Company: WAL-PA
Filing Date: 2025-08-01
Form Type: 10-Q
Source: 0001212545-25-000214
Chunk: 241

Company: WESTERN ALLIANCE BANCORPORATION
Filing Date: 2025-08-01
Form: 10-Q
Item: Part I, Item 8
Chunk 241
---
 net basis, and to offset net derivative positions with related cash collateral, where applicable. As of June 30, 2025 and December 31, 2024, the Company did not have any outstanding cash flow hedges. Derivatives Designated in Hedge RelationshipsThe Company utilizes derivatives that have been designated as part of a hedge relationship in accordance with the applicable accounting guidance to minimize the exposure to changes in benchmark interest rates, which reduces asset sensitivity and volatility due to interest rate fluctuations, such that interest rate risk falls within Board approved limits. The primary derivative instruments used to manage interest rate risk are interest rate swaps, which convert the contractual interest rate index of agreed-upon amounts of assets and liabilities (i.e., notional amounts) from either a fixed rate to a variable rate, or from a variable rate to a fixed rate. The Company has pay fixed/receive variable interest rate swaps designated as fair value hedges of certain fixed rate loans and AFS debt securities. As a result, the Company receives variable-rate interest payments in exchange for making fixed-rate payments over the lives of the contracts without exchanging the notional amounts. The variable-rate interest payments are based on SOFR plus a spread adjustment. During the three months ended June 30, 2025, the Company terminated an interest rate swap on hedged AFS U.S. Treasury securities. The terminated hedge had a notional value of $1.0 billion and a cumulative basis adjustment of $11 million at the time of termination. As the hedged securities were sold in the same period as the termination of the swap, both the basis adjustment and the related loss on sale of the hedged securities were recognized in earnings as a component of Gain on sales of investment securities, resulting in a net gain of $7.7 million, as described in "Note 2. Investment Securities."The Company also has pay fixed/receive variable interest rate swaps, designated as fair value hedges using the portfolio layer method to manage the exposure to changes in fair value associated with pools of fixed rate loans, resulting from changes in the designated benchmark interest rate (federal funds rate). These portfolio 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 was identified as the hedged item. Under these interest rate swap contracts, the Company receives a variable rate and pays a fixed rate on the outstanding notional amount. During the year