Q4 2025 Western Alliance Bancorp Earnings Call

January 27, 2026

Speaker #1: Hello, everyone, and thank you for standing by. Today's call will be beginning in one minute. Thank you for your patience.

Operator: Hello, everyone, and thank you for standing by. Today's call will be beginning in one minute. Thank you for your patience. Good day, everyone. Welcome to Western Alliance Bancorporation's Q4 and full year 2025 earnings call. You may also view the presentation today via webcast through the company's website at www.westernalliancebancorporation.com. I would now like to turn the call over to Miles Pondelik, Director of Investor Relations and Corporate Development. Please go ahead.

Speaker #2: Good day, everyone. Welcome to Western Alliance Bancorp's fourth quarter and full-year 2025 earnings call. You may also view the presentation today via webcast through the company's website at www.westernalliancebancorp.com.

Speaker #2: I would now like to turn the call over to Miles Pondelik, Director of Investor Relations and Corporate Development. Please go ahead.

Speaker #3: Thank you, and welcome to Western Alliance Bank's fourth quarter 2025 conference call. Our speakers today are Ken Vecchione, President and Chief Executive Officer, and Vishal Adnani, Chief Financial Officer.

Miles Pondelik: Thank you, and welcome to Western Alliance Bank's Fourth Quarter 2025 Conference Call. Our speakers today are Ken Vecchione, President and Chief Executive Officer, and Vishal Idnani, Chief Financial Officer. Before I hand the call over to Ken, please note that today's presentation contains forward-looking statements which are subject to risks, uncertainties, and assumptions. Except as required by law, the company does not undertake any obligation to update any forward-looking statements. For a more complete discussion of the risks and uncertainties that could cause actual results to differ materially from any forward-looking statements, please refer to the company's SEC filings, including the Form AK filed yesterday, which are available on the company's website. Now, for opening remarks, I'd like to turn the call over to Ken Vecchione.

Q4 2025 Western Alliance Bancorp Earnings Call

Request a DemoDemo

WAL

Western Alliance Bank

Earnings

Q4 2025 Western Alliance Bancorp Earnings Call

WAL

Tuesday, January 27th, 2026 at 5:00 PM

Transcript

No Transcript Available

No transcript data is available for this event yet. Transcripts typically become available shortly after an earnings call ends.

Want AI-powered analysis? Try AllMind AI →

Speaker #3: Before I hand the call over to Ken, please note that today's presentation contains forward-looking statements, which are subject to risks, uncertainties, and assumptions, except as required by law.

Speaker #3: The company does not undertake any obligation to update any forward-looking statements for a more complete discussion of the risks and uncertainties that could cause actual results to differ materially from any forward-looking statements.

Speaker #3: Please refer to the company's SEC filings, including the Form 8-K filed yesterday, which are available on the company's website. Now, for opening remarks, I'd like to turn the call over to Ken.

Speaker #3: Vecchione.

Speaker #4: Thank you, Miles. Good

Ken Vecchione: Thank you, Miles. Good afternoon, everyone. I'll make some brief comments about our fourth quarter and full year 2025 performance before handing the call over to our new Chief Financial Officer, Vishal Idnani, to discuss our financial results and drivers in more detail. I'll then close our prepared remarks by reviewing our 2026 outlook. Dale Gibbons, now back by popular demand, and our new Chief Banking Officer for Deposit Initiatives and Innovation, and Tim Bruckner, will join us for Q&A. Western Alliance closed 2025 with strong momentum, delivering record quarterly financial results and broad-based performance across the franchise. We saw robust loan growth, reduced seasonal deposit outflows, positive net interest income trends, stable NIM, rising fee income, and continued expansion in PPNR, all while maintaining steady asset quality and demonstrating meaningful operating leverage.

Speaker #4: Afternoon, everyone. I'll make some brief comments about our fourth quarter and full-year 2025 performance before handing the call over to our new Chief Financial Officer, Vishal Adnani, to discuss our financial results and drivers in more detail.

Speaker #4: I'll then close our prepared remarks by reviewing our 2026 outlook. Dale Gibbons, now back by popular demand, and our new Chief Banking Officer for Deposit Initiatives and Innovation, and Tim Bruckner will join us for Q&A.

Speaker #4: Western Alliance closed 2025 with strong momentum, delivering record quarterly financial results and broad-based performance across the franchise. We saw robust loan growth, reduced seasonal deposit outflows, positive net interest income trends, stable NIM, rising fee income, and continued expansion in PP&R—all while maintaining steady asset quality and demonstrating meaningful operating leverage.

Speaker #4: In the fourth quarter, net interest income, net revenue, and PP&R all reached record levels. EPS for the quarter was $2.59, up 33% from the prior year.

Ken Vecchione: In Q4, net interest income, net revenue, and PPNR all reached record levels. EPS for the quarter was $2.59, up 33% from prior year. Return on average assets were 1.23%, return on average tangible common equity was 16.9%, and tangible book value per share rose 17% year-over-year to $61.29. For the full year, we generated diversified HFI loan growth of $5 billion or 9% across regional banking and our specialized C&I verticals. Deposits increased $10.8 billion or 16%, supported by strong regional banking inflows and approximately 40% growth in our specialty escrow businesses, which Dale is now leading.

In Q4, net interest income, net revenue, and PPNR all reached record levels. EPS for the quarter was $2.59, up 33% from prior year. Return on average assets were 1.23%, return on average tangible common equity was 16.9%, and tangible book value per share rose 17% year-over-year to $61.29. For the full year, we generated diversified HFI loan growth of $5 billion or 9% across regional banking and our specialized C&I verticals. Deposits increased $10.8 billion or 16%, supported by strong regional banking inflows and approximately 40% growth in our specialty escrow businesses, which Dale is now leading.

Speaker #4: Return on average assets was 1.23%. Return on average tangible common equity was 16.9%. And tangible book value per share rose 17% year over year, to $61.29.

Speaker #4: Year over year, we generated diversified, full HFI loan growth of $5 billion, or 9%, across regional banking and our specialized C&I verticals. Deposits increased $10.8 billion, or 16%.

Speaker #4: Supported by strong regional banking inflows and approximately 40% growth in our specialty escrow businesses, which Dale is now leading. That interest income rose 8.4% on a linked-quarter annualized basis, driven by loan growth and higher average earning assets, and accompanied by a stable margin.

Ken Vecchione: Net interest income rose 8.4% on a linked quarter annualized basis, driven by loan growth and higher average earning assets, and accompanied by a stable margin. We continue to build momentum in commercial banking fees. Cross-selling treasury management, commercial products, and digital escrow disbursement services drove a 77% increase in service charges and fees in 2025. Q4 mortgage banking revenues did not experience a large seasonal decline and hence were only down $5 million compared to prior quarter. Our Juris Banking team delivered a standout quarter, completing the first round of more than 17 million digital payments in connection with the Facebook-Cambridge Analytica consumer data privacy settlement, the largest in US history, demonstrating the power of our comprehensive disbursement platform. Mortgage banking fundamentals continue to firm and quarterly results exceeded expectations despite typical seasonal softness.

Net interest income rose 8.4% on a linked quarter annualized basis, driven by loan growth and higher average earning assets, and accompanied by a stable margin. We continue to build momentum in commercial banking fees. Cross-selling treasury management, commercial products, and digital escrow disbursement services drove a 77% increase in service charges and fees in 2025. Q4 mortgage banking revenues did not experience a large seasonal decline and hence were only down $5 million compared to prior quarter. Our Juris Banking team delivered a standout quarter, completing the first round of more than 17 million digital payments in connection with the Facebook-Cambridge Analytica consumer data privacy settlement, the largest in US history, demonstrating the power of our comprehensive disbursement platform. Mortgage banking fundamentals continue to firm and quarterly results exceeded expectations despite typical seasonal softness.

Speaker #4: We continue to build momentum in commercial banking fees. Cross-selling treasury management, commercial products, and digital drove a 77% escrow disbursement services increase in service charges and fees in 2025.

Speaker #4: Q4 mortgage banking revenues did not experience a large seasonal decline and hence were only down $5 million compared to the prior quarter. Our Juris Banking team delivered a standout quarter, completing the first round of more than $17 million in digital payments in connection with the Facebook Cambridge Analytica Consumer Data Privacy Settlement, the largest in US history, demonstrating the power of our comprehensive disbursement platform.

Speaker #4: Mortgage banking fundamentals continue to firm, and quarterly results exceeded expectations, despite typical seasonal softness. We are constructive on this business heading into 2026 due to the current administration's focus on delivering affordable home ownership, potential capital relief on MSRs, and continued mortgage rate reductions, which point to stronger results for this business.

Ken Vecchione: We are constructive on this business heading into 2026 due to the current administration's focus on delivering affordable homeownership, potential capital relief on MSRs, and continued mortgage rate reductions, which point to a stronger results for this business. Operating leverage was a major theme in 2025, with net revenue growth outpacing non-interest expense growth by 4 times. Our multi-year investments to prepare for large financial institution status are serving us well, and even if the Category IV threshold remains unchanged, we expect to cross $100 billion in assets by year-end 2026 without a notable step-up in expenses. Asset quality remained steady in Q4, with total criticized assets declining by $8 million and staying well below mid-year levels. We are working to proactively resolve nonaccrual balances with meaningful improvement expected by the end of Q2.

We are constructive on this business heading into 2026 due to the current administration's focus on delivering affordable homeownership, potential capital relief on MSRs, and continued mortgage rate reductions, which point to a stronger results for this business. Operating leverage was a major theme in 2025, with net revenue growth outpacing non-interest expense growth by 4 times. Our multi-year investments to prepare for large financial institution status are serving us well, and even if the Category IV threshold remains unchanged, we expect to cross $100 billion in assets by year-end 2026 without a notable step-up in expenses. Asset quality remained steady in Q4, with total criticized assets declining by $8 million and staying well below mid-year levels. We are working to proactively resolve nonaccrual balances with meaningful improvement expected by the end of Q2.

Speaker #4: Operating leverage was a major theme in 2025, with net revenue growth outpacing non-interest expense growth by four times. Our multiple multi-year investments to prepare for large financial institution status are serving us well.

Speaker #4: And even if the category four threshold remains unchanged, we expect to cross $100 billion in assets by year-end 2026 without a notable step-up in expenses.

Speaker #4: Asset quality remained steady in Q4, with total criticized assets declining by $8 million and staying well below mid-year levels. We are working to proactively resolve non-accrual balances, with meaningful improvement expected by the end of the second quarter.

Speaker #4: We expect net charge-offs to remain elevated in the first half of the year as we work through non-accrual loans, with reserves adjusting modestly as our mix shifts towards higher-return C&I growth.

Ken Vecchione: We expect net charge-offs to remain elevated in the first half of the year as we work through nonaccrual loans, with reserves adjusting modestly as our mix shifts towards higher return C&I growth. However, these actions reinforce the strength of our credit discipline and should enhance our powerful risk-adjusted earnings engine, supported by an expanding revenue base and operating leverage. We are well-positioned for 2026 and excited about our organic growth opportunities. With that, Vishal will now walk you through our results in more detail.

We expect net charge-offs to remain elevated in the first half of the year as we work through nonaccrual loans, with reserves adjusting modestly as our mix shifts towards higher return C&I growth. However, these actions reinforce the strength of our credit discipline and should enhance our powerful risk-adjusted earnings engine, supported by an expanding revenue base and operating leverage. We are well-positioned for 2026 and excited about our organic growth opportunities. With that, Vishal will now walk you through our results in more detail.

Speaker #4: However, these actions reinforce the strength of our credit discipline and should enhance our powerful risk-adjusted earnings engine, supported by an expanding revenue base and operating leverage.

Speaker #4: We are well positioned for 2026 and excited about our organic growth opportunities. With that, Vishal will now walk you through our results in more detail.

Speaker #1: Thanks, Ken. Turning to slide four, in 2025, Western Alliance produced record net interest income of $2.9 billion, net revenue of $3.5 billion, and pre-provision net revenue of $1.4 billion.

Vishal Idnani: Thanks, Ken. Turning to Slide 4. In 2025, Western Alliance produced record net interest income of $2.9 billion, net revenue of $3.5 billion, and pre-provision net revenue of $1.4 billion. Net income available to common shareholders was $956 million, and EPS was $8.73. Net revenue and pre-provision net revenue increased 12% and 26%, respectively, from the prior year, demonstrating the continued successful execution of the bank's organic growth strategy. Non-interest income rose 25%, primarily driven by stronger commercial banking and disbursement fees, as mortgage banking remained essentially flat and in line with our prior expectations. Non-interest expense growth slowed to 4%. Lower deposit costs and reduced insurance expense were key drivers of this moderate expense growth and reinforced our operating leverage. These factors were key to strong annual EPS growth of 23%.

Speaker #1: Net income available to common shareholders was $956 million, and EPS was $8.73. Net revenue and pre-provision net revenue increased 12% and 26%, respectively, from the prior year.

Speaker #1: Demonstrating the continued successful execution of the bank's organic growth, rose 25%—strategy. Non-interest income was primarily driven by stronger commercial banking and disbursement fees, as mortgage banking remained essentially flat and in line with our prior expectations.

Speaker #1: Non-interest expense growth slowed to 4%. Lower deposit costs and reduced insurance expense were key drivers of this moderate expense growth and reinforced our operating leverage.

Speaker #1: These factors were key to strong annual EPS growth of 23%. Now, shifting to slide five, record net interest income of $766 million grew $16 million, or 8% on a linked quarter annualized basis, as a result of strong organic loan growth leading to higher average earning asset balances, while NIM remained relatively steady from the prior quarter.

Vishal Idnani: Now shifting to Slide five, record net interest income of $766 million grew $16 million, or 8%, on a linked quarter annualized basis as a result of strong organic loan growth, leading to a higher average earning asset balances, while NIM remained relatively steady from the prior quarter. Non-interest income rose 14% from Q3 to approximately $215 million from stronger commercial banking and disbursement fees. We experienced continued firming in mortgage banking revenue during what is typically a softer quarter. Loan servicing revenue was slightly down from accelerated MSR amortization as prepayment speeds increased with recent lower mortgage rates, which has benefited gain on sale income. Non-interest expense increased about $8 million from the prior quarter to $552 million.

Now shifting to Slide five, record net interest income of $766 million grew $16 million, or 8%, on a linked quarter annualized basis as a result of strong organic loan growth, leading to a higher average earning asset balances, while NIM remained relatively steady from the prior quarter. Non-interest income rose 14% from Q3 to approximately $215 million from stronger commercial banking and disbursement fees. We experienced continued firming in mortgage banking revenue during what is typically a softer quarter. Loan servicing revenue was slightly down from accelerated MSR amortization as prepayment speeds increased with recent lower mortgage rates, which has benefited gain on sale income. Non-interest expense increased about $8 million from the prior quarter to $552 million.

Speaker #1: Non-interest income rose 14% from Q3 to approximately $215 million, driven by stronger commercial banking and disbursement fees. We experienced continued firming in mortgage banking revenue during what is typically a softer quarter.

Speaker #1: Loan servicing revenue was slightly down from accelerated MSR amortization as prepayments speeds increased with recent lower mortgage rates, which has benefited gain on sale income.

Speaker #1: Non-interest expense increased about $8 million from the prior quarter to $552 million. Overall, we delivered solid operating leverage this quarter with net revenue growing nearly 5%, which outpaced the 1% growth in non-interest expense.

Vishal Idnani: Overall, we delivered solid operating leverage this quarter, with net revenue growing nearly 5%, which outpaced the 1% growth in non-interest expense. Pre-provision net revenue of $429 million marked another record quarter. Provision expense of $73 million declined $7 million from Q3 to account for stronger loan growth, the continued remixing of the portfolio into C&I categories, as well as the replenishment of net charge-offs. Turning to the balance sheet on Slide 6, HFI loans grew a robust $2 billion in the quarter, bringing full-year loan growth to $5 billion, which matched our 2025 full-year guidance. Deposit growth across regional banking, specialty escrow services, and HOA remained strong and helped offset typical seasonal pressure in mortgage warehouse. Notably, mortgage warehouse deposits performed better than expected, reflecting our efforts to improve stability by increasing the share of more durable principal and interest escrow balances.

Overall, we delivered solid operating leverage this quarter, with net revenue growing nearly 5%, which outpaced the 1% growth in non-interest expense. Pre-provision net revenue of $429 million marked another record quarter. Provision expense of $73 million declined $7 million from Q3 to account for stronger loan growth, the continued remixing of the portfolio into C&I categories, as well as the replenishment of net charge-offs. Turning to the balance sheet on Slide 6, HFI loans grew a robust $2 billion in the quarter, bringing full-year loan growth to $5 billion, which matched our 2025 full-year guidance. Deposit growth across regional banking, specialty escrow services, and HOA remained strong and helped offset typical seasonal pressure in mortgage warehouse. Notably, mortgage warehouse deposits performed better than expected, reflecting our efforts to improve stability by increasing the share of more durable principal and interest escrow balances.

Speaker #1: Pre-provision net revenue of $429 million marked another record quarter. Provision expense of $73 million declined $7 million from Q3 to account for stronger loan growth.

Speaker #1: The continued remixing of the portfolio into C&I categories, as well as the replenishment of net charge-offs. Turning to the balance sheet on slide six, HFI loans grew a robust $2 billion in the quarter, bringing full-year loan growth to $5 billion, which matched our 2025 full-year guidance.

Speaker #1: Deposit growth across regional banking specialty escrow services and HOA remained strong and helped offset typical seasonal pressure in mortgage warehouse. Notably, mortgage warehouse deposits performed better than expected, reflecting our efforts to improve stability by increasing the share of more durable principal and interest escrow balances.

Speaker #1: As a result, total deposits were essentially flat for the quarter. For the full year, deposits exceeded margin, increasing $10.8 billion, or nearly $2.5 billion above our revised guidance from last quarter.

Vishal Idnani: As a result, total deposits were essentially flat for the quarter. For the full year, deposits exceeded expectations by a wide margin, increasing $10.8 billion, or nearly $2.5 billion above our revised guidance from last quarter. In late November, we successfully issued $400 million of subordinated debt to bolster our total capital ratio. Overall, total assets expanded by $1.8 billion from Q3 to approximately $93 billion. Total equity ended the year at $8 billion, supported by organic earnings and an improved AOCI position, partially offset by higher dividends and the initiation of share repurchases. Tangible book value per share continued its upward trajectory, rising 17.3% year-over-year. Turning to Slide 7. Loan growth accelerated in Q4, increasing $2 billion from the prior quarter, or $5 billion for the year.

As a result, total deposits were essentially flat for the quarter. For the full year, deposits exceeded expectations by a wide margin, increasing $10.8 billion, or nearly $2.5 billion above our revised guidance from last quarter. In late November, we successfully issued $400 million of subordinated debt to bolster our total capital ratio. Overall, total assets expanded by $1.8 billion from Q3 to approximately $93 billion. Total equity ended the year at $8 billion, supported by organic earnings and an improved AOCI position, partially offset by higher dividends and the initiation of share repurchases. Tangible book value per share continued its upward trajectory, rising 17.3% year-over-year. Turning to Slide 7. Loan growth accelerated in Q4, increasing $2 billion from the prior quarter, or $5 billion for the year.

Speaker #1: In late November, we successfully issued $400 million of subordinated debt to bolster our total capital ratio. Overall, total assets expanded by $1.8 billion from Q3 to approximately $93 billion.

Speaker #1: Total equity ended the year at $8 billion, supported by organic earnings and an improved AOCI position, partially offset by higher dividends and the initiation of share repurchases.

Speaker #1: Tangible book value per share continued its upward trajectory, rising 17.3% year over year. Turning to slide seven, loan growth accelerated in Q4, increasing $2 billion from the prior quarter, or $5 billion for the year.

Speaker #1: Regional Banking posted about $1 billion of loan growth, with leading contributions from Innovation Banking, In-Market Commercial Banking, and Hotel Franchise Finance. These businesses made consistent, sizable contributions to overall loan growth throughout the year.

Vishal Idnani: Regional Banking posted about $1 billion of loan growth, with leading contributions from Innovation Banking, In-Market Commercial Banking, and hotel franchise finance. These businesses made consistent, sizable contributions to overall loan growth throughout the year. Additionally, if you look at the chart in the upper right corner, you'll see most of our quarterly and annual growth came from C&I. Mortgage warehouse and MSR financing were leading loan growth contributors from the national business lines. Now looking at Slide 8, impressive deposit growth in 2025 was driven by a notable acceleration in Regional Banking deposits across both In-Market Commercial Banking and Innovation Banking, along with continued momentum in specialty escrow services and HOA.

Regional Banking posted about $1 billion of loan growth, with leading contributions from Innovation Banking, In-Market Commercial Banking, and hotel franchise finance. These businesses made consistent, sizable contributions to overall loan growth throughout the year. Additionally, if you look at the chart in the upper right corner, you'll see most of our quarterly and annual growth came from C&I. Mortgage warehouse and MSR financing were leading loan growth contributors from the national business lines. Now looking at Slide 8, impressive deposit growth in 2025 was driven by a notable acceleration in Regional Banking deposits across both In-Market Commercial Banking and Innovation Banking, along with continued momentum in specialty escrow services and HOA.

Speaker #1: Additionally, if you look at the chart in the upper right corner, you'll see most of our quarterly and annual growth came from C&I. Mortgage warehouse and MSR financing were leading loan growth contributors from the national business lines.

Speaker #1: Now, looking at slide eight, impressive deposit growth in 2025 was driven by a notable acceleration in regional banking deposits across both in-market commercial banking and innovation banking.

Speaker #1: Along with continued momentum in specialty escrow services and HOA. To put numbers on it, in Q4, regional banking deposits grew $1.4 billion, of which $500 million came from innovation banking, while specialty escrow services deposits rose over $850 million and HOA deposits increased over $400 million.

Vishal Idnani: To put numbers on it, in Q4, regional banking deposits grew $1.4 billion, of which $500 million came from innovation banking, while specialty escrow services deposits rose over $850 million, and HOA deposits increased over $400 million. As noted earlier, the small decline in period-end deposits from Q3 reflected strength in these businesses, largely offsetting expected mortgage warehouse outflows... This is a notable improvement from the $1.7 billion net quarterly deposit decline experienced in Q4 2024. Turning to slide nine here. Turning to our net interest drivers, interest-bearing deposit costs fell 23 basis points from reduced costs across product categories. Solid average balance growth in lower cost interest-bearing DBA and savings and money market deposits reflect this deposit cost optimization. Overall, liability funding costs also declined, compressing 18 basis points from the prior quarter from lower borrowing costs.

To put numbers on it, in Q4, regional banking deposits grew $1.4 billion, of which $500 million came from innovation banking, while specialty escrow services deposits rose over $850 million, and HOA deposits increased over $400 million. As noted earlier, the small decline in period-end deposits from Q3 reflected strength in these businesses, largely offsetting expected mortgage warehouse outflows... This is a notable improvement from the $1.7 billion net quarterly deposit decline experienced in Q4 2024. Turning to slide nine here. Turning to our net interest drivers, interest-bearing deposit costs fell 23 basis points from reduced costs across product categories. Solid average balance growth in lower cost interest-bearing DBA and savings and money market deposits reflect this deposit cost optimization. Overall, liability funding costs also declined, compressing 18 basis points from the prior quarter from lower borrowing costs.

Speaker #1: As noted earlier, the small decline in period-end deposits from Q3 reflected strength in these businesses, largely offsetting expected mortgage warehouse outflows. This is a notable improvement from the $1.7 billion net quarterly deposit decline experienced in Q4 2024.

Speaker #1: Turning to slide nine here, turning to our net interest drivers, interest-bearing deposit costs fell 23 basis points from reduced costs across product categories. Solid average balance growth in lower-cost interest-bearing DDA and savings and money market deposits reflect this deposit cost optimization.

Speaker #1: Overall, liability funding costs also declined, compressing 18 basis points from the prior quarter from lower borrowing costs. Looking at average earning assets, the securities yield declined 18 basis points from Q3 to 4.54% from lower rates on a relatively stable average balance.

Vishal Idnani: Looking at average earning assets, the securities yield declined 18 basis points from Q3 to 4.54%, from lower rates on a relatively stable average balance. The HFI loan yield compressed 17 basis points following the resumption of FOMC rate cuts in September, which continued in Q4 with 2 additional 25 basis point reductions. Looking at slide 10, net interest income rose $16 million from Q3 to $766 million, driven by strong loan growth that pushed average earning assets $2.5 billion higher. The modest 2 basis point compression in net interest margin to 3.51% stemmed primarily from a 20 basis point decline in the yield on average earning assets from higher cash balances, along with the impact of lower loan and security yields.

Looking at average earning assets, the securities yield declined 18 basis points from Q3 to 4.54%, from lower rates on a relatively stable average balance. The HFI loan yield compressed 17 basis points following the resumption of FOMC rate cuts in September, which continued in Q4 with 2 additional 25 basis point reductions. Looking at slide 10, net interest income rose $16 million from Q3 to $766 million, driven by strong loan growth that pushed average earning assets $2.5 billion higher. The modest 2 basis point compression in net interest margin to 3.51% stemmed primarily from a 20 basis point decline in the yield on average earning assets from higher cash balances, along with the impact of lower loan and security yields.

Speaker #1: The HFI loan yield compressed 17 basis points following the resumption of FOMC rate cuts in September, which continued in Q4 with two additional 25 basis point reductions.

Speaker #1: Looking at slide 10, net interest income rose $16 million from Q3 to $766 million, driven by strong loan growth that pushed average earning assets $2.5 billion higher.

Speaker #1: The modest two basis point compression in net interest margin to 3.51% stemmed primarily from a 20 basis point decline in the yield on average earning assets from higher cash balances.

Speaker #1: Along with the impact of lower loan and security yields, the outperformance of deposit growth led to the spike in average cash balances, which we expect to revert to more normalized levels going forward.

Vishal Idnani: The outperformance of deposit growth led to the spike in average cash balances, which we expect to revert to more normalized levels going forward. Turning to slide 11, non-interest expense only increased 1% quarter-over-quarter. Deposit costs of $171 million resulted from higher average balances in deposit businesses such as HOA. The Q4 efficiency ratio of 55.7% and the adjusted efficiency ratio of 46.5%, both fell about 5 points year-over-year. Looking just at non-deposit cost OpEx, the quarterly increase reflects higher corporate bonus accrual related to our financial performance, partially offset by lower FDIC assessments. As has been reported by other banks, we also recognized a reduction in the FDIC special assessment, which lowered the insurance expense by about $7.5 million.

The outperformance of deposit growth led to the spike in average cash balances, which we expect to revert to more normalized levels going forward. Turning to slide 11, non-interest expense only increased 1% quarter-over-quarter. Deposit costs of $171 million resulted from higher average balances in deposit businesses such as HOA. The Q4 efficiency ratio of 55.7% and the adjusted efficiency ratio of 46.5%, both fell about 5 points year-over-year. Looking just at non-deposit cost OpEx, the quarterly increase reflects higher corporate bonus accrual related to our financial performance, partially offset by lower FDIC assessments. As has been reported by other banks, we also recognized a reduction in the FDIC special assessment, which lowered the insurance expense by about $7.5 million.

Speaker #1: Turning to slide 11, non-interest expense only increased 1% quarter over quarter. Deposit costs of $171 million resulted from higher average balances in deposit businesses such as HOA.

Speaker #1: The Q4 efficiency ratio of 55.7% and the adjusted efficiency ratio of 46.5% both fell about 5 points year over year. Looking just at non-deposit costs, the quarterly increase reflects higher corporate bonus accrual related to our financial performance, partially offset by lower FDIC assessments.

Speaker #1: As has been reported by other banks, we also recognize a reduction in the FDIC special assessment, which lowered the insurance expense by about $7.5 million.

Speaker #1: Concurrent with this benefit, AmeriHome recognized mortgage servicing deconversion costs of a like amount. Now, looking at slide 12, we remain asset-sensitive on a net interest income basis, but essentially interest rate neutral on an earnings-at-risk basis in a ramp scenario.

Vishal Idnani: Concurrent with this benefit, AmeriHome recognized mortgage servicing deconversion costs of a like amount. Now, looking at slide 12, we remain asset sensitive on a net interest income basis, but essentially interest rate neutral on an earnings at risk basis in a ramp scenario. This offset is supported by a projected deposit cost decline and an increase in mortgage banking revenue based upon our rate cut forecast of 25 basis point cuts in April and July. Turning to slide 13, asset quality remains stable. Criticized assets decreased nominally from Q3 and totaled $1.4 billion. Reductions in classified accruing assets and non-accrual loans were partially offset by modest increases in special mention loans and OREO. Turning to slide 14, quarterly net charge-offs were $44.6 million, or 31 basis points of average loans.

Concurrent with this benefit, AmeriHome recognized mortgage servicing deconversion costs of a like amount. Now, looking at slide 12, we remain asset sensitive on a net interest income basis, but essentially interest rate neutral on an earnings at risk basis in a ramp scenario. This offset is supported by a projected deposit cost decline and an increase in mortgage banking revenue based upon our rate cut forecast of 25 basis point cuts in April and July. Turning to slide 13, asset quality remains stable. Criticized assets decreased nominally from Q3 and totaled $1.4 billion. Reductions in classified accruing assets and non-accrual loans were partially offset by modest increases in special mention loans and OREO. Turning to slide 14, quarterly net charge-offs were $44.6 million, or 31 basis points of average loans.

Speaker #1: This offset is supported by a projected deposit cost decline and an increase in mortgage banking revenue, based upon our rate cut forecast of 25 basis point cuts in April and July.

Speaker #1: Turning to slide 13, asset quality remains stable. Criticized assets decreased nominally from Q3 and totaled $1.4 billion. Reductions in classified accruing assets and non-accrual loans were partially offset by modest increases in special mention loans and OREO.

Speaker #1: Turning to slide 14, quarterly net charge-offs were $44.6 million, or 31 basis points of average loans. Provision expense of $73 million was primarily a function of strong C&I-driven loan growth and net charge-off replenishment.

Vishal Idnani: Provision expense of $73 million was primarily a function of strong C&I-driven loan growth and net charge-off replenishment. Our allowance for funded loans moved about $20 million higher from the prior quarter to $461 million. The total loan ACL to funded loans ratio edged up two basis points to 87. Our total ACL fully covers non-performing loans at 102 percent and rose 10 points from the prior quarter. Now, looking at slide 15, our tangible common equity to tangible assets ratio increased approximately 20 basis points from 30 September to 7.3 percent from strong earnings growth, while our CET1 ratio edged down to 11 at our target level. Our solid capital levels are indicative of our ability to generate sufficient capital organically, support robust balance sheet growth, while returning value to shareholders through share repurchases.

Provision expense of $73 million was primarily a function of strong C&I-driven loan growth and net charge-off replenishment. Our allowance for funded loans moved about $20 million higher from the prior quarter to $461 million. The total loan ACL to funded loans ratio edged up two basis points to 87. Our total ACL fully covers non-performing loans at 102 percent and rose 10 points from the prior quarter. Now, looking at slide 15, our tangible common equity to tangible assets ratio increased approximately 20 basis points from 30 September to 7.3 percent from strong earnings growth, while our CET1 ratio edged down to 11 at our target level. Our solid capital levels are indicative of our ability to generate sufficient capital organically, support robust balance sheet growth, while returning value to shareholders through share repurchases.

Speaker #1: Our allowance for funded loans moved about $20 million higher from the prior quarter to $461 million. The total loan ACL to funded loans ratio edged up two basis points to 87.

Speaker #1: Our total ACL fully covers non-performing loans at 102% and rose 10 points from the prior quarter. Now, looking at slide 15, our tangible common equity to tangible assets ratio increased approximately 20 basis points from September 30th to 7.3% from strong earnings growth, while our CET1 ratio edged down to 11.

Speaker #1: At our target level, our solid capital levels are indicative of our ability to generate sufficient capital organically to support robust balance sheet growth while returning value to shareholders through share repurchases.

Vishal Idnani: We also issued $400 million of subordinated debt at the bank level in late November that augmented our total capital to 14.5%. We repurchased about 0.7 million shares during the quarter for $57.5 million at a weighted average share price of $79.55. Turning to slide 16, tangible book value per share increased $2.73 from 30 September to $61.29, from strong growth in organic retained earnings and complemented by a 16% improvement in our AOCI position. Since initiating our share buyback program in September, we have repurchased over 0.8 million shares to date and have utilized just over $68 million of the current $300 million authorization. Our quarterly cash dividend was hiked $0.04 during the quarter.

We also issued $400 million of subordinated debt at the bank level in late November that augmented our total capital to 14.5%. We repurchased about 0.7 million shares during the quarter for $57.5 million at a weighted average share price of $79.55. Turning to slide 16, tangible book value per share increased $2.73 from 30 September to $61.29, from strong growth in organic retained earnings and complemented by a 16% improvement in our AOCI position. Since initiating our share buyback program in September, we have repurchased over 0.8 million shares to date and have utilized just over $68 million of the current $300 million authorization. Our quarterly cash dividend was hiked $0.04 during the quarter.

Speaker #1: We also issued $400 million of subordinated debt at the bank level in late November that augmented our total capital to 14 and a half percent.

Speaker #1: We repurchased about 0.7 million shares during the quarter for $57.5 million at a weighted average share price of $79.55. Turning to slide 16, tangible book value per share increased $2.73 from September 30th to $61.29.

Speaker #1: From strong growth in organic retained earnings, and complemented by a 16% improvement in our AOCI position. Since initiating our share buyback program in September, we have repurchased over 0.8 million shares to date and have utilized just over $68 million of the current $300 million authorization.

Speaker #1: Our quarterly cash dividend was hiked $0.04 during the quarter. Consistent upward growth in tangible book value per share remains a hallmark of Western Alliance and has exceeded peers by four and a half times over the past decade.

Vishal Idnani: Consistent upward growth in tangible book value per share remains a hallmark of Western Alliance and has exceeded peers by 4.5 times over the past decade. Turning to slide 17, Western Alliance has been a consistent leader in creating shareholder value over the medium and long term. We have provided on this page 11 metrics we believe are key factors in driving leading financial results, strong profitability, and sustainable franchise value that ultimately compounds tangible book value and produces long-term superior total shareholder return. For the last 10 years, our EPS growth and tangible book value per share accumulation have ranked in the top quartile relative to peers.... We're also the leader in 10-year EPS, tangible book value, loan deposit, and revenue growth compared to peers. Lastly, ROATCE growth in the last two quarters has made solid progress toward achieving top quartile performance.

Consistent upward growth in tangible book value per share remains a hallmark of Western Alliance and has exceeded peers by 4.5 times over the past decade. Turning to slide 17, Western Alliance has been a consistent leader in creating shareholder value over the medium and long term. We have provided on this page 11 metrics we believe are key factors in driving leading financial results, strong profitability, and sustainable franchise value that ultimately compounds tangible book value and produces long-term superior total shareholder return. For the last 10 years, our EPS growth and tangible book value per share accumulation have ranked in the top quartile relative to peers.... We're also the leader in 10-year EPS, tangible book value, loan deposit, and revenue growth compared to peers. Lastly, ROATCE growth in the last two quarters has made solid progress toward achieving top quartile performance.

Speaker #1: 17. Western Alliance has been, to slide, a consistent leader in creating shareholder value over the medium and long term. We have provided on this page 11 metrics we believe are key factors in driving leading financial results: strong profitability and sustainable franchise value that ultimately compounds tangible book value and produces long-term superior total shareholder return.

Speaker #1: For the last 10 years, our EPS growth and tangible book value per share accumulation have ranked in the top quartile relative to peers. We're also the leader in 10-year EPS, tangible book value, loan, deposit, and revenue growth compared to peers.

Speaker #1: Lastly, ROATCE growth in the last two quarters has made solid progress toward achieving top quartile performance. I'll now hand the call back to Ken.

Vishal Idnani: I'll now hand the call back to Ken.

I'll now hand the call back to Ken.

Speaker #2: Thanks, Vishal. Given the strong macroeconomic tailwinds we continue to see, including an increasingly pro-growth regulatory stance, constructive sentiment across our commercial client base, and improving visibility on rate normalization, we remain confident in another year of strong earnings momentum for Western Alliance.

Ken Vecchione: Thanks, Vishal. Given the strong macroeconomic tailwinds we continue to see, including an increasingly pro-growth regulatory stance, constructive sentiment across our commercial client base, and improving visibility on rate normalization, we remain confident in another year of strong earnings momentum for Western Alliance. Our 2026 outlook is as follows: We enter 2026 with strong loan pipelines across business lines, supported by a healthier macro backdrop, and what we view as increasingly accommodative regulatory and political environments. These factors are buoying the risk appetite of our commercial customers. As a result, we expect loan growth of $6 billion and deposit growth of $8 billion. We continue to feel confident operating with CET1 around 11%. With our strong organic earnings trajectory, we expect to continue opportunistic share repurchases subject to market pricing, while maintaining capital broadly in line with current levels.

Speaker #2: Our 2026 outlook is as follows: strong loan pipelines across business lines, supported by a healthier macro backdrop and what we view as increasingly accommodative regulatory and political environments.

Speaker #2: These factors are buoying the risk appetite of our commercial customers. As a result, we expect loan growth of $6 billion and deposit growth of $8 billion.

Speaker #2: We continue to feel confident operating with CET1 around 11%. With our strong organic earnings trajectory, we expect to continue opportunistic share repurchases, subject to market pricing, while maintaining capital broadly in line with current levels.

Speaker #2: Our strong loan growth outlook, combined with continued opportunities to lower funding costs, supports our expectation for net interest income growth of 11% to 14%.

Ken Vecchione: Our strong loan growth outlook, combined with continued opportunities to lower funding costs, supports our expectation for net interest income growth of 11% to 14%. We assume two 25 basis point rate cuts in this outlook. We also expect modest expansion in net interest margin throughout the year, driven by ongoing remixing into higher return C&I categories and sustained momentum in core deposit growth. We expect non-interest income to grow between 2% to 4% off an elevated starting point. The building momentum exhibited in service charges and fees, and the constructive environment for mortgage points to continued growth in non-interest income. The combination of these emerging tailwinds favor a more robust revenue environment for mortgage and MSR-related income, even as we continue to operate with a conservative forecast.

Our strong loan growth outlook, combined with continued opportunities to lower funding costs, supports our expectation for net interest income growth of 11% to 14%. We assume two 25 basis point rate cuts in this outlook. We also expect modest expansion in net interest margin throughout the year, driven by ongoing remixing into higher return C&I categories and sustained momentum in core deposit growth. We expect non-interest income to grow between 2% to 4% off an elevated starting point. The building momentum exhibited in service charges and fees, and the constructive environment for mortgage points to continued growth in non-interest income. The combination of these emerging tailwinds favor a more robust revenue environment for mortgage and MSR-related income, even as we continue to operate with a conservative forecast.

Speaker #2: We assume two 25-basis-point rate cuts in this outlook. We also expect modest expansion in net interest margin throughout the year, driven by ongoing remixing into higher-return C&I categories and sustained momentum in core deposit growth.

Speaker #2: We expect non-interest income to grow between 2% to 4%, off an elevated starting point. The building momentum exhibited in service charges and fees and the constructive environment for mortgage points to continued growth in non-interest income.

Speaker #2: The combination of these emerging tailwinds favors a more robust revenue environment for mortgage and MSR-related income, even as we continue to operate with forecast.

Speaker #2: Non-interest expense will conservatively rise primarily as a function of scale and targeted investments that support top-line growth and operational efficiency. For 2026, total operating expenses are expected to increase between 2% and 7% for the year.

Ken Vecchione: Non-interest expense will rise, but primarily as a function of scale and targeted investments that support top-line growth and operational efficiency. For 2026, total operating expenses are expected to increase between 2% and 7% for the year. Deposit costs are projected to decline again between $535 million and $585 million from continued rate relief. Operating expenses, excluding deposit costs, are expected to be between $1.62 billion and $1.67 billion, reflecting continued investments in several new business lines and future technology. Looking at asset quality, we expect net charge-offs between 25 and 35 basis points as we proactively reduce non-accrual balances over the next couple of quarters. As I discussed in my opening remarks, with the ongoing loan growth shift into C&I, the reserve level should adjust as the mix evolves.

Non-interest expense will rise, but primarily as a function of scale and targeted investments that support top-line growth and operational efficiency. For 2026, total operating expenses are expected to increase between 2% and 7% for the year. Deposit costs are projected to decline again between $535 million and $585 million from continued rate relief. Operating expenses, excluding deposit costs, are expected to be between $1.62 billion and $1.67 billion, reflecting continued investments in several new business lines and future technology. Looking at asset quality, we expect net charge-offs between 25 and 35 basis points as we proactively reduce non-accrual balances over the next couple of quarters. As I discussed in my opening remarks, with the ongoing loan growth shift into C&I, the reserve level should adjust as the mix evolves.

Speaker #2: Deposit costs are projected to decline again, between $535 million and $585 million, from continued rate relief. Operating expenses excluding deposit costs are expected to be between $1.62 billion and $1.67 billion.

Speaker #2: Reflecting continued investments in several new business lines and future technology. Looking at asset quality, we expect net charge-offs between 25 and 35 basis points as we proactively reduce non-accrual balances over the next couple of quarters.

Speaker #2: As I discussed in my opening remarks, with the ongoing loan growth shift into C&I, the reserve level should adjust as the mix evolves. Our risk-adjusted PP&R trajectory remains strong, and we are confident in continued robust EPS growth.

Ken Vecchione: Our risk-adjusted PPNR trajectory remains strong, and we are confident in continued robust EB- EPS growth. Finally, we project our full year 2026 effective tax rate to be approximately 19%. At this time, Vishal, Dale, Tim, and I look forward to your questions.

Speaker #2: Finally, we project our full-year 2026 effective tax rate to be approximately 19%. At this time, Vishal, Dale, Tim, and I look forward to your questions.

Speaker #3: Thank you. We will now begin the question and answer session. If you would like to ask a question today, please do so now by pressing Start, followed by the number one on your telephone keypad.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question today, please do so now by pressing star followed by the number one on your telephone keypad. If you change your mind or you feel like your question has already been answered, you can press star followed by two to remove yourself from the queue. To allow everyone a chance during Q&A, we ask that you please limit yourself to one question and one follow-up. Our first question today comes from the line of Andrew Terrell with Stephens. Andrew, please go ahead.

Speaker #3: you feel like your question has already been If you change your mind or answered, you can press Start, followed by two, to remove yourself from the queue.

Speaker #3: To allow everyone a chance during Q&A, we ask that you please limit yourself to one question and one follow-up. Our first question today comes from the line of Andrew Tirrell with Stevens.

Speaker #3: Andrew, please go ahead.

Speaker #4: Hey, good morning. I was open to—

Andrew Terrell: Hey, good morning.

Speaker #5: Good morning.

Ken Vecchione: Good morning.

Andrew Terrell: I was hoping to maybe start on just the balance sheet growth guidance. Obviously, you know, loans up $6 billion in 2026, deposits up $8 billion, unchanged versus kind of your 2025 expectations. You know, you gave a lot of positive commentary about the momentum. I'm just wondering why, you know, maybe not a higher loan and deposit growth guidance, or do you feel like you're being conservative this year?

Speaker #4: Maybe start on just the balance sheet growth guidance. Obviously, loans up $6 billion in ’26, deposits up $8 billion—unchanged versus kind of your 2026 expectations.

Speaker #4: You gave a lot of positive comments there about the momentum. I'm just wondering why maybe not a higher loan and deposit growth guidance, or do you feel like you're being conservative this time?

Speaker #4: year?

Speaker #5: Yeah. Well, number

Ken Vecchione: Yeah. Well, number one, our loan growth and deposit growth as projected leads the peer group, and I'll just point that out. That's one. Number two, what you see here is all organic growth, which is very important. Number three, we are de-emphasizing certain areas of our loan portfolio, i.e., mostly, we're doing less in residential loan growth. So as that runs off, it puts more pressure on the other areas to accommodate the runoff in volume. And, I guess number four is that, you know, $6 billion and $8 billion seems about right. And as we continue to move forward throughout the year, if the projections are proving to be conservative, we will adjust accordingly.

Speaker #5: One, our loan growth and deposit growth as projected leads to peer group, and I'll just point that out. That's one. Number two, what you see here is all organic growth, which is very important.

Speaker #5: Number three, we are de-emphasizing certain areas of our loan portfolio—i.e., mostly we're doing less in residential loan growth. So as that runs off, it puts more pressure on the other areas to accommodate the runoff in volume.

Speaker #5: And I guess number four is that $6 billion and $8 billion seems about right. And as we continue to move forward throughout the year, if the projections are proving to be conservative, we will adjust accordingly.

Speaker #5: But going into this year, $6 to $8 billion will produce something along the order of a, today, in the consensus EPS that's out there, $10.38 range, which is about 19% EPS growth—which is, again, leading the peer group for any bank for organic growth.

Ken Vecchione: But going into this year, $6 to 8 billion will produce something along the order of a consensus EPS that's out there today in the $10.38 range, which is about 19% EPS growth, which is again leading the peer group for any bank, for organic growth. I actually think maybe leading the peer group, even for banks that have had M&A activity during the course of the year.

But going into this year, $6 to 8 billion will produce something along the order of a consensus EPS that's out there today in the $10.38 range, which is about 19% EPS growth, which is again leading the peer group for any bank, for organic growth. I actually think maybe leading the peer group, even for banks that have had M&A activity during the course of the year.

Speaker #5: I actually think maybe leading the peer group, even for banks that have had M&A activity during the course of the year.

Andrew Terrell: ... Oh, great. Thank you. And then, Ken, just on the charge-off commentary as well, it sounds like the charge-offs could be a little bit front half loaded. I guess, just should we think about first half charge-offs as potentially above your full year guided range before, you know, normalizing back to that 20 basis point type level that you've been guiding to previously as we move into the back half? Or just how should we think about the timing of charge-offs or magnitude throughout the year?

Speaker #4: No, great. Thank you. And then, Kim, just on the charge-off commentary as well, it sounds like the charge-offs could be a little bit front-half loaded.

Andrew Terrell: Oh, great. Thank you. And then, Ken, just on the charge-off commentary as well, it sounds like the charge-offs could be a little bit front half loaded. I guess, just should we think about first half charge-offs as potentially above your full year guided range before, you know, normalizing back to that 20 basis point type level that you've been guiding to previously as we move into the back half? Or just how should we think about the timing of charge-offs or magnitude throughout the year?

Speaker #4: I guess, should we think about first half charge-offs as potentially above your full-year guided range before normalizing back to that 20 basis point-type level that you've been guiding to previously as we move into the back half?

Speaker #4: How should we think about the timing of charge-offs or the magnitude throughout the—

Speaker #4: year?

Speaker #5: Yeah. I would

Ken Vecchione: Yeah, I would say, you know, I would think about the, the range, as the midpoint coming into the year for modeling purposes at, at 30. You could see it a little bit higher than that in the first half of the year as we look to get rid of, a number of non-accrual loans, that have been on our books. That is our effort to bring that number down well below our, loan loss reserve. And we think, that will be good- well, first, good for the business. It's good business overall, and it will be healthy, for our PE expansion and improving our market capitalization. So we are doing that. I think you saw some of that in, Q4. Charge-offs were a little bit higher than maybe you thought, but, classified and criticized loans remain flat.

Speaker #5: I would think about the range as the midpoint coming into the year for modeling purposes at 30. You could see it a little bit higher than that in the first half of the year as we look to get rid of a number of non-accrual loans that have been on our books.

Speaker #5: That is our effort to bring that number down well below our loan loss reserve, and we think that will be good. Well, first, good for the business.

Speaker #5: It's good business overall, and it will be healthy for our PE expansion and improving our market capitalization. So we are doing that. I think you saw some of that in Q4—charge-offs were a little bit higher than maybe you thought, but classified and criticized loans remain flat.

Speaker #5: And in terms of our visibility into the first half of the year, we have a number of properties designated to be either upgraded or sold, or not sold, or properties sold.

Ken Vecchione: And, in terms of visibility into the first half of the year, we have a number of properties designated to be either upgraded or sold or notes sold or property sold. And the hard part will be to determine whether or not a lot of that happens in Q1 or Q2. There's, as you know, a lot of paperwork that goes along with that and negotiations. But we do have a confident level that by the end of the Q2, the non-accrual loans will be down.

And, in terms of visibility into the first half of the year, we have a number of properties designated to be either upgraded or sold or notes sold or property sold. And the hard part will be to determine whether or not a lot of that happens in Q1 or Q2. There's, as you know, a lot of paperwork that goes along with that and negotiations. But we do have a confident level that by the end of the Q2, the non-accrual loans will be down.

Speaker #5: It'll be to determine whether or not a lot of that—and the hard part—will happen in Q1 or Q2. As you know, there's a lot of paperwork that goes along with that, and negotiations.

Speaker #5: But we do have a confidence level that by the end of Q2, the non-accrual loans will be

Speaker #5: down.

Speaker #3: Thank

Operator: Thank you. Our next question comes from Chris McGratty with KBW. Chris, please go ahead.

Speaker #3: You. Our next question comes from Chris McGrathie with KBW. Chris, please go ahead.

Speaker #6: Hi, good morning. Vishal, maybe you could talk about the strength in non-interest income and the big service charge number in the quarter. Again, I want to make sure I understand the sustainability of it.

Chris McGratty: Good morning. Vishal, maybe you could talk about the strength in non-interest income and big, big service charge number in the quarter. Again, I want to make sure I understand the sustainability of it. I guess, what's in that line? And obviously, I heard you on mortgage, but any near-term-

Christopher McGratty: Good morning. Vishal, maybe you could talk about the strength in non-interest income and big, big service charge number in the quarter. Again, I want to make sure I understand the sustainability of it. I guess, what's in that line? And obviously, I heard you on mortgage, but any near-term-

Speaker #6: Line? And obviously, I've heard you on mortgage, but any near-term expectations for, I guess, what's in that mortgage in a seasonally tough quarter? Thanks.

Vishal Idnani: Yes.

Chris McGratty: expectations for mortgages in a seasonally tough quarter? Thanks.

Christopher McGratty: expectations for mortgages in a seasonally tough quarter? Thanks.

Vishal Idnani: Yeah, sure. Happy to take that one. I think the big one there is the service charges. Two primary drivers in that, Chris. The first one is treasury management. We've made a lot of investments in that, and we continue to see a pickup in that on the cross sell there. And then the second one is going to be what Ken and I mentioned in the prepared remarks. There's a big improvement in fee income related to the digital disbursements business, right? So we did handle, you know, one of the largest settlements, the Facebook, Cambridge Analytica, and we're actually, when you get the settlement, we're distributing it to the end claimants, and there's, you know, fees associated with that.

Speaker #4: Yeah, sure. Happy to take that one. I think the big one there is the service charges. Two primary drivers in that. Chris, the first one is Treasury management.

Speaker #4: We've made a lot of investments in that, and we continue to see a pickup in that on the cross-sell there. And then the second one is going to be what Ken and I mentioned in the prepared remarks.

Speaker #4: There's a big improvement in fee income related to the digital disbursements business, right? So, we did handle one of the largest settlements—the Facebook Cambridge Analytica—and we're actually, when you get the settlement, we're distributing it to the end claimants.

Speaker #4: And there's fees associated with that, so it's going to depend on what that business looks like going forward. But we've already had other settlements that have come in.

Vishal Idnani: So it's going to depend on what that business looks like going forward, but we've already had, you know, other settlements that have come in, so we do feel positive on where that line is going in terms of sustaining that trajectory. On the mortgage side, I think Ken hit this well.

So it's going to depend on what that business looks like going forward, but we've already had, you know, other settlements that have come in, so we do feel positive on where that line is going in terms of sustaining that trajectory. On the mortgage side, I think Ken hit this well.

Speaker #4: So we do feel positive on where that trajectory—on where that line is going in terms of sustaining the mortgage side. I think, Ken—

Speaker #4: hit this well. Let me

Ken Vecchione: Let me.

Vishal Idnani: Yeah.

Ken Vecchione: I'll take that. So, first, good morning there, Chris. We are constructive on the mortgage business, as I said, as we begin 2026. And we see several tailwinds that could provide additional alpha earnings to our 2026 projections. As a starting point, we are assuming a 10% year-over-year increase in total mortgage fee-related revenues. However, if several of the administration's Make Housing Affordable programs take hold, combined with favorable regulatory changes and a lower interest rate environment, we think AmeriHome could outperform these projections. As a data point, and it's an early data point, so I caution everyone on this, but as a data point, entering the year here, we expect Q1 total mortgage revenues to be nearly equal Q4 results.

Speaker #5: So first, good morning there, I'll take that, Chris. We are constructive on the mortgage business, as I said, as we begin 2026. And we see several tailwinds that could provide additional alpha earnings to our 2026 projections.

Speaker #5: As a starting point, we are assuming a 10% year-over-year increase in total mortgage fee-related revenues. However, if several administrations’ make housing affordable programs take hold, combined with favorable regulatory changes and a lower interest rate environment, we think AmeriHome could outperform these projections.

Speaker #5: As a data point—and it's an early data point, so I caution everyone on this—but as a data point, entering the year here, we expect Q1 total mortgage revenues to be nearly equal to Q4 results. But I'll tell you that January's volumes and margins, as of close of business last night, were presently trending above our planning assumptions.

Ken Vecchione: But I'll tell you that January's volumes and margins, as of close of business last night, were presently trending above our planning assumptions. So, a little conservative on the mortgage income. It's based on some tailwinds, which we think are going to come. We'll wait. Those happen to be whether or not there's access to 401k funds or the GSEs buying $200 billion more of mortgage bonds. We also see certain areas of the United States seeing supply exceed demand, so we think some housing pricing may come down, and certainly in the Southeast. And we expect a couple of rate cuts, certainly with potentially a more sympathetic Fed chair in May. So, with all that going on, I'll think that's the economic and administration tailwinds that we have.

But I'll tell you that January's volumes and margins, as of close of business last night, were presently trending above our planning assumptions. So, a little conservative on the mortgage income. It's based on some tailwinds, which we think are going to come. We'll wait. Those happen to be whether or not there's access to 401k funds or the GSEs buying $200 billion more of mortgage bonds. We also see certain areas of the United States seeing supply exceed demand, so we think some housing pricing may come down, and certainly in the Southeast. And we expect a couple of rate cuts, certainly with potentially a more sympathetic Fed chair in May. So, with all that going on, I'll think that's the economic and administration tailwinds that we have.

AllMind AI

AllMind AI

Q4 2025 Western Alliance Bancorp Earnings Call

Event Details

Western Alliance Bank

Q4 2025 Western Alliance Bancorp Earnings Call

Open Event Documents

Search Transcript

Western Alliance Bank

Q4 2025 Western Alliance Bancorp Earnings Call

Transcript

No Transcript Available