Company: WAL-PA
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0001212545-25-000141
Chunk: 125

Company: WESTERN ALLIANCE BANCORPORATION
Filing Date: 2025-05-01
Form: 10-Q
Item: Part I, Item 1
Chunk 125
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4. The decrease in interest expense related to decreases in interest expense on other borrowings and deposits of $8.6 million and $2.3 million, respectively, due to lower rates, which were offset in part by an increase in average interest bearing deposits of $5.4 billion.

For the three months ended March 31, 2025, net interest income totaled $650.6 million, an increase of $51.7 million, or 8.6%, compared to $598.9 million for the three months ended March 31, 2024. The increase in net interest income was driven by an increase in average interest earning assets of $9.2 billion and lower rates on deposits, partially offset by lower yields on interest earning assets. The decrease in net interest margin of 13 basis points to 3.47% is largely the result of a decrease in rates that reduced yields on interest earning assets, partially offset by an increase in average interest earning assets compared to the same period in 2024.

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Provision for Credit Losses

The provision for credit losses in each period is reflected as a reduction in earnings for that period and includes amounts related to funded loans, unfunded loan commitments, and investment securities. The provision is equal to the amount required to maintain the ACL at a level that is adequate to absorb estimated lifetime credit losses inherent in the loan and investment securities portfolios based on remaining contractual maturity, adjusted for estimated prepayments as of each period end. The Company's CECL models incorporate historical experience, current conditions, and reasonable and supportable forecasts in measuring expected credit losses. For the three months ended March 31, 2025, the Company recorded a provision for credit losses of $31.2 million, compared to $15.2 million for the three months ended March 31, 2024. The provision for credit losses for the three months ended March 31, 2025 is primarily reflective of net loan charge-offs of $25.8 million, HFI loan growth, and an incremental ACL build for CRE and construction loans resulting from current market conditions. 

Non-interest Income

The following table presents a summary of non-interest income: 

Three Months Ended March 31,Increase (Decrease)20252024(in millions)Service charges and loan fees$37.2 $16.4 $20.8 Net gain on loan origination and sale activities49.5 45.3 4.2 Net loan servicing revenue21.8