would be required under this Topic for modifications not accounted for as separate contracts; 3) modifications of contracts do not require an entity to reassess its original conclusion about whether that contract contains an embedded derivative that is clearly and closely related to the economic characteristics and risks of the host contract under Subtopic 815-15, Derivatives and Hedging- Embedded Derivatives; and 4) for other Topics or Industry Subtopics in the Codification, the amendments in this Update also include a general principle that permits an entity to consider

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contract modifications due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. ~~An entity may make a one-time election~~

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope in order to ~~sell, transfer, or both sell~~clarify that certain optional expedients and ~~transfer debt securities classified as held~~exceptions in Topic 848 apply to ~~maturity~~derivatives that ~~reference a rate~~are affected by the discounting transition.

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Specifically, certain provisions in Topic 848, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discount, or contract price alignment that is modified as a result of reference rate ~~reform and that are classified as held to maturity before January 1, 2020.~~reform.

The amendments in ~~this Update~~these Updates are effective immediately for all entities ~~as of March 12, 2020~~and apply to contract modifications through December 31, 2022. The adoption of this accounting guidance is not expected to have a material impact on the Company's Consolidated Financial Statements.

Recently adopted accounting guidance

Income Taxes

In December 2019, the FASB issued guidance within ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in ASU 2019-12 are intended to reduce the cost and complexity of applying ASC 740. The amendments that are applicable to the Company address: 1) franchise and other taxes partially based on income; 2) step-up in basis of goodwill in a business combination; 3) allocation of tax expense in separate entity financial statements; and 4) interim recognition of enactment of tax laws or rate changes. The adoption of this guidance did not have a significant 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 susceptible to significant changes in the near term, particularly to the extent that economic conditions worsen or persist longer than expected in an adverse state, relate to: 1) the determination of the allowance for credit losses; 2) certain assets and liabilities carried at fair value; and 3) accounting for income taxes.

Principles of consolidation

As of ~~September 30, 2020,~~March 31, 2021, WAL has the following significant wholly-owned subsidiaries: WAB and 8 unconsolidated subsidiaries used as business trusts in connection with the issuance of trust-preferred securities.

~~The Bank~~WAB has the following significant wholly-owned subsidiaries: WABT, which holds certain investment securities, municipal and nonprofit loans, and leases; 1) WA PWI, which holds interests in certain limited partnerships invested primarily in low income housing tax credits and small business investment corporations; 2) Helios Prime, which holds interests in certain limited partnerships invested in renewable energy projects; and 3) BW Real Estate, Inc., which operates as a real estate investment trust and holds certain of WAB's real estate loans and related securities.

The Company does not have any other significant entities that should be 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 Financial Statements to conform to the current presentation. The reclassifications have no effect on net income or stockholders’ equity as previously reported.

Interim financial information

The accompanying Unaudited Consolidated Financial Statements as of and for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ have been prepared in condensed format and, therefore, do not include all of the information and footnotes required by GAAP for complete financial statements. These statements have been prepared on a basis that is substantially consistent with the accounting principles applied to the Company's audited Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

The information furnished in these interim statements reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for each respective period presented. Such adjustments are of a normal, recurring nature. The results of operations in the interim statements are not necessarily indicative of the results that may be expected for any other

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quarter or for the full year. The interim financial information should be read in conjunction with the Company's audited Consolidated Financial Statements.

Investment securities

Investment securities include debt and equity securities. Debt securities may be classified as HTM, AFS, or 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. The sale of an 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. Securities classified as AFS are securities that the Company intends to hold for an indefinite period of time, but not necessarily to

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maturity. Any decision to sell a security classified as AFS would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, decline in credit quality, 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 other comprehensive income, 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 part of non-interest income.

Equity securities are carried at their estimated fair value, with changes in fair value reported in earnings as part of non-interest income.

Interest income is recognized based on the coupon rate and includes the amortization of purchase premiums and the accretion of purchase discounts. Premiums and discounts on investment securities are generally amortized or accreted over the contractual life of the security 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.

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 against interest income.

Allowance for credit losses on investment securities

On January 1, 2020, the Company adopted the amendments within ASU 2016-13, which replaces the legacy US GAAP OTTI model with a credit loss model. ~~For discussion of the former OTTI methodology, refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2019.~~ 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, which 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 (probability of default, loss given default, and exposure at default) 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 the 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, but retains the concept from the OTTI model that credit losses are recognized once securities become impaired. For AFS debt securities, a decline in fair value due to credit loss results in recognition of an allowance for credit losses. Impairment may result from credit deterioration of the issuer or collateral underlying the security. The assessment of determining if a decline in fair value resulted from a credit loss is performed at the individual security level. Among other factors, the Company considers: 1) the extent to which the fair value is less than the amortized cost basis; 2) the financial condition and near term prospects of the issuer, including consideration of relevant financial metrics or ratios of the issuer; 3) any 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 that a credit loss exists, the Company records an allowance for credit losses 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 the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense. Interest accruals and amortization and accretion of premiums and discounts are suspended when the credit loss is recognized in earnings. Any interest received after the security has been placed on nonaccrual status is recognized on a cash

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basis. Accrued interest receivable on AFS 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 to retain the security until anticipated recovery of the security's fair value; and 2) whether it is more-likely-than not that the Company would be required to sell the security 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 allowance for credit losses with any incremental impairment recorded in earnings.

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~~Writeoffs~~Write-offs are made through reversal of the allowance for credit losses and direct ~~writeoff~~write-off of the amortized cost basis of the AFS security. The Company considers the following events to be indicators that a ~~writeoff~~write-off should be taken: 1) bankruptcy of the issuer; 2) significant adverse event(s) affecting the issuer in which it is improbable for the issuer to make its remaining payments on the security; and 3) significant loss of value of the underlying collateral behind a security. Recoveries on debt securities, if any, are recorded in the 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 capital stock of the FHLB based on the borrowing capacity used. These 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 dividend income received from the stock is reported in interest income. The Company conducts a periodic review and evaluation of its restricted stock to determine if any impairment exists. No impairment has been recorded to date.

Loans held for ~~sale~~

Loans held for sale consist of loans that the Company originates (or acquires) and intends to sell. These loans are carried at the lower of aggregate cost or fair value. Fair value is determined based on quoted fair market values or, when not available, discounted cash flows or appraisals of underlying collateral or the credit quality of the borrower.

~~Loans held for~~ investment

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost. Amortized cost is the amount of unpaid principal, adjusted for unamortized net deferred fees and costs, premiums and discounts, and ~~writeoffs.~~write-offs. In addition, the amortized cost of loans subject to a fair value hedge 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. At the purchase or acquisition date, loans are evaluated to determine if there has been more than insignificant credit deterioration since origination. Loans that have experienced more than insignificant credit deterioration since origination are referred to as PCD loans. In its evaluation of whether a loan has experienced more than insignificant deterioration in credit quality since origination, the Company takes into consideration loan grades, loan-to-values greater than policy limits, past due and nonaccrual status, and TDR loans. The Company may also consider external credit rating agency ratings for borrowers and for non-commercial loans, FICO score or band, probability of default levels, number of times past due, and standard deviations corresponding to FICO score or band. The initial estimate of credit losses on PCD loans is added to the purchase price on the acquisition date to establish the initial amortized cost basis of the loan; accordingly, the initial recognition of expected credit losses has no impact on net income. When the initial measurement of expected credit losses on PCD loans are 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 allowance for credit losses on PCD loans are recorded through the provision for credit losses. For purchased loans that are not deemed to have experienced more than insignificant credit deterioration since origination, any discounts or premiums included in the purchase price are accreted (or amortized) over the contractual life of the individual loan. For additional information, see "Note 3. Loans, Leases and Allowance for Credit Losses" of these Notes to Unaudited Consolidated Financial Statements.

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 of 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 a loan has scheduled payments, the amortization of the net deferred loan fee is calculated using the interest method over the contractual life of the loan. If a loan does not have scheduled payments, such as a line of credit, the net deferred loan fee is 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.

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Conversely, with respect to loans originated under the PPP, the Company incorporates projected prepayments in calculating effective yield. As a result, net deferred fees are accreted into interest income faster than would be the case when applying the contractual method based upon the timing and amount of estimated forgiven loan balances. The Company expects that a

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majority of PPP loans will qualify for forgiveness under the SBA program, based on requested loan amounts largely representing qualifying expenses at the time of application.

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 the loan has become 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 all loan types, when a loan is placed on nonaccrual 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 may recognize income on a cash basis when a payment is received and only for those nonaccrual loans for which the collection of the remaining principal balance is not in doubt. 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 principal has been paid in full or until circumstances have changed such that payments are again consistently received as contractually required. Loans are returned to accrual status when all of the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Troubled Debt Restructured Loans

A TDR loan is a loan on which the Company, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that the Company would not otherwise consider. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. The evaluation is performed under the Company's internal underwriting policy. The loan terms that may be modified or restructured due to a borrower’s financial situation include, but are 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 may be returned to accrual status when the loan is brought current, has performed 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 is no longer in doubt. Consistent with regulatory guidance, a TDR loan that is subsequently modified in another restructuring agreement but has shown sustained performance and classification as a TDR, will be removed from TDR status provided that the modified terms were market-based at the time of modification.

The CARES Act, signed into law on March 27, 2020, ~~permits~~permitted financial institutions to suspend requirements under GAAP for loan modifications to borrowers affected by COVID-19 that would otherwise be characterized as TDRs and suspend any determination related thereto if (i) the loan modification iswas made between March 1, 2020 and ~~the earlier of~~ December 31, 2020 ~~or 60 days after the end of the coronavirus emergency declaration~~ and (ii) the applicable loan was not more than 30 days past due as of December 31, 2019. The Consolidated Appropriations Act, 2021, signed into law on December 27, 2020, extends these provisions through January 1, 2022. In addition, federal bank regulatory authorities ~~have~~ issued guidance to encourage financial institutions to make loan modifications for borrowers affected by COVID-19 and ~~have~~ assured financial institutions that they will neither receive supervisory criticism for such prudent loan modifications, nor be required by examiners to automatically categorize COVID-19-related loan modifications as TDRs. The Company is applying this guidance to qualifying loan modifications.

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 loss is measured on a pool basis.

The nine risk rating categories can be generally described by the following groupings for loans:

"Pass" (grades 1 through 5): The Company has five pass risk ratings, which represent a level of credit quality that ranges from 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:

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Minimal risk. These 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.

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Low risk. These consist of loans with a high investment grade rating equivalent.

Modest risk. These 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. These 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. These 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): 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. 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 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 on loans

On January 1, 2020, the Company adopted the amendments within ASU 2016-13, Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets carried at amortized cost from an incurred loss model to an expected loss model. The discussion below reflects the current expected credit loss model methodology. ~~For discussion of the former incurred loss model methodology, refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2019.~~ Credit risk is inherent in the business of extending loans and leases to borrowers and is continuously monitored by management and reflected within the allowance for credit losses for loans. The allowance for credit losses is an estimate of life-of-loan losses for the Company's loans held for investment. The allowance for credit losses 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. Accrued interest receivable on loans, which is included in other assets on the Consolidated Balance Sheet, is excluded from the estimate of expected credit losses. Expected recoveries of amounts previously written off and expected to be written off are included in the valuation account and may not exceed the aggregate of amounts previously written off and expected to be written off. The Company formally re-evaluates and establishes the appropriate level of the allowance for credit losses on a quarterly basis.

Determining the appropriateness of the allowance is complex and requires judgment by management about the effect 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 allowance for credit losses and credit loss expense in those future periods. The allowance level is influenced by loan volumes, mix, loan performance metrics, asset quality characteristics, delinquency status, historical credit loss experience, and the inputs and assumptions in economic forecasts, such as macroeconomic inputs, length of reasonable and supportable forecast periods, and reversion methods. The methodology for estimating the amount of expected credit losses reported in the allowance for credit losses has two basic components: first, an asset-specific component involving individual loans that do not share risk characteristics with

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other loans and the measurement of expected credit losses for such individual loans and; second, a pooled component for estimated expected credit losses for pools of loans that share similar risk characteristics.

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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 determination of credit rating. All loans graded substandard or worse and all PCD loans, irrespective of credit rating, ~~are specifically reviewed for loss potential and, when deemed appropriate,~~ are assigned a reserve based on an individual evaluation. For these loans, the allowance is based primarily on the fair value of the underlying collateral, utilizing independent third-party appraisals.

Loans that share similar risk characteristics with other loans

In estimating the component of the allowance for credit losses for loans that share similar risk characteristics with other loans, such loans are segregated into loan segments. The Company's primary portfolio segments have changed due to adoption of the amendments within ASU 2016-13 to align with the methodology applied in estimating the allowance for credit losses under CECL. Loans are designated into loan segments based on loans pooled by product types, business lines, and similar risk characteristics or areas of risk concentration. Accordingly, the loan portfolio segments discussed below are based upon CECL-defined shared risk characteristics and are not comparable to the segments reported prior to adoption of the new accounting guidance.

In determining the allowance for credit losses, the Company derives 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 non-statistical estimation approaches. Probability of default is projected in these models or estimation approaches using multiple economic scenarios, whose outcomes are weighted based on the Company's economic outlook 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 share a common definition of default, which include loans that are 90 days past due, on nonaccrual status, have a ~~writeoff,~~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 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 residential, 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. Factors utilized in calculating average LGD vary for each loan segment and are further described below. Exposure at default refers to the Company's exposure to loss at the time of borrower ~~default and~~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. For most of the Company's loan segments, prepayment rate assumptions are based on a non-modeled approach that calculates the number of loans that were prepaid in full during the period divided by the total number of loans outstanding at the beginning of the period. 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 considerations of current trends and conditions that are 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 allowance for credit losses on loans for each of the loan portfolio segments identified:

~~Commercial~~Warehouse lending

The warehouse lending portfolio segment consists of mortgage warehouse lines, mortgage servicing rights financing facilities, and ~~industrial~~

~~The~~note finance loans, which have a monitored borrowing base to mortgage companies and similar lenders and are primarily structured as commercial and industrial loans. These loans are collateralized by real estate notes and mortgages or mortgage servicing rights and the borrowing base of these loans is tightly monitored and controlled by the Company. The primary support for the loan 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 interest rate shocks, residential lending rates, prepayment assumptions, and general 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.

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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 support the loans. Unemployment rates and the market valuation of residential properties have an effect on the tax revenues supporting these loans; however, these loans tend to be less cyclical in comparison to similar commercial loans as these loans rely on diversified tax bases. The Company uses a non-modeled approach to estimate expected credit losses, leveraging grade information and historical municipal default rates.

Tech & innovation

The Tech & innovation portfolio segment is comprised of commercial loans that are originated within this business line and not collateralized by real estate. The source of repayment of these loans is generally expected to be the income that is generated from the business. The models used to estimate expected credit losses for this loan segment include a combination of a vendor model and an internally-developed model. These models incorporate both 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 macroeconomic scenarios to produce a probability of default. Macroeconomic variables include the Dow Jones Index, credit spread between the BBB Bond Yield and 10-Year Treasury Bond Yield, unemployment rate, and CBOE VIX Index quarterly high. LGD and the prepayment rate assumption for EAD for this loan segment are driven by unemployment levels.

Other commercial and industrial

~~Table~~The other commercial and industrial segment is comprised of ~~Contents~~

commercial and industrial loans that are not originated within the Company's specialty business lines and are not collateralized by real estate. The models used to estimate expected credit losses for this loan segment is the same as those used for the Tech & Innovation portfolio segment.

Commercial real estate, owner-occupied

The CRE, owner-occupied portfolio segment is comprised of commercial loans that are collateralized by real estate, where the primary source of repayment is the 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 probability of default 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.

~~Commercial real estate, non-owner occupied~~Hotel franchise finance

The ~~CRE, non-owner occupied~~Hotel franchise finance segment is comprised of loans that are originated within this business line and are collateralized by real estate, where the owner is 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 probabilities of default and exposure at default 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, 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.

Other commercial real estate, non-owner occupied

The other commercial real estate, non-owner occupied segment is comprised of loans that are not originated within the Company's specialty business lines and are collateralized by real estate, where the owner is not the primary tenant. 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.

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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 that are 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 probability of default, loss given default severity, prepayment rate, and exposure at default 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 exposure at default for residential loans is based on industry prepayment history.

Probability of default for HELOCs is derived from an internally-developed model that projects PD by incorporating loan level information such as FICO score, lien position, balloon payments, and macroeconomic conditions such as property appreciation. LGD for this loan segment is driven by property appreciation and lien position. Exposure at default for HELOCs is calculated based on utilization rate assumptions using a non-modeled approach and incorporates management judgment.

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 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 ~~metropolitan statistical area ("MSA")~~MSA in which the property is located, among other items. The variables used in the internally-developed model include loan level drivers such as origination loan-to-value, loan maturity, and macroeconomic 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 property appreciation for fixed rate loans and unemployment levels for variable rate loans.

~~Warehouse lending~~

The warehouse lending portfolio segment consists of loans that have a monitored borrowing base to mortgage companies and similar lenders. These loans are collateralized by real estate notes and mortgages or mortgage servicing rights and the borrowing base of these loans is tightly monitored and controlled by the Company. The primary support for the loan takes the

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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 interest rate shocks, residential lending rates, prepayment assumptions, and general 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. 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 support the loans. Unemployment rates and the market valuation of residential properties have an effect on the tax revenues supporting these loans; however, these loans tend to be less cyclical in comparison to similar commercial loans as these loans rely on diversified tax bases. The Company uses a non-modeled approach to estimate expected credit losses, leveraging grade information and historical municipal default rates.

Other

This portfolio consists of those loans not already captured in one of the 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 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.

Off-balance sheet credit exposures, including unfunded loan commitments

The Company maintains a separate allowance for credit losses 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 allowance for credit losses 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 exposure at default that is derived from utilization rate assumptions using a non-modeled approach, and PD and LGD estimates that are derived from the same models and approaches for the Company's other loan portfolio segments described above as these unfunded commitments share similar risk characteristics with these loan portfolio segments. No credit loss estimate is reported 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.

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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 as part of occupancy expense over the lease term.

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 that the options will be exercised.

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In addition to the package of practical expedients, the Company also elected the practical expedient that allows lessees to make an accounting policy election to not separate non-lease components from the associated lease component, and instead account for them all together as part of the applicable lease component. This practical expedient can be elected separately for each underlying class of asset. 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 can 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 necessary. 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.

The Company’s intangible assets consist primarily of core deposit intangible assets that are amortized over periods ranging from five to 10 years. 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 ~~did~~has not ~~revise~~revised its estimates of the useful lives of its core deposit intangibles during the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 or ~~2019.~~2020.

Stock compensation plans

The Company has the Incentive Plan, as amended, which is described more fully in "Note 6. Stockholders' Equity" of these Notes to Unaudited Consolidated Financial Statements. Compensation expense on non-vested restricted stock awards is based on the fair value of the award on the measurement date which, for the Company, is the date of the grant and is recognized ratably over the service period of the award. Forfeitures are estimated at the time of the 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 on the EPS component for these awards is based on the fair value (market price of the Company's stock on the date of

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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 6. Stockholders' Equity" of these Notes to Unaudited Consolidated Financial Statements for further discussion of stock awards.

Dividends

WAL is a legal entity separate 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 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.

Treasury shares

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.

Common stock repurchases

~~On December 11, 2018, the~~The Company has previously adopted ~~its~~ common stock repurchase ~~program,~~programs pursuant to which the Company ~~was authorized to repurchase up to $250.0 million of its~~has repurchased shares ~~of common stock through December 31, 2019. The program was renewed through December 2020, authorizing the Company to repurchase up to an additional $250.0 million~~ of its outstanding common ~~stock.~~stock, the most recent of which expired in December 2020. All shares repurchased under the plan ~~are~~were retired upon settlement. The Company has elected to allocate the excess of the repurchase price over the par value of its common stock between APIC and retained earnings, with the portion allocated to APIC limited to the amount of APIC that was recorded at the time that the shares were initially issued, which iswas calculated on a last-in, first-out basis.

Derivative financial instruments

The Company uses interest rate swaps to mitigate interest-rate risk associated with changes to the fair value of certain fixed-rate financial instruments (fair value hedges).

The Company recognizes derivatives as assets or liabilities on 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. 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.

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. Changes in the fair value of derivatives not considered to be highly effective in hedging the change in fair value 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 after the derivative contract is executed. At inception, the Company performs a quantitative assessment to determine whether the derivatives used in hedging transactions are highly effective (as defined in the guidance) in offsetting changes in the fair value of the hedged item. Retroactive effectiveness is assessed, as well as the continued expectation that the hedge will remain effective prospectively.

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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 that 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 on the Consolidated Balance Sheet, but the carrying amount of the hedged item is no 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.

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Derivative instruments that are not designated as hedges, so called free-standing derivatives, are reported on 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 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 on the Consolidated Balance Sheet at fair value and is not designated as a hedging instrument.

Off-balance sheet instruments

In the ordinary course of business, the Company has entered 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 Statements when they are funded. They involve, to varying degrees, elements of credit risk in excess of amounts recognized on the Consolidated Balance Sheet. Losses could 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 and, in certain instances, may be unconditionally cancelable. 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 also has off-balance sheet arrangements related to its derivative instruments. Derivative instruments are recognized in the Consolidated Financial Statements at fair value and their notional values are carried off-balance sheet. See "Note 8. Derivatives and Hedging Activities" of these Notes to Unaudited Consolidated Financial Statements for further discussion.

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, and 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 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

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asset or liability 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.

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•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, for disclosure purposes, 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 that the Company ~~make assumptions regarding~~consider 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 in 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 ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020. The estimated fair value amounts for ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 have been measured as of period-end, and have not been re-evaluated or updated for purposes of these Unaudited 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 12. Fair Value Accounting" of these Notes to Unaudited 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, cash equivalents, and restricted cash

The carrying amounts reported on the Consolidated Balance Sheet for cash and due from banks approximate their fair value.

Money market investments

The carrying amounts reported on the Consolidated Balance Sheet for money market investments approximate their fair value.

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Investment securities

The fair values of publicly-traded CRA investments, exchange-listed preferred stock, trust preferred securities, 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 debt securities 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. ~~For a small subset of securities,~~In addition to matrix pricing, the Company uses other pricing sources, ~~are used,~~ including observed prices on publicly traded securities and dealer ~~quotes.~~quotes, to estimate the fair value of debt securities, which are also categorized as Level 2 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. 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.

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Loans

The fair value of loans 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-party independent valuation. As a result, the fair value for loans is categorized as Level 23 in the fair value ~~hierarchy, excluding collateral dependent and impaired loans, which are categorized as Level 3.~~hierarchy.

Accrued interest receivable and payable

The carrying amounts reported on the Consolidated Balance Sheet for accrued interest receivable and payable approximate their fair values.

Derivative financial instruments

All derivatives are recognized on 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 in the fair value hierarchy.

Deposits

The fair value disclosed for demand and savings deposits is by definition equal to the amount payable on demand at their reporting date (that is, their carrying amount), as these deposits do not have a contractual term. The carrying amount for variable rate deposit accounts approximates their fair value. Fair values for fixed 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 FHLB advances and customer repurchase agreements have been categorized as Level 2 in the fair value hierarchy due to their short durations.

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 2 in the fair value hierarchy.

Junior subordinated debt

Junior subordinated debt is valued based on a discounted cash flow model which uses as inputs Treasury Bond rates and the 'BB' and 'BBB' rated financial indexes. Junior subordinated debt has been categorized as Level 3 in the fair value hierarchy.

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Off-balance sheet instruments

The fair value of the Company’s off-balance sheet instruments (lending commitments and letters of credit) is based on quoted fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, and the counterparties’ credit standing.

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.

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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 on the Consolidated Balance Sheet. See "Note 10. Income Taxes" of these Notes to Unaudited Consolidated Financial Statements for further discussion on income taxes.

Non-interest income

Non-interest income includes service charges and fees, income from equity investments, card income, foreign currency income, income from bank owned life insurance, lending related income, net gain or loss on sales of investment securities, net fair value gain or loss adjustments on assets measured at fair value, and other income. 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 in accordance with ASC 606, Revenue from Contracts with Customers. Income from equity investments includes gains on equity warrant assets, SBIC equity income, and success fees. 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 ASC 606. Foreign currency income represents fees earned on the differential between purchases and sales of foreign currency on behalf of the Company’s clients. Income from bank owned life insurance is accounted for in accordance with ASC 325, Investments - Other. Lending related income includes fees earned from gains or losses on the sale of loans, SBA income, and letter of credit fees. Gains and losses on the sale of loans and SBA income are recognized pursuant to ASC 860, Transfers and Servicing. Net unrealized gains or losses on assets measured at fair value represent fair value changes in equity securities and are accounted for in accordance with ASC 321, Investments - Equity Securities. Fees related to standby letters of credit are accounted for in accordance with ASC 440, Commitments. Other income includes operating lease income, which is recognized on a straight-line basis over the lease term in accordance with ASC 842, Leases. Net gain or loss on sales/valuations of repossessed and other assets is presented as a component of non-interest expense, but may also be presented as a component of non-interest income in the event that a net gain is recognized. Net gain or loss on sales of repossessed and other assets are accounted for in accordance with ASC 610, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets. See "Note 14. Revenue from Contracts with Customers" of these Notes to Unaudited 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 the ~~new~~ standard.

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2. INVESTMENT SECURITIES

The carrying amounts and fair values of investment securities at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 are summarized as follows:


		September 30, 2020									March 31, 2021
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value
		(in thousands)									(in millions)
Held-to-maturity	Held-to-maturity									Held-to-maturity
Tax-exempt	Tax-exempt	$	504,477	$	43,663	$	0	$	548,140	Tax-exempt	$	698.0	$	43.8	$	(1.4)	$	740.4

Available-for-sale debt securities	Available-for-sale debt securities									Available-for-sale debt securities
CDO		$	50	$	8,126	$	0	$	8,176
CLO										CLO	$	980.3	$	0.8	$	(0.4)	$	980.7
Commercial MBS issued by GSEs	Commercial MBS issued by GSEs	91,769		3,888		0		95,657		Commercial MBS issued by GSEs	88.0		1.6		(1.8)		87.8
Corporate debt securities	Corporate debt securities	193,798		1,081		(8,270)		186,609		Corporate debt securities	286.0		5.0		(5.9)		285.1
Municipal securities		22,006		271		(118)		22,159

Private label residential MBS	Private label residential MBS	1,245,217		19,874		(854)		1,264,237		Private label residential MBS	1,905.7		9.8		(14.9)		1,900.6
Residential MBS issued by GSEs	Residential MBS issued by GSEs	1,329,773		32,314		(531)		1,361,556		Residential MBS issued by GSEs	2,277.8		18.5		(46.7)		2,249.6
Tax-exempt	Tax-exempt	961,373		51,117		(1,467)		1,011,023		Tax-exempt	1,271.4		62.0		(3.7)		1,329.7
Trust preferred securities		32,000		0		(6,792)		25,208

U.S. treasury securities	U.S. treasury securities	600		0		0		600		U.S. treasury securities	50.0		0		0		50.0
Other										Other	54.1		7.4		(5.1)		56.4
Total AFS debt securities	Total AFS debt securities	$	3,876,586	$	116,671	$	(18,032)	$	3,975,225	Total AFS debt securities	$	6,913.3	$	105.1	$	(78.5)	$	6,939.9

Equity securities	Equity securities									Equity securities
CRA investments	CRA investments	$	53,190	$	355	$	0	$	53,545	CRA investments	$	57.6	$	0	$	(0.2)	$	57.4
Preferred stock	Preferred stock	104,974		3,976		(1,934)		107,016		Preferred stock	129.5		6.2		(0.2)		135.5
Total equity securities	Total equity securities	$	158,164	$	4,331	$	(1,934)	$	160,561	Total equity securities	$	187.1	$	6.2	$	(0.4)	$	192.9


		December 31, 2019									December 31, 2020
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value
		(in thousands)									(in millions)
Held-to-maturity	Held-to-maturity									Held-to-maturity
Tax-exempt	Tax-exempt	$	485,107	$	31,303	$	(149)	$	516,261	Tax-exempt	$	568.8	$	43.0	$	0	$	611.8

Available-for-sale debt securities	Available-for-sale debt securities									Available-for-sale debt securities
CDO		$	50	$	10,092	$	0	$	10,142
CLO										CLO	$	146.9	$	0	$	0	$	146.9
Commercial MBS issued by GSEs	Commercial MBS issued by GSEs	95,062		366		(1,175)		94,253		Commercial MBS issued by GSEs	80.8		3.8		0		84.6
Corporate debt securities	Corporate debt securities	105,015		112		(5,166)		99,961		Corporate debt securities	271.1		4.8		(5.7)		270.2
Municipal securities		7,494		279		0		7,773

Private label residential MBS	Private label residential MBS	1,129,985		3,572		(4,330)		1,129,227		Private label residential MBS	1,461.7		15.7		(0.5)		1,476.9
Residential MBS issued by GSEs	Residential MBS issued by GSEs	1,406,594		9,283		(3,817)		1,412,060		Residential MBS issued by GSEs	1,462.5		27.9		(3.8)		1,486.6
Tax-exempt	Tax-exempt	530,729		24,548		(422)		554,855		Tax-exempt	1,109.3		78.1		0		1,187.4
Trust preferred securities		32,000		0		(4,960)		27,040
U.S. government sponsored agency securities		10,000		0		0		10,000
U.S. treasury securities		999		0		0		999

Other										Other	54.1		7.3		(5.5)		55.9
Total AFS debt securities	Total AFS debt securities	$	3,317,928	$	48,252	$	(19,870)	$	3,346,310	Total AFS debt securities	$	4,586.4	$	137.6	$	(15.5)	$	4,708.5

Equity securities	Equity securities									Equity securities
CRA investments	CRA investments	$	52,805	$	0	$	(301)	$	52,504	CRA investments	$	53.1	$	0.3	$	0	$	53.4
Preferred stock	Preferred stock	82,514		3,881		(198)		86,197		Preferred stock	107.0		7.3		(0.4)		113.9
Total equity securities	Total equity securities	$	135,319	$	3,881	$	(499)	$	138,701	Total equity securities	$	160.1	$	7.6	$	(0.4)	$	167.3

Securities with carrying amounts of approximately ~~$830.4~~$693.2 million and ~~$962.5~~$778.0 million at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, 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 at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, aggregated by major security type and length of time in a continuous unrealized loss position:


		September 30, 2020													March 31, 2021
		Less Than Twelve Months				More Than Twelve Months				Total					Less Than Twelve Months				More Than Twelve Months				Total
		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value			Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
		(in thousands)													(in millions)

Held-to-maturity														Held-to-maturity
Tax-exempt														Tax-exempt	$	1.4	$	48.0	$	0	$	0	$	1.4	$	48.0
Available-for-sale debt securities	Available-for-sale debt securities													Available-for-sale debt securities

CLO														CLO	$	0.4	$	638.6	$	0	$	0	$	0.4	$	638.6
Commercial MBS issued by GSEs														Commercial MBS issued by GSEs	1.8		48.0		0		0		1.8		48.0
Corporate debt securities	Corporate debt securities	$	70	$	31,528	$	8,200	$	91,800	$	8,270	$	123,328	Corporate debt securities	0.2		32.0		5.7		94.3		5.9		126.3
Municipal securities		118		9,384		0		0		118		9,384
Private label residential MBS	Private label residential MBS	851		131,620		3		2,435		854		134,055		Private label residential MBS	14.5		810.2		0.4		9.6		14.9		819.8
Residential MBS issued by GSEs	Residential MBS issued by GSEs	522		134,180		9		1,193		531		135,373		Residential MBS issued by GSEs	46.7		1,225.7		0		0		46.7		1,225.7
Tax-exempt	Tax-exempt	1,467		121,031		0		0		1,467		121,031		Tax-exempt	3.7		158.0		0		0		3.7		158.0
Trust preferred securities		0		0		6,792		25,208		6,792		25,208

Other														Other	0.4		11.6		4.7		27.3		5.1		38.9
Total AFS securities	Total AFS securities	$	3,028	$	427,743	$	15,004	$	120,636	$	18,032	$	548,379	Total AFS securities	$	67.7	$	2,924.1	$	10.8	$	131.2	$	78.5	$	3,055.3


		December 31, 2019													December 31, 2020
		Less Than Twelve Months				More Than Twelve Months				Total					Less Than Twelve Months				More Than Twelve Months				Total
		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value			Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
		(in thousands)													(in millions)
Held-to-maturity
Tax-exempt		$	149	$	24,325	$	0	$	0	$	149	$	24,325

Available-for-sale debt securities	Available-for-sale debt securities													Available-for-sale debt securities
Commercial MBS issued by GSEs		$	85	$	9,035	$	1,090	$	54,604	$	1,175	$	63,639

Corporate debt securities	Corporate debt securities	0		0		5,166		94,834		5,166		94,834		Corporate debt securities	$	0.1	$	17.3	$	5.6	$	94.3	$	5.7	$	111.6

Private label residential MBS	Private label residential MBS	1,776		337,285		2,554		258,791		4,330		596,076		Private label residential MBS	0.5		149.7		0		0		0.5		149.7
Residential MBS issued by GSEs	Residential MBS issued by GSEs	1,740		385,643		2,077		150,419		3,817		536,062		Residential MBS issued by GSEs	3.8		231.9		0		0		3.8		231.9
Tax-exempt		422		67,150		0		0		422		67,150
Trust preferred securities		0		0		4,960		27,040		4,960		27,040

Other														Other	0		0		5.5		26.5		5.5		26.5
Total AFS securities	Total AFS securities	$	4,023	$	799,113	$	15,847	$	585,688	$	19,870	$	1,384,801	Total AFS securities	$	4.4	$	398.9	$	11.1	$	120.8	$	15.5	$	519.7

The total number of AFS securities in an unrealized loss position at ~~September 30, 2020~~March 31, 2021 is ~~73,~~187, compared to ~~158~~49 at December 31, ~~2019.~~2020.

On ~~January 1, 2020,~~a quarterly basis, the Company ~~adopted the amendments within ASU 2016-13, which replaces the legacy US GAAP OTTI model with a credit loss model. The credit loss model under ASC 326-30, applicable to~~performs an impairment analysis on its AFS debt securities ~~requires recognition~~that are in an unrealized loss position at the end of the period to determine whether credit losses ~~through an allowance account, but retains~~should be recognized on these securities. Qualitative considerations made by the ~~concept from the OTTI model that credit losses~~Company in its impairment analysis are recognized once securities become impaired. For a detailed discussion of the impact of adoption of ASU 2016-13 and information related to investment securities, including accounting policies and methodologies used to estimate the allowance for credit losses on securities, see "Note 1. Summary of Significant Accounting Policies."further discussed below.

Government Issued Securities

Residential MBS issued by GSEs held by the Company are issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies, and have a long history of no credit losses. ~~As the Company does not intend to sell these securities~~Further, principal and ~~it is more likely than not that the Company will not be required to sell the securities prior to their anticipated recovery, no credit losses have been recognized~~interest payments on these securities ~~during the three and nine months ended September 30, 2020.~~continue to be made on a timely basis.

Non-Government Issued Securities

Qualitative factors used in the Company's credit loss assessment of its securities that are not issued and guaranteed by the U.S. government ~~included~~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 security and the likelihood of the issuer to be able to make payments that increase in the future, and failure of the issuer to make any scheduled principal or interest payments.

For the Company's corporate debt ~~municipal,~~ and tax-exempt securities, the Company also ~~considered~~considers various metrics of the issuer including days of cash on hand, the ratio of long-term debt to total assets, the net change in cash between reporting periods, and consideration of any breach in covenant requirements. ~~For the Company's private label residential MBS, the Company also considered metrics such as securitization risk weight factor, current credit support, whether there were any mortgage principal~~

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~~losses resulting from defaults in payments on the underlying mortgage collateral, and the credit default rate over the last twelve months.~~

~~As of September 30, 2020, no credit losses on the Company's corporate debt, municipal, and tax-exempt securities have been recognized.~~ The Company's corporate debt ~~and tax-exempt~~ securities continue to be highly rated, issuers continue to make timely principal and interest payments, and the unrealized losses on these security portfolios primarily relate to changes in interest rates and other market conditions that are not considered to be credit-related issues. The Company ~~is continuing~~

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continues to receive timely principal and interest payments on its ~~municipal~~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. ~~Further,~~

For the ~~Company does not intend to sell these securities and it is more likely than not that the Company will not be required to sell these securities prior to their anticipated recovery.~~

~~The~~ Company's private label residential MBS, ~~are~~which consist of non-agency collateralized mortgage obligations ~~and primarily carry investment grade credit ratings as of September 30, 2020. These securities~~that are secured by pools of residential mortgage ~~loans. Credit~~loans, the Company also considers metrics such as securitization risk weight factor, current credit support, whether there were any mortgage principal losses ~~have not been recognized~~resulting from defaults in payments on ~~these~~the underlying mortgage collateral, and the credit default rate over the last twelve months. These securities ~~as of September 30, 2020 as~~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,~~adequate.

The Company's CLO portfolio consists of highly rated securitization tranches, containing pools of medium to large-sized corporate, high yield bank loans. These are floating rate securities that have an investment grade rating of Single-A or better. The Company has been increasing its investment in these securities over the past several months and unrealized losses on these securities is primarily a function of the differential from the offer price and the valuation mid-market price.

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.

Based on the qualitative factors noted above and as the Company does not intend to sell these securities and it is more likely than not that the Company will not be required to sell ~~these~~the securities prior to their anticipated ~~recovery.~~

~~The Company's trust preferred~~recovery, no credit losses have been recognized on these securities ~~are investment grade~~during the three months ended March 31, 2021 and ~~the issuer continues to make timely principal~~2020. In addition, as of March 31, 2021 and ~~interest payments.~~

~~Based on the qualitative factors discussed above,~~December 31, 2020, no allowance for credit losses ~~for~~on the Company's AFS ~~debt~~ securities has been ~~recognized as of September 30, 2020.~~recognized.

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 ~~tables present~~table presents a rollforward by major security type of the allowance for credit losses ~~for~~on the Company's HTM debt securities:


		Three Months Ended September 30, 2020
		Balance,		Provision for (Reversal of) Credit Losses		Writeoffs			Recoveries			Balance,						Three Months Ended March 31, 2021
		June 30, 2020								September 30, 2020						Balance, December 31, 2020					Provision for Credit Losses	Write-offs		Recoveries		Balance, March 31, 2021
		(in thousands)											(in millions)
Held-to-maturity debt securities	Held-to-maturity debt securities													Held-to-maturity debt securities
Tax-exempt	Tax-exempt	$	7,649	$	(1,685)		$	0		$	0			$	5,964		Tax-exempt		$	6.8		$	2.4	$	0	$	0	$	9.2


		Nine Months Ended September 30, 2020
		Balance,		Provision for (Reversal of) Credit Losses		Writeoffs			Recoveries			Balance,						Three Months Ended March 31, 2020:
		January 1, 2020								September 30, 2020						Balance, January 1, 2020					Provision for Credit Losses	Write-offs		Recoveries		Balance March 31, 2020
		(in thousands)											(in millions)
Held-to-maturity debt securities	Held-to-maturity debt securities													Held-to-maturity debt securities
Tax-exempt	Tax-exempt	$	2,646	$	3,318		$	0		$	0			$	5,964		Tax-exempt		$	2.6		$	0.3	$	0	$	0	$	2.9

Accrued interest receivable on HTM securities totaled ~~$1.8~~$2.4 million and $2.0 million at ~~September 30,~~March 31, 2021 and December 31, 2020, respectively, and is excluded from the estimate of credit losses.

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The following tables summarize the carrying amount of the Company’s investment ratings position as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, which are updated quarterly and used to monitor the credit quality of the Company's securities:


		September 30, 2020																	March 31, 2021
		AAA		Split-rated AAA/AA+		AA+ to AA-		A+ to A-		BBB+ to BBB-		BB+ and below		Unrated		Totals			AAA		Split-rated AAA/AA+		AA+ to AA-		A+ to A-		BBB+ to BBB-		BB+ and below		Unrated		Totals
		(in thousands)																	(in millions)
Held-to-maturity	Held-to-maturity																	Held-to-maturity
Tax-exempt	Tax-exempt	$	0	$	0	$	0	$	0	$	0	$	0	$	504,477	$	504,477	Tax-exempt	$	0	$	0	$	0	$	0	$	0	$	0	$	698.0	$	698.0

Available-for-sale debt securities	Available-for-sale debt securities																	Available-for-sale debt securities
CDO		$	0	$	0	$	0	$	0	$	0	$	8,176	$	0	$	8,176
CLO																		CLO	$	25.0	$	0	$	649.8	$	305.9	$	0	$	0	$	0	$	980.7
Commercial MBS issued by GSEs	Commercial MBS issued by GSEs	0		95,657		0		0		0		0		0		95,657		Commercial MBS issued by GSEs	0		87.8		0		0		0		0		0		87.8
Corporate debt securities	Corporate debt securities	0		0		0		45,800		122,579		18,230		0		186,609		Corporate debt securities	0		0		19.2		28.1		219.6		18.2		0		285.1
Municipal securities		0		0		12,143		0		2,630		0		7,386		22,159
Private label residential MBS	Private label residential MBS	1,235,170		0		27,682		91		347		947		0		1,264,237		Private label residential MBS	1,812.8		0		86.5		0.1		0.3		0.9		0		1,900.6
Residential MBS issued by GSEs	Residential MBS issued by GSEs	0		1,361,556		0		0		0		0		0		1,361,556		Residential MBS issued by GSEs	0		2,249.6		0		0		0		0		0		2,249.6
Tax-exempt	Tax-exempt	43,328		56,725		447,629		431,459		0		0		31,882		1,011,023		Tax-exempt	43.2		56.5		519.1		679.1		0		0		31.8		1,329.7
Trust preferred securities		0		0		0		0		25,208		0		0		25,208

U.S. treasury securities	U.S. treasury securities	0		600		0		0		0		0		0		600		U.S. treasury securities	50.0		0		0		0		0		0		0		50.0
Other																		Other	0		0		11.6		0		29.8		6.9		8.1		56.4
Total AFS securities (1)	Total AFS securities (1)	$	1,278,498	$	1,514,538	$	487,454	$	477,350	$	150,764	$	27,353	$	39,268	$	3,975,225	Total AFS securities (1)	$	1,931.0	$	2,393.9	$	1,286.2	$	1,013.2	$	249.7	$	26.0	$	39.9	$	6,939.9

Equity securities	Equity securities																	Equity securities
CRA investments	CRA investments	$	0	$	27,795	$	0	$	0	$	0	$	0	$	25,750	$	53,545	CRA investments	$	0	$	27.4	$	0	$	0	$	0	$	0	$	30.0	$	57.4
Preferred stock	Preferred stock	0		0		0		0		68,945		37,135		936		107,016		Preferred stock	0		0		0		0		81.3		39.1		15.1		135.5
Total equity securities (1)	Total equity securities (1)	$	0	$	27,795	$	0	$	0	$	68,945	$	37,135	$	26,686	$	160,561	Total equity securities (1)	$	0	$	27.4	$	0	$	0	$	81.3	$	39.1	$	45.1	$	192.9

(1)Where ratings differ, the Company uses an average of the available ratings by major credit agencies.


		December 31, 2019																	December 31, 2020
		AAA		Split-rated AAA/AA+		AA+ to AA-		A+ to A-		BBB+ to BBB-		BB+ and below		Unrated		Totals			AAA		Split-rated AAA/AA+		AA+ to AA-		A+ to A-		BBB+ to BBB-		BB+ and below		Unrated		Totals
		(in thousands)																	(in millions)
Held-to-maturity	Held-to-maturity																	Held-to-maturity
Tax-exempt	Tax-exempt	$	0	$	0	$	0	$	0	$	0	$	0	$	485,107	$	485,107	Tax-exempt	$	0	$	0	$	0	$	0	$	0	$	0	$	568.8	$	568.8

Available-for-sale debt securities	Available-for-sale debt securities																	Available-for-sale debt securities
CDO		$	0	$	0	$	0	$	0	$	0	$	10,142	$	0	$	10,142
CLO																		CLO	$	0	$	0	$	139.6	$	7.3	$	0	$	0	$	0	$	146.9
Commercial MBS issued by GSEs	Commercial MBS issued by GSEs	0		94,253		0		0		0		0		0		94,253		Commercial MBS issued by GSEs	0		84.6		0		0		0		0		0		84.6
Corporate debt securities	Corporate debt securities	0		0		0		66,530		33,431		0		0		99,961		Corporate debt securities	0		0		19.2		28.1		194.5		28.4		0		270.2
Municipal securities		0		0		0		0		0		0		7,773		7,773
Private label residential MBS	Private label residential MBS	1,096,909		0		30,675		181		288		1,174		0		1,129,227		Private label residential MBS	1,385.5		0		90.1		0.1		0.3		0.9		0		1,476.9
Residential MBS issued by GSEs	Residential MBS issued by GSEs	0		1,412,060		0		0		0		0		0		1,412,060		Residential MBS issued by GSEs	0		1,486.6		0		0		0		0		0		1,486.6
Tax-exempt	Tax-exempt	52,610		2,856		327,657		171,732		0		0		0		554,855		Tax-exempt	44.3		57.3		454.7		599.3		0		0		31.8		1,187.4
Trust preferred securities		0		0		0		0		27,040		0		0		27,040
U.S. government sponsored agency securities		0		10,000		0		0		0		0		0		10,000
U.S. treasury securities		0		999		0		0		0		0		0		999

Other																		Other	0		0		12.3		0		29.1		6.9		7.6		55.9
Total AFS securities (1)	Total AFS securities (1)	$	1,149,519	$	1,520,168	$	358,332	$	238,443	$	60,759	$	11,316	$	7,773	$	3,346,310	Total AFS securities (1)	$	1,429.8	$	1,628.5	$	715.9	$	634.8	$	223.9	$	36.2	$	39.4	$	4,708.5

Equity securities	Equity securities																	Equity securities
CRA investments	CRA investments	$	0	$	25,375	$	0	$	0	$	0	$	0	$	27,129	$	52,504	CRA investments	$	0	$	27.8	$	0	$	0	$	0	$	0	$	25.6	$	53.4
Preferred stock	Preferred stock	0		0		0		0		82,851		2,105		1,241		86,197		Preferred stock	0		0		0		0		73.2		39.0		1.7		113.9
Total equity securities (1)	Total equity securities (1)	$	0	$	25,375	$	0	$	0	$	82,851	$	2,105	$	28,370	$	138,701	Total equity securities (1)	$	0	$	27.8	$	0	$	0	$	73.2	$	39.0	$	27.3	$	167.3

(1)Where ratings differ, the Company uses an average of the available ratings by major credit agencies.

A security is considered to be past due once it is 30 days contractually past due under the terms of the agreement. As of ~~September 30, 2020,~~March 31, 2021, there were no investment securities that were past due. In addition, the Company does not have a significant amount of investment securities on nonaccrual status ~~or securities that are considered to be collateral-dependent~~ as of ~~September 30, 2020.~~March 31, 2021.

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The amortized cost and fair value of the Company's debt securities as of ~~September 30, 2020,~~March 31, 2021, 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.


		September 30, 2020					March 31, 2021
		Amortized Cost		Estimated Fair Value			Amortized Cost		Estimated Fair Value
		(in thousands)					(in millions)
Held-to-maturity	Held-to-maturity					Held-to-maturity
Due in one year or less	Due in one year or less	$	7,330	$	7,336	Due in one year or less	$	10.7	$	10.7
After one year through five years	After one year through five years	17,135		17,628		After one year through five years	31.3		31.8

After ten years	After ten years	480,012		523,176		After ten years	656.0		697.9
Total HTM securities	Total HTM securities	$	504,477	$	548,140	Total HTM securities	$	698.0	$	740.4

Available-for-sale	Available-for-sale					Available-for-sale
Due in one year or less	Due in one year or less	$	600	$	600	Due in one year or less	$	50.0	$	50.0
After one year through five years	After one year through five years	9,024		9,047		After one year through five years	38.0		38.5
After five years through ten years	After five years through ten years	229,899		223,844		After five years through ten years	780.5		780.8
After ten years	After ten years	970,304		1,020,284		After ten years	1,773.3		1,832.6
Mortgage-backed securities	Mortgage-backed securities	2,666,759		2,721,450		Mortgage-backed securities	4,271.5		4,238.0
Total AFS securities	Total AFS securities	$	3,876,586	$	3,975,225	Total AFS securities	$	6,913.3	$	6,939.9

~~The following table presents gross gains~~During the three months ended March 31, 2021 and ~~losses on~~2020, the Company did not have significant sales of ~~investment securities:~~

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(in thousands)
Available-for-sale securities
Gross gains $ 0 $ 3,152 $ 405 $ 3,152
Gross losses 0 0 (175) 0
Net gains (losses) on AFS securities $ 0 $ 3,152 $ 230 $ 3,152
investments securities.

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3. LOANS, LEASES AND ALLOWANCE FOR CREDIT LOSSES

On January 1, 2020, the Company adopted the amendments within ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Accordingly, the Company's financial results for reporting periods beginning after January 1, 2020 are presented in accordance with ASC 326 while prior period amounts have not been adjusted and continue to be reported in accordance with legacy GAAP. For a detailed discussion of the impact of adoption of ASU 2016-13 and information related to loans and credit quality, including accounting policies and methodologies used to estimate the allowance for credit losses on loans, see "Note 1. Summary of Significant Accounting Policies."

The Company's primary portfolio segments have changed to align with the methodology applied in estimating the allowance for credit losses under CECL. In addition, as the concept of impaired loans does not exist under CECL, disclosures that related solely to impaired loans have been removed.

The composition of the Company's held for investment loan portfolio is as follows:


	~~September 30, 2020~~
	~~(in thousands)~~
~~Commercial and industrial~~
~~Tech & Innovation~~	$	~~2,277,889~~
~~Other commercial and industrial~~	~~5,993,712~~
~~CRE - owner occupied~~	~~1,970,163~~
~~CRE - non-owner occupied~~
~~Hotel Franchise Finance~~	~~1,942,886~~
~~Other CRE - non-owned occupied~~	~~3,433,932~~
~~Residential~~	~~2,330,064~~
~~Construction and land development~~	~~2,267,922~~
~~Warehouse lending~~	~~3,926,852~~
~~Municipal & nonprofit~~	~~1,686,690~~
~~Other~~	~~163,144~~
~~Total loans HFI~~	~~25,993,254~~
~~Allowance for credit losses~~	~~(310,560)~~
~~Total loans HFI, net of allowance~~	$	~~25,682,694~~

~~December 31, 2019~~

~~(in thousands)~~

~~Commercial and industrial~~

~~9,382,043~~

~~Commercial real estate - non-owner occupied~~

~~5,245,634~~

~~Commercial real estate - owner occupied~~

~~2,316,913~~

~~Construction and land development~~

~~1,952,156~~

~~Residential real estate~~

~~2,147,664~~

~~Consumer~~

~~57,083~~

~~Loans, net of deferred loan fees and costs~~

~~21,101,493~~

~~Allowance for credit losses~~

~~(167,797)~~

~~Total loans HFI~~

~~20,933,696~~


	March 31, 2021		December 31, 2020
	(in millions)
Warehouse lending	$	4,901.8	$	4,340.2
Municipal & nonprofit	1,676.9		1,728.8
Tech & innovation	2,514.2		2,548.3
Other commercial and industrial	6,174.3		5,911.2
CRE - owner occupied	1,814.5		1,909.3
Hotel franchise finance	2,038.8		1,983.9
Other CRE - non-owned occupied	3,613.0		3,640.2
Residential	3,055.8		2,378.5
Construction and land development	2,767.6		2,429.4
Other	154.1		183.2
Total loans HFI	28,711.0		27,053.0
Allowance for credit losses	(247.1)		(278.9)
Total loans HFI, net of allowance	$	28,463.9	$	26,774.1

Loans that are held for investment 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 allowance for credit losses. Net deferred loan fees of ~~$81.4~~$88.6 million and ~~$47.7~~$75.4 million reduced the carrying value of loans as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. Net unamortized purchase premiums on acquired and purchased loans of ~~$22.1~~$45.0 million and ~~$19.6~~$26.0 million increased the carrying value of loans as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

~~As of September 30, 2020 and December 31, 2019, the Company also had $20.8 million and $21.8 million of HFS loans, respectively.~~

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Nonaccrual and Past Due Loans

Loans are placed on nonaccrual status when management determines that 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 tables present nonperforming loan balances by loan portfolio segment:


		September 30, 2020									March 31, 2021
		Nonaccrual with No Allowance for Credit Loss		Nonaccrual with an Allowance for Credit Loss		Total Nonaccrual		Loans Past Due 90 Days or More and Still Accruing			Nonaccrual with No Allowance for Credit Loss		Nonaccrual with an Allowance for Credit Loss		Total Nonaccrual		Loans Past Due 90 Days or More and Still Accruing
		(in thousands)									(in millions)
Commercial and industrial
Tech & Innovation		$	18,725	$	0	$	18,725	$	0
Warehouse lending										Warehouse lending	$	0	$	0	$	0	$	0
Municipal & nonprofit										Municipal & nonprofit	0		0		0		0
Tech & innovation										Tech & innovation	9.3		3.4		12.7		0
Other commercial and industrial	Other commercial and industrial	26,997		4,614		31,611		16,866		Other commercial and industrial	8.6		6.4		15.0		0
CRE - owner occupied	CRE - owner occupied	38,567		0		38,567		0		CRE - owner occupied	32.1		0		32.1		0
CRE - non-owner occupied
Hotel Franchise Finance		0		0		0		11,263
Hotel franchise finance										Hotel franchise finance	0		0		0		0
Other CRE - non-owned occupied	Other CRE - non-owned occupied	18,404		10,667		29,071		0		Other CRE - non-owned occupied	41.5		0		41.5		0
Residential	Residential	5,388		0		5,388		0		Residential	9.0		0		9.0		0
Construction and land development	Construction and land development	0		192		192		0		Construction and land development	0		0		0		0
Warehouse lending		0		0		0		0
Municipal & nonprofit		0		1,952		1,952		0
Other	Other	158		45		203		0		Other	0.3		3.0		3.3		0
Total	Total	$	108,239	$	17,470	$	125,709	$	28,129	Total	$	100.8	$	12.8	$	113.6	$	0

~~In addition, the Company also has HFS loans totaling $20.8 million that are on nonaccrual status as of September 30, 2020.~~

December 31, 2019
Non-accrual loans Loans past due 90 days or more and still accruing
Current Past Due/
Delinquent Total
Non-accrual
(in thousands)
Commercial and industrial $ 19,080 $ 5,421 $ 24,501 $ 0
Commercial real estate
Owner occupied 4,418 124 4,542 0
Non-owner occupied 7,265 11,913 19,178 0
Multi-family 0 0 0 0
Construction and land development
Construction 2,147 0 2,147 0
Land 0 0 0 0
Residential real estate 1,231 4,369 5,600 0
Consumer 0 0 0 0
Total $ 34,141 $ 21,827 $ 55,968 $ 0


	December 31, 2020
	Nonaccrual with No Allowance for Credit Loss		Nonaccrual with an Allowance for Credit Loss		Total Nonaccrual		Loans Past Due 90 Days or More and Still Accruing
	(in millions)
Warehouse lending	$	0	$	0	$	0	$	0
Municipal & nonprofit	1.9		0		1.9		0
Tech & innovation	9.6		3.9		13.5		0
Other commercial and industrial	10.9		6.3		17.2		0
CRE - owner occupied	34.5		0		34.5		0
Hotel franchise finance	0		0		0		0
Other CRE - non-owned occupied	36.5		0		36.5		0
Residential	11.4		0		11.4		0
Construction and land development	0		0		0		0
Other	0.1		0.1		0.2		0
Total	$	104.9	$	10.3	$	115.2	$	0

The reduction in interest income associated with loans on nonaccrual status was approximately ~~$1.7~~$1.5 million and $0.7 million for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $4.1 million and $1.5 million for the nine months ended September 30, 2020 and 2019,~~ respectively.

~~Table of Contents~~

The following table presents an aging analysis of past due loans by loan portfolio segment:

September 30, 2020
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
Tech & Innovation $ 2,277,889 $ 0 $ 0 $ 0 $ 0 $ 2,277,889
Other commercial and industrial 5,969,739 4,617 2,490 16,866 23,973 5,993,712
CRE - owner occupied 1,970,163 0 0 0 0 1,970,163
CRE - non-owner occupied
Hotel Franchise Finance 1,931,623 0 0 11,263 11,263 1,942,886
Other CRE - non-owned occupied 3,433,932 0 0 0 0 3,433,932
Residential 2,319,530 10,325 209 0 10,534 2,330,064
Construction and land development 2,261,348 6,574 0 0 6,574 2,267,922
Warehouse lending 3,926,852 0 0 0 0 3,926,852
Municipal & nonprofit 1,686,690 0 0 0 0 1,686,690
Other 163,101 38 5 0 43 163,144
Total loans $ 25,940,867 $ 21,554 $ 2,704 $ 28,129 $ 52,387 $ 25,993,254

December 31, 2019
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 $ 9,376,377 $ 2,501 $ 637 $ 2,528 $ 5,666 $ 9,382,043
Commercial real estate
Owner occupied 2,316,165 624 0 124 748 2,316,913
Non-owner occupied 5,007,644 4,661 0 11,913 16,574 5,024,218
Multi-family 221,416 0 0 0 0 221,416
Construction and land development
Construction 1,176,908 0 0 0 0 1,176,908
Land 775,248 0 0 0 0 775,248
Residential real estate 2,134,346 7,627 1,721 3,970 13,318 2,147,664
Consumer 57,083 0 0 0 0 57,083
Total loans $ 21,065,187 $ 15,413 $ 2,358 $ 18,535 $ 36,306 $ 21,101,493


	March 31, 2021
	Current		30-59 Days Past Due		60-89 Days Past Due		Over 90 days Past Due		Total Past Due		Total
	(in millions)
Warehouse lending	$	4,901.8	$	0	$	0	$	0	$	0	$	4,901.8
Municipal & nonprofit	1,676.9		0		0		0		0		1,676.9
Tech & innovation	2,514.2		0		0		0		0		2,514.2
Other commercial and industrial	6,174.2		0.1		0		0		0.1		6,174.3
CRE - owner occupied	1,814.5		0		0		0		0		1,814.5
Hotel franchise finance	2,038.8		0		0		0		0		2,038.8
Other CRE - non-owned occupied	3,612.3		0.7		0		0		0.7		3,613.0
Residential	3,049.4		6.4		0		0		6.4		3,055.8
Construction and land development	2,767.6		0		0		0		0		2,767.6
Other	154.0		0		0.1		0		0.1		154.1
Total loans	$	28,703.7	$	7.2	$	0.1	$	0	$	7.3	$	28,711.0

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	December 31, 2020
	Current		30-59 Days Past Due		60-89 Days Past Due		Over 90 days Past Due		Total Past Due		Total
	(in millions)
Warehouse lending	$	4,340.2	$	0	$	0	$	0	$	0	$	4,340.2
Municipal & nonprofit	1,728.8		0		0		0		0		1,728.8
Tech & innovation	2,548.3		0		0		0		0		2,548.3
Other commercial and industrial	5,911.0		0.2		0		0		0.2		5,911.2
CRE - owner occupied	1,909.3		0		0		0		0		1,909.3
Hotel franchise finance	1,983.9		0		0		0		0		1,983.9
Other CRE - non-owned occupied	3,640.2		0		0		0		0		3,640.2
Residential	2,368.0		9.1		1.4		0		10.5		2,378.5
Construction and land development	2,429.4		0		0		0		0		2,429.4
Other	182.7		0.4		0.1		0		0.5		183.2
Total loans	$	27,041.8	$	9.7	$	1.5	$	0	$	11.2	$	27,053.0

Table of Contents

Credit Quality Indicators

The 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 performed on a quarterly basis. The risk rating categories are described in "Note 1. Summary of Significant Accounting Policies." The following tables present risk ratings ~~as of September 30, 2020~~ by loan portfolio ~~segment:~~segment and origination year. The origination year is the year of origination or renewal.


		Term Loan Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis				Total			Term Loan Amortized Cost Basis by Origination Year														Revolving Loans Amortized Cost Basis				Total
September 30, 2020		2020		2019		2018		2017		2016		Prior
March 31, 2021																				March 31, 2021	2021				2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis				Total
		(in thousands)																			(in millions)

Tech & Innovation
Warehouse lending																				Warehouse lending
Pass	Pass	$	524,508	$	315,900	$	132,566	$	1,459	$	1,898	$	0			$	1,236,377					$	2,212,708	Pass	$	91.6	$	63.2	$	0	$	0.8	$	1.5			$	0			$	4,744.7	$	4,901.8
Special mention	Special mention	3,499		8,957		2,651		0		0		0		0				15,107		Special mention	0				0		0		0		0		0		0				0
Substandard		32,412		2,006		0		0		0		0		15,656				50,074
Doubtful		0		0		0		0		0		0		0				0
Loss		0		0		0		0		0		0		0				0
Classified																				Classified	0				0		0		0		0		0		0				0
Total																				Total	$	91.6			$	63.2	$	0	$	0.8	$	1.5	$	0	$	4,744.7			$	4,901.8

Municipal & nonprofit																				Municipal & nonprofit
Pass																				Pass	$	10.7			$	222.1	$	133.6	$	81.4	$	227.7	$	997.9	$	3.5			$	1,676.9
Special mention																				Special mention	0				0		0		0		0		0		0				0
Classified																				Classified	0				0		0		0		0		0		0				0
Total																				Total	$	10.7			$	222.1	$	133.6	$	81.4	$	227.7	$	997.9	$	3.5			$	1,676.9

Tech & innovation																				Tech & innovation
Pass																				Pass	$	124.9			$	549.2	$	150.7	$	45.1	$	2.3	$	0.4	$	1,590.9			$	2,463.5
Special mention																				Special mention	4.0				14.4		0		0		0		0		0				18.4
Classified																				Classified	18.7				5.6		6.7		1.3		0		0		0				32.3
Total	Total	$	560,419	$	326,863	$	135,217	$	1,459	$	1,898	$	0	$	1,252,033			$	2,277,889	Total	$	147.6			$	569.2	$	157.4	$	46.4	$	2.3	$	0.4	$	1,590.9			$	2,514.2

Other commercial and industrial	Other commercial and industrial																			Other commercial and industrial
Pass	Pass	$	2,067,599	$	920,820	$	469,602	$	289,894	$	113,199	$	123,061	$	1,735,701			$	5,719,876	Pass	$	1,025.9			$	1,553.9	$	736.5	$	384.4	$	204.8	$	200.0	$	1,907.1			$	6,012.6
Special mention	Special mention	129		51,516		32,172		36,017		6,130		15,885		43,378				185,227		Special mention	0.2				2.8		43.1		17.8		29.9		4.8		5.2				103.8
Substandard		18,169		8,420		3,465		31,349		9,876		1,001		16,102				88,382
Doubtful		0		0		0		177		0		0		0				177
Loss		0		50		0		0		0		0		0				50
Classified																				Classified	0				0.9		19.7		3.7		16.2		10.6		6.8				57.9
Total	Total	$	2,085,897	$	980,806	$	505,239	$	357,437	$	129,205	$	139,947	$	1,795,181			$	5,993,712	Total	$	1,026.1			$	1,557.6	$	799.3	$	405.9	$	250.9	$	215.4	$	1,919.1			$	6,174.3

CRE - owner occupied	CRE - owner occupied																			CRE - owner occupied
Pass	Pass	$	173,784	$	327,618	$	322,396	$	423,987	$	167,304	$	376,175	$	74,887			$	1,866,151	Pass	$	88.3			$	245.1	$	291.8	$	235.9	$	370.8	$	420.0	$	32.6			$	1,684.5
Special mention	Special mention	877		11,412		4,411		17,306		3,309		10,658		0				47,973		Special mention	2.3				0.9		11.5		9.2		22.5		13.8		24.4				84.6
Substandard		2,237		7,573		4,926		10,483		6,311		22,460		2,049				56,039
Doubtful		0		0		0		0		0		0		0				0
Loss		0		0		0		0		0		0		0				0
Classified																				Classified	0				1.4		6.8		4.7		5.2		27.3		0				45.4
Total	Total	$	176,898	$	346,603	$	331,733	$	451,776	$	176,924	$	409,293	$	76,936			$	1,970,163	Total	$	90.6			$	247.4	$	310.1	$	249.8	$	398.5	$	461.1	$	57.0			$	1,814.5

Hotel Franchise Finance
Hotel franchise finance																				Hotel franchise finance
Pass	Pass	$	156,816	$	754,537	$	464,842	$	140,424	$	0	$	96,306	$	162,567			$	1,775,492	Pass	$	102.8			$	166.2	$	684.7	$	448.3	$	139.0	$	70.5	$	158.8			$	1,770.3
Special mention	Special mention	0		32,643		55,798		27,389		0		23,914		0				139,744		Special mention	0				6.1		82.8		56.7		27.4		11.9		0				184.9
Substandard		0		0		0		12,774		2,129		12,747		0				27,650
Doubtful		0		0		0		0		0		0		0				0
Loss		0		0		0		0		0		0		0				0
Classified																				Classified	0				11.0		56.8		0		12.5		3.3		0				83.6
Total	Total	$	156,816	$	787,180	$	520,640	$	180,587	$	2,129	$	132,967	$	162,567			$	1,942,886	Total	$	102.8			$	183.3	$	824.3	$	505.0	$	178.9	$	85.7	$	158.8			$	2,038.8

Other CRE - non-owned occupied	Other CRE - non-owned occupied																			Other CRE - non-owned occupied
Pass	Pass	$	648,330	$	961,315	$	663,375	$	431,032	$	182,475	$	232,800	$	211,671			$	3,330,998	Pass	$	167.1			$	1,069.3	$	857.6	$	527.1	$	317.5	$	337.4	$	271.8			$	3,547.8
Special mention	Special mention	0		13,217		7,031		5,458		4,257		7,288		0				37,251		Special mention	0				1.4		0		8.3		1.4		11.2		0				22.3
Substandard		8,350		26,454		0		12,432		6,652		11,795		0				65,683
Doubtful		0		0		0		0		0		0		0				0
Loss		0		0		0		0		0		0		0				0
Classified																				Classified	0				0.4		23.8		0		1.6		17.1		0				42.9
Total	Total	$	656,680	$	1,000,986	$	670,406	$	448,922	$	193,384	$	251,883	$	211,671			$	3,433,932	Total	$	167.1			$	1,071.1	$	881.4	$	535.4	$	320.5	$	365.7	$	271.8			$	3,613.0

Residential																				Residential
Pass																				Pass	$	599.9			$	1,116.5	$	715.6	$	338.4	$	92.8	$	145.5	$	38.3			$	3,047.0
Special mention																				Special mention	0				0		0		0		0		0		0				0
Classified																				Classified	0				0		4.9		3.2		0		0.7		0				8.8
Total																				Total	$	599.9			$	1,116.5	$	720.5	$	341.6	$	92.8	$	146.2	$	38.3			$	3,055.8

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Table of Contents

Term Loan Amortized Cost Basis by Origination Year Revolving Loans Amortized Cost Basis Total
September 30, 2020 2020 2019 2018 2017 2016 Prior
(in thousands)
Residential
Pass $ 524,852 $ 1,018,264 $ 472,941 $ 121,970 $ 91,138 $ 50,087 $ 45,392 $ 2,324,644
Special mention 0 0 0 0 0 0 0 0
Substandard 0 2,169 1,327 1,134 15 517 258 5,420
Doubtful 0 0 0 0 0 0 0 0
Loss 0 0 0 0 0 0 0 0
Total $ 524,852 $ 1,020,433 $ 474,268 $ 123,104 $ 91,153 $ 50,604 $ 45,650 $ 2,330,064
Construction and land development
Pass $ 492,218 $ 777,114 $ 422,749 $ 21,028 $ 1,403 $ 14,953 $ 496,079 $ 2,225,544
Special mention 1,463 0 36,476 0 0 0 4,247 42,186
Substandard 0 0 192 0 0 0 0 192
Doubtful 0 0 0 0 0 0 0 0
Loss 0 0 0 0 0 0 0 0
Total $ 493,681 $ 777,114 $ 459,417 $ 21,028 $ 1,403 $ 14,953 $ 500,326 $ 2,267,922
Warehouse lending
Pass $ 155,588 $ 48,455 $ 990 $ 1,640 $ 78 $ 0 $ 3,720,101 $ 3,926,852
Special mention 0 0 0 0 0 0 0 0
Substandard 0 0 0 0 0 0 0 0
Doubtful 0 0 0 0 0 0 0 0
Loss 0 0 0 0 0 0 0 0
Total $ 155,588 $ 48,455 $ 990 $ 1,640 $ 78 $ 0 $ 3,720,101 $ 3,926,852
Municipal & nonprofit
Pass $ 137,047 $ 170,963 $ 76,133 $ 232,816 $ 129,957 $ 927,762 $ 3,535 $ 1,678,213
Special mention 0 4,194 2,331 0 0 0 0 6,525
Substandard 0 0 0 1,952 0 0 0 1,952
Doubtful 0 0 0 0 0 0 0 0
Loss 0 0 0 0 0 0 0 0
Total $ 137,047 $ 175,157 $ 78,464 $ 234,768 $ 129,957 $ 927,762 $ 3,535 $ 1,686,690
Other
Pass $ 17,738 $ 16,175 $ 14,671 $ 6,909 $ 2,177 $ 71,880 $ 30,133 $ 159,683
Special mention 961 0 97 1,691 0 42 35 2,826
Substandard 0 135 189 0 97 196 18 635
Doubtful 0 0 0 0 0 0 0 0
Loss 0 0 0 0 0 0 0 0
Total $ 18,699 $ 16,310 $ 14,957 $ 8,600 $ 2,274 $ 72,118 $ 30,186 $ 163,144
Total by Risk Category
Pass $ 4,898,480 $ 5,311,161 $ 3,040,265 $ 1,671,159 $ 689,629 $ 1,893,024 $ 7,716,443 $ 25,220,161
Special mention 6,929 121,939 140,967 87,861 13,696 57,787 47,660 476,839
Substandard 61,168 46,757 10,099 70,124 25,080 48,716 34,083 296,027
Doubtful 0 0 0 177 0 0 0 177
Loss 0 50 0 0 0 0 0 50
Total $ 4,966,577 $ 5,479,907 $ 3,191,331 $ 1,829,321 $ 728,405 $ 1,999,527 $ 7,798,186 $ 25,993,254


	Term Loan Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Total
March 31, 2021	2021		2020		2019		2018		2017		Prior
	(in millions)
Construction and land development
Pass	$	219.6	$	673.7	$	668.9	$	375.3	$	8.9	$	1.1	$	758.0	$	2,705.5
Special mention	1.0		8.2		6.3		44.5		0		0		0		60.0
Classified	0		1.5		0.6		0		0		0		0		2.1
Total	$	220.6	$	683.4	$	675.8	$	419.8	$	8.9	$	1.1	$	758.0	$	2,767.6

Other
Pass	$	8.5	$	19.6	$	13.5	$	5.9	$	4.8	$	72.7	$	25.2	$	150.2
Special mention	0		0		0		0.1		0		0.1		0		0.2
Classified	3.0		0		0.1		0.2		0		0.4		0		3.7
Total	$	11.5	$	19.6	$	13.6	$	6.2	$	4.8	$	73.2	$	25.2	$	154.1

Total by Risk Category
Pass	$	2,439.3	$	5,678.8	$	4,252.9	$	2,442.6	$	1,370.1	$	2,245.5	$	9,530.9	$	27,960.1
Special mention	7.5		33.8		143.7		136.6		81.2		41.8		29.6		474.2
Classified	21.7		20.8		119.4		13.1		35.5		59.4		6.8		276.7
Total	$	2,468.5	$	5,733.4	$	4,516.0	$	2,592.3	$	1,486.8	$	2,346.7	$	9,567.3	$	28,711.0


	Term Loan Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Total
December 31, 2020	2020		2019		2018		2017		2016		Prior
	(in millions)








Warehouse lending
Pass	$	135.2	$	0	$	0.9	$	1.6	$	0.1	$	0	$	4,202.4	$	4,340.2
Special mention	0		0		0		0		0		0		0		0
Classified	0		0		0		0		0		0		0		0
Total	$	135.2	$	0	$	0.9	$	1.6	$	0.1	$	0	$	4,202.4	$	4,340.2

Municipal & nonprofit
Pass	$	219.3	$	156.6	$	81.6	$	231.2	$	129.1	$	905.6	$	3.5	$	1,726.9
Special mention	0		0		0		0		0		0		0		0
Classified	0		0		0		1.9		0		0		0		1.9
Total	$	219.3	$	156.6	$	81.6	$	233.1	$	129.1	$	905.6	$	3.5	$	1,728.8

Tech & innovation
Pass	$	609.7	$	207.4	$	76.9	$	2.0	$	0.9	$	0	$	1,608.8	$	2,505.7
Special mention	10.7		4.6		0		0		0		0		0		15.3
Classified	25.2		2.0		0		0		0		0		0.1		27.3
Total	$	645.6	$	214.0	$	76.9	$	2.0	$	0.9	$	0	$	1,608.9	$	2,548.3

Other commercial and industrial
Pass	$	2,069.5	$	819.8	$	447.7	$	250.7	$	99.7	$	114.6	$	1,935.7	$	5,737.7
Special mention	2.2		52.1		32.1		22.1		1.7		0.2		34.3		144.7
Classified	0.9		8.4		3.2		1.6		9.7		0.8		4.2		28.8
Total	$	2,072.6	$	880.3	$	483.0	$	274.4	$	111.1	$	115.6	$	1,974.2	$	5,911.2

CRE - owner occupied
Pass	$	252.2	$	307.1	$	302.1	$	402.4	$	148.4	$	323.5	$	39.5	$	1,775.2
Special mention	0.9		12.4		9.3		24.3		4.4		10.5		22.4		84.2
Classified	1.4		7.5		4.8		8.5		6.2		19.5		2.0		49.9
Total	$	254.5	$	327.0	$	316.2	$	435.2	$	159.0	$	353.5	$	63.9	$	1,909.3

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December 31, 2019
Pass Special Mention Substandard Doubtful Loss Total
(in thousands)
Commercial and industrial $ 9,265,823 $ 65,893 $ 49,878 $ 449 $ 0 $ 9,382,043
Commercial real estate
Owner occupied 2,265,566 9,579 41,768 0 0 2,316,913
Non-owner occupied 4,913,007 64,161 47,050 0 0 5,024,218
Multi-family 221,416 0 0 0 0 221,416
Construction and land development
Construction 1,157,169 17,592 2,147 0 0 1,176,908
Land 773,868 1,380 0 0 0 775,248
Residential real estate 2,141,336 366 5,962 0 0 2,147,664
Consumer 57,073 10 0 0 0 57,083
Total $ 20,795,258 $ 158,981 $ 146,805 $ 449 $ 0 $ 21,101,493

December 31, 2019
Pass Special Mention Substandard Doubtful Loss Total
(in thousands)
Current (up to 29 days past due) $ 20,785,118 $ 158,907 $ 120,897 $ 265 $ 0 $ 21,065,187
Past due 30 - 59 days 8,263 58 7,092 0 0 15,413
Past due 60 - 89 days 1,481 16 861 0 0 2,358
Past due 90 days or more 396 0 17,955 184 0 18,535
Total $ 20,795,258 $ 158,981 $ 146,805 $ 449 $ 0 $ 21,101,493










	Term Loan Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Total
December 31, 2020	2020		2019		2018		2017		2016		Prior
	(in millions)
Hotel franchise finance
Pass	$	161.6	$	792.0	$	464.1	$	139.9	$	0	$	101.5	$	162.6	$	1,821.7
Special mention	0		32.7		56.9		27.3		0		18.2		0		135.1
Classified	8.9		0		0		12.6		2.1		3.5		0		27.1
Total	$	170.5	$	824.7	$	521.0	$	179.8	$	2.1	$	123.2	$	162.6	$	1,983.9

Other CRE - non-owned occupied
Pass	$	1,032.6	$	912.5	$	560.8	$	384.3	$	164.7	$	208.4	$	281.0	$	3,544.3
Special mention	1.4		0		7.0		5.4		1.0		7.4		0		22.2
Classified	7.4		26.4		0		20.3		6.5		13.1		0		73.7
Total	$	1,041.4	$	938.9	$	567.8	$	410.0	$	172.2	$	228.9	$	281.0	$	3,640.2

Residential
Pass	$	759.5	$	869.3	$	402.0	$	108.9	$	113.8	$	74.1	$	39.5	$	2,367.1
Special mention	0		0		0		0		0		0		0		0
Classified	0		4.4		5.9		1.1		0		0		0		11.4
Total	$	759.5	$	873.7	$	407.9	$	110.0	$	113.8	$	74.1	$	39.5	$	2,378.5

Construction and land development
Pass	$	677.8	$	704.2	$	429.6	$	15.4	$	1.2	$	15.0	$	537.4	$	2,380.6
Special mention	8.5		0.4		38.0		0		0		0		0.4		47.3
Classified	0		0		1.5		0		0		0		0		1.5
Total	$	686.3	$	704.6	$	469.1	$	15.4	$	1.2	$	15.0	$	537.8	$	2,429.4

Other
Pass	$	21.1	$	15.6	$	14.5	$	5.8	$	1.8	$	75.8	$	45.7	$	180.3
Special mention	0		0		0.1		1.7		0		0.5		0		2.3
Classified	0		0.1		0.2		0		0.1		0.2		0		0.6
Total	$	21.1	$	15.7	$	14.8	$	7.5	$	1.9	$	76.5	$	45.7	$	183.2

Total by Risk Category
Pass	$	5,938.5	$	4,784.5	$	2,780.2	$	1,542.2	$	659.7	$	1,818.5	$	8,856.1	$	26,379.7
Special mention	23.7		102.2		143.4		80.8		7.1		36.8		57.1		451.1
Classified	43.8		48.8		15.6		46.0		24.6		37.1		6.3		222.2
Total	$	6,006.0	$	4,935.5	$	2,939.2	$	1,669.0	$	691.4	$	1,892.4	$	8,919.5	$	27,053.0

Troubled Debt Restructurings

A TDR loan is a loan on which the Company, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that the Company would not otherwise consider. The loan terms that have been modified or restructured due to a borrower’s financial situation include, but are 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 are extensions in terms or deferral of payments which result in no lost principal or interest followed by reductions in interest rates or accrued interest. Consistent with regulatory guidance, a TDR loan that is subsequently modified in another restructuring agreement but has shown sustained performance and classification as a TDR, will be removed from TDR status provided that the modified terms were market-based at the time of modification.

~~As of September 30, 2020, the~~The Company's TDR loans totaled ~~$60.8 million. During the three months ended September 30,~~$60.2 million and $61.6 million as of March 31, 2021 and December 31, 2020, ~~the Company~~respectively, and had ~~20 new~~an allowance for credit losses on these loans of $3.1 million and $2.7 million, respectively. As of March 31, 2021 and December 31, 2020, commitments outstanding on TDR loans ~~with a recorded investment of $25.0 million. During the nine months ended September 30, 2020, the Company had 22 new TDR loans with a recorded investment of $35.7 million.The Company has $2.7~~totaled $0.3 million ~~allowance allocated to these loans as of September 30, 2020~~ and ~~has committed to lend additional amounts totaling $4.2 million.~~

~~The following table presents TDR loans for the periods presented:~~

September 30, 2020
Number of Loans Recorded Investment
(dollars in thousands)
Commercial and industrial
Tech & Innovation 3 $ 12,111
Other commercial and industrial 16 30,270
CRE - owner occupied 3 2,335
CRE - non-owner occupied
Hotel Franchise Finance 2 5,746
Other CRE - non-owned occupied 3 10,295
Total 27 $ 60,757
$0.6 million, respectively.

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The following table presents TDR loans as of March 31, 2021:


	March 31, 2021
	Number of Loans	Recorded Investment
	(dollars in millions)


Tech & innovation	4	$	19.8
Other commercial and industrial	10	24.3
CRE - owner occupied	3	1.9
Hotel franchise finance	2	5.3
Other CRE - non-owned occupied	3	8.9



Total	22	$	60.2

During the three months ended ~~September 30, 2019,~~March 31, 2021, the Company had 3 new TDR loans with a recorded investment of ~~$11.8 million. During the nine months ended September 30, 2019, the Company had 7 new TDR loans with a recorded investment of $40.7~~$4.7 million. No principal amounts were forgiven and there were no waived fees or other expenses resulting from these TDR loans.

As of ~~December~~March 31, ~~2019, commitments outstanding on~~2020, the Company's TDR loans totaled ~~$0.2 million.~~$26.5 million, none of which were new TDR loans that were modified during the three months ended March 31, 2020.

A TDR loan is deemed to have a payment default when it becomes past due 90 days under the modified terms, goes on nonaccrual status, or is restructured again. Payment defaults, along with other qualitative indicators, are considered by management in the determination of the allowance for credit losses. During the three months ended ~~September 30, 2020,~~March 31, 2021, there ~~was 1 CRE, owner occupied loan with a recorded investment of $0.8 million~~were 0 loans for which there was a payment default within 12 months following the modification. During the ~~nine~~three months ended ~~September 30,~~March 31, 2020, there ~~were 2 CRE, owner occupied loans~~was 1 commercial and industrial loan with a recorded investment of ~~$1.5~~$0.7 million for which there was a payment ~~default within 12 months following the modification.~~default. There was no increase to the allowance for credit losses or a writeoff that resulted from ~~these~~this TDR ~~redefaults~~redefault during ~~the nine months ended September 30, 2020. During~~ the three months ended September 30, 2019, there were 0 TDR loans for which there was a payment default. During the nine months ended September 30, 2019, there were 2 TDR loans with a recorded investment of $0.4 million for which there was a payment default.March 31, 2020.

The terms of certain other loans were modified during the three and nine months ended September 30, 2020 that did not meet the definition of a TDR. The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties prior to the pandemic or a delay in a payment that was considered to be insignificant.

Collateral-Dependent Loans

The following table presents the amortized cost basis of collateral-dependent loans as of ~~September 30, 2020:~~March 31, 2021:


		September 30, 2020							March 31, 2021
		Real Estate Collateral		Other Collateral		Total			Real Estate Collateral		Other Collateral		Total
		(in thousands)							(in millions)
Commercial and industrial
Tech & Innovation		$	0	$	49,921	$	49,921
Warehouse lending								Warehouse lending	$	0	$	0	$	0
Municipal & nonprofit								Municipal & nonprofit	0		0		0
Tech & innovation								Tech & innovation	0		32.3		32.3
Other commercial and industrial	Other commercial and industrial	0		70,407		70,407		Other commercial and industrial	0		13.1		13.1
CRE - owner occupied	CRE - owner occupied	44,213		0		44,213		CRE - owner occupied	37.6		0		37.6
CRE - non-owner occupied
Hotel Franchise Finance		27,649		0		27,649
Hotel franchise finance								Hotel franchise finance	83.5		0		83.5
Other CRE - non-owned occupied	Other CRE - non-owned occupied	61,403		0		61,403		Other CRE - non-owned occupied	23.6		0		23.6
Residential	Residential	758		0		758		Residential	0		0		0
Construction and land development	Construction and land development	0		0		0		Construction and land development	2.0		0		2.0
Warehouse lending		0		0		0
Municipal & nonprofit		0		0		0
Other	Other	0		429		429		Other	0		0.4		0.4
Total	Total	$	134,023	$	120,757	$	254,780	Total	$	146.7	$	45.8	$	192.5

The Company did not identify any significant changes in the extent to which collateral secures its collateral dependent loans, whether ~~because~~in the form of a general deterioration or ~~some~~from other ~~reason~~factors during the period ended ~~September 30, 2020.~~March 31, 2021.

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Allowance for Credit Losses

The allowance for credit losses consists of the allowance for credit losses on loans and an allowance for credit losses on unfunded loan commitments. The allowance for credit losses on HTM securities is estimated separately from loans, see "Note 2. Investment Securities" for further discussion. Management considers the level of allowance for credit losses to be a reasonable and supportable estimate of expected credit losses inherent within the Company's loans held for investment portfolio as of ~~September 30, 2020.~~ March 31, 2021.

The below tables reflect the activity in the allowance for credit losses on loans held for investment by loan portfolio segment:


	Three Months Ended March 31, 2021
	Balance, December 31, 2020		Provision for (Recovery of) Credit Losses		Write-offs		Recoveries		Balance, March 31, 2021
	(1)								(1)
	(in millions)
Warehouse lending	$	3.4	$	0.2	$	0	$	0	$	3.6
Municipal & nonprofit	15.9		(0.7)		0		0		15.2
Tech & innovation	35.3		(11.6)		0		(0.2)		23.9
Other commercial and industrial	94.7		(16.5)		0.1		(0.3)		78.4
CRE - owner occupied	18.6		(8.9)		0		0		9.7
Hotel franchise finance	43.3		6.1		0		0		49.4
Other CRE - non-owned occupied	39.9		(5.4)		2.0		(0.2)		32.7
Residential	0.8		2.4		0		0		3.2
Construction and land development	22.0		3.9		0		0		25.9
Other	5.0		0.1		0		0		5.1
Total	$	278.9	$	(30.4)	$	2.1	$	(0.7)	$	247.1

(1)Includes an estimate of future recoveries.


	Three Months Ended March 31, 2020
	Balance, January 1, 2020		Provision for (Recovery of) Credit Losses		Write-offs		Recoveries		Balance, March 31, 2020
	(1)								(1)
	(in millions)
Warehouse lending	$	0.2	$	0.2	$	0	$	0	$	0.4
Municipal & nonprofit	17.4		(1.2)		0		0		16.2
Tech & innovation	22.4		17.4		0		0		39.8
Other commercial and industrial	95.8		23.3		0.1		(1.3)		120.3
CRE - owner occupied	10.4		0.1		0		0		10.5
Hotel franchise finance	14.1		4.7		0		0		18.8
Other CRE - non-owned occupied	10.5		1.7		0		(2.0)		14.2
Residential	3.8		(2.5)		0		0		1.3
Construction and land development	6.2		0.9		0		0		7.1
Other	6.1		0.6		0		0		6.7
Total	$	186.9	$	45.2	$	0.1	$	(3.3)	$	235.3

(1)Includes an estimate of future recoveries.

Accrued interest receivable on loans totaled $138.1 million and $142.1 million at March 31, 2021 and December 31, 2020, respectively, and is excluded from the estimate of credit losses.

Table of Contents

In addition to the allowance for credit losses on ~~funded loan balances,~~loans held for investment, the Company maintains a separate allowance for credit losses related to off-balance sheet credit exposures, including unfunded loan ~~commitments, and this amount~~commitments. This allowance is included in other liabilities on the consolidated balance sheets. ~~The Company's allowance for credit losses on unfunded loan commitments totaled $44.4 million and $9.0 million as of September 30, 2020 and December 31, 2019, respectively.~~

The below tables reflect the activity in the allowance for credit losses ~~for loans held for investment by~~on unfunded loan ~~portfolio segment:~~commitments:

Three Months Ended September 30, 2020
Balance, Provision for (Reversal of) Credit Losses Writeoffs Recoveries Balance,
June 30, 2020 September 30, 2020
(1) (1)
(in thousands)
Commercial and industrial
Tech & Innovation $ 54,559 $ (9,359) $ 6,364 $ 0 $ 38,836
Other commercial and industrial 109,930 (621) 748 (192) 108,753
CRE - owner occupied 15,587 3,897 83 (5) 19,406
CRE - non-owner occupied
Hotel Franchise Finance 35,864 2,163 0 0 38,027
Other CRE - non-owned occupied 32,672 9,196 1,246 0 40,622
Residential 1,725 16 307 (355) 1,789
Construction and land development 35,792 2,983 0 (6) 38,781
Warehouse lending 743 95 0 0 838
Municipal & nonprofit 17,128 768 0 0 17,896
Other 6,550 (934) 25 (21) 5,612
Total $ 310,550 $ 8,204 $ 8,773 $ (579) $ 310,560

~~(1)Includes an estimate of future recoveries.~~

Nine Months Ended September 30, 2020
Balance, Provision for (Reversal of) Credit Losses Writeoffs Recoveries Balance,
January 1, 2020 September 30, 2020
(1) (1)
(in thousands)
Commercial and industrial
Tech & Innovation $ 22,394 $ 25,556 $ 9,114 $ 0 $ 38,836
Other commercial and industrial 95,784 13,653 2,684 (2,000) 108,753
CRE - owner occupied 10,420 9,100 126 (12) 19,406
CRE - non-owner occupied
Hotel Franchise Finance 14,104 23,923 0 0 38,027
Other CRE - non-owned occupied 10,503 30,684 2,131 (1,566) 40,622
Residential 3,814 (2,103) 307 (385) 1,789
Construction and land development 6,218 32,540 0 (23) 38,781
Warehouse lending 246 592 0 0 838
Municipal & nonprofit 17,397 499 0 0 17,896
Other 6,045 (314) 231 (112) 5,612
Total $ 186,925 $ 134,130 $ 14,593 $ (4,098) $ 310,560

~~(1)Includes an estimate of future recoveries.~~

~~Accrued interest receivable on loans totaled $120.1 million at September 30, 2020 and is excluded from the estimate of credit losses.~~

~~Table of Contents~~

Three Months Ended September 30, 2019
June 30, 2019 Charge-offs Recoveries Provision for (Reversal of) Credit Losses September 30, 2019
(in thousands)
Construction and land development $ 26,091 $ 0 $ (17) $ 1,210 $ 27,318
Commercial real estate 41,258 139 (8) 4,817 45,944
Residential real estate 12,606 9 (131) 804 13,532
Commercial and industrial 79,635 1,950 (2,549) (2,815) 77,419
Consumer 819 1 (6) (16) 808
Total $ 160,409 $ 2,099 $ (2,711) $ 4,000 $ 165,021

Nine Months Ended September 30, 2019
December 31, 2018 Charge-offs Recoveries Provision for (Reversal of) Credit Losses September 30, 2019
(in thousands)
Construction and land development $ 22,513 $ 141 $ (81) $ 4,865 $ 27,318
Commercial real estate 34,829 139 (900) 10,354 45,944
Residential real estate 11,276 594 (251) 2,599 13,532
Commercial and industrial 83,118 6,092 (3,521) (3,128) 77,419
Consumer 981 2 (19) (190) 808
Total $ 152,717 $ 6,968 $ (4,772) $ 14,500 $ 165,021


	Three Months Ended March 31,
		2021		2020
	(in millions)
Balance, beginning of period		$	37.0	$	9.0
Beginning balance adjustment from adoption of CECL		—		15.1
(Recovery of) provision for credit losses		(4.4)		5.5
Balance, end of period		$	32.6	$	29.6

The following tables disaggregate the Company's allowance for credit losses on loans held for investment and loan ~~balance~~balances by measurement methodology:


		September 30, 2020													March 31, 2021
		Loans						Allowance							Loans						Allowance
		Collectively Evaluated for Credit Loss		Individually Evaluated for Credit Loss		Total		Collectively Evaluated for Credit Loss		Individually Evaluated for Credit Loss		Total			Collectively Evaluated for Credit Loss		Individually Evaluated for Credit Loss		Total		Collectively Evaluated for Credit Loss		Individually Evaluated for Credit Loss		Total
		(in thousands)													(in millions)
Commercial and industrial
Tech & Innovation		$	2,227,995	$	49,894	$	2,277,889	$	38,836	$	0	$	38,836
Warehouse lending														Warehouse lending	$	4,901.8	$	0	$	4,901.8	$	3.6	$	0	$	3.6
Municipal & nonprofit														Municipal & nonprofit	1,676.9		0		1,676.9		15.2		0		15.2
Tech & innovation														Tech & innovation	2,481.9		32.3		2,514.2		21.9		2.0		23.9
Other commercial and industrial	Other commercial and industrial	5,906,731		86,981		5,993,712		102,011		6,742		108,753		Other commercial and industrial	6,117.6		56.7		6,174.3		74.9		3.5		78.4
CRE - owner occupied	CRE - owner occupied	1,912,127		58,036		1,970,163		19,406		0		19,406		CRE - owner occupied	1,767.8		46.7		1,814.5		9.7		0		9.7
CRE - non-owner occupied
Hotel Franchise Finance		1,885,451		57,435		1,942,886		35,312		2,715		38,027
Hotel franchise finance														Hotel franchise finance	1,925.4		113.4		2,038.8		43.2		6.2		49.4
Other CRE - non-owned occupied	Other CRE - non-owned occupied	3,355,259		78,673		3,433,932		40,518		104		40,622		Other CRE - non-owned occupied	3,558.7		54.3		3,613.0		32.7		0		32.7
Residential	Residential	2,324,676		5,388		2,330,064		1,789		0		1,789		Residential	3,046.9		8.9		3,055.8		3.2		0		3.2
Construction and land development	Construction and land development	2,267,922		0		2,267,922		38,781		0		38,781		Construction and land development	2,765.6		2.0		2,767.6		25.9		0		25.9
Warehouse lending		3,926,852		0		3,926,852		838		0		838
Municipal & nonprofit		1,684,738		1,952		1,686,690		17,454		442		17,896
Other	Other	162,518		626		163,144		5,569		43		5,612		Other	150.4		3.7		154.1		3.6		1.5		5.1
Total	Total	$	25,654,269	$	338,985	$	25,993,254	$	300,514	$	10,046	$	310,560	Total	$	28,393.0	$	318.0	$	28,711.0	$	233.9	$	13.2	$	247.1


	December 31, 2020
	Loans						Allowance
	Collectively Evaluated for Credit Loss		Individually Evaluated for Credit Loss		Total		Collectively Evaluated for Credit Loss		Individually Evaluated for Credit Loss		Total
	(in millions)
Warehouse lending	$	4,340.2	$	0	$	4,340.2	$	3.4	$	0	$	3.4
Municipal & nonprofit	1,726.9		1.9		1,728.8		15.9		0		15.9
Tech & innovation	2,521.1		27.2		2,548.3		31.4		3.9		35.3
Other commercial and industrial	5,883.1		28.1		5,911.2		90.3		4.4		94.7
CRE - owner occupied	1,857.9		51.4		1,909.3		18.6		0		18.6
Hotel franchise finance	1,927.0		56.9		1,983.9		40.4		2.9		43.3
Other CRE - non-owned occupied	3,553.6		86.6		3,640.2		39.9		0		39.9
Residential	2,367.1		11.4		2,378.5		0.8		0		0.8
Construction and land development	2,427.9		1.5		2,429.4		22.0		0		22.0
Other	182.6		0.6		183.2		5.0		0		5.0
Total	$	26,787.4	$	265.6	$	27,053.0	$	267.7	$	11.2	$	278.9

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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, 2019:
Recorded Investment
Impaired loans with an allowance recorded $ 0 $ 11,913 $ 6,919 $ 0 $ 2,147 $ 0 $ 20,979
Impaired loans with no allowance recorded 17,736 23,625 42,065 5,600 6,274 24 95,324
Total loans individually evaluated for impairment 17,736 35,538 48,984 5,600 8,421 24 116,303
Loans collectively evaluated for impairment 2,296,342 5,159,921 9,333,059 2,142,045 1,943,735 57,059 20,932,161
Loans acquired with deteriorated credit quality 2,835 50,175 0 19 0 0 53,029
Total recorded investment $ 2,316,913 $ 5,245,634 $ 9,382,043 $ 2,147,664 $ 1,952,156 $ 57,083 $ 21,101,493
Unpaid Principal Balance
Impaired loans with an allowance recorded $ 0 $ 11,949 $ 9,844 $ 0 $ 2,262 $ 0 24,055
Impaired loans with no allowance recorded 18,681 24,738 43,848 5,708 6,413 52 99,440
Total loans individually evaluated for impairment 18,681 36,687 53,692 5,708 8,675 52 123,495
Loans collectively evaluated for impairment 2,297,168 5,177,477 9,312,100 2,113,893 1,963,116 57,383 20,921,137
Loans acquired with deteriorated credit quality 3,577 60,191 0 72 0 0 63,840
Total unpaid principal balance $ 2,319,426 $ 5,274,355 $ 9,365,792 $ 2,119,673 $ 1,971,791 $ 57,435 $ 21,108,472
Related Allowance for Credit Losses
Impaired loans with an allowance recorded $ 0 $ 1,219 $ 1,050 $ 0 $ 507 $ 0 $ 2,776
Impaired loans with no allowance recorded 0 0 0 0 0 0 0
Total loans individually evaluated for impairment 0 1,219 1,050 0 507 0 2,776
Loans collectively evaluated for impairment 13,842 32,114 81,252 13,714 23,387 614 164,923
Loans acquired with deteriorated credit quality 0 98 0 0 0 0 98
Total allowance for credit losses $ 13,842 $ 33,431 $ 82,302 $ 13,714 $ 23,894 $ 614 $ 167,797

Loan Purchases and Sales

The following table presents loan purchases by portfolio ~~segment during the three and nine months ended September 30, 2020:~~segment:


		Three		Nine			Three Months Ended March 31,
		Months Ended		Months Ended			2021		2020
		September 30, 2020		September 30, 2020			(in millions)
Warehouse lending						Warehouse lending	$	0	$	99.4
		(in thousands)
Commercial and industrial		$	271,085	$	663,171

Tech & innovation						Tech & innovation	34.9		177.2
Other commercial and industrial						Other commercial and industrial	217.6		91.5

Residential	Residential	243,311		919,509		Residential	1,016.6		279.5

Warehouse lending		0		99,446
Municipal & nonprofit		0		1,594

Other						Other	32.0		0
Total	Total	$	514,396	$	1,683,720	Total	$	1,301.1	$	667.6

There were 0no loans purchased with more-than-insignificant deterioration in credit quality during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020. ~~There were no significant loan sales during the three and nine months ended September 30, 2020.~~

~~Table of Contents~~

The following table presents loan ~~purchases and sales by class during the three and nine months ended September 30, 2019.~~sales:

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
Purchases Sales Purchases Sales
(in thousands) (in thousands)
Commercial and industrial $ 260,621 $ 14,238 $ 787,286 $ 49,068
Commercial real estate - non-owner occupied 19,177 0 49,211 0
Construction and land development 608 0 34,490 0
Residential real estate 428,665 0 959,190 0
Total $ 709,071 $ 14,238 $ 1,830,177 $ 49,068

~~The Company recognized a net loss of less than $0.1 million and $0.5 million on loan sales during the three and nine months ended September 30, 2019, respectively.~~


	Three Months Ended March 31,
		2021		2020
	(in millions)
Carrying value		$	100.1	$	0
Gain on sale		0.7		0

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4. OTHER BORROWINGS

The following table summarizes the Company’s borrowings as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019:~~2020:


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(in thousands)					(in millions)
Short-Term:	Short-Term:					Short-Term:

Federal funds purchased	Federal funds purchased	$	0	$	0	Federal funds purchased	$	0	$	0
FHLB advances	FHLB advances	10,000		0		FHLB advances	5.0		5.0

Total short-term borrowings	Total short-term borrowings	$	10,000	$	0	Total short-term borrowings	$	5.0	$	5.0

The Company maintains federal fund lines of credit totaling ~~$2.4~~$2.5 billion as of ~~September 30, 2020,~~March 31, 2021, which have rates comparable to the federal funds effective rate plus 0.10% to 0.20%. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, there were 0 outstanding balances on the Company's federal fund lines of credit.

The Company also maintains secured 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. The Company has a PPP lending facility with the FRB that allows the Company to pledge loans originated under the PPP in return for dollar for dollar funding from the FRB, which would provide up to ~~$1.8~~$1.5 billion in additional credit. The amount of available credit under the PPP lending facility will decline each period as these loans are paid down. At ~~September 30, 2020,~~March 31, 2021, the Company had no amounts outstanding under its line of credit or its PPP lending facility with the FRB and had ~~$10.0~~$5.0 million in borrowings under its lines of credit with the FHLB. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company had additional available credit with the FHLB of approximately ~~$4.4~~$4.2 billion and ~~$4.5~~$4.0 billion, respectively, and with the FRB of approximately ~~$2.4 billion and $1.1 billion, respectively.~~$2.7 billion.

Other short-term borrowing sources available to the Company include customer repurchase agreements, which totaled ~~$19.7~~$15.9 million and ~~$16.7~~$16.0 million at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. The weighted average rate on customer repurchase agreements was ~~0.18% and~~ 0.15% as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019, respectively.~~2020.

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5. QUALIFYING DEBT

Subordinated Debt

The Company's subordinated debt consists of three separate issuances. The Parent issued $175.0 million of subordinated debentures in June 2016, which were recorded net of issuance costs of $5.5 million, and mature July 1, 2056. Beginning on or after July 1, 2021, the Company may redeem the debentures, in whole or in part, at their principal amount plus any accrued and unpaid interest. The debentures have a fixed interest rate of 6.25% per annum.

In June 2015, WAB issued $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 is redeemable by WAB, in whole or in part, ~~on or after July 15, 2020 and on every interest payment date thereafter,~~ for a price equal to the principal amount plus accrued and unpaid interest. The subordinated debt had a fixed interest rate of 5.00% through June 30, 2020, which then converted to a variable rate of 3.20% plus three-month LIBOR through maturity. ~~Subsequent to September 30,~~On October 15, 2020, WAB redeemed $75 million of this subordinated debt issuance.

In May 2020, WAB issued $225.0 million of subordinated debt, which was recorded net of debt issuance costs of $3.1 million, and matures June 1, 2030. The subordinated debt is redeemable by WAB, in whole or in part, on or after June 1, 2025 and on every interest payment date thereafter, at a redemption price equal to the principal amount plus accrued and unpaid interest. The subordinated debt has a fixed interest rate of 5.25% through June 1, 2025 and then converts to a floating rate per annum equal to the three-month SOFR plus 512 basis points for each quarterly interest period during the floating rate period.

To hedge the interest rate risk on the Company's 2015 and 2016 subordinated debt issuances, the Company entered into fair value interest rate hedges with receive fixed/pay variable swaps.

The carrying value of all subordinated debt issuances, which includes the fair value of the related hedges, totals ~~$545.3~~$464.4 million and ~~$319.2~~$469.8 million at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

Junior Subordinated Debt

The Company has formed or acquired through acquisition 8 statutory business trusts, which exist for the exclusive purpose of issuing Cumulative Trust Preferred Securities.

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 of 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 ~~$73.5~~$79.3 million and ~~$74.4~~$78.9 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. The weighted average interest rate of all junior subordinated debt as of ~~September 30, 2020~~March 31, 2021 was ~~2.57%~~2.53%, which is three-month LIBOR plus the contractual spread of 2.34%, compared to a weighted average interest rate of ~~4.25%~~2.58% at December 31, ~~2019.~~2020.

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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6. STOCKHOLDERS' EQUITY

Stock-Based Compensation

Restricted Stock Awards

Restricted stock awards granted to employees generally vest over a 3-year period. Stock grants made to non-employee WAL directors in ~~2020 were~~2021 will be fully vested on July 1, ~~2020.~~2021. The Company estimates the compensation cost for stock grants based upon the grant date fair value. Stock compensation expense is recognized on a straight-line basis over the requisite service period for the entire award. The aggregate grant date fair value for the restricted stock awards granted during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 was 0$23.7 million and ~~$22.3~~$21.7 million, respectively. Stock compensation expense related to restricted stock awards granted to employees are included in Salaries and employee benefits in the Consolidated Income Statement. For restricted stock awards granted to WAL directors, related stock compensation expense is included in Legal, professional, and directors' fees. For the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, the Company recognized ~~$4.5 million and $15.3~~$5.6 million in stock-based compensation expense related to these stock grants, compared to ~~$4.0 million and $13.7~~$4.9 million for the three ~~and nine~~ months ended ~~September 30, 2019.~~March 31, 2020.

In addition, the Company previously granted shares of restricted stock to certain members of executive management that had both performance and service conditions that affect vesting. There were no such grants made during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ however expense is still being recognized for a grant made in 2017 with a four-year vesting period. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, the Company recognized $0.3 ~~million and $0.9~~ million in stock-based compensation expense related to these performance-based restricted stock ~~grants, compared to $0.5 million and $1.5 million for the three and nine months ended September 30, 2019.~~grant.

Performance Stock Units

The Company grants performance stock units to members of its executive management that do not vest unless the Company achieves a specified cumulative EPS target and a TSR performance measure over a three-year performance period. The number of shares issued will vary based on the cumulative EPS target and relative TSR performance factor that is 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 three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, the Company recognized ~~$1.8 million and $5.3~~$2.1 million in stock-based compensation expense related to these performance stock units, compared to ~~$1.6 million and $4.5~~$1.7 million for the three ~~and nine~~ months ended ~~September 30, 2019.~~March 31, 2020.

The three-year performance period for the ~~2017~~2018 grant ended on December 31, ~~2019,~~2020, 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, ~~136,334~~152,418 shares became fully vested and ~~was~~were distributed to executive management in the first quarter of ~~2020.~~2021.

Common Stock Sale

The Company sold 2.3 million shares of its common stock in a registered direct offering during the three months ended March 31, 2021. The shares were sold for $91.00 per share for aggregate net proceeds of $209.2 million.

Common Stock Repurchase

The Company's common stock repurchase program, ~~was renewed through~~which expired on December 31, 2020, ~~authorizing~~authorized the Company to repurchase up to $250.0 million of its outstanding common stock. ~~Effective April 17,~~During the three months ended March 31, 2020, the Company ~~temporarily suspended its stock repurchase program. Prior to this decision and pursuant to the repurchase plan, the Company~~ repurchased ~~2,066,479~~1,769,479 shares of its common stock at a weighted average price of ~~$34.65~~$35.30 for a total payment of ~~$71.7~~$62.5 million. During the three and nine months ended September 30, 2019, the Company repurchased 1,000,000 and 2,733,603 shares of its common stock at a weighted average price of $43.63 and $42.25 for a total payment of $43.7 million and $115.6 million, respectively.

Cash Dividend

During the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, the Company declared and paid a ~~quarterly~~ cash dividend of $0.25 per share, for a total dividend payment to shareholders of ~~$25.2 million and $76.0 million, respectively.~~$25.3 million. During the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2020, the Company declared and paid ~~one quarterly~~a cash dividend of $0.25 per share, for a total payment to shareholders of ~~common stock, totaling $25.7~~$25.6 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 three ~~and nine~~ months ended ~~September 30,~~March 31, 2021, the Company purchased treasury shares of 154,163 at a weighted average price of $83.56 per share. During the three months ended March 31, 2020, the Company purchased treasury shares of ~~14,398 and 164,564~~139,111 at a weighted average price of ~~$35.73 and $50.86~~$53.61 per share, respectively. During the three and nine months ended September 30, 2019, the Company purchased treasury shares of 33,031 and 209,183 at a weighted average price of $46.33 and $45.78 per share, respectively.share.

4541

7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in accumulated other comprehensive income by component, net of tax, for the periods indicated:


		Three Months Ended September 30,											Three Months Ended March 31,
		Unrealized holding gains (losses) on AFS		Unrealized holding gains (losses) on SERP		Unrealized holding gains (losses) on junior subordinated debt		Impairment loss on securities		Total			Unrealized holding gains (losses) on AFS		Unrealized holding gains (losses) on SERP		Unrealized holding gains (losses) on junior subordinated debt		Total
		(in thousands)											(in millions)
Balance, June 30, 2020		$	66,809	$	(313)	$	7,181	$	0	$	73,677
Other comprehensive income (loss) before reclassifications		7,592		(3)		(2,681)		0		4,908
Balance, December 31, 2020												Balance, December 31, 2020	$	92.1	$	(0.3)	$	0.5	$	92.3
Other comprehensive loss before reclassifications												Other comprehensive loss before reclassifications	(72.0)		0		(0.3)		(72.3)
Amounts reclassified from AOCI	Amounts reclassified from AOCI	0		0		0		0		0		Amounts reclassified from AOCI	(0.1)		0		0		(0.1)
Net current-period other comprehensive income (loss)		7,592		(3)		(2,681)		0		4,908
Balance, September 30, 2020		$	74,401	$	(316)	$	4,500	$	0	$	78,585

Balance, June 30, 2019		$	19,709	$	357	$	6,171	$	144	$	26,381
Other comprehensive income (loss) before reclassifications		11,014		(18)		598		0		11,594
Amounts reclassified from AOCI		(2,232)		0		0		(144)		(2,376)
Net current-period other comprehensive income (loss)		8,782		(18)		598		(144)		9,218
Balance, September 30, 2019		$	28,491	$	339	$	6,769	$	0	$	35,599

		Nine Months Ended September 30,
		Unrealized holding gains (losses) on AFS		Unrealized holding gains (losses) on SERP		Unrealized holding gains (losses) on junior subordinated debt		Impairment loss on securities		Total
Net current-period other comprehensive loss												Net current-period other comprehensive loss	(72.1)		0		(0.3)		(72.4)
Balance, March 31, 2021												Balance, March 31, 2021	$	20.0	$	(0.3)	$	0.2	$	19.9
		(in thousands)
Balance, December 31, 2019	Balance, December 31, 2019	$	21,399	$	(20)	$	3,629	$	0	$	25,008	Balance, December 31, 2019	$	21.4	$	0.0	$	3.6	$	25.0
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	53,176		(296)		871		0		53,751		Other comprehensive income (loss) before reclassifications	6.3		(0.3)		6.6		12.6
Amounts reclassified from AOCI	Amounts reclassified from AOCI	(174)		0		0		0		(174)		Amounts reclassified from AOCI	(0.1)		0		0		(0.1)
Net current-period other comprehensive income (loss)	Net current-period other comprehensive income (loss)	53,002		(296)		871		0		53,577		Net current-period other comprehensive income (loss)	6.2		(0.3)		6.6		12.5
Balance, September 30, 2020		$	74,401	$	(316)	$	4,500	$	0	$	78,585
Balance, March 31, 2020												Balance, March 31, 2020	$	27.6	$	(0.3)	$	10.2	$	37.5

Balance, December 31, 2018		$	(47,591)	$	392	$	13,433	$	144	$	(33,622)
Other comprehensive income (loss) before reclassifications		78,314		(53)		(6,664)		0		71,597
Amounts reclassified from AOCI		(2,232)		0		0		(144)		(2,376)
Net current-period other comprehensive income (loss)		76,082		(53)		(6,664)		(144)		69,221
Balance, September 30, 2019		$	28,491	$	339	$	6,769	$	0	$	35,599

The following table presents reclassifications out of accumulated other comprehensive income:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
Income Statement Classification	Income Statement Classification	2020		2019		2020		2019		Income Statement Classification	2021		2020
		(in thousands)									(in millions)
Gain (loss) on sales of investment securities, net		$	0	$	3,152	$	230	$	3,152
Income tax (expense) benefit		0		(776)		(56)		(776)
Gain on sales of investment securities, net										Gain on sales of investment securities, net	$	0.1	$	0.1
Income tax expense										Income tax expense	0.0		0.0
Net of tax	Net of tax	$	0	$	2,376	$	174	$	2,376	Net of tax	$	0.1	$	0.1

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8. 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 type of derivatives that the Company uses are interest rate swaps. Generally, these instruments are used to help manage the Company's exposure to interest rate risk and meet client financing and hedging needs.

Derivatives are recorded at fair value on the Consolidated Balance Sheets, 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 September 30, 2020, December 31, 2019, and September 30, 2019, the Company does not have any outstanding cash flow hedges.~~

Derivatives Designated in Hedge Relationships

The Company utilizes derivatives that have been designated as part of a hedge relationship in accordance with the applicable accounting guidance to minimize the exposure to changes in benchmark interest rates and volatility of net interest income and EVE to interest rate fluctuations. 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 a floating rate, or from a floating 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.

During the year ended December 31, 2020, the Company entered into interest rate swap contracts, designated as fair value hedges using the last-of-layer method to manage the exposure to changes in fair value associated with fixed rate loans, resulting from changes in the designated benchmark interest rate (Federal Funds rate). These last-of-layer hedges provide the Company the ability to execute a 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 is identified as the hedged item. Under these interest rate swap contracts, the Company receives a floating rate and pays a fixed rate on the outstanding notional amount.

The Company has also entered into receive fixed/pay variable interest rate swaps, designated as fair value hedges on its fixed rate 2015 and 2016 subordinated debt offerings. As a result, the Company is paying 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. In July 2020, the interest payment on this subordinated debt issuance converted from a fixed rate to a floating rate, at which time the Company unwound this swap. For the fair value hedge on the Parent's $175.0 million subordinated debentures issued on June 16, 2016, the Company is paying a floating rate of three-month LIBOR plus 3.25% and is receiving quarterly fixed payments of 6.25% to match the payments on the debt.

Derivatives Not Designated in Hedge Relationships

Management also enters into certain foreign exchange derivative contracts and back-to-back interest rate swaps which are not designated as accounting hedges. Foreign exchange derivative contracts include spot, forward, 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 that the Company places, are both remeasured at fair value, and are referred to as economic hedges since they economically offset the Company's exposure. The Company's back-to-back interest rate swaps are used to manage long-term interest rate risk.

Table of Contents

Fair Value Hedges

As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the following amounts are reflected on the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges:


		September 30, 2020				December 31, 2019					March 31, 2021				December 31, 2020
		Carrying Value of Hedged Assets/(Liabilities)		Cumulative Fair Value Hedging Adjustment (1)		Carrying Value of Hedged Assets/(Liabilities)		Cumulative Fair Value Hedging Adjustment (1)			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 thousands)									(in millions)
Loans - HFI, net of deferred loan fees and costs(2)	Loans - HFI, net of deferred loan fees and costs(2)	$	596,505	$	92,352	$	578,063	$	53,292	Loans - HFI, net of deferred loan fees and costs(2)	$	1,543.4	$	46.8	$	1,587.1	$	85.5
Qualifying debt	Qualifying debt	(323,386)		(3,417)		(319,197)		401		Qualifying debt	(242.0)		3.0		(247.6)		(2.7)

(1)Included in the carrying value of the hedged assets/(liabilities).

(2)The Company designated $1.0 billion as the hedged amount (from a closed portfolio of prepayable fixed rate loans with a carrying value of $1.8 billion and $1.9 billion as of March 31, 2021 and December 31, 2020, respectively) in this last-of-layer hedging relationship, which commenced in the fourth quarter of 2020. The cumulative basis adjustment included in the carrying value of these hedged items totaled $7.9 million and $0.6 million as of March 31, 2021 and December 31, 2020, respectively.

~~Table of Contents~~

For the Company's derivative instruments that are designated and qualify as a fair value hedge, the ~~effective portion is recorded~~gain or loss on the derivative instrument as ~~a basis adjustment~~well as the offsetting loss or gain on the hedged item attributable to the hedged ~~asset~~risk are recognized in current earnings in the same line item as the offsetting loss or ~~liability,~~gain on the related interest rate swaps. For loans, the gain or loss on the hedged item is included in interest income and for subordinated debt, the ~~ineffective portion~~gain or loss on the hedged items is ~~recorded~~included in ~~non-interest income.~~interest expense, as shown in the table below.


	Three Months Ended March 31,
	2021				2020
Income Statement Classification	Gain/(Loss) on Swaps		Gain/(Loss) on Hedged Item		Gain/(Loss) on Swaps		Gain/(Loss) on Hedged Item
	(in millions)
Interest income	$	38.7	$	(38.7)	$	(41.8)	$	41.8
Interest expense	(5.7)		5.7		4.8		(4.8)

Fair Values, Volume of Activity, and Gain/Loss Information Related to Derivative Instruments

The following table summarizes the fair values of the Company's derivative instruments on a gross and net basis as of ~~September 30, 2020,~~March 31, 2021, December 31, ~~2019,~~2020, and ~~September 30, 2019.~~March 31, 2020. The change in the notional amounts of these derivatives from ~~September 30, 2019~~March 31, 2020 to ~~September 30, 2020~~March 31, 2021 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 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. The fair value of derivative contracts, after taking into account the effects of master netting agreements, is included in other assets or other liabilities on the Consolidated Balance Sheets, as indicated in the following table:

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		September 30, 2020						December 31, 2019						September 30, 2019							March 31, 2021						December 31, 2020						March 31, 2020
				Fair Value						Fair Value						Fair Value							Fair Value						Fair Value						Fair Value
		Notional Amount		Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities			Notional Amount		Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities
		(in thousands)																			(in millions)
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:																			Derivatives designated as hedging instruments:
Fair value hedges	Fair value hedges																			Fair value hedges
Interest rate swaps(1)	Interest rate swaps(1)	$	692,348	$	3,417	$	92,352	$	862,952	$	1,778	$	55,471	$	865,321	$	0	$	63,970	Interest rate swaps(1)	$	1,685.9	$	7.9	$	57.7	$	1,689.9	$	3.3	$	86.1	$	859.1	$	4.4	$	95.1
Total	Total	692,348		3,417		92,352		862,952		1,778		55,471		865,321		0		63,970		Total	1,685.9		7.9		57.7		1,689.9		3.3		86.1		859.1		4.4		95.1
Netting adjustments ~~(1)~~(2)	Netting adjustments ~~(1)~~(2)	0		0		0		0		21		21		0		0		0		Netting adjustments ~~(1)~~(2)	0		5.4		5.4		0		0.6		0.6		0		0		0
Net	Net	$	692,348	$	3,417	$	92,352	$	862,952	$	1,757	$	55,450	$	865,321	$	0	$	63,970	Net	$	1,685.9	$	2.5	$	52.3	$	1,689.9	$	2.7	$	85.5	$	859.1	$	4.4	$	95.1

Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:																			Derivatives not designated as hedging instruments:
Foreign currency contracts	Foreign currency contracts	$	38,922	$	460	$	401	$	6,711	$	44	$	18	$	15,329	$	191	$	127	Foreign currency contracts	$	119.3	$	1.0	$	0.7	$	119.2	$	0.7	$	1.2	$	9.3	$	0.3	$	0.2
Interest rate swaps	Interest rate swaps	3,517		242		242		2,932		81		81		2,932		124		124		Interest rate swaps	3.5		0.2		0.2		3.5		0.2		0.2		2.9		0.2		0.2
Total	Total	$	42,439	$	702	$	643	$	9,643	$	125	$	99	$	18,261	$	315	$	251	Total	$	122.8	$	1.2	$	0.9	$	122.7	$	0.9	$	1.4	$	12.2	$	0.5	$	0.4

(1)Interest rate swap amounts include a notional amount of $1.0 billion related to the last-of-layer hedges.

(2)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.

Counterparty Credit Risk

Like other financial instruments, derivatives contain an element of credit risk. This risk is measured as the expected replacement value of the contracts. Management enters into bilateral collateral and master netting agreements that provide 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, which may require the Company to post collateral to counterparties when these contracts are in a net liability position and conversely, for counterparties to post collateral to the Company when these contracts are in a net asset position. ~~In general, the Company has a zero credit threshold with regard to derivative exposure with counterparties.~~ 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, and FHLMC. The total collateral pledged by the Company to counterparties exceeded its net derivative liabilities as of ~~September 30, 2020,~~March 31, 2021, December 31, ~~2019,~~2020, and ~~September 30, 2019,~~March 31, 2020, resulting in excess collateral postings of ~~$14.6~~$36.4 million, ~~$29.2~~$31.7 million and ~~$31.0~~$22.4 million, respectively.

~~Table of Contents~~

The following table summarizes the Company's largest exposure to an individual counterparty at the dates indicated:


		September 30, 2020		December 31, 2019		September 30, 2019				March 31, 2021		December 31, 2020		March 31, 2020
		(in thousands)						(in millions)
Largest gross exposure (derivative asset) to an individual counterparty	Largest gross exposure (derivative asset) to an individual counterparty	$	3,417	$	1,757	$	0		Largest gross exposure (derivative asset) to an individual counterparty	$	7.9	$	2.7	$	4.3
Collateral posted by this counterparty	Collateral posted by this counterparty	0		1,610		0			Collateral posted by this counterparty	0		0		0
Derivative liability with this counterparty	Derivative liability with this counterparty	0		0		0			Derivative liability with this counterparty	5.4		0		0
Collateral pledged to this counterparty	Collateral pledged to this counterparty	0		0		0			Collateral pledged to this counterparty	18.1		0		0
Net exposure after netting adjustments and collateral	Net exposure after netting adjustments and collateral	$	3,417	$	147	$	0		Net exposure after netting adjustments and collateral	$	7.9	$	2.7	$	4.3

9. EARNINGS PER SHARE

Diluted EPS is based on the weighted average outstanding common shares during each period, including common stock equivalents. Basic EPS is based on the weighted average outstanding common shares during the period.

The following table presents the calculation of basic and diluted EPS:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
		(in thousands, except per share amounts)									(in millions, except per share amounts)
Weighted average shares - basic	Weighted average shares - basic	99,850		102,041		100,322		103,024		Weighted average shares - basic	100.8		101.3
Dilutive effect of stock awards	Dilutive effect of stock awards	209		410		252		444		Dilutive effect of stock awards	0.6		0.4
Weighted average shares - diluted	Weighted average shares - diluted	100,059		102,451		100,574		103,468		Weighted average shares - diluted	101.4		101.7
Net income	Net income	$	135,769	$	127,375	$	313,005	$	371,107	Net income	$	192.5	$	83.9
Earnings per share - basic	Earnings per share - basic	1.36		1.25		3.12		3.60		Earnings per share - basic	1.91		0.83
Earnings per share - diluted	Earnings per share - diluted	1.36		1.24		3.11		3.59		Earnings per share - diluted	1.90		0.83

The Company had 0 anti-dilutive stock options outstanding at each of the periods ended ~~September 30, 2020~~March 31, 2021 and ~~2019.~~2020.

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10. INCOME TAXES

The Company's effective tax rate was ~~18.50%~~17.9% and ~~18.30%~~18.1% for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. ~~For the nine months ended September 30, 2020 and 2019, the Company's effective tax rate was 18.05% and 17.52%, respectively. The increase~~There is not a significant difference in the effective tax rate from the three and nine months ended September 30, 2019 is due primarily to tax expense associated with a surrender of bank owned life insurance, detriments from vested stock compensation and increased state tax accruals, partially offset by increases in forecasted tax-exempt income and investment tax credits in 2020.rate.

As of ~~September 30, 2020,~~March 31, 2021, the net ~~deferred tax asset was $46.6~~DTA balance totaled $49.8 million, an increase of ~~$28.6~~$18.5 million from ~~December 31, 2019.~~the year end 2020 DTA balance of $31.3 million. This overall increase in the net deferred tax asset was primarily the result of ~~an increase~~decreases in the ~~allowance for credit losses under the new CECL accounting guidance, which upon adoption on January 1, 2020, increased the deferred tax asset by $8.7 million. Expected~~fair market value of AFS securities and tax credit ~~carryovers which~~carryforwards. These items were not fully offset by ~~additional unrealized gains on AFS securities also contributed~~decreases in deferred insurance premiums and increases to ~~the increase. For a detailed discussion of the impact of adoption of CECL, see "Note 1. Summary of Significant Accounting Policies~~."premises and equipment.

Although realization is not assured, the Company believes that the realization of the recognized deferred tax asset of ~~$46.6~~$49.8 million at ~~September 30, 2020~~March 31, 2021 is more-likely-than-not based on expectations as to future taxable income and based on available tax planning strategies that could be implemented if necessary to prevent a carryover from expiring.

At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company had 0 deferred tax valuation allowance.

As of ~~September 30, 2020,~~March 31, 2021, the Company’s gross federal NOL carryovers after current year-to-date utilization, all of which are subject to limitations under Section 382 of the IRC, totaled approximately ~~$44.6~~$42.4 million for which a deferred tax asset of ~~$5.2~~$4.7 million has been recorded, reflecting the expected benefit of these remaining federal NOL carryovers. The Company ~~also has varying gross amounts of state NOL carryovers, with the most~~does not have any significant in Arizona. The gross Arizona NOL carryovers totaled approximately $0.7 million. A deferred tax asset balance of $0.1 million as of September 30, 2020 has been recorded to reflect the expected benefit of all remaining state NOL carryovers.

LIHTC and renewable energy projects

The Company holds ownership interests in limited 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 and deductions. The limited liability entities are considered to be VIEs; however, as a limited partner, the Company is not the primary beneficiary and is not required to consolidate these entities.

Investments in LIHTC and renewable energy total ~~$414.3~~$487.9 million and ~~$409.4~~$405.6 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. Unfunded LIHTC and renewable energy obligations are included as part of other liabilities on the Consolidated Balance Sheets and total ~~$161.5~~$228.9 million and ~~$191.0~~$151.7 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. For the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, $14.5~~$15.5 million and $13.0 million, respectively, of amortization related to LIHTC investments was recognized as a component of income tax expense. For the nine months ended September 30, 2020 and 2019, $34.2 million and $33.6$7.4 million, respectively, of amortization related to LIHTC investments was recognized as a component of income tax expense.

11. 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 letters of credit. They involve, to varying degrees, elements of credit risk in excess of amounts recognized on 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 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 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.

Letters of credit and financial guarantees are commitments issued by the Company to guarantee the performance of a customer to a third party in borrowing arrangements. The Company generally has recourse to recover from the customer any amounts paid under the guarantees. Typically, letters of credit issued have expiration dates within one year.

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A summary of the contractual amounts for unfunded commitments and letters of credit are as follows:


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(in thousands)					(in millions)
Commitments to extend credit, including unsecured loan commitments of $1,046,504 at September 30, 2020 and $895,175 at December 31, 2019		$	8,379,196	$	8,348,421
Commitments to extend credit, including unsecured loan commitments of $1,134.0 at March 31, 2021 and $1,077.2 at December 31, 2020						Commitments to extend credit, including unsecured loan commitments of $1,134.0 at March 31, 2021 and $1,077.2 at December 31, 2020	$	9,577.3	$	9,425.2
Credit card commitments and financial guarantees	Credit card commitments and financial guarantees	283,703		302,909		Credit card commitments and financial guarantees	289.9		291.5
Letters of credit, including unsecured letters of credit of $9,513 at September 30, 2020 and $5,850 at December 31, 2019		156,170		175,778
Letters of credit, including unsecured letters of credit of $7.4 at March 31, 2021 and $9.9 at December 31, 2020						Letters of credit, including unsecured letters of credit of $7.4 at March 31, 2021 and $9.9 at December 31, 2020	158.8		186.9
Total	Total	$	8,819,069	$	8,827,108	Total	$	10,026.0	$	9,903.6

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 other liabilities as a separate loss contingency and are not included in the allowance for credit losses reported in "Note 3. Loans, Leases and Allowance for Credit Losses" of these Unaudited Consolidated Financial Statements. This loss contingency for unfunded loan commitments and letters of credit was ~~$44.4~~$32.6 million and ~~$9.0~~$37.0 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. Changes to this liability are adjusted through the provision for credit losses in the Consolidated Income Statement. ~~In addition, upon adoption of ASU 2016-13 on January 1, 2020, the Company recorded an increase of $15.1 million to this liability, which was recorded as an adjustment to retained earnings, net of tax.~~

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~~three broad categories: ~~geography,~~ industry, product, and collateral. The Company's loan portfolio includes significant credit exposure to the CRE market. As of each of the periods ended ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, CRE related loans accounted for approximately ~~38%~~37% and ~~45%~~38% 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 ~~29%~~27% and ~~31%~~28% of these CRE loans, excluding construction and land loans, were owner-occupied at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

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 has operating leases under which it leases its branch offices, corporate headquarters, other offices, and data facility centers. Operating lease costs totaled ~~$3.9~~$3.7 million and ~~$10.9~~$3.4 million during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~respectively, compared to $3.2 million and $9.5 million for the three and nine months ended September 30, 2019,~~ respectively. Other lease costs, which include common area maintenance, parking, and taxes, and were included as part of occupancy expense, totaled $1.0 million and ~~$2.9~~$1.1 million during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~respectively, compared to $1.0 million and $3.0 million for the three and nine months ended September 30, 2019,~~ respectively.

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12. FAIR VALUE ACCOUNTING

The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in 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 Unaudited 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-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.

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 items at each reporting date. These unrealized gains and losses are recognized as part of other comprehensive income rather than earnings. The Company did not elect FVO treatment for the junior subordinated debt assumed in the Bridge Capital Holdings acquisition.

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ unrealized gains and losses from fair value changes on junior subordinated debt were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
		(in thousands)									(in millions)
Unrealized (losses)/gains		$	(3,555)	$	794	$	1,156	$	(8,837)
Unrealized (losses) gains										Unrealized (losses) gains	$	(0.4)	$	8.7
Changes included in OCI, net of tax	Changes included in OCI, net of tax	(2,681)		598		871		(6,664)		Changes included in OCI, net of tax	(0.3)		6.6

Fair value on a recurring basis

Financial assets and financial liabilities measured at fair value on a recurring basis include the following:

AFS securities: Securities classified as AFS are reported at fair value utilizing Level 1 and Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include quoted prices in active 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 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 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-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 selects a sample of investment securities and compares the values provided by its primary third-party pricing service to the market values obtained from secondary sources, including other pricing services and safekeeping statements, and

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evaluates those with notable variances. In instances where there are discrepancies in pricing from various sources and

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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.

Interest rate swaps: Interest rate swaps are reported at fair value utilizing Level 2 inputs. The Company obtains dealer quotations to value its interest rate swaps.

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.

The fair value of assets and liabilities measured at fair value on a recurring basis was determined using the following inputs as of the periods presented:


		Fair Value Measurements at the End of the Reporting Period Using:									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			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)									(in millions)
September 30, 2020
March 31, 2021										March 31, 2021
Assets:	Assets:									Assets:

Available-for-sale debt securities	Available-for-sale debt securities									Available-for-sale debt securities
CDO		$	0	$	8,176	$	0	$	8,176
CLO										CLO	$	0	$	980.7	$	0	$	980.7
Commercial MBS issued by GSEs	Commercial MBS issued by GSEs	0		95,657		0		95,657		Commercial MBS issued by GSEs	0		87.8		0		87.8
Corporate debt securities	Corporate debt securities	0		186,609		0		186,609		Corporate debt securities	0		285.1		0		285.1
Municipal securities		0		22,159		0		22,159
Private label residential MBS	Private label residential MBS	0		1,264,237		0		1,264,237		Private label residential MBS	0		1,900.6		0		1,900.6
Residential MBS issued by GSEs	Residential MBS issued by GSEs	0		1,361,556		0		1,361,556		Residential MBS issued by GSEs	0		2,249.6		0		2,249.6
Tax-exempt	Tax-exempt	0		1,011,023		0		1,011,023		Tax-exempt	0		1,329.7		0		1,329.7
Trust preferred securities		25,208		0		0		25,208

U.S. treasury securities	U.S. treasury securities	0		600		0		600		U.S. treasury securities	50.0		0		0		50.0
Other										Other	27.3		29.1		0		56.4
Total AFS debt securities	Total AFS debt securities	$	25,208	$	3,950,017	$	0	$	3,975,225	Total AFS debt securities	$	77.3	$	6,862.6	$	0	$	6,939.9
Equity securities	Equity securities									Equity securities
CRA investments	CRA investments	$	27,795	$	25,750	$	0	$	53,545	CRA investments	$	27.4	$	30.0	$	0	$	57.4
Preferred stock	Preferred stock	107,016		0		0		107,016		Preferred stock	135.5		0		0		135.5
Total equity securities	Total equity securities	$	134,811	$	25,750	$	0	$	160,561	Total equity securities	$	162.9	$	30.0	$	0	$	192.9
Loans - HFS		$	0	$	20,764	$	0	$	20,764

Derivative assets (1)	Derivative assets (1)	0		4,119		0		4,119		Derivative assets (1)	$	0	$	9.1	$	0	$	9.1
Liabilities:	Liabilities:									Liabilities:
Junior subordinated debt (2)	Junior subordinated debt (2)	$	0	$	0	$	60,529	$	60,529	Junior subordinated debt (2)	$	0	$	0	$	66.3	$	66.3
Derivative liabilities (1)	Derivative liabilities (1)	0		92,995		0		92,995		Derivative liabilities (1)	0		58.6		0		58.6

(1)Derivative assets and liabilities relate primarily to interest rate swaps, see "Note 8. Derivatives and Hedging Activities." In addition, the carrying value of loans is increased by ~~$92,352~~$46.8 million and the net carrying value of subordinated debt is increased by ~~$3,417~~$3.0 million as of ~~September 30, 2020~~March 31, 2021 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.

(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.

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		Fair Value Measurements at the End of the Reporting Period Using:									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			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)									(in millions)
December 31, 2019
December 31, 2020										December 31, 2020
Assets:	Assets:									Assets:

Available-for-sale debt securities	Available-for-sale debt securities									Available-for-sale debt securities
CDO		$	0	$	10,142	$	0	$	10,142
CLO										CLO	$	0	$	146.9	$	0	$	146.9
Commercial MBS issued by GSEs	Commercial MBS issued by GSEs	0		94,253		0		94,253		Commercial MBS issued by GSEs	0		84.6		0		84.6
Corporate debt securities	Corporate debt securities	5,127		94,834		0		99,961		Corporate debt securities	0		270.2		0		270.2
Municipal securities		0		7,773		0		7,773
Private label residential MBS	Private label residential MBS	0		1,129,227		0		1,129,227		Private label residential MBS	0		1,476.9		0		1,476.9
Residential MBS issued by GSEs	Residential MBS issued by GSEs	0		1,412,060		0		1,412,060		Residential MBS issued by GSEs	0		1,486.6		0		1,486.6
Tax-exempt	Tax-exempt	0		554,855		0		554,855		Tax-exempt	0		1,187.4		0		1,187.4
Trust preferred securities		27,040		0		0		27,040
U.S. government sponsored agency securities		0		10,000		0		10,000
U.S. treasury securities		0		999		0		999

Other										Other	26.5		29.4		0		55.9
Total AFS debt securities	Total AFS debt securities	$	32,167	$	3,314,143	$	0	$	3,346,310	Total AFS debt securities	$	26.5	$	4,682.0	$	0	$	4,708.5
Equity securities	Equity securities									Equity securities
CRA investments	CRA investments	$	52,504	$	0	$	0	$	52,504	CRA investments	$	27.8	$	25.6	$	0	$	53.4
Preferred stock	Preferred stock	86,197		0		0		86,197		Preferred stock	113.9		0		0		113.9
Total equity securities	Total equity securities	$	138,701	$	0	$	0	$	138,701	Total equity securities	$	141.7	$	25.6	$	0	$	167.3
Loans - HFS		$	0	$	21,803	$	0	$	21,803

Derivative assets (1)	Derivative assets (1)	0		1,903		0		1,903		Derivative assets (1)	$	0	$	4.2	$	0	$	4.2
Liabilities:	Liabilities:									Liabilities:
Junior subordinated debt (2)	Junior subordinated debt (2)	$	0	$	0	$	61,685	$	61,685	Junior subordinated debt (2)	$	0	$	0	$	65.9	$	65.9
Derivative liabilities (1)	Derivative liabilities (1)	0		55,570		0		55,570		Derivative liabilities (1)	0		87.5		0		87.5

(1)Derivative assets and liabilities relate primarily to interest rate swaps, see "Note 8. Derivatives and Hedging Activities." In addition, the carrying value of loans is increased by ~~$53,292~~$85.5 million and the net carrying value of subordinated debt is ~~decreased~~increased by ~~$401~~$2.7 million as of December 31, ~~2019~~2020 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.

(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 three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ the change in Level 3 liabilities measured at fair value on a recurring basis was as follows:


		Junior Subordinated Debt									Junior Subordinated Debt
		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
		(in thousands)									(in millions)
Beginning balance	Beginning balance	$	(56,974)	$	(58,315)	$	(61,685)	$	(48,684)	Beginning balance	$	(65.9)	$	(61.7)
Change in fair value (1)	Change in fair value (1)	(3,555)		794		1,156		(8,837)		Change in fair value (1)	(0.4)		8.7
Ending balance	Ending balance	$	(60,529)	$	(57,521)	$	(60,529)	$	(57,521)	Ending balance	$	(66.3)	$	(53.0)

(1)Unrealized ~~gains/~~gains (losses) attributable to changes in the fair value of junior subordinated debt are recorded as part of OCI, net of tax, and totaled ~~$(2.7)~~$(0.3) million and ~~$0.6~~$6.6 million for three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $0.9 million and $(6.7) million for the nine months ended September 30, 2020 and 2019,~~ respectively.

~~Table of Contents~~

For Level 3 liabilities measured at fair value on a recurring basis as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the significant unobservable inputs used in the fair value measurements were as follows:

September 30, 2020 Valuation Technique Significant Unobservable Inputs Input Value
(in thousands)
Junior subordinated debt $ 60,529 Discounted cash flow Implied credit rating of the Company 3.65 %

March 31, 2021

Valuation Technique

Significant Unobservable Inputs

Input Value

(in millions)

Junior subordinated debt

66.3

Discounted cash flow

Implied credit rating of the Company

2.78

December 31, 2019 Valuation Technique Significant Unobservable Inputs Input Value
(in thousands)
Junior subordinated debt $ 61,685 Discounted cash flow Implied credit rating of the Company 5.09 %

December 31, 2020

Valuation Technique

Significant Unobservable Inputs

Input Value

(in millions)

Junior subordinated debt

65.9

Discounted cash flow

Implied credit rating of the Company

2.87

The significant unobservable inputs used in the fair value measurement of the Company’s junior subordinated debt as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 was the implied credit risk for the Company. As of ~~September 30,~~March 31, 2021 and December 31, 2020, 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

Table of ~~December 31, 2019, the implied credit risk spread was calculated as the difference between the 15-year 'BB' rated financial index over the corresponding swap index.~~Contents

As of ~~September 30, 2020,~~March 31, 2021, the Company estimates the discount rate at ~~3.65%~~2.78%, which represents an implied credit spread of ~~3.42%~~2.59% plus three-month LIBOR ~~(0.23%~~(0.19%). As of December 31, ~~2019,~~2020, the Company estimated the discount rate at ~~5.09%~~2.87%, which was a ~~3.18%~~2.64% credit spread plus three-month LIBOR ~~(1.91%~~(0.24%).

~~Table of Contents~~

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 credit deterioration). The following table presents such assets carried on the Consolidated Balance Sheet by caption and by level within the ASC 825 hierarchy:


		Fair Value Measurements at the End of the Reporting Period Using									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)			Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Active Markets for Similar Assets (Level 2)		Unobservable Inputs (Level 3)
		(in thousands)									(in millions)
As of September 30, 2020:
As of March 31, 2021:										As of March 31, 2021:
Loans	Loans	$	245,219	$	0	$	0	$	245,219	Loans	$	183.0	$	0	$	0	$	183.0

Other assets acquired through foreclosure	Other assets acquired through foreclosure	8,591		0		0		8,591		Other assets acquired through foreclosure	4.2		0		0		4.2
As of December 31, 2019:
As of December 31, 2020:										As of December 31, 2020:
Loans	Loans	$	110,272	$	0	$	0	$	110,272	Loans	$	187.3	$	0	$	0	$	187.3

Other assets acquired through foreclosure	Other assets acquired through foreclosure	13,850		0		0		13,850		Other assets acquired through foreclosure	1.4		0		0		1.4

For Level 3 assets measured at fair value on a nonrecurring basis as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the significant unobservable inputs used in the fair value measurements were as follows:

~~September 30, 2020~~March 31, 2021

Valuation Technique(s)

Significant Unobservable Inputs

Range

(in ~~thousands)~~millions)

Loans

~~245,219~~183.0

Collateral method

Third party appraisal

Costs to sell

4.0% to 10.0%

Discounted cash flow method

Discount rate

Contractual loan rate

~~4.0%~~2.0% to 7.0%

Other assets acquired through foreclosure

~~8,591~~4.2

Collateral method

Third party appraisal

Costs to sell

4.0% to 10.0%

December 31, ~~2019~~2020

Valuation Technique(s)

Significant Unobservable Inputs

Range

(in ~~thousands)~~millions)

Loans

~~110,272~~187.3

Collateral method

Third party appraisal

Costs to sell

4.0% to 10.0%

Discounted cash flow method

Discount rate

Contractual loan rate

~~4.0%~~2.0% to 7.0%

~~Scheduled cash collections~~

~~Probability of default~~

~~0% to 20.0%~~

~~Proceeds from non-real estate collateral~~

~~Loss given default~~

~~0% to 70.0%~~

Other assets acquired through foreclosure

~~13,850~~1.4

Collateral method

Third party appraisal

Costs to sell

4.0% to 10.0%

Loans: Loans measured at fair value on a nonrecurring basis include collateral dependent loans held for investment. The specific reserves for these 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 these loans, which considers internally-developed, unobservable inputs such as discount rates, default rates, and loss severity.

Total Level 3 collateral dependent loans had an estimated fair value of ~~$245.2~~$183.0 million and ~~$110.3~~$187.3 million at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively, net of a specific valuation allowance of ~~$9.6~~$9.5 million and ~~$2.8~~$8.9 million at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

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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 twelve 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 ~~$8.6~~$4.2 million and ~~$13.9~~$1.4 million of such assets at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

Fair Value of Financial Instruments

The estimated fair value of the Company’s financial instruments is as follows:


		September 30, 2020															March 31, 2021
		Carrying Amount			Fair Value												Carrying Amount			Fair Value
				Level 1			Level 2			Level 3			Total						Level 1			Level 2			Level 3			Total
				(in thousands)															(in millions)
Financial assets:	Financial assets:															Financial assets:

Investment securities:	Investment securities:															Investment securities:
HTM	HTM	$	504,477		$	0		$	548,140		$	0		$	548,140	HTM	$	698.0		$	0		$	740.4		$	0		$	740.4
AFS	AFS	3,975,225			25,208			3,950,017			0			3,975,225		AFS	6,939.9			77.3			6,862.6			0			6,939.9
Equity	Equity	160,561			134,811			25,750			0			160,561		Equity	192.9			162.9			30.0			0			192.9
Derivative assets	Derivative assets	4,119			0			4,119			0			4,119		Derivative assets	9.1			0			9.1			0			9.1
Loans, net	Loans, net	25,703,458			0			0			26,107,177			26,107,177		Loans, net	28,463.9			0			0			29,244.8			29,244.8
Accrued interest receivable	Accrued interest receivable	140,827			0			140,827			0			140,827		Accrued interest receivable	169.9			0			169.9			0			169.9
Financial liabilities:	Financial liabilities:															Financial liabilities:
Deposits	Deposits	$	28,843,396		$	0		$	28,850,576		$	0		$	28,850,576	Deposits	$	38,393.1		$	0		$	38,397.4		$	0		$	38,397.4
Customer repurchase agreements	Customer repurchase agreements	19,688			0			19,688			0			19,688		Customer repurchase agreements	15.9			0			15.9			0			15.9

Other borrowings																Other borrowings	5.0			0			5.0			0			5.0
Qualifying debt	Qualifying debt	618,772			0			566,308			72,628			638,936		Qualifying debt	543.7			0			492.6			79.8			572.4
Derivative liabilities	Derivative liabilities	92,995			0			92,995			0			92,995		Derivative liabilities	58.6			0			58.6			0			58.6
Accrued interest payable	Accrued interest payable	15,666			0			15,666			0			15,666		Accrued interest payable	12.7			0			12.7			0			12.7


		December 31, 2019															December 31, 2020
		Carrying Amount			Fair Value												Carrying Amount			Fair Value
				Level 1			Level 2			Level 3			Total						Level 1			Level 2			Level 3			Total
				(in thousands)															(in millions)
Financial assets:	Financial assets:															Financial assets:
Investment securities:	Investment securities:															Investment securities:
HTM	HTM	$	485,107		$	0		$	516,261		$	0		$	516,261	HTM	$	568.8		$	0		$	611.8		$	0		$	611.8
AFS	AFS	3,346,310			32,167			3,314,143			0			3,346,310		AFS	4,708.5			26.5			4,682.0			0			4,708.5
Equity securities	Equity securities	138,701			138,701			0			0			138,701		Equity securities	167.3			141.7			25.6			0			167.3

Derivative assets	Derivative assets	1,903			0			1,903			0			1,903		Derivative assets	4.2			0			4.2			0			4.2
Loans, net	Loans, net	20,955,499			0			0			21,256,462			21,256,462		Loans, net	26,774.1			0			0			27,231.0			27,231.0
Accrued interest receivable	Accrued interest receivable	108,694			0			108,694			0			108,694		Accrued interest receivable	166.1			0			166.1			0			166.1
Financial liabilities:	Financial liabilities:															Financial liabilities:
Deposits	Deposits	$	22,796,493		$	0		$	22,813,265		$	0		$	22,813,265	Deposits	$	31,930.5		$	0		$	31,935.9		$	0		$	31,935.9
Customer repurchase agreements	Customer repurchase agreements	16,675			0			16,675			0			16,675		Customer repurchase agreements	16.0			0			16.0			0			16.0

Other borrowings																Other borrowings	5.0			0			5.0			0			5.0
Qualifying debt	Qualifying debt	393,563			0			332,635			74,155			406,790		Qualifying debt	548.7			0			488.1			79.3			567.4
Derivative liabilities	Derivative liabilities	55,570			0			55,570			0			55,570		Derivative liabilities	87.5			0			87.5			0			87.5
Accrued interest payable	Accrued interest payable	24,661			0			24,661			0			24,661		Accrued interest payable	11.0			0			11.0			0			11.0

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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 preclude an interest rate risk profile that does not conform to both management and BOD risk tolerances without ALCO approval. There is also ALCO reporting at the Parent level for reviewing interest rate risk for the Company, which gets 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 ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 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 insignificant at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020.

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13. SEGMENTS

The Company's reportable segments are aggregated ~~based primarily~~with 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 service~~consist of three reportable segments:

•Commercial segment: provides commercial banking and ~~related~~treasury management products and services to ~~their respective markets. The operations from the regional segments correspond to the following banking divisions: ABA in Arizona, BON~~small and ~~FIB in Nevada, TPB in Southern California, and Bridge in Northern California.~~

~~The Company's NBL segments provide~~middle-market businesses, specialized banking services to sophisticated commercial institutions and investors within niche ~~markets. The Company's NBL reportable segments include HOA Services, Public & Nonprofit Finance, Technology & Innovation, HFF,~~industries, 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 ~~Other NBLs. These NBLs are managed centrally and are broader in geographic scope than the Company's other segments, though still predominately located within the Company's core market areas.~~consumer banking services, such as residential mortgage banking.

~~The~~ •Corporate & Other ~~segment~~segment: consists of ~~corporate-related~~the Company's investment portfolio, Corporate borrowings and other related items, income and expense items not allocated to ~~the Company's~~our 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%~~8% 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 ~~segment~~segments to the extent that the amounts are directly attributable to those segments. Net interest income is recorded in each segment on a TEB with a corresponding increase in income tax expense, which is eliminated in the Corporate & Other segment.

Further, net interest income of a reportable segment includes a 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. 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 for the use of funds, while a provider of funds is credited through funds transfer pricing, which is determined based on the average life of the assets or liabilities in the portfolio. Residual funds transfer pricing mismatches are allocable to the Corporate & Other segment and presented as part of net interest income.

The net income amount 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 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.

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The following is a summary of operating segment information for the periods indicated:

Regional Segments
Balance Sheet: Consolidated Company Arizona Nevada Southern California Northern California
At September 30, 2020 (in millions)
Assets:
Cash, cash equivalents, and investment securities $ 6,119.8 $ 1.5 $ 8.8 $ 1.8 $ 2.3
Loans, net of deferred loan fees and costs 26,014.0 4,388.1 2,612.2 2,376.7 1,785.8
Less: allowance for credit losses (310.5) (57.0) (36.4) (31.5) (19.3)
Total loans 25,703.5 4,331.1 2,575.8 2,345.2 1,766.5
Other assets acquired through foreclosure, net 8.6 0 8.5 0 0
Goodwill and other intangible assets, net 299.0 0 23.2 0 153.9
Other assets 1,204.6 47.8 60.1 16.2 20.1
Total assets $ 33,335.5 $ 4,380.4 $ 2,676.4 $ 2,363.2 $ 1,942.8
Liabilities:
Deposits $ 28,843.4 $ 8,541.5 $ 4,733.9 $ 3,502.0 $ 2,741.1
Borrowings and qualifying debt 628.8 0 0 0 0
Other liabilities 639.3 28.7 18.8 8.6 20.0
Total liabilities 30,111.5 8,570.2 4,752.7 3,510.6 2,761.1
Allocated equity: 3,224.0 576.4 343.7 281.2 361.5
Total liabilities and stockholders' equity $ 33,335.5 $ 9,146.6 $ 5,096.4 $ 3,791.8 $ 3,122.6
Excess funds provided (used) 0 4,766.2 2,420.0 1,428.6 1,179.8

Income Statement:
Three Months Ended September 30, 2020 (in thousands)
Net interest income $ 284,738 $ 83,492 $ 46,625 $ 35,656 $ 28,353
Provision for (recovery of) credit losses 14,661 9,830 8,548 5,213 1,856
Net interest income after provision for credit losses 270,077 73,662 38,077 30,443 26,497
Non-interest income 20,606 1,771 2,391 1,186 2,381
Non-interest expense (124,092) (17,644) (15,800) (14,020) (12,885)
Income (loss) before income taxes 166,591 57,789 24,668 17,609 15,993
Income tax expense (benefit) 30,822 14,447 5,180 4,930 4,478
Net income $ 135,769 $ 43,342 $ 19,488 $ 12,679 $ 11,515

Nine Months Ended September 30, 2020 (in thousands)
Net interest income $ 852,158 $ 229,701 $ 139,328 $ 104,348 $ 85,345
Provision for (recovery of) credit losses 157,837 46,623 25,015 23,750 12,680
Net interest income after provision for credit losses 694,321 183,078 114,313 80,598 72,665
Non-interest income 46,985 4,943 7,355 3,269 6,450
Non-interest expense (359,372) (58,674) (44,414) (43,216) (38,460)
Income (loss) before income taxes 381,934 129,347 77,254 40,651 40,655
Income tax expense (benefit) 68,929 32,207 16,164 11,241 11,340
Net income $ 313,005 $ 97,140 $ 61,090 $ 29,410 $ 29,315


Balance Sheet:	Consolidated Company		Commercial		Consumer Related		Corporate & Other
At March 31, 2021:	(in millions)
Assets:
Cash, cash equivalents, and investment securities	$	13,235.3	$	13.4	$	33.1	$	13,188.8
Loans, net of deferred loan fees and costs	28,711.0		20,660.4		8,048.9		1.7
Less: allowance for credit losses	(247.1)		(229.8)		(17.3)		0
Total loans	28,463.9		20,430.6		8,031.6		1.7
Other assets acquired through foreclosure, net	4.2		4.2		0		0
Goodwill and other intangible assets, net	298.0		295.7		2.3		0
Other assets	1,395.6		251.5		113.1		1,031.0
Total assets	$	43,397.0	$	20,995.4	$	8,180.1	$	14,221.5
Liabilities:
Deposits	$	38,393.1	$	24,126.0	$	13,286.5	$	980.6
Borrowings and qualifying debt	548.7		0		0		548.7
Other liabilities	742.5		226.4		6.0		510.1
Total liabilities	39,684.3		24,352.4		13,292.5		2,039.4
Allocated equity:	3,712.7		2,100.3		702.9		909.5
Total liabilities and stockholders' equity	$	43,397.0	$	26,452.7	$	13,995.4	$	2,948.9
Excess funds provided (used)	0		5,457.3		5,815.3		(11,272.6)




Income Statement:










Three Months Ended March 31, 2021:	(in millions)
Net interest income	$	317.3	$	263.7	$	107.9	$	(54.3)
(Recovery of) provision for credit losses	(32.4)		(36.3)		1.7		2.2
Net interest income (expense) after provision for credit losses	349.7		300.0		106.2		(56.5)
Non-interest income	19.7		19.2		0.5		0
Non-interest expense	135.0		98.3		35.2		1.5
Income (loss) before income taxes	234.4		220.9		71.5		(58.0)
Income tax expense (benefit)	41.9		52.7		17.5		(28.3)
Net income	$	192.5	$	168.2	$	54.0	$	(29.7)

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National Business Lines
Balance Sheet: HOA
Services Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance Other NBLs Corporate & Other
At September 30, 2020
Assets: (in millions)
Cash, cash equivalents, and investment securities $ 0 $ 0 $ 0 $ 0 $ 26.6 $ 6,078.8
Loans, net of deferred loan fees and costs 280.0 1,686.7 2,329.3 2,099.3 8,451.8 4.1
Less: allowance for credit losses (2.3) (17.9) (41.5) (40.7) (63.9) 0
Total loans 277.7 1,668.8 2,287.8 2,058.6 8,387.9 4.1
Other assets acquired through foreclosure, net 0 0 0 0 0.1 0
Goodwill and other intangible assets, net 0 0 119.3 0.1 2.5 0
Other assets 5.4 11.9 9.2 33.4 110.3 890.2
Total assets $ 283.1 $ 1,680.7 $ 2,416.3 $ 2,092.1 $ 8,527.4 $ 6,973.1
Liabilities:
Deposits $ 3,697.9 $ 0 $ 4,646.4 $ 0 $ 61.4 $ 919.2
Borrowings and qualifying debt 0 0 0 0 0 628.8
Other liabilities (2.7) 91.8 5.4 0.9 56.8 411.0
Total liabilities 3,695.2 91.8 4,651.8 0.9 118.2 1,959.0
Allocated equity: 104.9 130.3 397.5 167.5 673.2 187.8
Total liabilities and stockholders' equity $ 3,800.1 $ 222.1 $ 5,049.3 $ 168.4 $ 791.4 $ 2,146.8
Excess funds provided (used) 3,517.0 (1,458.6) 2,633.0 (1,923.7) (7,736.0) (4,826.3)

Income Statement:
Three Months Ended September 30, 2020 (in thousands)
Net interest income $ 22,184 $ 2,800 $ 48,013 $ 12,536 $ 46,582 $ (41,503)
Provision for (recovery of) credit losses (138) 781 (9,048) 2,200 (2,706) (1,875)
Net interest income after provision for credit losses 22,322 2,019 57,061 10,336 49,288 (39,628)
Non-interest income 134 0 3,126 0 2,924 6,693
Non-interest expense (9,896) (1,724) (11,530) (2,596) (12,335) (25,662)
Income (loss) before income taxes 12,560 295 48,657 7,740 39,877 (58,597)
Income tax expense (benefit) 2,889 68 11,191 1,780 9,172 (23,313)
Net income $ 9,671 $ 227 $ 37,466 $ 5,960 $ 30,705 $ (35,284)

Nine Months Ended September 30, 2020 (in thousands)
Net interest income $ 67,740 $ 6,351 $ 137,436 $ 39,442 $ 128,096 $ (85,629)
Provision for (recovery of) credit losses (2,198) 553 25,471 27,530 (4,737) 3,150
Net interest income after provision for credit losses 69,938 5,798 111,965 11,912 132,833 (88,779)
Non-interest income 350 0 9,247 0 4,108 11,263
Non-interest expense (29,965) (5,114) (36,188) (7,353) (35,674) (60,314)
Income (loss) before income taxes 40,323 684 85,024 4,559 101,267 (137,830)
Income tax expense (benefit) 9,361 380 19,461 893 23,083 (55,201)
Net income $ 30,962 $ 304 $ 65,563 $ 3,666 $ 78,184 $ (82,629)


Balance Sheet:	Consolidated Company		Commercial		Consumer Related		Corporate
At December 31, 2020:	(in millions)
Assets:
Cash, cash equivalents, and investment securities	$	8,176.5	$	12.0	$	45.6	$	8,118.9
Loans, net of deferred loan fees and costs	27,053.0		20,245.8		6,798.2		9.0
Less: allowance for loan losses	(278.9)		(263.4)		(15.4)		(0.1)
Total loans	26,774.1		19,982.4		6,782.8		8.9
Other assets acquired through foreclosure, net	1.4		1.4		0		0
Goodwill and other intangible assets, net	298.5		296.1		2.4		0
Other assets	1,210.5		257.0		96.6		856.9
Total assets	$	36,461.0	$	20,548.9	$	6,927.4	$	8,984.7
Liabilities:
Deposits	$	31,930.5	$	21,448.0	$	9,936.8	$	545.7
Borrowings and qualifying debt	553.7		0		0		553.7
Other liabilities	563.3		170.4		3.3		389.6
Total liabilities	33,047.5		21,618.4		9,940.1		1,489.0
Allocated equity:	3,413.5		1,992.2		579.1		842.2
Total liabilities and stockholders' equity	$	36,461.0	$	23,610.6	$	10,519.2	$	2,331.2
Excess funds provided (used)	0		3,061.7		3,591.8		(6,653.5)















Three Months Ended March 31, 2020:	(in millions)
Net interest income	$	269.0	$	228.5	$	55.7	$	(15.2)
Provision for credit losses	51.2		47.9		3.0		0.3
Net interest income (expense) after provision for credit losses	217.8		180.6		52.7		(15.5)
Non-interest income	5.1		11.4		0.4		(6.7)
Non-interest expense	120.5		82.4		25.8		12.3
Income (loss) before income taxes	102.4		109.6		27.3		(34.5)
Income tax expense (benefit)	18.5		26.0		6.4		(13.9)
Net income	$	83.9	$	83.6	$	20.9	$	(20.6)

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Regional Segments
Balance Sheet: Consolidated Company Arizona Nevada Southern California Northern California
At December 31, 2019 (in millions)
Assets:
Cash, cash equivalents, and investment securities $ 4,471.2 $ 1.8 $ 9.0 $ 2.3 $ 2.2
Loans, net of deferred loan fees and costs 21,123.3 3,847.9 2,252.5 2,253.9 1,311.2
Less: allowance for credit losses (167.8) (31.6) (18.0) (18.3) (9.7)
Total loans 20,955.5 3,816.3 2,234.5 2,235.6 1,301.5
Other assets acquired through foreclosure, net 13.9 0 13.0 0.9 0
Goodwill and other intangible assets, net 297.6 0 23.2 0 154.6
Other assets 1,083.7 48.6 59.4 15.0 19.8
Total assets $ 26,821.9 $ 3,866.7 $ 2,339.1 $ 2,253.8 $ 1,478.1
Liabilities:
Deposits $ 22,796.5 $ 5,384.7 $ 4,350.1 $ 2,585.3 $ 2,373.6
Borrowings and qualifying debt 393.6 0 0 0 0
Other liabilities 615.1 17.8 11.9 1.2 15.9
Total liabilities 23,805.2 5,402.5 4,362.0 2,586.5 2,389.5
Allocated equity: 3,016.7 453.6 301.0 253.3 312.5
Total liabilities and stockholders' equity $ 26,821.9 $ 5,856.1 $ 4,663.0 $ 2,839.8 $ 2,702.0
Excess funds provided (used) 0 1,989.4 2,323.9 586.0 1,223.9

Income Statement:
Three Months Ended September 30, 2019 (in thousands)
Net interest income $ 266,422 $ 68,828 $ 40,565 $ 33,630 $ 23,504
Provision for (recovery of) credit losses 3,803 103 (62) (189) 218
Net interest income (expense) after provision for credit losses 262,619 68,725 40,627 33,819 23,286
Non-interest income 19,441 1,821 2,677 1,079 1,917
Non-interest expense (126,152) (27,241) (15,211) (15,185) (12,379)
Income (loss) before income taxes 155,908 43,305 28,093 19,713 12,824
Income tax expense (benefit) 28,533 10,826 5,899 5,520 3,591
Net income $ 127,375 $ 32,479 $ 22,194 $ 14,193 $ 9,233

Nine Months Ended September 30, 2019 (in thousands)
Net interest income $ 768,439 $ 183,772 $ 119,191 $ 95,751 $ 70,533
Provision for (recovery of) credit losses 15,303 1,705 166 611 (653)
Net interest income (expense) after provision for credit losses 753,136 182,067 119,025 95,140 71,186
Non-interest income 49,069 5,050 7,926 3,054 6,299
Non-interest expense (352,279) (72,183) (45,099) (44,890) (38,419)
Income (loss) before income taxes 449,926 114,934 81,852 53,304 39,066
Income tax expense (benefit) 78,819 28,733 17,189 14,925 10,939
Net income $ 371,107 $ 86,201 $ 64,663 $ 38,379 $ 28,127

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National Business Lines
Balance Sheet: HOA
Services Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance Other NBLs Corporate & Other
At December 31, 2019
Assets: (in millions)
Cash, cash equivalents, and investment securities $ 0 $ 0 $ 0 $ 0 $ 10.1 $ 4,445.8
Loans, net of deferred loan fees and costs 237.2 1,635.6 1,552.0 1,930.8 6,098.7 3.5
Less: allowance for credit losses (2.0) (13.7) (12.6) (12.6) (49.3) 0
Total loans 235.2 1,621.9 1,539.4 1,918.2 6,049.4 3.5
Other assets acquired through foreclosure, net 0 0 0 0 0 0
Goodwill and other intangible assets, net 0 0 119.7 0.1 0 0
Other assets 1.2 18.3 7.3 8.8 64.3 841.0
Total assets $ 236.4 $ 1,640.2 $ 1,666.4 $ 1,927.1 $ 6,123.8 $ 5,290.3
Liabilities:
Deposits $ 3,210.1 $ 0.1 $ 3,771.5 $ 0 $ 36.9 $ 1,084.2
Borrowings and qualifying debt 0 0 0 0 0 393.6
Other liabilities 1.8 52.9 0.1 0 2.8 510.7
Total liabilities 3,211.9 53.0 3,771.6 0 39.7 1,988.5
Allocated equity: 84.5 131.6 317.5 158.5 494.3 509.9
Total liabilities and stockholders' equity $ 3,296.4 $ 184.6 $ 4,089.1 $ 158.5 $ 534.0 $ 2,498.4
Excess funds provided (used) 3,060.0 (1,455.6) 2,422.7 (1,768.6) (5,589.8) (2,791.9)

Income Statement:
Three Months Ended September 30, 2019 (in thousands)
Net interest income (expense) $ 21,974 $ 3,394 $ 33,932 $ 12,845 $ 32,935 $ (5,185)
Provision for (recovery of) credit losses 60 (191) 895 1,956 1,210 (197)
Net interest income (expense) after provision for credit losses 21,914 3,585 33,037 10,889 31,725 (4,988)
Non-interest income 84 0 5,422 0 1,708 4,733
Non-interest expense (9,769) (1,845) (12,068) (2,197) (11,320) (18,937)
Income (loss) before income taxes 12,229 1,740 26,391 8,692 22,113 (19,192)
Income tax expense (benefit) 2,813 400 6,070 1,999 5,086 (13,671)
Net income $ 9,416 $ 1,340 $ 20,321 $ 6,693 $ 17,027 $ (5,521)

Nine Months Ended September 30, 2019 (in thousands)
Net interest income $ 64,520 $ 10,278 $ 91,871 $ 39,279 $ 88,212 $ 5,032
Provision for (recovery of) credit losses 27 (136) 2,635 3,587 6,558 803
Net interest income (expense) after provision for credit losses 64,493 10,414 89,236 35,692 81,654 4,229
Non-interest income 268 0 10,946 0 3,915 11,611
Non-interest expense (27,777) (5,683) (33,971) (6,757) (31,729) (45,771)
Income (loss) before income taxes 36,984 4,731 66,211 28,935 53,840 (29,931)
Income tax expense (benefit) 8,506 1,088 15,229 6,655 12,383 (36,828)
Net income $ 28,478 $ 3,643 $ 50,982 $ 22,280 $ 41,457 $ 6,897

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14. REVENUE FROM CONTRACTS WITH CUSTOMERS

ASC 606, Revenue from Contracts with Customers, requires revenue to be recognized at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to a customer. ASC 606 applies to all contracts with customers to provide goods or services in the ordinary course of business, except for contracts that are specifically excluded from its scope. The majority of the Company’s revenue streams including interest income, credit and debit card fees, income from equity investments including warrants and SBIC equity income, income from bank owned life insurance, foreign currency income, and lending related income ~~and gains and losses on sales of investment securities~~ are outside the scope of ASC 606. Revenue streams including service charges and fees, interchange fees on credit and debit cards, and success fees are within the scope of ASC 606.

Disaggregation of Revenue

The following table represents a disaggregation of revenue from contracts with customers for the periods indicated along with the reportable segment for each revenue category:

Regional Segments
Consolidated Company Arizona Nevada Southern California Northern California
Three Months Ended September 30, 2020 (in thousands)
Revenue from contracts with customers:
Service charges and fees $ 5,913 $ 1,188 $ 1,826 $ 889 $ 930
Debit and credit card interchange (1) 1,597 426 306 167 686
Success fees (2) 38 0 0 0 0
Other income 69 8 6 (1) 18
Total revenue from contracts with customers $ 7,617 $ 1,622 $ 2,138 $ 1,055 $ 1,634
Revenues outside the scope of ASC 606 (3) 12,989 149 253 131 747
Total non-interest income $ 20,606 $ 1,771 $ 2,391 $ 1,186 $ 2,381


				Regional Segments									Consolidated Company		Commercial		Consumer Related		Corporate & Other
		Consolidated Company		Arizona		Nevada		Southern California		Northern California
Nine Months Ended September 30, 2020		(in thousands)
Three Months Ended March 31, 2021												Three Months Ended March 31, 2021	(in millions)
Revenue from contracts with customers:	Revenue from contracts with customers:											Revenue from contracts with customers:
Service charges and fees	Service charges and fees	$	17,447	$	3,525	$	5,572	$	2,466	$	2,863	Service charges and fees	$	6.7	$	6.2	$	0.5	$	0
Debit and credit card interchange (1)	Debit and credit card interchange (1)	3,942		990		770		401		1,754		Debit and credit card interchange (1)	1.3		1.3		0		0
Success fees (2)	Success fees (2)	423		0		0		0		144		Success fees (2)	1.0		1.0		0		0
Other income	Other income	231		20		15		(6)		59		Other income	0.2		0.2		0		0
Total revenue from contracts with customers	Total revenue from contracts with customers	$	22,043	$	4,535	$	6,357	$	2,861	$	4,820	Total revenue from contracts with customers	$	9.2	$	8.7	$	0.5	$	0
Revenues outside the scope of ASC 606 (3)	Revenues outside the scope of ASC 606 (3)	24,942		408		998		408		1,630		Revenues outside the scope of ASC 606 (3)	10.5		10.5		0		0
Total non-interest income	Total non-interest income	$	46,985	$	4,943	$	7,355	$	3,269	$	6,450	Total non-interest income	$	19.7	$	19.2	$	0.5	$	0


	Consolidated Company		Commercial		Consumer Related		Corporate & Other
Three Months Ended March 31, 2020	(in millions)
Revenue from contracts with customers:
Service charges and fees	$	6.4	$	6.0	$	0.4	$	0
Debit and credit card interchange (1)	1.4		1.4		0		0
Success fees (2)	0.1		0.1		0		0
Other income	0.1		0.1		0		0
Total revenue from contracts with customers	$	8.0	$	7.6	$	0.4	$	0
Revenues outside the scope of ASC 606 (3)	(2.9)		3.8		0		(6.7)
Total non-interest income	$	5.1	$	11.4	$	0.4	$	(6.7)

(1)Included as part of Card income in the Consolidated Income Statement.

(2)Included as part of Income from equity investments in the Consolidated Income Statement.

(3)Amounts are accounted for under separate guidance. Refer to discussion of revenue sources not subject to ASC 606 under the Non-interest income section in "Note 1. Summary of Significant Accounting Policies."

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National Business Lines
HOA
Services Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance Other NBLs Corporate & Other
Three Months Ended September 30, 2020 (in thousands)
Revenue from contracts with customers:
Service charges and fees $ 114 $ 0 $ 963 $ 0 $ 3 $ 0
Debit and credit card interchange (1) 12 0 0 0 0 0
Success fees (2) 0 0 38 0 0 0
Other income 2 0 0 0 35 1
Total revenue from contracts with customers $ 128 $ 0 $ 1,001 $ 0 $ 38 $ 1
Revenues outside the scope of ASC 606 (3) 6 0 2,125 0 2,886 6,692
Total non-interest income $ 134 $ 0 $ 3,126 $ 0 $ 2,924 $ 6,693

National Business Lines
HOA
Services Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance Other NBLs Corporate & Other
Nine Months Ended September 30, 2020 (in thousands)
Revenue from contracts with customers:
Service charges and fees $ 308 $ 0 $ 2,707 $ 0 $ 6 $ 0
Debit and credit card interchange (1) 27 0 0 0 0 0
Success fees (2) 0 0 279 0 0 0
Other income 4 0 0 0 125 14
Total revenue from contracts with customers $ 339 $ 0 $ 2,986 $ 0 $ 131 $ 14
Revenues outside the scope of ASC 606 (3) 11 0 6,261 0 3,977 11,249
Total non-interest income $ 350 $ 0 $ 9,247 $ 0 $ 4,108 $ 11,263

~~(1)Included as part of Card income in the Consolidated Income Statement.~~

~~(2)Included as part of Income from equity investments in the Consolidated Income Statement.~~

~~(3)~~Amounts are accounted for under separate guidance. Refer to discussion of revenue sources not subject to ASC 606 under the Non-interest income section in "Note 1. Summary of Significant Accounting Policies."

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Regional Segments
Consolidated Company Arizona Nevada Southern California Northern California
Three Months Ended September 30, 2019 (in thousands)
Revenue from contracts with customers:
Service charges and fees $ 5,888 $ 1,226 $ 2,036 $ 770 $ 965
Debit and credit card interchange (1) 1,977 451 440 229 845
Success fees (2) 605 0 0 0 0
Other income 80 8 14 4 19
Total revenue from contracts with customers $ 8,550 $ 1,685 $ 2,490 $ 1,003 $ 1,829
Revenues outside the scope of ASC 606 (3) 10,891 136 187 76 88
Total non-interest income $ 19,441 $ 1,821 $ 2,677 $ 1,079 $ 1,917

Regional Segments
Consolidated Company Arizona Nevada Southern California Northern California
Nine Months Ended September 30, 2019 (in thousands)
Revenue from contracts with customers:
Service charges and fees $ 17,121 $ 3,525 $ 5,980 $ 2,218 $ 2,821
Debit and credit card interchange (1) 5,830 1,125 1,200 596 2,878
Success fees (2) 1,125 0 0 0 0
Other income 187 8 8 6 43
Total revenue from contracts with customers $ 24,263 $ 4,658 $ 7,188 $ 2,820 $ 5,742
Revenues outside the scope of ASC 606 (3) 24,806 392 738 234 557
Total non-interest income $ 49,069 $ 5,050 $ 7,926 $ 3,054 $ 6,299

National Business Lines
HOA
Services Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance Other NBLs Corporate & Other
Three Months Ended September 30, 2019 (in thousands)
Revenue from contracts with customers:
Service charges and fees $ 77 $ 0 $ 813 $ 0 $ 1 $ 0
Debit and credit card interchange (1) 12 0 0 0 0 0
Success fees (2) 0 0 605 0 0 0
Other income (3) 0 0 0 35 3
Total revenue from contracts with customers $ 86 $ 0 $ 1,418 $ 0 $ 36 $ 3
Revenues outside the scope of ASC 606 (3) (2) 0 4,004 0 1,672 4,730
Total non-interest income $ 84 $ 0 $ 5,422 $ 0 $ 1,708 $ 4,733

National Business Lines
HOA Services Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance Other NBLs Corporate & Other
Nine Months Ended September 30, 2019 (in thousands)
Revenue from contracts with customers:
Service charges and fees $ 241 $ 0 $ 2,333 $ 0 $ 3 $ 0
Debit and credit card interchange (1) 31 0 0 0 0 0
Success fees (2) 0 0 1,125 0 0 0
Other income 2 0 4 0 109 7
Total revenue from contracts with customers $ 274 $ 0 $ 3,462 $ 0 $ 112 $ 7
Revenues outside the scope of ASC 606 (3) (6) 0 7,484 0 3,803 11,604
Total non-interest income $ 268 $ 0 $ 10,946 $ 0 $ 3,915 $ 11,611

~~(1)Included as part of Card income in the Consolidated Income Statement.~~

~~(2)Included as part of Income from equity investments in the Consolidated Income Statement.~~

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Performance Obligations

Many of the services the Company performs for its customers are ongoing, and either party may cancel at any time. The fees for these contracts are dependent upon various underlying factors, such as customer deposit balances, and as such may be considered variable. The Company’s performance obligations for these services are satisfied as the services are rendered and payment is collected on a monthly, quarterly, or semi-annual basis. Other contracts with customers are for services to be provided at a point in time, and fees are recognized at the time such services are rendered. The Company had no material unsatisfied performance obligations as of ~~September 30, 2020.~~March 31, 2021. The revenue streams within the scope of ASC 606 are described in further detail below.

Service Charges and Fees

The Company performs deposit account services for its customers, which include analysis and treasury management services, use of safe deposit boxes, check upcharges, and other ancillary services. The depository arrangements the Company holds with its customers are considered day-to-day contracts with ongoing renewals and optional purchases, and as such, the contract duration does not extend beyond the services performed. Due to the short-term nature of such contracts, the Company generally recognizes revenue for deposit related fees as services are rendered. From time to time, the Company may waive certain fees for

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its customers. The Company considers historical experience when recognizing revenue from contracts with customers, and may reduce the transaction price to account for fee waivers or refunds.

Debit and Credit Card Interchange

When a credit or debit card issued by the Company is used to purchase goods or services from a merchant, the Company earns an interchange fee. The Company considers the merchant its customer in these transactions as the Company provides the merchant with the service of enabling the cardholder to purchase the merchant’s goods or services with increased convenience, and it enables the merchants to transact with a class of customer that may not have access to sufficient funds at the time of purchase. The Company acts as an agent to the payment network by providing nightly settlement services between the network and the merchant. This transmission of data and funds represents the Company’s performance obligation and is performed nightly. As the payment network is in direct control of setting the rates and the Company is acting as an agent, the interchange fee is recorded net of expenses as the services are provided.

Success Fees

Success fees are one-time fees detailed as part of certain loan agreements and are earned immediately upon occurrence of a triggering event. Examples of triggering events include: a borrower obtaining its next round of funding, an acquisition, or completion of a public offering. Success fees are variable consideration as the transaction price can vary and is contingent on the occurrence or non-occurrence of a future event. As the consideration is highly susceptible to factors outside of the Company’s influence and uncertainty about the amount of consideration is not expected to be resolved for an extended period of time, the variable consideration is constrained and is not recognized until the achievement of the triggering event.

Principal versus Agent Considerations

When more than one party is involved in providing goods or services to a customer, ASC 606 requires the Company to determine whether it is the principal or an agent in these transactions by evaluating the nature of its promise to the customer. An entity is a principal and therefore records revenue on a gross basis, if it controls a promised good or service before transferring that good or service to the customer. An entity is an agent and records as revenue the net amount it retains for its agency services if its role is to arrange for another entity to provide the goods or services. The Company most commonly acts as a principal and records revenue on a gross basis, except in certain circumstances. As an example, revenues earned from interchange fees, in which the Company acts as an agent, are recorded as non-interest income, net of the related expenses paid to the principal.

Contract Balances

The timing of revenue recognition may differ from the timing of cash settlements or invoicing to customers. The Company records contract liabilities, or deferred revenue, when payments from customers are received or due in advance of providing services to customers. The Company generally receives payments for its services during the period or at the time services are provided, therefore, does not have material contract liability balances at period-end. The Company records contract assets or receivables when revenue is recognized prior to receipt of cash from the customer. Accounts receivable totals ~~$1.5~~$1.7 million and $1.6 million ~~at each~~as of ~~the periods ended September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively, and are presented in Other assets on the Consolidated Balance Sheets.

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15. SUBSEQUENT EVENTS

On April 7, 2021, the Company completed its previously announced acquisition of Aris, the parent company of AHM, and certain other parties, pursuant to which, Aris merged with and into an indirect subsidiary of WAB. As a result of the Merger, AHM is now a wholly-owned indirect subsidiary of the Company and will continue to operate as AmeriHome Mortgage, a Western Alliance Bank company. AHM is a leading national business to business mortgage acquirer and servicer. The acquisition of AHM is expected to extend the Company’s national commercial businesses with a complementary national mortgage franchise that will allow the Company to expand mortgage offerings to existing clients. In addition, this acquisition positions the Company for continued growth, increased returns, and diversifies the Company’s revenue profile by expanding sources of fee revenue.

Based on AHM's closing balance sheet and a $275 million cash premium, total consideration was approximately $1.22 billion. This transaction will be accounted for as a business combination under the acquisition method of accounting. The Company will record the assets acquired and liabilities assumed at their fair values as of the acquisition date. Due to the limited time since the closing of the acquisition, the valuation efforts and related acquisition accounting are incomplete at the time of filing of these consolidated financial statements. As a result, the Company is unable to provide amounts recognized as of the acquisition date for major classes of assets and liabilities acquired, including goodwill and other intangible assets. In addition, because the acquisition accounting is incomplete, the Company is also unable to provide the supplemental pro forma revenue and earnings for the combined entity. The Company expects to file all required financial statements of AHM and related pro forma financial information through an amendment to its Form 8-K filed with the SEC on April 7, 2021 no later than 71 days following the date that such 8-K was required to be filed.

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Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations.

This discussion is designed to provide insight into management's assessment of significant trends related to the Company's consolidated financial condition, results of operations, liquidity, capital resources, and interest rate sensitivity. This Quarterly Report on Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 and the interim Unaudited Consolidated Financial Statements and Notes to Unaudited Consolidated Financial Statements hereto and financial information appearing elsewhere in this report. Unless the context requires otherwise, the terms "Company," "we," and "our" refer to Western Alliance Bancorporation and its wholly-owned subsidiaries on a consolidated basis.

Forward-Looking Information

Certain statements contained in this Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2020~~March 31, 2021 are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, 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.

The forward-looking statements contained in this Form 10-Q 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, including those risks discussed under the heading “Risk Factors” in this Form 10-Q. Risks and uncertainties include those set forth in the Company's filings with the SEC and the following factors that could cause actual results to differ materially from those presented: 1) ability to successfully integrate and operate AHM; 2) the potential adverse effects of the ongoing COVID-19 pandemic and any governmental or societal responses thereto, including legislative or regulatory changes such as the CARES ~~Act; 2)~~Act as well as the distribution and effectiveness of COVID-19 vaccines; 3) other financial market and economic conditions adversely effecting financial performance; 3)4) dependency on real estate and events that negatively impact the real estate market; 4)5) high concentration of commercial real estate and commercial and industrial loans; ~~5) actual credit losses may exceed expected losses in~~6) the ~~loan portfolio; 6) recent changes to FASB~~inherent risk associated with accounting ~~standards,~~estimates, including the impact to the Company's allowance, ~~and~~ provision for credit losses, and capital levels under the ~~new~~ CECL accounting standard; 7) results of any tax audit findings, challenges to the Company's tax positions, or adverse changes or interpretations of tax laws; 8) the geographic concentrations of the Company's assets increase the risks related to local economic conditions; 9) ~~exposure of financial instruments~~the Company's ability to ~~certain market risks may increase the volatility of earnings and AOCI;~~compete in a highly competitive market; 10) dependence on low-cost deposits; 11) ability to borrow from the FHLB or the FRB; 12) exposure to environmental liabilities related to the properties to which the Company acquires title; 13) perpetration of fraud; ~~13)~~14) information security breaches; ~~14)~~15) reliance on third parties to provide key components of the Company's infrastructure; ~~15)~~16) a change in the Company's creditworthiness; ~~16)~~17) the Company's ability to implement and improve its controls and processes to keep pace with its growth; ~~17)~~18) expansion strategies may not be successful; ~~18)~~19) risks associated with new lines of businesses or new products and services within existing lines of business; ~~19) the Company's ability to compete in a highly competitive market;~~ 20) the Company's ability to recruit and retain qualified employees and implement adequate succession planning to mitigate the loss of key members of its senior management team; 21) inadequate or ineffective risk management practices and internal controls and procedures; 22) the Company's ability to adapt to technological change; 23) exposure to natural and man-made disasters in markets that the Company operates; 24) risk of operating in a highly regulated industry and the Company's ability to remain in compliance; 25) failure to comply with state and federal banking agency laws and regulations; 26) exposure of financial instruments to certain market risks may increase the volatility of earnings and AOCI; 27) uncertainty about the future of LIBOR, changes in interest rates, and increased rate competition; ~~27) exposure to environmental liabilities related to the properties to which the Company acquires title;~~ and 28) risks related to ownership and price of the Company's common stock.

For more information regarding risks that may cause the Company's actual results to differ materially from any forward-looking statements, see “Risk Factors” in Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

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Recent Developments: Closing of AHM Acquisition

On April 7, 2021, the Company completed its previously announced acquisition of Aris, the parent company of AHM, pursuant to which, Aris merged with and into an indirect subsidiary of WAB. Based on AHM's closing balance sheet and a $275 million cash premium, total consideration was approximately $1.22 billion. As a result of the Merger, AHM is now a wholly-owned indirect subsidiary of the Company and will continue to operate as AmeriHome Mortgage, a Western Alliance Bank company. AHM is a leading national business to business mortgage acquirer and servicer. The acquisition of AHM is expected to extend the Company’s national commercial businesses with a complementary national mortgage franchise that will allow the Company to expand mortgage offerings to existing clients. In addition, this acquisition positions the Company for continued growth, increased returns, and diversifies the Company’s revenue profile by expanding sources of fee revenue.

Recent Developments: COVID-19 and the CARES Act

The ongoing COVID-19 global and national health emergency has caused significant disruption in the United States and international economies and financial markets. The spread of COVID-19 in the United States has caused illness, quarantines, cancellation of events and travel, business and school shutdowns, reduction in commercial activity and financial transactions, supply chain interruptions, increased unemployment, and overall economic and financial market instability. Many states, including Arizona, where we are headquartered, and California and Nevada, in which we have significant operations, declared states of emergency. These states, like many others, continue to be significantly impacted by the pandemic.

~~In response to the~~ COVID-19 pandemic the CARES Act was signed into law by President Trump on March 27, 2020. The CARES Act provides for approximately $2.2 trillion in emergency economic relief measures including, among other things, loan programs for small and mid-sized businesses and other economic relief for impacted businesses and industries, including financial institutions. Separately, and also in response to COVID-19, the Federal Reserve’s FOMC has set the federal funds target rate - i.e., the interest rate at which depository institutions such as the Bank lend reserve balances to other depository institutions overnight on an uncollateralized basis - to a historic low. On March 16, 2020, the FOMC set the federal funds target rate at 0 to 0.25 percent.

~~In addition to the general impact of the COVID-19 pandemic,~~ certain provisions of the CARES Act and other recent legislative and regulatory relief efforts have had and are expected to continue to have a material impact on ~~our~~the Company's operations, ~~which are~~as further discussed below.

Financial position and results of operations

The ~~Company's financial position and results of operations as of and~~continued improved outlook for the ~~three and nine months ended September 30, 2020 have been significantly impacted by the COVID-19 pandemic. The worsening of forecasted economic conditions~~overall economy from December 31, ~~2019 to September 30,~~ 2020 ~~attributable to the pandemic contributed to the $14.7~~resulted in a release of $32.4 million ~~and $157.8 million provision for~~in credit ~~losses recognized~~loss provisions during the three ~~and nine~~ months ended ~~September 30, 2020, respectively, under the new CECL accounting standard adopted by the Company on January 1, 2020.~~March 31, 2021. While the Company has not to date experienced significant ~~writeoffs~~write-offs related to the COVID-19 pandemic, the ~~continued uncertainty regarding the severity and duration of the pandemic and related economic effects will continue~~Company is continuing to ~~affect the Company’s estimate of~~closely monitor its allowance for credit losses and resulting provision for credit losses. To the extent the impact of the pandemic is prolonged and economic conditions continue to worsen or persist longer than forecast, such estimates may be insufficient and may change significantlyloans with borrowers in ~~the future. The Company’s interest income also may be negatively~~COVID-19 impacted in future periods as we continue to work with our affected borrowers to defer payments, interest and fees. Additionally, net interest margin may be reduced generally as a result of the low rate environment. These uncertainties and the economic environment will continue to affect earnings, slow growth, and may result in deterioration of asset quality in the Company's loan and investment portfolios. industries.

The below table details the Company's exposure to borrowers in industries generally considered to be the most impacted by the COVID-19 pandemic:


		September 30, 2020						March 31, 2021
		Business Segment(s)	Loan Balance		Percent of Total Loan Portfolio			Loan Balance		Percent of Total Loan Portfolio
			(dollars in millions)					(dollars in millions)
Industry (1):	Industry (1):						Industry (1):
Hotel	Hotel	HFF	$	2,099.3	8.1	%	Hotel	$	2,282.6	7.9	%
Investor dependent	Investor dependent	Tech & Innovation	1,335.0		5.1		Investor dependent	1,141.1		4.0
Retail (2)	Retail (2)	Regional segments	674.0		2.6		Retail (2)	697.5		2.4
Gaming	Gaming	Nevada segment	510.2		2.0		Gaming	569.9		2.0
Total	Total		$	4,618.5	17.8	%	Total	$	4,691.1	16.3	%

(1)Balances capture credit exposures in the business segments that manage the significant majority of industry relationships.

(2)Consists of real estate secured loan amounts that have significant retail dependency.

~~While~~Although the Company has not experienced disproportionate impacts among its business segments to date, borrowers in the industries detailed in the table above could have greater sensitivity to the economic downturn with potentially longer recovery periods than other business lines.

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Lending operations and accommodations to borrowers

The ~~CARES Act created~~original PPP terminated on August 8, 2020, but was reopened in January 2021, with $284 billion in additional funding. As part of the resumption of the program, significant clarifications and modifications were made related to the scope of businesses eligible, expansion of the scope of expenses eligible for forgiveness, and simplification of forgiveness mechanisms for loans of $150,000 or less. Eligible businesses were able to apply for and receive PPP loans through May 31, 2021 and certain small businesses that previously received a ~~new guaranteed, unsecured~~ loan ~~program~~ under the ~~SBA, called the Payroll Protection Program, or the PPP, which the Bank participates in,~~original program were eligible to fund operational costs of eligible businesses, organizations and self-employed persons during the pandemic period. The SBA has used funds authorized for the PPP to guarantee 100% of the amounts loaned under the PPP by lenders to eligible small businesses, nonprofits, veterans' organizations, and tribal businesses. One of the notable features of the PPP is that borrowers are eligible for loan forgiveness if borrowers maintain their staff and payroll and if loan amounts are used to cover eligible expenses, such as payroll, mortgage interest, rents and utilities payments.obtain an additional loan. These loans have a ~~two-year~~five-year term and ~~will~~ earn interest at a rate of 1%. ~~The~~During the three months ended, March 31, 2021, the Company ~~assisted our customers with applications for resources through~~funded $560 million in loans under the ~~program~~second round of the PPP and ~~approved over 4,700 applications.~~received $478.7 million in loan payoffs on the first round of PPP loans. As of ~~September 30, 2020,~~March 31, 2021, the outstanding balance of loans originated under the first and second round of the PPP totaled ~~$1.7~~$1.5 billion.

The CARES Act ~~permits~~permitted financial institutions to suspend requirements under GAAP for loan modifications to borrowers affected by COVID-19 and ~~is intended to provide~~provided interpretive guidance as to conditions that would constitute a short-term modification that would not meet the definition of a TDR. This ~~includes~~included the following (i) the loan modification iswas made between March 1, 2020 and ~~the earlier of~~ December 31, 2020 ~~or 60 days after the end of the coronavirus emergency declaration,~~ and (ii) the applicable loan was not more than 30 days past due as of December 31, 2019. The Consolidated Appropriations Act, 2021, signed into law on December 27, 2020, extends these provisions through January 1, 2022. The Company is applying this guidance to qualifying loan modifications. The types of loan modifications granted to borrowers included extensions of loan maturity dates, covenant waivers, interest only payments for a specified period of time,

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and loan payment deferrals. As of ~~September 30, 2020,~~March 31, 2021, the Company has outstanding modifications ~~meeting~~on loans that met these conditions ~~on loans~~ with a net balance of ~~$1.5 billion as~~$271.4 million, of ~~September 30, 2020.~~which, modifications involving loan payment deferrals total $68.5 million. Further, residential mortgage loans in forbearance have a net balance of ~~$127.3~~$65.0 million as of ~~September 30, 2020.~~

The MSLP supports lending to small and medium-sized businesses that were in sound financial condition before the onset of the COVID-19 pandemic. The MSLP operates through five facilities: the Main Street New Loan Facility, the Main Street Priority Loan Facility, the Main Street Expanded Loan Facility, the Nonprofit Organization New Loan Facility, and the Nonprofit Organization Expanded Loan Facility. The Federal Reserve Bank of Boston maintains the legal forms and agreements for eligible borrowers and eligible lenders to participate in the MSLP, and continues to refine the MSLP’s operational infrastructure and facilities. The Bank has registered as a lender under the MSLP and continues to monitor developments related thereto.

~~Capital and liquidity~~

While the Company has sufficient capital and does not anticipate any need for additional liquidity in response to the uncertainty regarding the severity and duration of the COVID-19 pandemic, the Company has taken several actions to ensure the strength of its capital and liquidity position. These actions include issuance of $225 million in subordinated debt at our bank subsidiary in May 2020, establishing a Federal Reserve lending facility in connection with funding loans to small and medium-sized businesses, and temporarily suspending stock repurchases since mid-April. In addition, the Company is also in a position to pledge additional collateral to increase its borrowing capacity with the FRB, if necessary. Further, management has elected to take advantage of the capital relief option that delays the estimated impact on regulatory capital by up to two years, with a three-year transition period to phase out the cumulative benefit to regulatory capital provided during the two-year delay.

~~Asset valuation~~

While the Company’s stock price has experienced volatility and periodic declines in value during the pandemic, management does not consider this decline to be a triggering event that would indicate that an interim goodwill impairment test was necessary as of September 30, 2020. Continued and sustained declines in the Company's stock price and/or other credit related impacts could give rise to triggering events in the future that could result in a write-down in the value of our goodwill, which could have a material adverse impact on our results of operations.

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~~Our processes, controls and business continuity plan~~

The Company has focused first on ensuring the well-being of our people, customers, and communities. Preventive health measures were put in place, which included establishing social distancing precautions for all employees in the office and customers visiting branches, preventive cleaning at offices and branches, and elimination of business related travel. The Company has continued returning employees to the office subject to applicable health and safety procedures in accordance with guidance from the CDC and local authorities, including regular symptom checks, requiring face cloth coverings, increasing physical space between employees, monitoring the number of employees in the workplace, and requiring employees with COVID-19 related symptoms or exposure to quarantine away from the office.

The Company has also concentrated on implementing additional business continuity measures that include establishing a cross-functional COVID-19 team, monitoring potential business interruptions, making improvements to our remote working technology, and conducting regular discussions with our technology vendors. We have not experienced significant disruption to our business as we have been able to facilitate remote work for our employees and have online tools in place for our customers. We believe that we are positioned to continue these business continuity measures for the foreseeable future; however, no assurances can be provided as these circumstances may change depending on the duration of the pandemic.March 31, 2021.

Included at the end of this section are updates to the Supervision and Regulation discussion disclosed in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.

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Financial Overview and Highlights

WAB operates the following full-service banking divisions: ABA, BON and FIB, Bridge, and TPB. The Company also ~~serves business customers through a national platform~~provides an array of specialized financial ~~services.~~services to its business customers across the country.

Financial Results Highlights for the ~~Third~~First Quarter of ~~2020~~2021

•Net income of ~~$135.8~~$192.5 million, compared to ~~$127.4~~$83.9 million for the ~~third~~first quarter ~~2019~~2020

•Diluted earnings per share of ~~$1.36,~~$1.90, compared to ~~$1.24~~$0.83 per share for the ~~third~~first quarter ~~2019~~2020

•Total loans of ~~$26.0~~$28.7 billion, up ~~$984.6 million from June 30, 2020, and $4.9~~$1.7 billion from December 31, ~~2019~~2020

•Total deposits of ~~$28.8~~$38.4 billion, up ~~$1.3 billion from June 30, 2020, and $6.0~~$6.5 billion from December 31, ~~2019~~2020

•Net interest margin of ~~3.71%~~3.37%, compared to ~~4.41%~~4.22% in the ~~third~~first quarter ~~2019~~2020

•Net revenue of ~~$305.3~~$337.0 million, an increase of ~~6.8%~~22.9%, or ~~$19.5~~$62.9 million, compared to the ~~third~~first quarter ~~2019,~~2020, with non-interest expense ~~decrease~~increase of ~~1.6%~~12.0%, or ~~$2.1~~$14.5 million, compared to the ~~third~~first quarter ~~2019~~2020

•PPNR of ~~$181.3~~$202.0 million, up ~~13.5%~~31.5% from ~~$159.7~~$153.6 million in the ~~third~~first quarter ~~2019~~20201

•Efficiency ratio of ~~39.7%~~39.1% in the ~~third~~first quarter ~~2020,~~2021, compared to ~~43.2%~~42.9% in the ~~third~~first quarter ~~2019~~20201

•Nonperforming assets (nonaccrual loans and repossessed assets) ~~increased~~decreased to ~~0.47%~~0.27% of total assets, from ~~0.25%~~0.33% at ~~September 30, 2019~~March 31, 2020

•Annualized net loan charge-offs to average loans outstanding of ~~0.13%~~0.02%, compared to net loan recoveries to average loans outstanding of ~~0.01%~~(0.06)% for the ~~third~~first quarter ~~2019~~2020

•Tangible common equity ratio of ~~8.9%~~7.9%, compared to ~~10.1%~~9.4% at ~~September 30, 2019~~March 31, 20201

•Stockholders' equity of ~~$3.2~~$3.7 billion, an increase of ~~$121.6 million from June 30, 2020 and $207.3~~$299.2 million from December 31, ~~2019~~2020

•Book value per common share of ~~$31.98,~~$35.89, an increase of ~~12.3%~~21.0% from ~~$28.48~~$29.65 at ~~September 30, 2019~~March 31, 2020

•Tangible book value per share, net of tax, of ~~$29.03,~~$33.02, an increase of ~~$3.43~~$6.29 from ~~$25.60~~$26.73 at ~~September 30, 2019~~March 31, 20201

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 three ~~and nine~~ months ended ~~September 30, 2020.~~March 31, 2021.

1 See Non-GAAP Financial Measures section beginning on page ~~74.~~65.

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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:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2020			2019			2020			2019				2021			2020
		(in thousands, except per share amounts)													(in millions, except per share amounts)
Net income	Net income	$	135,769		$	127,375		$	313,005		$	371,107		Net income	$	192.5		$	83.9
Earnings per share - basic	Earnings per share - basic	1.36			1.25			3.12			3.60			Earnings per share - basic	1.91			0.83
Earnings per share - diluted	Earnings per share - diluted	1.36			1.24			3.11			3.59			Earnings per share - diluted	1.90			0.83
Return on average assets	Return on average assets	1.66		%	1.94		%	1.38		%	2.03		%	Return on average assets	1.93		%	1.22		%
Return on average tangible common equity (1)	Return on average tangible common equity (1)	18.73			19.41			14.90			19.86			Return on average tangible common equity (1)	24.2			12.2
Net interest margin	Net interest margin	3.71			4.41			4.03			4.56			Net interest margin	3.37			4.22

(1) See Non-GAAP Financial Measures section beginning on page ~~74.~~65.


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(in thousands)					(in millions)
Total assets	Total assets	$	33,335,506	$	26,821,948	Total assets	$	43,397.0	$	36,461.0
Total loans, net of deferred loan fees and costs	Total loans, net of deferred loan fees and costs	26,014,018		21,123,296		Total loans, net of deferred loan fees and costs	28,711.0		27,053.0
Total deposits	Total deposits	28,843,396		22,796,493		Total deposits	38,393.1		31,930.5

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 nonaccrual 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:


		September 30, 2020			December 31, 2019				March 31, 2021			December 31, 2020
		(dollars in thousands)							(dollars in millions)
Non-accrual loans (1)		$	146,472		$	55,968
Nonaccrual loans								Nonaccrual loans	$	113.6		$	115.2
Non-performing assets	Non-performing assets	212,384			98,174			Non-performing assets	150.6			149.8
Non-accrual loans to gross loans		0.56		%	0.27		%
Nonaccrual loans to funded loans								Nonaccrual loans to funded loans	0.40		%	0.43		%
Net charge-offs to average loans outstanding ~~(2)~~(1)	Net charge-offs to average loans outstanding ~~(2)~~(1)	0.13			0.02			Net charge-offs to average loans outstanding ~~(2)~~(1)	0.02			0.06

(1)~~Includes non-accrual HFS loans of $20.8 million and zero at September 30, 2020 and December 31, 2019, respectively.~~

~~(2)~~Annualized on an actual/actual basis for the three months ended ~~September 30, 2020.~~March 31, 2021. Actual year-to-date for the year ended December 31, ~~2019.~~2020.

Asset and Deposit 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 ~~$33.3~~$43.4 billion at ~~September 30, 2020~~March 31, 2021 from ~~$26.8~~$36.5 billion at December 31, ~~2019.~~2020. The increase in total assets of ~~$6.5~~$6.9 billion, or ~~24.3%~~19.0%, relates primarily to an increase in cash and investment securities from continued deposit growth in addition to continued loan growth. Total loans increased by ~~$4.9~~$1.7 billion, or ~~23.2%~~6.1%, to ~~$26.0~~$28.7 billion as of ~~September 30, 2020,~~March 31, 2021, compared to ~~$21.1~~$27.1 billion as of December 31, ~~2019.~~2020. The increase in loans from December 31, ~~2019, which includes $1.7 billion in PPP loans,~~2020 was driven by increases in commercial and industrial loans of ~~$4.3 billion, with smaller increases in~~$746.3 million, residential real estate loans of $674.5 million, and construction and land development ~~residential real estate, and CRE, non-owner occupied~~ loans of ~~$348.3 million, $239.5 million, and $161.8 million, respectively.~~$336.5 million. These increases were partially offset by a decrease in CRE, owner occupied loans of ~~$103.4~~$104.8 million.

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Total deposits increased ~~$6.0~~$6.5 billion, or ~~26.5%~~20.2%, to ~~$28.8~~$38.4 billion as of ~~September 30, 2020~~March 31, 2021 from ~~$22.8~~$31.9 billion as of December 31, ~~2019.~~2020. The increase in deposits from December 31, ~~2019~~2020 was driven by an increase of ~~$4.5~~$4.1 billion in non-interest bearing demand deposits ~~$1.5~~and $2.9 billion in savings and money market ~~accounts, and interest bearing demand deposits of $793.8 million.~~accounts. These increases were offset in part by a decrease in ~~certificates~~interest bearing demand deposits of ~~deposit~~$503.0 million.

Table of ~~$676.1 million.~~Contents

RESULTS OF OPERATIONS

The following table sets forth a summary financial overview for the comparable periods:


		Three Months Ended September 30,				Increase		Nine Months Ended September 30,				Increase			Three Months Ended March 31,				Increase
		2020		2019		(Decrease)		2020		2019		(Decrease)			2021		2020		(Decrease)
		(in thousands, except per share amounts)													(in millions, except per share amounts)
Consolidated Income Statement Data:	Consolidated Income Statement Data:													Consolidated Income Statement Data:
Interest income	Interest income	$	304,843	$	315,608	$	(10,765)	$	930,297	$	909,624	$	20,673	Interest income	$	334.1	$	307.2	$	26.9
Interest expense	Interest expense	20,105		49,186		(29,081)		78,139		141,185		(63,046)		Interest expense	16.8		38.2		(21.4)
Net interest income	Net interest income	284,738		266,422		18,316		852,158		768,439		83,719		Net interest income	317.3		269.0		48.3
Provision for credit losses		14,661		3,803		10,858		157,837		15,303		142,534
Net interest income after provision for credit losses		270,077		262,619		7,458		694,321		753,136		(58,815)
(Recovery of) provision for credit losses														(Recovery of) provision for credit losses	(32.4)		51.2		(83.6)
Net interest income after (recovery of) provision for credit losses														Net interest income after (recovery of) provision for credit losses	349.7		217.8		131.9
Non-interest income	Non-interest income	20,606		19,441		1,165		46,985		49,069		(2,084)		Non-interest income	19.7		5.1		14.6
Non-interest expense	Non-interest expense	124,092		126,152		(2,060)		359,372		352,279		7,093		Non-interest expense	135.0		120.5		14.5
Income before provision for income taxes	Income before provision for income taxes	166,591		155,908		10,683		381,934		449,926		(67,992)		Income before provision for income taxes	234.4		102.4		132.0
Income tax expense	Income tax expense	30,822		28,533		2,289		68,929		78,819		(9,890)		Income tax expense	41.9		18.5		23.4
Net income	Net income	$	135,769	$	127,375	$	8,394	$	313,005	$	371,107	$	(58,102)	Net income	$	192.5	$	83.9	$	108.6
Earnings per share - basic	Earnings per share - basic	$	1.36	$	1.25	$	0.11	$	3.12	$	3.60	$	(0.48)	Earnings per share - basic	$	1.91	$	0.83	$	1.08
Earnings per share - diluted	Earnings per share - diluted	$	1.36	$	1.24	$	0.12	$	3.11	$	3.59	$	(0.47)	Earnings per share - diluted	$	1.90	$	0.83	$	1.07

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. 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. 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.

Pre-Provision Net Revenue

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 net interest income plus non-interest income less non-interest expense. Management believes that 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.

~~Table of Contents~~

The following table shows the components of PPNR for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~2019:~~2020:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
		(in thousands)									(in millions)
Net interest income										Net interest income	$	317.3	$	269.0
Total non-interest income	Total non-interest income	$	20,606	$	19,441	$	46,985	$	49,069	Total non-interest income	19.7		5.1
Net interest income		284,738		266,422		852,158		768,439
Net revenue	Net revenue	$	305,344	$	285,863	$	899,143	$	817,508	Net revenue	$	337.0	$	274.1
Total non-interest expense	Total non-interest expense	124,092		$	126,152	359,372		352,279		Total non-interest expense	135.0		120.5
Pre-provision net revenue	Pre-provision net revenue	$	181,252	$	159,711	$	539,771	$	465,229	Pre-provision net revenue	$	202.0	$	153.6
Less:	Less:									Less:
Provision for credit losses		14,661		3,803		157,837		15,303
(Recovery of) provision for credit losses										(Recovery of) provision for credit losses	(32.4)		51.2
Income tax expense	Income tax expense	30,822		28,533		68,929		78,819		Income tax expense	41.9		18.5
Net income	Net income	$	135,769	$	127,375	$	313,005	$	371,107	Net income	$	192.5	$	83.9

Table of Contents

Efficiency Ratio

The following table shows the components used in the calculation of the efficiency ratio, which management uses as a metric for assessing cost efficiency:

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(dollars in thousands)
Total non-interest expense $ 124,092 $ 126,152 $ 359,372 $ 352,279
Divided by:
Total net interest income 284,738 266,422 852,158 768,439
Plus:
Tax equivalent interest adjustment 7,188 6,423 20,638 18,736
Total non-interest income 20,606 19,441 46,985 49,069
$ 312,532 $ 292,286 $ 919,781 $ 836,244
Efficiency ratio - tax equivalent basis 39.7 % 43.2 % 39.1 % 42.1 %

~~Table of Contents~~


	Three Months Ended March 31,
	2021			2020
	(dollars in millions)
Total non-interest expense	$	135.0		$	120.5
Divided by:
Total net interest income	$	317.3		$	269.0
Plus:
Tax equivalent interest adjustment	8.0			6.5
Total non-interest income	19.7			5.1
	$	345.0		$	280.6
Efficiency ratio - tax equivalent basis	39.1		%	42.9		%

Tangible Common Equity

The following table presents financial measures related to tangible common equity. Tangible common equity represents total stockholders' equity, less identifiable intangible assets and goodwill. 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.


		September 30, 2020			December 31, 2019				March 31, 2021			December 31, 2020
		(dollars and shares in thousands)							(dollars and shares in millions)
Total stockholders' equity	Total stockholders' equity	$	3,224,046		$	3,016,748		Total stockholders' equity	$	3,712.7		$	3,413.5
Less: goodwill and intangible assets	Less: goodwill and intangible assets	298,987			297,608			Less: goodwill and intangible assets	298.0			298.5
Total tangible stockholders' equity	Total tangible stockholders' equity	2,925,059			2,719,140			Total tangible stockholders' equity	3,414.7			3,115.0
Plus: deferred tax - attributed to intangible assets	Plus: deferred tax - attributed to intangible assets	1,689			1,921			Plus: deferred tax - attributed to intangible assets	1.4			1.6
Total tangible common equity, net of tax	Total tangible common equity, net of tax	$	2,926,748		$	2,721,061		Total tangible common equity, net of tax	$	3,416.1		$	3,116.6

Total assets	Total assets	$	33,335,506		$	26,821,948		Total assets	$	43,397.0		$	36,461.0
Less: goodwill and intangible assets, net	Less: goodwill and intangible assets, net	298,987			297,608			Less: goodwill and intangible assets, net	298.0			298.5
Tangible assets	Tangible assets	33,036,519			26,524,340			Tangible assets	43,099.0			36,162.5
Plus: deferred tax - attributed to intangible assets	Plus: deferred tax - attributed to intangible assets	1,689			1,921			Plus: deferred tax - attributed to intangible assets	1.4			1.6
Total tangible assets, net of tax	Total tangible assets, net of tax	$	33,038,208		$	26,526,261		Total tangible assets, net of tax	$	43,100.4		$	36,164.1

Tangible common equity ratio	Tangible common equity ratio	8.9		%	10.3		%	Tangible common equity ratio	7.9		%	8.6		%
Common shares outstanding	Common shares outstanding	100,825			102,524			Common shares outstanding	103.4			100.8
Book value per share	Book value per share	$	31.98		$	29.42		Book value per share	$	35.89		$	33.85
Tangible book value per share, net of tax	Tangible book value per share, net of tax	29.03			26.54			Tangible book value per share, net of tax	33.02			30.90

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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 1 and total capital. The FRB and other banking regulators use ~~common equity tier 1~~CET1 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 1~~CET1 plus allowance measure is an important regulatory metric for assessing asset quality.

As permitted by the regulatory capital rules, the Company elected to delay the estimated impact of CECL on its regulatory capital over a five-year transition period ending December 31, 2024. As a result, capital ratios and amounts as of ~~September 30, 2020~~March 31, 2021 exclude the impact of the increased allowance for credit losses related to the adoption of ASC 326.


		September 30, 2020			December 31, 2019				March 31, 2021			December 31, 2020
		(dollars in thousands)							(dollars in millions)
Common equity tier 1:	Common equity tier 1:							Common equity tier 1:
Common equity	Common equity	$	3,285,991		$	3,016,748		Common equity	$	3,756.6		$	3,465.9
Less:	Less:							Less:
Non-qualifying goodwill and intangibles	Non-qualifying goodwill and intangibles	297,298			295,607			Non-qualifying goodwill and intangibles	296.6			296.9

Disallowed deferred tax asset	Disallowed deferred tax asset	165			2,243			Disallowed deferred tax asset	2.7			—
AOCI related adjustments	AOCI related adjustments	74,084			21,379			AOCI related adjustments	19.7			91.8
Unrealized gain on changes in fair value liabilities	Unrealized gain on changes in fair value liabilities	4,501			3,629			Unrealized gain on changes in fair value liabilities	0.2			0.5
Common equity tier 1	Common equity tier 1	$	2,909,943		$	2,693,890		Common equity tier 1	$	3,437.4		$	3,076.7
Divided by: Risk-weighted assets	Divided by: Risk-weighted assets	$	29,079,735		$	25,390,142		Divided by: Risk-weighted assets	$	33,326.1		$	31,015.4
Common equity tier 1 ratio	Common equity tier 1 ratio	10.0		%	10.6		%	Common equity tier 1 ratio	10.3		%	9.9		%

Common equity tier 1	Common equity tier 1	$	2,909,943		$	2,693,890		Common equity tier 1	$	3,437.4		$	3,076.7

Plus: Trust preferred securities	Plus: Trust preferred securities	81,500			81,500			Plus: Trust preferred securities	81.5			81.5

Less:
Disallowed deferred tax asset		—			—
Unrealized gain on changes in fair value liabilities		—			—

Tier 1 capital	Tier 1 capital	$	2,991,443		$	2,775,390		Tier 1 capital	$	3,518.9		$	3,158.2
Divided by: Tangible average assets	Divided by: Tangible average assets	$	32,190,510		$	26,110,275		Divided by: Tangible average assets	$	40,072.7		$	34,349.3
Tier 1 leverage ratio	Tier 1 leverage ratio	9.3		%	10.6		%	Tier 1 leverage ratio	8.8		%	9.2		%

Total capital:	Total capital:							Total capital:
Tier 1 capital	Tier 1 capital	$	2,991,443		$	2,775,390		Tier 1 capital	$	3,518.9		$	3,158.2
Plus:	Plus:							Plus:
Subordinated debt	Subordinated debt	515,329			305,732			Subordinated debt	449.3			454.8
Adjusted allowances for credit losses	Adjusted allowances for credit losses	287,647			176,752			Adjusted allowances for credit losses	233.3			259.0
Less: Tier 2 qualifying capital deductions		—			—

Tier 2 capital	Tier 2 capital	$	802,976		$	482,484		Tier 2 capital	$	682.6		$	713.8

Total capital	Total capital	$	3,794,419		$	3,257,874		Total capital	$	4,201.5		$	3,872.0
Total capital ratio	Total capital ratio	13.0		%	12.8		%	Total capital ratio	12.6		%	12.5		%

Classified assets to tier 1 capital plus allowance:	Classified assets to tier 1 capital plus allowance:							Classified assets to tier 1 capital plus allowance:
Classified assets	Classified assets	$	325,659		$	171,246		Classified assets	$	280.9		$	223.7

Divided by: Tier 1 capital	Divided by: Tier 1 capital	2,991,443			2,775,390			Divided by: Tier 1 capital	3,518.9			3,158.2
Plus: Adjusted allowances for credit losses	Plus: Adjusted allowances for credit losses	287,647			176,752			Plus: Adjusted allowances for credit losses	233.3			259.0
Total Tier 1 capital plus adjusted allowances for credit losses	Total Tier 1 capital plus adjusted allowances for credit losses	$	3,279,090		$	2,952,142		Total Tier 1 capital plus adjusted allowances for credit losses	$	3,752.2		$	3,417.2
Classified assets to tier 1 capital plus allowance ~~(1)~~	Classified assets to tier 1 capital plus allowance ~~(1)~~	9.9		%	5.8		%	Classified assets to tier 1 capital plus allowance ~~(1)~~	7.5		%	6.5		%

~~(1)Upon adoption of ASU 2016-13,~~ ~~Measurement of Credit Losses on Financial Instruments,~~ the allowance for credit losses has been modified to also include amounts related to unfunded loan commitments and investment securities. Prior period amounts have been restated to conform to current presentation.

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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:


		Three Months Ended September 30,													Three Months Ended March 31,
		2020						2019							2021						2020
		Average Balance		Interest		Average Yield / Cost		Average Balance		Interest		Average Yield / Cost			Average Balance		Interest		Average Yield / Cost		Average Balance		Interest		Average Yield / Cost
		(dollars in thousands)													(dollars in millions)
Interest earning assets	Interest earning assets													Interest earning assets
Loans:	Loans:													Loans:
Commercial and industrial	Commercial and industrial	$	12,687,865	$	130,041	4.17	%	$	8,423,017	$	118,332	5.72	%	Commercial and industrial	$	13,951.6	$	151.0	4.48	%	$	9,651.1	$	124.7	5.32	%
CRE - non-owner-occupied	CRE - non-owner-occupied	5,393,133		63,813		4.72		4,722,176		69,421		5.85		CRE - non-owner-occupied	5,649.7		65.1		4.68		5,238.0		68.9		5.30
CRE - owner-occupied	CRE - owner-occupied	2,232,653		26,645		4.85		2,259,576		30,099		5.38		CRE - owner-occupied	2,094.2		24.4		4.83		2,281.3		29.2		5.24
Construction and land development	Construction and land development	2,209,340		32,293		5.83		2,226,289		39,177		7.00		Construction and land development	2,484.8		35.6		5.81		2,006.0		32.2		6.50
Residential real estate	Residential real estate	2,395,956		23,358		3.88		1,701,599		20,913		4.88		Residential real estate	2,507.7		21.9		3.55		2,158.2		20.8		3.88
Consumer	Consumer	38,524		473		4.88		69,519		990		5.65		Consumer	34.5		0.4		5.39		55.4		0.8		5.47
Loans held for sale	Loans held for sale	20,290		—		—		237		—		—		Loans held for sale	—		—		—		21.8		0.3		5.98
Total loans (1), (2), (3)	Total loans (1), (2), (3)	24,977,761		276,623		4.47		19,402,413		278,932		5.79		Total loans (1), (2), (3)	26,722.5		298.4		4.59		21,411.8		276.9		5.27
Securities:	Securities:													Securities:
Securities - taxable	Securities - taxable	2,811,615		14,769		2.09		3,073,116		20,575		2.66		Securities - taxable	4,531.4		18.5		1.66		2,889.2		17.3		2.40
Securities - tax-exempt	Securities - tax-exempt	1,556,431		12,634		4.07		1,062,087		9,085		4.30		Securities - tax-exempt	1,980.9		15.5		3.99		1,164.3		10.1		4.40
Total securities (1)	Total securities (1)	4,368,046		27,403		2.79		4,135,203		29,660		3.08		Total securities (1)	6,512.3		34.0		2.37		4,053.5		27.4		2.98
Other	Other	1,926,386		817		0.17		1,009,926		7,016		2.76		Other	5,864.0		1.7		0.12		802.0		2.9		1.49
Total interest earning assets	Total interest earning assets	31,272,193		304,843		3.97		24,547,542		315,608		5.20		Total interest earning assets	39,098.8		334.1		3.55		26,267.3		307.2		4.80
Non-interest earning assets	Non-interest earning assets													Non-interest earning assets
Cash and due from banks	Cash and due from banks	163,812						346,833						Cash and due from banks	166.1						196.0
Allowance for credit losses	Allowance for credit losses	(325,039)						(162,629)						Allowance for credit losses	(289.1)						(192.7)
Bank owned life insurance	Bank owned life insurance	174,998						172,447						Bank owned life insurance	176.6						174.4
Other assets	Other assets	1,237,441						1,094,205						Other assets	1,271.2						1,158.9
Total assets	Total assets	$	32,523,405					$	25,998,398					Total assets	$	40,423.6					$	27,603.9
Interest-bearing liabilities	Interest-bearing liabilities													Interest-bearing liabilities
Interest-bearing deposits:	Interest-bearing deposits:													Interest-bearing deposits:
Interest-bearing transaction accounts	Interest-bearing transaction accounts	$	3,636,299	$	1,463	0.16	%	$	2,488,581	$	5,061	0.81	%	Interest-bearing transaction accounts	$	3,905.4	$	1.3	0.13	%	$	3,098.5	$	4.5	0.58	%
Savings and money market accounts	Savings and money market accounts	10,170,085		5,661		0.22		8,456,531		26,608		1.25		Savings and money market accounts	13,994.4		7.1		0.21		9,033.4		17.6		0.79
Certificates of deposit	Certificates of deposit	1,845,479		5,091		1.10		2,250,362		11,685		2.06		Certificates of deposit	1,681.1		2.4		0.59		2,346.0		10.4		1.78
Total interest-bearing deposits	Total interest-bearing deposits	15,651,863		12,215		0.31		13,195,474		43,354		1.30		Total interest-bearing deposits	19,580.9		10.8		0.22		14,477.9		32.5		0.90
Short-term borrowings	Short-term borrowings	35,996		18		0.20		17,495		47		1.07		Short-term borrowings	24.8		0.1		1.13		148.2		0.4		1.17

Qualifying debt	Qualifying debt	616,218		7,872		5.08		387,799		5,785		5.92		Qualifying debt	547.2		5.9		4.39		395.1		5.3		5.34
Total interest-bearing liabilities	Total interest-bearing liabilities	16,304,077		20,105		0.49		13,600,768		49,186		1.43		Total interest-bearing liabilities	20,152.9		16.8		0.34		15,021.2		38.2		1.02
Interest cost of funding earning assets	Interest cost of funding earning assets					0.26						0.79		Interest cost of funding earning assets					0.18						0.58
Non-interest-bearing liabilities	Non-interest-bearing liabilities													Non-interest-bearing liabilities
Non-interest-bearing demand deposits	Non-interest-bearing demand deposits	12,422,208						8,916,568						Non-interest-bearing demand deposits	15,972.6						8,869.7
Other liabilities	Other liabilities	617,006						579,624						Other liabilities	772.3						643.0
Stockholders’ equity	Stockholders’ equity	3,180,114						2,901,438						Stockholders’ equity	3,525.8						3,070.0
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	32,523,405					$	25,998,398					Total liabilities and stockholders' equity	$	40,423.6					$	27,603.9
Net interest income and margin (4)	Net interest income and margin (4)			$	284,738	3.71	%			$	266,422	4.41	%	Net interest income and margin (4)			$	317.3	3.37	%			$	269.0	4.22	%

(1)Yields on loans and securities have been adjusted to a TEB. The taxable-equivalent adjustment was ~~$7.2~~$8.0 million and ~~$6.4~~$6.5 million for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively.

(2)Included in the yield computation are net loan fees of ~~$18.2~~$32.9 million and ~~$13.4~~$15.5 million for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, 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.~~

~~Table of Contents~~

Nine Months Ended September 30,
2020 2019
Average
Balance Interest Average
Yield / Cost Average
Balance Interest Average
Yield / Cost
(dollars in thousands)
Interest earning assets
Loans:
Commercial and industrial $ 11,556,578 $ 396,578 4.69 % $ 7,955,590 $ 340,808 5.88 %
CRE - non-owner occupied 5,325,633 198,335 4.99 4,468,371 199,372 5.98
CRE - owner occupied 2,262,428 83,353 5.02 2,279,886 90,113 5.39
Construction and land development 2,114,957 95,451 6.05 2,210,205 118,687 7.20
Residential real estate 2,294,876 67,122 3.91 1,535,964 56,275 4.90
Consumer 49,164 1,922 5.22 64,490 2,844 5.90
Loans held for sale 21,259 324 2.04 80 — —
Total loans (1), (2), (3) 23,624,895 843,085 4.83 18,514,586 808,099 5.92
Securities:
Securities - taxable 2,826,004 48,271 2.28 2,865,596 60,641 2.83
Securities - tax-exempt 1,376,648 34,753 4.25 979,677 27,053 4.62
Total securities (1) 4,202,652 83,024 2.93 3,845,273 87,694 3.29
Other 1,136,169 4,188 0.49 700,698 13,831 2.64
Total interest earning assets 28,963,716 930,297 4.39 23,060,557 909,624 5.38
Non-interest earning assets
Cash and due from banks 173,909 225,907
Allowance for credit losses (263,207) (157,809)
Bank owned life insurance 178,660 171,470
Other assets 1,206,162 1,098,583
Total assets $ 30,259,240 $ 24,398,708
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts $ 3,410,882 $ 7,530 0.29 % $ 2,511,860 $ 16,194 0.86 %
Savings and money market accounts 9,546,249 28,875 0.40 7,854,914 73,283 1.25
Certificates of deposit 2,113,020 23,331 1.47 2,114,659 31,553 1.99
Total interest-bearing deposits 15,070,151 59,736 0.53 12,481,433 121,030 1.30
Short-term borrowings 150,118 570 0.51 129,382 2,257 2.33
Qualifying debt 500,522 17,833 4.76 376,154 17,898 6.36
Total interest-bearing liabilities 15,720,791 78,139 0.66 12,986,969 141,185 1.45
Interest cost of funding earning assets 0.36 0.82
Non-interest-bearing liabilities
Non-interest-bearing demand deposits 10,813,205 8,118,791
Other liabilities 622,889 495,597
Stockholders’ equity 3,102,355 2,797,351
Total liabilities and stockholders' equity $ 30,259,240 $ 24,398,708
Net interest income and margin (4) $ 852,158 4.03 % $ 768,439 4.56 %

~~(1)Yields on loans and securities have been adjusted to a TEB. The taxable-equivalent adjustment was $20.6 million and $18.7 million for the nine months ended September 30, 2020 and 2019, respectively.~~

~~(2)Included in the yield computation are net loan fees of $61.5 million and $37.9 million for the nine months ended September 30, 2020 and 2019,~~ 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.

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		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2020 versus 2019						2020 versus 2019							2021 versus 2020
		Increase (Decrease) Due to Changes in (1)						Increase (Decrease) Due to Changes in (1)							Increase (Decrease) Due to Changes in (1)
		Volume		Rate		Total		Volume		Rate		Total			Volume		Rate		Total
		(in thousands)													(in millions)
Interest income:	Interest income:													Interest income:
Loans:	Loans:													Loans:
Commercial and industrial	Commercial and industrial	$	43,711	$	(32,002)	$	11,709	$	123,572	$	(67,802)	$	55,770	Commercial and industrial	$	46.5	$	(20.2)	$	26.3
CRE - non-owner occupied	CRE - non-owner occupied	7,939		(13,547)		(5,608)		31,926		(32,963)		(1,037)		CRE - non-owner occupied	4.7		(8.5)		(3.8)
CRE - owner-occupied	CRE - owner-occupied	(321)		(3,133)		(3,454)		(643)		(6,117)		(6,760)		CRE - owner-occupied	(2.2)		(2.6)		(4.8)
Construction and land development	Construction and land development	(248)		(6,636)		(6,884)		(4,299)		(18,937)		(23,236)		Construction and land development	6.9		(3.5)		3.4
Residential real estate	Residential real estate	6,769		(4,324)		2,445		22,197		(11,350)		10,847		Residential real estate	3.1		(2.0)		1.1
Consumer	Consumer	(381)		(136)		(517)		(599)		(323)		(922)		Consumer	(0.2)		(0.2)		(0.4)
Loans held for sale	Loans held for sale	—		—		—		323		1		324		Loans held for sale	—		(0.3)		(0.3)
Total loans	Total loans	57,469		(59,778)		(2,309)		172,477		(137,491)		34,986		Total loans	58.8		(37.3)		21.5
Securities:	Securities:													Securities:
Securities - taxable	Securities - taxable	(1,374)		(4,432)		(5,806)		(676)		(11,694)		(12,370)		Securities - taxable	6.7		(5.5)		1.2
Securities - tax-exempt	Securities - tax-exempt	4,013		(464)		3,549		10,021		(2,321)		7,700		Securities - tax-exempt	6.4		(1.0)		5.4
Total securities	Total securities	2,639		(4,896)		(2,257)		9,345		(14,015)		(4,670)		Total securities	13.1		(6.5)		6.6
Other	Other	389		(6,588)		(6,199)		1,605		(11,248)		(9,643)		Other	1.5		(2.7)		(1.2)
Total interest income	Total interest income	60,497		(71,262)		(10,765)		183,427		(162,754)		20,673		Total interest income	73.4		(46.5)		26.9

Interest expense:	Interest expense:													Interest expense:
Interest-bearing transaction accounts	Interest-bearing transaction accounts	$	462	$	(4,060)	$	(3,598)	$	1,985	$	(10,649)	$	(8,664)	Interest-bearing transaction accounts	0.3		(3.5)		(3.2)
Savings and money market	Savings and money market	954		(21,901)		(20,947)		5,116		(49,524)		(44,408)		Savings and money market	2.5		(13.0)		(10.5)
Certificates of deposit	Certificates of deposit	(1,117)		(5,477)		(6,594)		(18)		(8,204)		(8,222)		Certificates of deposit	(0.9)		(7.1)		(8.0)
Short-term borrowings	Short-term borrowings	9		(38)		(29)		79		(1,766)		(1,687)		Short-term borrowings	(0.5)		0.2		(0.3)

Qualifying debt	Qualifying debt	2,918		(831)		2,087		4,431		(4,496)		(65)		Qualifying debt	1.6		(1.0)		0.6
Total interest expense	Total interest expense	3,226		(32,307)		(29,081)		11,593		(74,639)		(63,046)		Total interest expense	3.0		(24.4)		(21.4)

Net increase		$	57,271	$	(38,955)	$	18,316	$	171,834	$	(88,115)	$	83,719
Net change														Net change	$	70.4	$	(22.1)	$	48.3

(1)Changes attributable to both volume and rate are designated as volume changes.

Comparison of interest income, interest expense and net interest margin

The Company's primary source of revenue is interest income. For the three months ended ~~September 30, 2020,~~March 31, 2021, interest income was ~~$304.8~~$334.1 million, ~~a decrease~~an increase of ~~$10.8~~$26.9 million, or ~~3.4%~~8.8%, compared to ~~$315.6~~$307.2 million for the three months ended ~~September 30, 2019.~~March 31, 2020. This ~~decrease~~increase was primarily the result of a $5.3 billion increase in the average loan balance that drove a $21.5 million increase in interest income from loans from the three months ended March 31, 2020. Interest income from investment securities also increased by $6.6 million for the comparable period due to an increase in the average investment balance of $2.5 billion. These increases were partially offset by a decrease in other interest income from interest bearing cash accounts and federal funds sold of ~~$6.2~~$1.2 million. Also contributing to the decrease in total interest income were net declines in interest income from loans and investment securities, each totaling $2.3 million. The decline in interest rates from September 30, 2019 outweighed the increases in the related average asset balances, resulting in a decrease in total interest income.

For the nine months ended September 30, 2020, interest income was $930.3 million, an increase of $20.7 million, or 2.3%, compared to $909.6 million for the nine months ended September 30, 2019. This increase was primarily the result of a $5.1 billion increase in the average loan balance, which offset the decline in interest rates and drove a $35.0 million increase in loan interest income for the nine months ended September 30, 2020. This increase was offset in part by decreases in other interest income of $9.6 million and interest income from investment securities of $4.7 million for the comparable period due to the lower interest rate environment.

~~Table of Contents~~

For the three months ended ~~September 30, 2020,~~March 31, 2021, interest expense was ~~$20.1~~$16.8 million, a decrease of ~~$29.1~~$21.4 million, or ~~59.1%~~56.0%, compared to ~~$49.2~~$38.2 million for the three months ended ~~September 30, 2019.~~March 31, 2020. Interest expense on deposits decreased ~~$31.1~~$21.7 million for the same period despite an increase in average interest-bearing deposits of ~~$2.5~~$5.1 billion as the Company benefited from repricing efforts in a lower rate environment, resulting in a ~~99 basis point reduction in average cost of interest-bearing deposits.~~

For the nine months ended September 30, 2020, interest expense was $78.1 million, a decrease of $63.0 million, or 44.7%, compared to $141.2 million for the nine months ended September 30, 2019. Interest expense on deposits decreased $61.3 million for the same period despite an increase in average interest-bearing deposits of $2.6 billion, resulting in a 7768 basis point reduction in average cost of interest-bearing deposits.

For the three months ended ~~September 30, 2020,~~March 31, 2021, net interest income was ~~$284.7~~$317.3 million, an increase of ~~$18.3~~$48.3 million, or ~~6.9%~~18.0%, compared to ~~$266.4~~$269.0 million for the three months ended ~~September 30, 2019.~~March 31, 2020. The increase in net interest income reflects a ~~$6.7~~$12.8 billion increase in average interest-earning assets, partially offset by an increase of ~~$2.7~~$5.1 billion in average interest-bearing liabilities. The decrease in net interest margin of 7085 basis points to ~~3.71%~~3.37% is largely the result of excess liquidity from deposit growth that has outpaced loan growth as well as a decrease in loan yields due to a lower rate environment and lower yields ~~on PPP loans primarily driven by changes in prepayment assumptions that reduced net deferred loan fee accretion on PPP loans~~ during the three months ended ~~September 30, 2020.~~March 31, 2021. These decreases to net interest margin were offset by lower deposit and funding costs for the three months ended ~~September 30, 2020~~March 31, 2021 compared to the same period in ~~2019.~~2020.

~~For the nine months ended September 30, 2020, net interest income was $852.2 million, an increase~~

Table of $83.7 million, or 10.9%, compared to $768.4 million for the nine months ended September 30, 2019. The increase in net interest income reflects a $5.9 billion increase in average interest-earning assets, partially offset by an increase of $2.7 billion in average interest-bearing liabilities. The decrease in net interest margin of 53 basis points to 4.03% is the result of excess liquidity and a lower rate environment as explained in the above paragraphs.Contents

Provision for Credit Losses

The provision for credit losses in each period is reflected as a reduction in earnings for that period and ~~upon the adoption of CECL,~~ 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 losses at a level that is adequate to absorb estimated lifetime credit losses inherent in the loan and investment securities portfolios. For the three and nine months ended September 30, 2020, the provision for credit losses was $14.7 million and $157.8 million, compared to $3.8 million and $15.3 million for the three and nine months ended September 30, 2019, respectively. The significant increase in the provision for credit losses from the three and nine months ended September 30, 2019 is primarily related to the current economic environment and estimating expected credit losses under the new CECL accounting standard. This standard changes the methodology for estimating credit losses on financial instruments from an incurred loss model to an expected total loss model. This results in the recognition of expected losses over the life of loans and HTM investment securitiesportfolios at the time that the loan is originated or the security is ~~purchased, rather than after a loss has been incurred, which results in an acceleration in the timing of loss recognition. Further, as the~~purchased. The Company's CECL models incorporate historical experience, current conditions, and reasonable and supportable forecasts in measuring expected credit ~~losses,~~losses. For the ~~worsening~~three months ended March 31, 2021, a release of ~~economic assumptions due~~credit loss provisions of $32.4 million was recognized, compared to ~~the ongoing pandemic has also contributed to an elevated~~a provision for credit losses of $51.2 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2020.

~~Table of Contents~~

The significant decrease in the provision for credit losses from the three months ended March 31, 2020 is primarily related to the current improved economic outlook.

Non-interest Income

The following table presents a summary of non-interest income for the periods presented:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2020		2019		Increase (Decrease)		2020		2019		Increase (Decrease)			2021		2020		Increase (Decrease)
		(in thousands)													(in millions)
Income from equity investments														Income from equity investments	$	7.6	$	3.8	$	3.8
Service charges and fees	Service charges and fees	$	5,913	$	5,888	$	25	$	17,447	$	17,121	$	326	Service charges and fees	6.7		6.4		0.3
Foreign currency income														Foreign currency income	2.2		1.3		0.9
Card income	Card income	1,873		1,729		144		4,768		5,195		(427)		Card income	1.6		1.7		(0.1)
Foreign currency income		1,755		1,321		434		4,242		3,564		678
Income from bank owned life insurance	Income from bank owned life insurance	1,345		979		366		8,977		2,938		6,039		Income from bank owned life insurance	1.0		1.0		—
Income from equity investments		1,186		3,742		(2,556)		6,263		6,619		(356)
Lending related income and gains on sale of loans, net		705		539		166		2,072		1,343		729
Gain on sales of investment securities, net		—		3,152		(3,152)		230		3,152		(2,922)
Fair value gain (loss) adjustments on assets measured at fair value, net		5,882		222		5,660		(986)		4,628		(5,614)
Lending related income and gains (losses) on sale of loans, net														Lending related income and gains (losses) on sale of loans, net	(0.1)		0.6		(0.7)
Fair value losses on assets measured at fair value, net														Fair value losses on assets measured at fair value, net	(1.5)		(11.3)		9.8

Other income	Other income	1,947		1,869		78		3,972		4,509		(537)		Other income	2.2		1.6		0.6
Total non-interest income	Total non-interest income	$	20,606	$	19,441	$	1,165	$	46,985	$	49,069	$	(2,084)	Total non-interest income	$	19.7	$	5.1	$	14.6

Total non-interest income for the three months ended ~~September 30, 2020~~March 31, 2021 compared to the same period in ~~2019~~2020 increased by ~~$1.2~~$14.6 million. The ~~most significant~~primary driver of the increase in non-interest income relates to ~~the~~ net fair value ~~gain adjustment~~loss adjustments on assets measured at fair value of ~~$5.9~~$1.5 million for the three months ended ~~September 30, 2020,~~March 31, 2021, compared to ~~$0.2~~$11.3 million for the same period in ~~2019.~~2020. This change is predominantly related to ~~increases~~a decrease in the fair value of equity securities, consisting primarily of preferred stock of other financial institutions. ~~Offsetting this~~Further contributing to the increase in non-interest income is ~~a decrease~~an increase in ~~the net gain on sales of investment securities and~~ income from equity investments. During the three months ended September 30, 2019, the Company sold investment securities as part of a portfolio balancing initiative and recognized a net gain on sale of $3.2 million, which did not recur during the current period. IncomeMarch 31, 2021, income from equity investments ~~decreased $2.6~~increased $3.8 million due to ~~a decrease~~an increase in warrant income from the three months ended ~~September 30, 2019.~~March 31, 2020.

Total non-interest income for the nine months ended September 30, 2020 compared to the same period in 2019 decreased by $2.1 million. The most significant decrease in non-interest income of $5.6 million relates to a net fair value loss adjustment incurred during the nine months ended September 30, 2020. As mentioned above, this change is predominantly related to valuation declines on preferred stock investments. In addition, there was a $3.2 million gain on security sales recognized during the nine months ended September 30, 2019 that did not recur in the current period. These decreases were offset in part by an increase in income from bank owned life insurance of $6.0 million primarily attributable to a one-time enhancement fee of $5.6 million from the surrender and replacement of certain policies, which was intended to offset the increase in tax expense related to the surrender.

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Non-interest Expense

The following table presents a summary of non-interest expense for the periods presented:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2020		2019		Increase (Decrease)		2020		2019		Increase (Decrease)			2021		2020		Increase (Decrease)
		(in thousands)													(in millions)
Salaries and employee benefits	Salaries and employee benefits	$	78,757	$	70,978	$	7,779	$	220,455	$	205,328	$	15,127	Salaries and employee benefits	$	83.7	$	72.1	$	11.6
Legal, professional, and directors' fees	Legal, professional, and directors' fees	10,034		8,248		1,786		31,105		26,885		4,220		Legal, professional, and directors' fees	10.1		10.4		(0.3)
Data processing														Data processing	9.9		8.6		1.3
Occupancy	Occupancy	9,426		8,263		1,163		25,752		24,251		1,501		Occupancy	8.6		8.2		0.4
Data processing		8,864		7,095		1,769		26,044		20,563		5,481
Deposit costs	Deposit costs	3,246		11,537		(8,291)		14,098		24,930		(10,832)		Deposit costs	6.3		7.3		(1.0)
Insurance	Insurance	3,064		3,071		(7)		9,506		8,691		815		Insurance	4.2		3.0		1.2
Loan and repossessed asset expenses	Loan and repossessed asset expenses	1,771		1,953		(182)		5,280		5,419		(139)		Loan and repossessed asset expenses	2.2		1.5		0.7
Business development	Business development	950		1,443		(493)		4,062		4,972		(910)		Business development	0.8		2.3		(1.5)
Marketing	Marketing	848		842		6		2,621		2,640		(19)		Marketing	0.6		0.9		(0.3)
Card expense	Card expense	505		548		(43)		1,631		1,892		(261)		Card expense	0.6		0.7		(0.1)
Intangible amortization	Intangible amortization	373		387		(14)		1,120		1,161		(41)		Intangible amortization	0.5		0.4		0.1
Net loss (gain) on sales / valuations of repossessed and other assets		123		3,379		(3,256)		(1,335)		2,856		(4,191)

Net gain on sales / valuations of repossessed and other assets														Net gain on sales / valuations of repossessed and other assets	(0.3)		(1.4)		1.1
Acquisition related expense														Acquisition related expense	0.4		—		0.4

Other expense	Other expense	6,131		8,408		(2,277)		19,033		22,691		(3,658)		Other expense	7.4		6.5		0.9
Total non-interest expense	Total non-interest expense	$	124,092	$	126,152	$	(2,060)	$	359,372	$	352,279	$	7,093	Total non-interest expense	$	135.0	$	120.5	$	14.5

Total non-interest expense for the three months ended ~~September 30, 2020 decreased $2.1~~March 31, 2021 increased $14.5 million compared to the same period in ~~2019. This change primarily relates to deposit cost decreases of $8.3 million for the three months ended September 30, 2020 compared to the same period~~2020. The increase in ~~2019, primarily due to a decline in deposit earnings credits paid to account holders in a lower rate environment. In addition, there~~non-interest expense was a $3.1 million loss due to an OREO property impairment from the three months ended September 30, 2019 and a $2.3 million decrease in other expense from decreased travel and entertainment and charitable contribution expenses incurred in the three months ended September 30, 2020 as a result of COVID-19. These decreases were offset in partdriven by an increase in salaries and employee benefits ~~occupancy expense, data processing, and legal, professional and director fees, which have increased~~ as the Company ~~supports~~continues to support its ~~continued growth.~~

~~Total non-interest expense for the nine months ended September 30, 2020 compared to the same period in 2019~~growth, which also increased ~~$7.1 million. This increase primarily relates to salaries and employee benefits,~~ data processing, insurance, and ~~legal, professional and directors' fees, which have increased as~~occupancy expense to a lesser degree. In addition, the Company ~~supports its continued growth. These increases were offset in part by~~recognized a decrease in deposit costs of $10.8 million for the nine months ended September 30, 2020 compared to the same period in 2019, primarily due to a decline in deposit earnings credits paid to account holders in a lower rate environment. In addition, there was a $3.1 loss due to OREO property impairment in the prior year and a $1.5$1.4 million gain on the sale of an OREO property during the three months ended March 31, 2020, compared to minimal activity in the current year. There was also a $3.7 million decrease in other expenses from decreased travel, entertainment and charitable contribution expenses incurred in the nine months ended September 30, 2020 as a result of COVID-19.quarter.

Income Taxes

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Business Segment Results

The Company's reportable segments are aggregated ~~primarily based~~with 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 service~~consist of three reportable segments:

•Commercial segment: provides commercial banking and ~~related~~treasury 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, provide~~middle-market businesses, specialized banking services to sophisticated commercial institutions and investors within niche ~~markets. These NBLs are managed centrally~~industries, 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 than the Company's other segments, though still predominately located within the Company's core market areas. The~~ consumer banking services, such as residential mortgage banking.

•Corporate & Other ~~segment~~segment: consists of ~~corporate-related~~the Company's investment portfolio, Corporate borrowings and other related items, income and expense items not allocated to ~~the Company's~~our other reportable segments, and inter-segment eliminations.

The following tables present selected operating segment information for the periods presented:


				Regional Segments									Consolidated Company		Commercial		Consumer Related		Corporate & Other
		Consolidated Company		Arizona		Nevada		Southern California		Northern California
At September 30, 2020		(in millions)
At March 31, 2021												At March 31, 2021	(in millions)
Loans, net of deferred loan fees and costs	Loans, net of deferred loan fees and costs	$	26,014.0	$	4,388.1	$	2,612.2	$	2,376.7	$	1,785.8	Loans, net of deferred loan fees and costs	$	28,711.0	$	20,660.4	$	8,048.9	$	1.7
Deposits	Deposits	28,843.4		8,541.5		4,733.9		3,502.0		2,741.1		Deposits	38,393.1		24,126.0		13,286.5		980.6

At December 31, 2019
At December 31, 2020												At December 31, 2020
Loans, net of deferred loan fees and costs	Loans, net of deferred loan fees and costs	$	21,123.3	$	3,847.9	$	2,252.5	$	2,253.9	$	1,311.2	Loans, net of deferred loan fees and costs	$	27,053.0	$	20,245.8	$	6,798.2	$	9.0
Deposits	Deposits	22,796.5		5,384.7		4,350.1		2,585.3		2,373.6		Deposits	31,930.5		21,448.0		9,936.8		545.7


		(in thousands)
Three Months Ended September 30, 2020
Three Months Ended March 31, 2021												Three Months Ended March 31, 2021	(in millions)
Pre-tax income	Pre-tax income	$	166,591	$	57,789	$	24,668	$	17,609	$	15,993	Pre-tax income	$	234.4	$	220.9	$	71.5	$	(58.0)

Nine Months Ended September 30, 2020
Three Months Ended March 31, 2020												Three Months Ended March 31, 2020
Pre-tax income	Pre-tax income	$	381,934	$	129,347	$	77,254	$	40,651	$	40,655	Pre-tax income	$	102.4	$	109.6	$	27.3	$	(34.5)

Three Months Ended September 30, 2019
Pre-tax income		$	155,908	$	43,305	$	28,093	$	19,713	$	12,824

Nine Months Ended September 30, 2019
Pre-tax income		$	449,926	$	114,934	$	81,852	$	53,304	$	39,066

~~Table of Contents~~

National Business Lines
HOA
Services Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance Other NBLs Corporate & Other
At September 30, 2020 (in millions)
Loans, net of deferred loan fees and costs $ 280.0 $ 1,686.7 $ 2,329.3 $ 2,099.3 $ 8,451.8 $ 4.1
Deposits 3,697.9 — 4,646.4 — 61.4 919.2
At December 31, 2019
Loans, net of deferred loan fees and costs $ 237.2 $ 1,635.6 $ 1,552.0 $ 1,930.8 $ 6,098.7 $ 3.5
Deposits 3,210.1 0.1 3,771.5 — 36.9 1,084.2

(in thousands)
Three Months Ended September 30, 2020
Pre-tax income $ 12,560 $ 295 $ 48,657 $ 7,740 $ 39,877 $ (58,597)
Nine Months Ended September 30, 2020
Pre-tax income $ 40,323 $ 684 $ 85,024 $ 4,559 $ 101,267 $ (137,830)
Three Months Ended September 30, 2019
Pre-tax income $ 12,229 $ 1,740 $ 26,391 $ 8,692 $ 22,113 $ (19,192)
Nine Months Ended September 30, 2019
Pre-tax income $ 36,984 $ 4,731 $ 66,211 $ 28,935 $ 53,840 $ (29,931)

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BALANCE SHEET ANALYSIS

Total assets increased ~~$6.5~~$6.9 billion, or ~~24.3%~~19.0%, to ~~$33.3~~$43.4 billion at ~~September 30, 2020,~~March 31, 2021, compared to ~~$26.8~~$36.5 billion at December 31, ~~2019.~~2020. The increase in total assets relates primarily to ~~organic~~an increase in cash and investment securities from continued deposit growth in addition to continued loan growth. Loans increased ~~$4.9~~$1.7 billion, or ~~23.2%~~6.1%, to ~~$26.0~~$28.7 billion at ~~September 30, 2020,~~March 31, 2021, compared to ~~$21.1~~$27.1 billion at December 31, ~~2019.~~2020. The increase in loans from December 31, ~~2019, which includes $1.7 billion in PPP loans,~~2020 was driven by increases in commercial and industrial loans of ~~$4.3 billion, with smaller increases in~~$746.3 million, residential real estate loans of $674.5 million, and construction and land development loans of ~~$348.3 million, residential real estate loans of $239.5 million, and CRE, non-owner occupied loans of $161.8~~$336.5 million. These increases were partially offset by a decrease in CRE, owner occupied loans of ~~$103.4~~$104.8 million.

Total liabilities increased ~~$6.3~~$6.6 billion, or ~~26.5%~~20.1%, to ~~$30.1~~$39.7 billion at ~~September 30, 2020,~~March 31, 2021, compared to ~~$23.8~~$33.0 billion at December 31, ~~2019.~~2020. The increase in liabilities is due primarily to an increase in total deposits of ~~$6.0~~$6.5 billion, or ~~26.5%~~20.2%, to ~~$28.8~~$38.4 billion. The increase in deposits from December 31, ~~2019~~2020 was driven by ~~increases~~an increase of ~~$4.5~~$4.1 billion in non-interest bearing demand deposits ~~$1.5~~and $2.9 billion in savings and money market ~~accounts, and $793.8 million in interest bearing demand deposits,~~accounts. These increases were offset in part by a decrease in interest bearing demand deposits of $676.1 million in certificates of deposit. In addition, qualifying debt increased by $225.2 million due to the issuance of $225.0 million of subordinated debt, recorded net of issue costs, in May 2020.$503.0 million.

Total stockholders’ equity increased by ~~$207.3~~$299.2 million, or ~~6.9%~~8.8%, to ~~$3.2~~$3.7 billion at ~~September 30, 2020~~March 31, 2021 from $3.4 billion at December 31, ~~2019.~~2020. The increase in stockholders' equity is primarily a function of net income and the sale of 2.3 million shares of common stock in a registered direct offering during the three months ended March 31, 2021, partially offset by share repurchases in 2020 and quarterly dividends to ~~shareholders as well as the adoption impact of CECL.~~shareholders.

Investment securities

Debt securities are classified at the time of acquisition as either HTM, AFS, or trading 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 securities that may be sold prior to maturity based upon asset/liability management decisions. Investment securities classified as AFS are carried at fair value. Unrealized gains or losses on AFS debt securities are recorded as part of AOCI in stockholders’ equity, net of tax. Amortization of premiums or accretion of discounts on MBS is periodically adjusted for estimated prepayments. Trading securities are reported at fair value, with unrealized gains and losses 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 investment securities portfolio for each of the periods below:


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(in thousands)					(in millions)
Debt securities	Debt securities					Debt securities
CDO		$	8,176	$	10,142
CLO						CLO	$	980.7	$	146.9
Commercial MBS issued by GSEs	Commercial MBS issued by GSEs	95,657		94,253		Commercial MBS issued by GSEs	87.8		84.6
Corporate debt securities	Corporate debt securities	186,609		99,961		Corporate debt securities	285.1		270.2
Municipal securities		22,159		7,773

Private label residential MBS	Private label residential MBS	1,264,237		1,129,227		Private label residential MBS	1,900.6		1,476.9
Residential MBS issued by GSEs	Residential MBS issued by GSEs	1,361,556		1,412,060		Residential MBS issued by GSEs	2,249.6		1,486.6
Tax-exempt	Tax-exempt	1,515,500		1,039,962		Tax-exempt	2,027.7		1,756.2
Trust preferred securities		25,208		27,040
U.S. government sponsored agency securities		—		10,000

U.S. treasury securities	U.S. treasury securities	600		999		U.S. treasury securities	50.0		—
Other						Other	56.4		55.9
Total debt securities	Total debt securities	$	4,479,702	$	3,831,417	Total debt securities	$	7,637.9	$	5,277.3

Equity securities	Equity securities					Equity securities
CRA investments	CRA investments	$	53,545	$	52,504	CRA investments	$	57.4	$	53.4
Preferred stock	Preferred stock	107,016		86,197		Preferred stock	135.5		113.9
Total equity securities	Total equity securities	$	160,561	$	138,701	Total equity securities	$	192.9	$	167.3

8673

Table of Contents

Loans

The table below summarizes the distribution of the Company’s held for investment loan portfolio:


	~~September 30, 2020~~
	~~(in thousands)~~
~~Commercial and industrial~~
~~Tech & Innovation~~	$	~~2,277,889~~
~~Other commercial and industrial~~	~~5,993,712~~
~~CRE - owner occupied~~	~~1,970,163~~
~~CRE - non-owner occupied~~
~~Hotel Franchise Finance~~	~~1,942,886~~
~~Other CRE - non-owned occupied~~	~~3,433,932~~
~~Residential~~	~~2,330,064~~
~~Construction and land development~~	~~2,267,922~~
~~Warehouse lending~~	~~3,926,852~~
~~Municipal & nonprofit~~	~~1,686,690~~
~~Other~~	~~163,144~~
~~Total loans HFI~~	~~25,993,254~~
~~Allowance for credit losses~~	~~(310,560)~~
~~Total loans HFI, net of allowance~~	$	~~25,682,694~~

~~December 31, 2019~~

~~(in thousands)~~

~~Commercial and industrial~~

~~9,382,043~~

~~Commercial real estate - non-owner occupied~~

~~5,245,634~~

~~Commercial real estate - owner occupied~~

~~2,316,913~~

~~Construction and land development~~

~~1,952,156~~

~~Residential real estate~~

~~2,147,664~~

~~Consumer~~

~~57,083~~

~~Loans, net of deferred loan fees and costs~~

~~21,101,493~~

~~Allowance for credit losses~~

~~(167,797)~~

~~Total loans HFI~~

~~20,933,696~~


	March 31, 2021		December 31, 2020
	(in millions)
Warehouse lending	$	4,901.8	$	4,340.2
Municipal & nonprofit	1,676.9		1,728.8
Tech & innovation	2,514.2		2,548.3
Other commercial and industrial	6,174.3		5,911.2
CRE - owner occupied	1,814.5		1,909.3
Hotel franchise finance	2,038.8		1,983.9
Other CRE - non-owned occupied	3,613.0		3,640.2
Residential	3,055.8		2,378.5
Construction and land development	2,767.6		2,429.4
Other	154.1		183.2
Total loans HFI	28,711.0		27,053.0
Allowance for credit losses	(247.1)		(278.9)
Total loans HFI, net of allowance	$	28,463.9	$	26,774.1

~~As of September 30,~~ 2020, ~~and December 31, 2019, the Company also had $20.8 million and $21.8 million of HFS loans,~~ respectively.

Concentrations of Lending Activities

The Company monitors concentrations within ~~four~~three broad categories: ~~geography,~~ industry, product, and collateral. The Company’s loan portfolio includes significant credit exposure to the CRE market. As of each of the periods ended ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, CRE related loans accounted for approximately ~~38%~~37% and ~~45%~~38% 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 ~~29%~~27% and ~~31%~~28% of these CRE loans, excluding construction and land loans, were owner-occupied at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

~~Table of Contents~~

Non-performing Assets

Total non-performing loans ~~increased~~decreased by ~~$119.5~~$2.0 million at ~~September 30, 2020~~March 31, 2021 to ~~$203.8~~$146.4 million from ~~$84.3~~$148.4 million at December 31, ~~2019.~~2020.


		September 30, 2020			December 31, 2019				March 31, 2021			December 31, 2020
		(dollars in thousands)							(dollars in millions)
Total nonaccrual loans (1)	Total nonaccrual loans (1)	$	146,472		$	55,968		Total nonaccrual loans (1)	$	113.6		$	115.2
Loans past due 90 days or more on accrual status	Loans past due 90 days or more on accrual status	28,129			—			Loans past due 90 days or more on accrual status	—			—
Accruing troubled debt restructured loans	Accruing troubled debt restructured loans	29,192			28,356			Accruing troubled debt restructured loans	32.8			33.2
Total nonperforming loans	Total nonperforming loans	$	203,793		$	84,324		Total nonperforming loans	$	146.4		$	148.4

Other assets acquired through foreclosure, net	Other assets acquired through foreclosure, net	$	8,591		$	13,850		Other assets acquired through foreclosure, net	$	4.2		$	1.4
Nonaccrual HFI and HFS loans to funded HFI loans		0.56		%	0.27		%

Nonaccrual HFI loans to funded HFI loans	Nonaccrual HFI loans to funded HFI loans	0.48		%	0.27		%	Nonaccrual HFI loans to funded HFI loans	0.40		%	0.43		%
Loans past due 90 days or more on accrual status to funded HFI loans	Loans past due 90 days or more on accrual status to funded HFI loans	0.11		%	—			Loans past due 90 days or more on accrual status to funded HFI loans	—			—

(1)Includes non-accrual TDR loans of ~~$31.6~~$27.4 million and ~~$10.6~~$28.4 million at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019, respectively, and non-accrual HFS loans of $20.8 million and zero at September 30,~~ 2020, ~~and December 31, 2019,~~ respectively.

Interest income that would have been recorded under the original terms of non-accrual loans was ~~$1.7~~$1.5 million and $0.7 million for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $4.1 million and $1.5 million for the nine months ended September 30, 2020 and 2019,~~ respectively.

Table of Contents

The composition of nonaccrual HFI loans by loan type and by segment were as follows:


		September 30, 2020							March 31, 2021
		Nonaccrual Balance		Percent of Nonaccrual Balance		Percent of Total HFI Loans					Nonaccrual Balance		Percent of Nonaccrual Balance		Percent of Total HFI Loans
		(dollars in thousands)						(dollars in millions)
Commercial and industrial
Tech & Innovation		$	18,725	14.89	%	0.07	%
Warehouse lending										Warehouse lending	$	—	—	%	—	%
Municipal & nonprofit										Municipal & nonprofit	—		—		—
Tech & innovation										Tech & innovation	12.7		11.2		0.05
Other commercial and industrial	Other commercial and industrial	31,611		25.15		0.12				Other commercial and industrial	15.0		13.2		0.05
CRE - owner occupied	CRE - owner occupied	38,567		30.68		0.15				CRE - owner occupied	32.1		28.3		0.11
CRE - non-owner occupied
Hotel Franchise Finance		—		—		—
Hotel franchise finance										Hotel franchise finance	—		—		—
Other CRE - non-owned occupied	Other CRE - non-owned occupied	29,071		23.13		0.11				Other CRE - non-owned occupied	41.5		36.5		0.15
Residential	Residential	5,388		4.29		0.02				Residential	9.0		7.9		0.03
Construction and land development	Construction and land development	192		0.15		0.00				Construction and land development	—		—		—
Warehouse lending		—		—		—
Municipal & nonprofit		1,952		1.55		0.01
Other	Other	203		0.16		0.00				Other	3.3		2.9		0.01
Total non-accrual loans	Total non-accrual loans	$	125,709	100.00	%	0.48	%			Total non-accrual loans	$	113.6	100.0	%	0.40	%

December 31, 2019
Nonaccrual
Balance Percent of Nonaccrual Balance Percent of
Total HFI Loans
(dollars in thousands)
Commercial and industrial $ 24,501 43.77 % 0.12 %
Commercial real estate 23,720 42.38 0.11
Construction and land development 2,147 3.84 0.01
Residential real estate 5,600 10.01 0.03
Consumer — — —
Total non-accrual loans $ 55,968 100.00 % 0.27 %

~~Table of Contents~~

September 30, 2020 December 31, 2019
Nonaccrual Loans Percent of Segment's Total HFI Loans Nonaccrual Loans Percent of Segment's Total
HFI Loans
(dollars in thousands)
Arizona $ 46,246 1.05 % $ 29,062 0.76 %
Nevada 4,588 0.18 8,001 0.36
Southern California 24,797 1.04 1,759 0.08
Northern California 24,346 1.36 5,193 0.40
HOA Services 72 0.03 — —
Public & Nonprofit Finance 1,952 0.12 2,147 0.13
Technology and Innovation 18,725 0.80 5,867 0.38
Other NBLs 4,983 0.06 3,939 0.06
Total non-accrual loans $ 125,709 0.48 % $ 55,968 0.27 %


	December 31, 2020
	Nonaccrual Balance		Percent of Nonaccrual Balance		Percent of Total HFI Loans
	(dollars in millions)
Warehouse lending	$	—	—	%	—	%
Municipal & nonprofit	1.9		1.7		0.01
Tech & innovation	13.5		11.7		0.05
Other commercial and industrial	17.2		14.9		0.06
CRE - owner occupied	34.5		29.9		0.13
Hotel franchise finance	—		—		—
Other CRE - non-owned occupied	36.5		31.7		0.14
Residential	11.4		9.9		0.04
Construction and land development	—		—		—
Other	0.2		0.2		—
Total non-accrual loans	$	115.2	100.0	%	0.43	%

Troubled Debt Restructured Loans

A TDR loan is a loan on which the Company, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that the Company would not otherwise consider. The loan terms that have been modified or restructured due to a borrower’s financial situation include, but are 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 are extensions in terms or deferral of payments which result in no lost principal or interest followed by reductions in interest rates or accrued interest. Consistent with regulatory guidance, a TDR loan that is subsequently modified in another restructuring agreement but has shown sustained performance and classification as a TDR, will be removed from TDR status provided that the modified terms were market-based at the time of modification.

Table of Contents

Allowance for Credit Losses

The allowance for credit losses consists of the allowance for credit losses on loans and an allowance for credit losses on unfunded loan commitments. The following table summarizes the activity in the Company's allowance for credit losses on loans held for investment for the period indicated:


		Three Months Ended September 30, 2020																Three Months Ended March 31, 2021
		Balance,		Provision for (Reversal of) Credit Losses				Writeoffs				Recoveries				Balance,						Balance, December 31, 2020			Provision for (Recovery of) Credit Losses					Write-offs				Recoveries				Balance, March 31, 2021
		June 30, 2020								September 30, 2020								(1)											(1)
		(1)								(1)								(in millions)
		(in thousands)
Commercial and industrial
Tech & Innovation		$	54,559			$	(9,359)			$	6,364			$	—				$	38,836
Warehouse lending																			Warehouse lending			$	3.4				$	0.2				$	—			$	—			$	3.6
Municipal & nonprofit																			Municipal & nonprofit			15.9			(0.7)					—				—				15.2
Tech & innovation																			Tech & innovation			35.3			(11.6)					—				(0.2)				23.9
Other commercial and industrial	Other commercial and industrial	109,930				(621)				748				(192)					108,753		Other commercial and industrial			94.7			(16.5)					0.1				(0.3)				78.4
CRE - owner occupied	CRE - owner occupied	15,587		3,897						83				(5)					19,406		CRE - owner occupied			18.6			(8.9)					—				—				9.7
CRE - non-owner occupied
Hotel Franchise Finance		35,864		2,163				—				—				38,027
Hotel franchise finance																			Hotel franchise finance			43.3			6.1					—				—				49.4
Other CRE - non-owned occupied	Other CRE - non-owned occupied	32,672		9,196				1,246				—				40,622			Other CRE - non-owned occupied			39.9			(5.4)					2.0				(0.2)				32.7
Residential	Residential	1,725		16				307				(355)				1,789			Residential			0.8			2.4					—				—				3.2
Construction and land development	Construction and land development	35,792		2,983				—				(6)				38,781			Construction and land development			22.0			3.9					—				—				25.9
Warehouse lending		743		95				—				—				838
Municipal & nonprofit		17,128		768				—				—				17,896
Other	Other	6,550		(934)				25				(21)				5,612			Other			5.0			0.1					—				—				5.1
Total	Total	$	310,550	$	8,204			$	8,773			$	(579)			$	310,560		Total			$	278.9		$	(30.4)				$	2.1			$	(0.7)			$	247.1

Net charge-offs to average loans outstanding

~~0.13~~0.02

Allowance for credit losses on loans to funded HFI loans

~~1.19~~0.86

(1)Includes an estimate of future recoveries.

~~Table of Contents~~

Nine Months Ended September 30, 2020
Balance, Provision for (Reversal of) Credit Losses Writeoffs Recoveries Balance,
January 1, 2020 September 30, 2020
(1) (1)
(in thousands)
Commercial and industrial
Tech & Innovation $ 22,394 $ 25,556 $ 9,114 $ — $ 38,836
Other commercial and industrial 95,784 13,653 2,684 (2,000) 108,753
CRE - owner occupied 10,420 9,100 126 (12) 19,406
CRE - non-owner occupied
Hotel Franchise Finance 14,104 23,923 — — 38,027
Other CRE - non-owned occupied 10,503 30,684 2,131 (1,566) 40,622
Residential 3,814 (2,103) 307 (385) 1,789
Construction and land development 6,218 32,540 — (23) 38,781
Warehouse lending 246 592 — — 838
Municipal & nonprofit 17,397 499 — — 17,896
Other 6,045 (314) 231 (112) 5,612
Total $ 186,925 $ 134,130 $ 14,593 $ (4,098) $ 310,560

~~Net charge-offs to average loans outstanding~~

~~0.16~~

~~(1)Includes an estimate of future recoveries.~~

Three Months Ended September 30, 2019
Balance, Charge-offs Recoveries Provision for (Reversal of) Credit Losses Balance,
June 30, 2019 September 30, 2019
(in thousands)
Construction and land development $ 26,091 $ — $ (17) $ 1,210 $ 27,318
Commercial real estate 41,258 139 (8) 4,817 45,944
Residential real estate 12,606 9 (131) 804 13,532
Commercial and industrial 79,635 1,950 (2,549) (2,815) 77,419
Consumer 819 1 (6) (16) 808
Total $ 160,409 $ 2,099 $ (2,711) $ 4,000 $ 165,021


	Three Months Ended March 31, 2020
	Balance, January 1, 2020		Provision for (Recovery of) Credit Losses		Write-offs		Recoveries		Balance, March 31, 2020
	(1)								(1)
	(in millions)
Warehouse lending	$	0.2	$	0.2	$	—	$	—	$	0.4
Municipal & nonprofit	17.4		(1.2)		—		—		16.2
Tech & innovation	22.4		17.4		—		—		39.8
Other commercial and industrial	95.8		23.3		0.1		(1.3)		120.3
CRE - owner occupied	10.4		0.1		—		—		10.5
Hotel franchise finance	14.1		4.7		—		—		18.8
Other CRE - non-owned occupied	10.5		1.7		—		(2.0)		14.2
Residential	3.8		(2.5)		—		—		1.3
Construction and land development	6.2		0.9		—		—		7.1
Other	6.1		0.6		—		—		6.7
Total	$	186.9	$	45.2	$	0.1	$	(3.3)	$	235.3

Net recoveries to average loans outstanding

~~(0.01)~~(0.06)

Allowance for credit losses on loans to funded HFI loans

~~0.91~~1.02

Nine Months Ended September 30, 2019
Balance, Charge-offs Recoveries Provision for (Reversal of) Credit Losses Balance,
December 31, 2018 September 30, 2019
(in thousands)
Construction and land development $ 22,513 $ 141 $ (81) $ 4,865 $ 27,318
Commercial real estate 34,829 139 (900) 10,354 45,944
Residential real estate 11,276 594 (251) 2,599 13,532
Commercial and industrial 83,118 6,092 (3,521) (3,128) 77,419
Consumer 981 2 (19) (190) 808
Total $ 152,717 $ 6,968 $ (4,772) $ 14,500 $ 165,021

~~Net charge-offs to average loans outstanding~~

~~0.02~~

9076

Table of Contents

The following table summarizes the allocation of the allowance for credit losses on loans held for investment by loan type.


		September 30, 2020							March 31, 2021
		Allowance for credit losses		Percent of total allowance for credit losses		Percent of loan type to total HFI loans			Allowance for credit losses		Percent of total allowance for credit losses		Percent of loan type to total HFI loans
		(dollars in thousands)							(dollars in millions)
Commercial and industrial
Tech & Innovation		$	38,836	12.5	%	8.8	%
Warehouse lending								Warehouse lending	$	3.6	1.5	%	17.1	%
Municipal & nonprofit								Municipal & nonprofit	15.2		6.2		5.8
Tech & innovation								Tech & innovation	23.9		9.6		8.8
Other commercial and industrial	Other commercial and industrial	108,753		35.0		23.1		Other commercial and industrial	78.4		31.7		21.5
CRE - owner occupied	CRE - owner occupied	19,406		6.2		7.6		CRE - owner occupied	9.7		3.9		6.4
CRE - non-owner occupied
Hotel Franchise Finance		38,027		12.2		7.5
Hotel franchise finance								Hotel franchise finance	49.4		20.0		7.1
Other CRE - non-owned occupied	Other CRE - non-owned occupied	40,622		13.1		13.2		Other CRE - non-owned occupied	32.7		13.2		12.6
Residential	Residential	1,789		0.6		9.0		Residential	3.2		1.3		10.6
Construction and land development	Construction and land development	38,781		12.5		8.7		Construction and land development	25.9		10.5		9.6
Warehouse lending		838		0.3		15.1
Municipal & nonprofit		17,896		5.8		6.5
Other	Other	5,612		1.8		0.6		Other	5.1		2.1		0.5
Total	Total	$	310,560	100.0	%	100.0	%	Total	$	247.1	100.0	%	100.0	%

December 31, 2019
Allowance for credit losses Percent of total allowance for credit losses Percent of loan type to total HFI loans
(dollars in thousands)
Commercial and industrial $ 82,302 49.0 % 44.5 %
Commercial Real Estate 47,273 28.2 35.8
Construction and Land Development 23,894 14.2 9.2
Residential Real Estate 13,714 8.2 10.2
Consumer 614 0.4 0.3
Total $ 167,797 100.0 % 100.0 %


	December 31, 2020
	Allowance for credit losses		Percent of total allowance for credit losses		Percent of loan type to total HFI loans
	(dollars in millions)
Warehouse lending	$	3.4	1.2	%	16.0	%
Municipal & nonprofit	15.9		5.7		6.4
Tech & innovation	35.3		12.7		9.4
Other commercial and industrial	94.7		33.9		21.8
CRE - owner occupied	18.6		6.7		7.1
Hotel franchise finance	43.3		15.5		7.3
Other CRE - non-owned occupied	39.9		14.3		13.5
Residential	0.8		0.3		8.8
Construction and land development	22.0		7.9		9.0
Other	5.0		1.8		0.7
Total	$	278.9	100.0	%	100.0	%

In addition to the allowance for loan losses, the Company maintains a separate allowance for credit losses 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 tables reflect the activity in the allowance for credit losses on unfunded loan commitments:


	Three Months Ended March 31,
		2021		2020
	(in millions)
Balance, beginning of period		$	37.0	$	9.0
Beginning balance adjustment from adoption of CECL		—		15.1
(Recovery of) provision for credit losses		(4.4)		5.5
Balance, end of period		$	32.6	$	29.6

Table of Contents

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 the Company's Annual Report for the year ended December 31, ~~2019.~~2020. The following table presents information regarding potential and actual problem loans, consisting of loans graded Special Mention, Substandard, Doubtful, and Loss, but still performing:

September 30, 2020
Number of Loans Loan Balance Percent of Loan Balance Percent of Total HFI Loans
(dollars in thousands)
Commercial and industrial
Tech & Innovation 28 $ 14,929 3.36 % 0.06 %
Other commercial and industrial 71 186,478 41.97 0.72
CRE - owner occupied 30 44,247 9.96 0.17
CRE - non-owner occupied
Hotel Franchise Finance 9 115,831 26.08 0.45
Other CRE - non-owned occupied 12 30,940 6.97 0.12
Residential 1 32 0.01 —
Construction and land development 8 42,378 9.54 0.16
Warehouse lending — — — —
Municipal & nonprofit 3 6,525 1.47 0.03
Other 14 2,835 0.64 0.01
Total 176 $ 444,195 100.00 % 1.72 %

~~Table of Contents~~


	March 31, 2021
	Number of Loans	Loan Balance		Percent of Loan Balance		Percent of Total HFI Loans
	(dollars in millions)
Warehouse lending	—	$	—	—	%	—	%
Municipal & nonprofit	—	—		—		—
Tech & innovation	5	18.3		4.4		0.06
Other commercial and industrial	75	62.7		14.9		0.22
CRE - owner occupied	37	80.3		19.1		0.28
Hotel franchise finance	10	144.9		34.4		0.50
Other CRE - non-owned occupied	7	12.0		2.8		0.04
Residential	—	—		—		—
Construction and land development	8	60.0		14.3		0.21
Other	16	42.4		10.1		0.15
Total	158	$	420.6	100.0	%	1.46	%

December 31, 2019
Number of Loans Loan Balance Percent of Loan Balance Percent of Total
HFI Loans
(dollars in thousands)
Commercial and industrial 73 $ 96,464 43.06 % 0.46 %
Commercial real estate 37 107,839 48.14 0.51
Construction and land development 10 18,971 8.47 0.09
Residential real estate 3 727 0.33 0.00
Consumer 1 10 0.00 0.00
Total 124 $ 224,011 100.00 % 1.06 %


	December 31, 2020
	Number of Loans	Loan Balance		Percent of Loan Balance		Percent of Total HFI Loans
	(dollars in millions)


Tech & innovation	4	$	15.3	3.6	%	0.06	%
Other commercial and industrial	71	74.3		17.6		0.27
CRE - owner occupied	37	79.8		18.9		0.30
Hotel franchise finance	9	116.9		27.6		0.43
Other CRE - non-owned occupied	9	15.8		3.7		0.06

Construction and land development	7	47.3		11.2		0.17
Other	21	73.4		17.4		0.27
Total	158	$	422.8	100.0	%	1.56	%

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 that are determined to have an indefinite useful life are not subject to amortization, but are subsequently evaluated for impairment at least annually. The Company has goodwill and intangible assets totaling ~~$299.0~~$298.0 million at ~~September 30, 2020, which have been allocated to the Nevada, Northern California, Technology & Innovation, and HFF operating segments.~~March 31, 2021.

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 three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ there were no events or circumstances that indicated an interim impairment test of goodwill or other intangible assets was necessary.

Deferred Tax Assets

At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company had no deferred tax valuation allowance.

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Deposits

Deposits are the primary source for funding the Company's asset growth. Total deposits increased to ~~$28.8~~$38.4 billion at ~~September 30, 2020,~~March 31, 2021, from ~~$22.8~~$31.9 billion at December 31, ~~2019,~~2020, an increase of ~~$6.0~~$6.5 billion, or ~~26.5%~~20.2%. The increase in deposits is largely attributable to ~~an increase~~increases in non-interest bearing demand deposits of ~~$4.5~~$4.1 billion and ~~increases of $1.5 billion in~~ savings and money market accounts ~~and $793.8 million in interest bearing demand deposits,~~of $2.9 billion. These increases were partially offset by a decrease in ~~certificates~~interest bearing demand deposits of ~~deposit of $676.1~~$503.0 million.

WAB is a participant in the Promontory Interfinancial Network, a network that offers deposit placement services such as CDARS and ICS, which offer products that qualify large deposits for FDIC insurance. At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company also has ~~$914.9~~$976.2 million and ~~$1.1 billion,~~$554.8 million, respectively, of wholesale brokered deposits. In addition, deposits for which the Company provides account holders with earnings credits and referral fees totaled ~~$3.6~~$8.6 billion and ~~$3.1~~$5.9 billion at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. The Company incurred ~~$2.9~~$5.8 million and ~~$11.2~~$7.0 million in deposit related costs during the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively. The Company incurred $13.0 million and $24.0 million in deposit related costs during the nine months ended September 30, 2020 and 2019,~~ respectively.

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The average balances and weighted average rates paid on deposits are presented below:

Three Months Ended September 30,
2020 2019
Average Balance Rate Average Balance Rate
(dollars in thousands)
Interest-bearing transaction accounts $ 3,636,299 0.16 % $ 2,488,581 0.81 %
Savings and money market accounts 10,170,085 0.22 8,456,531 1.25
Certificates of deposit 1,845,479 1.10 2,250,362 2.06
Total interest-bearing deposits 15,651,863 0.31 13,195,474 1.30
Non-interest-bearing demand deposits 12,422,208 — 8,916,568 —
Total deposits $ 28,074,071 0.17 % $ 22,112,042 0.78 %


		Nine Months Ended September 30,									Three Months Ended March 31,
		2020				2019					2021				2020
		Average Balance		Rate		Average Balance		Rate			Average Balance		Rate		Average Balance		Rate
		(dollars in thousands)									(dollars in millions)
Interest-bearing transaction accounts	Interest-bearing transaction accounts	$	3,410,882	0.29	%	$	2,511,860	0.86	%	Interest-bearing transaction accounts	$	3,905.4	0.13	%	$	3,098.5	0.58	%
Savings and money market accounts	Savings and money market accounts	9,546,249		0.40		7,854,914		1.25		Savings and money market accounts	13,994.4		0.21		9,033.4		0.79
Certificates of deposit	Certificates of deposit	2,113,020		1.47		2,114,659		1.99		Certificates of deposit	1,681.1		0.59		2,346.0		1.78
Total interest-bearing deposits	Total interest-bearing deposits	15,070,151		0.53		12,481,433		1.30		Total interest-bearing deposits	19,580.9		0.22		14,477.9		0.90
Non-interest-bearing demand deposits	Non-interest-bearing demand deposits	10,813,205		—		8,118,791		—		Non-interest-bearing demand deposits	15,972.6		—		8,869.7		—
Total deposits	Total deposits	$	25,883,356	0.31	%	$	20,600,224	0.79	%	Total deposits	$	35,553.5	0.12	%	$	23,347.6	0.56	%

Other Borrowings

The Company from time to time utilizes short-term borrowed funds to support short-term liquidity needs generally created by increased loan demand. The majority of these short-term borrowed funds consist of advances from the FHLB and customer repurchase agreements. 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, collateralized by securities, including securities 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. At ~~September 30, 2020,~~March 31, 2021, total short-term borrowed funds consist of FHLB advances of ~~$10.0~~$5.0 million and customer repurchase agreements of ~~$19.7~~$15.9 million. At December 31, ~~2019,~~2020, total short-term borrowed funds consisted of FHLB advances of $5.0 million and customer repurchase agreements of ~~$16.7~~$16.0 million.

Qualifying Debt

Qualifying debt consists of subordinated debt and junior subordinated debt, inclusive of issuance costs and fair market value adjustments. At ~~September 30, 2020,~~March 31, 2021, the carrying value of qualifying debt was ~~$618.8~~$543.7 million, compared to ~~$393.6~~$548.7 million at December 31, ~~2019. The increase in qualifying debt from December 31, 2019 is due to issuance of $225.0 million of subordinated debt, recorded net of issuance costs, in May~~ 2020.

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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 11. Commitments and Contingencies" to the Unaudited Consolidated Financial Statements) 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.

In March 2020, the federal bank regulatory authorities issued an interim final rule that delays the estimated impact on regulatory capital resulting from the adoption of CECL. The interim final rule provides banking organizations that implement CECL before the end of 2020 the option to delay for two years the estimated impact of CECL on regulatory capital relative to regulatory capital determined under the prior incurred loss methodology, followed by a three-year transition period to phase out the aggregate amount of capital benefit provided during the initial two-year delay. The Company has elected the five-year CECL transition option in connection with its adoption of CECL on January 1, 2020. As a result, capital ratios and amounts as of ~~September 30, 2020~~March 31, 2021 exclude the impact of the increased allowance for credit losses related to the adoption of ASC 326.

As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company and the Bank exceeded the capital levels necessary to be classified as well-capitalized, as defined by the 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:


		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			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)																	(dollars in millions)
September 30, 2020
March 31, 2021																		March 31, 2021
WAL	WAL	$	3,794,419	$	2,991,443	$	29,079,735	$	32,190,510	13.0	%	10.3	%	9.3	%	10.0	%	WAL	$	4,201.5	$	3,518.9	$	33,326.1	$	40,072.7	12.6	%	10.6	%	8.8	%	10.3	%
WAB	WAB	3,555,485		2,925,840		29,102,161		32,211,409		12.2		10.1		9.1		10.1		WAB	3,938.5		3,442.8		33,390.1		40,171.9		11.8		10.3		8.5		10.3
Well-capitalized ratios	Well-capitalized ratios									10.0		8.0		5.0		6.5		Well-capitalized ratios									10.0		8.0		5.0		6.5
Minimum capital ratios	Minimum capital ratios									8.0		6.0		4.0		4.5		Minimum capital ratios									8.0		6.0		4.0		4.5

December 31, 2019
December 31, 2020																		December 31, 2020
WAL	WAL	$	3,257,874	$	2,775,390	$	25,390,142	$	26,110,275	12.8	%	10.9	%	10.6	%	10.6	%	WAL	$	3,872.0	$	3,158.2	$	31,015.4	$	34,349.3	12.5	%	10.2	%	9.2	%	9.9	%
WAB	WAB	3,030,301		2,703,549		25,452,261		26,134,431		11.9		10.6		10.3		10.6		WAB	3,619.4		3,078.2		31,140.6		34,367.0		11.6		9.9		9.0		9.9
Well-capitalized ratios	Well-capitalized ratios									10.0		8.0		5.0		6.5		Well-capitalized ratios									10.0		8.0		5.0		6.5
Minimum capital ratios	Minimum capital ratios									8.0		6.0		4.0		4.5		Minimum capital ratios									8.0		6.0		4.0		4.5

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Critical Accounting Policies

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and could potentially result in materially different results under different assumptions and conditions. The critical accounting policies upon which the Company's financial condition and results of operations depend, and which involve the most complex subjective decisions or assessments, are included in the discussion entitled "Critical Accounting Policies" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019,~~2020, and all amendments thereto, as filed with the SEC.

~~During the first quarter of 2020, the Company adopted the ASUs related to credit losses, which include ASU 2016-13,~~ ~~Measurement of Credit Losses on Financial Instruments, ASU 2019-04,~~ ~~Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,~~ ~~ASU 2019-05,~~ ~~Financial Instruments - Credit Losses,~~ ~~and ASU 2019-11,~~ ~~Codification Improvements to Topic 326, Financial Instruments—Credit Losses~~. The new standards significantly change the impairment model for most financial assets that are measured at amortized cost, including off-balance sheet credit exposures, from an incurred loss model to an expected loss model. The amendments in ASU 2016-13 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. Determining the appropriateness of the allowance is complex 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 allowance for credit losses and credit loss expense in those future periods. The allowance level is influenced by loan volumes, loan asset quality ratings, delinquency status, historical credit loss experience, loan performance characteristics, and other conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions. Changes to the 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" for a detailed discussion of the Company's methodologies for estimating expected credit losses.

There were no ~~other~~ material changes to the critical accounting policies disclosed in the ~~Company's~~ Annual Report on Form ~~10-K for the fiscal year ended December 31, 2019.~~10-K.

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, including the ongoing COVID-19 pandemic.

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, 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, 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. Liquidity requirements can also be met through short-term borrowings or the disposition of short-term assets.

While the Company does not anticipate any need for additional liquidity, in response to the uncertainty regarding the severity and duration of the COVID-19 pandemic, the Company has taken several actions to ensure the strength of its liquidity position. These actions include establishing a $1.8 billion Federal Reserve lending facility in connection with funding loans to small and medium-sized businesses and suspending stock repurchases effective as of April 17, 2020. In addition, the Company is also in a position to pledge additional collateral to increase its borrowing capacity with the FRB, if necessary.

The following table presents the available and outstanding balances on the Company's lines of credit:

~~September 30, 2020~~March 31, 2021

Available
Balance

Outstanding Balance

(in millions)

Unsecured fed funds credit lines at correspondent banks

~~2,402.0~~2,452.0

—

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In addition to lines of credit, the Company has borrowing capacity with the FHLB and FRB from pledged loans and securities. The borrowing capacity, outstanding borrowings, and available credit as of ~~September 30, 2020~~March 31, 2021 are presented in the following table:


	~~September 30, 2020~~March 31, 2021
	(in millions)
FHLB:
Borrowing capacity	$	~~4,412.9~~4,220.5
Outstanding borrowings	~~10.0~~5.0
Letters of credit	21.0
Total available credit	$	~~4,381.9~~4,194.5

FRB:
Borrowing capacity	$	~~2,414.9~~2,733.5
Outstanding borrowings	—
Total available credit	$	~~2,414.9~~2,733.5

The Company also has a separate PPP lending facility with the FRB that allows the Company to pledge loans originated under the PPP in return for dollar for dollar funding from the FRB, which would provide up to $1.5 billion in additional credit. The amount of available credit under the PPP lending facility will decline each period as these loans are paid down.

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 funding and deposit cash withdrawals for the next 90-120 days. At ~~September 30, 2020,~~March 31, 2021, there was ~~$4.6~~$11.5 billion in liquid assets, comprised of ~~$1.4~~$5.3 billion in cash and cash equivalents and ~~$3.1~~$6.2 billion in unpledged marketable securities. At December 31, ~~2019,~~2020, the Company maintained ~~$2.9~~$6.6 billion in liquid assets, comprised of ~~$434.6 million~~$2.7 billion of cash and cash equivalents and ~~$2.5~~$3.9 billion of unpledged marketable securities.

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,

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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 non-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 subsidiary 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 ~~September 30, 2020,~~March 31, 2021, 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 ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ net cash provided by operating activities was ~~$450.1~~$100.1 million and ~~$534.5~~$124.0 million, respectively.

The Company's primary investing activities are the origination of real estate and commercial loans, the collection of repayments of these loans, and the purchase and sale of securities. The Company's net cash provided by and used in investing activities has been primarily influenced by its loan and securities activities. The Company's cash balance during the three months ended March 31, 2021 and 2020 was reduced by $1.6 billion and $2.0 billion, respectively, as a result of a net increase in loans ~~for the nine months ended September 30, 2020 and 2019 was $4.8 billion and $2.4 billion, respectively. There was~~as well as a net increase in investment securities ~~for the nine months ended September 30, 2020~~of $2.4 billion and ~~2019 of $663.5 million and $221.1~~$353.7 million, respectively.

Net cash provided by financing activities has been impacted significantly by increased deposit levels. During the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ net deposits increased ~~$6.0~~$6.5 billion and ~~$3.3~~$2.0 billion, respectively.

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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 $150.0 million, respectively, through one participating financial institution or, a combined total of $200.0 million per individual customer, with the entire amount being covered by FDIC insurance. As of ~~September 30, 2020,~~March 31, 2021, the Company has ~~$449.3~~$546.0 million of CDARS and ~~$1.1~~$1.5 billion of ICS deposits.

As of ~~September 30, 2020,~~March 31, 2021, the Company has ~~$914.9~~$976.2 million 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 three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, WAB paid dividends to the Parent of $15.0 ~~million and $145.0 million, respectively.~~million. Subsequent to ~~September 30, 2020,~~March 31, 2021, WAB paid dividends to the Parent of ~~$15.0~~$35.0 million.

Recent accounting pronouncements

See "Note 1. Summary of Significant Accounting Policies," of the Notes to Unaudited Consolidated Financial Statements contained in Item 1. Financial Statements for information on recent and recently adopted accounting pronouncements and their expected impact, if any, on the Company's Consolidated Financial Statements.

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Supervision and Regulation

The following information is intended to update, and should be read in conjunction with, the information contained under the caption “Supervision and Regulation” in the Company’s Annual Report on Form 10-K ~~and the supplemental disclosure related thereto contained under the same caption in the Company’s Form 10-Q~~ for the ~~quarter~~year ended ~~June 30, 2020.~~December 31, 2020, based on completion of the Company's acquisition of AHM on April 7, 2021.

~~CARES Act~~Supervision, Regulation and Licensing of AHM

~~On March 27, 2020, the CARES Act was passed by Congress~~AHM is a residential mortgage producer and ~~signed into law~~servicer that operates in a heavily regulated industry. In addition to supervision by the President. The CARES Act provided approximately $2.2 trillion in direct economic relief in response to the public health and economic impacts of COVID-19. Many of the CARES Act’s programs are, and remain, dependent upon the direct involvement of U.S. financial institutions like the Company and the Bank. These programs have been implemented through rules and guidance adopted by federal ~~departments and~~banking agencies ~~including the U.S. Department of Treasury, the Federal Reserve, and other federal bank regulatory authorities, including those~~ with ~~direct supervisory~~primary jurisdiction over the Company and WAB, AHM is subject to the ~~Bank. Furthermore,~~rules, regulations and oversight of certain federal, state and local governmental authorities, including the CFPB, HUD, and government-sponsored enterprises in the mortgage industry such as FHLMC, FNMA, and GNMA.

Further, AHM must comply with a large number of federal consumer protection laws and regulations including, among others:

•the ~~COVID-19 pandemic evolves, federal regulatory authorities continue~~Real Estate Settlement Procedures Act and Regulation X, which require lenders, mortgage brokers, or servicers to ~~issue additional guidance~~provide borrowers with pertinent and timely disclosures regarding the nature and costs of the settlement process and prohibit specific practices related thereto;

•the Truth In Lending Act and Regulation 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 prohibit discrimination and provide applicants and borrowers rights with respect to credit decisioning and the ~~implementation, lifecycle,~~residential mortgage process, and ~~eligibility requirements for the various CARES Act programs~~require disclosures and impose obligations on financial businesses conducting residential lending and mortgage servicing.

The CFPB as well as ~~industry-specific recovery procedures for COVID-19. In addition, it is possible that Congress will enact supplementary COVID-19 response legislation, including new bills comparable in scope~~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 ~~CARES Act, prior to the end of 2020.~~

Set forth below is a brief overview of select provisions of the CARES Act and other regulations and supervisory guidance related to the COVID-19 pandemic that are applicable to the operations and activities of the Company and its subsidiaries, including the Bank. The following description is qualified in its entirety by reference to the full text of the CARES Act and the statutes, regulations, and policies described herein. Future legislation and/or amendments to the provisions of the CARES Act or changes to any of the statutes, regulations, or regulatory policies applicable to the Company and its subsidiaries could have a material effect on the Company. Such legislation and related regulations and supervisory guidance will be implemented over time and will remain subject to review by Congress and the implementing regulations issued by federal regulatory authorities. The Companyresidential mortgage industry continues to ~~assess~~evolve. In particular, as part of its enforcement authority, the ~~impact of the CARES Act, the potential impact of new COVID-19 legislation, and other statutes, regulations, and supervisory guidance related to the COVID-19 pandemic.~~

~~Paycheck Protection Program~~. The CARES Act amended the SBA’s loan program, in which the Bank participates, to create a guaranteed, unsecured loan program, the PPP, to fund operational costs of eligible businesses, organizations and self-employed persons during COVID-19. On June 5, 2020, the President signed the PPPFA into law, whichCFPB can order, among other things, ~~gave borrowers additional time~~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 ~~flexibility~~civil money penalties.

AHM is also subject to ~~use PPP~~state and local laws, rules and regulations and oversight by various state agencies that license and oversee consumer protection, loan ~~proceeds. Shortly thereafter,~~servicing, origination and ~~due to~~collection activities of mortgage industry participants. Despite the ~~evolving impact~~fact that AHM is the operating subsidiary of the COVID-19 pandemic, the President signed additional legislation authorizing the SBA to resume accepting PPP applications on July 6, 2020 and extending the PPP application deadline to August 8, 2020. It is anticipated that additional revisions to the SBA’s interim final rules on forgiveness and loan review procedures, including potential Congressional legislation on those issues, will be forthcoming to address these and related changes. As a ~~participating lender in the PPP, the Bank continues to monitor legislative,~~depository institution, it must comply with certain regulatory and ~~supervisory developments related thereto.~~

~~Troubled Debt Restructuring~~licensing requirements of multiple states in order to conduct its business, and ~~Loan Modifications for Affected Borrowers. The CARES Act permits banks~~does (and will continue to) incur significant costs to ~~suspend requirements under GAAP for loan modifications to borrowers affected by COVID-19 that would otherwise be characterized~~comply with these requirements. These laws, rules and regulations may change as ~~TDRs~~statutes and ~~suspend any determination related thereto if (i) the loan modification is made between March 1, 2020~~regulations are enacted, promulgated, amended, interpreted and the earlier of December 31, 2020 or 60 days after the end of the COVID-19 emergency declaration, and (ii) the applicable loan was not more than 30 days past due as of December 31, 2019. Federal bank regulatory authorities also issued guidance to encourage banks to make loan modifications for borrowers affected by COVID-19 and to assure banks that they will not be criticized by examiners for doing so.

~~Federal Reserve Programs and Other Recent Initiatives~~

~~Main Street Lending Program~~. The CARES Act encouraged the Federal Reserve, in coordination with the Secretary of the Treasury, to establish or implement various programs to help midsize businesses, nonprofits, and municipalities. On April 9, 2020, the Federal Reserve proposed the creation of the MSLP to implement certain of these recommendations. On June 15, 2020, the Federal Reserve Bank of Boston opened the MSLP for lender registration. The MSLP supports lending to small and medium-sized businesses that were in sound financial condition before the onset of the COVID-19 pandemic. The MSLP operates through five facilities: the Main Street New Loan Facility, the Main Street Priority Loan Facility, the Main Street Expanded Loan Facility, the Nonprofit Organization New Loan Facility, and the Nonprofit Organization Expanded Loan Facility. The Federal Reserve Bank of Boston maintains the legal forms and agreements for eligible borrowers and eligible lenders to participate in the MSLP, and continues to refine the MSLP’s operational infrastructure and facilities. The Bank has registered as a lender under the MSLP and continues to monitor developments related thereto.enforced.

~~Table of Contents~~

~~Temporary Regulatory Capital Relief related to Impact of CECL.~~ Concurrent with enactment of the CARES Act, the federal bank regulatory authorities issued an interim final rule in late March 2020 that delayed the estimated impact on regulatory capital resulting from the adoption of CECL. Subsequently, on August 26, 2020, the federal banking agencies issued a final rule that allows institutions that adopt the CECL accounting standard in 2020 to mitigate CECL’s estimated effects on regulatory capital for two years. The CECL final rule is substantially similar to the interim final rule issued in March 2020 in connection with other CARES Act related regulatory relief. The final rule gives eligible institutions the option to mitigate the estimated capital effects of CECL for two years, followed by a three-year transition period. The Company has elected this capital relief option.

~~Supervisory Developments.~~ On June 25, 2020, the Federal Reserve announced that it would take several actions to ensure large banks remain resilient despite the ongoing economic impact of COVID-19. Specifically, in the third quarter, the Federal Reserve will require large banks to preserve capital by suspending share repurchases, capping dividend payments, and allowing dividends according to a formula based on recent income. The Company and the Bank continue to monitor these developments, as well as other evolving supervisory responses to the COVID-19 pandemic, to assess what effect (if any) they will have, but do not anticipate any material impact at this time.

~~Modification of the Volcker Rule.~~ Also on June 25, 2020, the Federal Reserve - along with the Commodity Futures Trading Commission, FDIC, the Office of the Comptroller of the Currency, and the SEC - issued a final rule modifying the Volcker Rule’s prohibition on banking entities investing in or sponsoring hedge funds or private equity funds (“covered funds”). The Volcker Rule generally prohibits banking entities from engaging in proprietary trading and from acquiring or retaining ownership interests in, sponsoring or having certain relationships with a hedge fund or private equity fund. The final rule modifies three areas of the Volcker Rule 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 other activities that do not raise concerns that the Volcker Rule was intended to address. The new rule became effective October 1, 2020. The Company and the Bank do not anticipate any material impact at this time from the new rule.

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Item 3.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 and rates, foreign currency exchange rates, commodity prices, and equity prices. The Company's market risk arises primarily from interest rate risk inherent in its lending, investing, and deposit taking activities. 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.

Interest rate risk is addressed by ALCO, which includes members of executive management, finance, and operations. ALCO monitors interest rate risk by analyzing the potential impact on the net EVE and net interest income 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 maintain 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 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 to adjust the asset and liability mix to bring interest rate risk within Board-approved limits.

Net Interest Income Simulation. In order to measure interest rate risk at ~~September 30, 2020,~~March 31, 2021, the Company used 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 re-pricing relationships for each of the Company's products. Many of the Company's assets are floating rate loans, which are assumed to re-price immediately and, proportional to the change in market rates, depending on their contracted index, including the impact of caps or 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 concurrently with interest rate changes taken by the Federal Open Market Committee.

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 remains static and that its structure does 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.

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. Changes that vary significantly from the modeled assumptions may have significant effects on the Company's actual net interest income.

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This simulation model assesses the changes in net interest income that would occur in response to an instantaneous and sustained increase or decrease (shock) in market interest rates. At ~~September 30, 2020,~~March 31, 2021, our net interest income exposure for the next twelve months related to these hypothetical changes in market interest rates was within our current guidelines.

Sensitivity of Net Interest Income


		Parallel Shift Rate Scenario (change in basis points from Base)												Parallel Shift Rate Scenario (change in basis points from Base)
		Down 100			Base		Up 100			Up 200				Down 100			Base		Up 100			Up 200
		(in thousands)												(in millions)
Interest Income	Interest Income	$	1,143,728		$	1,173,944	$	1,298,005		$	1,461,979		Interest Income	$	1,411.0		$	1,464.1	$	1,644.8		$	1,895.5
Interest Expense	Interest Expense	44,820			68,285		136,442			204,790			Interest Expense	32.6			63.5		159.1			254.8
Net Interest Income	Net Interest Income	$	1,098,908		$	1,105,659	$	1,161,563		$	1,257,189		Net Interest Income	$	1,378.4		$	1,400.6	$	1,485.7		$	1,640.7
% Change	% Change	(0.6)		%			5.1		%	13.7		%	% Change	(1.6)		%			6.1		%	17.1		%


		Interest Rate Ramp Scenario (change in basis points from Base)												Interest Rate Ramp Scenario (change in basis points from Base)
		Down 100			Base		Up 100			Up 200				Down 100			Base		Up 100			Up 200
		(in thousands)												(in millions)
Interest Income	Interest Income	$	1,149,818		$	1,173,944	$	1,230,788		$	1,296,622		Interest Income	$	1,431.4		$	1,464.1	$	1,540.4		$	1,636.5
Interest Expense	Interest Expense	54,229			68,285		83,030			97,032			Interest Expense	43.5			63.5		85.7			106.8
Net Interest Income	Net Interest Income	$	1,095,589		$	1,105,659	$	1,147,758		$	1,199,590		Net Interest Income	$	1,387.9		$	1,400.6	$	1,454.7		$	1,529.7
% Change	% Change	(0.9)		%			3.8		%	8.5		%	% Change	(0.9)		%			3.9		%	9.2		%

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. 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.

At ~~September 30, 2020,~~March 31, 2021, 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 ~~September 30, 2020:~~March 31, 2021:

Economic Value of Equity


		Interest Rate Scenario (change in basis points from Base)																		Interest Rate Scenario (change in basis points from Base)
		Down 100			Base		Up 100			Up 200			Up 300			Up 400				Down 100			Base		Up 100			Up 200			Up 300			Up 400
		(in thousands)																		(in millions)
Assets	Assets	$	34,477,744		$	34,013,005	$	33,462,593		$	32,884,102		$	32,493,211		$	31,942,018		Assets	$	44,657.2		$	43,789.9	$	42,899.6		$	42,051.6		$	41,292.2		$	40,586.6
Liabilities	Liabilities	30,084,298			29,052,741		28,125,021			27,230,099			26,343,698			25,540,101			Liabilities	38,891.0			37,571.1		36,414.6			35,285.1			34,157.1			33,138.3
Net Present Value	Net Present Value	$	4,393,446		$	4,960,264	$	5,337,572		$	5,654,003		$	6,149,513		$	6,401,917		Net Present Value	$	5,766.2		$	6,218.8	$	6,485.0		$	6,766.5		$	7,135.1		$	7,448.3
% Change	% Change	(11.4)		%			7.6		%	14.0		%	24.0		%	29.1		%	% Change	(7.3)		%			4.3		%	8.8		%	14.7		%	19.8		%

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.

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Derivative Contracts. In the normal course of business, the Company uses derivative instruments to meet the needs of its customers and manage exposure to fluctuations in interest rates. The following table summarizes the aggregate notional amounts, market values, and terms of the Company’s derivative positions as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019:~~2020:

Outstanding Derivatives Positions


September 30, 2020					December 31, 2019
March 31, 2021										March 31, 2021				December 31, 2020
Notional	Notional	Net Value		Weighted Average Term (Years)	Notional		Net Value		Weighted Average Term (Years)	Notional	Net Value		Weighted Average Term (Years)	Notional		Net Value		Weighted Average Term (Years)
(dollars in thousands)
(dollars in millions)										(dollars in millions)
$	734,787	$	(88,876)	18.0	$	872,595	$	(53,667)	16.1	1,808.7	$	(49.5)	15.8	$	1,812.6	$	(83.3)	16.0

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Item 4.Controls and Procedures.

Evaluation of Disclosure Controls

Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, the CEO and CFO have concluded that the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, as amended, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Additionally, the Company's disclosure controls and procedures were also effective in ensuring that information required to be disclosed by the Company in the reports it files or is subject to under the Exchange Act is accumulated and communicated to the Company's management, including the CEO and CFO, to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

There have not been any changes in the Company's internal control over financial reporting during the quarter ended ~~September 30, 2020,~~March 31, 2021, which have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.Legal Proceedings.

There are no material pending legal proceedings to which the Company is a party or to which any of its properties are subject. There are no material proceedings known to the Company to be contemplated by any governmental authority. 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.

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Item 1A.Risk Factors.

The Company has updated the risk factors contained in Item ~~1A. Risk Factors~~1A of ~~the Company’s~~its Annual Report on Form 10-K for the year ended December 31, ~~2019 includes a discussion~~2020 based on the completion of the Company’s acquisition of AHM on April 7, 2021. Other than as set forth below, there were no material risks and uncertainties that could adversely affect our business and impact our results of operations or financial condition. The information presented below updates, and should be read in conjunction with,changes to the risk factors ~~and information~~ disclosed in Item 1A of the Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2020.

The ~~COVID-19 pandemic~~risk factor captioned “The Company’s proposed acquisition of AHM is subject to regulatory approvals and ~~resulting adverse economic~~other closing conditions ~~have~~and may be more difficult, costly or time-consuming to complete than the Company expects” is no longer applicable.

The risk factor captioned “If the Merger is completed, the addition of AHM’s national mortgage franchise would present risks that could cause the Company to not realize the strategic and financial goals contemplated at the time it entered into the agreement to acquire AHM or otherwise adversely affect the Company’s results of operations” has been updated as follows:

The recent addition of AHM’s national mortgage franchise presents risks that could cause the Company to not realize the strategic and financial goals of the AHM acquisition or could otherwise adversely affect the Company’s results of operations.

Risks the Company faces with respect to its recently completed acquisition of AHM include:

•Management’s estimates regarding AHM’s future earnings potential may not be achievable, because AHM’s performance could be adversely impacted ~~our business and results and could have~~by a ~~more material adverse impact on our business, financial condition and results of operations.~~

~~The ongoing COVID-19 global and national health emergency has caused significant disruption~~rising rate environment, changes in the ~~United States and international economies and financial markets. The spread~~mix of COVID-19 in the United States has caused illness, quarantines, cancellation of events and travel, business and school shutdowns, reduction in commercial activity and financial transactions, supply chain interruptions, increased unemployment, and overall economic and financial market instability. Many states, including Arizona, where we are headquartered, and California and Nevada, in which we have significant operations, declared states of emergency. These states, like many others, continue to be significantly impactedpurchase versus refinancing volumes, competition, or other factors not known or anticipated by the ~~pandemic.~~Company;

~~Although~~•The integration of AHM into WAB may be more costly or time-consuming than expected despite the ~~Bank has continued operating,~~fact that AHM continues to operate under its existing brand and management team;

•The Company may not realize the ~~COVID-19 pandemic has caused disruptions~~benefits it expects to ~~our~~achieve from the acquisition of AHM such as those anticipated from funding, cross-selling, and other integration synergies;

•The Company is subject to increased compliance costs and risks with respect to aspects of AHM’s business ~~and could cause material disruptions to our business and~~that differ from or are larger in scope than WAB’s previously existing similar operations, in the future. Impacts to our business have included the transition of a significant portion of our workforce to home locations, increases in costs due to additional health and safety precautions implemented at our branches, and an increase in draws on unfunded loan commitments and requests for forbearance and loan modifications. To the extent that commercial and social restrictions remain in place or increase, our expenses, delinquencies, foreclosures and credit losses may materially increase. In addition, the unprecedented nature of COVID-19 related disruptions heighten the inherent uncertainty of forecasting future economic conditions and their impact on our loan portfolio, and therefore increases the risk that the assumptions, judgments and estimates used to determine the appropriate allowance for future credit losses may prove to be incorrect, resulting in actual credit losses that exceed the Company’s recorded allowance.including:

~~Unfavorable economic conditions also may make it more difficult for us~~◦The need to maintain ~~deposit levels~~various state licenses and ~~loan origination volume~~federal and to obtain additional financing. Furthermore, such conditions have and may continue to adversely impact accounting estimates that we use to determine our allowance and provision for credit losses. Such conditions also could impact the value of assets we carry on our balance sheet such as goodwill, and cause the value of collateral associated with our existing loans to decline. Further, certain debt and equity instruments may experience significant fluctuations in value due to market disruption, widening of credit spreads, and governmental purchase intervention.

In addition, in March 2020, the Federal Reserve lowered the target range for the federal funds rate to a range from 0 to 0.25 percent, in part as a result of the pandemic. Sudden or unexpectedly large changes in interest rates could impact our ability to effectively manage our interest rate risk and could result in maturity imbalances in our assets and liabilities. A prolonged period of very low interest rates or an increase in interest rates that affects our borrowers' ability to repay loans could reduce our net interest income and have a material adverse impact on our cash flows.

While we have taken and are continuing to take actions to protect the safety and well-being of our employees and customers, no assurance can be given that the steps being taken will be deemed to be adequate or appropriate, nor can we predict the level of disruption which will occur to our employee's ability to perform their jobs or provide customer support and service. The continued or renewed spread of COVID-19 could negatively impact the availability of key personnel necessarygovernment-sponsored agency approvals required to conduct ~~our~~AHM’s business, the business and operations of our third-party service providers who perform critical services for our business, or the businesses of many of our customers and borrowers. A sizable percentage of our workforce has returned to working in our office buildings, and it is possible that one or more members of our senior management or other key employees contracts the virus and is unable to perform their essential duties. At the same time, many of our employees and employees of companies we do business with continue to work remotely as a result of the pandemic, and the risk of ~~cyber-attacks, breaches~~adverse consequences resulting from periodic examinations by such state and federal agencies or ~~similar events, whether through our systems~~from changes in laws or ~~those of third parties on which we rely, therefore has increased.~~

~~Among~~regulations that may be promulgated in the ~~factors outside our control that are likely to affect the impact the COVID-19 pandemic will ultimately have on our business are:~~future;

•◦Increased compliance risk and cost associated with federal, state and local laws, regulations and judicial and administrative decisions relating to mortgage loans and consumer protection, including those designed to discourage predatory lending, collections and servicing practices with respect to mortgage loans; and

◦Increased compliance risk and costs associated with federal, state and local laws related to data privacy and the ~~pandemic’s course~~handling of non-public personal financial information of AHM’s customers, including the California Consumer Protection Act and ~~severity;~~similar regulations that have been or may be enacted by other states;

•~~the direct~~The Company may have difficulties retaining key personnel from AHM or managing AHM’s technology platform;

•The Company’s operating results may be adversely impacted by claims or liabilities related to AHM’s business including, among others, (i) claims from government agencies, current or former customers or employees, consumers, financing providers, vendors and ~~indirect results of the pandemic, such as recessionary economic trends, including~~other business partners or third parties; (ii) repurchase and indemnification obligations with respect to ~~employment, wages~~sold loans or any failure to be able to enforce repurchase and ~~benefits, commercial activity, consumer spending~~indemnification obligations of counterparties with respect to purchased loans; and ~~real estate market values;~~(iii) counterparty and interest rate risk with respect to derivative and hedging instruments;

•~~political, legal~~AHM’s business may be further affected by the continuation or worsening of the COVID-19 pandemic; and

•AHM’s business may be adversely impacted by changes in the competitive or regulatory actions and policies in response to the pandemic, including the effects of restrictions on commerce and banking, such as moratoria and other suspensions of collections, foreclosures, and related obligations;landscape.

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•the timing, magnitude and effect of public spending, directly or through subsidies, its direct and indirect effects on commercial activity and incentives of employers and individuals to resume or increase employment, wages and benefits and commercial activity;

•~~the timing and availability of direct and indirect governmental support for various financial assets, including mortgage loans;~~

•~~the potential long-term impact on the tourism and hospitality industries, which could affect our hotel franchise finance business and portfolio;~~

•~~the long-term effect of the economic downturn on our intangible assets such as our deferred tax asset and goodwill;~~

•~~potential longer-term effects of increased government spending on the interest rate environment and borrowing costs for non-governmental parties;~~

•~~the ability of our employees and our third-party vendors to work effectively during the course of the pandemic;~~

•~~potential longer-term shifts toward mobile banking, telecommuting and telecommerce; and~~

•~~geographic variation in the severity and duration of the COVID-19 pandemic, including in states in which we operate physically such as Arizona, California and Nevada;~~

The ongoing COVID-19 pandemic has resulted in severe volatility in the financial markets and meaningfully lower stock prices for many companies, including our common stock. Depending on the extent and duration of the COVID-19 pandemic, the price of our common stock may continue to experience volatility and declines.

The Company is a participating lender in the PPP, a loan program administered through the SBA, that was created to help eligible businesses, organizations and self-employed persons fund their operational costs during the COVID-19 pandemic. Under this program, the SBA guarantees 100% of the amounts loaned under the PPP. Certain ambiguities in the laws, rules and guidance regarding the requirements and operation of the PPP may expose the Company to risks relating to noncompliance with the PPP. For instance, other financial institutions have experienced litigation related to their policies and procedures for accepting and processing applications for the PPP. Any financial liability, litigation costs or reputational damage caused by PPP related litigation could have a material adverse impact on our business, financial condition and results of operations. In addition, the Company may be exposed to credit risk on a PPP loan if a determination is made by the SBA that there is a deficiency in the manner in which the loan was originated, funded or serviced. In such a case, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty, or, if it has already paid under the guaranty, seek recovery of any related loss from the Company.

We are continuing to monitor the COVID-19 pandemic and related risks, although the rapid development and fluidity of the situation precludes any specific prediction as to its ultimate impact on us. However, if the pandemic continues to spread or otherwise results in a continuation or worsening of the current economic and commercial environments, our business, financial condition, results of operations and cash flows, as well as our regulatory capital and liquidity ratios, could be materially adversely affected.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

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:

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 be Purchased Under the Plans or Programs
July 2020 13,158 $ 36.16 — $ 178,392,414
August 2020 — — — 178,392,414
September 2020 1,240 31.21 — 178,392,414
Total 14,398 $ 35.85 — $ 178,392,414


	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 be Purchased Under the Plans or Programs
January 2021	43,152	$	68.16	—	$	—
February 2021	111,011	89.55		—	—
March 2021	—	—		—	—
Total	154,163	$	83.56	—	$	—

(1) Shares purchased during the period ~~outside of the publicly announced repurchase program~~ 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's~~Company currently does not have a common stock repurchase program was renewed through December 2020, authorizing the Company to repurchase up to $250.0 million of its outstanding common stock. Due to the COVID-19 pandemic, effective as of April 17, 2020, the Company has temporarily suspended its stock repurchases.program.

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Item 5.Other Information

Not applicable.

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Item 6.Exhibits

EXHIBITS


2.1						Agreement and Plan of Merger, dated February 16, 2021, by and among Western Alliance Bank, Western Alliance Equipment Finance, Inc., WAB Mortgage Sub, LLC, Aris Mortgage Holding Company, LLC, A-A Mortgage Opportunities, LP, and the individual members set forth on the signature page thereto (incorporated by reference to Exhibit 2.1 of Western Alliance's Form 8-K filed with the SEC on February 16, 2021).^

3.1						Amended and Restated Certificate of Incorporation, effective as of May 19, 2015 (incorporated by reference to Exhibit 3.1 of Western Alliance's Form 10-K filed with the SEC on March 1, ~~2019.~~2019 ).

3.2						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).

3.3						Articles of Conversion, as filed with the Nevada Secretary of State on May 29, 2014 (incorporated by reference to Exhibit 3.1 of Western Alliance’s Form 8-K filed with the SEC on June 3, 2014).

3.4						Certificate of Conversion, as filed with the Delaware Secretary of State on May 29, 2014 (incorporated by reference to Exhibit 3.2 of Western Alliance’s Form 8-K filed with the SEC on June 3, 2014).

10.1						Form of Securities Purchased Agreement dated February 28, 2021 (incorporated by reference to Exhibit 10.1 of Western Alliance's Form 8-K filed with the SEC on March 4, 2021).#

31.1*						CEO Certification Pursuant Rule 13a-14(a)/15d-14(a).

31.2*						CFO Certification Pursuant Rule 13a-14(a)/15d-14(a).

32**						CEO and CFO Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes Oxley Act of 2002.

101						Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, (ii) the Consolidated Income Statements for the three months ended ~~September 30,~~March 31, 2021 and March 31, 2020 and ~~September 30, 2019 and nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ (iii) the Consolidated Statements of Comprehensive Income for the three months ended ~~September 30,~~March 31, 2021 and March 31, 2020 and ~~September 30, 2019 and nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ (iv) the Consolidated Statements of Stockholders’ Equity for the three months ended ~~September 30,~~March 31, 2021 and March 31, 2020 and ~~September 30, 2019~~the three months March 31, 2021 and ~~the nine months September 30,~~ 2020, ~~and 2019,~~ (v) the Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ and (vi) the Notes to unaudited Consolidated Financial Statements. (Pursuant to Rule 406T of Regulation S-T, this information is deemed furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.) (Filed herewith).

104						The cover page of Western Alliance Bancorporation’s Quarterly Report on Form 10-Q for the quarterly period ended ~~September 30, 2020,~~March 31, 2021, formatted in Inline XBRL (contained in Exhibit 101).

* Filed herewith.

** Furnished herewith.

± Management contract or compensatory arrangement.

^ Certain schedules and attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish a supplemental copy of any omitted schedule or attachment to the SEC upon request.

# Certain schedules and attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish a supplemental copy of any omitted schedule or attachment to the SEC upon request.

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SIGNATURES

Pursuant to the requirements 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

~~October~~April 30, ~~2020~~2021

By:

/s/ Kenneth A. Vecchione

Kenneth A. Vecchione

President and Chief Executive Officer

~~October~~April 30, ~~2020~~2021

By:

/s/ Dale Gibbons

Dale Gibbons

Vice Chairman and Chief Financial Officer

~~October~~April 30, ~~2020~~2021

By:

/s/ J. Kelly Ardrey Jr.

J. Kelly Ardrey Jr.

Chief Accounting Officer

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		Page
PART I. FINANCIAL INFORMATION

Item 1.	Glossary of Entities and Terms	3
	Financial Statements (Unaudited)
	Consolidated Balance Sheets	4
	Consolidated Income Statements	54
	Consolidated Statements of Comprehensive Income	76
	Consolidated Statements of Stockholders’ Equity	87
	Consolidated Statements of Cash Flows	98
	Notes to Unaudited Consolidated Financial Statements	119
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	6861
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	~~100~~84
Item 4.	Controls and Procedures	~~103~~86

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	~~103~~86
Item 1A.	Risk Factors	~~104~~87
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	~~105~~88
Item 5.	Other Information	~~106~~88
Item 6.	Exhibits	~~107~~89

SIGNATURES		~~108~~90


	January 1, 2020
	Pre-ASC 326 Adoption		Post-ASC 326 Adoption		Impact of ASC 326 Adoption
	(in thousands)
Assets:
Allowance for credit losses on HTM securities	$	0	$	2,646	$	2,646
Allowance for credit losses on loans	167,797		186,925		19,128
Deferred tax asset	18,025		26,675		8,650
Liabilities:
Off-balance sheet credit exposures	$	8,955	$	24,044	$	15,089
Equity:
Retained earnings	$	1,680,317	$	1,655,370	$	(24,947)


	December 31, 2019
		Non-accrual loans					Loans past due 90 days or more and still accruing
			Current			Past Due/ Delinquent			Total Non-accrual
				(in thousands)
Commercial and industrial				$	19,080		$	5,421	$	24,501	$	0
Commercial real estate
Owner occupied				4,418			124		4,542		0
Non-owner occupied				7,265			11,913		19,178		0
Multi-family				0			0		0		0
Construction and land development
Construction				2,147			0		2,147		0
Land				0			0		0		0
Residential real estate				1,231			4,369		5,600		0
Consumer				0			0		0		0
Total				$	34,141		$	21,827	$	55,968	$	0


	Three Months Ended September 30, 2019
	June 30, 2019		Charge-offs		Recoveries		Provision for (Reversal of) Credit Losses		September 30, 2019
	(in thousands)
Construction and land development	$	26,091	$	0	$	(17)	$	1,210	$	27,318
Commercial real estate	41,258		139		(8)		4,817		45,944
Residential real estate	12,606		9		(131)		804		13,532
Commercial and industrial	79,635		1,950		(2,549)		(2,815)		77,419
Consumer	819		1		(6)		(16)		808
Total	$	160,409	$	2,099	$	(2,711)	$	4,000	$	165,021


	Nine Months Ended September 30, 2019
	December 31, 2018		Charge-offs		Recoveries		Provision for (Reversal of) Credit Losses		September 30, 2019
	(in thousands)
Construction and land development	$	22,513	$	141	$	(81)	$	4,865	$	27,318
Commercial real estate	34,829		139		(900)		10,354		45,944
Residential real estate	11,276		594		(251)		2,599		13,532
Commercial and industrial	83,118		6,092		(3,521)		(3,128)		77,419
Consumer	981		2		(19)		(190)		808
Total	$	152,717	$	6,968	$	(4,772)	$	14,500	$	165,021


	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, 2019:
Recorded Investment
Impaired loans with an allowance recorded	$	0	$	11,913	$	6,919	$	0	$	2,147	$	0	$	20,979
Impaired loans with no allowance recorded	17,736		23,625		42,065		5,600		6,274		24		95,324
Total loans individually evaluated for impairment	17,736		35,538		48,984		5,600		8,421		24		116,303
Loans collectively evaluated for impairment	2,296,342		5,159,921		9,333,059		2,142,045		1,943,735		57,059		20,932,161
Loans acquired with deteriorated credit quality	2,835		50,175		0		19		0		0		53,029
Total recorded investment	$	2,316,913	$	5,245,634	$	9,382,043	$	2,147,664	$	1,952,156	$	57,083	$	21,101,493
Unpaid Principal Balance
Impaired loans with an allowance recorded	$	0	$	11,949	$	9,844	$	0	$	2,262	$	0	24,055
Impaired loans with no allowance recorded	18,681		24,738		43,848		5,708		6,413		52		99,440
Total loans individually evaluated for impairment	18,681		36,687		53,692		5,708		8,675		52		123,495
Loans collectively evaluated for impairment	2,297,168		5,177,477		9,312,100		2,113,893		1,963,116		57,383		20,921,137
Loans acquired with deteriorated credit quality	3,577		60,191		0		72		0		0		63,840
Total unpaid principal balance	$	2,319,426	$	5,274,355	$	9,365,792	$	2,119,673	$	1,971,791	$	57,435	$	21,108,472
Related Allowance for Credit Losses
Impaired loans with an allowance recorded	$	0	$	1,219	$	1,050	$	0	$	507	$	0	$	2,776
Impaired loans with no allowance recorded	0		0		0		0		0		0		0
Total loans individually evaluated for impairment	0		1,219		1,050		0		507		0		2,776
Loans collectively evaluated for impairment	13,842		32,114		81,252		13,714		23,387		614		164,923
Loans acquired with deteriorated credit quality	0		98		0		0		0		0		98
Total allowance for credit losses	$	13,842	$	33,431	$	82,302	$	13,714	$	23,894	$	614	$	167,797


	National Business Lines
Balance Sheet:	HOA Services		Public & Nonprofit Finance		Technology & Innovation		Hotel Franchise Finance		Other NBLs		Corporate & Other
At September 30, 2020
Assets:	(in millions)
Cash, cash equivalents, and investment securities	$	0	$	0	$	0	$	0	$	26.6	$	6,078.8
Loans, net of deferred loan fees and costs	280.0		1,686.7		2,329.3		2,099.3		8,451.8		4.1
Less: allowance for credit losses	(2.3)		(17.9)		(41.5)		(40.7)		(63.9)		0
Total loans	277.7		1,668.8		2,287.8		2,058.6		8,387.9		4.1
Other assets acquired through foreclosure, net	0		0		0		0		0.1		0
Goodwill and other intangible assets, net	0		0		119.3		0.1		2.5		0
Other assets	5.4		11.9		9.2		33.4		110.3		890.2
Total assets	$	283.1	$	1,680.7	$	2,416.3	$	2,092.1	$	8,527.4	$	6,973.1
Liabilities:
Deposits	$	3,697.9	$	0	$	4,646.4	$	0	$	61.4	$	919.2
Borrowings and qualifying debt	0		0		0		0		0		628.8
Other liabilities	(2.7)		91.8		5.4		0.9		56.8		411.0
Total liabilities	3,695.2		91.8		4,651.8		0.9		118.2		1,959.0
Allocated equity:	104.9		130.3		397.5		167.5		673.2		187.8
Total liabilities and stockholders' equity	$	3,800.1	$	222.1	$	5,049.3	$	168.4	$	791.4	$	2,146.8
Excess funds provided (used)	3,517.0		(1,458.6)		2,633.0		(1,923.7)		(7,736.0)		(4,826.3)


	National Business Lines
	HOA Services		Public & Nonprofit Finance		Technology & Innovation		Hotel Franchise Finance		Other NBLs		Corporate & Other
Nine Months Ended September 30, 2019	(in thousands)
Revenue from contracts with customers:
Service charges and fees	$	241	$	0	$	2,333	$	0	$	3	$	0
Debit and credit card interchange (1)	31		0		0		0		0		0
Success fees (2)	0		0		1,125		0		0		0
Other income	2		0		4		0		109		7
Total revenue from contracts with customers	$	274	$	0	$	3,462	$	0	$	112	$	7
Revenues outside the scope of ASC 606 (3)	(6)		0		7,484		0		3,803		11,604
Total non-interest income	$	268	$	0	$	10,946	$	0	$	3,915	$	11,611