2022

ANNUAL REPORT

Shareholders Letter
Shareholders Letter
Shareholders Letter

STABLE.
RELIABLE.
READY.

Kenneth Vecchione
Dear Fellow Shareholders,

At the close of 2022, it would have been difficult to foresee the events that would play out in the banking industry in March of this year. The challenges that impacted our sector were not ones we would ever wish to experience, and yet, as we move forward with a renewed perspective, we are proud of our long history of sound financial management that has served us well.

Our diverse commercial client base, with multiple national deposit business lines, was the key factor in our resilience in the face of historic turbulence in the banking industry. Western Alliance Bank had another strong year in 2022 – and we are confident we will extend our momentum as the industry continues to evolve.

For the year, our diversified national commercial bank posted record net revenue and net income growth of 30% and 17.6%, respectively. Tangible book value per share rose 6.4% over 2021 to $40.25 and pre-provision net revenue (PPNR) climbed 25.7% year over year to nearly $1.4 billion, with net income of $1.1 billion and earnings per share up 11.9% to $9.70.

Importantly, we accomplished all this while maintaining solid and stable asset quality as we experienced virtually no net charge-offs for the year. Thanks to the strong fundamentals of our business, we sustained full-year momentum even as uncertainties around interest rates, inflation and GDP growth continue to affect the banking industry and the U.S. economy more broadly.

Executive Perspectives
| EXECUTIVE PERSPECTIVES
Executive Perspectives
Executive Perspectives

Consistent Performance Makes Us a Bank for All Seasons

Dale M. Gibbons

Vice Chairman, Chief Financial Officer

I have long described Western Alliance as “a bank for all seasons,” thanks to our ability to deliver consistent, strong performance across every kind of economic cycle. It all starts with our longstanding, demonstrated conservative credit culture, which results in solid asset quality supported by our proven underwriting specialization and focus on business diversification.

We have accomplished these strong results because of our deliberate business transformation: In 2010, our loan portfolio was focused on community banking, concentrated in Nevada and geared toward local C&I businesses and high-net-worth developers. Today, we are a national, specialized commercial bank with a regional branch footprint, geared toward specialized C&I companies and institutional sponsor-backed developers.

Western Alliance is well-equipped to weather the more challenging economic environment expected in 2023. Our emphasis on varied client types and diverse deposit franchises support strong performance in every economic climate.

National Bank, Regional Footprint

In March 2023, issues unique to Silicon Valley Bank and Signature Bank led to their failures, impacting the entire banking sector. Despite these events, Western Alliance Bank began 2023 with a renewed emphasis on liquidity management and remains in a strong position. As a national bank with a regional branch footprint, Western Alliance’s uniquely flexible, diversified business model positions us as a premier commercial bank with strong asset quality across economic cycles. This approach enabled us to close out the fourth quarter with record revenues, earnings and tangible book value as we thoughtfully deployed liquidity into sound organic growth.

Demonstrating the power of our PPNR generation, our Common Equity Tier 1 (CET1) capital ratio for Q4 reached 9.32% ­— 65 basis points higher than the previous quarter. Through superior PPNR results and industry-leading return on equity and assets, we continue to generate significant capital to fund our organic growth and build strong regulatory capital ratios. Even in the unlikely event that the bank were required to recognize unrealized losses on its held-to-maturity and available-for-sale investment portfolios, which totaled $1.1 billion at year-end 2022, capital levels would remain above those needed to be considered well capitalized. This compares favorably to many of the largest banks in the country.

Our business approach – diversification, strong asset quality and industry-leading operating leverage – will continue to serve us well in a softer economy and validate our franchise as a top-performing commercial bank. We are, indeed, “a bank for all seasons” and remain focused on our mission of becoming the nation’s leader in commercial banking despite the market turmoil.

Executive Perspectives
| EXECUTIVE PERSPECTIVES
Executive Perspectives
Executive Perspectives

Delivering on Specialized Expertise

Stephen R. Curley

Chief Banking Officer, National Business Lines and President, Alliance Association Bank

At Western Alliance Bank, we know that delivering on our specialized expertise – based on deep knowledge of the key industries and sectors we serve — supports both exceptional performance and excellent customer experiences. Our significant expertise enables us to develop sophisticated solutions, including technology enhancements that deliver features and functionality that differentiate us from competitors.

Combined with always-responsive, outstanding personal service, our expertise in a growing number of specialized areas – from HOA banking and mortgage warehouse lending to Public & Nonprofit Finance, Business Escrow Services and more – makes us a trusted advisor for clients across the country and across the U.S. economy.

According to American Banker, which ranked Western Alliance Bank the #1 top-performing bank with more than $50 billion in assets in its most recent listings, one reason our organization succeeds is that our specialty lines are not a commoditized offering.

Doing things differently, by providing outstanding service and spot-on products and services that are custom-built for the specific sectors we serve, including robust, customizable treasury management solutions, adds value for clients. This is what our national business lines are all about.

Executive Perspectives

As a national bank with a regional branch footprint, Western Alliance’s uniquely flexible, diversified business model positions us as a premier commercial bank with strong asset quality across economic cycles. This approach enabled us to close out the fourth quarter with record revenues.”

Executive Perspectives
| EXECUTIVE PERSPECTIVES
Executive Perspectives
Executive Perspectives

Regional Banking Excellence

Tim R. Bruckner

Chief Credit Officer

Our reliable, relationship-driven approach to regional banking consistently hits the sweet spot for small and mid-sized businesses across our core geographic footprint of Arizona, California and Nevada. Being a meaningful part of a client’s balance sheet is how we’ve become trusted business advisors for a broad range of commercial customers in markets we know well.

More than just loans and deposits, our teams work hard to assess the full banking needs of individual clients and then meet those needs with personalized attention and tailored products and services – a proactive, proven approach that leads to deeper, longer-lasting relationships. Importantly, our in-depth knowledge of our customers and their businesses, combined with our long history of conservative underwriting, supports strong credit quality.

Last year, excellence in regional banking was a key driver for tangible book value and other metrics that showcase the continuing strength of Western Alliance Bank.

Diverse Deposit Generators Strengthen Western Alliance

Western Alliance’s ongoing focus on our diversified deposit businesses is an essential element of our national commercial bank strategy. Previous investments in our scalable national funding channels, including HOA, Settlement Services and Business Escrow Services, combined with several other targeted initiatives we expect to roll out in 2023, provide meaningful opportunities to gather incremental deposits this year. Our diverse deposit generators continue to deliver a critical differentiator for Western Alliance versus other mid-size banks. In Q4 2022 alone, HOA banking grew by $293 million over the prior quarter.

Executive Perspectives
| EXECUTIVE PERSPECTIVES
Executive Perspectives
Executive Perspectives

Meeting Customers Where They Are:
Online and In Person

Tim Boothe

Chief Operating Officer

In 2022, clients and teams in every part of the bank continued to benefit from ongoing, targeted investments in foundational technologies designed to benefit people – from increased transaction speeds and enhanced fraud protection to sophisticated API integrations and more.

These accomplishments are all part of our relentless focus on customers, and we work hard to build even more trust, loyalty and confidence through reliably strong performance. Whether customers choose to bank with us online, in person or both, we are a stable and reliable banking resource, enabling our commercial clients to progress in the most efficient and successful ways possible.

As I said in a recent Wall Street Journal article addressing culture as the “secret sauce” behind our digital technology transformation that enables human-focused innovation: “We don’t try to outmaneuver the really large players – we look to out-culture them.”

In practical terms, this means that our relationship-centric, entrepreneurial teams across Western Alliance Bank are empowered to make smart, quick decisions that support customers using robust, leading-edge technology tools.

Executive Perspectives

Western Alliance’s ongoing focus on our diversified deposit businesses is an essential element of our national commercial bank strategy.”

Executive Perspectives
| EXECUTIVE PERSPECTIVES
Executive Perspectives
Executive Perspectives

Risk Management Is Part of Everyone’s Job

Emily Nachlas

Chief Risk Officer

Risk management is not just something we do at Western Alliance Bank – it’s part of who we are. Here, no matter what someone’s official job title is, we are all risk managers. This forward-looking, active approach – versus a “check the box” mentality – positively differentiates our organization.

Over the past few years, Western Alliance has proactively increased our investment in risk management and related technology innovation as we prepare to become a larger organization. Notable initiatives underway to strengthen all three lines of defense include: enhancing capital and liquidity planning, stress testing and internal control governance; our scalable AML Transaction Monitoring System; an enterprise-wide governance, risk and compliance system to automate and integrate risk processes; and improved controls testing programs.

As we work to become the nation’s leader in commercial banking, robust and sophisticated risk management will be a key part of how we do business and secure the interests of all our stakeholders.

Deliberate Business Transformation Delivers Results

We are confident in our proven business strategy that continues to deliver industry-leading performance. Western Alliance has dramatically – and deliberately – transformed the business over the last decade to become a national commercial bank focused on deep segment expertise, underwriting specialization and business diversification.

Our balanced mix of regionally focused commercial banking divisions and national, specialized businesses enables selective relationships with strong counterparties, sector-leading profitability, consistently low efficiency ratios and commitment to risk management. This has allowed us to achieve greater consistency of earnings growth versus peers over the last decade.

Throughout 2022, we further executed on our strategy of conservatively positioning our loan portfolio, focusing our growth on insured and economically resistant loan categories that are better equipped to withstand economic uncertainty.

Our balance sheet today is well-positioned to weather the more difficult economic environment expected in 2023, with a large percentage of loans in historically low-to-no-loss categories.

Executive Perspectives
| EXECUTIVE PERSPECTIVES
Executive Perspectives
Executive Perspectives

Corporate Responsibility Helps Build a Better Bank

Jessica Jarvi

General Counsel

In our world, corporate responsibility is a total ecosystem supporting clients, colleagues, investors and communities. Corporate responsibility incorporates how we manage, develop and empower our people, how we shape the products and services we offer, and the investments we make in our communities.

In 2022, Western Alliance proudly published our first Corporate Responsibility Report, which formalizes our commitment to communicate our Environmental, Social and Governance (ESG) priorities and progress. We recognize that embedding high-quality governance practices and top-tier human capital management within our business operations is a strategic imperative. This commitment drives our corporate responsibility strategy, which also emphasizes sound business conduct and ethics and impactful Diversity, Equity and Inclusion (DEI) practices. Other corporate responsibilities focus on community support programs and investing in sustainable workplaces that emphasize energy efficiency and waste reduction.

We’ve created an organization in which we all win or lose together. Our DEI and allyship initiatives help define and direct our efforts to build a better bank for all of us.

Demonstrated Conservative Credit Culture

Western Alliance’s longstanding, conservative credit culture continues to produce sustained superior asset quality with distinctly low realized credit losses. As noted above, net charge-offs for 2022 totaled a very modest $1.5 million, with a non-performing assets to total assets ratio of only 0.14% at year end. Our annualized, average net charge-offs from Q1 2014 through Q4 2022 were just 1 basis point, well below our peer average of 15 basis points. Year after year, in every economic cycle, maintaining superior asset quality is a top priority for us.

Executive Perspectives
| EXECUTIVE PERSPECTIVES
Executive Perspectives
Executive Perspectives

Putting People First at Western Alliance

Barbara Kennedy

Chief Human Resources Officer

Teamwork and collaboration are cornerstones of Western Alliance Bank’s established culture of “People. Performance. Possibilities.” Doing right by our customers, colleagues and communities starts with our people. Every day, our teams demonstrate our core values, including passion and creativity, which leads to decision-making that supports success in our fast-moving organization.

In 2022 and into the present, Western Alliance remains sharply focused on retaining the top-tier talent we work so hard to acquire and successfully integrate into our company. In fact, companywide turnover for 2022 was well below the financial services industry average, a testament to our successful efforts to prioritize hiring deliberately to ensure we choose the right people.

At Western Alliance, our people are engaged and empowered – in turn, fueling a collaborative, committed relationship with our customers. Being nimble, flexible and entrepreneurial are all characteristics that describe our people. These attributes also define Western Alliance Bank and our singular culture that puts people first.

Well-Prepared for the Future

In 2022, Western Alliance Bank took additional steps in preparation for becoming a larger national commercial bank. In Q3, we announced the promotions of several senior executives and the formation of a new Executive Leadership Team (ELT), including Emily Nachlas, Chief Risk Officer, and Jessica Jarvi, General Counsel. Tim Bruckner, in his role as Chief Credit Officer, oversees our proven, conservative approach to credit, and Steve Curley’s newly created role as Chief Banking Officer for National Business Lines provides focused leadership to support our diversified commercial bank strategy.

Strategic activity across the bank further prepares Western Alliance for what’s ahead. Last year, we expanded our presence in Colorado and Chicago to work with our existing client base in these Western and Midwestern states as a complement to our regional banking divisions in Arizona, California and Nevada. We recently opened our first New York City office to better serve our broad array of existing clients in our specialized deposit franchises that are based in the tri-state area. We also announced a new technology hub in Columbus, Ohio, which will enable us to capitalize on the wealth of IT talent in this region of the country to advance our comprehensive digital capabilities for our clients.

As we continue to deepen our connections with customers in every part of the bank, with an emphasis on growing and diversifying core deposits, I am confident that the key differentiating characteristics of our bank and the talented people who work here – entrepreneurial spirit, flexibility and nimbleness – will ensure our ongoing success.

For the people of Western Alliance, our customers are the reason we come to work every day. Being a trusted advisor to their commercial enterprises – providing the tailored banking products and services they count on to run their operations effectively – is what we are all about. While we always appreciate the loyalty and confidence of our clients, we are especially grateful for their trust during the recent turmoil in the banking industry.

I would also like to thank our Board of Directors for their sound guidance and support as we continue to execute our strategic plans. And, on behalf of everyone at Western Alliance Bank, I want to express tremendous gratitude to our shareholders for your steadfast commitment to our organization.

Kenneth A. Vecchione Signature
Kenneth A. Vecchione
President and Chief Executive Officer
FACTS AND FIGURES
$5.4B
Total Equity
$67.7B
In Assets
3,365
Employees
56
Offices
LONG-TERM DEPOSIT RATING1
A2
Moody's Investor Service
A
Kroll Bond Rating Agency
LONG-TERM DEBT RATING1
A-
Kroll Bond Rating Agency
Baa2
Moody's Investor Service
IDC FINANCIAL PLANNING
The Standard in Financial Rating Institutions, Rated 300 Superior*
*Report dated 11/15/2021
INDUSTRY ACCOLADES
#1 Top-Performing Large Bank with Assets $50 Billion and Above
AMERICAN BANKER
#1 Bank with Assets of $50 Billion+ and Top 10 U.S. Banks for Growth Strategy
BANK DIRECTOR'S 2022 RANKINGBANKING STUDY
#2 Best-Performing of the 50 Largest Public U.S. Banks
S&P GLOBAL MARKET INTELLIGENCE 2021
One of Forbes’ “America’s Best Banks” Year After Year
  1. As of April 20, 2023

Financial Highlights

(Swipe the table below to view the data)

2020 2021 2022
Balance Sheet ($ in millions)
Total Assets 36,461 55,983 67,734
HFI Loans, net of deferred fees 27,053 39,075 51,862
Total Deposits 31,930 47,612 53,644
Total Equity 3,413 4,963 5,356
Profitability ($ in millions)
Net Interest Income 1,166.9 1,548.8 2,216.3
PPNR2 746.1 1,122.8 1,384.2
Net Income 506.6 899.2 1,057.3
ROAA (%) 1.61 1.83 1.62
ROATCE2 (%) 17.7 26.2 25.4
Net Interest Margin (%) 3.97 3.41 3.67
Efficiency Ratio2 (%) 38.8 42.9 44.9
Tangible Common Equity / Tangible Assets2 (%) 8.6 7.3 6.5
Asset Quality (%)
Non-Performing Assets3 / Total Assets 0.32 0.15 0.14
Loan Loss Reserves / Funded Loans 1.17 0.74 0.69
Common Equity Tier 1 (CET1) Ratio 9.9 9.1 9.3
Per Share Information ($)
Common Dividends Declared per Share4 1.00 1.20 1.42
Earnings Per Share 5.04 8.67 9.70
  1. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the Securities and Exchange Commission.
  2. Non-performing assets include nonaccrual loans and repossessed assets.
  3. Quarterly cash dividend initiated in 3Q 2019.
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  1. Peers consist of 33 publicly traded banks headquartered in the US with total assets between $25B and $150B, excluding target banks of pending acquisitions, as of December 31, 2022. Source: S&P Global Market Intelligence.

Our Leadership Team

BOARD OF DIRECTORS
Bruce Beach

Bruce Beach

Board Chairman

Kevin M. Blakely

Kevin M. Blakely

Member

Juan R. Figuereo

Juan R. Figuereo

Member

Paul S. Galant

Paul S. Galant

Member

Howard N. Gould

Howard N. Gould

Member

Marianne Boyd Johnson

Marianne Boyd Johnson

Member

Robert P. Latta

Robert P. Latta

Member

Adriane C. McFetridge

Adriane C. McFetridge

Member

Michael Patriarca

Michael Patriarca

Member

Bryan K. Segedi

Bryan K. Segedi

Member

Donald D. Snyder

Donald D. Snyder

Member

Sung Won Sohn, Ph.D.

Sung Won Sohn, Ph.D.

Member

Mary Tuuk Kuras

Mary Tuuk Kuras

Member

Kenneth A. Vecchione

Kenneth A. Vecchione

President and CEO

William S. Boyd

William S. Boyd

Director Emeritus

EXECUTIVE LEADERSHIP TEAM
Kenneth A. Vecchione

Kenneth A. Vecchione

President and CEO

Dale M. Gibbons

Dale M. Gibbons

Vice Chairman and CFO

Tim Boothe

Tim Boothe

Chief Operating Officer

Tim R. Bruckner

Tim R. Bruckner

Chief Credit Officer

Stephen R. Curley

Stephen R. Curley

Chief Banking Officer, National Business Lines and President, Alliance Association Bank

Jessica Jarvi

Jessica Jarvi

General Counsel

Barbara Kennedy

Barbara Kennedy

Chief Human Resources Officer

Emily Nachlas

Emily Nachlas

Chief Risk Officer

Randall S. Theisen

Randall S. Theisen

Chief Legal Officer & Head of Corporate Affairs