Company: WAL-PA
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0001212545-25-000141
Chunk: 198

Company: WESTERN ALLIANCE BANCORPORATION
Filing Date: 2025-05-01
Form: 10-Q
Item: Part I, Item 8
Chunk 198
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 other remuneration from rights to various borrower contracted fees, such as late charges, collateral reconveyance charges, and non-sufficient funds fees. Contractually specified servicing fees, late fees, and ancillary income associated with the Company's MSR portfolio totaled $59.0 million for the three months ended March 31, 2025 and $67.0 million for the three months ended March 31, 2024. Early payoff fee income totaled $4.4 million and $4.8 million for the three months ended March 31, 2025 and 2024, respectively. These amounts are recorded as Net loan servicing revenue in the Consolidated Income Statement.In accordance with its contractual loan servicing obligations, the Company is required to advance funds to or on behalf of investors when borrowers do not make payments. The Company advances property taxes and insurance premiums for borrowers who have insufficient funds in escrow accounts, plus any other costs to preserve real estate properties. The Company may also advance funds to maintain, repair, and market foreclosed real estate properties. The Company is entitled to recover all or a portion of the advances from borrowers of reinstated and performing loans, from the proceeds of liquidated properties or from the government agency or GSE guarantor of charged-off loans. Servicing advances are charged-off when they are deemed to be uncollectible. As of March 31, 2025 and December 31, 2024, net servicing advances totaled $66 million and $84 million, respectively, which are recorded as Other assets on the Consolidated Balance Sheet.

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The following table presents the effect of hypothetical changes in the fair value of MSRs caused by assumed immediate changes in the below inputs that are used to determine fair value:March 31, 2025(in millions)Fair value of mortgage servicing rights$1,241 Increase (decrease) in fair value resulting from:Interest rate change of 50 basis pointsAdverse change(88)Favorable change71 Option adjusted spread change of 50 basis pointsIncrease(27)Decrease28 Conditional prepayment rate change of 1%Increase(37)Decrease41 Cost to service change of 10%Increase(11)Decrease14 

Sensitivities are hypothetical changes in fair value and cannot be extrapolated because the relationship of changes in assumptions to changes in fair value may not be linear. In addition, the offsetting effect of hedging activities are not contemplated in these results and further