0001212545 us-gaap:FairValueInputsLevel3Member us-gaap:JuniorSubordinatedDebtMember 2019-01-01 2019-12-31
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
FORM 10-K
☒
FORM 10-K
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019
2021
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number: 001-32550 
WESTERN ALLIANCE BANCORPORATION
(Exact name of registrant as specified in its charter)
Delaware
88-0365922
Delaware88-0365922
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
One E. Washington Street, Suite 1400PhoenixArizona85004
(Address of principal executive offices)(Zip Code)
(602) (602) 389-3500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.0001 Par ValueWALNew York Stock Exchange
Title
Depositary Shares, Each Representing a 1/400th Interest in a Share of each class4.250% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A
Trading Symbol(s)WAL PrAName of each exchange on which registered
Common Stock, $0.0001 Par ValueWALNew York Stock Exchange
6.25% Subordinated Debentures due 2056WALANew York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☒    No  ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ☐    No  ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” "accelerated filer" "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
☐
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
The aggregate market value of the registrant’s voting stock held by non-affiliates was approximately $4.28$9.04 billion based on the June 30, 20192021 closing price of said stock on the New York Stock Exchange ($44.7292.85 per share).
As of February 24, 2020,18, 2022, Western Alliance Bancorporation had 102,479,213106,997,341 shares of common stock outstanding.
Portions of the registrant’s definitive proxy statement for its 20202022 Annual Meeting of Stockholders are incorporated by reference into Part III of this report.


Table of Contents
INDEX
 
Page
Forward-Looking Statements
3
Item 1.
Business
5
Item 1A.
Risk Factors
15
Item 1B.
Unresolved Staff Comments
28
Item 2.
Properties
28
Item 3.
Legal Proceedings
28
Item 4.
Mine Safety Disclosures
28
Page
PART IItem 5.
Forward-Looking Statements
3
Item 1.
Business
5
Item 1A.
Risk Factors
14
Item 1B.
Unresolved Staff Comments
26
Item 2.
Properties
26
Item 3.
Legal Proceedings
26
Item 4.
Mine Safety Disclosures
26
PART II
Item 5.
Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
2729
Item 6.
Selected Financial DataReserved
2930
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
31
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
6770
Item 8.
Financial Statements and Supplementary Data
6972
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
145155
Item 9A.
Controls and Procedures
145155
Item 9B.
Other Information
147157
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
157
Item 10.
Directors, Executive Officers and Corporate Governance
148157
Item 11.
Executive Compensation
148157
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
148157
Item 13.
Certain Relationships and Related Transactions, and Director Independence
148157
Item 14.
Principal Accountant Fees and Services
148157
Item 15.
Exhibits and Financial Statement Schedules
148157
Item 16.
Form 10-K Summary
150159
151160



2
Table of Contents
PART I
Forward-Looking Statements
Certain statements contained in this Annual Report on Form 10-K for the fiscal year ended December 31, 20192021 (this “Form 10-K”) are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Statements that constitute forward-looking statements within the meaning of the Reform Act are generally identified through the inclusion of words such as “aim,” “anticipate,” “believe,” “drive,” “estimate,” “expect,” “expressed confidence,” “forecast,” “future,” “goals,” “guidance,” “intend,” “may,” “opportunity,” “plan,” “position,” “potential,” “project,” “ seek,” “should,” “strategy,” “target,” “will,” “would” or similar statements or variations of such words and other similar expressions. All statements other than historical fact are “forward-looking statements” within the meaning of the Reform Act, including statements that are related to or are dependent on estimates or assumptions relating to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions that are not historical facts. These forward-looking statements reflect the Company's current views about future events and financial performance and involve certain risks, uncertainties, assumptions, and changes in circumstances that may cause the Company's actual results to differ significantly from historical results and those expressed in any forward-looking statement. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to, those described in “Risk Factors” in Item 1A of this Form 10-K. Forward-looking statements speak only as of the date they are made and the Company undertakes no obligation to publicly update or revise any forward-looking statements included in this Form 10-K or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise, except to the extent required by federal securities laws. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Form 10-K might not occur, and you should not put undue reliance on any forward-looking statements.

3
Table of Contents
GLOSSARY OF ENTITIES AND TERMS
The acronyms and abbreviations identified below are used in various sections of this Form 10-K, including "Management's Discussion and Analysis of Financial Condition and Results of Operations," in Item 7 and the Consolidated Financial Statements and the Notes to Consolidated Financial Statements in Item 8 of this Form 10-K:
ENTITIES / DIVISIONS:
ABAAlliance Bank of ArizonaHOA ServicesCompanyHomeowner Associations Services
BONBank of NevadaLVSPLas Vegas Sunset Properties
BridgeBridge BankTPBTorrey Pines Bank
CompanyWestern Alliance Bancorporation and subsidiariesTPBTorrey Pines Bank
AmeriHomeAmeriHome Mortgage Company, LLCCSICS Insurance CompanyWA PWIWestern Alliance Public Welfare Investments, LLC
CSIArisCS InsuranceAris Mortgage Holding Company, LLCDSTDigital Settlement Technologies LLCWAB or BankWestern Alliance Bank
FIBBONBank of NevadaFIBFirst Independent BankWABTWestern Alliance Business Trust
HFFBridgeHotel Franchise FinanceBridge BankLVSPLas Vegas Sunset PropertiesWAL or ParentWestern Alliance Bancorporation
TERMS:
ACLAllowance for Credit LossesFRBFederal Reserve Bank
AFSAvailable-for-SaleFVOFair Value Option
ALCOAsset and Liability Management CommitteeGAAPU.S. Generally Accepted Accounting Principles
ALLLAllowance for Loan and Lease LossesGLBAGramm-Leach-Bliley Act
AOCIAccumulated Other Comprehensive IncomeGNMAGovernment National Mortgage Association
APICAdditional paid in capitalGSEGovernment-Sponsored Enterprise
ARRCAlternative Reference Rate CommitteeHFIHeld for Investment
ASCAccounting Standards CodificationHFSHeld for Sale
ASUAccounting Standards UpdateHTMHeld-to-Maturity
Basel CommitteeBasel Committee on Banking SupervisionICSInsured Cash Sweep Service
Basel IIIBanking Supervision's December 2010 final capital frameworkIRCInternal Revenue Code
BHCABank Holding Company Act of 1956ISDAInternational Swaps and Derivatives Association
BODBoard of DirectorsITInformation Technology
BOLIBank Owned Life InsuranceLIBORLondon Interbank Offered Rate
CAMELSCapital Adequacy, Assets, Management Capability, Earnings, Liquidity, SensitivityLIHTCLow-Income Housing Tax Credit
Capital RulesThe FRB, the OCC, and the FDIC 2013 approved final rulesMBSMortgage-Backed Securities
CCOChief Credit OfficerMOUMemorandum of Understanding
CDARSCertificate Deposit Account Registry ServiceNBLNational Business Lines
CDOCollateralized Debt ObligationNOLNet Operating Loss
CECLCurrent Expected Credit LossNPVNet Present Value
CEOChief Executive OfficerNYSENew York Stock Exchange
CET1Common Equity Tier 1OCCOffice of the Comptroller of the Currency
CFOChief Financial OfficerOCIOther Comprehensive Income
CFPBConsumer Financial Protection BureauOFACOffice of Foreign Asset Control
CLOCollateralized Loan ObligationOREOOther Real Estate Owned
CMOCollateralized Mortgage ObligationOTTIOther-than-Temporary Impairment
COSOCommittee of Sponsoring Organizations of the Treadway CommissionPCAOBPublic Company Accounting Oversight Board
CRACommunity Reinvestment ActPCIPurchased Credit Impaired
CRECommercial Real EstatePPNRPre-Provision Net Revenue
DIFFDIC's Deposit Insurance FundROURight of use
Dodd-Frank ActThe Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010SBALIBORSmall Business AdministrationLondon Interbank Offered Rate
DTAAFSAvailable-for-SaleDTADeferred Tax AssetSBICLIHTCSmall Business Investment CompanyLow-Income Housing Tax Credit
DTLALCODeferred TaxAsset and Liability Management CommitteeSBLFEADSmall Business Lending FundExposure at DefaultMBSMortgage-Backed Securities
EGRRCPAAmeriborAmerican Interbank Offered RateEBOEarly buyoutMOUMemorandum of Understanding
AOCIAccumulated Other Comprehensive IncomeEGRRCPAThe Economic Growth, Regulatory Relief, and Consumer Protection ActSECMSASecurities and Exchange CommissionMetropolitan Statistical Area
EPSAPICAdditional Paid in CapitalEPSEarnings per shareShareSERPMSRSupplemental Executive Retirement PlanMortgage Servicing Right
EVEARRCAlternative Reference Rate CommitteeEVEEconomic Value of EquitySLCNBLSenior Loan CommitteeNational Business Lines
ASCAccounting Standards CodificationExchange ActSecurities Exchange Act of 1934, as amendedAmendedSOFRNOLSecured Overnight Funding RateNet Operating Loss
FASBASUAccounting Standards UpdateFASBFinancial Accounting Standards BoardSRNPVSupervision and Regulation LettersNet Present Value
FCRABasel CommitteeBasel Committee on Banking SupervisionFCRAFair Credit Reporting Act of 1971TCJANYSETax Cuts and Jobs Act of 2017New York Stock Exchange
FDIABasel IIIBanking Supervision's December 2010 Final Capital FrameworkFDIAFederal Deposit Insurance ActTDROCCTroubled Debt RestructuringOffice of the Comptroller of the Currency
FDICBHCABank Holding Company Act of 1956FDICFederal Deposit Insurance CorporationTEBOCITax Equivalent BasisOther Comprehensive Income
FHLBBODBoard of DirectorsFHAFederal Housing AdministrationOFACOffice of Foreign Asset Control
BOLIBank Owned Life InsuranceFHLBFederal Home Loan BankTSROREOTotal Shareholder ReturnOther Real Estate Owned
FHLMCBSBYBloomberg Short Term Bank Yield IndexFHLMCFederal Home Loan Mortgage CorporationUSDAPCAOBPublic Company Accounting Oversight Board
CAMELSCapital Adequacy, Assets, Management Capability, Earnings, Liquidity, SensitivityFICOThe Financing CorporationPCDPurchased Credit Deteriorated
Capital RulesThe FRB, the OCC, and the FDIC 2013 Approved Final RulesFNMAFederal National Mortgage AssociationPDProbability of Default
CARES ActCoronavirus Aid, Relief and Economic Security ActFOMCFederal Open Market CommitteePPNRPre-Provision Net Revenue
CBDPCommercial Banking Development ProgramFRAFederal Reserve ActPPPPaycheck Protection Program
CBOEChicago Board Options ExchangeFRBFederal Reserve BankROURight of Use
CCOChief Credit OfficerFTCFederal Trade CommissionSBASmall Business Administration
CDARSCertificate Deposit Account Registry ServiceFVOFair Value OptionSBICSmall Business Investment Company
CDCCenters for Disease Control and PreventionGAAPU.S. Generally Accepted Accounting PrinciplesSECSecurities and Exchange Commission
CDOCollateralized Debt ObligationGLBAGramm-Leach-Bliley ActSERPSupplemental Executive Retirement Plan
CECLCurrent Expected Credit LossGNMAGovernment National Mortgage AssociationSLCSenior Loan Committee
CEOChief Executive OfficerGSEGovernment-Sponsored EnterpriseSOFRSecured Overnight Funding Rate
CET1Common Equity Tier 1HELOCHome Equity Line of CreditSRSupervision and Regulation Letters
CFOChief Financial OfficerHFIHeld for InvestmentTDRTroubled Debt Restructuring
CFPBConsumer Financial Protection BureauHFSHeld for SaleTEBTax Equivalent Basis
CLOCollateralized Loan ObligationHTMHeld-to-MaturityTSRTotal Shareholder Return
COSOCommittee of Sponsoring Organizations of the Treadway CommissionHUDU.S. Department of Housing and Urban DevelopmentUPBUnpaid Principal Balance
COVID-19Coronavirus Disease 2019ICSInsured Cash Sweep ServiceUSDAUnited States Department of Agriculture
FICOCRAThe Financing CorporationCommunity Reinvestment ActVIEIRCInternal Revenue CodeVAVeterans Affairs
CRECommercial Real EstateIRLCInterest Rate Lock CommitmentVIEVariable Interest Entity
FNMAD&IFederal National MortgageDiversity and InclusionISDAInternational Swaps and Derivatives AssociationXBRLeXtensible Business Reporting Language
FRADIFFederal Reserve ActFDIC's Deposit Insurance FundLGDLoss Given Default

4
Item 1.Business.
Table of Contents
Item 1.Business.
Organization Structure and Description of Services
WAL is a bank holding company headquartered in Phoenix, Arizona, incorporated under the laws of the state of Delaware. WAL provides a full spectrum of customized loan, deposit lending,and treasury management international banking, and online banking products and servicescapabilities, including blockchain-based offerings through its wholly-owned banking subsidiary, WAB.
WAB operates the following full-service banking divisions: ABA, BON, Bridge, FIB, and TPB. The Company also servesprovides an array of specialized financial services to business customers through a national platformacross the country, and has added to these capabilities with the acquisition of specialized financialAmeriHome on April 7, 2021, which provides mortgage banking services. In addition, the Company has two non-bank subsidiaries,subsidiaries: LVSP, which held and managed certain OREO properties, and CSI, a captive insurance company formed and licensed under the laws of the State of Arizona and established as part of the Company's overall enterprise risk management strategy.
WAL also has eight unconsolidated subsidiaries used as business trusts in connection with issuance of trust-preferred securities as described in "Note 9.12. Qualifying Debt" in Item 8 of this Form 10-K.
Bank Subsidiary
At December 31, 2019,2021, WAL has the following bank subsidiary:
Bank Name Headquarters Location Cities 
Total
Assets
 
Net
Loans
 DepositsBank NameHeadquartersLocation CitiesTotal
Assets		Net
Loans		Deposits
     (in millions)   (in millions)
Western Alliance Bank Phoenix,
Arizona		 
Arizona: Chandler, Flagstaff, Gilbert, Mesa, Phoenix, Scottsdale, and Tucson
 $26,862.7
 $20,955.5
 $23,086.0
Western Alliance BankPhoenix,
Arizona
Arizona: Chandler, Flagstaff, Gilbert, Mesa, Phoenix, Scottsdale, and Tucson
$55,997.3 $44,458.0 $48,007.7 
Nevada: Carson City, Fallon, Reno, Sparks, Henderson, Las Vegas, Mesquite, and North Las Vegas
Nevada: Carson City, Fallon, Henderson, Las Vegas, Mesquite, Reno, and Sparks
$55,997.3 
California: Beverly Hills, Carlsbad, Costa Mesa, La Mesa, Los Angeles, Menlo Park, Oakland, Palo Alto, Pleasanton, San Diego, San Francisco, and San Jose
California: Beverly Hills, Carlsbad, Costa Mesa, Irvine, La Mesa, Los Angeles, Marina Del Ray, Oakland, Pleasanton, San Diego, San Francisco, San Jose, and Woodland Hills
 
Other: Atlanta, Georgia; Boston, Massachusetts; and Reston, Virginia
 $48,007.7 
WAB also has the following significant wholly-owned subsidiaries:
•Western Alliance Business Trust holds certain investment securities, municipal and non-profit loans, and leases.
•WA PWI LLC holds interests in certain limited partnerships invested primarily in low income housing tax credits and small business investment corporations.
•BW Real Estate, Inc. operates as a real estate investment trust and holds certain of WAB's real estate loans and related securities.
•Helios Prime, Inc. holds certain equity interests in renewable energy tax credit transactions.
•Western Finance Company (formerly Western Alliance Equipment Finance) purchases and originates equipment finance leases and provides mortgage banking services through its wholly-owned subsidiary, AmeriHome Mortgage.
Market Segments
The Company’sCompany's reportable segments are defined primarily by geographic location,aggregated with a focus on products and services offered and markets served. The Company's regional segments, which include Arizona, Nevada, Southern California, and Northern California, provide full serviceconsist of three reportable segments:
•Commercial segment: provides commercial banking and relatedtreasury management products and services to their respective markets. The Company's NBL segments providesmall and middle-market businesses, specialized banking services to sophisticated commercial institutions and investors within niche markets. These NBLs are managed centrallyindustries, as well as financial services to the real estate industry.
•Consumer Related segment: offers consumer banking services, such as residential mortgage banking, and are broadercommercial banking services to enterprises in geographic scope than the Company's other segments, though still predominately within the Company's core market areas. The consumer-related sectors.
•Corporate & Other segmentsegment: consists of the Company's investment portfolio, corporateCorporate borrowings and other related items, income and expense items not allocated to our other reportable segments, and inter-segment eliminations.
5
Table of Contents
Loan and deposit accounts are typically assigned directly to the segments where these products are originated and/or serviced. Equity capital is assigned to each segment based on the risk profile of their assets and liabilities with a funds credit provided for the use of this equity as a funding source.liabilities. Any excess equity not allocated to segments based on risk is assigned to the Corporate & Other segment.

Net interest income, provision for credit losses, and non-interest expense amounts are recorded in their respective segments to the extent that the amounts are directly attributable to those segments. Net interest income of a reportable segment includes a funds transfer pricing process that matches assets and liabilities with similar interest rate sensitivity and maturity characteristics. Using this funds transfer pricing methodology, liquidity is transferred between users and providers. Net income amounts for each reportable segment are further derived by the use of expense allocations. Certain expenses not directly attributable to a specific segment are allocated across all segments based on key metrics, such as number of employees, number of transactions processed for loans and deposits, and average loan balances, and average deposit balances. Income taxes are applied to each segment based on the effective tax rate for the geographic location of the segment. Any difference in the corporate tax rate and the aggregate effective tax rates in the segments are adjusted in the Corporate & Other segment.
Lending Activities
General
Through WAB and its banking divisions and operating subsidiaries, the Company provides a variety of financial serviceslending products to customers, including CRE loans, construction and land development loans, commercial loans, and consumer loans. The Company’s lending has focused primarily on meeting the needs of business customers.
Commercial and Industrial: Commercial and industrial loans are a significant portion of the Company's loan portfolio and include working capital lines of credit, loans to technology companies, inventory and accounts receivable lines, mortgage warehouse lines, equipment loans and leases, and other commercial loans. Loans to technology companies,Equipment loans and leases, tax-exempt municipalities, and not-for-profit organizations are also categorized as commercial and industrial loans.
CRE: Loans to fund the purchase or refinancing of CRE for investors (non-owner occupied) or owner occupants are a significant portion of the Company's loan portfolio. These CRE loans are secured by multi-family residential properties, professional offices, industrial facilities, retail centers, hotels, and other commercial properties. As of December 31, 20192021 and 2018, 31%2020, 23% and 36%28% of the Company's CRE loans were owner occupied. Owner occupied CRE loans are loans secured by owner occupied non-farm nonresidential properties for which the primary source of repayment (more than 50%) is the cash flow from the ongoing operations and activities conducted by the borrower who owns the property. Non-owner occupied CRE loans are CRE loans for which the primary source of repayment is rental income generated from the collateral property.
Construction and Land Development: Construction and land development loans include single family and multi-family residential projects, industrial/warehouse properties, office buildings, retail centers, medical office facilities, and residential lot developments. These loans are primarily originated to experienced local developers with whom the Company has a satisfactory lending history. An analysis of each construction project is performed as part of the underwriting process to determine whether the type of property, location, construction costs, and contingency funds are appropriate and adequate. Loans to finance commercial raw land are primarily to borrowers who plan to initiate active development of the property within two years.
Residential: The Company has a residential mortgage acquisition program, in which it partners with strategic third parties to executeexecutes flow and bulk residential loan purchases that meet the Company's goals and underwriting criteria.criteria through its residential mortgage acquisition program. These loan purchases consist of both conforming and non-conforming loans. Non-conforming loan purchases are considered to be high quality as the borrowers have high FICO scores and the loans generally have low loan-to-values. Residential loans made up 10% of the Company's total loan portfolio as of December 31, 2019, compared to 7% as of December 31, 2018.
Consumer: Limited types of consumer loans are offered to meet customer demand and to respond to community needs. Examples of these consumer loans include home equity loans and lines of credit, home improvement loans, personal lines of credit, and loans to individuals for investment purposes.


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At December 31, 2019,2021, the Company's HFI loan portfolio totaled $21.12$39.1 billion, or approximately 79%70% of total assets. The following table sets forth the composition of the Company's HFI loan portfolio as of the periods presented: 
 December 31,December 31,
 2019 201820212020
 Amount Percent Amount PercentAmountPercentAmountPercent
 (dollars in thousands)(dollars in millions)

        
Commercial and industrial $9,382,043
 44.5% $7,762,642
 43.8%Commercial and industrial$18,297.5 46.8 %$14,324.4 52.9 %
Commercial real estate - non-owner occupied 5,245,634
 24.8
 4,213,428
 23.8
Commercial real estate - non-owner occupied6,526.4 16.7 5,654.7 20.9 
Commercial real estate - owner occupied 2,316,913
 11.0
 2,325,380
 13.1
Commercial real estate - owner occupied1,898.1 4.9 2,156.8 8.0 
Construction and land development 1,952,156
 9.2
 2,134,753
 12.1
Construction and land development3,022.7 7.7 2,431.3 9.0 
Residential real estate 2,147,664
 10.2
 1,204,355
 6.8
Residential real estate9,281.7 23.8 2,434.6 9.0 
Consumer 57,083
 0.3
 70,071
 0.4
Consumer49.0 0.1 51.2 0.2 
Loans, net of deferred loan fees and costs $21,101,493
 100.0% $17,710,629
 100.0%
Loans HFI, net of deferred loan fees and costsLoans HFI, net of deferred loan fees and costs$39,075.4 100.0 %$27,053.0 100.0 %
Allowance for credit losses (167,797)   (152,717)  Allowance for credit losses(252.5)(278.9)
Total loans HFI $20,933,696
   $17,557,912
  
Net loans HFINet loans HFI$38,822.9 $26,774.1 
For additional information concerning loans, see "Note 3.5. Loans, Leases and Allowance for Credit Losses" of the Consolidated Financial Statements contained herein or "Management's Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition – Loans discussions"Loans" in Item 87 of this Form 10-K.
The Company adheres to a specific set of credit standards that are intended to ensure appropriate management of credit risk. Furthermore, the Bank's senior management team plays an active role in monitoring compliance with such standards.
Loan originations are subject to a process that includes the credit evaluation of borrowers, utilizing established lending limits, analysis of collateral, and procedures for continual monitoring and identification of credit deterioration. Loan officers actively monitor their individual credit relationships in order to report suspected risks and potential downgrades as early as possible. The BOD approves all material changes to loan policy, as well as lending limit authorities. The Bank's lending policies generally incorporate consistent underwriting standards across all geographic regions in which the Bank operates, customized as necessary to conform to state law and local market conditions. The Bank's credit culture emphasizes timely identification of troubled credits to allow management to take prompt corrective action, when necessary.
Loan Approval Procedures and Authority
The Company's loan approval procedures are executed through a tiered loan limit authorization process, which is structured as follows:
•
•Individual Credit Authorities. The credit approval levels for individual divisional and senior credit officers are set by policy and certain credit administration officers' approval authorities are established on a delegated basis.
•Management Loan Committees. Credits in excess of individual divisional or senior credit officer approval authority are submitted to the appropriate divisional or NBL loan committee. The divisional committees consist of members of the Bank's senior management team of each division and the NBL loan committees consist of the Bank's divisional or senior credit officers.
• The credit approval levels for individual divisional and senior credit officers are set by policy and certain credit administration officers' approval authorities are established on a delegated basis.
•
Management Loan Committees. Credits in excess of individual divisional or senior credit officer approval authority are submitted to the appropriate divisional or NBL loan committee. The divisional committees consist of members of the Bank's senior management team of each division and the NBL loan committees consist of the Bank's divisional or senior credit officers.
•
Credit Administration. Credits in excess of the divisional or NBL loan committee approval authority require the additional approval of the Bank's CCO and any credits in excess of the CCO's individual approval authority are submitted to the WAB SLC. In addition, the SLC reviews all other loan approvals to any one new borrower in excess of established thresholds. The SLC is chaired by the WAB CCO and includes the Company’s CEO.
Loans to One Borrower. In addition to the limits set forth above, subject to certain exceptions, state banking laws generally limit the amount of funds that a bank may lend to a single borrower. Under Arizona law, the obligations of one borrower to a bank generally may not exceed 20% of the bank’s capital, plus an additional 10% of its capital if the additional amounts are fully secured by readily marketable collateral. Arizona law does not specifically require aggregation of loans to affiliated entities in determining compliance with the lending limit. As a matter of longstanding practice, the Arizona Department of Financial Institutions uses the same aggregation analysis as applied to national banks by the OCC.

7
Table of Contents
Concentrations of Credit Risk. The Company's lending policies also establish customer and product concentration limits for its HFI portfolio, which are based on commitment amounts, to control single customer and product exposures. The Company's lending policies have several different measures to limit concentration exposures. Set forth below are the primary segmentation limits and actual measures at the commitment level as of December 31, 2019:2021:
 Percent of Total Capital Percent of Tier 1 Capital and ACL
 Policy Limit Actual Policy LimitActual
CRE 435% 232%CRE300 %196 %
Commercial and industrial 400
 289
Commercial and industrial685 583 
Construction and land development 85
 59
Construction and land development160 137 
Residential real estate 100
 66
Residential real estate320 203 
Consumer 5
 2
Consumer10 3 
Asset Quality
General
To measure asset quality, the Company has instituted a loan grading system consisting of nine different categories. The first five are considered satisfactory "pass" ratings. The other four "non-pass" grades range from a “Special mention” category to a “Loss” category and are consistent with the grading systems used by federal banking regulators. All loans are assigned a credit risk grade at the time they are made and each assigned loan officer reviews the credit with his or her immediate supervisorformally reviewed on a quarterly basis as part of the Company's loan grade certification process to determine whether a change in the credit risk grade is warranted. In addition, the grading of the Company's loan portfolio is reviewed on a regular basis by its internal Loan Review Department.
Collection Procedure
If a borrower fails to make a scheduled payment on a loan, Bank personnel attempt to remedy the deficiency by contacting the borrower and seeking payment. Contacts generally are made within 15 business days after the payment becomes past due. The Bank maintains regional Special Assets Departments, which generally service and collect loans rated Substandard or worse. Each division is responsible for monitoring activity that may indicate an increased risk rating, including, but not limited to, past-dues, overdrafts, and loan agreement covenant defaults. Loans deemed uncollectible are charged-off.
Nonperforming Assets
Nonperforming assets include loans past due 90 days or more and still accruing interest, non-accrual loans, TDR loans, and repossessed assets, including OREO. In general, loans are placed on non-accrual status when the Company determines that ultimate collection of principal and interest is in doubt due to the borrower’s financial condition, collateral value, and collection efforts. In addition, the Company considers all loans rated Substandard or lower to be experiencing financial difficulty. A TDR loan is a loan for which the Company, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that the Company would not otherwise consider. Other repossessed assets result from loans where the Company has received title or physical possession of the borrower’s assets. The Company generally re-appraises OREO and collateral dependent impairednon-residential loans with balances greater than $1.0 million every 12 months. The total net realized and unrealized gains and losses of repossessed and other assets was not significant during each of the years ended December 31, 2019, 2018,2021, 2020, and 2017.2019. However, losses may be experienced in future periods.
Criticized Assets
Federal bank regulators require banks to classify its assets on a regular basis. In addition, in connection with their examinations of the Bank, examiners have authority to identify problem assets and, if appropriate, re-classify them. A loan grade of "Special Mention" from the Company's internal loan grading system is utilized to identify potential problem assets and loan grades of "Substandard," "Doubtful," and "Loss" are utilized to identify actual problem assets.

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The following describes the potential and actual problem assets using the Company's internal loan grading system definitions:
•
•"Special Mention" (Grade 6): Generally these are assets that possess potential weaknesses that warrant management's close attention. These loans may involve borrowers with adverse financial trends, higher debt to equity ratios, or weaker liquidity positions, but not to the degree of being considered a “problem loan” where risk of loss may be apparent. Loans in this category are usually performing as agreed, although there may be non-compliance with financial covenants.
•“Substandard” (Grade 7): These assets are characterized by well-defined credit weaknesses and carry the distinct possibility that the Company will sustain some loss if such weakness or deficiency is not corrected. All loans 90 days or more past due and all loans on non-accrual status are considered at least "Substandard," unless extraordinary circumstances would suggest otherwise.
•“Doubtful” (Grade 8): These assets have all the weaknesses inherent in those classified as "Substandard" with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable, but because of certain known factors which may work to the advantage and strengthening of the asset (for example, capital injection, perfecting liens on additional collateral and refinancing plans), classification as an estimated loss is deferred until a more precise status may be determined.
• Generally these are assets that possess potential weaknesses that warrant management's close attention. These loans may involve borrowers with adverse financial trends, higher debt to equity ratios, or weaker liquidity positions, but not to the degree of being considered a “problem loan” where risk of loss may be apparent. Loans in this category are usually performing as agreed, although there may be non-compliance with financial covenants.
•
“Substandard” (Grade 7): These assets are characterized by well-defined credit weaknesses and carry the distinct possibility that the Company will sustain some loss if such weakness or deficiency is not corrected. All loans 90 days or more past due and all loans on non-accrual status are considered at least "Substandard," unless extraordinary circumstances would suggest otherwise.
•
“Doubtful” (Grade 8): These assets have all the weaknesses inherent in those classified as "Substandard" with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable, but because of certain known factors which may work to the advantage and strengthening of the asset (for example, capital injection, perfecting liens on additional collateral and refinancing plans), classification as an estimated loss is deferred until a more precise status may be determined.
•
“Loss” (Grade 9): These assets are considered uncollectible and having such little recoverable value that it is not practical to defer writing off the asset. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practicable or desirable to defer writing off the asset, even though partial recovery may be achieved in the future.
Allowance for Credit Losses
The Company must maintain an adequate allowance for credit losses. The allowance for credit losses is established through a provision for credit losses andin each period is reflected as a reduction in earnings. Loans are charged againstearnings for that period and, upon the adoption of CECL on January 1, 2020, includes amounts related to funded loans, unfunded loan commitments, and investment securities. The provision is equal to the amount required to maintain the allowance for credit losses when management believesat a level that collectability ofis adequate to absorb estimated lifetime credit losses inherent in the contractual principal or interest is unlikely.loan and investment securities portfolios as well as off-balance sheet credit exposures. Subsequent recoveries, if any, are credited to the allowance. The allowance is reported at an amount believed adequate to absorb probablefor credit losses on existing loans that may become uncollectable, based on evaluation of the collectability offunded loans and priorinvestment securities are presented as a reduction to the respective asset balance on the Consolidated Balance Sheet. The allowance for credit loss experience, together withlosses on unfunded loan commitments is classified in other factors.liabilities on the Consolidated Balance Sheet. For a detailed discussion of the Company’s methodology see “Management’s Discussion and Analysis and Financial Condition – Critical Accounting Policies – Allowance for Credit Losses” in Item 7 of this Form 10-K.
The Company also records estimated losses on unfunded loan commitments, which are classified as non-interest expense, with corresponding reserves in other liabilities.
Investment Activities
The Company has an investment policy, which wasis approved by the BOD.BOD on an annual basis. This policy dictates that investment decisions be made based on the safety of the investment, liquidity requirements of the Bank and holding company, potential returns, cash flow targets, and consistency with the Company's interest rate risk management. The Bank’s ALCO is responsible for making securities portfolio decisions in accordance with established policies. The CFO and Treasurer have the authority to purchase and sell securities within specified guidelines. All investment transactions for the Bank and for the holding company were reviewed by the ALCO and BOD.
Generally, the
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The Company's investment policy limits new securities investmentspurchases to certain eligible investment types and, in the following: securities backed by the full faith and credit of the U.S. government, including U.S. treasury bills, notes, and bonds, direct obligations of Ginnie Mae, USDA and SBA loans; MBS or CMO issued by a GSE, such as Fannie Mae or Freddie Mac; debt securities issued by a GSE, such as Fannie Mae, Freddie Mac, and the FHLB; tax-exempt securities with a rating of “Single-A” or higher; preferred stock where the issuing company is rated “BBB” or higher; corporate debt with a rating of “Single-A” or better; investment grade corporate bond mutual funds; private label collateralized mortgage obligations with a single rating of “AA” or higher; commercial mortgage-backed securities with a rating of “AAA;” low income housing development bonds; and mandatory purchases of equity securities of the FRB and FHLB.

Investment securitiesaggregate, are further subject to the following quantitative limits of the Bank:
Securities CategoryBasis LimitPercentage or Dollar Limit
Preferred stockCommon equity tier 110.0%
Tax-exempt municipal securitiesTotal assets5.0%
Tax-exempt low income housing development bondsTotal capital30.0%
Investment grade corporate bond mutual fundsTier 1 capital5.0%
Collateralized loan obligationsTotal assets5.0 %
Corporate debt holdingsTotal assets2.5%
Commercial mortgage-backed securitiesAggregate purchases$50.0 million
The Company no longer purchases (although it may continue to hold previously acquired) CDOs. The Company's policies also govern the use of derivatives, and provide that the Company prudently use derivatives in accordance with applicable regulations as a risk management tool to reduce the overall exposure to interest rate risk, and not for speculative purposes.
As of December 31, 2019, theThe Company's investment securities portfolio includes debt and equity securities. Debt securities are classified as AFS or HTM pursuant to ASC Topic 320, Investments and ASC Topic 825, Financial Instruments. Equity securities are reported at fair value in accordance with ASC Topic 321, Equity Securities. For further discussion of significant accounting policies related to the Company's investment securities portfolio refer to "Note 1. Summary of Significant Accounting Policies" in Item 8 of this Form 10-K.
As of December 31, 2019,2021, the Company's investment securities portfolio totals $4.0$7.5 billion, representing approximately 14.8%13% of the Company's total assets, with the majority of the portfolio invested in AAA/AA+ rated securities. The average duration of the Company's investment securities is 4.65.4 years as of December 31, 2019.2021.
The following table summarizes the carrying value of investment securities as of December 31, 20192021 and 2018:2020:
December 31,
 December 31,20212020
 2019 2018AmountPercentAmountPercent
 Amount Percent Amount Percent(dollars in millions)
Debt securitiesDebt securities
 (dollars in thousands)
Available-for-sale debt securities        
CDO $10,142
 0.3% $15,327
 0.4%
CLOCLO$926.2 12.4 %$146.9 2.7 %
Commercial MBS issued by GSEs 94,253
 2.4
 100,106
 2.7
Commercial MBS issued by GSEs68.5 1.0 84.6 1.5 
Corporate debt securities 99,961
 2.5
 99,380
 2.7
Corporate debt securities382.9 5.1 270.2 5.0 
Municipal securities 7,773
 0.2
 —
 —
Private label residential MBS 1,129,227
 28.4
 924,594
 25.0
Private label residential MBS1,724.9 23.1 1,476.9 27.1 
Residential MBS issued by GSEs 1,412,060
 35.6
 1,530,124
 41.4
Residential MBS issued by GSEs1,993.4 26.8 1,486.6 27.3 
Tax-exempt 1,039,962
 26.2
 841,573
 22.8
Tax-exempt2,105.3 28.2 1,756.2 32.3 
Trust preferred securities 27,040
 0.7
 28,617
 0.8
U.S. government sponsored agency securities 10,000
 0.3
 38,188
 1.0
U.S. treasury securities 999
 0.0
 1,984
 0.1
U.S. treasury securities13.0 0.2 — — 
OtherOther81.7 1.1 55.9 1.0 
Total debt securities $3,831,417
 96.5% $3,579,893
 96.9%Total debt securities$7,295.9 97.9 %$5,277.3 96.9 %
        
Equity securities        Equity securities
CRA investments $52,504
 1.3% $51,142
 1.4%CRA investments$44.6 0.6 %$53.4 1.0 %
Preferred stock 86,197
 2.2
 63,919
 1.7
Preferred stock113.9 1.5 113.9 2.1 
Total equity securities $138,701
 3.5% $115,061
 3.1%Total equity securities$158.5 2.1 %$167.3 3.1 %
        
Total investment securities $3,970,118
 100.0% $3,694,954
 100.0%Total investment securities$7,454.4 100.0 %$5,444.6 100.0 %
As of December 31, 20192021 and 2018,2020, the Company had investments in BOLI of $174.0$180.2 million and $170.1$176.3 million, respectively. BOLI is used to help offset employee benefit costs. For additional information concerning investments, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Financial Condition – Investments” in Item 7 of this Form 10-K.

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Deposit Products
The Company offers a variety of deposit products, including checking accounts, savings accounts, money market accounts, and other types of deposit accounts, including fixed-rate, fixed maturity certificates of deposit. The Company has historically focused on growing its lower cost core customer deposits. As of December 31, 2019,2021, the deposit portfolio was comprised of 37%45% non-interest-bearing deposits and 63%55% interest-bearing deposits.
The competition for deposits in the Company's markets is strong. The Company has historically been successful in attracting and retaining deposits due to several factors, including its:
•knowledgeable and empowered bankers committed to providing personalized and responsive service that translates into long lasting relationships;
•broad selection of cash management services offered; and
•incentives to employees for business development and retention.
Deposit balances are generally influenced by national and local economic conditions, changes in prevailing interest rates, competivenesscompetitiveness of the Company's offered rates, perceived stability of financial institutions, and competition. In order to attract and retain deposits, the Company relies on providing quality service and introducing new products and services that meet the needs of its customers.
The Bank's deposit rates are determined through an internal oversight process under the direction of its ALCO. The Bank considers a number of factors when determining deposit rates, including:
•current and projected national and local economic conditions and the outlook for interest rates;
•local competition;
•loan and deposit positions and forecasts, including any concentrations in either; and
•rates charged on FHLB advances and other funding sources.
The following table shows the Company's deposit composition: 
 December 31,December 31,
 2019 201820212020
 Amount Percent Amount PercentAmountPercentAmountPercent
 (in thousands)(in millions)
Non-interest-bearing demand deposits $8,537,905
 37.4% $7,456,141
 38.9%Non-interest-bearing demand deposits$21,353.4 44.9 %$13,463.3 42.2 %
Interest-bearing transaction accounts 2,760,865
 12.1
 2,555,609
 13.3
Interest-bearing transaction accounts6,924.0 14.5 4,396.4 13.8 
Savings and money market accounts 9,120,747
 40.0
 7,330,709
 38.2
Savings and money market accounts17,278.6 36.3 12,413.4 38.9 
Time certificates of deposit ($250,000 or more) 1,426,133
 6.3
 1,009,900
 5.3
Time certificates of deposit ($250,000 or more)523.0 1.1 602.0 1.9 
Other time deposits 950,843
 4.2
 825,088
 4.3
Other time deposits1,533.0 3.2 1,055.4 3.2 
Total deposits $22,796,493
 100.0% $19,177,447
 100.0%Total deposits$47,612.0 100.0 %$31,930.5 100.0 %
Although the Company does not pay interest to depositors of non-interest-bearing accounts, earnings credits are awarded to some account holders, which offset charges incurred by account holders for other services. Earnings credits earned in excess of charges incurred by account holders are recorded in deposit costs as part of non-interest expense and fluctuate as a result of deposit balances eligible for earnings credits, along with the earnings credit rates on these deposit balances.
In addition to the Company's deposit base, it has access to other sources of funding, including FHLB and FRB advances, Federal funds purchased, repurchase agreements, and secured and unsecured lines of credit with other financial institutions. Previously, the Company has also accessed the capital markets through trust preferred, subordinated debt, and Senior Note offerings. For additional information concerning the Company's deposits, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Balance Sheet Analysis – Deposits” in Item 7 of this Form 10-K.
Other Financial Products and Services
In addition to traditional commercial banking activities, the Company offers other financial services to its customers, including internet banking, wire transfers, electronic bill payment and presentment, blockchain-based offerings, lock box services, courier, and cash management services.

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Customer, Product, and Geographic Concentrations
Approximately 45%Commercial and 49%industrial loans make up 47% and 53% of the Company's HFI loan portfolio as of December 31, 2021 and 2020, respectively. In addition, 29% and 38% of the Company's loan portfolio at December 31, 20192021 and 2018,2020, respectively, was represented by CRE and construction and land development loans. The Company’s business is concentrated primarily in the Phoenix, Las Vegas, Los Angeles, Phoenix, Reno, San Francisco, San Jose, San Diego and Tucson metropolitan areas. Consequently, the Company is dependent on the trends of these regional economies.
Although commercial and industrial loans make up approximately 44% of the Company's loan portfolio as of December 31, 2019 and 2018, the Company does not consider this to be a significant concentration risk as these loans are well diversified in terms of customers and product offerings.
The Company's lending activities, including those within its NBLs, are driven in large part by the customers served in the market areas where the Company has offices in the states of Arizona, Nevada, and California. The following table presents a breakout of the in-footprint and out-of-footprint distribution of loans:
 December 31, 2019 December 31, 2018
 In-Footprint Out-of-Footprint Total In-Footprint Out-of-Footprint Total
Arizona16.2% 2.0% 18.2% 18.1% 2.5% 20.6%
Nevada10.0
 0.7
 10.7
 11.1
 0.2
 11.3
Southern California10.7
 —
 10.7
 12.2
 —
 12.2
Northern California5.7
 0.5
 6.2
 6.8
 0.5
 7.3
HOA Services0.3
 0.8
 1.1
 0.3
 0.9
 1.2
Hotel Franchise Finance2.8
 6.3
 9.1
 1.5
 6.9
 8.4
Public & Nonprofit Finance6.8
 1.0
 7.8
 7.8
 1.0
 8.8
Technology & Innovation2.4
 4.9
 7.3
 2.4
 4.4
 6.8
Other NBLs13.7
 15.2
 28.9
 10.3
 13.1
 23.4
Total68.6% 31.4% 100.0% 70.5% 29.5% 100.0%
The Company is not dependent upon any single or limited number of customers, the loss of which would have a material adverse effect on the Company. Neither the Company nor any of its reportable segments have customer relationships that individually account for 10% or more of consolidated or segment revenues. No material portion of the Company’s business is seasonal.
Competition
The financial services industry is highly competitive. Many of the Company's competitors are much larger in total assets and capitalization, have greater access to capital markets, offer a broader range of financial services than the Company can offer, and may have lower cost structures.
This increasingly competitive environment is primarily a result of long-term changes in regulation that made mergers and geographic expansion easier, changes in technology and product delivery systems and web-based tools, and the accelerating pace of consolidation among financial services providers. The Company competes for loans, deposits, and customers with other banks, credit unions, brokerage companies, mortgage companies, insurance companies, finance companies, financial technology firms, and other non-bank financial services providers. This strong competition for deposit and loan products directly affects the interest rates on those products and the terms on which they are offered to customers.
Technological innovation continues to contribute to greater competition in domestic and international financial services markets.
Mergers between financial institutions have placed additional pressure on banks to consolidate their operations, reduce expenses, and increase revenues to remain competitive. The competitive environment is also significantly impacted by federal and state legislation that makes it easier for non-bank financial institutions to compete with the Company.
Human Capital Resources
The Company’s culture is defined by its corporate values of integrity, creativity, teamwork, passion, and excellence. People are the foundation of the Company and the Company invests in their success by providing expanded opportunities to attract and retain its people. Our people are committed to our clients’ success and, by putting clients first, we create strong shareholder performance. This leads to tremendous possibilities to fuel client growth and support the Company’s communities.
The Company is deeply committed to giving back to the communities where it does business and strives to help low-to-moderate income geographies become healthier and more sustainable communities. Employees are encouraged to dedicate their time and expertise to charitable and civic organizations they are passionate about. In total, employees have volunteered more than 20,000 hours since 2019. The Company is also committed to providing financial support for education, affordable housing, and community development lending and investments.
As of December 31, 2019,2021, the Company has 1,835employed 3,139 full-time equivalent employees.employees in its branches and loan production offices across the United States, an increase of 64% from December 31, 2020 due to the AmeriHome acquisition in April 2021 as well as continued organic growth. The Company’s employees are not represented by a union or covered by a collective bargaining agreement. Management believes
Diversity and Inclusion
The Company is committed to improving workforce diversity at all levels of the organization and to providing equal opportunity in all aspects of employment. In 2021, the Company continued to make progress towards enhancing its ability to attract and retain a diverse population of employees. The Company has built relationships with community and educational institutions to strengthen its pipelines of talent in underrepresented communities. The Company has established an executive-led Diversity & Inclusion Opportunity Council, which guides and sponsors initiatives, sets goals designed to increase diversity of thought and access to leadership, evaluates organizational and best practice D&I strategies, and creates subcommittees to activate goals. Overall, the D&I Opportunity Council is focused on accelerating D&I activities and results. One aspect of this work is the active support of Business Resource Groups focused on the career advancement of diverse groups within the
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Company, such as women, minority groups, and LGBTQIA+ employees. These groups foster opportunities to engage in programs, network with peers, and connect with Bank leadership.
The Company employs a diverse workforce that reflects its communities, with 44% of the Company's employees belonging to an ethnic minority group as of December 31, 2021, an increase from 38% as of the end of the prior year. In terms of gender diversity, approximately 55% of the Company's employees are women as of December 31, 2021, which is a decrease from 58% in the prior year. Of the employees that are women, 47% occupy roles that involve supervising and managing other employees as of December 31, 2021. With respect to the Company's Board of Directors, 15% belong to a minority group and 15% are women. The Company remains committed to increasing the share of women and minority groups in the ranks of its leadership and Board of Directors.
Recruiting, Retention, and Talent Development
The Company recognizes that its success is highly dependent on its ability to attract, retain and develop employees. To foster this development, the Company has created two early talent identification programs, a college internship program and Commercial Banking Development Program, each of which enhance management’s ability to hire outstanding people. Campus recruitment initiatives and partnerships also fuel the Company’s pipeline of talent. Within the internship program, college students and recent graduates are paired with leaders across the Company to create a valuable, immersive experience, with an objective of retaining the most promising interns and eventually bringing this talent into the Bank through the CBDP or other appropriate positions. The CBDP is an 18-month, on-the-job development program to train successful credit analysts that offers progressive assignments, mentoring, opportunities to learn the business and various aspects of leadership, with the objective of growing these individuals into future leaders of the Company. Additionally, the Company has expanded its sales training and mentoring efforts to foster internal development within its commercial lending teams.
As a growing company, recruiting new talent to the organization is key to the Company’s success and part of that objective includes building a diverse workforce that is representative of the communities that the Company serves. In 2021, excluding the impact of AmeriHome for which comprehensive data is not available, 38% of WAB’s open positions were filled by candidates belonging to an ethnic minority group and 67% of promotions were awarded to ethnically diverse or female employees. The Company has made a commitment to growing the share of its employee relationspopulation from diverse communities and has experienced some success in recent years, although the Company believes there is still an opportunity for additional advancement in this area.
Retaining employees who have been key contributors to the Company's success story remains an important objective. From 2017 through 2020, the Company achieved a multi-year decline in its turnover rate. For 2021, the Company’s turnover rate has been meaningfully impacted by the Great Resignation, which refers to the trend in which employees voluntarily resigned from their jobs in record numbers, with turnover rates highest among mid-career employees. This trend increased the Company's turnover rate to 19% in 2021, from 13% in 2020. As reflected in the table below and consistent with the employee resignation data collected during the Great Resignation, the Company's turnover rate is highest among employees in the Under 30 age group.
Age GroupTurnover Rate
Under 3027%
Between 30-5019
Over 5016
The Company also offers a variety of resources to help its employees grow in their current roles and build new skills, including online development programs and workshops, mentoring programs, and internal webinars that feature speakers from across the Company, sharing information about their business line, division, or functional area. The Company encourages its employees to take an active role in their career and through the annual performance management process, employees are good.able to identify individual development goals and create an action plan to achieve these goals.
With the understanding that bias is a larger societal issue, the Company offers training to create awareness and understanding of everyday biases and micro-behaviors, and helps individuals to implement solutions to create a more inclusive workplace. This training is required for all employees and additional, focused trainings are required for all managers, including one specifically promoting inclusion.
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Compensation and Benefits
The Company’s compensation and benefits programs are designed to attract, retain, motivate, and reward employees to deliver strong performance and excellence. In addition to salaries, these programs include annual bonuses, stock awards, a 401(k) Plan with an employer matching contribution, healthcare, life insurance and other benefits, health savings and flexible spending accounts, and various paid time off benefits. Throughout the organization, 99% of employees participate in the annual bonus plan or are eligible to receive business incentives.
Health and Wellness
The Company is committed to supporting the wellness of its people, to enable their personal and professional productivity, improve physical and mental well-being, and provide support for optimal health at work and at home. To support these efforts, the Company has established Wellness Committees to engage its people in well-being initiatives that provide opportunities for employees to develop healthier lifestyles by promoting habits and attitudes that support wellness.
Throughout the ongoing COVID-19 pandemic, the Company's focus has been on the well-being of its people. Preventive health measures were put in place, which included establishing social distancing precautions for all employees in the office and customers visiting branches and preventive cleaning at offices and branches. The Company has returned most employees to the office subject to applicable health and safety procedures in accordance with guidance from the CDC and local authorities, including regular symptom checks and requiring employees with COVID-19 related symptoms or exposure to quarantine away from the office.
Supervision and Regulation
The Company and its subsidiaries are extensively regulated and supervised under both federal and state laws. A summary description of the laws and regulations that relate to the Company’s operations are discussed in Item 7 of this Form 10-K.

Additional Available Information
The Company maintains an internet website at http://www.westernalliancebancorporation.com. The Company makes available its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange Act and other information related to the Company free of charge, through this site, as soon as reasonably practicable after it electronically files those documents with, or otherwise furnishes them to the SEC. The SEC maintains an internet site at http://www.sec.gov, from which all forms filed electronically may be accessed. The Company’s internet website and the information contained therein are not incorporated into this Form 10-K.
In addition, copies of the Company’s annual report will be made available, free of charge, upon written request. 

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Item 1A.Risk Factors.
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Item 1A.Risk Factors.
Investing in the Company’sour common stock involves various risks, many of which are specific to the Company’sour business. The discussion below addresses the material risks and uncertainties, of which the Company iswe are currently aware, that could have a material adverse effect on the Company’sour business, results of operations, and financial condition. Other risks that the Company doeswe do not know about now, or that the Company doeswe do not currently believe are significant,material, could negatively impact the Company’sour business or the trading price of the Company’sour securities. See additional discussions about credit, interest rate, market, and litigation risks in "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations."
Market and Economic Risks Relating
The COVID-19 pandemic and resulting adverse economic conditions have adversely impacted our business and results and could have a more material adverse impact on our business, financial condition and results of operations.
The ongoing COVID-19 global and national health emergency has caused significant disruption in the United States and international economies and financial markets. Although we have continued operating, the COVID-19 pandemic has caused disruptions to our business and could cause material disruptions to our business and operations in the future. Impacts to our business have included the transition of a portion of our workforce to home locations, increases in costs due to additional health and safety precautions implemented at branches, and an increase in draws on unfunded loan commitments and requests for forbearance and loan modifications at the onset of the pandemic. To the extent that commercial and social restrictions remain in place or increase, our expenses, delinquencies, foreclosures and credit losses may materially increase. In addition, the unprecedented nature of COVID-19 related disruptions heighten the inherent uncertainty of forecasting future economic conditions and their impact on our loan portfolio, and therefore increases the risk that the assumptions, judgments and estimates used to determine the appropriate allowance for future credit losses may prove to be incorrect, resulting in actual credit losses that exceed our recorded allowance.
We are continuing to monitor the COVID-19 pandemic, including the emergence and impact of the Delta and Omicron variants, its economic effects and related risks, although the rapid development and fluidity of the situation precludes any specific prediction as to its ultimate impact. Among the factors outside our control that are likely to affect the impact the COVID-19 pandemic will ultimately have on our business are:
•the pandemic’s course and severity, including the impact related to the Company's Businessdistribution and effectiveness of the available COVID-19 vaccines and treatments and the potential development for additional vaccines and treatments in the future;
The Company’s•the direct and indirect results of the pandemic, such as recessionary economic trends, including with respect to employment, wages and benefits, commercial activity, consumer spending and real estate market values;
•political, legal and regulatory actions and policies in response to the pandemic, including the effects of restrictions on commerce and banking, such as moratoria and other suspensions of collections, foreclosures, and related obligations;
•the timing, magnitude and effect of public spending, directly or through subsidies, its direct and indirect effects on commercial activity and incentives of employers and individuals to resume or increase employment, wages and benefits and commercial activity;
•the timing and availability of direct and indirect governmental support for various financial assets, including mortgage loans;
•the potential long-term impact on the tourism and hospitality industries, which could affect our hotel franchise finance business and portfolio;
•potential longer-term effects of increased government spending on the interest rate environment, borrowing costs for non-governmental parties and inflation;
•the ability of our employees and third-party vendors to work effectively during the course of the pandemic;
•potential longer-term shifts toward mobile banking, telecommuting and telecommerce; and
•geographic variation in the severity and duration of the COVID-19 pandemic, including in states in which we operate physically such as Arizona, California and Nevada.
If the COVID-19 pandemic results in a continuation or worsening of current economic conditions and commercial environments, our business, financial condition and results of operations could be materially adversely affected. Additional potential effects related to the COVID-19 pandemic are discussed in the other risk factors contained in this report.
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Our financial performance may be adversely affected by conditions in the financial markets and economic conditions generally.
The Company’sOur financial performance is highly dependent upon the business environment in the markets where the Company operateswe operate and in the U.S. as a whole. Unfavorable or uncertain economic and market conditions can be caused by declines in economic growth, business activity, or investor or business confidence, limitations on the availability or increases in the cost of credit and capital, increases in inflation or interest rates, government shutdowns, the imposition of tariffs on trade, natural disasters, the emergence of widespread health emergencies or pandemics, terrorist attacks, acts of war (including the impact of the escalating military conflict between Russia and Ukraine), or a combination of these or other factors. The ongoing COVID-19 pandemic has caused significant disruption in the U.S. economy and financial markets, including in Arizona, where we are headquartered, and California and Nevada, where we have significant operations.
The specific impact on the Companyus of many of these factorsunfavorable or uncertain economic or market conditions is difficult to predict, could be long or short term, and may be indirect, such as disruptions in our customers' supply chain or a reduction in the demand for their products or services. A worsening of business and economic conditions generally or specifically in the principal markets in which the Company conductswe conduct business could have adverse effects, including the following:
•a decrease in deposit balances or the demand for loans and other products and services the Company offers;we offer;
•an increase in the number of borrowers who become delinquent, file for protection under bankruptcy laws or default on their loans or other obligations to the Company,us, which could lead to higher levels of nonperforming assets, net charge-offs, and provisions for credit losses;
•a decrease in the value of loans and other assets or in the value of collateral;
•a decrease in net interest income from the Company’sour lending and deposit gathering activities;
•an impairment of certain intangible assets such as goodwill; and
•an increase in competition resulting from increasing consolidation within the financial services industry.
In the U.S. financial services industry, the commercial soundness of financial institutions is closely interrelated as a result of credit, trading, clearing or other relationships between the institutions. As a result, concerns about, or a default or threatened default by, one institution could lead to significant market-wide liquidity and credit problems, losses or defaults by other institutions. This is sometimes referred to as “systemic risk” and may adversely affect financial intermediaries, such as clearing agencies, clearing houses, banks, securities firms, and exchanges, with which the Company interactswe interact on a daily basis, and therefore could adversely affect the Company.us.
It is possible that the business environment in the U.S. will continue to be challenging or experience additional volatility in the future. There can be no assurance that thesesuch conditions will improve in the near term or that conditions will not worsen. Such conditions could adversely affect the Company’sour business, results of operations, and financial condition.
Changes in interest rates and increased rate competition could adversely affect our profitability, business, and prospects.
Most of our assets and liabilities are monetary in nature, which subjects us to significant risks from changes in interest rates and can impact our net income, the valuation of our assets and liabilities, and our ability to effectively manage our interest rate risk.
We derive a significant amount of our revenue from net interest income and, therefore, our net income depends heavily on our net interest margin. Net interest margin is the difference between the interest we receive on loans, securities, and other earning assets and the interest we pay on interest-bearing deposits, borrowings, and other liabilities. These rates are highly sensitive to many factors beyond our control, including competition, general economic conditions, and monetary and fiscal policies of various governmental and regulatory authorities, including the FRB. In a rising rate environment, the rate of interest we pay on our interest-bearing deposits, borrowings, and other liabilities may increase more quickly than the rate of interest we receive on loans, securities, and other earning assets, which could adversely impact our net interest income and earnings. Conversely, our earnings also could be adversely affected in a declining rate environment if the rates on our loans and other investments fall more quickly than those on our deposits and other liabilities. Because of our relatively high reliance on net interest income, our revenue and earnings are more sensitive to changes in market rates than other financial institutions that have more diversified sources of revenue.
Loan volumes are also affected by market interest rates on loans. Lower interest rates are usually associated with higher loan originations. Conversely, decreasing interest rates generally increase loan repayment rates and cause more borrowers to refinance loans, which could result in the loss of future net servicing revenues with an associated write-down of the related MSRs. In contrast, in rising interest rate environments, loan repayment rates generally decline and result in a lower volume of loan originations. In addition to the impact on our lending business, a decrease in loan originations would adversely affect the volume of loans available for purchase by our mortgage warehouse lending platform.
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In addition to the potential effects on net interest margin and loan volumes, an increase in the general level of interest rates may adversely affect the ability of certain borrowers to pay interest and principal on their obligations and may also reduce the amount of non-interest income we can earn due to potentially lower levels of banking business conducted generally as well lower levels of servicing, gain on sale, and other revenues generated through our residential mortgage business.
Interest rates are expected to rise in 2022. The CompanyFederal Reserve’s target range for the federal funds rate has remained at 0 to 0.25 percent since the onset of the pandemic. In the January 2022 FOMC meeting, the federal funds target rate was kept at the current range, although the FOMC signaled that it expects to raise the target range for the federal funds rate in the near term. With this guidance, many market commentators have published revised forecasts and are anticipating multiple rate hikes in 2022. An increase in interest rates could materially and adversely affect our business, financial condition, results of operations, and cash flows.
Our financial instruments expose us to certain market risks and may increase the volatility of earnings and AOCI.
We hold certain financial instruments measured at fair value. For those financial instruments measured at fair value, we are required to recognize the changes in the fair value of such instruments in earnings or AOCI each quarter. Therefore, any increases or decreases in the fair value of these financial instruments have a corresponding impact on reported earnings or AOCI. Fair value can be affected by a variety of factors, many of which are beyond our control, including our credit position, interest rate volatility, capital markets volatility, and other economic factors. Accordingly, we are subject to mark-to-market risk and the application of fair value accounting may cause our earnings and AOCI to be more volatile than would be suggested by our underlying performance.
Due to the inherent risk associated with accounting estimates, our allowance for credit losses may be insufficient, which could require us to raise additional capital or otherwise adversely affect our financial condition and results of operations.
Credit losses are inherent in the business of making loans. Management makes various assumptions and judgments about the collectability of our consolidated loan portfolio and maintains an ACL The measurement of expected credit losses takes place at the time the financial asset is first added to the balance sheet (with periodic updates thereafter) and is based on a number of factors, including the size of the portfolio, asset classifications, economic trends, industry experience and trends, industry and geographic concentrations, estimated collateral values, management’s assessment of the credit risk inherent in the portfolio, loan underwriting policies, historical loan loss experience, and reasonable and supportable forecasts. In addition, we individually evaluate all loans identified as problem loans and establish an allowance based upon our estimation of the potential loss associated with those problem loans. Additions to the ACL recorded through our provision for credit losses decrease our net income. Measurement of expected credit losses under CECL has generally resulted in more volatility in the provision for credit losses and the resulting ACL in comparison to the incurred loss model. If management’s assumptions and judgments are incorrect or if economic conditions worsen compared to forecast, our actual credit losses may exceed our ACL.
At December 31, 2021, our ACL on funded loans and loss contingency on unfunded loan commitments and letters of credit totals $252.5 million and $37.6 million, respectively. Deterioration in the real estate market or general economic conditions could affect the ability of our loan customers to service their debt, which could result in additional loan loss provisions and increases in our ACL. In addition, we may be required to record additional loan provisions or increase our ACL based on new information regarding existing loans, input from regulators in connection with their review of our loan portfolio, changes in regulatory guidance, regulations or accounting standards, identification of additional problem loans, changes in economic outlook, and other factors, both within and outside of our management’s control. Moreover, because future events are uncertain and because we may not successfully identify all deteriorating loans in a timely manner, there may be loans that deteriorate in an accelerated time frame.
Any increases in the provision or ACL will result in a decrease in our net income and, potentially, capital, and may have a material adverse effect on our financial condition and results of operations. If actual credit losses materially exceed our ACL, we may be required to raise additional capital, which may not be available to us on acceptable terms or at all. Our inability to raise additional capital on acceptable terms when needed could materially and adversely affect our financial condition, results of operations, and capital.
The markets in which we operate are subject to the risk of both natural and man-made disasters.
Many of the real and personal properties securing our loans are located in California and more generally in the southwestern portion of the United State. Much of California experiences wildfires from time to time that cause significant damage throughout the state. While these wildfires have not significantly damaged our own properties, it is possible that our borrowers may experience losses in the future, which may materially impair their ability to meet the terms of their obligations. California is also prone to other natural disasters, including, but not limited to, drought, earthquakes, flooding, and mudslides. Additional significant natural or man-made disasters in the state of California or in our other markets could lead to damage or injury to our
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own properties and/or employees, and could increase the risk that many of our borrowers may experience losses or sustained job interruption, which may materially impair their ability to maintain deposits or meet the terms of their loan obligations. Therefore, additional natural disasters, a man-made disaster or a catastrophic event, or a combination of these or other factors, in any of our markets could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
Climate change or societal responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers and vendors.
The lack of empirical data surrounding the credit and other financial risks posed by climate change makes it impossible to predict the specific impact climate change may have on our financial condition and results of operations; however, the physical effects of climate change may also impact us. In addition to the risk of more frequent and/or severe natural disasters, climate change can result in longer term shifts in climate patterns such as extreme heat, sea level rise, declining fresh water resources, and more frequent and prolonged drought. The effects of climate change and may have a significant effect in our geographic markets, and could disrupt our operations, the operations of our customers or third parties on which we rely, or supply chains generally. These disruptions, including increased regulation and compliance cost for our customers and changes in consumer behaviors, could result in declines in the economic conditions in geographic markets or industries in which our customers operate and impact their ability to repay loans or maintain deposits and could affect the value of real estate and other assets that serve as collateral for loans.
Bank regulators have increasingly viewed financial institutions as playing an important role in helping to address climate change, which may result in increased requirements regarding the disclosure and management of climate risks and related lending activities. We may also become subject to new or heightened regulatory requirements related to climate change, such as requirements relating to operational resiliency or stress testing for various climate stress scenarios. New or increased regulations could result in increased compliance costs or capital requirements. Changes in regulations and customer preferences and behaviors could negatively affect our growth or force us to alter our business strategies, including whether and on what terms and conditions we will engage in certain activities or offer certain products or services and which growth industries and customers we pursue. Additionally, our reputation and customer relationships may be damaged due to our practices related to climate change, including our involvement, or our customers’ involvement, in certain industries or projects associated with causing or exacerbating climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change. Overall, climate change, its effects and the resulting, unknown impact could have a material adverse effect on our financial condition and results of operations.
Credit Risks
We are highly dependent on real estate and events that negatively impact the real estate market will hurt the Company’sour business and earnings.
The CompanyA significant portion of our business is located in areas in which economic growth is largely dependent on the real estate market, and a majority of the Company’sour loan portfolio is secured by or otherwise dependent on real estate. The market for real estate is cyclical and a significant change in the outlook for this sector is uncertain.real estate market that resulted in deterioration in the value of collateral or rental or occupancy rates could adversely affect borrowers’ ability to repay loans. Changes in the real estate market could also affect the value of foreclosed assets. A decline in real estate activity would likely cause a decline in asset and deposit growth and negatively impact the Company’sour earnings and financial condition.

The Company’sOur loan portfolio consists primarily of commercial and industrial and CRE loans, which containcontains concentrations in certain business lines or product types that have unique risk characteristics and may expose the Companyus to increased lending risks.
The Company’sOur loan portfolio consists primarily of commercial and industrial, residential mortgage, and CRE loans, which contain material concentrations in certain business lines or product types, such as mortgage warehouse, real estate, corporate finance, municipal and nonprofit loans, as well as in specific business sectors such as technology and innovation. These loan concentrations present unique risks and involve specialized underwriting and management as they often involve large loan balances to a single borrower or group of related borrowers. Consequently, an adverse development with respect to one commercial loan or one credit relationship may adversely affect the Company.us. In addition, based on the nature of lending to these specialty markets, repayment of loans may be dependent upon borrowers receiving additional equity financing or, in some cases, a successful sale to a third party, public offering, or other form of liquidity event. Unforeseen adverse events, changes in regulatory policy, or a general decline in the borrower's industry may have a material adverse effect on the Company’s financial condition
Our commercial and results of operations.
Due to the inherent risk associated with accounting estimates, the Company’s allowance for credit losses may be insufficient, which could require the Company to raise additional capital or otherwise adversely affect the Company’s financial conditionindustrial, CRE, and results of operations.
Credit lossesconstruction loans, are inherent in the business of making loans. Management makes various assumptions and judgments about the collectability of the Company’s consolidated loan portfolio and maintains an allowance for estimated credit losses based on a number of factors, including the size of the portfolio, asset classifications, economic trends, industry experience and trends, industry and geographic concentrations, estimated collateral values, management’s assessment of the credit risk inherent in the portfolio, historical loan loss experience, and loan underwriting policies. In addition, the Company evaluates all loans identified as problem loans and augments the allowance based upon its estimation of the potential loss associated with those problem loans. Additions to the allowance for credit losses recorded through the Company’s provision for credit losses decrease the Company’s net income. If such assumptions and judgments are incorrect, the Company’s actual credit losses may exceed the Company’s allowance for credit losses.
At December 31, 2019, the Company's allowance for credit losses and loss contingency on unfunded loan commitments and letters of credit is $167.8 million and $9.0 million, respectively. Deterioration in the real estate market or general economic conditions could affect the ability of the Company’s loan customers to service their debt, which could result in additional loan provisions and increases in the Company’s allowance for credit losses. In addition, the Company may be required to record additional loan provisions or increase the Company’s allowance for credit losses based on new information regarding existing loans, input from regulators in connection with their review of the Company’s allowance, changes in regulatory guidance, regulations or accounting standards, identification of additional problem loans, changes in economic outlook, and other factors, both within and outside of the Company’s management’s control. Moreover, because future events are uncertain and because the Company may not successfully identify all deteriorating loans in a timely manner, there may be loans that deteriorate in an accelerated time frame.
Any increases in the provision or allowance for credit losses will result in a decrease in the Company’s net income and, potentially, capital, and may have a material adverse effect on the Company’s financial condition and results of operations. If actual credit losses materially exceed the Company’s allowance for credit losses, the Company may be required to raise additional capital, which may not be available to the Company on acceptable terms or at all. The Company’s inability to raise additional capital on acceptable terms when needed could materially and adversely affect the Company’s financial condition, results of operations, and capital.
Recent changes to the FASB accounting standards will result in a significant change to the Company’s recognition of credit losses and may materially impact the Company’s financial condition or results of operations.
The incurred loss model for recognizing credit losses was replaced with an expected loss model referred to as CECL, which became effective on January 1, 2020 and will be reported in the Company's first quarter 2020 financial results. Under the incurred loss model, the Company delays recognition of losses until it is probable that a loss has been incurred. The CECL model represents a dramatic departure from the incurred loss model.  The CECL model requires the Company to present certain financial assets carried at amortized cost, such as loans held for investment and held-to-maturity debt securities, at the net amount expected to be collected. Additionally, the measurement of expected credit losses will take place at the time the financial asset is first added to the balance sheet (with periodic updates thereafter) and will be based on current conditions, information about past events, including historical experience, and reasonable and supportable forecasts that impact the collectability of the reported amount. As such, the CECL model will materially impact how the Company determines its ACL and the Company’s ACL may experience more fluctuations under the CECL model, which may result in significant volatility in the provision for credit losses and, therefore, earnings. Upon transition from the incurred loss model to the CECL model, on January 1, 2020, the Company recognized an increase to its allowance for credit losses on loans and unfunded loan commitments of $19 million and $15 million, respectively, and established

an allowance of $3 million on its HTM securities. These increases resulted in a one-time cumulative adjustment to retained earnings of $25 million, which is net of related tax effects. 
The Company could be subject to tax audits, challenges to its tax positions, or adverse changes or interpretations of tax laws.
The Company is subject to federal and applicable state income tax laws and regulations. Income tax laws and regulations are often complex and require significant judgment in determining the Company’s effective tax rate and in evaluating its tax positions. The Company’s determination of its tax liability is subject to review by applicable tax authorities. Any audits or challenges of such determinations may adversely affect the Company’s effective tax rate, tax payments or financial condition.
U.S. tax legislation enacted in late 2017 made significant changes to federal tax law, including the taxation of corporations, by, among other things, reducing the corporate income tax rate, disallowing certain deductions that had previously been allowed, and altering the expensing of capital expenditures. Further changes in tax laws, changes in interpretations, guidance or regulations that may be promulgated, or challenges to judgments or actions that the Company may take with respect to tax laws could negatively impact the Company's business.
Because of the geographic concentration of the Company’s assets, changes in local economic conditions could adversely affect the Company’s business and results of operations.
The Company’s business is primarilyalso largely concentrated in selected markets in Arizona, California, and Nevada. As a result of this geographic concentration, the Company’s financial condition and results of operations depend largely upon economic conditions in these market areas. Deteriorationdeterioration in economic conditions in these markets could result in one or more of the following: an increase in loan delinquencies and charge-offs;charge-offs, an increase in problem assets and foreclosures;foreclosures, a decrease in the demand for the Company’sour products and services;services or a decrease in the value of real estate and other collateral for loans, especially real estate.loans. Like the rest of
The Company’s financial instruments expose
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the Company to certain market risks and may increase the volatility of earnings and AOCI.
The Company holds certain financial instruments measured at fair value. For those financial instruments measured at fair value, the Company is required to recognize the changesUnited States, economic conditions in the fair value of such instruments in earnings or AOCI each quarter. Therefore, any increases or decreases in the fair value of these financial instrumentsstates have a corresponding impact on reported earnings or AOCI. Fair value can bebeen adversely affected by a variety of factors, many of which are beyond the Company’s control, including the Company’s credit position, interest rate volatility, capital markets volatility, and other economic factors. Accordingly, the Company is subject to mark-to-market risk and the application of fair value accounting may cause the Company’s earnings and AOCI to be more volatile than would be suggested by the Company’s underlying performance.
If the Company loses a significant portion of its core deposits or a significant deposit relationship, or its cost of funding deposits increases significantly, the Company's liquidity and/or profitability would be adversely impacted.
The Company’s success depends on its ability to maintain sufficient liquidity to fund its current obligations and support loan growth and, specifically, to attract and retain a stable base of relatively low-cost deposits. The competition for these deposits in the Company's markets is strong and customers may demand higher interest rates on their deposits or seek other investments offering higher rates of return. The Company offers reciprocal deposit products, through third party networks to customers seeking federal insurance for deposit amounts that exceed the applicable deposit insurance limit at a single institution. The Company also from time to time offers other credit enhancements to depositors, such as FHLB letters of credit and, for certain deposits of public monies, pledges of collateral in the form of readily marketable securities. Any event or circumstance that interferes with or limits the Company's ability to offer these products to customers that require greater security for their deposits, such as a significant regulatory enforcement action or a significant decline in capital levels at the Company's bank subsidiary, could negatively impact the Company's ability to attract and retain deposits. If the Company were to lose a significant deposit relationship or a significant portion of its low-cost deposits, the Company would be required to borrow from other sources at higher rates and the Company's liquidity and profitability would be adversely impacted.
From time to time, the Company has utilized borrowings from the FHLB and the FRB,COVID-19 pandemic, and there can be no assurance these programsas to if or when such conditions will be availableimprove or that such conditions will not worsen.
Unforeseen adverse events, changes in economic conditions, and changes in regulatory policy affecting borrowers’ industries or markets could have a material adverse impact on our financial condition and results of operations.
Our credit linked notes do not ensure full protection against credit losses, and as needed.
Assuch we could still incur significant credit losses on loans for which risk of December 31, 2019, the Companyloss has no borrowings from the FHLB of San Francisco or the FRB. However, in the past, the Company has utilized borrowings from the FHLB of San Francisco and the FRB to satisfy its short-term liquidity needs. The Company’s borrowing capacity is generally dependent on the value of its collateral pledgedbeen transferred pursuant to these entities.transactions.
We have entered into two transactions to mitigate exposure to losses on our loan portfolio. These lenders could reduce the Company’s borrowing capacity or eliminate certain types of collateral and could otherwise modify or even terminate their loan programs. Any change or termination could have an adverse effect on the Company’s liquidity and profitability.

The Company's business may be adversely affected by fraud.
As a financial institution, the Company is inherently exposed to a wide range of operational risks, including, but not limited to, theft and other fraudulent activity by employees, customers, and other third parties targeting the Company and/or the Company’s customers or data. Such activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering and other dishonest acts.
Although the Company devotes substantial resources to maintaining effective policies and internal controls to identify and prevent such incidents, given the persistence and increasing sophistication of possible perpetrators, the Company may experience financial losses or reputational harmtransactions are structured as a result of fraud.
A failure in or breach of the Company’s operational or security systems or infrastructure, or those of the Company’s third-party vendors and other service providers, including as a result of cyber-attacks, could disrupt the Company’s businesses, result in the disclosure or misuse of confidential or proprietary information, damage the Company’s reputation, increase the Company’s costs, and cause losses.
The Company’s operations rely on the secure processing, storage, and transmission of confidential and other information. Although the Company takes numerous protective measures to maintain the confidentiality, integrity, and availability of the Company’s and its customers’ information across all geographies and product lines, and endeavors to modify these protective measures as circumstances warrant, the nature of the threats continues to evolve. As a result, the Company’s computer systems, software, and networks and those of the Company’s customers and third-party vendors may be vulnerable to unauthorized payments and account access, loss or destruction of data (including confidential client information), account takeovers, unavailability of service, computer viruses or other malicious code, cyber-attacks, and other events that could have an adverse security impact and result in significant losses to the Company and/or its customers. These threats may originate externally from increasingly sophisticated third parties, including foreign governments, organized criminal groups, and other hackers, or from outsourced or infrastructure-support providers and application developers, or the threats may originate from within the Company’s organization.
The Company also facessenior unsecured credit linked notes, which transfer the risk of operational disruption, failure, termination, or capacity constraintsfirst losses on covered loans to these note holders. These notes have an aggregate principal amount of any$242.0 million and $227.6 million on a $1.9 billion and $4.6 billion reference pool of warehouse loans and residential mortgages, respectively. Pursuant to these arrangements, in the event of borrower default, the principal balance of the third parties that facilitatenotes will be reduced by the Company’s business activities, including vendors, exchanges, clearing agents, clearing houses, or other financial intermediaries. Such parties could also be the source or cause of an attack on, or breachamount of the Company’s operational systems, data or infrastructure. In addition,loss, up to the Companyamount of the aggregate principal of the notes. However, all residual risk over and above the first loss position is retained by us. While current estimates of future credit losses are below the first loss position, no assurances can be given that these losses will not exceed the first loss position and, if credit losses were to exceed the first loss position, our financial condition and results of operations could be adversely effected. We may be atenter into more such transactions in the future.
We are exposed to risk of an operational failureenvironmental liabilities with respect to its customers’ systems. The Company’s riskproperties to which we obtain title.
Approximately 53% of our loan portfolio at December 31, 2021 was secured by real estate. In the course of our business, we may foreclose on and exposuretake title to real estate, and could be subject to environmental liabilities with respect to these matters remains heightened because of, among other things, the evolving nature ofproperties. We may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation, and clean-up costs incurred by these threats, the outsourcing of many of the Company’s business operations, and the continued uncertain global economic environment. As cyber threats continue to evolve, the Companyparties in connection with environmental contamination, or may be required to expend significant additional resources to continue to modifyinvestigate or enhance its protective measuresclean up hazardous or to investigate and remediate any information security vulnerabilities.
The Company maintains insurance policies that it believes provide reasonable coveragetoxic substances, or chemical releases at a manageable expense for an institutionproperty. The costs associated with investigation or remediation activities could be substantial. In addition, if we are the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. These costs and claims could be substantial and adversely affect our business and prospects.
Strategic Risks
Our future success depends on our ability to compete effectively in a highly competitive and rapidly evolving market.
We face substantial competition in all phases of our operations from a variety of different competitors. Our competitors, including money center banks, national and regional commercial banks, community banks, thrift institutions, mutual savings banks, credit unions, finance companies, insurance companies, securities dealers, brokers, mortgage bankers, investment advisors, money market mutual funds, financial technology companies and other financial institutions, compete with lending and deposit-gathering services offered by us. Increased competition in our markets or our inability to compete effectively may result in reduced loans and deposits or less favorable pricing.
In particular, we have experienced intense price and terms competition in some of the Company’slending lines of business and deposits in recent years. Many of these competing institutions have much greater financial and marketing resources than we have. Due to their size, larger competitors can achieve economies of scale and scope with similar technological systems. However, the Company cannot assure that these policies will afford coverage for all possible losses or would be sufficient to cover all financial losses, damages, or penalties, including lost revenues, should the Company experience any one or moremay offer a broader range of its or a third party’s systems failing or experiencing an attack.
The Company relies on third parties to provide key components of its business infrastructure.
The Company relies on third parties to provide key components for its business operations, such as data processing and storage, recording and monitoring transactions, online banking interfaces and services, internet connections, and network access. While the Company selects these third-party vendors carefully, it does not control their actions. Any problems caused by these third parties, including those resulting from breakdowns or other disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher volumes, cyber-attacks and security breaches at a vendor, failure of a vendor to provide services for any reason, or poor performance by a vendor, could adversely affect the Company’s ability to deliver products and services to its customers and otherwise conduct its business. Financial or operational difficulties of a third-party vendor could also hurt the Company’s operations if those difficulties interfere with the vendor's ability to serve the Company. Replacing these third-party vendors also could create significant delays and expense. Any of these things could adversely affect the Company’s business and financial performance.
A change in the Company’s creditworthiness could increase the Company’s cost of funding or adversely affect its liquidity.
Market participants regularly evaluate the Company’s creditworthiness and the creditworthiness of the Company’s long-term debt based on a number of factors,more attractive pricing than us. In addition, some of which are not entirely within the Company’s control, including the Company’s financial strength and conditions within the financial services organizations with which we compete are not subject to the same degree of regulation as is imposed on bank holding companies and federally insured depository institutions. As a result, these non-bank competitors have certain advantages over us in accessing funding and in providing various services.
The banking business in our primary market areas is very competitive, and the level of competition facing us may increase further, which may limit our asset growth and financial results. In particular, our predominate source of revenue is net interest income. Therefore, if we are unable to compete effectively, including sustaining loan and deposit growth at our historical levels, our business and results of operations may be adversely affected.
The financial services industry generally. There can be no assurance thatalso is facing increasing competitive pressure from the Company's perceived creditworthiness will remain the same. Changes could adversely affect the costintroduction of disruptive new technologies such as blockchain and digital payments, often by non-traditional competitors and financial technology companies. Among other things, technology and other terms upon whichchanges are allowing customers to complete financial transactions that historically have involved banks at one or both ends of the Company is able to obtain funding and its access to the capital markets, and could increase the Company’s costtransaction. The elimination of capital. Likewise, any loss of or

decline in the credit rating assigned to WAB could impair its ability to attract deposits or to obtain other funding sources, or increase its cost of funding.
The Company's controls and processes, its reporting systems and procedures, and its operational infrastructure may not be able to keep pace with its growth, which could cause it to experience compliance and operational problems or lose customers, or incur additional expenditures beyond current projections, any one of which could adversely affect the Company’s financial results.
The Company’s future success will depend on the ability of officers and other key employees to effectively implement solutions designed to improve operational, credit, financial, management and other internal risk controls and processes,banks as intermediaries for certain transactions, as well as improve reporting systems and procedures, while at the same time maintaining and growing existingfurther disruption of traditional bank businesses and client relationships. The Company may not successfully implement such changes or improvementsproducts by non-banks, could result in an efficient or timely manner, or it may discover deficiencies in its existing systemsthe loss of fee income and controls thatdeposits and otherwise adversely affect the Company’s ability to supportour business and grow its existing businesses and client relationships, and could require the Company to incur additional expenditures to expand its administrative and operational infrastructure. If the Company is unable to maintain and implement improvements to its controls, processes, and reporting systems and procedures, the Company may lose customers, experience compliance and operational problems or incur additional expenditures beyond current projections, any oneresults.
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The Company’sOur expansion strategy may not prove to be successful and itsour market value and profitability may suffer.
The CompanyWe continually evaluatesevaluate expansion through acquisitions of banks and other financial assets and businesses. Like previous acquisitions by us such as the Company,acquisition of AmeriHome in 2021 and Digital Settlement Technologies LLC in early 2022, any future acquisitions will be accompanied by risks commonly encountered in such transactions, including, among other things:
•time and expense incurred while identifying, evaluating and negotiating potential acquisitions and transactions;
•difficulty in accurately estimating the value of target companies or assets and in evaluating target companies' or assets’ credit, operations, management, and market risks;
•potential payment of a premium over book and market values that may cause dilution of the Company’sour tangible book value or earnings per share;
•exposure to unknown or contingent liabilities of the target company;
•potential exposure to asset quality issues of the target company;
•difficulty of integrating the operations and personnel;
•potential disruption of the Company’sour ongoing business;
•failure to retain key personnel at the acquired business;
•inability of the Company’sour management to maximize itsour financial and strategic position by the successful implementation of uniform product offerings and the incorporation of uniform technology into the Company’sour product offerings and control systems; and
•failure to realize any expected revenue increases, cost savings, and other projected benefits from an acquisition.
The Company expectsWe expect that competition for suitable acquisition candidates may be significant. The CompanyWe may compete with other banks or financial service companies with similar acquisition strategies, many of which are larger and have greater financial and other resources. The CompanyWe cannot assure that itwe will be able to successfully identify and acquire suitable acquisition targets on acceptable terms and conditions, or that itwe will be able to obtain the regulatory approvals needed to complete any such transactions.
The CompanyWe cannot provide any assurance that itwe will be successful in overcoming these risks or any other problems encountered in connection with acquisitions. Potential regulatory enforcement actions could also adversely affect the Company'sour ability to engage in certain acquisition activities. The Company’sOur inability to overcome the risks inherent in the successful completion and integration of acquisitions could have an adverse effect on the achievement of the Company'sour business strategy.

There are substantial risks and uncertainties associated with the introduction or expansion of lines of business or new products and services within existing lines of business.
From time to time, the Companywe may implement new lines of business, offer new products and services within existing lines of business, or offer existing products or services to new industries, geographies, or market segments. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed or industries are heavily regulated. In developing and marketing new lines of business and/or new products and services, the Companywe may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved and price and profitability targets may not prove attainable. External factors, such as compliance with laws and regulations, competitive alternatives, and shifting market preferences or government policies, may also impact the successful implementation of a new line of business, product or service or the offering of existing products and services to an emerging industry. Furthermore, any new line of business and/or new product or service could have a significant impact on the effectiveness of the Company’sour system of internal controls. Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on the Company’sour business, results of operations, and financial condition.
The Company’s future success depends on its ability to compete effectively in a highly competitive and rapidly evolving market.
The Company faces substantial competition in all phases of its operations from a variety of different competitors. The Company’s competitors, including large commercial banks, community banks, thrift institutions, mutual savings banks, credit unions, finance companies, insurance companies, securities dealers, brokers, mortgage bankers, investment advisors, money market mutual funds, and other financial institutions, compete with lending and deposit-gathering services offered by the Company. Increased competition in the Company’s markets may result in reduced loans and deposits or less favorable pricing.
There is competition for financial services in the markets inWe are pursuing digital payments initiatives which the Company conduct its businesses, including from many local commercial banks, as well as numerous national and regionally based commercial banks. In particular, the Company has experienced intense price and terms competition in some of the lending lines of business and deposits in recent years. Many of these competing institutions have much greater financial and marketing resources than the Company has. Due to their size, larger competitors can achieve economies of scale and may offer a broader range of products and services or more attractive pricing than the Company. In addition, some of the financial services organizations with which the Company competes are not subject to the same degree of regulation as is imposed on bank holding companiessignificant uncertainty and federally insured depository institutions. As a result, these non-bank competitors have certain advantages over the Company in accessing funding and in providing various services.
The banking business in the Company’s primary market areas is very competitive, and the level of competition facing the Company may increase further, which may limit its asset growth and financial results. In particular, the Company's predominate source of revenue is net interest income from its loan portfolio. Therefore, if the Company is unable to compete effectively, including sustaining loan and deposit growth at its historical levels, its business and results of operations may be adversely affected.
The financial services industry also is facing increasing competitive pressure from the introduction of disruptive new technologies, often by non-traditional competitors and financial technology companies. Among other things, technology and other changes are allowing customers to complete financial transactions that historically have involved banks at one or both ends of the transaction. The elimination of banks as intermediaries for certain transactions, as well as further disruption of traditional bank businesses and products by non-banks, could result in the loss of fee income and deposits and otherwise adversely affect our business, andreputation, or financial results.
We are pursuing digital payments initiatives, including our recently announced acquisition of Digital Settlement Technologies LLC, a digital payments platform for the class action legal industry, and our recently announced decision to implement a fully integrated digital banking platform for our customers, including a digital token powered by the TassatPay platform. The Company’sdigital payments products and services we offer may use or rely on blockchain-based technologies or assets. Use of blockchain-based technologies in payments are a relatively new and unproven technology, and the laws and regulations surrounding them are uncertain and evolving. Blockchain and digital payment technology has drawn significant scrutiny from governments and regulators in multiple jurisdictions and we expect that scrutiny to continue. Any changes in such laws and regulations applicable to, or scrutiny directed at, our products and services may impede or delay the offering of digital payments solutions,
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increase our operating costs, require significant management time and attention, or otherwise harm our business or results of operations.
In addition, market acceptance of digital payments products and services is subject to significant uncertainty. As such, there can be no assurance that digital payments products and services we offer and the technologies we have chosen to implement will be accepted and desired by customers. We do not have significant prior experience with blockchain-based technology, which may adversely affect our ability to successfully integrate and market such digital payments products and services. We also will incur increased costs in connection with these efforts, and our investments may not be successful. Any of these events could adversely affect our business, reputation, or financial results.
Our success is dependent upon itsour ability to recruit and retain qualified employees, including members of itsour divisional and business line leadership and management teams.
The Company’sOur business plan includes and is dependent upon hiring and retaining highly qualified and motivated executives and employees at every level. In particular, the Company’sour relative success to date has been partly the result of itsour management’s ability to identify and retain highly qualified employees in divisional, business line and geographic leadership and administrative support roles, as well as thoseand experienced bankers with expertise in certain specialty areas or that have long-standing relationships in their communities or markets.markets, including with respect to our business-to-business mortgage platform. These professionals bring with them valuable knowledge, specialized skills and expertise, and customer relationships and in some cases extensive ties within markets upon which our competitive strategy is based, and have been an integral part of the Company’sour ability to attract deposits and to expand itsour market share.
Additionally, as part of the Company's strategy, the Company depends on divisional and business line leadership and management teams in each of its significant geographic locations. In addition to their skills and experience as bankers, these persons provide the Company with extensive ties within markets upon which the Company’s competitive strategy is based.

The Company’s ability to retain these highly qualified and motivated persons may be hindered by the fact that it has We have not entered into employment agreements with most of them.our employees and competition for talent in our industry is intense. The Company incentivizeslabor market is currently challenging, with employee turnover at an all-time high and increased wage pressure. In addition, the transition to an increased remote work environment, which we believe is likely to survive the COVID-19 pandemic for many organizations, may exacerbate the challenges of attracting and retaining talented and diverse employees as job markets may be less constrained by physical geography. We incentivize employee retention through itsour equity incentive plans; however, the Companywe cannot guarantee the effectiveness of itsour equity incentive plans in retaining these key employees and executives. Were the Companywe to lose key employees, itwe may not be able to replace them with equally qualified persons who bring the same skills and knowledge of and ties to the communities and markets within which the Company operates.we operate. If the Company iswe are unable to hire or retain qualified employees itor hire new qualified employees to keep up with or outpace employee turnover, we may not be able to successfully execute itsour business strategy or may incur additional costs to achieve itsour objectives.
Further, as it relates to the pandemic, we have taken and are continuing to take actions to protect the safety and well-being of our employees and customers; however, no assurance can be given that the steps being taken will be adequate or appropriate. The Companycontinued or renewed spread of COVID-19 or a similar pandemic could negatively impact the availability of key personnel necessary to conduct our business. Most of our workforce has returned to working in our office buildings, and it is possible that one or more members of senior management or other key employees contracts the virus and is unable to perform their essential duties.
We could be harmed if itsour succession planning is inadequate to mitigate the loss of key members of itsour senior management team.
The Company believesWe believe that itsour senior management team including, but not limited to, Robert Sarver, its Executive Chairman and Kenneth Vecchione, its CEO, havehas contributed greatly to itsour performance. In addition, the Companywe from time to time experiencesexperience retirements and other changes to itsour senior management team. The Company'sOur future performance depends on a smooth transition of itsour senior management, including finding and training highly qualified replacements who are properly equipped to lead the Company. The Company hasus. We have adopted retention strategies, including equity awards, from which itsour senior management team benefits in order to achieve its goals, and entered into an employment agreement with Mr. Vecchione, which expires in 2020.our goals. However, the Companywe cannot assure itsour succession planning and retention strategies will be effective and the loss of senior management could have an adverse effect on the Company’sour business.
Liquidity Risks
If we lose a significant portion of our core deposits or a significant deposit relationship, or our cost of funding deposits increases significantly, our liquidity and/or profitability would be adversely impacted.
Our success depends on our ability to maintain sufficient liquidity to fund our current obligations and support loan growth and, specifically, to attract and retain a stable base of relatively low-cost deposits. The Company'scompetition for these deposits in our markets is strong and customers may demand higher interest rates on their deposits or seek other investments offering higher rates of return. We offer reciprocal deposit products, through third party networks to customers seeking federal insurance for deposit amounts that exceed the applicable deposit insurance limit at a single institution. We also from time to time offer other credit enhancements to depositors, such as FHLB letters of credit and, for certain deposits of public monies, pledges of collateral in the form of readily marketable securities. Any event or circumstance that interferes with or limits our ability to offer these products to customers that require greater security for their deposits, such as a significant regulatory enforcement action or a
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significant decline in capital levels at our bank subsidiary, could negatively impact our ability to attract and retain deposits. If we were to lose a significant deposit relationship or a significant portion of our low-cost deposits, we would be required to borrow from other sources at higher rates and our liquidity and profitability would be adversely impacted.
We may be required to repurchase mortgage loans or indemnify investors under certain circumstances.
A substantial portion of our mortgage banking operations involves the sale of loans to third parties, including through securitization. When loans are sold or securitized, we make customary representations and warranties about such loans to the loan purchaser or through documents governing our securitized loan pools. If a mortgage loan does not comply with the representations and warranties made with respect to it at the time of its sale, we could be required to repurchase the loan, replace it with a substitute loan and/or indemnify secondary market purchasers or investors for losses, and may not have recourse to the correspondent seller that sold the mortgage loans and breached similar or other representations and warranties. Significant indemnification or repurchase activity on securitized or sold loans without offsetting recourse to a counterparty from which the loan was purchased could have a material adverse effect our financial condition and results of operations.
We utilize borrowings from the FHLB and the FRB, and there can be no assurance these programs will be available as needed.
As of December 31, 2021, we have no borrowings from the FHLB of San Francisco or the FRB. However, we have utilized borrowings from the FHLB of San Francisco and the FRB to satisfy our short-term liquidity needs. Our borrowing capacity is generally dependent on the value of our collateral pledged to these entities. These lenders could reduce our borrowing capacity or eliminate certain types of collateral and could otherwise modify or even terminate their loan programs. Any change to or termination of these programs could have an adverse effect on our liquidity and profitability.
A change in our creditworthiness could increase our cost of funding or adversely affect our liquidity.
Market participants regularly evaluate our creditworthiness and the creditworthiness of our long-term debt based on a number of factors, some of which are not entirely within our control, including our financial strength and conditions within the financial services industry generally. There can be no assurance that our perceived creditworthiness will remain the same. Changes could adversely affect the cost and other terms upon which we are able to obtain funding and our access to the capital markets, and could increase our cost of capital. Likewise, any loss of or decline in the credit rating assigned to WAB could impair our ability to attract deposits or to obtain other funding sources, or increase our cost of funding.
Operational and Technological Risks
A failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors and other service providers, including as a result of cyber-attacks, could disrupt our businesses, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs, and cause losses.
Our operations rely on the secure processing, storage, and transmission of confidential and other information. As a result of the COVID-19 pandemic, the number of our employees working remotely at least some of the time has increased substantially. Although we take numerous protective measures to maintain the confidentiality, integrity, and security of our customers’ information across all geographies and product lines, and endeavor to modify these protective measures as circumstances warrant, the nature of the threats continues to evolve. As a result, our computer systems, software, and networks and those of our customers and third-party vendors may be vulnerable to unauthorized payments and account access, loss or destruction of data (including confidential client information), account takeovers, unavailability of service, computer viruses or other malicious code, cyber-attacks, and other events that could have an adverse security impact and result in significant losses to us and/or our customers. These threats may originate externally from increasingly sophisticated third parties, including foreign governments, organized criminal groups, and other hackers, or from outsourced or infrastructure-support providers and application developers, or the threats may originate from within our organization.
We also face the risk of operational disruption, failure, termination, or capacity constraints of any of the third parties that facilitate our business activities, including vendors, exchanges, clearing agents, clearing houses, or other financial intermediaries. Such parties could also be the source or cause of an attack on, or breach of, our operational systems, data or infrastructure. In addition, we may be at risk of an operational failure with respect to our customers’ systems. Our risk and exposure to these matters remains heightened because of, among other things, the ongoing COVID-19 pandemic, the evolving nature of these threats, the outsourcing of many of our business operations, and the continued uncertain global economic environment. As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities.
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We maintain insurance policies that we believe provide reasonable coverage at a manageable expense for an institution of our size and scope with similar technological systems. However, we cannot assure that these policies will afford coverage for all possible losses or would be sufficient to cover all financial losses, damages, or penalties, including lost revenues, should we experience any one or more of our or a third party’s systems failing or experiencing an attack.
We rely on third parties to provide key components of our business infrastructure.
We rely on third parties to provide key components for our business operations, such as data processing and storage, recording and monitoring transactions, online banking interfaces and services, internet connections, and network access. While we select these third-party vendors carefully, we do not control their actions. Any problems caused by these third parties, including those resulting from breakdowns or other disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher volumes, cyber-attacks and security breaches at a vendor, failure of a vendor to provide services for any reason, poor performance by a vendor, or service issues caused by the effects of COVID-19 or a similar pandemic on a vendor could adversely affect our ability to deliver products and services to our customers and otherwise conduct our business. Financial or operational difficulties of a third-party vendor could also hurt our operations if those difficulties interfere with the vendor's ability to serve us. Replacing these third-party vendors also could create significant delays and expense. Any of these things could adversely affect our business and financial performance.
Our business may be adversely affected by fraud.
As a financial institution, we are inherently exposed to a wide range of operational risks, including, but not limited to, theft and other fraudulent activity by employees, customers, and other third parties targeting us and/or our customers or data. Such activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering and other dishonest acts.
Although we devote substantial resources to maintaining effective policies and internal controls to identify and prevent such incidents, given the persistence and increasing sophistication of possible perpetrators, we may experience financial losses or reputational harm as a result of fraud.
Our controls and processes, our reporting systems and procedures, and our operational infrastructure may not be able to keep pace with our growth, which could cause us to experience compliance and operational problems or lose customers, or incur additional expenditures beyond current projections, any one of which could adversely affect our financial results.
Our future success will depend on the ability of officers and other key employees to effectively implement solutions designed to improve operational, credit, financial, management and other internal risk controls and processes, as well as improve reporting systems and procedures, while at the same time maintaining and growing existing businesses and client relationships. We may not successfully implement such changes or improvements in an efficient or timely manner, or we may discover deficiencies in our existing systems and controls that adversely affect our ability to support and grow our existing businesses and client relationships, and could require us to incur additional expenditures to expand our administrative and operational infrastructure. If we are unable to maintain and implement improvements to our controls, processes, and reporting systems and procedures, we may lose customers, experience compliance and operational problems or incur additional expenditures beyond current projections, any one of which could adversely affect our financial results.
The replacement of LIBOR may adversely affect our business.
LIBOR and certain other interest rate benchmarks are the subject of recent national, international and other regulatory guidance and reform. On March 5, 2021, the United Kingdom administrator of LIBOR announced that the 1-month, 3-month, 6-month and 12-month US dollar LIBOR settings would cease to exist after June 30, 2023 and numerous other LIBOR settings, including the 1-week and 2-month US dollar LIBOR settings, would cease to exist after December 31, 2021. The U.S. federal banking agencies issued a statement in November 2020 encouraging banks to transition away from U.S. dollar LIBOR as soon as practicable and to stop entering into new contracts that use U.S. dollar LIBOR by December 31, 2021. We began offering three alternative rate indices (including SOFR, Ameribor, and BSBY) on our lending products to our customers in the second half of 2021. Each of these rates indices are International Organization of Securities Commissions compliant and, as of December 31, 2021, we are no longer originating new loans using any LIBOR index.
The market transition away from LIBOR to alternative reference rates is complex and could have a range of adverse effects on our business, financial condition and results of operations. In particular, the transition could:
•adversely affect the interest rates received or paid on the value of our LIBOR-based assets and liabilities;
•adversely affect the interest rates received or paid on the value of other securities or financial arrangements, given LIBOR's role in determining market interest rates globally;
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•prompt inquiries or other actions from regulators in respect of our preparation and readiness for the replacement of LIBOR with an alternative reference rate; and
•result in disputes, litigation or other actions with borrowers or counterparties about the interpretation and enforceability of certain fallback language in LIBOR-based contracts and securities.
The transition away from LIBOR to an alternative reference rate or rates will require the transition to or development of appropriate systems, models and analytics to effectively transition our risk management and other processes from LIBOR-based products to those based on the applicable alternative reference rate. Accordingly, management’s LIBOR transition team is actively working on the LIBOR transition project. Despite these efforts, the manner and impact of this transition and related developments, as well as the effect of these developments on our funding costs, investment and trading securities portfolios, and business, is uncertain and could have a material adverse impact on our profitability.
Our risk management practices may prove to be inadequate or not fully effective.
The Company'sOur risk management framework seeks to mitigate risk and appropriately balance risk and return. The Company hasWe have established policies and procedures intended to identify, monitor, and manage the types of risk to which it iswe are subject, including, but not limited to, credit risk, market risk, liquidity risk, operational risk, legal and compliance risk, and reputational risk. A BOD level risk committee approves and reviews the Company'sour key risk management policies and oversees operation of the Company'sour risk management framework. Although the Company haswe have devoted significant resources to developing itsour risk management policies and procedures and expectsexpect to continue to do so in the future, these policies and procedures, as well as the Company'sour risk management techniques, may not be fully effective. In addition, as regulations and the markets in which the Company operateswe operate continue to evolve, the Company'sour risk management framework may not always keep sufficient pace with those changes. If the Company'sour risk management framework does not effectively identify or mitigate itsour risks, the Companywe could suffer unexpected losses or other material adverse impact.impacts. Management of the Company'sour risks in some cases depends upon the use of analytical and/or forecasting models. If the models the Company useswe use to mitigate these risks are inadequate, or are subject to ineffective governance, the Companywe may incur increased losses. In addition, there may be risks that exist, or that develop in the future, that the Company haswe have not appropriately anticipated, identified, or mitigated.
The Company'sOur internal controls and procedures may fail or be circumvented and the accuracy of the Company'sour judgments and estimates about financial and accounting matters may impact operating results and financial condition.
The Company'sOur management regularly reviews and updates itsour internal controls over financial reporting, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls and procedures, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of the Company'sour controls and procedures, or failure to comply with regulations related to controls and procedures, could result in materially inaccurate reported financial statements and/or have a material adverse effect on the Company'sour business, results of operations, and financial condition. Similarly, the Company'sour management makes certain estimates and judgments in preparing the Company'sour financial statements. The quality and accuracy of those estimates and judgments will impact the Company'sour operating results and financial condition.
If the Company iswe are unable to understand and adapt to technological change the Company’sand implement new technology-driven products and services, our business could be adversely affected.
The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology can increase efficiency and enable financial institutions to better serve customers and to reduce costs. However, someWe expect that new technologies neededwill continue to compete effectively resultemerge and may be superior to, or render obsolete, the technologies currently used in incremental operating costs. The Company’sour products and services. Our future success depends, in part, upon itsour ability to address the needs of itsour customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in operations. Many of the Company’sour competitors, because of their larger size and available capital, have substantially greater resources to invest in technological improvements. The CompanyDeveloping or acquiring new technologies and incorporating them into our products and services may require significant investment, take considerable time, and ultimately may not be successful. We cannot predict which technological developments or innovations will become widely adopted or how those technologies may be regulated. We also may not be able to effectively implementmarket new technology-driven products and services or be successful in marketing these products and services to itsour customers. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on the Company’sour business and, in turn, itsour financial condition and results of operations.

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The markets in which the Company operates are subject to the risk of both naturalLegal and man-made disasters.Compliance Risks
Many of the real and personal properties securing the Company's loans are located in California. Much of California experiences wildfires from time to time that cause significant damage throughout the state. While these wildfires did not significantly damage the Company's own properties, it is possible that its borrowers may experience losses as a result, which may materially impair their ability to meet the terms of their obligations. California is also prone to other natural disasters, including, but not limited to, drought, earthquakes, flooding, and mudslides. Additional significant natural or man-made disasters in the state of California or in the Company's other markets could lead to damage or injury to the Company's own properties and/or employees, and could increase the risk that many of its borrowers may experience losses or sustained job interruption, which may materially impair their ability to maintain deposits or meet the terms of their loan obligations. Therefore, additional natural disasters, a man-made disaster or a catastrophic event, or a combination of these or other factors, in any of the Company's markets could have a material adverse effect on the Company's business, financial condition, results of operations, and cash flows.
Risks Related to the Banking Industry
The Company operatesWe operate in a highly regulated environment and the laws and regulations that govern the Company’sour operations, corporate governance, executive compensation, and accounting principles, or changes in them, or the Company’sour failure to comply with them, may adversely affect the Company.us.
The Company isWe are subject to extensive regulation, supervision, and legislation that govern almost all aspects of itsour operations. Intended to protect customers, depositors, and the DIF, these laws and regulations, among other matters, prescribe minimum capital requirements, impose limitations on the business activities in which the Companywe can engage, require monitoring and reporting of suspicious activity and of customers who are perceived to present a heightened risk of money laundering or other illegal activity, limit the dividends or distributions that WAB can pay to the CompanyWAL or that the Companywe can pay to itsour stockholders, restrict the ability of affiliates to guarantee the Company’sour debt, impose certain specific accounting requirements on the Companyus that may be more restrictive and may result in greater or earlier charges to earnings or reductions in the Company’sour capital than does GAAP, among other things. Our acquisition of AmeriHome also significantly increased our operations in the mortgage industry, where the scope of applicable regulations has grown in complexity in recent years and may continue to do so under the Biden administration as the government continues to prioritize consumer protection measures. AmeriHome’s operations are subject to federal, state and local laws, regulations and judicial and administrative decisions, including those designed to discourage predatory lending and regulate collections and servicing practices with respect to mortgage loans.
Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations often impose significant additional compliance costs. To the extent the Company continueswe continue to grow larger and become more complex, regulatory oversight and risk and the cost of compliance will likely increase, which may adversely affect the Company.us. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Supervision and Regulation” included in this Form 10-K for a more detailed summary of the regulations and supervision to which the Companywe are subject.
Changes to the legal and regulatory framework governing the Company’sour operations, including the passage and continued implementation of the Dodd-Frank Act and EGRRCPA, have drastically revised the laws and regulations under which the Company operates.we operate. In general, bank regulators have increased their focus on risk management and regulatory compliance, and the Company expectswe expect this focus to continue. Additional compliance requirements may be costly to implement, may require additional compliance personnel, and may limit the Company’sour ability to offer competitive products to itsour customers.
The Company isWe are also subject to changes in federal and state law, as well as regulations and governmental policies, income tax laws, and accounting principles. Regulations affecting banks and other financial institutions are undergoing continuous review and frequently change, and the ultimate effect of such changes cannot be predicted. Regulations and laws may be modified at any time, and new legislation may be enacted that will affect the Company,us, WAB, and the Company’sour other subsidiaries. Any changes in federal and state law, as well as regulations and governmental policies, income tax laws, and accounting principles, could affect the Companyus in substantial and unpredictable ways, including ways that may adversely affect the Company’sour business, financial condition, or results of operations. Failure to appropriately comply with any such laws, regulations or principles or an alleged failure to comply, even if the Companywe acted in good faith or the alleged failure reflects a difference in interpretation, could result in sanctions by regulatory agencies, civil money penalties or damage to the Company’sour reputation, all of which could adversely affect the Company’sour business, financial condition, or results of operations.

State and federal banking agencies periodically conduct examinations of the Company’sour business, including compliance with laws and regulations, and the Company’sour failure to comply with any supervisory actions to which the Company iswe are or becomesbecome subject as a result of such examinations may adversely affect the Company.us.
State and federal banking agencies, including the FRB, FDIC, and CFPB, periodically conduct examinations of the Company’sour business, including for compliance with laws and regulations. If, as a result of an examination, ana federal agency were to determine that theour financial condition, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of any of the Company’sour operations had become unsatisfactory, or that the Companywe or itsour management was in violation of any law or regulation, federal banking agenciesthe agency may take a number of different remedial or enforcement actions it deems appropriate to remedy such a deficiency. These actions include the power to enjoin “unsafe or unsound” practices, to require affirmative actions to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in the Company’sour capital, to restrict the Company’sour growth, and to assess civil monetary penalties against the Companyus and/or officers or directors, and to remove officers and directors. If the FDIC concludes that such conditions cannot be corrected or there is an imminent risk of loss to depositors, it may terminate WAB’s deposit insurance. Under Arizona law, the state banking supervisory authority has many of the same enforcement powers with respect to itsour state-chartered banks. Finally, thebank. The CFPB also has the authority to examine the Companyus and has authority to take enforcement actions, including the issuance of cease-and-desist orders or civil monetary penalties against the Companyus if it finds that the Company offerswe offer consumer financial products and services in violation of federal consumer financial protection laws or in an unfair, deceptive, or abusive manner. Finally, our AmeriHome subsidiary needs to maintain certain state licenses and federal and
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government-sponsored agency approvals required to conduct its business and is subject to periodic examinations by such state and federal agencies, which can result in increases in administrative costs, substantial penalties due to compliance errors, or the loss of licenses.
If the Companywe were unable to comply with regulatory directives in the future, or if the Companywe were unable to comply with the terms of any future supervisory requirements to which the Companywe may become subject, then itwe could become subject to a variety of supervisory actions and orders, including cease and desist orders, prompt corrective actions, MOUs, and/or other regulatory enforcement actions. If the Company’sour regulators were to take such supervisory actions, then the Companywe could, among other things, become subject to restrictions on itsour ability to enter into acquisitions and develop any new business, as well as restrictions on itsour existing business. The CompanyWe also could be required to raise additional capital, dispose of certain assets and liabilities within a prescribed period of time, or both. Failure to implement the measures in the time frames provided, or at all, could result in additional orders or penalties from federal and state regulators, which could result in one or more of the remedial actions described above. In the event the Company waswe were ultimately unable to comply with the terms of a regulatory enforcement action, itwe could fail and be placed into receivership by the FDIC or the chartering agency. The terms of any such supervisory action and the consequences associated with any failure to comply therewith could have a material negative effect on the Company’sour business, operating flexibility, and financial condition.
Uncertainty aboutCurrent and proposed regulations addressing consumer privacy and data use and security could increase our costs and impact our reputation.
We are subject to federal, state and local laws related to consumer privacy and data use and security, including information safeguard rules under the futureGramm-Leach-Bliley Act and the California Consumer Protection Act. These rules require that financial institutions develop, implement, and maintain a written, comprehensive information security program containing safeguards that are appropriate to the financial institution’s size and complexity, the nature and scope of LIBOR,the financial institution’s activities, and its accepted alternatives, may adversely affect our business.
the sensitivity of any customer information at issue. The United Kingdom Financial Conduct Authority,States has experienced a heightened legislative and regulatory focus on privacy and data security, including requirements as to consumer notification in the agency that regulates LIBOR, has announced it intendsevent of data breaches and certain types of security breaches. Additional regulations in these areas may increase compliance costs, which could negatively impact earnings. In addition, failure to stop compelling bankscomply with the privacy, data use and security laws and regulations to submit rates for the calculationwhich we are subject, including by reason of LIBOR after 2021, which mayinadvertent disclosure of confidential information, could result in the usefines, sanctions, penalties, reputational harm, loss of LIBOR in financial contracts being phased out by the end of 2021. The ARRC has proposed that the SOFR represents best practice as the alternative to LIBOR for use in derivativesconsumer confidence, and other financial contracts that are currently indexed to LIBOR. ARRC has proposed a paced market transition plan to SOFR from LIBOR and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to LIBOR. It is not possible at this time to predict what rate or rates may become accepted alternatives to LIBOR, or what the effectadverse consequences, any of any such changes in views or alternatives may be on the markets for LIBOR-indexed financial instruments. The market transition away from LIBOR to an alternative reference rate, such as the SOFR, is complex and could have a range of adverse effects on our loan and lease and investment portfolios, asset-liability management, business, financial condition and results of operations. LIBOR is the reference rate for many transactions in which the Company lends and borrows money, issues, purchases and sells securities and enters into derivative contracts to manage its or its customers’ risk related to these transactions. Accordingly, management has established a LIBOR transition team to lead the Company in the execution of its project plan. Despite these efforts, the manner and impact of this transition and related developments, as well as the effect of these developments on the Company's funding costs, investment and trading securities portfolios, and business, is uncertain and could have a material adverse impacteffect on the Company's profitability.our results of operations and business.

We could be subject to adverse changes or interpretations of tax laws, tax audits, or challenges to our tax positions.
We are subject to federal and applicable state income tax laws and regulations. Income tax laws and regulations are often complex and require significant judgment in determining our effective tax rate and in evaluating our tax positions. Changes in interest ratestax laws, changes in interpretations, guidance or regulations that may be promulgated, or challenges to judgments or actions that we may take with respect to tax laws could negatively impact our current and increased rate competition could adversely affectfuture financial performance. On September 13, 2021, the Company’s profitability, business,Ways and prospects.
MostMeans Committee of the Company’s assets and liabilities are monetary in nature,U.S. House of Representatives released proposed tax reform legislation, which subjects the Company to significant risks from changes in interest rates and can impact the Company’s net income and the valuation of its assets and liabilities. Increases or decreases in prevailing interest rates could have an adverse effect on the Company’s business, asset quality, and prospects. The Company derives substantially all of its revenue from net interest income and, therefore, its operating income and net income depend to a great extent on its net interest margin. Net interest margin is the difference between the interest yields the Company receives on loans, securities, and other earning assets and the interest rates the Company pays on interest-bearing deposits, borrowings, and other liabilities. These rates are highly sensitive to many factors beyond the Company’s control, including competition, general economic conditions, and monetary and fiscal policies of various governmental and regulatory authorities, including the FRB. In a rising rate environment, the rate of interest the Company pays on its interest-bearing deposits, borrowings, and other liabilities may increase more quickly than the rate of interest the Company receives on loans, securities, and other earning assets, which could adversely impact the Company’s net interest income and earnings. The Company’s earnings also could be adversely affected in a declining rate environment if the rates on the Company’s loans and other investments fall more quickly than those on its deposits and other liabilities. Because of the Company's relatively high reliance on net interest income, its revenue and earnings are more sensitive to changes in market rates than other financial institutions that have more diversified sources of revenue. The Company experiences substantial competition on the basis of interest rates for both loans and deposits.
In addition, loan volumes are affected by market interest rates on loans. Lower interest rates are usually associated with higher loan originations, while rising interest rates are generally associated with a lower volume of loan originations. Conversely, in falling interest rate environments, loan repayment rates will increase and, in rising interest rate environments, loan repayment rates will decline. The Company cannot guarantee that it will be able to minimize interest rate risk. In addition,includes an increase in the general levelfederal corporate tax rate from 21% to 26.5% for corporations earning more than $5 million, and alters selected provisions of interest ratesthe Internal Revenue Code, among other changes. At this time, we are unable to predict whether this change or any other proposed change in tax law will ultimately be enacted.
In addition, our determination of our tax liability is subject to review by applicable tax authorities. In the normal course of business, we are routinely subject to examinations and challenges from federal and applicable state and local taxing authorities regarding the amount of taxes due in connection with investments we have made and the businesses in which we have engaged. Recently, federal and state and local taxing authorities have been increasingly aggressive in challenging tax positions taken by financial institutions. The challenges made by taxing authorities may result in adjustments to the timing or amount of taxable income or deductions, or the allocation of income among tax jurisdictions. Any such challenges that are not resolved in our favor may adversely affect the ability of certain borrowers to pay the interest on and principal of their obligations.our effective tax rate, tax payments or financial condition.
Interest rates also affect how much money the Company can lend. When interest rates rise, the cost of borrowing increases. Accordingly, changes in market interest rates could materially and adversely affect the Company’s net interest income, asset quality, loan origination volume, business, financial condition, results of operations, and cash flows.
The Company is exposed to risk of environmental liabilitiesCertain allegations with respect to properties to which the Company obtains title.Phoenix Suns and Robert Sarver could generate negative publicity for us and cause reputational harm.
Approximately 55%Robert Sarver, our former Chief Executive Officer and current Executive Chairman of the Company’s loan portfolio at December 31, 2019 was secured by real estate. InBoard of Directors, is the coursemanaging co-owner of the Company’s business,Phoenix Suns National Basketball Association (NBA) franchise. On November 4, 2021, ESPN published a report describing alleged misconduct and inappropriate behavior by Mr. Sarver relating to his role with the CompanyPhoenix Suns. After publication of the report, the NBA announced that it would be conducting a formal investigation into these allegations, which may foreclose on and take title to real estate, and could be subject to environmental liabilities with respect to these properties. The Company may be held liable to a governmental entity or to third partiesproceed for property damage, personal injury, investigation, and clean-up costs incurred by these parties in connection with environmental contamination, or may be required to investigate or clean up hazardous or toxic substances, or chemical releases at a property. The costs associated with investigation or remediation activities could be substantial.an undetermined period of time. In addition, ifas previously announced, the Companyindependent directors of our Board have hired an outside law firm, Munger, Tolles & Olson LLP, to conduct an independent investigation to assist them in evaluating Mr. Sarver’s role with us. This investigation is ongoing and being directed and overseen by the ownerindependent
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directors. Mr. Sarver has not had an active role in the management of our business since stepping down as CEO in 2018 and the allegations in the ESPN report do not relate to his current or former ownerprevious position with us. However, the results of a contaminated site, the Company may be subjectinvestigations are unknown at this time and the potential impact on us related to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. These costs and claims could be substantial and adversely affect the Company’s business and prospects.any negative publicity concerning Mr. Sarver is uncertain.

Securities-Related Risks Related to the Company's Common Stock
The price of the Company’sour common stock may fluctuate significantly in the future.
The price of the Company’sour common stock on the New York Stock Exchange constantly changes. The Company expects thatongoing COVID-19 pandemic has resulted in severe volatility in the marketfinancial markets. Depending on the extent and duration of the COVID-19 pandemic, the price of itsour common stock willmay continue to fluctuate and thereexperience volatility or decline. There can be no assurances about the market price for itsour common stock.
The Company’sOur stock price may fluctuate as a result of a variety of factors many of which are beyond the Company’sour control. These factors include:
•actual or anticipated changes in the political climate or public policy, including international trade policy;
•sales of the Company’sour equity securities;
the Company’s•our financial condition, performance, creditworthiness, and prospects;
•quarterly variations in the Company’sour operating results or the quality of itsour assets;
•operating results that vary from the expectations of management, securities analysts, and investors;
•changes in expectations as to the Company’sour future financial performance;
•announcements of strategic developments, acquisitions, and other material events by the Companyus or itsour competitors;
•the operating and securities price performance of other companies that investors believe are comparable to the Company;us;
•the credit, mortgage, and housing markets, the markets for securities relating to mortgages or housing, and developments with respect to financial institutions generally;
•changes in interest rates and the slope of the yield curve;
•changes in national and global financial markets and economies and general market conditions, such as interest or foreign exchange rates, stock, commodity or real estate valuations or volatility and other geopolitical, regulatory or judicial events; and
the Company’s•our past and future dividend and share repurchase practices.
There may be future sales or other dilution of the Company’sour equity, which may adversely affect the market price of the Company’sour common stock or preferred stock.
The Company isWe are not restricted from issuing additional common stock or preferred stock, including any securities that are convertible into or exchangeable for, or that represent the right to receive, common stock. The CompanyWe also grantsgrant a significant number of shares of common stock to employees and directors under the Company’sour Incentive Plan each year. The issuance of any additional shares of the Company’sour common stock or preferred stock or securities convertible into, exchangeable for or that represent the right to receive common stock, or the exercise of such securities could be substantially dilutive to stockholders of the Company’sour common stock. Holders of the Company’sour common stock and preferred stock have no preemptive rights that entitle such holders to purchase their pro rata share of any offering of shares of any class or series. Because the Company’sour decision to issue securities in anythe future offering will depend on market conditions, itsour acquisition activity, and other factors, the Companywe cannot predict or estimate the amount, timing, or nature of itsour future offerings. Thus, the Company’sour stockholders bear the risk of the Company’sour future offerings reducing the market price of the Company’sour common stock and diluting their stock holdings in the Company.us.
There can be no assurance that the Companywe will continue to declare cash dividends or repurchase stock.stock as we have in the past.
On June 4, 2019, the Company announced that its BOD authorized the initiation ofWe have paid regular quarterly dividends pursuant to whichon our common stock since the Company intends to pay dividends on its common stock,third quarter of 2019, subject to quarterly declarations by the BOD. During 2019,BOD, and also have paid dividends on our preferred stock since the Company declared and paid two quarterly cash dividendsissuance of $0.25 per common share. In December 2018,such securities in the Companythird quarter of 2021. We have previously adopted a common stock repurchase program,programs, pursuant to which the Company was authorized to repurchase up to $250.0 millionwe have repurchased shares of itsour outstanding common stock, throughthe most recent of which expired in December 2019. During 2019, the Company repurchased an aggregate of 2,822,402 shares of common stock. The common stock repurchase program was renewed through December 2020, authorizing the Company to repurchase up to an additional $250.0 million of its outstanding common stock.2020.


The Company’sOur dividend payments and/or stock repurchasesrepurchase practices may change from time-to-time, and no assurance can be provided that itwe will continue to declare dividends and/or repurchase stock in any particular amounts or at all.all, or institute a new stock repurchase program. Dividends and/or stock repurchases are subject to capital availability and the discretion of the Company’sour BOD, which must evaluate, among other things, whether cash dividends and/or stock repurchases are in the best interest of itsour stockholders and are in compliance with all applicable laws and any agreements containing provisions that limit the Company’sour ability to declare and pay cash dividends and/or
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repurchase stock. In addition,Furthermore, our outstanding Series A preferred stock is senior to our common stock and could adversely affect the amountability of us to declare or pay dividends or distributions on common stock. Under the Company spendsterms of the Series A preferred stock, we are prohibited from paying dividends on our common stock unless all dividends for the latest dividend period on all outstanding shares of Series A preferred stock have been declared and paid in full or declared and a sum sufficient for the numberpayment of shares that it is able to repurchase under its stock repurchase program may be further affected by a number of other factors, including the stock price and blackout periods in which the Company is restricted from repurchasing shares.those dividends has been set aside. A reduction in or elimination of the Company’sour dividend payments or dividend program and/or stock repurchases could have a negative effect on the Company’sour stock price.
Offerings of debt, which would be senior to the Company’sour common stock upon liquidation, and/or preferred equity securities that may be senior to the Company’sour common stock for purposes of dividend distributions or upon liquidation, may adversely affect the market price of the Company’sour common stock.
The CompanyWe may from time to time issue debt securities, borrow money through other means, or issue preferred stock. From time to time the Company borrowsWe may also borrow money from the FRB, the FHLB, other financial institutions, and other lenders. At December 31, 2019, the Company2021, we had outstanding $175,000,000 of 6.25% subordinated debentures with a maturity date of July 1, 2056,debt, senior unsecured debt, and WAB hadshort-term borrowings. In addition, AmeriHome has outstanding $150,000,000 aggregate principal amount of 5.00% Fixed-to-Floating Rate Subordinated Notes due July 15, 2025.senior notes that were issued prior to the acquisition. We also have outstanding Series A preferred stock, which is senior to our common stock. All of these securities or borrowings have priority over theour common stock in a liquidation, which could affect the market price of the Company’sour stock.
The Company’sOur BOD is authorized to issue one or more classes or series of preferred stock from time to time without any action on the part of the stockholders. The Company’sOur BOD also has the power, without stockholder approval, to set the terms of any such classes or series of preferred stock that may be issued, including voting rights, dividend rights, and preferences over the Company’sour common stock with respect to dividends or upon the Company’sour dissolution, winding-up, and liquidation and other terms. If the Company issueswe issue additional preferred stock in the future that has a preference over itsour common stock, with respect to the payment of dividends or upon the Company’sour liquidation, dissolution, or winding up, or if the Company issueswe issue preferred stock with voting rights that dilute the voting power of itsour common stock and/or the rights of holders of itsour common stock, the market price of itsour common stock could be adversely affected.
Anti-takeover provisions could negatively impact the Company’sour stockholders.
Provisions of Delaware law and provisions of the Company’sour Certificate of Incorporation, as amended, and itsour Amended and Restated Bylaws could make it more difficult for a third party to acquire control of the Companyus or have the effect of discouraging a third party from attempting to acquire control of the Company.us. Additionally, the Company’sour Certificate of Incorporation, as amended, authorizes the Company’sour BOD to issue additional series of preferred stock and such preferred stock could be issued as a defensive measure in response to a takeover proposal. These provisions could make it more difficult for a third party to acquire the Companyus even if an acquisition might be in the best interest of the Company’sour stockholders.

Item 1B.Unresolved Staff Comments
Item 1B.Unresolved Staff Comments
None.
Item 2.Properties
Item 2.Properties
The Company and WAB are headquartered at One E. Washington Street in Phoenix, Arizona. WAB operates 3836 domestic branch locations, which include six executive and administrative offices, of which 20 of these locations are owned and 1816 are leased.  The Company also has several loan production and other offices across the United States. In addition, WAB owns and occupies a 36,000 square foot operations facility in Las Vegas, Nevada.  See "Item 1. Business” for location cities. For information regarding rental payments, see "Note 4.7. Premises and Equipment" of the Consolidated Financial Statements included in this Form 10-K.
Item 3.Legal Proceedings
Item 3.Legal Proceedings
There are no material pending legal proceedings to which the Company is a party or to which any of its properties are subject. There are no material proceedings known to the Company to be contemplated by any governmental authority. See "Note 18. Commitments and Contingencies" of the “Supervision and Regulation” section of "Item 7. Management's Discussion and Analysis ofConsolidated Financial Condition and Results of Operations" ofStatements included in this Form 10-K for additional information. From time to time, the Company is involved in a variety of litigation matters in the ordinary course of its business and anticipates that it will become involved in new litigation matters in the future.
Item 4.Mine Safety Disclosures
Item 4.Mine Safety Disclosures
Not applicable.

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PART II
Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
The Company’s common stock began trading on the New York Stock Exchange under the symbol “WAL” on June 30, 2005. The Company has filed, without qualifications, its 20192021 Domestic Company Section 303A CEO Certification regarding its compliance with the NYSE’s corporate governance listing standards.
Holders
At December 31, 2019,2021, there were approximately 1,4761,694 stockholders of record.record of our common stock. This number does not include stockholders who hold shares in the name of brokerage firms or other financial institutions. The Company is not provided the exact number of or identities of these stockholders. There are no other classes of common equity outstanding.
Dividends
During the fourth quarter of 2019,2021, the Company's Board of Directors approved a cash dividend of $0.25$0.35 per common share. The dividend payment to shareholders totaled $25.6$36.5 million and was paid on NovemberDecember 3, 2021. In addition, the Company paid a cash dividend of $0.29 per depository share to preferred shareholders on December 29, 2019.2021, totaling $3.5 million.
Share Repurchases
The following table provides information about the Company's purchases of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act for the periods indicated:
Total Number of Shares
Purchased (1)(2)
Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)
Approximate Dollar Value of Shares That May Yet to be Purchased Under the Plans or Programs
October 20217,347 $121.30 — $— 
November 2021— — — — 
December 2021— — — — 
Total7,347 $121.30 — $— 

(1)    Shares purchased during the period outside of the publicly announced repurchase program were transferred to the Company from employees in satisfaction of minimum tax withholding obligations associated with the vesting of restricted stock awards during the period.
(2)    The Company has previously adopted common stock repurchase programs, the most recent of which expired as of December 31, 2020.

29
  
Total Number of Shares
Purchased (1)(2)
 Average Price Paid Per Share 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)
 Approximate Dollar Value of Shares That May Yet to be Purchased Under the Plans or Programs
October 2019 21,998
 $48.80
 20,000
 $97,874,800
November 2019 44,399
 51.43
 44,399
 95,591,561
December 2019 24,530
 53.23
 24,400
 94,293,079
Total 90,927
 $51.28
 88,799
 $94,293,079
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(1)Shares purchased during the period outside of the publicly announced repurchase program were transferred to the Company from employees in satisfaction of minimum tax withholding obligations associated with the vesting of restricted stock awards during the period.
(2)On December 12, 2018, the Company announced that it had adopted a common stock repurchase program, pursuant to which the Company was authorized to repurchase up to $250 million of its shares of common stock through December 31, 2019. The Company had $94.3 million in authorized common stock repurchase capacity that expired under the original program as of December 31, 2019. The Company's common stock repurchase program was renewed through December 2020, authorizing the Company to repurchase up to an additional $250.0 million of its outstanding common stock.


Performance Graph
The following graph summarizes a five year comparison of the cumulative total returns for the Company’s common stock, the Standard & Poor’s 500 stock index and the KBW Regional Banking Total Return Index, each of which assumes an initial value of $100.00 on December 31, 20142016 and reinvestment of dividends.
chart-02f3fd7625ee5b2fbe8a01.jpgwal-20211231_g1.jpg


Item 6.Selected Financial Data.
The following selected financial data have been derived from the Company’s consolidated financial condition and results of operations, as of and for the years ended December 31, 2019, 2018, 2017, 2016, and 2015, and should be read in conjunction with the Consolidated Financial Statements and the related notes included elsewhere in this report: Item 6.[Reserved]

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  Year Ended December 31,
  2019 2018 2017 2016 2015
  (in thousands)
Results of Operations:          
Interest income $1,225,045
 $1,033,483
 $845,513
 $700,506
 $525,144
Interest expense 184,633
 117,604
 60,849
 43,293
 32,568
Net interest income 1,040,412
 915,879
 784,664
 657,213
 492,576
Provision for credit losses 18,500
 23,000
 17,250
 8,000
 3,200
Net interest income after provision for credit losses 1,021,912
 892,879
 767,414
 649,213
 489,376
Non-interest income 65,095
 43,116
 45,344
 42,915
 29,768
Non-interest expense 482,781
 425,667
 360,941
 330,949
 260,606
Income before provision for income taxes 604,226
 510,328
 451,817
 361,179
 258,538
Income tax expense 105,055
 74,540
 126,325
 101,381
 64,294
Net income $499,171
 $435,788
 $325,492
 $259,798
 $194,244


  As of and for the Year Ended December 31,
  2019 2018 2017 2016 2015
  (dollars in thousands, except per share data)
Per Share Data:          
Earnings per share available to common stockholders - basic $4.86
 $4.16
 $3.12
 $2.52
 $2.05
Earnings per share available to common stockholders - diluted 4.84
 4.14
 3.10
 2.50
 2.03
Dividends paid per share 0.50
 —
 —
 —
 —
Book value per common share 29.42
 24.90
 21.14
 18.00
 15.44
Tangible book value per share1
 26.54
 22.07
 18.31
 15.17
 12.54
Shares outstanding at period end 102,524
 104,949
 105,487
 105,071
 103,087
Weighted average shares outstanding - basic 102,667
 104,669
 104,179
 103,042
 94,570
Weighted average shares outstanding - diluted 103,133
 105,370
 104,997
 103,843
 95,219
Selected Balance Sheet Data:          
Cash and cash equivalents $434,596
 $498,572
 $416,768
 $284,491
 $224,640
Investment securities and money market investments 3,970,118
 3,694,961
 3,754,569
 2,702,512
 1,984,126
Loans, net of deferred loan fees and costs 21,123,296
 17,710,629
 15,093,935
 13,208,436
 11,136,663
Allowance for credit losses 167,797
 152,717
 140,050
 124,704
 119,068
Total assets 26,821,948
 23,109,486
 20,329,085
 17,200,842
 14,275,089
Total deposits 22,796,493
 19,177,447
 16,972,532
 14,549,863
 12,030,624
Other borrowings —
 491,000
 390,000
 80,000
 150,000
Qualifying debt 393,563
 360,458
 376,905
 367,937
 210,328
Total stockholders' equity 3,016,748
 2,613,734
 2,229,698
 1,891,529
 1,591,502
Selected Other Balance Sheet Data:          
Average assets $24,914,123
 $21,246,315
 $18,869,553
 $16,134,263
 $12,420,803
Average earning assets 23,586,512
 20,064,545
 17,770,939
 15,117,364
 11,621,977
Average stockholders' equity 2,845,379
 2,411,709
 2,079,287
 1,770,914
 1,323,952
Selected Financial and Liquidity Ratios:          
Return on average assets 2.00% 2.05% 1.72% 1.61% 1.56 %
Return on average tangible common equity1
 19.60
 20.64
 18.31
 17.71
 17.83
Net interest margin 4.52
 4.68
 4.65
 4.58
 4.51
Loan to deposit ratio 92.66
 92.35
 88.93
 90.78
 92.57
Capital Ratios:          
Tier 1 leverage ratio 10.6% 10.9% 10.3% 9.9% 9.8 %
Tier 1 capital ratio 10.9
 11.1
 10.8
 10.5
 10.2
Total capital ratio 12.8
 13.2
 13.3
 13.2
 12.2
Selected Asset Quality Ratios:          
Net charge-offs (recoveries) to average loans outstanding 0.02% 0.06% 0.01% 0.02% (0.06)%
Non-accrual loans to gross loans 0.27
 0.16
 0.29
 0.31
 0.44
Non-accrual loans and repossessed assets to total assets 0.26
 0.20
 0.36
 0.51
 0.65
Loans past due 90 days or more and still accruing to gross loans —
 0.00
 0.00
 0.01
 0.03
Allowance for credit losses to gross loans 0.80
 0.86
 0.93
 0.95
 1.07
Allowance for credit losses to non-accrual loans 299.81
 550.41
 318.84
 309.65
 246.10
1 Item 7.See Non-GAAPManagement's Discussion and Analysis of Financial Measures section beginning on page 33.Condition and Results of Operations.


Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis is designed to provide insight on the financial condition and results of operations of Western Alliance Bancorporation and its subsidiaries and should be read in conjunction with “Item 8. Financial Statements and Supplementary Data.” This discussion and analysis contains forward-looking statements that involve risk, uncertainties, and assumptions. Certain risks, uncertainties, and other factors, including, but not limited to, those set forth under “Forward-Looking Statements” at the beginning of Part I of this Form 10-K and those discussed in Part I, Item 1A of this Form 10-K under the heading "Risk Factors," may cause actual results to differ materially from those projected in the forward-looking statements.
For a comparison of the 20182020 results to the 20172019 results and other 20172019 information not included herein, refer to the "Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.2020.
Recent Developments
Closing of AmeriHome Acquisition
On April 7, 2021, the Company completed its acquisition of Aris, the parent company of AmeriHome, pursuant to which, Aris merged with and into an indirect subsidiary of WAB. Based on AmeriHome's final closing balance sheet and a $275 million cash premium, total cash consideration was approximately $1.2 billion. As a result of the Merger, AmeriHome is now a wholly-owned indirect subsidiary of the Company and will continue to operate as AmeriHome Mortgage, a Western Alliance Bank company. AmeriHome is a leading national business-to-business mortgage acquirer and servicer. The acquisition of AmeriHome complements the Company’s national commercial businesses with a mortgage franchise that allows the Company to expand mortgage-related offerings to existing clients and diversifies the Company’s revenue profile by expanding sources of non-interest income.
AmeriHome's results of operations have been included in the Company's results beginning April 7, 2021.
Acquisition of Digital Disbursements
On January 25, 2022, the Company completed its acquisition of Digital Settlement Technologies LLC, doing business as Digital Disbursements, a digital payments platform for the class action legal industry. The Digital Disbursements' proprietary platform enables claimants to select their payment method, including direct-to-bank account options and popular digital wallets. This provides the Company with the internal capability to significantly increase efficacy, reduce distribution costs and improve potential fraud detection for the legal class action market. The acquisition is expected to grow the Company's deposit base and continue to extend the suite of legal banking services offered while serving adjacent sectors that will benefit from digital payments technology.
COVID-19 and the CARES Act
The COVID-19 pandemic and certain provisions of the CARES Act and other recent legislative and regulatory relief efforts have had and are expected to continue to have a material impact on the Company's operations, as further discussed below.
Financial position and results of operations
The Company recorded a recovery of credit losses of $21.4 million during year ended December 31, 2021, compared to a provision for credit losses of $123.6 million during the year ended December 31, 2020. The decrease in the provision for credit losses compared to the same period in the prior year is attributable to the continued improved outlook for the overall economy. While the Company has not to date experienced significant write-offs related to the COVID-19 pandemic, the Company is continuing to closely monitor its loans with borrowers in COVID-19 impacted industries.
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The below table details the Company's exposure to borrowers in industries generally considered to be the most impacted by the COVID-19 pandemic:
December 31, 2021
Loan BalancePercent of Total Loan Portfolio
(dollars in millions)
Industry (1):
Hotel$2,745.6 6.1 %
Investor dependent985.8 2.2 
Retail (2)699.9 1.6 
Gaming924.1 2.1 
Total$5,355.4 12.0 %
(1)Balances capture credit exposures in the business segments that manage the significant majority of industry relationships.
(2)Consists of real estate secured loan amounts that have significant retail dependency.
Although the Company has not experienced disproportionate impacts among its business segments to date, borrowers in the industries detailed in the table above could have greater sensitivity to the economic downturn with potentially longer recovery periods than other business lines.
Lending operations and accommodations to borrowers
The original PPP terminated on August 8, 2020, but was reopened in January 2021, with $284 billion in additional funding. As part of the resumption of the program, significant clarifications and modifications were made related to the scope of businesses eligible, expansion of the scope of expenses eligible for forgiveness, and simplification of forgiveness mechanisms for loans of $150,000 or less. Eligible businesses were able to apply for and receive PPP loans through May 31, 2021 and certain small businesses that previously received a loan under the original program were eligible to obtain an additional loan. These loans have a five-year term and earn interest at a rate of 1%. During the year ended December 31, 2021, the Company funded $602.5 million in loans under the second round of the PPP and received $1.4 billion and $215.8 million in loan payoffs on the first and second rounds of PPP loans, respectively. As of December 31, 2021, the carrying value of loans originated under the first and second round of the PPP totaled $411.9 million.
The CARES Act permitted financial institutions to suspend requirements under GAAP for loan modifications to borrowers affected by COVID-19 and provided interpretive guidance as to conditions that would constitute a short-term modification that would not meet the definition of a TDR. This included the following (i) the loan modification was made between March 1, 2020 and December 31, 2020, and (ii) the applicable loan was not more than 30 days past due as of December 31, 2019. The Consolidated Appropriations Act, 2021 extended these provisions through January 1, 2022. The Company is applying this guidance to qualifying loan modifications. The types of loan modifications granted to borrowers included extensions of loan maturity dates, covenant waivers, interest only payments for a specified period of time, and loan payment deferrals. As of December 31, 2021, the Company has outstanding modifications on HFI commercial loans that met these conditions with a net balance of $152.8 million, none of which, involve loan payment deferrals. Further, residential HFI mortgage loans in forbearance have a net balance of $22.2 million as of December 31, 2021.


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Financial Overview and Highlights
WAL is a bank holding company headquartered in Phoenix, Arizona, incorporated under the laws of the state of Delaware. WAL provides a full spectrum of customized loan, deposit lending,and treasury management international banking, and online banking products and servicescapabilities, including blockchain-based offerings through its wholly-owned banking subsidiary, WAB.
WAB operates the following full-service banking divisions: ABA, BON and FIB, Bridge, and TPB. The Company also serves business customers through a national platformprovides an array of specialized financial services to its business customers across the country and has added to these capabilities with the acquisition of AmeriHome on April 7, 2021, which provides mortgage banking services.
Financial Results Highlights of 20192021
•Net income available to common stockholders of $895.7 million for 2021, compared to $506.6 million for 2020
•Diluted earnings per share of $8.67 for 2021, compared to $5.04 per share for 2020
•Net revenue of $2.0 billion, constituting year-over-year growth of 57.8%, or $715.3 million, compared to an increase in non-interest expenses of 73.2%, or $359.8 million
•PPNR1 increased $376.7 million to $1.1 billion, compared to $746.1 million in 2020
•
Net income of $499.2 million for 2019, compared to $435.8 million for 2018
•
Diluted earnings per share of $4.84 for 2019, compared to $4.14 per share for 2018
•
Net operating revenue of $1.1 billion, constituting year-over-year growth of 13.1%, or $127.0 million, compared to an increase in operating non-interest expenses of 14.9%, or $62.2 million1
•
Operating PPNR increased $64.8 million to $618.3 million, compared to $553.5 million in 20181
Income tax expense increased $30.5$107.9 million to $105.1$223.8 million, compared to $74.5$115.9 million in 20182020
•Total HFI loans of $39.1 billion, up $12.0 billion from December 31, 2020
•Total deposits of $47.6 billion, up $15.7 billion from December 31, 2020
•Stockholders' equity of $5.0 billion, an increase of $1.5 billion from December 31, 2020
•Nonperforming assets (nonaccrual loans and repossessed assets) decreased to 0.15% of total assets, from 0.32% at December 31, 2020
•
Total loans of $21.1 billion, up $3.4 billion from December 31, 2018
•
Total deposits of $22.8 billion, up $3.6 billion from December 31, 2018
•
Stockholders' equity of $3.0 billion, an increase of $403.0 million from December 31, 2018
•
Nonperforming assets (nonaccrual loans and repossessed assets) increased to 0.26% of total assets, from 0.20% at December 31, 2018
Net loan charge-offs to average loans outstanding of 0.02% for 2019,2021, compared to 0.06% for 20182020
•Net interest margin of 3.41% in 2021, compared to 3.97% in 2020
•
Net interest margin of 4.52% in 2019, compared to 4.68% in 2018
Return on average assets of 2.00%1.83% for 2019,2021, compared to 2.05%1.61% for 20182020
•
Tangible common equity ratio of 10.3%, compared to 10.2% at December 31, 20181Tangible common equity ratio1 of 7.3%, compared to 8.6% at December 31, 2020
•Tangible book value per share, net of tax1, of $37.84, an increase of 22.5% from $30.90 at December 31, 2020
•Efficiency ratio1 of 41.8% in 2021, compared to 38.8% in 2020
•
Tangible book value per share, net of tax, of $26.54, an increase of 20.3% from $22.07 at December 31, 20181
•
Operating efficiency ratio of 42.7% in 2019, compared to 41.9% in 20181
The impact to the Company from these items, and others of both a positive and negative nature, are discussed in more detail below as they pertain to the Company’s overall comparative performance for the year ended December 31, 2019.

2021.
1 See Non-GAAP Financial Measures section beginning on page 33.36.


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As a bank holding company, management focuses on key ratios in evaluating the Company's financial condition and results of operations.
Results of Operations and Financial Condition
A summary of the Company's results of operations, financial condition, and selected metrics are included in the following tables: 
  Year Ended December 31,
  2019 2018 2017
  (dollars in thousands, except per share amounts)
Net income $499,171
 $435,788
 $325,492
Earnings per share - basic 4.86
 4.16
 3.12
Earnings per share - diluted 4.84
 4.14
 3.10
Return on average assets 2.00% 2.05% 1.72%
Return on average tangible common equity1
 19.60
 20.64
 18.31
Net interest margin 4.52
 4.68
 4.65
Operating efficiency ratio1
 42.68
 41.93
 41.51
  December 31,
  2019 2018
  (in thousands)
Total assets $26,821,948
 $23,109,486
Total loans, net of deferred loan fees and costs 21,123,296
 17,710,629
Securities and money market investments 3,970,118
 3,694,961
Total deposits 22,796,493
 19,177,447
Other borrowings —
 491,000
Qualifying debt 393,563
 360,458
Stockholders' equity 3,016,748
 2,613,734
Tangible common equity, net of tax1
 2,721,061
 2,316,464
Year Ended December 31,
202120202019
(dollars in millions, except per share amounts)
Net income$899.2 $506.6 $499.2 
Net income available to common stockholders895.7 506.6 499.2 
Earnings per share - basic8.72 5.06 4.86 
Earnings per share - diluted8.67 5.04 4.84 
Return on average assets1.83 %1.61 %2.00 %
Return on average equity22.3 %16.1 %17.5 %
Return on average tangible common equity (1)26.2 17.7 19.6 
Net interest margin3.41 3.97 4.52 
1 (1)See Non-GAAP Financial Measures section beginning on page 33.36.
December 31,
20212020
(in millions)
Total assets$55,982.6 $36,461.0 
Loans HFS5,635.1 — 
Loans HFI, net of deferred loan fees and costs39,075.4 27,053.0 
Securities and money market investments7,454.4 5,444.6 
Total deposits47,612.0 31,930.5 
Other borrowings1,501.9 21.0 
Qualifying debt895.8 548.7 
Stockholders' equity4,962.6 3,413.5 
Tangible common equity, net of tax1
4,035.2 3,116.6 
(1) See Non-GAAP Financial Measures section beginning on page 36.
Asset Quality
For all banks and bank holding companies, asset quality plays a significant role in the overall financial condition of the institution and results of operations. The Company measures asset quality in terms of non-accrualnonaccrual loans as a percentage of gross loans and net charge-offs as a percentage of average loans. Net charge-offs are calculated as the difference between charged-off loans and recovery payments received on previously charged-off loans. The following table summarizes the Company's key asset quality metrics:metrics for HFI loans:  
At or for the Year Ended December 31,
202120202019
(dollars in millions)
Nonaccrual loans$72.6 $115.2 $56.0 
Repossessed assets11.7 1.4 13.9 
Non-performing assets87.3 149.8 98.2 
Loans past due 90 days and still accruing— — — 
Nonaccrual loans to funded loans0.19 %0.43 %0.27 %
Nonaccrual and repossessed assets to total assets0.15 0.32 0.26 
Loans past due 90 days and still accruing to funded loans— — — 
Allowance for loan losses to funded loans0.65 1.03 0.80 
Allowance for credit losses to funded loans0.74 1.17 0.84 
Allowance for loan losses to nonaccrual loans348 242 300 
Net charge-offs to average loans outstanding0.02 0.06 0.02 
34
  At or for the Year Ended December 31,
  2019 2018 2017
  (dollars in thousands)
Non-accrual loans $55,968
 $27,746
 $43,925
Repossessed assets 13,850
 17,924
 28,540
Non-performing assets 98,174
 82,722
 114,939
Loans past due 90 days and still accruing —
 594
 43
Non-accrual loans to gross loans 0.27% 0.16% 0.29%
Nonaccrual and repossessed assets to total assets 0.26
 0.20
 0.36
Loans past due 90 days and still accruing to gross loans —
 0.00
 0.00
Allowance for credit losses to gross loans 0.80
 0.86
 0.93
Allowance for credit losses to non-accrual loans 299.81
 550.41
 318.84
Net charge-offs to average loans outstanding 0.02
 0.06
 0.01
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Asset and LiabilityDeposit Growth
The Company’s assets and liabilities are comprised primarily of loans and deposits. Therefore, the ability to originate new loans and attract new deposits is fundamental to the Company’s growth.
Total assets increased to $26.8$56.0 billion at December 31, 20192021 from $23.1$36.5 billion at December 31, 2018.2020. The increase in total assets of $3.7$19.5 billion, or 16.1%53.5%, relates primarily towas driven by continued organic loan and deposit growth and the acquisition of $3.4AmeriHome. HFI loans increased by $12.0 billion, or 19.3%44.4%, to $21.1$39.1 billion as of December 31, 2019,2021, compared to $17.7$27.1 billion as of December 31, 2018.2020. The increase in HFI loans from December 31, 20182020 was driven by increases in residential real estate and commercial and industrial loans of $1.6$6.8 billion and $4.0 billion, respectively. CRE, non-owner occupied and construction and land development loans also increased $871.7 million and $591.4 million, respectively. These increases were partially offset by a decrease in CRE, owner occupied loans of $1.0 billion, and residential real estate$258.7 million. Additionally, HFS loans of $943.3 million. Total deposits increased $3.6 billion, or 18.9%, to $22.8totaled $5.6 billion as of December 31, 2019 from $19.22021.
Total deposits increased $15.7 billion, or 49.1%, to $47.6 billion as of December 31, 2018.2021 from $31.9 billion as of December 31, 2020. The increase in deposits from December 31, 20182020 was driven by an increaseincreases of $7.9 billion in non-interest bearing demand deposits, $4.9 billion in savings and money market accounts, and interest bearing demand deposits of $1.8 billion, non-interest-bearing demand deposit of $1.1 billion, and certificates of deposits of $542.0 million from December 31, 2018.$2.5 billion.

RESULTS OF OPERATIONS
The following table sets forth a summary financial overview for the comparable periods:
Year Ended December 31,Increase
20212020(Decrease)
(in millions, except per share amounts)
Consolidated Income Statement Data:
Interest income$1,658.7 $1,261.8 $396.9 
Interest expense109.9 94.9 15.0 
Net interest income1,548.8 1,166.9 381.9 
(Recovery of) provision for credit losses(21.4)123.6 (145.0)
Net interest income after provision for (recovery of) credit losses1,570.2 1,043.3 526.9 
Non-interest income404.2 70.8 333.4 
Non-interest expense851.4 491.6 359.8 
Income before provision for income taxes1,123.0 622.5 500.5 
Income tax expense223.8 115.9 107.9 
Net income899.2 506.6 392.6 
Dividends on preferred stock3.5 — 3.5 
Net income available to common stockholders$895.7 $506.6 $389.1 
Earnings per share - basic$8.72 $5.06 $3.66 
Earnings per share - diluted$8.67 $5.04 $3.63 


35
  Year Ended December 31, Increase
  2019 2018 (Decrease)
  (in thousands, except per share amounts)
Consolidated Income Statement Data:    
Interest income $1,225,045
 $1,033,483
 $191,562
Interest expense 184,633
 117,604
 67,029
Net interest income 1,040,412
 915,879
 124,533
Provision for credit losses 18,500
 23,000
 (4,500)
Net interest income after provision for credit losses 1,021,912
 892,879
 129,033
Non-interest income 65,095
 43,116
 21,979
Non-interest expense 482,781
 425,667
 57,114
Income before provision for income taxes 604,226
 510,328
 93,898
Income tax expense 105,055
 74,540
 30,515
Net income $499,171
 $435,788
 $63,383
Earnings per share - basic $4.86
 $4.16
 $0.70
Earnings per share - diluted $4.84
 $4.14
 $0.70
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Non-GAAP Financial Measures
The following discussion and analysis contains financial information determined by methods other than those prescribed by GAAP. The Company's management uses these non-GAAP financial measures in their analysis of the Company's performance. These measurements typically adjust GAAP performance measures to exclude the effects of certain activities or transactions that, in management's opinion, do not reflect recurring period-to-period comparisons of the Company's performance. Management believes presentation of these non-GAAP financial measures provides useful supplemental information that is essential to a complete understanding of the operating results of the Company's core businesses.Company. Since the presentation of these non-GAAP performance measures and their impact differ between companies, these non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Operating Pre-Provision Net Revenue
Operating PPNR is defined by the Federal Reserve in SR 14-3, which requires companies subject to the rule to project PPNR over the planning horizon for each of the economic scenarios defined annually by the regulators. Banking regulations define PPNR as the sum of net interest income plusand non-interest income less non-interest expense. Management has further adjusted this metric to exclude any non-recurring or non-operational elements of non-interest income or non-interest expense, which are outlined in the table below.expenses before adjusting for loss provisions. Management believes that this is an important metric as it illustrates the underlying performance of the Company, it enables investors and others to assess the Company's ability to generate capital to cover credit losses through the credit cycle, and provides consistent reporting with a key metric used by bank regulatory agencies.

The following table shows the components of operating PPNR for the years ended December 31, 2019, 2018,2021, 2020, and 2017:2019:
Year Ended December 31,
202120202019
(in millions)
Net interest income$1,548.8 $1,166.9 $1,040.4 
Total non-interest income404.2 70.8 65.1 
Net revenue$1,953.0 $1,237.7 $1,105.5 
Total non-interest expense851.4 491.6 482.0 
Less:
Acquisition and restructure expense15.3 — — 
Loss on extinguishment of debt5.9 — — 
Total non-interest expense, adjusted$830.2 $491.6 $482.0 
Pre-provision net revenue$1,122.8 $746.1 $623.5 
Less:
Acquisition and restructure expense15.3 — — 
Loss on extinguishment of debt5.9 — — 
(Recovery of) provision for credit losses(21.4)123.6 19.3 
Income tax expense223.8 115.9 105.0 
Net income$899.2 $506.6 $499.2 
36
  Year Ended December 31,
  2019 2018 2017
  (in thousands)
Total non-interest income $65,095
 $43,116
 $45,344
Less:      
Gain (loss) on sales of investment securities, net (1) 3,152
 (7,656) 2,343
Fair value gain (loss) adjustments on assets measured at fair value, net (1) 5,119
 (3,611) (1)
Total operating non-interest income 56,824
 54,383
 43,002
Plus: net interest income 1,040,412
 915,879
 784,664
Net operating revenue $1,097,236
 $970,262
 $827,666
       
Total non-interest expense $482,781
 $425,667
 $360,941
Less:      
Contribution to charitable foundation (2) —
 7,645
 —
401(k) plan change and other miscellaneous items (2) —
 1,218
 —
Net loss (gain) on sales / valuations of repossessed and other assets (1) 3,818
 9
 (80)
Total operating non-interest expense $478,963
 $416,795
 $361,021
       
Operating pre-provision net revenue $618,273
 $553,467
 $466,645
Plus:      
Revenue adjustments 8,271
 (11,267) 2,342
Less:      
Provision for credit losses 18,500
 23,000
 17,250
Expense adjustments 3,818
 8,872
 (80)
Income before provision for income taxes 604,226
 510,328
 451,817
Income tax expense 105,055
 74,540
 126,325
Net income $499,171
 $435,788
 $325,492
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(1)The operating PPNR non-GAAP performance metric is adjusted to exclude the effects of this non-operational item.
(2)The operating PPNR non-GAAP performance metric is adjusted to exclude the effects of these non-recurring items. See "Note 19. Related Party Transactions" for further information regarding the charitable contribution.

Tangible Common Equity
The following table presents financial measures related to tangible common equity. Tangible common equity represents total stockholders' equity, less identifiable intangible assets and goodwill. Management believes that tangible common equity financial measures are useful in evaluating the Company's capital strength, financial condition, and ability to manage potential losses. In addition, management believes that these measures improve comparability to other institutions that have not engaged in acquisitions that resulted in recorded goodwill and other intangible assets.
December 31
20212020
(dollars and shares in millions)
Total stockholders' equity$4,962.6 $3,413.5 
Less:
Goodwill and intangible assets634.8 298.5 
Preferred stock294.5 — 
Total tangible common stockholders' equity4,033.3 3,115.0 
Plus: deferred tax - attributed to intangible assets1.9 1.6 
Total tangible common equity, net of tax$4,035.2 $3,116.6 
Total assets$55,982.6 $36,461.0 
Less: goodwill and intangible assets, net634.8 298.5 
Tangible assets55,347.8 36,162.5 
Plus: deferred tax - attributed to intangible assets1.9 1.6 
Total tangible assets, net of tax$55,349.7 $36,164.1 
Tangible common equity ratio7.3 %8.6 %
Common shares outstanding106.6 100.8 
Book value per common share$43.78 $33.85 
Tangible book value per common share, net of tax37.84 30.90 
 December 31
 2019 2018
 (dollars and shares in thousands)
Total stockholders' equity$3,016,748
 $2,613,734
Less: goodwill and intangible assets297,608
 299,155
Total tangible stockholders' equity2,719,140
 2,314,579
Plus: deferred tax - attributed to intangible assets1,921
 1,885
Total tangible common equity, net of tax$2,721,061
 $2,316,464
    
Total assets$26,821,948
 $23,109,486
Less: goodwill and intangible assets, net297,608
 299,155
Tangible assets26,524,340
 22,810,331
Plus: deferred tax - attributed to intangible assets1,921
 1,885
Total tangible assets, net of tax$26,526,261
 $22,812,216
    
Tangible common equity ratio10.3% 10.2%
Common shares outstanding102,524
 104,949
Book value per share$29.42
 $24.90
Tangible book value per share, net of tax26.54
 22.07
Operating Efficiency Ratio
The following table shows the components used in the calculation of the operating efficiency ratio, which management uses as a metric for assessing cost efficiency:
Year Ended December 31,
202120202019
(dollars in millions)
Total non-interest expense, adjusted$830.2 $491.6 $482.0 
Divided by:
Total net interest income1,548.8 1,166.9 1,040.4 
Plus:
Tax equivalent interest adjustment33.3 28.4 25.1 
Total non-interest income404.2 70.8 65.1 
$1,986.3 $1,266.1 $1,130.6 
Efficiency ratio - tax equivalent basis41.8 %38.8 %42.7 %

37
 Year Ended December 31,
 2019 2018 2017
 (dollars in thousands)
Total operating non-interest expense$478,963
 $416,795
 $361,021
Divided by:     
Total net interest income$1,040,412
 $915,879
 $784,664
Plus:     
Tax equivalent interest adjustment25,094
 23,809
 41,989
Operating non-interest income56,824
 54,383
 43,002
Net operating revenue - TEB$1,122,330
 $994,071
 $869,655
Operating efficiency ratio - TEB42.7% 41.9% 41.5%
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Regulatory Capital
The following table presents certain financial measures related to regulatory capital under Basel III, which includes Common Equity Tiercommon equity tier 1 and total capital. The FRB and other banking regulators use Common Equity Tier 1CET1 and total capital as a basis for assessing a bank's capital adequacy; therefore, management believes it is useful to assess financial condition and capital adequacy using this same basis. Specifically, the total capital ratio takes into consideration the risk levels of assets and off-balance sheet financial instruments. In addition, management believes that the classified assets to Common Equity Tier 1CET1 plus allowance measure is an important regulatory metric for assessing asset quality.
As permitted by the regulatory capital rules, the Company elected to delay the estimated impact of CECL on its regulatory capital over a five-year transition period ending December 31, 2024. As a result, capital ratios and amounts as of December 31, 2021 exclude the impact of the increased allowance for credit losses related to the adoption of ASC 326.
December 31,
20212020
(dollars in millions)
Common equity tier 1:
Common equity$4,715.4 $3,465.9 
Less:
Non-qualifying goodwill and intangibles631.3 296.9 
Disallowed deferred tax asset— — 
AOCI related adjustments16.4 91.8 
Unrealized gain on changes in fair value liabilities(0.7)0.5 
Common equity tier 1$4,068.4 $3,076.7 
Divided by: Risk-weighted assets$44,697.0 $31,015.4 
Common equity tier 1 ratio9.1 %9.9 %
Common equity tier 1$4,068.4 $3,076.7 
Plus: Preferred stock and trust preferred securities375.9 81.5 
Less:
Disallowed deferred tax asset— — 
Unrealized gain on changes in fair value liabilities— — 
Tier 1 capital$4,444.3 $3,158.2 
Divided by: Tangible average assets$56,972.9 $34,349.3 
Tier 1 leverage ratio7.8 %9.2 %
Total capital:
Tier 1 capital$4,444.3 $3,158.2 
Plus:
Subordinated debt815.1 454.8 
Adjusted allowances for credit losses239.6 259.0 
Less: Tier 2 qualifying capital deductions— — 
Tier 2 capital$1,054.7 $713.8 
Total capital$5,499.0 $3,872.0 
Total capital ratio12.3 %12.5 %
Classified assets to tier 1 capital plus allowance:
Classified assets$300.7 $223.7 
Divided by: Tier 1 capital4,444.3 3,158.2 
Plus: Adjusted allowances for credit losses239.6 259.0 
Total Tier 1 capital plus adjusted allowances for credit losses$4,683.9 $3,417.2 
Classified assets to tier 1 capital plus allowance6.4 %6.5 %

38
 December 31,
 2019 2018
 (dollars in thousands)
Common Equity Tier 1:   
Common Equity$3,016,748
 $2,613,734
Less:   
Non-qualifying goodwill and intangibles295,607
 296,769
Disallowed deferred tax asset2,243
 768
AOCI related adjustments21,379
 (47,055)
Unrealized gain on changes in fair value liabilities3,629
 13,432
Common Equity Tier 1$2,693,890
 $2,349,820
Divided by: Risk-weighted assets$25,390,142
 $21,983,976
Common Equity Tier 1 ratio10.6% 10.7%
    
Common Equity Tier 1$2,693,890
 $2,349,820
Plus:   
Trust preferred securities81,500
 81,500
Less:   
Disallowed deferred tax asset—
 —
Unrealized gain on changes in fair value liabilities—
 —
Tier 1 capital$2,775,390
 $2,431,320
Divided by: Tangible average assets$26,110,275
 $22,204,799
Tier 1 leverage ratio10.6% 10.9%
    
Total Capital:   
Tier 1 capital$2,775,390
 $2,431,320
Plus:   
Subordinated debt305,732
 305,131
Qualifying allowance for credit losses167,797
 152,717
Other8,955
 8,188
Less: Tier 2 qualifying capital deductions—
 —
Tier 2 capital$482,484
 $466,036
    
Total capital$3,257,874
 $2,897,356
    
Total capital ratio12.8% 13.2%
    
Classified assets to Tier 1 capital plus allowance for credit losses:   
Classified assets$171,246
 $242,101
Divided by:   
Tier 1 capital2,775,390
 2,431,320
Plus: Allowance for credit losses167,797
 152,717
Total Tier 1 capital plus allowance for credit losses$2,943,187
 $2,584,037
    
Classified assets to Tier 1 capital plus allowance5.8% 9.4%

Net Interest Margin
The net interest margin is reported on a TEB. A tax equivalent adjustment is added to reflect interest earned on certain securities and loans that are exempt from federal and state income tax. The following tables set forth the average balances, interest income, interest expense, and average yield (on a fully TEB) for the periods indicated:
Year Ended December 31,
20212020
Average
Balance		InterestAverage
Yield / Cost		Average
Balance		InterestAverage
Yield / Cost
(dollars in millions)
Interest earning assets
Loans held for sale$5,475.7 $174.4 3.18 %$20.0 $0.3 1.63 %
Loans held for investment:
Commercial and industrial14,978.4 624.8 4.26 12,032.1 549.6 4.67 
CRE - non-owner occupied5,829.0 271.3 4.67 5,370.1 262.9 4.91 
CRE - owner occupied2,029.8 97.7 4.92 2,244.6 109.8 5.00 
Construction and land development2,790.4 160.0 5.74 2,183.5 129.9 5.97 
Residential real estate5,129.2 158.9 3.10 2,318.6 89.4 3.85 
Consumer39.0 1.7 4.43 47.0 2.4 5.19 
Total HFI loans (1), (2), (3)30,795.8 1,314.4 4.32 24,195.9 1,144.0 4.79 
Securities:
Securities - taxable5,284.5 95.8 1.81 2,936.5 63.1 2.15 
Securities - tax-exempt2,137.1 68.9 4.05 1,476.4 49.3 4.20 
Total securities (1)7,421.6 164.7 2.46 4,412.9 112.4 2.84 
Other2,718.3 5.2 0.19 1,452.1 5.1 0.36 
Total interest earning assets46,411.4 1,658.7 3.65 30,080.9 1,261.8 4.29 
Non-interest earning assets
Cash and due from banks292.7 171.2 
Allowance for credit losses(261.0)(277.7)
Bank owned life insurance178.1 177.9 
Other assets2,486.7 1,221.1 
Total assets$49,107.9 $31,373.4 
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts$4,750.8 $5.9 0.13 %$3,488.3 $9.0 0.26 %
Savings and money market accounts15,814.3 33.1 0.21 10,008.9 34.8 0.35 
Certificates of deposit1,849.5 8.5 0.46 1,997.6 26.6 1.33 
Total interest-bearing deposits22,414.6 47.5 0.21 15,494.8 70.4 0.45 
Short-term borrowings1,206.0 8.2 0.68 119.7 0.6 0.49 
Long-term debt373.2 21.1 5.65 — — — 
Qualifying debt827.5 33.1 4.00 514.1 23.9 4.66 
Total interest-bearing liabilities24,821.3 109.9 0.44 16,128.6 94.9 0.59 
Interest cost of funding earning assets0.24 %0.32 %
Non-interest-bearing liabilities
Non-interest-bearing demand deposits19,415.6 11,465.5 
Other liabilities837.2 627.5 
Stockholders’ equity4,033.8 3,151.8 
Total liabilities and stockholders' equity$49,107.9 $31,373.4 
Net interest income and margin (4)$1,548.8 3.41 %$1,166.9 3.97 %
(1)Yields on loans and securities have been adjusted to a TEB. The taxable-equivalent adjustment was $33.3 million and $28.4 million for the year ended December 31, 2021 and 2020, respectively.
(2)Included in the yield computation are net loan fees of $131.7 million and $94.9 million for the year ended December 31, 2021 and 2020, respectively.
(3)Includes non-accrual loans.
(4)Net interest margin is computed by dividing net interest income by total average earning assets.
39
  Year Ended December 31,
  2019 2018
  Average
Balance		 Interest Average
Yield / Cost		 Average
Balance		 Interest Average
Yield / Cost
  (dollars in thousands)
Interest earning assets            
Loans:            
Commercial and industrial $8,200,542
 $461,918
 5.78% $7,039,090
 $387,422
 5.68%
CRE - non-owner occupied 4,629,580
 270,353
 5.85
 3,952,702
 234,753
 5.95
CRE - owner occupied 2,284,746
 120,607
 5.38
 2,263,112
 118,351
 5.34
Construction and land development 2,176,595
 155,459
 7.16
 1,975,587
 137,227
 6.96
Residential real estate 1,663,544
 80,669
 4.85
 616,159
 29,681
 4.82
Consumer 64,291
 3,712
 5.77
 54,078
 3,143
 5.81
Loans held for sale 5,556
 352
 6.34
 —
 —
 —
Total loans (1), (2), (3) 19,024,854
 1,093,070
 5.83
 15,900,728
 910,577
 5.82
Securities:            
Securities - taxable 2,904,567
 79,124
 2.72
 2,803,350
 78,630
 2.80
Securities - tax-exempt 1,008,655
 36,765
 4.57
 879,888
 33,042
 4.69
Total securities (1) 3,913,222
 115,889
 3.20
 3,683,238
 111,672
 3.26
Other 648,436
 16,086
 2.48
 480,579
 11,234
 2.34
Total interest earning assets 23,586,512
 1,225,045
 5.30
 20,064,545
 1,033,483
 5.27
Non-interest earning assets            
Cash and due from banks 214,470
     145,246
    
Allowance for credit losses (159,907)     (146,288)    
Bank owned life insurance 171,960
     168,685
    
Other assets 1,101,088
     1,014,127
    
Total assets $24,914,123
     $21,246,315
    
Interest-bearing liabilities            
Interest-bearing deposits:            
Interest-bearing transaction accounts $2,545,806
 $20,988
 0.82% $1,891,160
 $11,584
 0.61%
Savings and money market accounts 8,125,832
 95,533
 1.18
 6,501,241
 54,962
 0.85
Certificates of deposit 2,117,177
 41,884
 1.98
 1,748,675
 23,918
 1.37
Total interest-bearing deposits 12,788,815
 158,405
 1.24
 10,141,076
 90,464
 0.89
Short-term borrowings 134,622
 2,838
 2.11
 260,662
 4,853
 1.86
Qualifying debt 379,675
 23,390
 6.16
 362,410
 22,287
 6.15
Total interest-bearing liabilities 13,303,112
 184,633
 1.39
 10,764,148
 117,604
 1.09
Interest cost of funding earning assets     0.78%     0.59%
Non-interest-bearing liabilities            
Non-interest-bearing demand deposits 8,246,232
     7,712,791
    
Other liabilities 519,400
     357,667
    
Stockholders’ equity 2,845,379
     2,411,709
    
Total liabilities and stockholders' equity $24,914,123
     $21,246,315
    
Net interest income and margin (4)   $1,040,412
 4.52%   $915,879
 4.68%
(1)Yields on loans and securities have been adjusted to a TEB. The taxable-equivalent adjustment was $25.1 million and $23.8 million for 2019 and 2018, respectively.
(2)Included in the yield computation are net loan fees of $56.2 million and accretion on acquired loans of $12.7 million for 2019, compared to $44.8 million and $18.6 million for 2018, respectively.
(3)Includes non-accrual loans.
(4)Net interest margin is computed by dividing net interest income by total average earning assets.

Year Ended December 31,
2021 versus 2020
Increase (Decrease) Due to Changes in (1)
VolumeRateTotal
(in millions)
Interest income:
Loans held for sale$173.8 $0.3 $174.1 
Loans:
Commercial and industrial122.9 (47.7)75.2 
CRE - non-owner occupied21.4 (13.0)8.4 
CRE - owner occupied(10.3)(1.8)(12.1)
Construction and land development34.8 (4.7)30.1 
Residential real estate87.1 (17.6)69.5 
Consumer(0.4)(0.3)(0.7)
Total loans255.5 (85.1)170.4 
Securities:
Securities - taxable42.6 (9.9)32.7 
Securities - tax-exempt21.3 (1.7)19.6 
Total securities63.9 (11.6)52.3 
Other2.4 (2.3)0.1 
Total interest income495.6 (98.7)396.9 
Interest expense:
Interest-bearing transaction accounts$1.6 $(4.7)$(3.1)
Savings and money market12.2 (13.9)(1.7)
Time certificates of deposit(0.7)(17.4)(18.1)
Short-term borrowings7.4 0.2 7.6 
Long-term debt21.1 — 21.1 
Qualifying debt12.5 (3.3)9.2 
Total interest expense54.1 (39.1)15.0 
Net change$441.5 $(59.6)$381.9 

  Year Ended December 31,
  2019 versus 2018
  Increase (Decrease) Due to Changes in (1)
  Volume Rate Total
  (in thousands)
Interest income:      
Loans:      
Commercial and industrial $65,422
 $9,074
 $74,496
CRE - non-owner occupied 39,528
 (3,928) 35,600
CRE - owner occupied 1,142
 1,114
 2,256
Construction and land development 14,357
 3,875
 18,232
Residential real estate 50,790
 198
 50,988
Consumer 590
 (21) 569
Loans held for sale 352
 —
 352
Total loans 172,181
 10,312
 182,493
Securities:      
Securities - taxable 2,757
 (2,263) 494
Securities - tax-exempt 4,693
 (970) 3,723
Total securities 7,450
 (3,233) 4,217
Other 4,164
 688
 4,852
Total interest income 183,795
 7,767
 191,562
       
Interest expense:      
Interest-bearing transaction accounts $5,397
 $4,007
 $9,404
Savings and money market 19,100
 21,471
 40,571
Time certificates of deposit 7,290
 10,676
 17,966
Short-term borrowings (2,657) 642
 (2,015)
Qualifying debt 1,064
 39
 1,103
Total interest expense 30,194
 36,835
 67,029
       
Net increase $153,601
 $(29,068) $124,533
(1)Changes due to both volume and rate have been allocated to volume changes.
(1)Changes due to both volume and rate have been allocated to volume changes.
Comparison of interest income, interest expense and net interest margin
The Company's primary source of revenue is interest income. For the year ended December 31, 2019,2021, interest income was $1.2$1.7 billion, an increase of $191.6$396.9 million, or 18.5%31.5%, compared to $1.0$1.3 billion for the year ended December 31, 2018.2020. This increase was primarily the result of interest income from HFS loans of $174.4 million, coupled with a $3.1$170.4 million increase in interest income from HFI loans that was driven by a $6.6 billion increase in the average HFI loan balance that drove a $182.5 million increase in loan interest income for the year ended December 31, 2019.2021. Interest income from investment securities also increased by $4.2$52.3 million for the comparable period primarily due to an increase in the average investment balance of $230.0 million, partially offset by a decrease in interest rates from December 31, 2018. Other interest income increased $4.9 million from the comparable period due primarily to an increase in interest-bearing cash account balances.$3.0 billion. Average yield on interest earning assets increaseddecreased to 5.30%3.65% for the year ended December 31, 2019,2021, compared to 5.27%4.29% in 2018,2020, which was primarily the result of increased yields on the Company's interest-bearing cash accounts.a lower rate environment.
For the year ended December 31, 2019,2021, interest expense was $184.6$109.9 million, compared to $117.6$94.9 million for the year ended December 31, 2018.2020. Interest expense on deposits increased $67.9decreased $22.9 million for the same period aswhile average interest-bearing deposits increased $2.6$6.9 billion, which was paired with a 35-basis point increase indue to the lower rate environment, reduced the average cost of interest-bearing deposits.deposits by 24 basis points. Interest expense on short-term borrowings decreased by $2.0across all debt types increased $37.9 million as a result of a $126.0 million decrease in average short-term borrowings for the year ended December 31, 20192021 compared to the same period in 2018. Interest expense on qualifying2020 as a result of an increase of $1.8 billion in average total debt. The increase in average total debt increased by $1.1during the year ended December 31, 2021 is attributable to increases in overnight borrowings and AmeriHome warehouse facilities, issuances of $600.0 million due to changes in related interest rate swap expense arising from fluctuationssubordinated debt and $469.6 million in interest rates.credit linked notes, as well as $300.0 million in AmeriHome senior notes.
For the year ended December 31, 2019,2021, net interest income was $1.0$1.5 billion, compared to $915.9 million$1.2 billion for the year ended December 31, 2018.2020. The increase in net interest income reflects a $3.5$16.3 billion increase in average interest earning assets, offset by a $2.5an increase of $8.7 billion increase in average interest-bearing liabilities. The decrease in net interest margin of 1656 basis points compared to 20182020 is the result of a decrease in loan and investment security yields due to a lower rate environment and higher funding costs on borrowings during 2021. These decreases to net interest margin were offset in part by lower deposit and funding costs.costs compared to 2020.

40
Provision for Credit Losses
The provision for credit losses on loans in each period is reflected as a reduction in earnings for that period.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 allowance for credit losses at a level that is adequate to absorb probableestimated lifetime credit losses inherent in the loan portfolio.and investment securities portfolios at the time that the loan is originated or the security is purchased. The Company's CECL models incorporate historical experience, current conditions, and reasonable and supportable forecasts in measuring expected credit losses. For the year ended December 31, 2019,2021, the Company recognized a recovery of credit losses of $21.4 million, compared to a provision for credit losses was $18.5 million, compared to $23.0of $123.6 million for the year ended December 31, 2018.2020. The decrease in provision from the provision wasprior year is primarily duerelated to a reduction in net charge-offs and loan mix.
The Company may also establish an additional allowance for credit losses on PCI loans through provision for credit losses when impairment is determined as a result of lower than expected cash flows. As of December 31, 2019 and 2018, the allowance for credit losses on PCI loans was $0.1 million. For non-PCI loans, an additional allowance for credit losses is established when the remaining credit marks on these loans are lower than the Company's calculated allowance for similar types of organic loans. As of December 31, 2019 and 2018, the allowance for credit losses on non-PCI loans was $0.9 million and $3.4 million, respectively.
The Company also records estimated losses on unfunded loan commitments, which are classified as non-interest expense, with corresponding reserves in other liabilities. For the years ended December 31, 2019 and 2018, the Company recorded $0.8 million and $2.0 million, respectively, in non-interest expense for estimated losses on unfunded loan commitments. As of December 31, 2019 and 2018, the loss contingency for unfunded loan commitments and letters of credit was $9.0 millionand $8.2 million as of December 31, 2019 and 2018, respectively.current improved economic outlook.
Non-interest Income
The following table presents a summary of non-interest income for the periods presented: 
Year Ended December 31,
20212020Increase (Decrease)
(in millions)
Net gain on loan origination and sale activities$326.2 $— $326.2 
Service charges and fees28.3 23.3 5.0 
Income from equity investments22.1 12.7 9.4 
Commercial banking related income17.4 14.7 2.7 
Gain on sales of investment securities8.3 0.2 8.1 
Gain on recovery from credit guarantees7.2 — 7.2 
Fair value (loss) gain on assets measured at fair value, net(1.3)3.8 (5.1)
Net loan servicing revenue (expense)(16.3)— (16.3)
Other income12.3 16.1 (3.8)
Total non-interest income$404.2 $70.8 $333.4 
  Year Ended December 31,
  2019 2018 Increase (Decrease)
  (in thousands)
Service charges and fees $23,353
 $22,295
 $1,058
Income from equity investments 8,290
 8,595
 (305)
Card income 6,979
 8,009
 (1,030)
Foreign currency income 4,987
 4,760
 227
Income from bank owned life insurance 3,901
 3,946
 (45)
Lending related income and gains (losses) on sale of loans, net 3,158
 4,340
 (1,182)
Gain (loss) on sales of investment securities, net 3,152
 (7,656) 10,808
Fair value gain (loss) adjustments on assets measured at fair value, net 5,119
 (3,611) 8,730
Other income 6,156
 2,438
 3,718
Total non-interest income $65,095
 $43,116
 $21,979
Total non-interest income for the year ended December 31, 2019 compared to 2018, increased by $22.0 million, or 51.0%. The increase is due to sales of investment securities and fair value adjustments. The net gain on sales of investment securities of $3.2 million during the year ended December 31, 2019 was the result of a portfolio re-balancing initiative. The net loss on sales of investment securities of $7.7 million during the year ended December 31, 2018 relates to sales of low yielding investment securities, which were replaced with investment securities with shorter durations and higher yields, as well as losses on sales of equity securities. The net fair value gain on assets measured at fair value was $5.1 million for the year ended December 31, 2019, compared to a net loss of $3.6 million for the year ended December 31, 2018, which resulted from changes in the fair market value of the Company's equity securities. Other increases in non-interest income were due to increases in service charges and fees and other non-interest income. The increase in service charges and fees of $1.1 million is due to continued growth in the Company's deposit base, which increased $3.6 billion during the year ended December 31, 2019. The increase in other non-interest income of $3.7 million is due primarily to an increase in rental income on equipment leases. These increases were partially offset by a decrease in lending income of $1.2 million due to fewer gains on the sale of loans2021 compared to the same period in 2018.2020increased by $333.4 million. The increase in non-interest income is primarily attributable to mortgage banking income resulting from the acquisition of AmeriHome. Net gain on loan origination and sale activities totaled $326.2 million, partially offset by net loan servicing expense of $16.3 million for the period from the acquisition date through December 31, 2021. In addition, income from equity investments increased $9.4 million over the prior year due to an increase in warrant activity for the year ended December 31, 2021.

The Company also recognized gains from sale of investment securities of $8.3 million and a recovery from credit guarantees of $7.2 million during the year ended December 31, 2021. During the onset of the pandemic in 2020, the Company increased its investments in tax-exempt municipal securities to take advantage of dislocations in the municipal market as credit spreads widened. As performance of these securities significantly improved during the year and as part of the Company's interest rate management actions, a portion of these municipal securities was sold to realize this appreciation in value. The recovery from credit guarantees is attributable to credit protection provided by the credit linked note transactions entered into during the year ended December 31, 2021. The amount of the gain is equal to the allowance for credit losses recorded on the aggregate $6.4 billion reference pools.
41
Non-interest Expense
The following table presents a summary of non-interest expense for the periods presented:
Year Ended December 31,
20212020Increase (Decrease)
(in millions)
Salaries and employee benefits$466.7 $303.6 $163.1 
Legal, professional, and directors' fees58.6 42.2 16.4 
Data processing58.2 35.7 22.5 
Loan servicing expenses53.5 — 53.5 
Occupancy43.8 34.1 9.7 
Deposit costs29.8 18.5 11.3 
Loan acquisition and origination expenses28.8 — 28.8 
Insurance23.0 13.3 9.7 
Business development and marketing13.5 9.6 3.9 
Loss on extinguishment of debt5.9 — 5.9 
Net gain on sales and valuations of repossessed and other assets(3.5)(1.5)(2.0)
Acquisition and restructure expenses15.3 — 15.3 
Other expense57.8 36.1 21.7 
Total non-interest expense$851.4 $491.6 $359.8 
 Year Ended December 31,
 2019 2018 Increase (Decrease)
 (in thousands)
Salaries and employee benefits$279,274
 $253,238
 $26,036
Legal, professional, and directors' fees37,009
 28,722
 8,287
Occupancy32,507
 29,404
 3,103
Deposit costs31,719
 18,900
 12,819
Data processing30,577
 22,716
 7,861
Insurance11,924
 14,005
 (2,081)
Loan and repossessed asset expenses7,571
 4,578
 2,993
Business development7,043
 5,960
 1,083
Marketing4,199
 3,770
 429
Card expense2,346
 4,301
 (1,955)
Intangible amortization1,547
 1,594
 (47)
Net loss (gain) on sales / valuations of repossessed and other assets3,818
 9
 3,809
Other expense33,247
 38,470
 (5,223)
Total non-interest expense$482,781
 $425,667
 $57,114
Total non-interest expense for the year ended December 31, 20192021 increased $359.8 million compared to 2018, increased $57.1 million, or 13.4%the same period in 2020. ThisThe increase primarily relatesin non-interest expense was driven by the AmeriHome acquisition, which contributed to the increase in salaries and employee benefits deposit costs, legal, professional,of $163.1 million from the addition of approximately 1,000 employees along with new expense categories related to mortgage banking activities, including loan servicing expenses of $53.5 million and directors' fees, data processing, net loss on sales/valuationsloan acquisition and origination expenses of repossessed and other assets, and occupancy expenses. Salaries and employee benefits have increased as$28.8 million. In addition, the Company supports its continued growth through hiringincurred acquisition and incentives. Full-time equivalent employees increased 2.7%restructure expenses of $15.3 million, which include acquisition costs and costs related to 1,835 during the year ended December 31, 2019. Deposit costs consistrepurchase of fees to the Promontory Interfinancial Network and othersEBO loans for reciprocal deposits as well as earnings credits on select deposits. The increase in deposit costspurposes of $12.8 million for 2019 compared to 2018 relates primarily to an increase in deposit earnings credits paid to account holders due to a higher amount of deposits eligible for these credits. The increase to legal, professional, and directors' fees of $8.3 million largely relates to consulting projects aimed at the implementation of CECL and other technology initiatives that will help position the Company for continued growth. The net loss on sales/valuations of repossessed and other assets of $3.8 million primarily relates to valuation adjustments on OREO properties. The other significant increases to non-interest expense consist of increases in data processing and occupancy of $7.9 million and $3.1 million, respectively, which relate tooptimizing the Company's support of its continued growth. These increases were partially offset by a decrease in other non-interest expense of $5.2 million, which primarily relates to a non-recurring charitable donation of $7.6 million made in 2018 as well as a decrease in FDIC insurance costs of $2.4 million due to the elimination of the FDIC assessment surcharge in the fourth quarter of 2018. The decrease in other non-interest expense was offset in part by a $3.2 million increase in depreciation expense on leased equipment.combined balance sheet.
Income Taxes
For the years ended December 31, 2019, 2018,2021, 2020, and 20172019 the Company's effective tax rate was 17.39%19.9%, 14.61%,18.6% and 27.96%17.4%, respectively. The increase in the effective tax rate from 20182020 to 20192021 is primarily due primarily to management's decision duringincreases in pretax book income and state taxes associated with the third quarter of 2018 to carryback its 2017 federal NOLs.AmeriHome acquisition which were not fully offset by growth in permanent tax benefit items for the year. The decreaseincrease in the effective tax rate from 20172019 to 20182020 is primarily due primarily to tax expense associated with the decreasesurrender of bank owned life insurance, no valuation allowance release in the federal statutory rate effective in 2018, a reduction in excise taxes,2020 and management's decision during the third quarter 2018return to carryback its 2017 federal NOLs. The reduction in excise taxes from 2017 to 2018 resulted from not deferring WAB's 2018 dividend from BW Real Estate as was the case in 2017. The Company's 2017 federal NOLs resulted from the accelerationprovision adjustments.

42

Business Segment Results
The Company's reportable segments are defined primarily basedaggregated with a focus on geographic location,products and services offered and markets served. The Company's regional segments, which include Arizona, Nevada, Southern California, and Northern California, provide full serviceconsist of three reportable segments:
•Commercial segment: provides commercial banking and relatedtreasury management products and services to their respective markets. The Company's NBL segments, which include HOA services, Public & Nonprofit Finance, Technology & Innovation, HFF,small and Other NBLs, providemiddle-market businesses, specialized banking services to sophisticated commercial institutions and investors within niche markets. These NBLs are managed centrallyindustries, as well as financial services to the real estate industry.
•Consumer Related segment: offers consumer banking services, such as residential mortgage banking, and are broadercommercial banking services to enterprises in geographic scope than the Company's other segments, though still predominately located within the Company's core market areas. The consumer-related sectors.
•Corporate & Other segmentsegment: consists of corporate-relatedthe Company's investment portfolio, Corporate borrowings and other related items, income and expense items not allocated to the Company'sour other reportable segments, and inter-segment eliminations.
The following tables present selected operating segment information for the periods presented:
Consolidated CompanyCommercialConsumer RelatedCorporate & Other
December 31, 2021(in millions)
Loans, net of deferred loan fees and costs$39,075.4 $25,092.4 $13,983.0 $— 
Deposits47,612.0 30,466.8 15,362.9 1,782.3 
December 31, 2020
Loans, net of deferred loan fees and costs$27,053.0 $20,245.8 $6,798.2 $9.0 
Deposits31,930.5 21,448.0 9,936.8 545.7 
    Regional Segments
  Consolidated Company Arizona Nevada Southern California Northern California
December 31, 2019 (in millions)
Loans, net of deferred loan fees and costs $21,123.3
 $3,847.9
 $2,252.5
 $2,253.9
 $1,311.2
Deposits 22,796.5
 5,384.7
 4,350.1
 2,585.3
 2,373.6
           
December 31, 2018          
Loans, net of deferred loan fees and costs $17,710.6
 $3,647.9
 $2,003.5
 $2,161.1
 $1,300.2
Deposits 19,177.4
 5,090.2
 3,996.4
 2,347.5
 1,839.1
Year Ended December 31, 2021(in millions)
Income (loss) before income taxes$1,123.0 $861.5 $496.1 $(234.6)
Year Ended December 31, 2020
Income (loss) before income taxes$622.5 $612.7 $220.5 $(210.7)
Year Ended December 31, 2019 (in thousands)
Income (loss) before income taxes $604,226
 $156,493
 $111,001
 $73,649
 $53,079
           
Year Ended December 31, 2018          
Income (loss) before income taxes $510,328
 $139,047
 $99,322
 $59,334
 $48,132
  National Business Lines  
  
HOA
Services
 Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance  Other NBL Corporate & Other
December 31, 2019 (in millions)
Loans, net of deferred loan fees and costs $237.2
 $1,635.6
 $1,552.0
 $1,930.8
 $6,098.7
 $3.5
Deposits 3,210.1
 0.1
 3,771.5
 —
 36.9
 1,084.2
             
December 31, 2018            
Loans, net of deferred loan fees and costs $210.0
 $1,547.5
 $1,200.9
 $1,479.9
 $4,154.9
 $4.7
Deposits 2,607.2
 —
 2,559.0
 —
 —
 738.0
Year Ended December 31, 2019 (in thousands)
Income (loss) before income taxes $49,823
 $5,668
 $93,748
 39,935
 $78,895
—
$(58,065)
             
Year Ended December 31, 2018            
Income (loss) before income taxes $35,097
 $8,288
 $72,334
 42,467
 $44,281
 $(37,974)

BALANCE SHEET ANALYSIS
Total assets increased $3.7 billion, or 16.1%, to $26.8$56.0 billion at December 31, 2019 compared to $23.12021 from $36.5 billion at December 31, 2018.2020. The increase in total assets relates primarily toof $19.5 billion, or 53.5%, was driven by continued organic loan growth. Loansand deposit growth and the acquisition of AmeriHome. HFI loans increased $3.4by $12.0 billion, or 19.3%44.4%, to $21.1$39.1 billion atas of December 31, 2019,2021, compared to $17.7$27.1 billion atas of December 31, 2018.2020. The increase in HFI loans from December 31, 20182020 was driven by increases in residential real estate and commercial and industrial loans of $1.6$6.8 billion and $4.0 billion, respectively. CRE, non-owner occupied and construction and land development loans also increased $871.7 million and $591.4 million, respectively. These increases were partially offset by a decrease in CRE, owner occupied loans of $1.0$258.7 million. Additionally, HFS loans totaled $5.6 billion and residential real estate loansas of $943.3 million.December 31, 2021.
Total liabilities increased $3.3$18.0 billion, or 16.1%54.4%, to $23.8$51.0 billion at December 31, 2019,2021, compared to $20.5$33.0 billion at December 31, 2018.2020. The increase in liabilities is due primarily to an increase in total deposits. Total deposits increased $3.6$15.7 billion, or 18.9%49.1%, to $22.8$47.6 billion at December 31, 2019.2021. The increase in deposits from December 31, 20182020 was driven by an increase in non-interest-bearing demand deposits of $7.9 billion, savings and money market deposits of $1.8$4.9 billion, non-interest-bearinginterest-bearing demand depositdeposits of $1.1$2.5 billion, and certificates of depositsdeposit of $542.0$398.6 million. Other borrowings also increased $1.5 billion due to an increase in overnight borrowings, AmeriHome senior notes, and issuance of credit linked notes. Qualified debt also increased $347.1 million from December 31, 2018.primarily related to issuance of $600.0 million in subordinated debt in June 2021, partially offset by redemptions of $250.0 million in subordinated debt during the year.
Total stockholders’ equity increased by $403.0 million,$1.5 billion, or 15.4%45.4%, to $3.0$5.0 billion at December 31, 20192021, compared to $2.6$3.4 billion at December 31, 2018.2020. The increase in stockholders' equity relatesis primarily toa function of net income forand net proceeds of $834.8 million from issuances of common and preferred stock during the year, ended December 31, 2019 and an increase in the fair value of the Company's AFS portfolio, which is recognized as part of AOCI, partially offset by share repurchases under its common stock repurchase planquarterly dividends to shareholders and dividends paid to shareholders.unrealized losses on AFS securities.
43
Investment securities
Debt securities are classified at the time of acquisition as either HTM, AFS, or trading based upon various factors, including asset/liability management strategies, liquidity and profitability objectives, and regulatory requirements. HTM securities are carried at amortized cost, adjusted for amortization of premiums or accretion of discounts. AFS securities are securities that may be sold prior to maturity based upon asset/liability management decisions. Investment securities classified as AFS are carried at fair value. Unrealizedvalue with unrealized gains or losses on AFSthese securities are recorded as part of AOCI in stockholders’ equity.equity, net of tax. Amortization of premiums or accretion of discounts on MBS is periodically adjusted for estimated prepayments. Trading securities are reported at fair value, with unrealized gains and losses on these securities included in current period earnings.
The Company's investment securities portfolio is utilized as collateral for borrowings, required collateral for public deposits and customer repurchase agreements, and to manage liquidity, capital, and interest rate risk.
The following table summarizes the carrying value of the investment securities portfolio for each of the periods below: 
At December 31,
20212020Increase
(Decrease)
(in millions)
Debt securities
CLO$926.2 $146.9 $779.3 
Commercial MBS issued by GSEs68.5 84.6 (16.1)
Corporate debt securities382.9 270.2 112.7 
Private label residential MBS1,724.9 1,476.9 248.0 
Residential MBS issued by GSEs1,993.4 1,486.6 506.8 
Tax-exempt2,105.3 1,756.2 349.1 
U.S. treasury securities13.0 — 13.0 
Other81.7 55.9 25.8 
Total debt securities$7,295.9 $5,277.3 $2,018.6 
Equity securities
CRA investments$44.6 $53.4 $(8.8)
Preferred stock113.9 113.9 — 
Total equity securities$158.5 $167.3 $(8.8)
Debt securities increased $2.0 billion, or 38.3%, from December 31, 2020. The increase in investment securities is largely attributable to deployment of excess liquidity with purchases of CLOs, residential MBS issued by GSEs, tax-exempt municipal securities, and private label residential MBS. The Company continued to increase its investment in CLOs during the year as these variable rate securities generate yields that are higher than those for MBS and will benefit from future increases in interest rates. The Company's CLO portfolio consists of second or third credit tranche bonds of structured transactions, rated AA to A.
The Company has variable rate securities, which consist primarily of CLOs. The rates on these securities will convert to a SOFR index when LIBOR is discontinued in June 2023.

44
  At December 31,
  2019 2018 2017 2016 2015
  (in thousands)
Debt securities          
CDO $10,142
 $15,327
 $21,857
 $13,490
 $10,060
Commercial MBS issued by GSEs 94,253
 100,106
 109,077
 117,792
 19,114
Corporate debt securities 99,961
 99,380
 103,483
 64,144
 13,251
Municipal securities 7,773
 —
 —
 —
 —
Private label commercial MBS —
 —
 —
 —
 4,691
Private label residential MBS 1,129,227
 924,594
 868,524
 433,685
 257,128
Residential MBS issued by GSEs 1,412,060
 1,530,124
 1,689,295
 1,356,258
 1,171,702
Tax-exempt 1,039,962
 841,573
 765,960
 500,312
 334,830
Trust preferred securities 27,040
 28,617
 28,617
 26,532
 24,314
U.S. government sponsored agency securities 10,000
 38,188
 61,462
 56,022
 —
U.S. treasury securities 999
 1,984
 2,482
 2,502
 2,993
Total debt securities $3,831,417
 $3,579,893
 $3,650,757
 $2,570,737
 $1,838,083
           
           
Equity securities          
CRA investments $52,504
 $51,142
 $50,616
 $37,113
 $34,685
Preferred stock 86,197
 63,919
 53,196
 94,662
 111,236
Total equity securities $138,701
 $115,061
 $103,812
 $131,775
 $145,921

Weighted average yield on investment securities is calculated by dividing income within each maturity range by the outstanding amount of the related investment and has not been tax-effected on tax-exempt obligations.investment. For purposes of calculating the weighted average yield, AFS securities are carried at amortized cost in the table below.below and tax-exempt obligations have not been tax-effected. The maturity distribution and weighted average yield of the Company's investment security portfolios at December 31, 20192021 are summarized in the table below: 
December 31, 2021
Due Under 1 YearDue 1-5 YearsDue 5-10 YearsDue Over 10 YearsTotal
AmountYieldAmountYieldAmountYieldAmountYieldAmountYield
(dollars in millions)
Held-to-maturity
Private label residential MBS (1)$— — %$— — %$— — %$216.9 2.20 %$216.9 2.20 %
Tax-exempt bonds40.7 4.00 18.1 4.75 — — 831.4 4.10 890.2 4.11 
Total HTM securities$40.7 4.00 %$18.1 4.75 %$— — %$1,048.3 3.71 %$1,107.1 3.74 %
Available-for-sale
CLO$— — %$— — %$422.9 1.89 %$503.1 1.81 %$926.0 1.85 %
Commercial MBS issued by GSEs (1)— — 15.2 2.73 8.8 2.21 44.2 2.09 68.2 2.25 
Corporate debt securities— — 112.0 3.03 265.7 3.54 5.0 3.70 382.7 3.39 
Private label residential MBS (1)— — 0.1 5.50 3.8 2.78 1,524.8 2.16 1,528.7 2.17 
Residential MBS issued by GSEs (1)— — 4.1 2.62 1.6 2.70 2,021.8 1.87 2,027.5 1.87 
Tax-exempt— — 1.0 4.33 59.8 2.96 1,084.3 2.73 1,145.1 2.74 
U.S. treasury securities13.0 0.04 — — — — — — 13.0 0.04 
Other1.0 2.50 6.2 2.99 12.0 4.42 56.1 2.45 75.3 2.81 
Total AFS securities$14.0 0.22 %$138.6 2.99 %$774.6 2.59 %$5,239.3 2.14 %$6,166.5 2.21 %
  December 31, 2019
  Due Under 1 Year Due 1-5 Years Due 5-10 Years Due Over 10 Years Total
  Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
  (dollars in thousands)
Held-to-maturity                    
Tax-exempt $7,330
 5.27% $17,414
 4.30% $—
 —% $460,363
 4.57% $485,107
 4.57%
                     
Available-for-sale                    
CDO $—
 —% $—
 —% $—
 —% $50
 —% $50
 —%
Commercial MBS issued by GSEs (1) —
 —
 18,445
 2.26
 1,680
 4.28
 74,937
 2.28
 95,062
 2.31
Corporate debt securities —
 —
 5,015
 4.32
 100,000
 2.35
 —
 —
 105,015
 2.45
Municipal securities —
 —
 —
 —
 —
 —
 7,494
 5.57
 7,494
 5.57
Private label residential MBS (1) 99
 5.39
 —
 —
 —
 —
 1,129,886
 3.24
 1,129,985
 3.24
Residential MBS issued by GSEs (1) 3
 5.26
 1,423
 2.74
 8,429
 2.53
 1,396,739
 2.66
 1,406,594
 2.66
Tax-exempt —
 —
 9,751
 3.58
 39,236
 3.43
 481,742
 3.01
 530,729
 3.05
Trust preferred securities —
 —
 —
 —
 —
 —
 32,000
 2.45
 32,000
 2.45
U.S. government sponsored agency securities —
 —
 —
 —
 10,000
 2.40
 —
 —
 10,000
 2.40
U.S. treasury securities 999
 1.68
 —
 —
 —
 —
 —
 —
 999
 1.68
Total AFS securities $1,101
 2.02% $34,634
 2.95% $159,345
 2.65% $3,122,848
 2.92% $3,317,928
 2.91%
                     
                     
Equity                    
CRA investments $44,555
 2.89% $5,250
 2.51% $3,000
 3.00% $—
 —% $52,805
 2.86%
Preferred stock —
 —
 —
 —
 —
 —
 82,514
 5.81
 82,514
 5.81
Total equity securities $44,555
 2.89% $5,250
 2.51% $3,000
 3.00% $82,514
 5.81% $135,319
 4.66%
(1)MBS are comprised of pools of loans with varying maturities, the majority of which are due after 10 years.
(1)MBS are comprised of pools of loans with varying maturities, the majority of which are due after 10 years.
The Company does not ownhold any subprime MBS in its investment portfolio. The majorityApproximately 55% of its MBS are GSE issued. The remaining MBS that are not GSE issued consist primarily of $1.1investment grade securities, including $1.4 billion rated AAA $30.7and $87.4 million rated AA, $0.2 million rated A, $0.3 million rated BBB, and $1.2 million non-investment grade.AA.
Gross unrealized losses at December 31, 20192021 relate primarily to changes in interest rates and other market interest rate increases since the securities' original purchase date.conditions that are not considered to be credit-related issues. The Company has reviewed its securities on which there is an unrealized loss in accordance with its accountingallowance for credit losses policy for OTTI securities described in "Note 2. Investment Securities"1. Summary of Significant Accounting Policies" to the Consolidated Financial Statements contained herein. There were no impairment charges recorded duringBased on the yearsanalysis performed, management determined that an allowance for credit losses on the Company's AFS securities was not necessary at December 31, 2021.
The credit loss model under ASC 326-20, applicable to HTM securities, requires recognition of lifetime expected credit losses through an allowance account at the time the security is purchased. For the year ended December 31, 2019, 2018,2021, the Company recognized a recovery of credit losses on HTM securities of $1.6 million, compared to a provision for credit losses of $4.1 million for the same period in 2020, resulting in a total allowance of $5.2 million and 2017.
The Company does not consider any securities to be other-than-temporarily impaired$6.8 million as of December 31, 2019, 2018,2021 and 2017. However,2020, respectively.
45
Loans HFS
The Company acquired loans held for sale initially as part of the AmeriHome acquisition and, as part of its ongoing mortgage banking business, the Company cannot guaranteecontinues to purchase residential mortgage loans with the intention to sell these loans at a later date. The following is a summary of these loans by type:
December 31, 2021
(in millions)
Government-insured or guaranteed:
EBO (1)$1,692.8
Non-EBO1,396.6
Total government-insured or guaranteed3,089.4
Agency-conforming2,482.9
Non-agency62.8
Total loans HFS$5,635.1
(1)    EBO loans are delinquent loans repurchased under the terms of the GNMA MBS program that OTTI will not occur in future periods. Atcan be resold when loans are brought current.
The Company had no loans HFS as of December 31, 2019, the Company has the intent and ability to retain its investments for a period of time sufficient to allow for any anticipated recovery in fair value.

2020.
Loans HFI
The table below summarizes the distribution of the Company’s held for investment loan portfolio at the end of each of the periods indicated:portfolio: 
  December 31,
  2019 2018 2017 2016 2015
  (in thousands)
Loans, held for investment          
Commercial and industrial $9,391,760
 $7,765,100
 $6,841,247
 $5,859,446
 $5,264,856
Commercial real estate - non-owner occupied 5,261,018
 4,223,427
 3,911,313
 3,549,876
 2,289,480
Commercial real estate - owner occupied 2,320,237
 2,329,205
 2,245,060
 2,015,671
 2,085,738
Construction and land development 1,971,633
 2,155,625
 1,647,726
 1,489,488
 1,143,228
Residential real estate 2,147,652
 1,203,613
 425,291
 258,734
 322,265
Consumer 56,932
 69,995
 48,583
 38,572
 26,474
Deferred loan fees and costs (47,739) (36,336) (25,285) (22,260) (19,187)
Loans, net of deferred loan fees and costs 21,101,493
 17,710,629
 15,093,935
 13,189,527
 11,112,854
Allowance for credit losses (167,797) (152,717) (140,050) (124,704) (119,068)
Total loans HFI $20,933,696
 $17,557,912
 $14,953,885
 $13,064,823
 $10,993,786
December 31,
20212020Increase
(Decrease)
(in millions)
Warehouse lending$5,155.9 $4,340.2 $815.8 
Municipal & nonprofit1,579.2 1,728.8 (149.7)
Tech & innovation1,417.8 1,403.0 14.8 
Equity fund resources3,829.8 1,145.3 2,684.5 
Other commercial and industrial6,465.7 5,911.2 554.6 
CRE - owner occupied1,723.7 1,909.3 (185.5)
Hotel franchise finance2,534.0 1,983.9 550.1 
Other CRE - non-owner occupied3,951.8 3,640.2 311.6 
Residential9,242.8 2,378.5 6,864.3 
Construction and land development3,005.8 2,429.4 576.4 
Other168.9 183.2 (14.3)
Total loans HFI39,075.4 27,053.0 12,022.4 
Allowance for credit losses(252.5)(278.9)26.4 
Total loans HFI, net of allowance$38,822.9 $26,774.1 $12,048.8 
Loans that are held for investmentclassified as HFI are stated at the amount of unpaid principal, adjusted for net deferred fees and costs, premiums and discounts purchase accounting fair value adjustments,on acquired and purchased loans, and an allowance for credit losses. Net deferred loan fees of $85.7 million and $75.4 million reduced the carrying value of loans as of December 31, 20192021 and 2018 total $47.7 million and $36.3 million, respectively, which is a reduction in the carrying value of loans.2020, respectively. Net unamortized purchase premiums on secondary market loan purchases total $29.9acquired and purchased loans of $184.8 million and $2.0$26.0 million as of December 31, 2019 and 2018, respectively. Total loans held for investment are also net of interest rate and credit marks on acquired loans, which are a net reduction inincreased the carrying value of loans. Interest rate marks were $3.8 million and $7.1 million as of December 31, 2019 and 2018, respectively. Credit marks were $6.5 million and $14.6 million as of December 31, 2019 and 2018, respectively.
As of December 31, 2019, the Company also had $21.8 million of HFS loans. There were no HFS loans as of December 31, 2018.2021 and 2020, respectively.


46
The following table sets forth the amount of loans including HFS loans, outstanding by type of loan as of December 31, 20192021 that were contractually due in one year or less, more than one year and less than five years, and more than five years based on remaining scheduled repayments of principal. Lines of credit or other loans having no stated final maturity and no stated schedule of repayments are reported as due in one year or less. The table also presents an analysis of the rate structure for loans within the same maturity time periods. Actual cash flows from these loans may differ materially from contractual maturities due to prepayment, refinancing, or other factors.
  Due in one year or less Due after one year to five years Due after five years Total
  (in thousands)
Commercial and industrial        
Floating rate $2,451,864
 $3,441,591
 $1,369,159
 $7,262,614
Fixed rate 91,335
 833,937
 1,215,960
 2,141,232
Commercial real estate — non-owner occupied        
Floating rate 543,071
 2,113,368
 642,467
 3,298,906
Fixed rate 190,053
 1,194,158
 562,517
 1,946,728
Commercial real estate — owner occupied        
Floating rate 82,498
 192,699
 929,909
 1,205,106
Fixed rate 51,837
 301,032
 758,938
 1,111,807
Construction and land development        
Floating rate 746,293
 932,849
 142,057
 1,821,199
Fixed rate 24,303
 57,846
 48,808
 130,957
Residential real estate        
Floating rate 25,962
 35,122
 719,539
 780,623
Fixed rate 3,218
 6,888
 1,356,935
 1,367,041
Consumer        
Floating rate 31,735
 12,063
 2,350
 46,148
Fixed rate 3,477
 3,509
 3,949
 10,935
Total $4,245,646
 $9,125,062
 $7,752,588
 $21,123,296
Due in one year or lessDue after one year to five yearsDue after five years to fifteen yearsDue after fifteen yearsTotal
(in millions)
Warehouse lending
Variable rate$3,295.3 $1,794.9 $6.9 $— $5,097.1 
Fixed rate39.0 19.8 — — 58.8 
Municipal & nonprofit
Variable rate— 39.1 397.7 59.5 496.3 
Fixed rate1.8 57.1 612.5 411.5 1,082.9 
Tech & innovation
Variable rate137.1 1,261.9 — — 1,399.0 
Fixed rate3.1 15.7 — — 18.8 
Equity fund resources
Variable rate2,157.9 1,664.6 7.3 — 3,829.8 
Fixed rate— — — — — 
Other commercial and industrial
Variable rate707.5 2,639.1 1,575.2 18.1 4,939.9 
Fixed rate144.3 1,092.9 280.2 8.4 1,525.8 
CRE - owner occupied
Variable rate33.1 294.5 478.3 100.7 906.6 
Fixed rate39.5 280.8 471.8 25.0 817.1 
Hotel franchise finance
Variable rate261.3 1,556.1 — — 1,817.4 
Fixed rate63.1 591.1 62.4 — 716.6 
Other CRE - non-owner occupied
Variable rate610.1 1,630.1 370.6 28.9 2,639.7 
Fixed rate185.2 754.9 371.3 0.7 1,312.1 
Residential
Variable rate8.2 15.8 3.3 562.5 589.8 
Fixed rate4.0 1.5 42.8 8,604.7 8,653.0 
Construction and land development
Variable rate806.6 1,874.9 89.0 4.8 2,775.3 
Fixed rate54.8 161.0 14.7 — 230.5 
Other
Variable rate77.1 14.8 15.2 2.7 109.8 
Fixed rate4.2 32.1 22.8 — 59.1 
Total$8,633.2 $15,792.7 $4,822.0 $9,827.5 $39,075.4 
As of December 31, 2019,2021, approximately $9.7$18.3 billion, or 67.6%74.3%, of total variable rate loans were subject to rate floors with a weighted average interest rate of 4.8%4.0%. At December 31, 2018,2020, approximately $8.3$13.7 billion, or 69.3%75.3% of total variable rate loans were subject to rate floors with a weighted average interest rate of 4.8%4.4%. At December 31, 2019,2021, total loans consisted of 68.2%63.0% with floatingvariable rates and 31.8%37.0% with fixed rates, compared to 67.3%67.5% with floatingvariable rates and 32.7%32.5% with fixed rates at December 31, 2018.2020.
The Company began offering three alternative rate indices (including SOFR, Ameribor, and BSBY) on its lending products to its customers in the second half of 2021. Existing variable rate loan contracts contain LIBOR replacement language, which allow for conversion to a different rate index and spread adjustment, if necessary.
47
Concentrations of Lending Activities
The Company monitors concentrations within four broad categories:of lending activities at the product collateral, geography, and industry.borrower relationship level. The Company’s loan portfolio includes significant credit exposure to the CRE market. AtCommercial and industrial loans made up 47% and 53% of the Company's HFI loan portfolio as of December 31, 20192021 and 2018,2020, respectively. In addition, CRE related loans accounted for approximately 45%29% and 49%38% of total loans, at December 31, 2021 and 2020 respectively. Substantially all of these CRE loans are secured by first liens with an initial loan to value ratio of generally not more than 75%. Approximately 31%23% and 36%28% of these CRE loans, excluding construction and land loans, were owner occupiedowner-occupied at December 31, 20192021 and 2018,2020, respectively. No borrower relationships at both the commitment and funded loan level exceeded 5% of total HFI loans as of December 31, 2021 and 2020.
Impaired loans
A loan is identified as impaired when it is no longer probable that interest and principal will be collected according to the contractual terms of the original loan agreement. Impaired loans are measured for reserve requirements in accordance with ASC 310 based on the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral less applicable disposition costs if the loan is collateral dependent. The amount of an impairment reserve, if any, and any subsequent changes are charged against the allowance for credit losses.
In addition to the Company's own internal loan review process, regulators may from time to time direct the Company to modify loan grades, loan impairment calculations, or loan impairment methodology.

Non-performing Assets
Total non-performing loans increaseddecreased by $19.5 million, or 30.1%, at December 31, 2019 to $84.3 million from $64.8$72.8 million at December 31, 2018.2021 to $75.6 million from $148.4 million at December 31, 2020.
December, 31
20212020
(dollars in millions)
Total nonaccrual loans (1)$72.6 $115.2 
Loans past due 90 days or more on accrual status— — 
Accruing troubled debt restructured loans3.0 33.2 
Total nonperforming loans75.6 148.4 
Other assets acquired through foreclosure, net$11.7 $1.4 
Nonaccrual loans to funded HFI loans0.19 %0.43 %
Loans past due 90 days or more on accrual status to funded HFI loans— — 
  December, 31
  2019 2018 2017 2016 2015
  (dollars in thousands)
Total non-accrual loans (1) $55,968
 $27,746
 $43,925
 $40,272
 $48,381
Loans past due 90 days or more on accrual status —
 594
 43
 1,067
 3,028
Accruing troubled debt restructured loans 28,356
 36,458
 42,431
 53,637
 70,707
Total nonperforming loans, excluding loans acquired with deteriorated credit quality 84,324
 64,798
 86,399
 94,976
 122,116
Other impaired loans 31,979
 47,454
 12,155
 4,233
 6,758
Total impaired loans $116,303
 $112,252
 $98,554
 $99,209
 $128,874
Other assets acquired through foreclosure, net $13,850
 $17,924
 $28,540
 $47,815
 $43,942
Non-accrual loans to gross loans held for investment 0.27% 0.16% 0.29% 0.31% 0.44%
Loans past due 90 days or more on accrual status to gross loans held for investment —
 0.00
 0.00
 0.01
 0.03
Interest income that would have been recorded under the original terms of non-accrual loans 2,170
 2,268
 2,444
 2,045
 2,549
(1)Includes non-accrual TDR loans of $17.8 million and $28.4 million at December 31, 2021 and 2020, respectively.
(1)Includes non-accrual TDR loans of $10.6 million and $8.0 million at December 31, 2019 and 2018, respectively.
Interest income that would have been recorded under the original terms of nonaccrual loans was $5.3 million, $5.0 million, and $2.2 million for the years ended December 31, 2021, 2020, and 2019, respectively.
The composition of non-accrualnonaccrual HFI loans by loan type and byportfolio segment were as follows: 
December 31, 2021
Nonaccrual
Balance		Percent of Nonaccrual BalancePercent of
Total HFI Loans
(dollars in millions)
Tech & innovation$13.3 18.3 %0.03 %
Equity fund resources0.6 0.8 0.00 
Other commercial and industrial16.1 22.2 0.05 
CRE - owner occupied13.0 17.9 0.03 
Other CRE - non-owner occupied13.1 18.0 0.03 
Residential15.1 20.8 0.05 
Construction and land development1.0 1.4 0.00 
Other0.4 0.6 0.00 
Total non-accrual loans$72.6 100.0 %0.19 %
  December 31, 2019 December 31, 2018
  Non-accrual
Balance		 Percent of Non-Accrual Balance Percent of
Total HFI Loans		 Non-accrual
Balance		 Percent of Non-Accrual Balance Percent of
Total HFI Loans
  (dollars in thousands)
Commercial and industrial $24,501
 43.77% 0.12% $15,090
 54.39% 0.09%
Commercial real estate 23,720
 42.38
 0.11
 —
 —
 —
Construction and land development 2,147
 3.84
 0.01
 476
 1.71
 0.00
Residential real estate 5,600
 10.01
 0.03
 11,939
 43.03
 0.07
Consumer —
 —
 —
 241
 0.87
 0.00
Total non-accrual loans $55,968
 100.00% 0.27% $27,746
 100.00% 0.16%
December 31, 2020
Nonaccrual
Balance		Percent of Nonaccrual BalancePercent of
Total HFI Loans
(dollars in millions)
Municipal & nonprofit$1.9 1.7 %0.01 %
Tech & innovation13.5 11.7 0.05 
Other commercial and industrial17.2 14.9 0.06 
CRE - owner occupied34.5 29.9 0.13 
Other CRE - non-owner occupied36.5 31.7 0.14 
Residential11.4 9.9 0.04 
Other0.2 0.2 0.00 
Total non-accrual loans$115.2 100.0 %0.43 %
48
  December 31, 2019 December 31, 2018
  Nonaccrual Loans Percent of Segment's Total HFI Loans Nonaccrual Loans Percent of Segment's Total
HFI Loans
  (dollars in thousands)
Arizona $29,062
 0.76% $8,312
 0.23%
Nevada 8,001
 0.36
 6,374
 0.32
Southern California 1,759
 0.08
 8,564
 0.40
Northern California 5,193
 0.40
 4,255
 0.33
Public & Nonprofit Finance 2,147
 0.13
 —
 —
Technology and Innovation 5,867
 0.38
 —
 —
Other NBLs 3,939
 0.06
 241
 0.00
Total non-accrual loans $55,968
 0.27% $27,746
 0.16%

Troubled Debt Restructured Loans
A TDR loan is a loan that is granted a concession,on which the Company, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that the lenderCompany would not otherwise consider. The loan terms that have been modified or restructured due to a borrower’s financial situation include, but are not limited to, a reduction in the stated interest rate, an extension of the maturity or renewal of the loan at an interest rate below current market, a reduction in the face amount of the debt, a reduction in the accrued interest, or deferral of interest payments. The majority of the Company's modifications are extensions deferrals, renewals, and rewrites. Ain terms or deferral of payments which result in no lost principal or interest followed by reductions in interest rates or accrued interest. Consistent with regulatory guidance, a TDR loan is also considered impaired. Generally, a loan that is subsequently modified at an effective market rate of interest is no longer disclosedin another restructuring agreement but has shown sustained performance and classification as a TDR, in years subsequent towill be removed from TDR status provided that the restructuring if it is performing based onmodified terms were market-based at the terms specified by the restructuring agreement. However, such loans continue to be considered impaired.time of modification.
As of December 31, 2019 and 2018, the aggregate amount of loans classified as impaired was $116.3 million and $112.3 million, respectively, a net increase of 3.6%. The total specificfollowing table presents TDR loans:
December 31, 2021December 31, 2020
Number of LoansRecorded InvestmentNumber of LoansRecorded Investment
(dollars in millions)
Tech & innovation2 2$2.1 4 $20.4 
Other commercial and industrial7 6.2 9 22.9 
CRE - owner occupied1 0.5 4 2.6 
Hotel franchise finance— — 2 5.5 
Other CRE - non-owner occupied5 11.0 3 10.2 
Construction and land development1 1.0 — — 
Total16 $20.8 22 $61.6 
The Company had an allowance for credit losses related toon these loans was $2.8of zero and $2.7 million and $0.7 million atas of December 31, 20192021 and 2018,2020, respectively. The Company had $28.4 million and $36.5 million inThere were no commitments outstanding on TDR loans classified as accruing restructured loans atof December 31, 2019 and 2018, respectively.
The following tables present a breakdown2021, compared to $0.6 million as of total impaired loans and the related specific reserves for the periods indicated: 
  December 31, 2019
  Impaired
Balance		 Percent of Impaired Balance Percent of
Total HFI Loans		 Reserve
Balance		 Percent of Reserve Balance Percent of
Total Allowance
  (dollars in thousands)
Commercial and industrial $48,984
 42.12% 0.23% $1,050
 37.83% 0.62%
Commercial real estate 53,274
 45.81
 0.25
 1,219
 43.91
 0.73
Construction and land development 8,421
 7.23
 0.04
 507
 18.26
 0.30
Residential real estate 5,600
 4.82
 0.03
 —
 —
 —
Consumer 24
 0.02
 0.00
 —
 —
 —
Total impaired loans $116,303
 100.00% 0.55% $2,776
 100.00% 1.65%
  December 31, 2018
  Impaired
Balance		 Percent of Impaired Balance Percent of
Total HFI Loans		 Reserve
Balance		 Percent of Reserve Balance Percent of
Total Allowance
  (dollars in thousands)
Commercial and industrial $63,896
 56.92% 0.36% $621
 91.19% 0.41%
Commercial real estate 18,937
 16.87
 0.11
 —
 —
 —
Construction and land development 9,403
 8.38
 0.05
 —
 —
 —
Residential real estate 19,744
 17.59
 0.11
 60
 8.81
 0.04
Consumer 272
 0.24
 0.00
 —
 —
 —
Total impaired loans $112,252
 100.00% 0.63% $681
 100.00% 0.45%
Impaired loans by segment at December 31, 2019 and 2018 were as follows:2020.

49
  December 31,
  2019 2018
  (in thousands)
Arizona $62,175
 $34,899
Nevada 25,667
 33,860
Southern California 6,630
 8,576
Northern California 9,878
 4,928
Public & Nonprofit Finance 2,147
 —
Technology & Innovation 5,867
 29,748
Other NBLs 3,939
 241
Total impaired loans $116,303
 $112,252


The amountTable of interest income recognized on impaired loans for the years ended December 31, 2019, 2018, and 2017 was approximately $5.0 million, $4.5 million, and $4.0 million, respectively.Contents
Allowance for Credit Losses on HFI Loans
The following table summarizes the activity in the Company's allowance for credit losses consists of the allowance for credit losses on loans and an allowance for credit losses on unfunded loan commitments. The allowance for credit losses on HTM securities is estimated separately from loans and is discussed within the period indicated: 
  Year Ended December 31,
  2019 2018 2017 2016 2015
  (dollars in thousands)
Allowance for credit losses:          
Balance at beginning of period $152,717
 $140,050
 $124,704
 $119,068
 $110,216
Provision charged to operating expense:          
Commercial and industrial 3,039
 13,198
 14,268
 10,638
 18,411
Commercial real estate 11,674
 2,177
 5,347
 (2,449) (9,762)
Construction and land development 1,431
 1,482
 (2,805) 1,732
 (1,454)
Residential real estate 2,620
 5,867
 318
 (2,137) (3,539)
Consumer (264) 276
 122
 216
 (456)
Total Provision 18,500
 23,000
 17,250
 8,000
 3,200
Recoveries of loans previously charged-off:          
Commercial and industrial (4,265) (2,427) (3,112) (3,991) (3,754)
Commercial real estate (909) (1,237) (2,897) (5,690) (4,139)
Construction and land development (91) (1,433) (1,229) (485) (1,872)
Residential real estate (412) (947) (1,778) (875) (2,181)
Consumer (25) (43) (84) (144) (203)
Total recoveries (5,702) (6,087) (9,100) (11,185) (12,149)
Loans charged-off:          
Commercial and industrial 8,120
 15,034
 8,186
 12,477
 5,550
Commercial real estate 139
 233
 2,269
 728
 —
Construction and land development 141
 1
 —
 18
 —
Residential real estate 594
 1,038
 447
 165
 820
Consumer 128
 114
 102
 161
 127
Total charged-off 9,122
 16,420
 11,004
 13,549
 6,497
Net charge-offs (recoveries) 3,420
 10,333
 1,904
 2,364
 (5,652)
Balance at end of period $167,797
 $152,717
 $140,050
 $124,704
 $119,068
Net charge-offs (recoveries) to average loans outstanding 0.02% 0.06% 0.01% 0.02% (0.06)%
Allowance for credit losses to gross loans 0.80
 0.86
 0.93
 0.95
 1.07
Allowance for credit losses to gross organic loans 0.82
 0.92
 1.03
 1.11
 1.23

Investment Securities section.
The following table summarizes the allocation of the allowance for credit losses on HFI loans by loan type. However,portfolio segment:
December 31, 2021December 31, 2020
Allowance for credit lossesPercent of total allowance for credit lossesPercent of loan type to total HFI loansAllowance for credit lossesPercent of total allowance for credit lossesPercent of loan type to total HFI loans
(dollars in millions)(dollars in millions)
Warehouse lending$3.0 1.2 %13.2 %$3.4 1.2 %16.0 %
Municipal & nonprofit13.7 5.4 4.1 15.9 5.7 6.4 
Tech & innovation25.7 10.2 3.6 33.4 12.0 5.2 
Equity fund resources9.6 3.8 9.8 1.9 0.7 4.2 
Other commercial and industrial103.6 41.0 16.5 94.7 33.9 21.8 
CRE - owner occupied10.6 4.2 4.4 18.6 6.7 7.1 
Hotel franchise finance41.5 16.4 6.5 43.3 15.5 7.3 
Other CRE - non-owner occupied16.9 6.7 10.1 39.9 14.3 13.5 
Residential12.5 5.0 23.7 0.8 0.3 8.8 
Construction and land development12.5 5.0 7.7 22.0 7.9 9.0 
Other2.9 1.1 0.4 5.0 1.8 0.7 
Total$252.5 100.0 %100.0 %$278.9 100.0 %100.0 %
During the allocation of a portion ofyears ended December 31, 2021 and 2020, net loan charge-offs to average loans outstanding was 0.02% and 0.06%, respectively.
In addition to the allowance for credit losses on funded HFI loans, the Company maintains a separate allowance for credit losses related to one category of loans does not preclude its availability to absorb lossesoff-balance sheet credit exposures, including unfunded loan commitments. This allowance balance totaled $37.6 million and $37.0 million at December 31, 2021 and 2020, respectively, and is included in other categories. Other liabilities on the Consolidated Balance Sheets.

50
  Commercial and Industrial Commercial Real Estate Construction and Land Development Residential Real Estate Consumer Total
  (dollars in thousands)
December 31, 2019            
Allowance for credit losses $82,302
 $47,273
 $23,894
 $13,714
 $614
 $167,797
Percent of total allowance for credit losses 49.0% 28.2% 14.2% 8.2% 0.4% 100.0%
Percent of loan type to total HFI loans 44.5
 35.8
 9.2
 10.2
 0.3
 100.0
December 31, 2018            
Allowance for credit losses $83,118
 $34,829
 $22,513
 $11,276
 $981
 $152,717
Percent of total allowance for credit losses 54.4% 22.8% 14.8% 7.4% 0.6% 100.0%
Percent of loan type to total HFI loans 43.8
 36.9
 12.1
 6.8
 0.4
 100.0
December 31, 2017            
Allowance for credit losses $82,527
 $31,648
 $19,599
 $5,500
 $776
 $140,050
Percent of total allowance for credit losses 58.9% 22.6% 14.0% 3.9% 0.6% 100.0%
Percent of loan type to total HFI loans 45.2
 40.8
 10.9
 2.8
 0.3
 100.0
December 31, 2016            
Allowance for credit losses $73,333
 $25,673
 $21,175
 $3,851
 $672
 $124,704
Percent of total allowance for credit losses 58.8% 20.6% 17.0% 3.1% 0.5% 100.0%
Percent of loan type to total HFI loans 44.3
 42.1
 11.3
 2.0
 0.3
 100.0
December 31, 2015            
Allowance for Credit Losses $71,181
 $23,160
 $18,976
 $5,278
 $473
 $119,068
Percent of Total Allowance for Credit Losses 59.8% 19.5% 15.9% 4.4% 0.4% 100.0%
Percent of loan type to total HFI loans 47.4
 39.3
 10.2
 2.9
 0.2
 100.0
Problem Loans
The Company classifies loans consistent with federal banking regulations using a nine category grading system. These loan grades are described in further detail in "Item 1. Business” of this Form 10-K. The following table presents information regarding potential and actual problem loans, consisting of loans graded as Special Mention, Substandard, Doubtful, and Loss, but which are still performing, and excluding acquired loans:performing: 
  December 31, 2019
  Number of Loans Loan Balance Percent of Loan Balance Percent of Total HFI Loans
  (dollars in thousands)
Commercial and industrial 73
 $96,464
 43.06% 0.46%
Commercial real estate 37
 107,839
 48.14
 0.51
Construction and land development 10
 18,971
 8.47
 0.09
Residential real estate 3
 727
 0.33
 0.00
Consumer 1
 10
 0.00
 0.00
Total 124
 $224,011
 100.00% 1.06%
December 31, 2021
Number of LoansProblem Loan BalancePercent of Problem Loan BalancePercent of Total HFI Loans
(dollars in millions)
Tech & innovation13 $38.9 11.4 %0.10 %
Other commercial and industrial66 60.6 17.9 0.16 
CRE - owner occupied14 16.0 4.7 0.04 
Hotel franchise finance9 138.7 40.9 0.35 
Other CRE - non-owner occupied5 11.6 3.4 0.03 
Residential35 15.7 4.6 0.04 
Construction and land development7 28.1 8.3 0.07 
Other17 29.8 8.8 0.08 
Total166 $339.4 100.0 %0.87 %
  December 31, 2018
  Number of Loans Loan Balance Percent of Loan Balance Percent of Total
HFI Loans
  (dollars in thousands)
Commercial and industrial 107
 $125,585
 62.37% 0.71%
Commercial real estate 42
 71,116
 35.32
 0.40
Construction and land development 3
 4,040
 2.01
 0.02
Residential real estate 1
 527
 0.26
 0.00
Consumer 2
 75
 0.04
 0.00
Total 155
 $201,343
 100.00% 1.13%
December 31, 2020
Number of LoansProblem Loan BalancePercent of Problem Loan BalancePercent of Total HFI Loans
(dollars in millions)
Tech & innovation4 $15.3 3.6 %0.06 %
Other commercial and industrial71 74.3 17.6 0.27 
CRE - owner occupied37 79.8 18.9 0.30 
Hotel franchise finance9 116.9 27.6 0.43 
Other CRE - non-owner occupied9 15.8 3.7 0.06 
Construction and land development7 47.3 11.2 0.17 
Other21 73.4 17.4 0.27 
Total158 $422.8 100.0 %1.56 %

Mortgage Servicing Rights
As of December 31, 2021, the fair value of the Company's MSRs related to residential mortgage loans totaled $698.0 million.
The following is a summary of the UPB of loans underlying the Company's MSR portfolio by type:
December 31, 2021
(in millions)
FNMA and FHLMC$38,753.9
GNMA14,379.3
Non-agency1,214.4
Total unpaid principal balance of loans$54,347.6
Goodwill and Other Intangible Assets
Goodwill represents the excess consideration paid for net assets acquired in a business combination over their fair value. Goodwill and other intangible assets acquired in a business combination that are determined to have an indefinite useful life are not subject to amortization, but are subsequently evaluated for impairment at least annually. The Company has goodwill of $289.9 million and intangible assets totaling $7.7$491.3 million as of December 31, 2019, which have been allocated2021. The increase from $289.9 million at December 31, 2020 is attributable to the Nevada, Northern California, Technology & Innovation,AmeriHome acquisition in April 2021. See "Note 2. Mergers, Acquisitions and HFF operating segments.Dispositions" for further discussion of the acquisition.
The Company performs its annual goodwill and intangibles impairment tests as of October 1 each year, or more often if events or circumstances indicate that the carrying value may not be recoverable. During the years ended December 31, 2019, 2018, and 2017, there were no events or circumstances that indicated an interim impairment test of goodwill or other intangible assets was necessary and, basedBased on the Company's annual goodwill and intangibles impairment tests as of October 1 of each of theseduring the years ended December 31, 2021, 2020, and 2019, it was determined that goodwill and intangible assets arewere not impaired.
51
The following is a summary of acquired intangible assets:
 December 31, 2019 December 31, 2018December 31, 2021December 31, 2020
 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
 (in thousands)(in millions)
Subject to amortization            Subject to amortization
Core deposit intangibles $14,647
 $7,284
 $7,363
 $14,647
 $5,737
 $8,910
Core deposit intangibles$14.6 $10.2 $4.4 $14.6 $8.8 $5.8 
Customer relationship intangiblesCustomer relationship intangibles2.5 0.6 1.9 2.5 0.1 2.4 
Correspondent customer relationshipsCorrespondent customer relationships76.0 2.8 73.2 — — — 
Trade name - AmeriHomeTrade name - AmeriHome9.5 0.4 9.1 — — — 
Operating licensesOperating licenses55.5 1.0 54.5 — — — 
$158.1 $15.0 $143.1 $17.1 $8.9 $8.2 
            
 December 31, 2019 December 31, 2018December 31, 2021December 31, 2020
 Gross Carrying Amount Impairment Net Carrying Amount Gross Carrying Amount Impairment Net Carrying AmountGross Carrying AmountImpairmentNet Carrying AmountGross Carrying AmountImpairmentNet Carrying Amount
 (in thousands)(in millions)
Not subject to amortization            Not subject to amortization
Trade name $350
 $—
 $350
 $350
 $—
 $350
Trade name - Bridge BankTrade name - Bridge Bank$0.4 $— $0.4 $0.4 $— $0.4 
Deferred Tax Assets
Net deferred tax assets decreased $14.0As of December 31, 2021, the net DTA balance totaled $20.9 million, to $18.0a decrease of $10.4 million from $31.3 million as of December 31, 2018. This2020. The overall decrease in net deferred tax assets was due to an increase in deferred tax liabilities, not fully offset by an increase in deferred tax assets. The increase in deferred tax liabilities from December 31, 2020 is primarily attributable to an increase in mortgage servicing rights from AmeriHome operations and a decrease in deferred insurance premiums related to the result ofCompany’s insurance captive, which was in a deferred tax asset position in the prior year. These increases were offset in part by a decrease in deferred tax liabilities related to a decrease in the fair market value of AFS securities. In addition, there wasThe increase in deferred tax assets from December 31, 2020 is primarily attributable to a large decreasechange in tax planning strategy pertaining to the overall estimated loss reserve, which was largely offset by increases to DTLs related todepreciation election on premises and equipment, and income associated withwhich was in a deferred tax credits for lease pass-through transactions (50(d) income).liability position in the prior year.
As of December 31, 2019,2021 and 2020, the Company has no deferred tax valuation allowance. As of December 31, 2018, the Company's deferred tax valuation allowance of $2.4 million related to net capital loss carryovers.
Deposits
Deposits are the primary source for funding the Company's asset growth. Total deposits increased to $22.8$47.6 billion at December 31, 20192021, from $19.2$31.9 billion at December 31, 2018,2020, an increase of $3.6$15.7 billion, or 18.9%49.1%. TheBy deposit type, the increase in deposits is attributable to an increase across all deposit types, with the largest increases in non-interest-bearing demand deposits of $7.9 billion, savings and money market depositsaccounts of $1.8$4.9 billion, and non-interest-bearinginterest-bearing demand deposits of $1.1$2.5 billion, and certificates of deposit of $398.6 million from December 31, 2018.2020.
WAB is a participant in the Promontory Interfinancial Network, a network that offers deposit placement services such as CDARS and ICS, which offer products that qualify large deposits for FDIC insurance. At December 31, 2019,2021, the Company has $407.7had $729.2 million of CDARS deposits and $661.8 million$1.8 billion of ICS deposits, compared to $322.9$496.4 million of CDARS deposits and $706.9 million$1.3 billion of ICS deposits at December 31, 2018.2020. At December 31, 20192021 and 2018,2020, the Company also has $1.1had wholesale brokered deposits of $1.8 billion and $718.2$554.8 million, respectively, of wholesale brokered deposits.respectively.
In addition, deposits for which the Company provides account holders with earnings credits or referral fees totaled $3.1$10.8 billion and $2.3$5.9 billion at December 31, 20192021 and 2018,2020, respectively. The Company incurred $30.5$27.4 million and $18.0$17.0 million in deposit related costs on these deposits during the year ended December 31, 20192021 and 2018,2020, respectively. These costs are reported in depositDeposit costs as part of non-interest expense. The increase in these costs relatesfrom the prior year is due to both an increase in depositsdeposit balances eligible for earnings credits along with higher average earnings credits paid during the first halfor referral fees.

52

The average balances and weighted average rates paid on deposits are presented below:
Year Ended December 31,
202120202019
Average BalanceRateAverage BalanceRateAverage BalanceRate
(dollars in millions)
Interest-bearing transaction accounts$4,750.8 0.13 %$3,488.3 0.26 %$2,545.8 0.82 %
Savings and money market accounts15,814.3 0.21 10,008.9 0.35 8,125.8 1.18 
Certificates of deposit1,849.5 0.46 1,997.6 1.33 2,117.2 1.98 
Total interest-bearing deposits22,414.6 0.21 15,494.8 0.45 12,788.8 1.24 
Non-interest-bearing demand deposits19,415.6 — 11,465.5 — 8,246.2 — 
Total deposits$41,830.2 0.11 %$26,960.3 0.26 %$21,035.0 0.75 %
  Year Ended December 31,
  2019 2018 2017
  Average Balance Rate Average Balance Rate Average Balance Rate
  (dollars in thousands)
Interest-bearing transaction accounts $2,545,806
 0.82% $1,891,160
 0.61% $1,467,231
 0.27%
Savings and money market accounts 8,125,832
 1.18
 6,501,241
 0.85
 6,208,057
 0.42
Certificates of deposit 2,117,177
 1.98
 1,748,675
 1.37
 1,560,896
 0.76
Total interest-bearing deposits 12,788,815
 1.24
 10,141,076
 0.89
 9,236,184
 0.45
Non-interest-bearing demand deposits 8,246,232
 —
 7,712,791
 —
 6,788,783
 —
Total deposits $21,035,047
 0.75% $17,853,867
 0.51% $16,024,967
 0.26%
CertificatesAt December 31, 2021 and 2020, the Company had total uninsured deposits of Deposit$26.9 billion and $18.2 billion, respectively. Total U.S. time deposits in excess of $100,000 or More
the FDIC insurance limit were $465.5 million and $569.8 million at December 31, 2021 and 2020, respectively. The table below discloses the remaining maturity for certificatesestimated uninsured time deposits: 
December 31, 2021
(in millions)
3 months or less$190.3
3 to 6 months152.3
6 to 12 months158.0
Over 12 months36.2
Total$536.8
Uninsured deposit information presented herein is estimated using the same methodologies utilized for regulatory reporting, where applicable. Specific to uninsured time deposits, the Company made certain assumptions to estimate uninsured amounts by maturity. At the account level, deposit insurance was assumed to apply first to non-time deposits, then any remaining insurance amounts were applied to maturity groupings on a pro-rata basis, based on the depositor's total amount of deposit of $100,000 or more: 
  December 31,
  2019 2018
  (in thousands)
3 months or less $945,551
 $682,549
3 to 6 months 596,467
 446,847
6 to 12 months 597,496
 409,736
Over 12 months 101,615
 99,211
Total $2,241,129
 $1,638,343
time deposits.
Other Borrowings
Short-Term Borrowings
The Company from time to time utilizes short-term borrowed funds to support short-term liquidity needs generally created by increased loan demand. The majority of these short-term borrowed funds consist of advances from the FHLB, Federalfederal funds purchased from correspondent banks or the FHLB, and customer repurchase agreements. The Company’s borrowing capacity with the FHLB is determined based on collateral pledged, generally consisting of securities and loans. In addition, the Company has borrowing capacity from other sources, collateralized by securities, including Federal funds purchased and securities sold under agreements to repurchase. Federal funds purchased are unsecured borrowings with other banks. Securities sold under agreements to repurchase, are collateralized by securities andwhich are reflected at the amount of cash received in connection with the transaction, and may require additional collateral based on the fair value of the underlying securities. At December 31, 2019, total short-term borrowed funds consist of customer repurchase agreements of $16.7 million. At December 31, 2018,2021, total short-term borrowed funds consisted of Federalfederal funds purchased of $256.0$675.0 million, FHLB overnight advancessecured borrowings of $235.0$35.3 million, and customer repurchase agreements of $22.4$16.6 million. At December 31, 2020, total short-term borrowed funds consisted of customer repurchase agreements of $16.0 million and FHLB advances of $5.0 million.

Long-Term Borrowings
The Company's long-term borrowings consist of AmeriHome senior notes from the acquisition on April 7, 2021 and credit linked notes issued during the year ended December 31, 2021, inclusive of issuance costs and fair market value adjustments. At December 31, 2021, the carrying value of long-term borrowings totaled $775.0 million. The Company did not have long-term borrowings as of December 31, 2020.

53
Qualifying Debt
Qualifying debt consists of subordinated debt and junior subordinated debt, inclusive of issuance costs and fair market value adjustments. At December 31, 2019,2021, the carrying value of all subordinatedqualifying debt issuances, which includes the fair value of related hedges, was $319.2$895.8 million, compared to $299.4$548.7 million at December 31, 2018.2020. The increase in qualifying debt from December 31, 2020 is primarily related to issuance of $600.0 million of subordinated debt in June 2021, recorded net of issue costs of $8.1 million. This issuance was partially offset by redemptions of subordinated debt totaling $250.0 million during the year ended December 31, 2021.
The junior subordinated debt has contractual balances and maturity dates as follows:
December 31,
Name of TrustMaturity20212020
At fair value(in millions)
BankWest Nevada Capital Trust II2033$15.5 $15.5 
Intermountain First Statutory Trust I203410.3 10.3 
First Independent Statutory Trust I20357.2 7.2 
WAL Trust No. 1203620.6 20.6 
WAL Statutory Trust No. 220375.2 5.2 
WAL Statutory Trust No. 320377.7 7.7 
Total contractual balance66.5 66.5 
FVO on junior subordinated debt0.9 (0.6)
Junior subordinated debt, at fair value$67.4 $65.9 
At amortized cost
Bridge Capital Holdings Trust I2035$12.4 $12.4 
Bridge Capital Holdings Trust II20365.1 5.1 
Total contractual balance17.5 17.5 
Purchase accounting adjustment, net of accretion (1)(4.2)(4.5)
Junior subordinated debt, at amortized cost$13.3 $13.0 
Total junior subordinated debt$80.7 $78.9 
    December 31,
Name of Trust Maturity 2019 2018
At fair value   (in thousands)
BankWest Nevada Capital Trust II 2033 $15,464
 $15,464
Intermountain First Statutory Trust I 2034 10,310
 10,310
First Independent Statutory Trust I 2035 7,217
 7,217
WAL Trust No. 1 2036 20,619
 20,619
WAL Statutory Trust No. 2 2037 5,155
 5,155
WAL Statutory Trust No. 3 2037 7,732
 7,732
Total contractual balance   66,497
 66,497
FVO on junior subordinated debt   (4,812) (17,812)
Junior subordinated debt, at fair value   $61,685
 $48,685
At amortized cost      
Bridge Capital Holdings Trust I 2035 $12,372
 $12,372
Bridge Capital Holdings Trust II 2036 5,155
 5,155
Total contractual balance   17,527
 17,527
Purchase accounting adjustment, net of accretion (1)   (4,845) (5,155)
Junior subordinated debt, at amortized cost   $12,682
 $12,372
       
Total junior subordinated debt   $74,367
 $61,057
(1)The purchase accounting adjustment is being amortized over the remaining life of the trusts, pursuant to accounting guidance.
(1)The purchase accounting adjustment is being amortized over the remaining life of the trusts, pursuant to accounting guidance.
The weighted average interest rate of all junior subordinated debt as of December 31, 20192021 was 4.25%2.55%, which is three-month LIBOR plus the contractual spread of 2.34%, compared to a weighted average interest rate of 5.15%2.58% at December 31, 2018.2020. Subsequent to June 30, 2023, interest rates on the Company's junior subordinated debt will be based on SOFR.


54
Capital Resources
The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements could trigger certain mandatory or discretionary actions that, if undertaken, could have a direct material effect on the Company’s business and financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance sheet items (discussed in "Note 15.18. Commitments and Contingencies" to the Consolidated Financial Statements) as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
In connection with its adoption of CECL on January 1, 2020, the Company elected the five-year CECL transition option that delays the estimated impact on regulatory capital resulting from the adoption of CECL. As a result of this election, the estimated impact of CECL on regulatory capital relative to regulatory capital determined under the prior incurred loss methodology has been delayed for two years, followed by a three-year transition period to phase out the aggregate amount of capital benefit provided during the initial two-year delay. As a result, capital ratios and amounts as of December 31, 2021 exclude the impact of the increased allowance for credit losses related to the adoption of ASC 326.
As a result of the Company's continued commercial loan growth and the acquisition of AmeriHome, the Company undertook various capital actions during the year to ensure that its capital levels remained strong, which included offerings of common and preferred stock as well as issuances of subordinated debt and credit linked notes. As of December 31, 20192021 and 2018,2020, the Company and the Bank's capital ratiosBank exceeded the capital levels necessary to be classified as well-capitalized, thresholds, as defined by the various banking agencies. The actual capital amounts and ratios for the Company and the Bank are presented in the following tables as of the periods indicated:
Total CapitalTier 1 CapitalRisk-Weighted AssetsTangible Average AssetsTotal Capital RatioTier 1 Capital RatioTier 1 Leverage RatioCommon Equity
Tier 1
(dollars in millions)
December 31, 2021
WAL$5,499.0 $4,444.3 $44,697.0 $56,972.9 12.3 %9.9 %7.8 %9.1 %
WAB5,119.9 4,657.5 44,726.1 56,961.6 11.4 10.4 8.2 10.4 
Well-capitalized ratios10.0 8.0 5.0 6.5 
Minimum capital ratios8.0 6.0 4.0 4.5 
December 31, 2020
WAL$3,872.0 $3,158.2 $31,015.4 $34,349.3 12.5 %10.2 %9.2 %9.9 %
WAB3,619.4 3,078.2 31,140.6 34,367.0 11.6 9.9 9.0 9.9 
Well-capitalized ratios10.0 8.0 5.0 6.5 
Minimum capital ratios8.0 6.0 4.0 4.5 
  Total Capital Tier 1 Capital Risk-Weighted Assets Tangible Average Assets Total Capital Ratio Tier 1 Capital Ratio Tier 1 Leverage Ratio Common Equity
Tier 1
  (dollars in thousands)
                 
December 31, 2019                
WAL $3,257,874
 $2,775,390
 $25,390,142
 $26,110,275
 12.8% 10.9% 10.6% 10.6%
WAB 3,030,301
 2,703,549
 25,452,261
 26,134,431
 11.9
 10.6
 10.3
 10.6
Well-capitalized ratios         10.0
 8.0
 5.0
 6.5
Minimum capital ratios         8.0
 6.0
 4.0
 4.5
                 
December 31, 2018                
WAL $2,897,356
 $2,431,320
 $21,983,976
 $22,204,799
 13.2% 11.1% 10.9% 10.7%
WAB 2,628,650
 2,317,745
 22,040,765
 22,209,700
 11.9
 10.5
 10.4
 10.5
Well-capitalized ratios         10.0
 8.0
 5.0
 6.5
Minimum capital ratios         8.0
 6.0
 4.0
 4.5
Common Stock Repurchase Plan
On December 12, 2018,With the acquisition of AmeriHome, the Company announcedis also required to maintain specified levels of capital to remain in good standing with certain federal government agencies, including FNMA, FHLMC, GNMA, and HUD. These capital requirements are generally tied to the unpaid balances of loans included in the Company's servicing portfolio or loan production volume. Noncompliance with these capital requirements can result in various remedial actions up to, and including, removing the Company's ability to sell loans to and service loans on behalf of the respective agency. The Company believes that it had adopted a common stock repurchase plan, pursuant to which the Company was authorized to repurchase up to $250 million of its shares of common stock through December 31, 2019. The Company had $94.3 millionis in authorized common stock repurchase capacity that expired under the original programcompliance with these requirements as of December 31, 2019. The Company's common stock repurchase program was renewed through December 2020, authorizing the Company to repurchase up to an additional $250.0 million2021.



55
Contractual Obligations and Off-Balance Sheet Arrangements
The Company enters into contracts for services in the ordinary course of business that may require payment for services to be provided in the future and may contain penalty clauses for early termination of the contracts. To meet the financing needs of customers, the Company has financial instruments with off-balance sheet risk, including commitments to extend credit and standby letters of credit. The Company has also committed to irrevocably and unconditionally guarantee the payments or distributions with respect to the holders of preferred securities of the Company's eight statutory business trusts to the extent that the trusts have not made such payments or distributions, including: 1) accrued and unpaid distributions; 2) the redemption price; and 3) upon a dissolution or termination of the trust, the lesser of the liquidation amount and all accrued and unpaid distributions and the amount of assets of the trust remaining available for distribution. The Company does not believe that these off-balance sheet arrangements have or are reasonably likely to have a material effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources. However, there can be no assurance that such arrangements will not have a future effect.

The following table sets forth the Company's significant contractual obligations as of December 31, 2019:
  Payments Due by Period
  Total Less Than 1 Year 1-3 Years 3-5 Years After 5 Years
  (in thousands)
Time deposit maturities $2,376,976
 $2,259,182
 $113,190
 $4,604
 $—
Qualifying debt 409,024
 —
 —
 —
 409,024
Operating lease obligations 90,145
 12,369
 19,637
 18,067
 40,072
Purchase obligations 103,303
 42,683
 49,301
 11,319
 —
Total $2,979,448
 $2,314,234
 $182,128
 $33,990
 $449,096
Purchase obligations primarily relate to contracts for software licensing, maintenance, and outsourced service providers.
Off-balance sheet commitments associated with outstanding letters of credit, commitments to extend credit, and credit card guarantees as of December 31, 2019 are summarized below. Since commitments associated with letters of credit and commitments to extend credit may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements. 
    Amount of Commitment Expiration per Period
  Total Amounts Committed Less Than 1 Year 1-3 Years 3-5 Years After 5 Years
  (in thousands)
Commitments to extend credit $8,348,421
 $2,873,303
 $3,170,848
 $1,299,506
 $1,004,764
Credit card commitments and financial guarantees 302,909
 302,909
 —
 —
 —
Letters of credit 175,778
 156,375
 18,786
 617
 —
Total $8,827,108
 $3,332,587
 $3,189,634
 $1,300,123
 $1,004,764
The following table sets forth certain information regarding short-term borrowings as of December 31, 2019 and the respective prior year-end balances for customer repurchase agreements, FHLB advances, and Federal funds purchased: 
  December 31,
  2019 2018 2017
  (dollars in thousands)
Customer Repurchase Accounts:      
Maximum month-end balance $20,288
 $30,559
 $41,153
Balance at end of year 16,675
 22,411
 26,017
Average balance 17,182
 24,421
 33,842
Federal Funds Purchased      
Maximum month-end balance 335,000
 256,000
 —
Balance at end of year —
 256,000
 —
Average balance 67,851
 20,542
 —
FHLB Advances:      
Maximum month-end balance 380,000
 625,000
 440,000
Balance at end of year —
 235,000
 390,000
Average balance 49,589
 215,699
 29,781
Total Short-Term Borrowed Funds $16,675
 $513,411
 $416,017
Weighted average interest rate at end of year 0.15% 2.46% 1.33%
Weighted average interest rate during year 1.99
 1.73
 0.53

Critical Accounting Policies
The Notes to the Consolidated Financial Statements contain a discussion of the Company's significant accounting policies, including information regarding recently issued accounting pronouncements, adoption of such policies, and the related impact of their adoption. The Company believes that certain of these policies, along with various estimates that it is required to make in recording its financial transactions, are important to have a complete understanding of the Company's financial position. In addition, these estimates require management to make complex and subjective judgments, many of which include matters with a high degree of uncertainty. The following is a summary of these critical accounting policies and significant estimates.
Allowance for credit losses
Credit risk is inherent in the business of extending loans and leases to borrowers, for which the Company must maintainThe ACL guidance requires that an adequate allowance for credit losses. The allowance fororganization measure all expected credit losses for financial assets held at the reporting date, including off-balance sheet credit exposures, based on historical experience, current conditions, and reasonable and supportable forecasts. Determining the appropriateness of the allowance is established through a provision for credit losses recorded to expense. Loanscomplex and requires judgment by management about the effect of matters that are charged againstinherently uncertain. In future periods, evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance for credit losses when management believes that the contractual principal or interest will not be collected. Subsequent recoveries, if any, are credited to the allowance.and credit loss expense in those future periods. The allowance level is an amount believed adequate to absorb estimated probable losses on existing loans that may become uncollectable, based on evaluation of the collectability of loans and priorinfluenced by loan volumes, loan asset quality ratings, delinquency status, historical credit loss experience, together withloan performance characteristics, and other factors. The Company formally re-evaluatesconditions influencing loss expectations, such as reasonable and establishessupportable forecasts of economic conditions. During the appropriate level ofyear ended December 31, 2021, the allowance forlevel was most impacted by the improvement in economic forecasts, which resulted in recognition of a recovery of credit losses onof $21.4 million. Changes to the assumptions in the model in future periods could have a quarterly basis.
The allowance consists of specific and general components. The specific allowance applies to impaired loans. For impaired collateral dependent loans, the reserve is calculated basedmaterial impact on the collateral value, netCompany's Consolidated Financial Statements. See "Note 1. Summary of estimated disposition costs. Generally, the Company obtains independent collateral valuation analysisSignificant Accounting Policies" for each loan over a specified dollar threshold every 12 months. Loans not collateral dependent are evaluated based on the expected future cash flows discounted at the original contractual interest rate.
The general allowance covers all non-impaired loans and incorporates several quantitative and qualitative factors, which are used for alldetailed discussion of the Company's portfolio segments. Quantitative factors include company-specific, 10-year historical net charge-offs stratified bymethodologies for estimating expected credit losses.
Fair value of financial instruments
The Company uses fair value measurements to recognize certain financial instruments at fair value. In connection with the AmeriHome acquisition, the Company acquired financial instruments, including loans with similar characteristics. Qualitative factors include: 1) levelsHFS, MSRs, and derivative instruments, that are recorded at fair value and require management to make significant judgments in estimating the fair value of these financial instruments. The degree of management judgment involved in determining the fair value of a financial instrument is dependent upon the availability of quoted market prices or observable market inputs. For financial instruments that are actively traded and trendshave quoted market prices or observable market inputs, there is minimal subjectivity involved in delinquenciesmeasuring fair value. However, when quoted market prices or observable market inputs are not fully available, significant management judgment may be necessary to estimate the fair value of these financial instruments. The fair value of MSRs is determined using a discounted cash flow model based on unobservable inputs, as MSRs are not traded in active markets. Assumptions used to value the Company’s MSRs represent management’s best estimate of assumptions that market participants would use to value this asset and impaired loans; 2) levelsmay require significant judgement. The primary risk of material changes to the value of the MSRs resides in the potential volatility and trendsjudgment in charge-offsthe assumptions used, specifically prepayment speeds, option adjusted spreads, and recoveries; 3) trends in volume and terms of loans; 4) changes in underwriting standards or lending policies; 5) experience, ability, depth of lending staff; 6) national and local economic trends and conditions; 7) changes in credit concentrations; 8) out-of-market exposures; 9) changes in quality of loan review system; and 10)discount rates. Hypothetical changes in the value of underlying collateral.
Due to the credit concentration of the Company's loan portfolio in real estate secured loans, the value of collateral is heavily dependentMSRs based on real estate values in Arizona, Nevada, and California. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significantassumed immediate changes in economic or other conditions. In addition, regulators, as an integral part of their examination processes, periodically review the Bank's allowance for credit losses, and may require the Bank to make additions to the allowance based on their judgment about information available to them at the time of their examination. Management regularly reviews the assumptions and formulae usedcertain inputs are disclosed in determining the allowance and makes adjustments if required to reflect the current risk profile of the portfolio.“Note 6. Mortgage Servicing Rights.”
Income taxes
The Company’s income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management’s best estimate of current and future taxes to be paid. The Company is subject to federal and state income taxes in the United States. Significant judgments and estimates are required in the determination of the consolidated income tax expense.
Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. In evaluating the Company's ability to recover its deferred tax assets in the jurisdictions from which they arise, all available positive and negative evidence is considered, including scheduled reversals of deferred tax liabilities, tax planning strategies, projected future taxable income, and recent operating results. The assumptions about future taxable income require the use of significant judgment and are consistent with the plans and estimates used to manage the underlying business.

56
Liquidity
Liquidity is the ongoing ability to accommodate liability maturities and deposit withdrawals, fund asset growth and business operations, and meet contractual obligations through unconstrained access to funding at reasonable market rates. Liquidity management involves forecasting funding requirements and maintaining sufficient capacity to meet the needs and accommodate fluctuations in asset and liability levels due to changes in the Company's business operations or unanticipated events.

events, including the ongoing COVID-19 pandemic.
The ability to have readily available funds sufficient to repay fully maturing liabilities is of primary importance to depositors, creditors, and regulators. The Company's liquidity, represented by cash and amounts due from banks, federal funds sold, HFS mortgages, and non-pledged marketable securities, is a result of the Company's operating, investing, and financing activities and related cash flows. In order to ensure that funds are available when necessary, on at least a quarterly basis, the Company projects the amount of funds that will be required over a 12-monthtwelve-month period and it also strives to maintain relationships with a diversified customer base. Liquidity requirements can also be met through short-term borrowings or the disposition of short-term assets.
The following table presents the available and outstanding balances on the Company's lines of credit:
  December 31, 2019
  Available
Balance		 Outstanding Balance
  (in millions)
Unsecured fed funds credit lines at correspondent banks $1,215.0
 $—
December 31, 2021
Available
Balance		Outstanding Balance
(in millions)
Unsecured fed funds credit lines at correspondent banks$2,848.4 $675.0 
In addition to lines of credit, the Company has borrowing capacity with the FHLB and FRB from pledged loans and securities. The Company also has warehouse borrowing lines of credit assumed as part of the AmeriHome acquisition. The borrowing capacity, outstanding borrowings, and available credit as of December 31, 20192021 are presented in the following table:
December 31, 2021
(in millions)
FHLB:
Borrowing capacity$7,832.4
Outstanding borrowings—
Letters of credit21.0
Total available credit$7,811.4
FRB:
Borrowing capacity$3,385.3
Outstanding borrowings—
Total available credit$3,385.3
Warehouse borrowings:
Borrowing capacity$1,000.0
Outstanding borrowings—
Total available credit$1,000.0
The Company also has a separate PPP lending facility with the FRB that allows the Company to pledge loans originated under the PPP in return for dollar for dollar funding from the FRB, which would provide up to approximately $416 million in additional credit. The amount of available credit under the PPP lending facility will continue to decline each period as these loans are paid down.
Cash requirements of the Company include contracts for services in the ordinary course of business that may require payment for services to be provided in the future and may contain penalty clauses for early termination of the contracts. Additionally, to meet the financing needs of customers, the Company has financial instruments with off-balance sheet risk, including commitments to extend credit and standby letters of credit.
57
  December 31, 2019
  (in millions)
FHLB:  
Borrowing capacity $4,483.4
Outstanding borrowings —
Letters of credit 21.0
Total available credit $4,462.4
   
FRB:  
Borrowing capacity $1,149.4
Outstanding borrowings —
Total available credit $1,149.4
The following table sets forth the Company's significant contractual obligations as of December 31, 2021:
Payments Due by Period
TotalLess Than 1 Year1-3 Years3-5 YearsAfter 5 Years
(in millions)
Time deposit maturities$2,056.0 $1,932.4 $119.6 $4.0 $— 
Qualifying debt909.0 — — — 909.0 
Other borrowings1,496.5 726.9 242.0 — 527.6 
Operating lease obligations156.3 15.1 43.4 37.6 60.2 
Purchase obligations111.6 33.5 48.2 29.9 — 
Total$4,729.4 $2,707.9 $453.2 $71.5 $1,496.8 
Purchase obligations primarily relate to contracts for software licensing, maintenance, and outsourced service providers.
Off-balance sheet commitments associated with outstanding letters of credit, commitments to extend credit, and credit card guarantees as of December 31, 2021 are summarized below. Since commitments associated with letters of credit and commitments to extend credit may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements. 
Amount of Commitment Expiration per Period
Total Amounts CommittedLess Than 1 Year1-3 Years3-5 YearsAfter 5 Years
(in millions)
Commitments to extend credit$13,396.3 $3,652.0 $6,235.1 $2,322.1 $1,187.0 
Credit card commitments and financial guarantees306.3 306.3 — — — 
Letters of credit198.1 190.7 3.0 4.4 — 
Total$13,900.7 $4,149.0 $6,238.1 $2,326.5 $1,187.0 
The following table sets forth certain information regarding short-term borrowings as of December 31, 2021 and the respective prior year-end balances: 
December 31,
202120202019
(dollars in millions)
Customer Repurchase Accounts:
Maximum month-end balance$21.6 $33.7 $20.3 
Balance at end of year16.6 16.0 16.7 
Average balance19.6 23.3 17.2 
Federal Funds Purchased
Maximum month-end balance2,283.0 690.0 335.0 
Balance at end of year675.0 — — 
Average balance418.9 75.1 67.9 
FHLB Advances:
Maximum month-end balance4,200.0 130.0 380.0 
Balance at end of year— 5.0 — 
Average balance392.6 21.3 49.6 
Warehouse borrowings:
Maximum month-end balance819.7 — — 
Balance at end of year— — — 
Average balance442.3 — — 
Total Short-Term Borrowed Funds$691.6 $21.0 $16.7 
Weighted average interest rate at end of year0.16 %0.12 %0.15 %
Weighted average interest rate during year0.67 0.46 1.99 
The Company has also committed to irrevocably and unconditionally guarantee the payments or distributions with respect to the holders of preferred securities of the Company's eight statutory business trusts to the extent that the trusts have not made such payments or distributions, including: 1) accrued and unpaid distributions; 2) the redemption price; and 3) upon a dissolution or termination of the trust, the lesser of the liquidation amount and all accrued and unpaid distributions and the
58
amount of assets of the trust remaining available for distribution. The Company does not believe that these off-balance sheet arrangements have or are reasonably likely to have a material effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources. However, there can be no assurance that such arrangements will not have a future effect.
The Company has a formal liquidity policy and, in the opinion of management, its liquid assets are considered adequate to meet cash flow needs for loan funding and deposit cash withdrawals for the next 90-120 days. At December 31, 2019,2021, there is $2.9was $8.7 billion in liquid assets, comprised of $434.6$516.4 million in cash and cash equivalents, $4.0 billion in HFS loans, and $2.5$4.2 billion in unpledged marketable securities. At December 31, 2018,2020, the Company maintained $3.0$6.6 billion in liquid assets, comprised of $498.6 million$2.7 billion of cash and cash equivalents and money market investments, and $2.5$3.9 billion inof unpledged marketable securities.
The Parent maintains liquidity that would be sufficient to fund its operations and certain non-bank affiliate operations for an extended period should funding from normal sources be disrupted. Since deposits are taken by WAB and not by the Parent, Parent liquidity is not dependent on the Bank's deposit balances. In the Company's analysis of Parent liquidity, it is assumed that the Parent is unable to generate funds from additional debt or equity issuances, receives no dividend income from subsidiaries and does not pay dividends to stockholders, while continuing to make nondiscretionarynon-discretionary payments needed to maintain operations and repayment of contractual principal and interest payments owed by the Parent and affiliated companies. Under this scenario, the amount of time the Parent and its non-bank subsidiariessubsidiary can operate and meet all obligations before the current liquid assets are exhausted is considered as part of the Parent liquidity analysis. Management believes the Parent maintains adequate liquidity capacity to operate without additional funding from new sources for over 12twelve months.
WAB maintains sufficient funding capacity to address large increases in funding requirements, such as deposit outflows. This capacity is comprised of liquidity derived from a reduction in asset levels and various secured funding sources. On a long-term basis, the Company’s liquidity will be met by changing the relative distribution of its asset portfolios (for example, by reducing investment or loan volumes, or selling or encumbering assets). Further, the Company can increase liquidity by soliciting higher levels of deposit accounts through promotional activities and/or borrowing from correspondent banks, the FHLB of San Francisco, and the FRB. At December 31, 2019,2021, the Company's long-term liquidity needs primarily relate to funds required to support loan originations, commitments, and deposit withdrawals, which can be met by cash flows from investment payments and maturities, and investment sales, if necessary.

The Company’s liquidity is comprised of three primary classifications: 1) cash flows provided by operating activities; 2) cash flows used in investing activities; and 3) cash flows provided by financing activities. Net cash provided by or used in operating activities consists primarily of net income, adjusted for changes in certain other asset and liability accounts and certain non-cash income and expense items, such as the provision for credit losses, investment and other amortization and depreciation. For the years ended December 31, 2019, 2018,2021, 2020, and 2017,2019, net cash (used in) provided by operating activities was $717.8 million, $541.0$(2.7) billion, $670.2 million, and $383.8$717.8 million, respectively.
The Company's primary investing activities are the origination of real estate and commercial loans, the collection of repayments of these loans, and the purchase and sale of securities. The Company's net cash provided by and used in investing activities has been primarily influenced by its loan and securities activities. The net increase in loans forCompany's cash balance during the years ended December 31, 2021, 2020, and 2019, 2018,was reduced by $12.7 billion, $5.9 billion, and 2017, was $3.4 billion, $2.6 billion, and $1.9 billion, respectively. Therespectively, as a result of a net increase in loans as well as a net increase in investment securities for the years ended December 31, 2019, 2018,of $2.0 billion, $1.5 billion, and 2017 was $109.5 million, $12.4 million, and $1.1 billion, respectively.
Net cash provided by financing activities has been impacted significantly by increased deposit levels. During the years ended December 31, 2019, 2018,2021, 2020, and 2017,2019, net deposits increased $3.6$15.7 billion, $2.2$9.1 billion, and $2.4$3.6 billion, respectively.
Fluctuations in core deposit levels may increase the Company's need for liquidity as certificates of deposit mature or are withdrawn before maturity, and as non-maturity deposits, such as checking and savings account balances, are withdrawn. Additionally, the Company is exposed to the risk that customers with large deposit balances will withdraw all or a portion of such deposits, due in part to the FDIC limitations on the amount of insurance coverage provided to depositors. To mitigate the uninsured deposit risk, the Company participates in the CDARS and ICS programs, which allow an individual customer to invest up to $50.0 million and $120.0$150.0 million, respectively, through one participating financial institution or, a combined total of $185.0$200.0 million per individual customer, with the entire amount being covered by FDIC insurance. As of December 31, 2019,2021, the Company has $407.7$729.2 million of CDARS and $661.8 million$1.8 billion of ICS deposits.
As of December 31, 2019,2021, the Company has $1.1$1.8 billion of wholesale brokered deposits outstanding. Brokered deposits are generally considered to be deposits that have been received from a third party who is engaged in the business of placing deposits on behalf of others. A traditional deposit broker will direct deposits to the banking institution offering the highest interest rate available. Federal banking laws and regulations place restrictions on depository institutions regarding brokered deposits because of the general concern that these deposits are not relationship based and are at a greater risk of being
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withdrawn and placed on deposit at another institution offering a higher interest rate, thus posing liquidity risk for institutions that gather brokered deposits in significant amounts.
Federal and state banking regulations place certain restrictions on dividends paid. The total amount of dividends thatwhich may be paid at any date is generally limited to the retained earnings of the bank. Dividends paid by WAB to the Parent would be prohibited if the effect thereof would cause the Bank’s capital to be reduced below applicable minimum capital requirements. During the year ended December 31, 2019, WAB and LVSP paid dividends to the Parent of $130.0 million and $4.0 million, respectively. Subsequent to December 31, 2019,2021, WAB paid dividends to the Parent of $35.0$50.0 million.
Recent accounting pronouncements
See "Note 1. Summary of Significant Accounting Policies," of the Notes to Consolidated Financial Statements contained in Item 8. Financial Statements and Supplementary Data for information on recent and recently adopted accounting pronouncements and their expected impact, if any, on the Company's Consolidated Financial Statements.

SUPERVISION AND REGULATION
WAL, WAB, and certain of its non-banking subsidiaries are subject to comprehensive regulation under federal and state laws. The regulatory framework applicable to bank holding companies and their subsidiary banks is intended to protect depositors, the DIF, and the U.S. banking system as a whole. This system is not designed to protect equity investors in bank holding companies such as WAL.
Set forth below is a summary of the significant laws and regulations applicable to WAL and its subsidiaries. The description that follows is qualified in its entirety by reference to the full text of the statutes, regulations, and policies that are described. Such statutes, regulations, and policies are subject to ongoing review by Congress and state legislatures and federal and state regulatory agencies. A change in any of the statutes, regulations, or regulatory policies applicable to WAL and its subsidiaries could have a material effect on the results of the Company.
Overview
WAL is a separate and distinct legal entity from WAB and its other subsidiaries. As a registered bank holding company, WAL is subject to inspection, examination, and supervision by the FRB, and is regulated under the BHCA. WAL is also under the jurisdiction of the SEC and is subject to the disclosure and other regulatory requirements of the Securities Act of 1933, as amended, and the Exchange Act, as administered by the SEC. The Company’s common stock is listed on the NYSE under the trading symbol “WAL” and the Company is subject to the rules of the NYSE for listed companies. The Company is a financial institution holding company within the meaning of Arizona law. WAL provides a full spectrum of deposit, lending, treasury management, and online banking products and services through WAB, its wholly-owned banking subsidiary. WAB is an Arizona chartered bank and a member of the Federal Reserve System. WAB operates the following full-service banking divisions: ABA, BON, Bridge, FIB, and TPB. WAB is subject to the supervision of, and to regular examination by, the Arizona Department of Financial Institutions, the FRB as its primary federal regulator, and the FDIC as its deposit insurer. WAB's deposits are insured by the FDIC up to the applicable deposit insurance limits in accordance with FDIC laws and regulations. The Company also serves business customers through a national platform of specialized financial services providers.
WAL and WAB are also supervised by the CFPB for compliance with federal consumer financial protection laws. The Company’s non-bank subsidiaries are subject to federal and state laws and regulations, including regulations of the FRB.
The Dodd-Frank Act significantly changed the financial regulatory regime in the United States. Since the enactment of the Dodd-Frank Act, U.S. banks and financial services firms have been subject to enhanced regulation and oversight. Several provisions of the Dodd-Frank Act are subject to further rulemaking, guidance, and interpretation by the federal banking agencies.  While the current administration and its appointees to the federal banking agencies have expressed interest
Enacted in reviewing, revising, and perhaps repealing portions of the Dodd-Frank Act and certain of its implementing regulations, is not clear whether any such legislation or regulatory changes will be enacted or, if enacted, what the effect on the Company would be. 
EGRRCPA
On May 24, 2018, the President signed into law the EGRRCPA, which, among other things, amended certain provisions of the Dodd-Frank Act. The EGRRCPA provides limited regulatory relief to certain financial institutions while preserving the existing framework under which U.S. financial institutions are regulated. The EGRRCPA relieves bank holding companies with less than $100 billion in assets, such as the Company, from the enhanced prudential standards imposed under Section 165 of the Dodd-Frank Act (including, but not limited to, resolution planning and enhanced liquidity and risk management requirements). In addition to amending the Dodd-Frank Act, the EGRRCPA also includes certain additional banking-related provisions, consumer protection provisions and securities law-related provisions. While many of the EGRRCPA’s changes have been implemented through rules adopted by federal agencies, the Company expects to continue to evaluate the potential impact of the EGRRCPA as it is further implemented.
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Supervision, Regulation and Licensing of AmeriHome
AmeriHome is a residential mortgage producer and servicer that operates in a heavily regulated industry. In addition to supervision by the federal banking agencies with primary jurisdiction over the Company and WAB, AmeriHome is subject to the rules, regulations and oversight of certain federal, state and local governmental authorities, including the CFPB, HUD, and government-sponsored enterprises in the mortgage industry such as FHLMC, FNMA, and GNMA.
Further, AmeriHome must comply with a large number of federal consumer protection laws and regulations including, among others:
•the Real Estate Settlement Procedures Act and Regulation X, which require lenders, mortgage brokers, or servicers to provide borrowers with pertinent and timely disclosures regarding the nature and costs of the settlement process and prohibit specific practices related thereto;
•the Truth In Lending Act and Regulation Z, which require disclosures and timely information on the nature and costs of the residential mortgages and the real estate settlement process;
•the Secure and Fair Enforcement for Mortgage Licensing Act, which applies to businesses and individuals engaging in the residential mortgage loan business;
•the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Fair Debt Collection Practices Act, the Federal Trade Commission Act, and the rules and regulations of the FTC and CFPB that prohibit unfair, abusive or deceptive acts or practices;
•the Fair Credit Reporting Act (as amended by the Fair and Accurate Credit Transactions Act) and Regulation V, which address the accuracy, fairness, and privacy of information in the files of consumer reporting agencies; and
•the Equal Credit Opportunity Act and Regulation B, the Fair Housing Act, the Homeowners Protection Act, and the Home Mortgage Disclosure Act and Regulation C, which generally disallow discrimination on a prohibited basis, provide applicants and borrowers rights with respect to credit decisioning and the residential mortgage process, and require disclosures and impose obligations on financial businesses conducting residential lending and mortgage servicing.
The CFPB as well as the FTC have rulemaking authority with respect to many of the federal consumer protection laws applicable to mortgage lenders and servicers, and their rulemaking and regulatory agendas relating to the residential mortgage industry continues to evolve. In particular, as part of its enforcement authority, the CFPB can order, among other things, rescission or reformation of contracts, the refund of moneys or the return of real property, restitution, disgorgement or compensation for unjust enrichment, the payment of damages or other monetary relief, public notifications regarding violations, remediation of practices, external compliance monitoring and civil money penalties.
AmeriHome is also subject to state and local laws, rules and regulations and oversight by various state agencies that license and oversee consumer protection, loan servicing, origination and collection activities of mortgage industry participants. Despite the fact that AmeriHome is the operating subsidiary of a depository institution, it must comply with regulatory and licensing requirements in certain states in order to conduct its business, and does (and will continue to) incur significant costs to comply with these requirements. These laws, rules and regulations may change as statutes and regulations are enacted, promulgated, amended, interpreted and enforced.
CARES Act
The CARES Act was enacted in March 2020 to provide economic relief in response to the public health and economic impacts of COVID-19. Many of the CARES Act’s programs are, and remain, dependent upon the direct involvement of U.S. financial institutions like the Company and the Bank. These programs have been implemented through rules and guidance adopted by federal departments and agencies, including the U.S. Department of Treasury, the Board of Governors of the Federal Reserve System (the "Federal Reserve"), and other federal banking agencies, including those with direct supervisory jurisdiction over the Company and the Bank. Furthermore, as the COVID-19 pandemic continues to evolve, federal regulatory authorities continue to issue additional guidance and regulations with respect to the implementation, lifecycle, and eligibility requirements for the various CARES Act programs as well as industry-specific recovery procedures for COVID-19.
The Company continues to assess the impact of the CARES Act, the potential impact of new COVID-19 legislation, and other statutes, regulations, and supervisory guidance related to the COVID-19 pandemic.
The CARES Act amended the SBA’s loan program, in which the Bank participates, to create a guaranteed, unsecured loan program, the PPP, to fund operational costs of eligible businesses, organizations and self-employed persons during COVID-19. In December 2020, Congress revived the PPP and allocated additional PPP funds for 2021 and in March 2021, Congress
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extended the deadline for PPP applications to May 31, 2021, with a further extension of the Congressional PPP authorization through June 30, 2021.
On May 14, 2021, the Federal Reserve announced a third extension of its rule to bolster the effectiveness of the PPP, which applies to PPP loans made since March 31, 2021 and allowed banks to continue to make PPP loans to a broad range of small businesses within their communities. The rule extension applied to PPP loans made from March 31 through June 30, 2021 and sunsets on March 31, 2022 unless the PPP is again extended by Congress. As a participating PPP lender, the Bank continues to monitor legislative, regulatory, and supervisory developments related thereto.
Bank Holding Company Regulation
WAL is a bank holding company as defined under the BHCA. The BHCA generally limits the business of bank holding companies to banking, managing or controlling banks, and other activities that the FRB has determined to be so closely related to banking as to be a proper incident thereto. Business activities that have been determined to be related to banking, and therefore appropriate for bank holding companies and their affiliates to engage in, include securities brokerage services, investment advisory services, fiduciary services, and certain management advisory and data processing services, among others. Bank holding companies that have elected to become financial holding companies may engage in any activity, or acquire and retain the shares of a company engaged in any activity that is either: (i) financial in nature or incidental to such financial activity (as determined by the FRB in consultation with the Secretary of the Treasury) or (ii) complementary to a financial activity, and that does not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally (as solely determined by the FRB).

Activities that are financial in nature include securities underwriting and dealing, insurance underwriting, and making merchant banking investments.
Mergers and Acquisitions
The BHCA, the Bank Merger Act, and other federal and state statutes regulate the direct and indirect acquisition of depository institutions. The BHCA requires prior FRB approval for a bank holding company to acquire, directly or indirectly, 5% or more of any class of voting securities of a commercial bank or its parent holding company and for a company, other than a bank holding company, to acquire 25% or more of any class of voting securities of a bank or bank holding company. In April 2020, the Federal Reserve adopted a final rule codifying the presumptions used in determinations of whether a company has the ability to exercise a controlling influence over another company for purposes of the BHCA, and providing greater transparency on the types of relationships that the Federal Reserve generally views as supporting a determination of control. Under the Change in Bank Control Act, any person, including a company, may not acquire, directly or indirectly, control of a bank without providing 60 days’ prior notice and receiving a non-objection from the appropriate federal banking agency.
Under the Bank Merger Act, the prior approval of the appropriate federal banking agency is required for insured depository institutions to merge or enter into purchase and assumption transactions. In reviewing applications seeking approval of merger and purchase and assumption transactions, the federal banking agencies will consider, among other things, the competitive effecteffects and public benefits of the transactions, the capital position of the combined banking organization, the applicant's performance record under the CRA, and the effectiveness of the subject organizations in combating money laundering activities. For further information relating to the CRA, see the section titled “Community Reinvestment Act and Fair Lending Laws.”
Under Section 6-142 of the Arizona Revised Statutes, no person may acquire control of a company that controls an Arizona bank without the prior approval of the Arizona Superintendent of Financial Institutions, or Arizona Superintendent. A person who has the power to vote 15% or more of the voting stock of a controlling company is presumed to control the company.
Enhanced Prudential Standards
Section 165 of the Dodd-Frank Act imposes enhanced prudential standards on larger banking organizations, with certain of these standards applicable to banking organizations over $10 billion, including WAL and WAB, as of the quarter ending June 30, 2014. In October 2012, the FDIC, the OCC, and the FRB issued separate but similar rules requiring covered banks and bank holding companies with $10 billion to $50 billion in total consolidated assets to conduct an annual company-run stress test. WAL and WAB conducted a company-run capital stress test as required by the Dodd-Frank Act in 2017 and provided the results to the FRB. WAL found the Company would have sufficient capital to maintain regulatory capital levels throughout an economic downturn.
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As a result of passage of the EGRRCPA, bank holding companies with less than $100 billion in assets, such as the Company, are exempt from the enhanced prudential standards imposed under Section 165 of the Dodd-Frank Act (including, but not limited to, the resolution planning and enhanced liquidity and risk management requirements therein). Notwithstanding these changes, the capital planning and risk management practices of the Company and the Bank will continue to be reviewed through the regular supervisory processes of the FRB.
In February 2014, Further, in connection with the FRB issued a rule furtherFRB’s rules implementing the enhanced prudential standards required by the Dodd-Frank Act. Although most(and as subsequently modified by application of the standards apply only toEGRRCPA’s higher consolidated asset thresholds for bank holding companies with more than $50 billion in assets, as directed bycompanies), the Dodd-Frank Act, the rule contains certain standards that apply to bank holding companies with more than $10 billion in assets, including a requirement to establishCompany has established a risk committee of the Company's BOD to manage enterprise-wide risk. The Company meets these requirements. The EGRRCPA increased the asset threshold for requiring a bank holding company to establish a separate risk committee of independent directors from $10 billion to $50 billion. Notwithstanding this change, the Companyand has retained its separate risk committee of independent directors.

Further, in connection with the FRB’s rules implementing the enhanced prudential standards required by Dodd-Frank (and as subsequently modified by application of the EGRRCPA’s higher consolidated asset thresholds for bank holding companies), the Company has established a risk committee of the BOD to manage enterprise-wide risk and has retained its separate risk committee of independent directors.
Volcker Rule
Section 619 of the Dodd-Frank Act, commonly known as the Volcker Rule, restricts the ability of banking entities, such as the Company and WAB, from: (i) engaging in “proprietary trading” and (ii) investing in or sponsoring certain covered funds, subject to certain limited exceptions. Under the Volcker Rule, the term "covered funds" is defined as any issuer that would be an investment company under the Investment Company Act but for the exemption in Section 3(c)(1) or 3(c)(7) of that Act, which includes CLO and CDO securities. There are also several exemptions from the definition of covered fund, including, among other things, loan securitizations, joint ventures, certain types of foreign funds, entities issuing asset-backed commercial paper, and registered investment companies. Further, the final rules permit banking entities, subject to certain conditions and limitations, to invest in or sponsor a covered fund in connection with: (1) organizing and offering the covered fund; (2) certain risk-mitigating hedging activities; and (3) de minimis investments in covered funds. Compliance with the Volcker Rule was required by July 21, 2017.
The EGRRCPA and subsequent promulgation of inter-agency final rules have aimed at simplifying and tailoring requirements related to the Volcker Rule, including by eliminating collection of certain metrics and reducing the compliance burdens associated with other metrics for banks with less than $20 billion in average trading assets and liabilities. ComplianceIn June 2020, the Federal Reserve - along with the Commodity Futures Trading Commission, FDIC, the OCC, and the SEC - issued a final rule modifying the Volcker Rule’s prohibition on banking entities investing in or sponsoring hedge funds or private equity funds (“covered funds”). The Volcker Rule generally prohibits banking entities from engaging in proprietary trading and from acquiring or retaining ownership interests in, sponsoring or having certain relationships with a hedge fund or private equity fund. The final rule modifies three areas of the Volcker Rule by: (1) streamlining the covered funds portion of the rule; (2) addressing the extraterritorial treatment of certain foreign funds; and (3) permitting banking entities to offer financial services and engage in other activities that do not raise concerns that the Volcker Rule was required by July 21, 2017 and theintended to address. The new rule became effective October 1, 2020. The Company believes it is fully compliant.compliant with the Volcker Rule, including as modified by the new rule.

Dividends
Historically, theThe Company has not declared or paid cash dividends on its common stock, electing instead to retain earnings for growth. On July 30, 2019, WAL's BOD authorized the payment of regular quarterly dividends declaringsince the Company's first quarterly cash dividendthird quarter of $0.25 per share of common stock, which was paid on August 30, 2019. Whether the Company continues to pay quarterly dividends and the amount of any such dividends will be at the discretion of WAL's BOD and will depend on the Company’s earnings, financial condition, results of operations, business prospects, capital requirements, regulatory restrictions, contractual restrictions, and other factors that the BOD may deem relevant.
The Company’s ability to pay dividends is subject to the regulatory authority of the FRB. The supervisory concern of the FRB focuses on a bank holding company’s capital position, its ability to meet its financial obligations as they come due, and its capacity to act as a source of financial strength to its insured depository institution subsidiaries. In addition, FRB policy discourages the payment of dividends by a bank holding company that is not supported by current operating earnings.
As a Delaware corporation, the Company is also subject to limitations under Delaware law on the payment of dividends. Under the Delaware General Corporation Law, dividends may only be paid out of surplus or out of net profits for the year in which the dividend is declared or the preceding year, and no dividends may be paid on common stock at any time during which the capital of outstanding preferred stock or preference stock exceeds the Company's net assets.
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From time to time, the Company may become a party to financing agreements and other contractual obligations that have the effect of limiting or prohibiting the declaration or payment of dividends under certain circumstances. Holding company expenses and obligations with respect to its outstanding trust preferred securities and corresponding subordinated debt also may limit or impair the Company’s ability to declare and pay dividends.
Since the Company has no significant assets other than the voting stock of its subsidiaries, it currently depends on dividends from WAB and, to a lesser extent, its non-bank subsidiaries, for a substantial portion of its revenue and as the primary sources of its cash flow. The ability of a state member bank, such as WAB, to pay cash dividends is restricted by the FRB and the State of Arizona. The FRB’s Regulation H states that a member bank may not declare or pay a dividend if the total of all dividends declared during that calendar year exceed the bank’s net income during that calendar year and the retained net income of the prior two years. Further, without receiving prior approval from both the FRB and two-thirds of its shareholders, a bank cannot declare or pay a dividend that would exceed its undivided profits or withdraw any portion of its permanent capital.
Under Section 6-187 of the Arizona Revised Statutes, WAB may pay dividends on the same basis as any other Arizona corporation, except that cash dividends paid out of capital surplus require the prior approval of the Arizona Superintendent. Under Section 10-640 of the Arizona Revised Statutes, a corporation may not make a distribution to stockholders if to do so would render the corporation insolvent or unable to pay its debts as they become due. However, an Arizona bank may not declare a non-stock dividend out of capital surplus without the approval of the Arizona Superintendent.
Federal Reserve System
As a member of the Federal Reserve System, WAB ishas historically been required by law to maintain reserves against its transaction deposits. The reserves mustdeposits, which were to be held in cash or with the FRB. In response to the ongoing COVID-19 pandemic, the Federal Reserve reduced the reserve requirement ratios to zero percent effective on March 26, 2020.
Additionally, on June 4, 2021, the Federal Reserve adopted amendments to Regulation D (Reserve Requirements of Depository Institutions, 12 C.F.R. Part 204) to eliminate references to an “interest on required reserves” rate and to an “interest on excess reserves” rate and replace them with a reference to a single “interest on reserve balances” rate. The amendments also simplified the formula used to calculate the amount of interest paid on balances maintained by or on behalf of eligible institutions in master accounts at Federal Reserve Banks, are permittedand to meet this requirement by maintaining the specified amount as an average balance over a two-week period.made other conforming amendments. The total of reserve balances was approximately $164.1 million and $145.9 million as of December 31, 2019 and 2018, respectively.rule became effective on July 29, 2021.
Source of Strength Doctrine
FRB policy requires bank holding companies to act as a source of financial and managerial strength to their subsidiary banks. Section 616 of the Dodd-Frank Act codified the requirement that bank holding companies act as a source of financial strength. As a result, the Company is expected to commit resources to support WAB, including at times when the Company may not be in a financial position to provide such resources. Any capital loans by a bank holding company to any of its subsidiary banks are subordinate in right of payment to deposits and to certain other indebtedness of such subsidiary banks. The U.S. Bankruptcy Code provides that, in the event of a bank holding company's bankruptcy, any commitment by the bank holding company to a federal banking agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment.

Capital Adequacy and Prompt Corrective Action
The Capital Rules established a comprehensive capital framework for U.S. banking organizations. The Capital Rules generally implement the Basel Committee's Basel III final capital framework for strengthening international capital standards. The Capital Rules revise the definitions and the components of regulatory capital, as well as address other issues affecting the numerator in banking institutions’ regulatory capital ratios. The Capital Rules also address asset risk weights and other matters affecting the denominator in banking institutions’ regulatory capital ratios and replaced the existing general risk-weighting approach with a more risk-sensitive approach.
The Capital Rules: (i) include CET1 and the related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements; (iii) mandate that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and (iv) expand the scope of the deductions from and adjustments to capital as compared to existing regulations. Under the Capital Rules, for most banking organizations, the most common form of Additional Tier 1 capital is non-cumulative perpetual preferred stock, and the most common forms of Tier 2 capital are subordinated notes and a portion of the allocation for loan and lease losses, in each case, subject to the Capital Rules’ specific requirements.
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Pursuant to the Capital Rules, the minimum capital ratios are as follows:
•4.5% CET1 to risk-weighted assets;
•6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets;
•8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets; and
•4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (called “leverage ratio”).
The Capital Rules also include a “capital conservation buffer,” composed entirely of CET1, in addition to these minimum risk-weighted asset ratios. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET1 to risk-weighted assets above the minimum but below the capital conservation buffer will face constraints on dividends, equity, and other capital instrument repurchases and compensation based on the amount of the shortfall. The Capital Rules became fully phased-in on January 1, 2019. Thus, the capital standards applicable to the Company include an additional capital conservation buffer of 2.5% of CET1, effectively resulting in minimum ratios inclusive of the capital conservation buffer of (i) CET1 to risk-weighted assets of at least 7%, (ii) Tier 1 capital to risk-weighted assets of at least 8.5%, and (iii) Total capital to risk-weighted assets of at least 10.5%.
The Capital Rules provide for a number of deductions from and adjustments to CET1. These include, for example, the requirement that mortgage servicing assets, deferred tax assets arising from temporary differences that could not be realized through net operating loss carrybacks, and significant investments in non-consolidated financial entities be deducted from CET1 to the extent that any one such category exceeds 10% of CET1 or all such items, in the aggregate, exceed 15% of CET1. The Capital Rules further prescribe that the effects of accumulated other comprehensive income or loss items reported as a component of stockholders’ equity be included in CET1 capital; however, non-advanced approaches banking organizations may make a one-time permanent election to exclude these items. The Company, as a non-advanced approaches institution, has made this one-time election.
The Capital Rules also preclude certain hybrid securities, such as trust preferred securities, issued on or after May 19, 2010 from inclusion in bank holding companies’ Tier 1 capital. The Company has used trust preferred securities in the past as a tool for raising additional Tier 1 capital and otherwise improving its regulatory capital ratios. Although the Company may continue to include its existing trust preferred securities as Tier 1 capital, the prohibition on the use of these securities as Tier 1 capital going forward may limit the Company’s ability to raise capital in the future.
The risk-weighting categories in the Capital Rules are standardized and include a risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities, to 600% for certain equity exposures, and resulting in higher risk weights for a variety of asset classes.
In September 2017, the federal banking agencies proposedAs of April 1, 2020, final rules became effective simplifying the Capital Rules. On July 9, 2019, the federal banking agencies adopted a final rule (replacing a substantially similar interim rule) to simplify several requirements of the regulatory capital rules for non-advanced approaches institutions, such as the Company. The final rule simplifies the capital treatment for mortgage servicing assets, certain deferred tax assets, investments in the capital instruments of unconsolidated financial institutions, and minority interest. The final rule will be effective as of April 1, 2020 for the amendments to simplify the capital rules.
Management believes the Company is in compliance, and will continue to be in compliance, with the targeted capital ratios.

Concurrent with enactment of the CARES Act, the federal bank regulatory authorities issued an interim final rule in late March 2020 that delayed the estimated impact on regulatory capital resulting from the adoption of CECL. Subsequently, on August 26, 2020, the federal banking agencies issued a final rule that allows institutions that adopt the CECL accounting standard in 2020 to mitigate CECL’s estimated effects on regulatory capital for two years. The CECL final rule is substantially similar to the interim final rule issued in March 2020 in connection with other CARES Act related regulatory relief. The final rule gives eligible institutions the option to mitigate the estimated capital effects of CECL for two years, followed by a three-year transition period. The Company has elected this capital relief option.
Prompt Corrective Action and Safety and Soundness
Pursuant to Section 38 of the FDIA, federal banking agencies are required to take “prompt corrective action” should a depository institution fail to meet certain capital adequacy standards. At each successive lower capital category, an insured depository institution is subject to more restrictions and prohibitions, including restrictions on growth, restrictions on interest rates paid on deposits, restrictions or prohibitions on payment of dividends and restrictions on the acceptance of brokered deposits. Furthermore, if an insured depository institution is classified in one of the undercapitalized categories, it is required to submit a capital restoration plan to the appropriate federal banking agency, and the holding company must guarantee the performance of that plan. Based upon its capital levels, a bank that is classified as well-capitalized, adequately capitalized, or undercapitalized may be treated as though it were in the next lower capital category if the appropriate federal banking agency, after notice and opportunity for hearing, determines that an unsafe or unsound condition, or an unsafe or unsound practice, warrants such treatment.
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For purposes of prompt corrective action, to be: (i) well-capitalized, a bank must have a total risk based capital ratio of at least 10%, a Tier 1 risk based capital ratio of at least 8%, a CET1 risk based capital ratio of at least 6.5%, and a Tier 1 leverage ratio of at least 5%; (ii) adequately capitalized, a bank must have a total risk based capital ratio of at least 8%, a Tier 1 risk based capital ratio of at least 6%, a CET1 risk based capital ratio of at least 4.5%, and a Tier 1 leverage ratio of at least 4%; (iii) undercapitalized, a bank would have a total risk based capital ratio of less than 8%, a Tier 1 risk based capital ratio of less than 6%, a CET1 risk based capital ratio of less than 4.5%, and a Tier 1 leverage ratio of less than 4%; (iv) significantly undercapitalized, a bank would have a total risk based capital ratio of less than 6%, a Tier 1 risk based capital ratio of less than 4%, a CET1 risk based capital ratio of less than 3%, and a Tier 1 leverage ratio of less than 3%; (v) critically undercapitalized, a bank would have a ratio of tangible equity to total assets that is less than or equal to 2%.
Bank holding companies and insured banks also may be subject to potential enforcement actions of varying levels of severity by the federal banking agencies for unsafe or unsound practices in conducting their business, or for violation of any law, rule, regulation, condition imposed in writing by the agency or term of a written agreement with the agency. In more serious cases, enforcement actions may include: (i) the issuance of directives to increase capital; (ii) the issuance of formal and informal agreements; (iii) the imposition of civil monetary penalties; (iv) the issuance of a cease and desist order that can be judicially enforced; (v) the issuance of removal and prohibition orders against officers, directors, and other institution-affiliated parties; (vi) the termination of the bank’s deposit insurance; (vii) the appointment of a conservator or receiver for the bank; and (viii) the enforcement of such actions through injunctions or restraining orders based upon a judicial determination that the agency would be harmed if such equitable relief was not granted.
Transactions with Affiliates and Insiders
Under federal law, transactions between insured depository institutions and their affiliates are governed by Sections 23A and 23B of the FRA and implementing Regulation W. In a bank holding company context, at a minimum, the parent holding company of a bank, and any companies which are controlled by such parent holding company, are affiliates of the bank. Generally, Sections 23A and 23B of the FRA are intended to protect insured depository institutions from losses arising from transactions with non-insured affiliates by limiting the extent to which a bank or its subsidiaries may engage in covered transactions with any one affiliate and with all affiliates of the bank in the aggregate, and requiring that such transactions be on terms consistent with safe and sound banking practices.
Further, Section 22(h) of the FRA and its implementing Regulation O restricts loans to directors, executive officers, and principal stockholders (“insiders”). Under Section 22(h), loans to insiders and their related interests may not exceed, together with all other outstanding loans to such persons and affiliated entities, the institution's total capital and surplus. Loans to insiders above specified amounts must receive the prior approval of the BOD. Further, under Section 22(h) of the FRA, loans to directors, executive officers, and principal stockholders must be made on terms substantially the same as offered in comparable transactions to other persons, except that such insiders may receive preferential loans made under a benefit or compensation program that is widely available to the bank's employees and does not give preference to the insider over the employees. Section 22(g) of the FRA places additional limitations on loans to executive officers.
Lending Limits
In addition to the requirements set forth above, state banking law generally limits the amount of funds that a state-chartered bank may lend to a single borrower. Under Section 6-352 of the Arizona Revised Statutes, the obligations of one borrower to a bank may not exceed 20% of the bank’s capital, plus an additional 10% of its capital if the additional amounts are fully secured by readily marketable collateral.

Brokered Deposits
Section 29 of the FDIA and FDIC regulations generally limit the ability of any bank to accept, renew or roll over any brokered deposit unless it is “well capitalized” or, with the FDIC’s approval, “adequately capitalized.” However, as a result of the EGRRCPA, the FDIC has undertaken a comprehensive review of its regulatory approach to brokered deposits, including reciprocal deposits, and interest rate caps applicable to banks that are less than “well"well capitalized.”" On December 12, 2019,15, 2020, the FDIC issued final rules that amend the FDIC's methodology for calculating interest rate caps, provide a new process for banks that seek FDIC approval to offer a competitive rate on deposits when the prevailing rate in the bank's local market exceeds the national rate cap, and provides specific exemptions and streamlined application and notice of proposed rulemakingprocedures for certain deposit-placement arrangements that are not subject to modernize its brokered deposit regulations. At this time, it is difficultrestrictions. These final rules became effective on April 1, 2021. To date, there has been no material impact to predict what changes, if any, toeither the brokered deposit regulations will actually be implementedCompany or the effectBank from the rules.
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Consumer Protection and CFPB Supervision
The Dodd-Frank Act centralized responsibility for consumer financial protection by creating the CFPB, an independent agency charged with responsibility for implementing, enforcing, and examining compliance with federal consumer financial protection laws. The Company is subject to a number of federal and state laws designed to protect borrowers and promote lending to various sectors of the economy and population. These laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection Procedures Act, the Truth in Lending Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Practices Act, various state law counterparts, and the Consumer Financial Protection Act of 2010, which is part of the Dodd-Frank Act. The Dodd-Frank Act does not prevent states from adopting stricter consumer protection standards. State regulation of financial products and potential enforcement actions could also adversely affect the Company’s business, financial condition, or operations.
Depositor Preference
The FDIA provides that, in the event of the “liquidation or other resolution” of an insured depository institution, the claims of depositors of the institution, including the claims of the FDIC as subrogee of insured depositors, and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution. If an insured depository institution fails, insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, non-deposit creditors, including the parent bank holding company, with respect to any extensions of credit they have made to such insured depository institution.
Federal Deposit Insurance
Substantially all of the deposits of WAB are insured up to applicable limits by the FDIC’s DIF. The basic limit on FDIC deposit insurance is $250,000 per depositor. WAB is subject to deposit insurance assessments to maintain the DIF.
The FDIC uses a risk-based assessment system that imposes insurance premiums based upon a risk matrix that takes into account a bank's CAMELS rating. The risk matrix utilizes different risk categories distinguished by capital levels and supervisory ratings. As a result of the Dodd-Frank Act, the base for insurance assessments is now consolidated average assets less average tangible equity. Assessment rates are calculated using formulas that take into account the risk of the institution being assessed. WAB is classified as, and subject to the scorecard for, a large and highly complex institution to determine its total base assessment rate.
The Dodd-Frank Act requires that the FDIC raise the minimum reserve ratio of the DIF from 1.15% to 1.35%, and that the FDIC offset the effect of this increase on insured depository institutions with total consolidated assets of less than $10 billion. In March 2016, the FDIC finalized a rule to impose a surcharge of 4.5 cents per $100 of their assessment base on deposit insurance assessment rates paid by insured depository institutions with total consolidated assets of more than $10 billion. As of June 30, 2016, the minimum reserve ratio reached 1.17% and as such, WAB was subject to the surcharge beginning July 1, 2016. At September 30, 2018, the reserve ratio reached 1.36%, exceeding the statutorily required minimum. As a result, WAB was no longer subject to the surcharge as of September 30, 2018. The FDIC also has authority to further increase deposit insurance assessments. FDIC deposit insurance expense also includes FICO assessments related to outstanding FICO bonds. These assessments will continue until the FICO bonds mature, with such maturities beginning in 2017 and continuing through 2019.
Under the FDIA, the FDIC may terminate deposit insurance upon a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. The Company’s management is not aware of any practice, condition, or violation that might lead to the termination of its deposit insurance.

Financial Privacy and Data Security
The Company is subject to federal laws, including the GLBA, and certain state laws containing consumer privacy protection provisions. These provisions limit the ability of banks and other financial institutions to disclose non-public information about consumers to affiliated and non-affiliated third parties and limit the reuse of certain consumer information received from non-affiliated institutions. These provisions require notice of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to affiliates or non-affiliated third parties by means of “opt out” or “opt in” authorizations.
For example, in August 2018, the CFPB published its final rule to update Regulation P pursuant to the amended GLBA. Under this rule, certain qualifying financial institutions are not required to provide annual privacy notices to customers. To qualify, a financial institution must not share nonpublic personal information about customers except as described in certain statutory exceptions that do not trigger a customer’s statutory opt-out right. In addition, the financial institution must not have changed its disclosure policies and practices from those disclosed in its most recent privacy notice. The rule sets forth timing requirements for delivery of annual privacy notices in the event that a financial institution that qualified for the annual notice exemption later changes its policies or practices in such a way that it no longer qualifies for the exemption.
The GLBA also requires that financial institutions implement comprehensive written information security programs that include administrative, technical, and physical safeguards to protect consumer information. Further, pursuant to interpretive guidance issued under the GLBA and certain state laws, financial institutions are required to notify customers of security breaches that result in unauthorized access to their nonpublic personal information.
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For example, under California law, every business that owns or licenses personal information about a California resident must maintain reasonable security procedures and policies to protect that information and comply with specific requirements relating to the destruction of records containing personal information and disclosure of breaches to customers, and restrictions on the use of customer information unless the customer "opts in." Other states, including Arizona and Nevada where WAB has branches, may also have applicable laws requiring businesses that retain consumer personal information to develop reasonable security policies and procedures, notify consumers of a security breach, or provide disclosures about the use and sharing of consumer personal information.
The federal banking agencies, including the FRB, through the Federal Financial Institutions Examination Council, have adopted guidelines to encourage financial institutions to address cybersecurity risks and identify, assess, and mitigate these risks, both internally and at critical third-party services providers. In October 2016, the federal bank regulatory agencies issued proposed rules on enhanced cybersecurity risk management and resilience standards that would apply to very large financial institutions and to services provided by third parties to these institutions. The comment period for these proposed rules has closed and a final rule has not been published. Although the proposed rules would apply only to bank holding companies and banks with $50 billion or more in total consolidated assets, these rules could influence
On November 18, 2021, the federal bank regulatory agencies’ expectationsagencies issued final rule to improve the sharing of information about cyber incidents that may affect the U.S. banking system. The rule requires a banking organization to notify its primary federal regulator of any significant computer-security incident as soon as possible and supervisory requirementsno later than 36 hours after the banking organization determines that a cyber incident has occurred. Notification is required for information security standardsincidents that have materially affected—or are reasonably likely to materially affect—the viability of a banking organization’s operations, its ability to deliver banking products and cybersecurity programsservices, or the stability of the financial institutionssector. In addition, the rule requires a bank service provider to notify affected banking organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has materially affected or is reasonably likely to materially affect banking organization customers for four or more hours. Compliance with less than $50 billion in total consolidated assets.the final rule is required by May 1, 2022. WAL and WAB are currently assessing the impact of this rule, but do not anticipate any material impact to their respective operations at this time.
These laws and regulations impose compliance costs and create obligations and, in some cases, reporting obligations, and compliance with these laws, regulations, and obligations require significant resources of WAL and WAB.
Community Reinvestment Act and Fair Lending Laws
WAB has a responsibility under the CRA to help meet the credit needs of its communities, including low and moderate income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution's discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA. In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit discrimination in lending practices on the basis of characteristics specified in those statutes. WAB’s failure to comply with the provisions of the CRA could, at a minimum, result in regulatory restrictions on its activities and the activities of the Company. WAB’s failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions. WAB received a rating of “Satisfactory” in its most recent CRA examination, in January 2019.
On December 17, 2019, the OCC and the FDIC issued a joint notice of proposed rulemaking to modernize the regulations implementing the CRA. While the proposed rule will not apply to WAB because its primary federal regulator is the FRB, it may impact the overall environment as it relates to CRA compliance and portend future changes by the FRB. Under the rulemaking, the federal banking agencies intend to: (i) clarify which activities qualify for CRA credit; (ii) update where activities count for CRA credit; (iii) create a more transparent and objective method for measuring CRA performance; and (iv) provide for more transparent, consistent, and timely CRA-related data collection, record keeping, and reporting. WAL and WAB expect to monitor

developments with respect to this rulemaking and assess the impact, if any, of changes to the CRA regulations proposed by the federal banking agencies.
Federal Home Loan Bank of San Francisco
WAB is a member of the FHLB of San Francisco, which is one of 12 regional FHLBs that provide funding to their members to support residential lending, as well as affordable housing and community development loans. Each FHLB serves as a reserve, or central bank, for the members within its assigned region. Each FHLB makes loans to its members in accordance with policies and procedures established by the board of directors of the FHLB. As a member, WAB must purchase and maintain stock in the FHLB of San Francisco. At December 31, 2019,2021, WAB’s total investment in FHLB stock was $17.3 million.
Incentive Compensation
The Dodd-Frank Act requires the federal banking agencies and the SEC to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at specified regulated entities, including the Company and WAB, with at least $1 billion in total consolidated assets, that encourage inappropriate risks by providing an executive officer, employee, director, or principal shareholder with excessive compensation, fees, or benefits that could lead to material financial loss to the entity. The federal banking agencies and the SEC most recently proposed such regulations in 2016, but the regulations have not yet been finalized. If the regulations are adopted in the form initially proposed, they will restrict the manner in which executive compensation is structured.
The Dodd-Frank Act also requires publicly traded companies to give stockholders a non-binding vote on executive compensation at least every three years and on so-called “golden parachute” payments in connection with approvals of mergers and acquisitions. WAL gives stockholders a non-binding vote on executive compensation annually.
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Preventing Suspicious Activity
Under Title III of the USA PATRIOT Act, all financial institutions are required to take certain measures to identify their customers, prevent money laundering, monitor customer transactions, and report suspicious activity to U.S. law enforcement agencies. Financial institutions also are required to respond to requests for information from federal banking agencies and law enforcement agencies. Information sharing among financial institutions for the above purposes is encouraged by an exemption granted to complying financial institutions from the privacy provisions of the GLBA and other privacy laws. Financial institutions that hold correspondent accounts for foreign banks or provide private banking services to foreign individuals are required to take measures to avoid dealing with certain foreign individuals or entities, including foreign banks with profiles that raise money laundering concerns, and are prohibited from dealing with foreign “shell banks” and persons from jurisdictions of particular concern. The primary federal banking agencies and the Secretary of the Treasury have adopted regulations to implement several of these provisions. The new Customer Due Diligence Rule, that was effective beginning May 11, 2018, clarified and strengthened the existing obligations for identifying new and existing customers and explicitly included risk-based procedures for conducting ongoing customer due diligence. All financial institutions also are required to establish internal anti-money laundering programs. The effectiveness of a financial institution in combating money laundering activities is a factor to be considered in any application submitted by the financial institution under the Bank Merger Act. The Company has a Bank Secrecy Act and USA PATRIOT Act Board-approved compliance program and engages in relatively few transactions with foreign financial institutions or foreign persons.
The FCRA’s Red Flags Rule requires financial institutions with covered accounts (e.g., consumer bank accounts and loans) to develop, implement, and administer an identity theft prevention program. This program must include reasonable policies and procedures to detect suspicious patterns or practices that indicate the possibility of identity theft, such as inconsistencies in personal information or changes in account activity.
Office of Foreign Assets Control Regulation
The United States has imposed economic sanctions that affect transactions with designated foreign countries, nationals, and others. These are typically known as the OFAC rules based on their administration by the OFAC. The OFAC-administered sanctions targeting countries take many different forms. Generally, they contain one or more of the following elements: (i) restrictions on trade with or investment in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned country and prohibitions on “U.S. persons” engaging in financial transactions relating to making investments in, or providing investment-related advice or assistance to, a sanctioned country; and (ii) a blocking of assets in which the government or specially designated nationals of the sanctioned country have an interest, by prohibiting transfers of property subject to U.S. jurisdiction (including property in the possession or control of U.S. persons). Blocked assets (property and bank deposits) cannot be paid out, withdrawn, set off, or transferred in any manner without a license from OFAC. Failure to comply with these sanctions could have serious legal and reputational consequences.

Future Legislative Initiatives
Federal and state legislatures may introduce legislation that will impact the financial services industry. In addition, federal banking agencies may introduce regulatory initiatives that are likely to impact the financial services industry, generally. However it is not clear whether such changes will be enacted or, if enacted, what their effect on the Company will be. New legislation could change banking statutes and the operating environment of the Company in substantial and unpredictable ways. If enacted, such legislation could increase or decrease the cost of doing business, limit or expand permissible activities, or affect the competitive balance among banks, savings associations, credit unions, and other financial institutions. The Company cannot predict whether any such legislation will be enacted, and, if enacted, the effect that it or any implementing regulations would have on the financial condition or results of operations of the Company. A change in statutes, regulations, or regulatory policies applicable to WAL or any of its subsidiaries could have a material effect on the business of the Company.

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Item 7A.Quantitative and Qualitative Disclosures about Market Risk.
Item 7A.Quantitative and Qualitative Disclosures about Market Risk.
Market risk is the risk of loss in a financial instrument arising from adverse changes in market prices interestand rates, foreign currency exchange rates, commodity prices, and equity prices. The Company's market risk arises primarily from interest rate risk inherent in its lending, investing, and deposit taking activities. To that end, management actively monitors and manages the Company's interest rate risk exposure. The Company generally manages its interest rate sensitivity by evaluating re-pricing opportunities on its earning assets to those on its funding liabilities.
Management uses various asset/liability strategies to manage the re-pricing characteristics of the Company's assets and liabilities, all of which are designed to ensure that exposure to interest rate fluctuations is limited to within the Company's guidelines of acceptable levels of risk-taking. Hedging strategies, including the terms and pricing of loans and deposits and management of the deployment of its securities, are used to reduce mismatches in interest rate re-pricing opportunities of portfolio assets and their funding sources.
Interest rate risk is addressed by the ALCO, which includes members of executive management, finance, and operations. ALCO monitors interest rate risk by analyzing the potential impact on the net EVE and net interest income from potential changes in interest rates and considers the impact of alternative strategies or changes in balance sheet structure. The Company manages its balance sheet in part to maintain the potential impact on EVE and net interest income within acceptable ranges despite changes in interest rates.
The Company's exposure to interest rate risk is reviewed at least quarterly by the ALCO. Interest rate risk exposure is measured using interest rate sensitivity analysis to determine its change in both EVE and net interest income in the event of hypothetical changes in interest rates. If potential changes to EVE and net interest income resulting from hypothetical interest rate changes are not within the limits established by the BOD, the BOD may direct management to adjust the asset and liability mix to bring interest rate risk within Board-approved limits.
Net Interest Income Simulation. In order to measure interest rate risk at December 31, 2019,2021, the Company usesused a simulation model to project changes in net interest income that result from forecasted changes in interest rates. This analysis calculates the difference between a baseline net interest income forecast using current yield curves that do not take into consideration any future anticipated rate hikes, compared to forecasted net income resulting from an immediate parallel shift in rates upward or downward, along with other scenarios directed by ALCO. The income simulation model includes various assumptions regarding the re-pricing relationships for each of the Company's products. Many of the Company's assets are floatingvariable rate loans, which are assumed to re-price immediately and, proportional to the change in market rates, depending on their contracted index, including the impact of caps or floors. Some loans and investments contain contractual prepayment features (embedded options) and, accordingly, the simulation model incorporates prepayment assumptions. The Company's non-term deposit products re-price concurrently with interest rate changes taken by the Federal Open Market Committee.FOMC.
This analysis indicates the impact of changes in net interest income for the given set of rate changes and assumptions. It assumes the balance sheet remains static and that its structure does not change over the course of the year. It does not account for all factors that could impact the Company's results, including changes by management to mitigate interest rate changes or secondary factors, such as changes to the Company's credit risk profile as interest rates change.
Furthermore, loan prepayment rate estimates and spread relationships change regularly. Interest rate changes create changes in actual loan prepayment speeds that will differ from the market estimates incorporated in this analysis. Changes that vary significantly from the modeled assumptions may have a significant effectseffect on the Company's actual net interest income.
This simulation model assesses the changes in net interest income that would occur in response to an instantaneous and sustained increase or decrease (shock) in market interest rates. At December 31, 2019, the Company's2021, our net interest income exposure for the next 12twelve months related to these hypothetical changes in market interest rates was within the Company'sour current guidelines.

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Sensitivity of Net Interest Income
 Parallel Shift Rate Scenario
(change in basis points from Base)		Parallel Shift Rate Scenario
(change in basis points from Base)
 Down 100 Base Up 100 Up 200Down 100BaseUp 100Up 200
 (in thousands)(in millions)
Interest Income $1,198,091
 $1,302,915
 $1,437,503
 $1,576,092
Interest Income$1,664.5 $1,731.5 $1,928.3 $2,183.0 
Interest Expense 96,043
 157,552
 222,366
 287,172
Interest Expense119.6 137.8 261.9 387.7 
Net Interest Income 1,102,048
 1,145,363
 1,215,137
 1,288,920
Net Interest Income1,544.9 1,593.7 1,666.4 1,795.3 
% Change (3.8)%   6.1% 12.5%% Change(3.1)%4.6 %12.6 %
 Interest Rate Ramp Scenario
(change in basis points from Base)		Interest Rate Ramp Scenario
(change in basis points from Base)
 Down 100 Base Up 100 Up 200Down 100BaseUp 100Up 200
 (in thousands)(in millions)
Interest Income $1,253,569
 $1,302,915
 $1,359,077
 $1,421,736
Interest Income$1,700.8 $1,731.5 $1,806.2 $1,900.6 
Interest Expense 127,741
 157,552
 172,436
 186,619
Interest Expense120.5 137.8 168.4 198.8 
Net Interest Income 1,125,828
 1,145,363
 1,186,641
 1,235,117
Net Interest Income1,580.3 1,593.7 1,637.8 1,701.8 
% Change (1.7)%   3.6% 7.8%% Change(0.8)%2.8 %6.8 %
Economic Value of Equity. The Company measures the impact of market interest rate changes on the NPV of estimated cash flows from its assets, liabilities, and off-balance sheet items, defined as EVE, using a simulation model. This simulation model assesses the changes in the market value of interest rate sensitive financial instruments that would occur in response to an instantaneous and sustained increase or decrease (shock) in market interest rates.
At December 31, 2019,2021, the Company's EVE exposure related to these hypothetical changes in market interest rates was within the Company's current guidelines. The following table shows the Company's projected change in EVE for this set of rate shocks at December 31, 2019:2021:
Economic Value of Equity 
 Interest Rate Scenario (change in basis points from Base)Interest Rate Scenario (change in basis points from Base)
 Down 100 Base Up 100 Up 200 Up 300 Up 400Down 200Down 100BaseUp 100Up 200Up 300
 (in thousands)(in millions)
Assets $27,618,706
 $27,087,840
 $26,546,699
 $26,026,259
 $25,542,390
 $25,085,162
Assets$58,978.5 $57,876.4 $56,360.6 $54,954.3 $53,688.8 $52,556.0 
Liabilities 22,634,719
 22,035,566
 21,519,248
 21,072,481
 20,685,165
 20,346,458
Liabilities51,057.1 49,151.4 47,485.0 46,027.9 44,726.7 43,555.8 
Net Present Value 4,983,987
 5,052,274
 5,027,451
 4,953,778
 4,857,225
 4,738,704
Net Present Value7,921.4 8,725.0 8,875.6 8,926.4 8,962.1 9,000.2 
% Change (1.4)%   (0.5)% (1.9)% (3.9)% (6.2)%% Change(10.8)%(1.7)%0.6 %1.0 %1.4 %
The computation of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates, asset prepayments, and deposit decay, and should not be relied upon as indicative of actual results. Further, the computations do not contemplate any actions the Company may undertake in response to changes in interest rates. Actual amounts may differ from the projections set forth above should market conditions vary from the underlying assumptions.
Derivative Contracts. In the normal course of business, the Company uses derivative instruments to meet the needs of its customers and manage exposure to fluctuations in interest rates. The following table summarizes the aggregate notional amounts, market values, and terms of the Company’s derivative positions as of December 31, 20192021 and 2018:2020:
Outstanding Derivatives Positions
December 31,
20212020
NotionalNPVWeighted Average Term (Years)NotionalNPVWeighted Average Term (Years)
(dollars in millions)
$480,765.9 $(49.6)1.5 $1,812.6 $(83.3)16.0 
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December 31,
2019 2018
Notional Net Value Weighted Average Term (Years) Notional Net Value Weighted Average Term (Years)
(dollars in thousands)
$872,595
 $(53,667) 16.1
 $1,017,773
 $(42,477) 15.8

Item 8.Financial Statements and Supplementary Data
Item 8.Financial Statements and Supplementary Data
The Company's Consolidated Financial Statements and Supplementary Data included in this Annual Report is immediately following the Index to Consolidated Financial Statements page to this Annual Report.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
7073
7277
7378
7579
7680
7781
7983

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of
Western Alliance Bancorporation

Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Western Alliance Bancorporation and Subsidiariessubsidiaries (the Company) as of December 31, 20192021 and 2018,2020, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2019,2021, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20192021 and 2018,2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019,2021, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019,2021, based on criteria established in Internal Control-IntegratedControl—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report, dated March 2, 2020,February 25, 2022, expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Allowance for Credit Losses – Loans Held for Investment
As described in Notes 1 and 3 of4 to the consolidated financial statements, the Company’s allowance for credit losses for loans held for investment totaled $168$252.5 million as of December 31, 2019.2021. The allowance for credit losses represents an amount considered adequate to absorb estimated probable losses on existing loans that may become uncollectable, based on evaluation ofheld for investment is calculated under the collectability of loans and priorexpected credit loss experience, together with other factors.model and is an estimate of life-of-loan losses for the Company’s loans held for investment.
The allowance for credit losses for loans held for investment consists of two components: the specifican asset-specific component for estimating credit losses for individual loans that do not share risk characteristics with other loans and a pooled component for estimating credit losses for pools of loans that share similar risk characteristics. The allowance for impaired loansthe pooled component is derived from an estimate of expected credit losses primarily using an expected loss methodology that incorporates risk parameters (probability of default, loss given default and the general allowance for non-impaired loans. The general allowanceexposure at default) which are derived from various vendor models, internally developed statistical models or non-statistical estimation approaches.
73
Probability of default is comprised of a quantitative reserveprojected in these models or estimation approaches using economic scenarios, whose outcomes are weighted based on the Company’s historical charge-offeconomic outlook and were developed to incorporate relevant information about past events, current conditions, and reasonable and supportable forecasts.
Loss given default is typically derived from the Company’s own loss experience, however for the residential, warehouse lending and municipal and nonprofit loan segments, non-modeled methodologies are employed to estimate loss given default.
Exposure at default refers to the Company’s exposure to loss at the time of borrower default. For revolving lines of credit, the Company incorporates an expectation of increased line utilization for a qualitative reservehigher exposure at default on defaulted loans based on management’s evaluationhistorical experience. For term loans, exposure at default is calculated using an amortization schedule based on loan terms, adjusted for prepayment assumptions.
The quantitative estimates of several judgmentalexpected credit losses derived from the probability of default, loss given default and exposure at default are then adjusted to incorporate considerations of current trends and conditions that are not captured in the quantitative credit loss estimates through the use of qualitative or environmental factors. The qualitative factors evaluatedmeasurement of expected credit losses is influenced by managementloan volumes, loan mix, loan performance metrics, asset quality characteristics, delinquency status, historical credit loss experience, current conditions and reasonable and supportable economic forecasts.
The estimation of the allowance for credit losses on loans held for investment for pools of loans that share similar risk characteristics involves many inputs and assumptions, many of which are derived from various vendor and in-house models. These inputs and assumptions include, levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs

and recoveries; trends in volume and terms of loans; changes in underwriting standards and lending policies; experience, ability and depth of lending staff; national and local economic trends and conditions; changes in credit concentrations; out-of-market exposures; changes in quality of loan review system; and changes inamong others, the value of underlying collateral. Theselection, evaluation and measurement of these qualitative factorsthe reasonable and supportable forecast scenarios, which requires management to apply a significant amount of judgment and involves a high degree of estimation.
We identified the qualitative reservedetermination and evaluation of the probability of default, loss given default and exposure at default assumptions and forecasted economic scenario components of the allowance for credit losses for loans held for investment as a critical audit matter because auditing the underlying qualitative factorsassumptions, and economic scenario forecasts used in the qualitative reserveallowance for credit losses on loans held for investment involved a high degree of complexity and auditor judgment given the high degree of subjectivity exercised by management in developing the qualitative adjustment,allowance for credit losses on loans held for investment, which resulted in high estimation uncertainty.
Our audit procedures related to management’s evaluation and establishment of the qualitative reserveprobability of default, loss given default and exposure at default assumptions and forecasted economic scenarios components of the allowance for credit losses includefor Loans included the following, among others:
•We obtained an understanding of the relevant controls related to the evaluation and establishment of the qualitative reserveprobability of default, loss given default and exposure at default assumptions and the forecasted economic scenario components of the allowance for credit losses for loans held for investment and tested such controls for design and operating effectiveness, including controls related to management’s assessment and review of the qualitative factor changes and conclusions.effectiveness.
•We tested management’s process and significant judgments in the evaluation and establishment of the qualitative reserveprobability of default, loss given default and exposure at default assumptions and forecasted economic scenario components of the allowance for credit losses, which included:
◦Evaluating management’s considerations and data utilized as a basis for the adjustments relating to qualitative reserve factors, as well as testing the completeness and accuracy of the underlying data.
◦Evaluating the reasonableness of management’s judgments related to the qualitative and quantitative assessment of the considerations and data utilized in the determination of qualitative general reserve factors and the resulting qualitative component of the allowance for credit losses.
◦We evaluated management’s considerations and data utilized as a basis for the probability of default, loss given default and exposure at default assumptions and selection of forecasted economic scenarios and weightings and tested the completeness and accuracy of the underlying data that was available to management.
◦We evaluated the reasonableness of management’s judgments related to the probability of default, loss given default and exposure at default assumptions and forecasted scenarios, and qualitative and quantitative assessment of the considerations and data utilized in the determination of the forecasted economic scenarios and the resulting components of the allowance for credit losses for loans held for investment.
◦We evaluated the reasonableness of management’s judgments related to the establishment of the models being used in determining the probability of default, loss given default and exposure at default assumptions.
◦We utilized internal specialists to assist in evaluating the statistical documentation and process used by management in validating the models established by vendors.
74
Valuation of Correspondent Customer Relationships and Operating Licenses
As described in Note 2 to the financial statements, on April 7, 2021, the Company completed its acquisition of Aris, the parent company of AmeriHome. As a result of the transaction, the Company acquired correspondent relationships and operating licenses which were determined to be separately identifiable intangible assets with acquisition date fair values of $76.0 million and $55.5 million, respectively.
The Company, with the assistance of a third-party appraiser, calculated the fair value of the correspondent customer relationships and operating licenses utilizing an income approach with key, subjective assumptions related to forecasted revenues, discount rates and the time period over which cash flows would occur.
We identified the evaluation of the assumptions related to projected cash flows and discount rates utilized in the fair value calculations of correspondent customer relationships and operating licenses as a critical audit matter, because a high degree of subjectivity was involved in evaluating the key inputs of projected cash flows and discount rates. Auditing these assumptions involved a high degree of auditor judgement and increased audit effort as there was limited observable market information related to the assumptions and the calculated fair value of the correspondent customer relationships and operating licenses intangible assets were sensitive to possible changes in these key inputs.
Our audit procedures related to the valuation assumptions related to projected cash flows and discount rates used to determine the acquisition-date fair value of correspondent customer relationships and operating licenses intangible assets included the following, among others:
•We obtained an understanding of the relevant controls related to the development of forecasts of future revenues and estimated discount rates and tested such controls for design and operating effectiveness.
•We tested management’s process for determining fair value including:
◦We obtained the third-party valuation report and evaluated the appropriateness of valuation models utilized by third-party appraisers.
◦We tested completeness and accuracy of data inputs provided by management and utilized in the valuation models.
◦We evaluated the reasonableness of management’s projected cash flows, by comparing management’s prior forecasts to historical results of the acquired business and considering consistency of the projections with external market and industry data.
◦We tested the reasonableness of the projected cash flows by comparing them to historical results.
◦We utilized an internal valuation specialist to assist with developing an independent estimate of the discount rate based on publicly available market data and comparing the resulting rate to that utilized by management.
Valuation of Mortgage Servicing Rights
As described in Note 6 to the financial statements, the Company’s mortgage servicing rights totaled $698.0 million as of December 31, 2021. When the Company sells mortgage loans in the secondary market and retains the right to service these loans, a servicing right asset is capitalized at the time of sale when the benefits of servicing are deemed to be greater than adequate compensation for performing the servicing activities. Mortgage servicing rights represent the then-current fair value of future net cash flows expected to be realized from performing servicing activities. The Company has elected to subsequently measure mortgage servicing rights at fair value. The Company estimates the fair value of mortgage servicing rights using a discounted cash flow model that incorporates assumptions that market participants would use in estimating the fair value of servicing rights, including, but not limited to, option adjusted spread, conditional prepayment rate, servicing fee rate, and cost to service.
We identified the option adjusted spread and conditional prepayment rate assumptions used in the valuation of mortgage servicing rights as a critical audit matter due to the significant judgement required by management in determining these assumptions. Auditing these assumptions involved a high degree of auditor judgement and increased audit effort as there was limited observable market information and the calculated fair value of the mortgage servicing rights is sensitive to changes in these key assumptions.
75
Our audit procedures related to the valuation of mortgage servicing rights at December 31, 2021 included, among others, testing management’s process for determining the fair value, including:
•We evaluated the appropriateness of the valuation model.
•We tested the completeness and accuracy of the data used in the model.
•We utilized valuation specialists to assist with evaluating the reasonableness of the option adjusted spread and conditional prepayment rate assumptions by considering the consistency with external market and industry data.

/s/ RSM US LLP

We have served as the Company’s auditor since 1994.
Phoenix, ArizonaLos Angeles, California
March 2, 2020February 25, 2022

76

WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
  December 31,
  2019 2018
  (in thousands,
except shares and per share amounts)
Assets:    
Cash and due from banks $185,977
 $180,053
Interest-bearing deposits in other financial institutions 248,619
 318,519
Cash, cash equivalents, and restricted cash 434,596
 498,572
Money market investments —
 7
Investment securities - AFS, at fair value; amortized cost of $3,317,928 at December 31, 2019 and $3,339,888 at December 31, 2018 3,346,310
 3,276,988
Investment securities - HTM, at amortized cost; fair value of $516,261 at December 31, 2019 and $298,648 at December 31, 2018 485,107
 302,905
Investment securities - equity 138,701
 115,061
Investments in restricted stock, at cost 66,509
 66,132
Loans - HFS 21,803
 —
Loans, net of deferred loan fees and costs 21,101,493
 17,710,629
Less: allowance for credit losses (167,797) (152,717)
Net loans held for investment 20,933,696
 17,557,912
Premises and equipment, net 125,838
 119,474
Operating lease right of use asset 72,558
 —
Other assets acquired through foreclosure, net 13,850
 17,924
Bank owned life insurance 174,046
 170,145
Goodwill 289,895
 289,895
Other intangible assets, net 7,713
 9,260
Deferred tax assets, net 18,025
 31,990
Investments in LIHTC and renewable energy 409,365
 369,648
Other assets 283,936
 283,573
Total assets $26,821,948
 $23,109,486
Liabilities:    
Deposits:    
Non-interest-bearing demand $8,537,905
 $7,456,141
Interest-bearing 14,258,588
 11,721,306
Total deposits 22,796,493
 19,177,447
Customer repurchase agreements 16,675
 22,411
Other borrowings —
 491,000
Qualifying debt 393,563
 360,458
Operating lease liability 78,112
 —
Other liabilities 520,357
 444,436
Total liabilities 23,805,200
 20,495,752
Commitments and contingencies (Note 15) 

 

Stockholders’ equity:    
Common stock - par value $0.0001; 200,000,000 authorized; 104,527,544 shares issued at December 31, 2019 and 106,741,870 at December 31, 2018 10
 10
Treasury stock, at cost (2,003,873 shares at December 31, 2019 and 1,793,231 shares at December 31, 2018) (62,728) (53,083)
Additional paid in capital 1,374,141
 1,417,724
Accumulated other comprehensive income (loss) 25,008
 (33,622)
Retained earnings 1,680,317
 1,282,705
Total stockholders’ equity 3,016,748
 2,613,734
Total liabilities and stockholders’ equity $26,821,948
 $23,109,486
See accompanying Notes to Consolidated Financial Statements.

WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
  Year Ended December 31,
  2019 2018 2017
  (in thousands, except per share amounts)
Interest income:      
Loans, including fees $1,093,070
 $910,577
 $747,510
Investment securities 111,939
 106,752
 83,354
Dividends 6,133
 7,915
 7,740
Other 13,903
 8,239
 6,909
Total interest income 1,225,045
 1,033,483
 845,513
Interest expense:      
Deposits 158,405
 90,464
 41,965
Other borrowings 1,372
 4,329
 561
Qualifying debt 23,390
 22,287
 18,273
Other 1,466
 524
 50
Total interest expense 184,633
 117,604
 60,849
Net interest income 1,040,412
 915,879
 784,664
Provision for credit losses 18,500
 23,000
 17,250
Net interest income after provision for credit losses 1,021,912
 892,879
 767,414
Non-interest income:      
Service charges and fees 23,353
 22,295
 20,346
Income from equity investments 8,290
 8,595
 4,496
Card income 6,979
 8,009
 6,313
Foreign currency income 4,987
 4,760
 3,536
Income from bank owned life insurance 3,901
 3,946
 3,861
Lending related income and gains (losses) on sale of loans, net 3,158
 4,340
 2,212
Gain (loss) on sales of investment securities, net 3,152
 (7,656) 2,343
Fair value gain (loss) adjustments on assets measured at fair value, net 5,119
 (3,611) (1)
Other income 6,156
 2,438
 2,238
Total non-interest income 65,095
 43,116
 45,344
Non-interest expense:      
Salaries and employee benefits 279,274
 253,238
 214,344
Legal, professional, and directors' fees 37,009
 28,722
 29,814
Occupancy 32,507
 29,404
 27,860
Deposit costs 31,719
 18,900
 9,731
Data processing 30,577
 22,716
 19,225
Insurance 11,924
 14,005
 14,042
Loan and repossessed asset expenses 7,571
 4,578
 4,617
Business development 7,043
 5,960
 6,128
Marketing 4,199
 3,770
 3,804
Card expense 2,346
 4,301
 3,413
Intangible amortization 1,547
 1,594
 2,074
Net loss (gain) on sales / valuations of repossessed and other assets 3,818
 9
 (80)
Other expense 33,247
 38,470
 25,969
Total non-interest expense 482,781
 425,667
 360,941
Income before provision for income taxes 604,226
 510,328
 451,817
Income tax expense 105,055
 74,540
 126,325
Net income $499,171
 $435,788
 $325,492

  Year Ended December 31,
  2019 2018 2017
  (in thousands, except per share amounts)
Earnings per share:      
Basic $4.86
 $4.16
 $3.12
Diluted 4.84
 4.14
 3.10
Weighted average number of common shares outstanding:      
Basic 102,667
 104,669
 104,179
Diluted 103,133
 105,370
 104,997
December 31,
20212020
(in millions,
except shares and per share amounts)
Assets:
Cash and due from banks$166.2 $174.2 
Interest-bearing deposits in other financial institutions350.2 2,497.5 
Cash, cash equivalents and restricted cash516.4 2,671.7 
Investment securities - AFS, at fair value; amortized cost of $6,166.5 at December 31, 2021 and $4,586.4 at December 31, 20206,188.8 4,708.5 
Investment securities - HTM, at amortized cost and net of allowance for credit losses of $5.2 and $6.8 (fair value of $1,146.4 and $611.8) at December 31, 2021 and December 31, 2020, respectively1,101.9 562.0 
Investment securities - equity158.5 167.3 
Investments in restricted stock, at cost91.7 67.0 
Loans HFS (includes $3,939.7 measured at fair value at December 31, 2021 )5,635.1 — 
Loans HFI, net of deferred loan fees and costs39,075.4 27,053.0 
Less: allowance for credit losses(252.5)(278.9)
Net loans held for investment38,822.9 26,774.1 
Mortgage servicing rights698.0 — 
Premises and equipment, net181.9 134.1 
Operating lease right of use asset133.0 72.5 
Bank owned life insurance180.2 176.3 
Goodwill and intangible assets, net634.8 298.5 
Deferred tax assets, net20.9 31.3 
Investments in LIHTC and renewable energy631.3 405.6 
Other assets987.2 392.1 
Total assets$55,982.6 $36,461.0 
Liabilities:
Deposits:
Non-interest-bearing demand$21,353.4 $13,463.3 
Interest-bearing26,258.6 18,467.2 
Total deposits47,612.0 31,930.5 
Other borrowings1,501.9 21.0 
Qualifying debt895.8 548.7 
Operating lease liability142.8 79.9 
Other liabilities867.5 467.4 
Total liabilities51,020.0 33,047.5 
Commitments and contingencies (Note 18)00
Stockholders’ equity:
Preferred stock (par value $0.0001 and liquidation value per share of $25; 20,000,000 authorized; 12,000,000 issued and outstanding at December 31, 2021 and 0 at December 31, 2020)294.5 — 
Common stock (par value $0.0001; 200,000,000 authorized; 108,981,341 shares issued at December 31, 2021 and 103,013,290 at December 31, 2020) and additional paid in capital1,966.2 1,390.9 
Treasury stock, at cost (2,350,021 shares at December 31, 2021 and 2,169,397 shares at December 31, 2020)(86.8)(71.1)
Accumulated other comprehensive income15.7 92.3 
Retained earnings2,773.0 2,001.4 
Total stockholders’ equity4,962.6 3,413.5 
Total liabilities and stockholders’ equity$55,982.6 $36,461.0 
See accompanying Notes to Consolidated Financial Statements.

77
WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
Year Ended December 31,
202120202019
(in millions, except per share amounts)
Interest income:
Loans, including fees$1,488.8 $1,144.3 $1,093.0 
Investment securities158.6 107.8 111.9 
Dividends and other11.3 9.7 20.1 
Total interest income1,658.7 1,261.8 1,225.0 
Interest expense:
Deposits47.5 70.4 158.4 
Qualifying debt33.1 23.9 23.4 
Other borrowings29.3 0.6 2.8 
Total interest expense109.9 94.9 184.6 
Net interest income1,548.8 1,166.9 1,040.4 
(Recovery of) provision for credit losses(21.4)123.6 19.3 
Net interest income after provision for (recovery of) credit losses1,570.2 1,043.3 1,021.1 
Non-interest income:
Net gain on loan origination and sale activities326.2 — — 
Service charges and fees28.3 23.3 23.3 
Income from equity investments22.1 12.7 8.3 
Commercial banking related income17.4 14.7 16.1 
Gain on sales of investment securities8.3 0.2 3.1 
Gain on recovery from credit guarantees7.2 — — 
Fair value (loss) gain on assets measured at fair value, net(1.3)3.8 5.1 
Net loan servicing revenue (expense)(16.3)— — 
Other income12.3 16.1 9.2 
Total non-interest income404.2 70.8 65.1 
Non-interest expense:
Salaries and employee benefits466.7 303.6 279.3 
Legal, professional, and directors' fees58.6 42.2 37.0 
Data processing58.2 35.7 30.6 
Loan servicing expenses53.5 — — 
Occupancy43.8 34.1 32.6 
Deposit costs29.8 18.5 31.7 
Loan acquisition and origination expenses28.8 — — 
Insurance23.0 13.3 11.9 
Business development and marketing13.5 9.6 11.2 
Loss on extinguishment of debt5.9 — — 
Net (gain) loss on sales and valuations of repossessed and other assets(3.5)(1.5)3.8 
Acquisition and restructure expenses15.3 — — 
Other expense57.8 36.1 43.9 
Total non-interest expense851.4 491.6 482.0 
Income before provision for income taxes1,123.0 622.5 604.2 
Income tax expense223.8 115.9 105.0 
Net income899.2 506.6 499.2 
Dividends on preferred stock3.5 — — 
Net income available to common stockholders$895.7 $506.6 $499.2 
Earnings per share:
Basic$8.72 $5.06 $4.86 
Diluted8.67 5.04 4.84 
Weighted average number of common shares outstanding:
Basic102.7 100.2 102.7 
Diluted103.3 100.5 103.1 
See accompanying Notes to Consolidated Financial Statements.
78
WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
  Year Ended December 31,
  2019 2018 2017
  (in thousands)
Net income $499,171
 $435,788
 $325,492
Other comprehensive income (loss), net:      
Unrealized gain (loss) on AFS securities, net of tax effect of $(23,205), $13,354, and $(3,973), respectively 71,222
 (40,808) 6,334
Unrealized (loss) gain on SERP, net of tax effect of $138, $24, and $(79), respectively (412) (77) 264
Unrealized (loss) gain on junior subordinated debt, net of tax effect of $3,197, $(1,857), and $2,220, respectively (9,804) 5,693
 (3,604)
Realized (gain) loss on sale of AFS securities included in income, net of tax effect of $776, $(1,883), and $899, respectively (2,376) 5,773
 (1,444)
Net other comprehensive income (loss) 58,630
 (29,419) 1,550
Comprehensive income $557,801
 $406,369
 $327,042
Year Ended December 31,
202120202019
(in millions)
Net income$899.2 $506.6 $499.2 
Other comprehensive income (loss), net:
Unrealized (loss) gain on AFS securities, net of tax effect of $22.4, $(23.1), and $(23.2), respectively(69.0)70.9 71.2 
Unrealized loss on SERP, net of tax effect of $—, $0.1, and $0.1, respectively— (0.3)(0.4)
Unrealized loss on junior subordinated debt, net of tax effect of $0.3, $1.1, and $3.2, respectively(1.2)(3.1)(9.8)
Realized gain on sale of AFS securities included in income, net of tax effect of $2.1, $0, and $0.7, respectively(6.4)(0.2)(2.4)
Net other comprehensive (loss) income(76.6)67.3 58.6 
Comprehensive income$822.6 $573.9 $557.8 
See accompanying Notes to Consolidated Financial Statements.

79
WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
 Preferred StockCommon StockAdditional Paid in CapitalTreasury StockAccumulated Other Comprehensive Income (Loss)Retained EarningsTotal Stockholders’ Equity
 SharesAmountSharesAmount
(in millions)
Balance, December 31, 2018— $— 104.9 $— $1,417.7 $(53.1)$(33.6)$1,282.7 $2,613.7 
Net income— — — — — — — 499.2 499.2 
Restricted stock, performance stock units, and other grants, net— — 0.6 — 26.3 — — — 26.3 
Restricted stock surrendered (1)— — (0.2)— — (9.6)— — (9.6)
Stock repurchase— — (2.8)— (69.9)— — (50.3)(120.2)
Dividends paid— — — — — — — (51.3)(51.3)
Other comprehensive income, net— — — — — — 58.6 — 58.6 
Balance, December 31, 2019— $— 102.5 $— $1,374.1 $(62.7)$25.0 $1,680.3 $3,016.7 
Balance, January 1, 2020 (2)— — 102.5 — 1,374.1 (62.7)25.0 1,655.4 2,991.8 
Net income— — — — — — — 506.6 506.6 
Restricted stock, performance stock units, and other grants, net— — 0.6 — 29.1 — — — 29.1 
Restricted stock surrendered (1)— — (0.2)— — (8.4)— — (8.4)
Stock repurchase— — (2.1)— (12.3)— — (59.3)(71.6)
Dividends paid— — — — — — — (101.3)(101.3)
Other comprehensive income, net— — — — — — 67.3 — 67.3 
Balance, December 31, 2020— $— 100.8 $— $1,390.9 $(71.1)$92.3 $2,001.4 $3,413.5 
Net income— — — — — — — 899.2 899.2 
Restricted stock, performance stock unit, and other grants, net— — 0.6 — 35.0 — — — 35.0 
Restricted stock surrendered (1)— — (0.2)— — (15.7)— — (15.7)
Preferred stock issuance, net12.0 294.5 — — — — — — 294.5 
Common stock issuance, net— — 5.4 540.3 540.3 
Dividends paid to preferred stockholders— — — — — — — (3.5)(3.5)
Dividends paid to common stockholders— — — — — — — (124.1)(124.1)
Other comprehensive loss, net— — — — — — (76.6)— (76.6)
Balance, December 31, 202112.0 $294.5 106.6 $— $1,966.2 $(86.8)$15.7 $2,773.0 $4,962.6 
  Common Stock Additional Paid in Capital Treasury Stock Accumulated Other Comprehensive (Loss) Income Retained Earnings Total Stockholders’ Equity
  Shares Amount     
 (in thousands)
Balance, December 31, 2016 105,071
 $10
 $1,400,140
 $(26,362) $(4,695) $522,436
 $1,891,529
Balance, January 1, 2017 (1) 105,071
 10
 1,400,140
 (26,362) (4,695) 522,974
 1,892,067
Net income —
 —
 —
 —
 —
 325,492
 325,492
Exercise of stock options 38
 —
 846
 —
 —
 —
 846
Restricted stock, performance stock units, and other grants, net 648
 —
 23,554
 —
 —
 —
 23,554
Restricted stock surrendered (2) (270) —
 —
 (13,811) —
 —
 (13,811)
Other comprehensive income, net —
 —
 —
 —
 1,550
 —
 1,550
Balance, December 31, 2017 105,487
 $10
 $1,424,540
 $(40,173) $(3,145) $848,466
 $2,229,698
Balance, January 1, 2018 (3) 105,487
 10
 1,424,540
 (40,173) (4,203) 849,524
 2,229,698
Net income —
 —
 —
 —
 —
 435,788
 435,788
Exercise of stock options 22
 —
 554
 —
 —
 —
 554
Restricted stock, performance stock units, and other grants, net 564
 —
 25,711
 —
 —
 —
 25,711
Restricted stock surrendered (2) (223) —
 —
 (12,910) —
 —
 (12,910)
Stock repurchase (901) —
 (33,081) —
 —
 (2,607) (35,688)
Other comprehensive loss, net —
 —
 —
 —
 (29,419) —
 (29,419)
Balance, December 31, 2018 104,949
 $10
 $1,417,724
 $(53,083) $(33,622) $1,282,705
 $2,613,734
Net income —
 —
 —
 —
 —
 499,171
 499,171
Exercise of stock options 3
 —
 80
 —
 —
 —
 80
Restricted stock, performance stock unit, and other grants, net 605
 —
 26,238
 —
 —
 —
 26,238
Restricted stock surrendered (2) (211) —
 —
 (9,645) —
 —
 (9,645)
Stock repurchase (2,822) —
 (69,901) —
 —
 (50,230) (120,131)
Dividends paid —
 —
 —
 —
 —
 (51,329) (51,329)
Other comprehensive income, net —
 —
 —
 —
 58,630
 —
 58,630
Balance, December 31, 2019 102,524
 $10
 $1,374,141
 $(62,728) $25,008
 $1,680,317
 $3,016,748

(1)Share amounts represent Treasury Shares, see "Note 1. Summary of Significant Accounting Policies" for further discussion.
(1)As adjusted for adoption of ASU 2017-12. The cumulative effect of adoption of this guidance at January 1, 2017 resulted in an increase to retained earnings of $0.5 million and a corresponding increase to loans for the fair market value adjustment on the swaps.
(2)Share amounts represent Treasury Shares, see "Note 1. Summary of Significant Accounting Policies" for further discussion.
(3)As adjusted for adoption of ASU 2016-01 and ASU 2018-02. The cumulative effect of adoption of this guidance at January 1, 2018 resulted in an increase to retained earnings of $1.1 million and a corresponding decrease to accumulated other comprehensive income.
(2)As adjusted for adoption of ASU 2016-13, Measurement of Credit Losses on Financial Instruments. The cumulative effect of adoption of this guidance at January 1, 2020 resulted in a decrease to retained earnings of $24.9 million due to an increase in the allowance for credit losses. See "Note 1. Summary of Significant Accounting Policies" for further discussion.
See accompanying Notes to Consolidated Financial Statements.

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WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31,
202120202019
(in millions)
Cash flows from operating activities:
Net income$899.2 $506.6 $499.2 
Adjustments to reconcile net income to cash (used in) provided by operating activities:
(Recovery of) provision for credit losses(21.4)123.6 19.3 
Depreciation and amortization33.7 22.9 18.5 
Stock-based compensation35.1 28.7 26.2 
Deferred income taxes42.0 (25.1)(5.1)
Amortization of net premiums for investment securities39.8 28.2 17.1 
Amortization of tax credit investments49.5 49.2 41.5 
Amortization of operating lease right of use asset16.3 11.7 10.5 
Amortization of net deferred loan fees and net purchase premiums(66.3)(51.2)(42.7)
Purchases and originations of loans HFS(59,569.6)— — 
Proceeds from sales and payments on loans held for sale56,647.7 — — 
Mortgage servicing rights capitalized upon sale of mortgage loans(763.8)— — 
Net (gains) losses on:
Change in fair value of mortgage servicing rights and other177.7 — — 
Other(16.3)(9.4)(5.1)
Changes in other assets and liabilities, net(157.6)(15.0)138.4 
Net cash (used in) provided by operating activities$(2,654.0)$670.2 $717.8 
Cash flows from investing activities:
Investment securities - AFS
Purchases$(3,248.4)$(2,966.2)$(927.6)
Principal pay downs and maturities1,634.1 1,515.5 785.7 
Proceeds from sales164.5 156.6 150.4 
Investment securities - HTM
Purchases(595.6)(182.7)(131.4)
Principal pay downs and maturities54.9 17.4 21.6 
Proceeds from sales— — 10.0 
Equity securities carried at fair value
Purchases(36.2)(34.5)(32.7)
Redemptions21.0 7.6 14.6 
Proceeds from sales4.4 — — 
Proceeds from sale of mortgage servicing rights, net1,182.8 — — 
Purchase of other investments(134.6)(133.1)(150.8)
Proceeds from bank owned life insurance, net— 5.9 — 
Net increase in loans HFI(12,665.0)(5,897.2)(3,429.0)
Purchase of premises, equipment, and other assets, net(69.4)(26.8)(33.8)
Cash consideration paid for AmeriHome acquisition, net of cash acquired(1,024.4)— — 
Net cash used in investing activities$(14,711.9)$(7,537.5)$(3,723.0)
Cash flows from financing activities:
Net increase in deposits$15,681.5 $9,134.0 $3,619.0 
Net proceeds from issuance of long-term debt1,055.7 221.9 — 
Payments on long-term debt(475.9)(75.0)— 
Net (decrease) increase in short-term borrowings(1,742.1)4.3 (496.7)
Cash paid for tax withholding on vested restricted stock and other(15.8)(7.9)(9.6)
Common stock repurchases— (71.6)(120.2)
Cash dividends paid on common stock and preferred stock(127.6)(101.3)(51.3)
Proceeds from issuance of common stock in offerings, net540.3 — — 
Proceeds from issuance of preferred stock, net294.5 — — 
Net cash provided by financing activities$15,210.6 $9,104.4 $2,941.2 
Net (decrease) increase in cash, cash equivalents, and restricted cash(2,155.3)2,237.1 (64.0)
Cash, cash equivalents, and restricted cash at beginning of period2,671.7 434.6 498.6 
Cash, cash equivalents, and restricted cash at end of period$516.4 $2,671.7 $434.6 
81
  December 31,
  2019 2018 2017
  (in thousands)
Cash flows from operating activities:      
Net income $499,171
 $435,788
 $325,492
Adjustments to reconcile net income to cash provided by operating activities:      
Provision for credit losses 18,500
 23,000
 17,250
Depreciation and amortization 18,457
 14,319
 13,393
Stock-based compensation 26,238
 25,711
 23,554
Deferred income taxes (5,129) (16,709) 88,471
Amortization of net premiums for investment securities 17,095
 14,247
 16,938
Amortization of tax credit investments 41,501
 35,898
 25,355
Amortization of operating lease right of use asset 10,458
 —
 —
Accretion of fair market value adjustments on loans acquired from business combinations (12,678) (18,565) (28,235)
Accretion and amortization of fair market value adjustments on other assets and liabilities acquired from business combinations 1,857
 1,904
 2,385
Income from bank owned life insurance (3,901) (3,946) (3,861)
(Gains) / Losses on:      
Sales of investment securities (3,152) 7,656
 (2,343)
Assets measured at fair value, net (5,119) 3,611
 1
Sale of loans (690) (2,638) (945)
Other assets acquired through foreclosure, net (604) (1,214) (228)
Valuation adjustments of other repossessed assets, net 4,144
 1,267
 120
Sale of premises, equipment, and other assets, net 278
 (44) 28
Changes in other assets and liabilities, net 111,346
 20,687
 (93,564)
Net cash provided by operating activities 717,772
 540,972
 383,811
Cash flows from investing activities:      
Investment securities - trading      
Proceeds from sales —
 —
 994
Investment securities - AFS      
Purchases (927,589) (520,734) (1,429,434)
Principal pay downs and maturities 785,659
 425,151
 430,934
Proceeds from sales 150,377
 154,434
 110,104
Investment securities - HTM      
Purchases (131,384) (56,575) (169,400)
Principal pay downs and maturities 21,594
 8,987
 6,174
Proceeds from sales 10,000
 —
 —
Equity securities carried at fair value      
Purchases (32,725) (71,728) —
Redemption of principal (reinvestment of dividends) 14,598
 (577) —
Proceeds from sales —
 48,639
 —
Purchase of investment tax credits (141,668) (109,598) (38,098)
Purchase of SBIC investments (8,688) (4,129) (5,819)
Sale (purchase) of money market investments, net 7
 (7) —
Proceeds from bank owned life insurance —
 1,655
 607
(Purchase) liquidation of restricted stock, net (377) (347) (535)
Loan fundings and principal collections, net (3,429,014) (2,586,703) (1,873,387)
Purchase of premises, equipment, and other assets, net (35,148) (11,313) (8,862)
Proceeds from sale of other real estate owned and repossessed assets, net 1,325
 9,412
 21,195
Net cash used in investing activities (3,723,033) (2,713,433) (2,955,527)
       

  December 31,
  2019 2018 2017
  (in thousands)
Cash flows from financing activities:      
Net increase (decrease) in deposits $3,619,046
 $2,204,915
 $2,422,669
Net (decrease) increase in borrowings (496,736) 97,394
 294,289
Proceeds from exercise of common stock options 80
 554
 846
Cash paid for tax withholding on vested restricted stock (9,645) (12,910) (13,811)
Common stock repurchases (120,131) (35,688) —
Cash dividends paid on common stock (51,329) —
 —
Net cash provided by financing activities 2,941,285
 2,254,265
 2,703,993
Net (decrease) increase in cash, cash equivalents, and restricted cash (63,976) 81,804
 132,277
Cash, cash equivalents, and restricted cash at beginning of period 498,572
 416,768
 284,491
Cash, cash equivalents, and restricted cash at end of period $434,596
 $498,572
 $416,768
Supplemental disclosure:      
Cash paid (received) during the period for:      
Interest $180,436
 $113,507
 $59,838
Income taxes, net of refunds (23,403) 18,760
 99,430
Non-cash operating, investing, and financing activity:      
Transfers to other assets acquired through foreclosure, net 898
 5,744
 1,812
December 31,
202120202019
(in millions)
Supplemental disclosure:
Cash paid during the period for:
Interest$111.6 $108.6 $180.4 
Income taxes, net175.7 44.2 (23.4)
Non-cash operating, investing, and financing activity:
Net increase (decrease) in unfunded commitments and obligations$294.1 $(102.2)$36.6 
Transfers of securitized LHFS to AFS securities144.5 — — 
See accompanying Notes to Consolidated Financial Statements.

82
WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of operation
WAL is a bank holding company headquartered in Phoenix, Arizona, incorporated under the laws of the state of Delaware. WAL provides a full spectrum of customized loan, deposit lending,and treasury management international banking, and online banking products and servicescapabilities, including blockchain-based offerings through its wholly-owned banking subsidiary, WAB.
WAB operates the following full-service banking divisions: ABA, BON, FIB, Bridge, and TPB. The Company also serves business customers through a national platform of specialized financial services and has added to these capabilities with the acquisition of AmeriHome on April 7, 2021, which provides mortgage banking services. In addition, the Company has two non-bank subsidiaries, which are LVSP, which held and managed certain OREO properties, and CSI, a captive insurance company formed and licensed under the laws of the State of Arizona and established as part of the Company's overall enterprise risk management strategy.
Basis of presentation
The accounting and reporting policies of the Company are in accordance with GAAP and conform to practices within the financial services industry. The accounts of the Company and its consolidated subsidiaries are included in the Consolidated Financial Statements.
Recent accounting pronouncements
Convertible Debt and Derivatives and Hedging
In August 2020, the FASB issued guidance within ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). The amendments in this update affect entities that issue convertible instruments and/or contracts indexed to and potentially settled in an entity’s own equity. The new ASU simplifies the convertible accounting framework through elimination of the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The amendments to ASC Subtopics 470 and 815 are effective for interim and annual reporting periods beginning after December 15, 2021 and are not expected to have a material impact on the Company’s Consolidated Financial Statements.
Reference Rate Reform
In March 2020, the FASB issued guidance within ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, in response to the scheduled discontinuation of LIBOR on December 31, 2021. Since the issuance of this guidance, the publication cessation of U.S. dollar LIBOR has been extended to June 30, 2023. The amendments in this update provide optional guidance designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, borrowings) necessitated by reference rate reform.
The following optional expedients for applying the requirements of certain ASC Topics or Industry Subtopics in the Codification are permitted for contracts that are modified because of reference rate reform and that meet certain scope guidance: 1) modifications of contracts within the scope of ASC Topics 310, Receivables, and 470, Debt, should be accounted for by prospectively adjusting the effective interest rate; 2) modifications of contracts within the scope of ASC Topic 842, Leases, should be accounted for as a continuation of the existing contracts with no reassessments of the lease classification and the discount rate or remeasurements of lease payments that otherwise would be required under this ASC Topic for modifications not accounted for as separate contracts; 3) modifications of contracts do not require an entity to reassess its original conclusion about whether that contract contains an embedded derivative that is clearly and closely related to the economic characteristics and risks of the host contract under ASC Subtopic 815-15, Derivatives and Hedging- Embedded Derivatives; and 4) for other ASC Topics or Industry Subtopics in the Codification, the amendments in this Update also include a general principle that permits an entity to consider contract modifications due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination.
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In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope in order to clarify that certain optional expedients and exceptions in ASC Topic 848 apply to derivatives that are affected by the discounting transition. Specifically, certain provisions in ASC Topic 848, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discount, or contract price alignment that is modified as a result of reference rate reform.
The amendments in these updates are effective immediately for all entities and apply to contract modifications through December 31, 2022. The adoption of this accounting guidance is not expected to have a material impact on the Company's Consolidated Financial Statements.
Recently adopted accounting guidance
Income Taxes
In December 2019, the FASB issued guidance within ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in ASU 2019-12 are intended to reduce the cost and complexity of applying ASC 740. The amendments that are applicable to the Company address: 1) franchise and other taxes partially based on income; 2) step-up in basis of goodwill in a business combination; 3) allocation of tax expense in separate entity financial statements; and 4) interim recognition of enactment of tax laws or rate changes. The adoption of this guidance did not have a significant impact on the Company’s Consolidated Financial Statements.
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management's estimates and judgments are ongoing and are based on experience, current and expected future conditions, third-party evaluations and various other assumptions that management believes are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities, as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. Actual results may differ from those estimates and assumptions used in the Consolidated Financial Statements and related notes. Material estimates that are particularly susceptible to significant changes in the near term, particularly to the extent that economic conditions worsen or persist longer than expected in an adverse state, relate to: 1) the determination of the allowance for credit losses; 2) certain assets and liabilities carried at fair value; and 3) accounting for income taxes.
Principles of consolidation
As of December 31, 2019,2021, WAL has the following significant wholly-owned subsidiaries: WAB and 8 unconsolidated subsidiaries used as business trusts in connection with the issuance of trust-preferred securities.
The BankWAB has the following significant wholly-owned subsidiaries: 1) WABT, which holds certain investment securities, municipal and nonprofit loans, and leases; 2) WA PWI, which holds interests in certain limited partnerships invested primarily in low income housing tax credits and small business investment corporations; and3) Helios Prime, which holds interests in certain limited partnerships invested in renewable energy projects; 4) BW Real Estate, Inc., which operates as a real estate investment trust and holds certain of WAB's real estate loans and related securities.securities; and 5) Western Finance Company (formerly Western Alliance Equipment Finance), which purchases and originates equipment finance leases and provides mortgage banking services through its wholly-owned subsidiary, AmeriHome Mortgage.
The Company does not have any other significant entities that should be consolidated. All significant intercompany balances and transactions have been eliminated in consolidation.
Reclassifications
Certain amounts reported in prior periods may have been reclassified in the Consolidated FinancialIncome Statements for the prior periods have been reclassified to conform to the current presentation. The reclassifications have no effect on net income or stockholders’ equity as previously reported.
84
Cash and cash equivalents
For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks (including cash items in process of clearing), and federal funds sold. Cash flows from loans originated by the Company and customer deposit accounts are reported net.
The Company maintains deposit accounts with other banks, which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts.

Business combinations
Cash reserve requirements
Depository institutionsBusiness combinations are required by law to maintain reserves againstaccounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method, the acquiring entity in a business combination recognizes all of the acquired assets and assumed liabilities at their transaction deposits. The reserves must be held in cash or with the FRB. Banks are permitted to meet this requirement by maintaining the specified amount as an average balance over a two-week period. The total of reserve balances was approximately $164.1 million and $145.9 millionestimated fair values as of December 31, 2019the date of acquisition. Any excess of the purchase price over the fair value of net assets and 2018, respectively.other identifiable intangible assets acquired is recorded as goodwill. To the extent the fair value of net assets acquired, including identified intangible assets, exceeds the purchase price, a bargain purchase gain is recognized. Assets acquired and liabilities assumed from contingencies are also recognized at fair value if the fair value can be determined during the measurement period. Results of operations of an acquired business are included in the Consolidated Income Statement from the date of acquisition. Acquisition-related costs, including conversion and restructuring charges, are expensed as incurred.
Investment securities
Investment securities include debt securities and equity securities. Debt securities may be classified as HTM, AFS, or trading. The appropriate classification is initially decided at the time of purchase. Securities classified as HTM are those debt securities that the Company has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs, or general economic conditions. These securities are carried at amortized cost. The sale of an HTM security within three months of its maturity date or after the majority of the principal outstanding has been collected is considered a maturity for purposes of classification and disclosure.
Securities classified as AFS or trading securities are reported as an asset on the Consolidated Balance Sheet at their estimated fair value. As the fair values of AFS debt securities change, the changes are reported net of income tax as an element of OCI, except for other-than-temporarily-impaired securities. When AFS debt securities are sold, the unrealized gains or losses are reclassified from OCI to non-interest income. The changes in the fair values of trading securities are reported in non-interest income. Securities classified as AFS are debt securities that the Company doesintends to hold for an indefinite period of time, but not have the positive intent and ability to holdnecessarily to maturity. Any decision to sell a security classified as AFS would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, decline in credit quality, and regulatory capital considerations.
EquityHTM securities are reported as an asset on the Consolidated Balance Sheetcarried at amortized cost. AFS securities are carried at their estimated fair value, with unrealized holding gains and losses reported in OCI, net of tax. When AFS debt securities are sold, the unrealized gains or losses are reclassified from OCI to non-interest income. Trading securities are carried at their estimated fair value, with changes recognizedin fair value reported in earnings as part of non-interest incomeincome.
Equity securities are carried at their estimated fair value, with changes in the Consolidated Income Statement.fair value reported in earnings as part of non-interest income.
Interest income is recognized based on the coupon rate and increased by accretion of discounts earned or decreased byincludes the amortization of purchase premiums paidand the accretion of purchase discounts. Premiums and discounts on investment securities are generally amortized or accreted over the contractual life of the security adjusted for prepayments estimates, using the interest method.
In estimating whether there For the Company's mortgage-backed securities, amortization or accretion of premiums or discounts are any OTTIadjusted for anticipated prepayments. Gains and losses on the sale of investment securities are recorded on the trade date and determined using the specific identification method.
A debt security is placed on nonaccrual status at the time its principal or interest payments become 90 days past due. Interest accrued but not received for a security placed on nonaccrual is reversed against interest income.
Allowance for credit losses on investment securities
On January 1, 2020, the Company adopted ASC Topic 326, Financial Instruments-Credit Losses, which replaced the legacy GAAP Other-than-Temporary Impairment model with a credit loss model. The credit loss model under ASC 326-20, applicable to HTM debt securities, requires recognition of lifetime expected credit losses through an allowance account at the time the security is purchased. The Company measures expected credit losses on its HTM debt securities on a collective basis by major security type. The Company's HTM securities portfolio consists of low income housing tax-exempt bonds and private label residential MBS. Low income housing tax-exempt bonds share similar risk characteristics with the Company's CRE, non-owner occupied or construction and land loan pools, given the similarity in underlying assets or collateral. Accordingly, expected credit losses on HTM securities are estimated using the same models and approaches as these loan pools, which utilize risk parameters (probability of default, loss given default, and exposure at default) in the measurement of expected credit losses. The historical data used to estimate probability of default and severity of loss in the event of default is derived or obtained from
85
internal and external sources and adjusted for the expected effects of reasonable and supportable forecasts over the expected lives of the securities on those historical losses. Accrued interest receivable on HTM securities, which is included in other assets on the Consolidated Balance Sheet, is excluded from the estimate of expected credit losses.
The credit loss model under ASC 326-30, applicable to AFS debt securities, management considers the:requires recognition of credit losses through an allowance account with credit losses recognized once securities become impaired. For AFS debt securities, a decline in fair value due to credit loss results in recognition of an allowance for credit losses. Impairment may result from credit deterioration of the issuer or collateral underlying the security. An assessment to determine whether a decline in fair value resulted from a credit loss is performed at the individual security level. Among other factors, the Company considers: 1) length of time and the extent to which the fair value has beenis less than the amortized cost;cost basis; 2) the financial condition and near term prospects of the issuer, including consideration of relevant financial metrics or ratios of the issuer; 3) impactany adverse conditions related to an industry or geographic area of an issuer; 4) any changes in market interest rates; and 4) intent and abilityto the rating of the security by a rating agency; and 5) any past due principal or interest payments from the issuer. If an assessment of the above factors indicates that a credit loss exists, the Company records an allowance for credit losses for the excess of the amortized cost basis over the present value of cash flows expected to retain its investment for a period of time sufficientbe collected, limited to allow for any anticipated recovery inthe amount that the security's fair value and whether it is not more-likely-than-not the Company would be required to sell the security.
Declines in the fair value of individual AFS securities that are deemed to be other-than-temporary are reflected in earnings when identified. The fair value of the debt security then becomes the new cost basis. For individual debt securities where the Company does not intend to sell the security and it is not more-likely-than-not that the Company will be required to sell the security before recovery ofless than its amortized cost basis,basis. Subsequent changes in the other-than-temporary decline in fair value of the debt security related to: 1)allowance for credit losses are recorded as a provision for (or recovery of) credit loss is recognized in earnings; and 2) interest rate, market, or other factors is recognized in OCI.
For individual debt securities where the Company either intends to sell the security or when it is more-likely-than-not the Company will not recover all of its amortized cost, the OTTI is recognized in earnings equal to the entire difference between the security's cost basis and its fair value at the balance sheet date. For individual debt securities for which a credit loss has been recognized in earnings, interestexpense. Interest accruals and amortization and accretion of premiums and discounts are suspended when the credit loss is recognized. Interestrecognized in earnings. Any interest received after accruals havethe security has been suspendedplaced on nonaccrual status is recognized in income on a cash basis. Accrued interest receivable on AFS debt securities, which is included in other assets on the Consolidated Balance Sheet, is excluded from the estimate of expected credit losses.
For each AFS security in an unrealized loss position, the Company also considers: 1) its intent to retain the security until anticipated recovery of the security's fair value; and 2) whether it is more-likely-than not that the Company would be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the debt security is written down to its fair value and the write-down is charged against the allowance for credit losses with any incremental impairment recorded in earnings.
Write-offs are made through reversal of the allowance for credit losses and a direct write-off of the amortized cost basis of the AFS security. The Company considers the following events to be indicators that a write-off should be taken: 1) bankruptcy of the issuer; 2) significant adverse event(s) affecting the issuer in which it is improbable for the issuer to make its remaining payments on the security; and 3) significant loss of value of the underlying collateral behind a security. Recoveries on debt securities, if any, are recorded in the period received.
Restricted stock
WAB is a member of the Federal Reserve System and, as part of its membership, is required to maintain stock in the FRB in a specified ratio to its capital. In addition, WAB is a member of the FHLB system and, accordingly, maintains an investment in capital stock of the FHLB based on the borrowing capacity used. The Bank also maintains an investment in its primary correspondent bank. These investments are considered equity securities with no actively traded market. Therefore, the shares are considered restricted investment securities. These investments are carried at cost, which is equal to the value at which they may be redeemed. The dividend income received from the stock is reported in interest income. The Company conducts a periodic review and evaluation of its restricted stock to determine if any impairment exists. No impairment has been recorded to date.

Loans held for sale

The Company began holding loans HFS in connection with the AmeriHome acquisition and continues to purchase and originate loans as part of its mortgage banking business. Loans held for sale consistHFS are reported at fair value or the lower of cost or fair value, depending on the acquisition source. The Company has elected to record loans purchased from correspondent sellers or originated directly to consumers at fair value to more timely reflect the Company's performance. Changes in fair value of loans thatHFS are reported in current period income as a component of Net gain on loan origination and sale activities in the Company originates (or acquires) and intendsConsolidated Income Statement. Alternatively, delinquent loans repurchased under the terms of the GNMA MBS program, referred to sell. Theseas EBO loans, are carriedreported at the lower of aggregate cost or fair value. FairFor EBO loans, the amount by which cost exceeds fair value is determined basedaccounted for as a valuation allowance and any changes in the valuation allowance are included in Net gain on available market data for similar assets, expected cash flows,loan origination and appraisalssale activities in the Consolidated Income Statement.
The Company recognizes a transfer of underlying collateralloans as a sale when it surrenders control over the transferred loans. Control is considered to be surrendered when the transferred loans have been legally isolated from the Company, the transferee has the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred loans, and the Company does not maintain effective control over the transferred loans through either an agreement that entitles or obligates the Company to repurchase or redeem the loans before their maturity or the credit quality ofability to unilaterally cause the borrower. Gains and losses onholder to return loans. If the saletransfer of loans qualifies as a sale, the Company derecognizes such loans and records the gain or loss as a
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component of Net gain on loan origination and sale activities in the Consolidated Income Statement. If the transfer of loans does not qualify as a sale, the proceeds from the transfer are accounted for as secured borrowings.
Loan acquisition and origination fees on loans HFS consist of fees earned by the Company for purchasing and originating loans and are recognized pursuant to ASC 860, Transfersat the time the loans are purchased or originated. These fees generally represent flat, per loan fee amounts and Servicing. Interestare included as part of Net gain on loan origination and sale activities in the Consolidated Income Statement.
Recognition of interest income on thesenon-government guaranteed or insured loans HFS is suspended and accrued dailyunpaid interest receivable is reversed against interest income when loans become 90 days delinquent or when recovery of income and loan origination feesprincipal becomes doubtful. Loans return to accrual status when the principal and costsinterest become current and it is probable that the amounts are deferredfully collectible. For government guaranteed or insured loans HFS that are 90 days delinquent, the Company continues to recognize interest income at the debenture rate for FHA loans and included inat the cost basisnote rate for VA and USDA loans, adjusted for probability of the loan. The Company issues various representations and warranties associated with these loan sales. The Company has not experienced any losses as a result of these representations and warranties.default.
Loans held for investment
The Company generally holds loans for investment andLoans that management has the intent and ability to hold loansfor the foreseeable future or until their maturity. Therefore, theymaturity or payoff are reported at book value. Net loans are stated atamortized cost. Amortized cost is the amount of unpaid principal, adjusted for unamortized net deferred fees and costs, premiums and discounts, purchase accounting fair value adjustments, and an allowance for credit losses.write-offs. In addition, the book valuesamortized cost of loans subject to a fair value hedge are adjusted for changes in value attributable to the effective portion of the hedged benchmark interest rate risk.
The Company may also purchase loans or acquire loans through a business combination. These acquiredAt the purchase or acquisition date, loans are recorded at their estimated fair value onevaluated to determine whether there has been more than insignificant credit deterioration since origination. Loans that have experienced more than insignificant credit deterioration since origination are referred to as PCD loans. In its evaluation of whether a loan has experienced more than insignificant deterioration in credit quality since origination, the dateCompany takes into consideration loan grades, loan-to-values greater than policy limits, past due and nonaccrual status, and TDR loans. The Company may also consider external credit rating agency ratings for borrowers and for non-commercial loans, FICO score or band, probability of purchase, which is compriseddefault levels, and number of unpaid principal adjusted for estimatedtimes past due. The initial estimate of credit losses and interest rate fair value adjustments. Loans are evaluated individually aton PCD loans is added to the purchase price on the acquisition date to determine if thereestablish the initial amortized cost basis of the loan; accordingly, the initial recognition of expected credit losses has been credit deterioration since origination. Such loans may then be aggregated and accounted for as a pool of loans basedno impact on common characteristics.net income. When the Company acquires suchinitial measurement of expected credit losses on PCD loans are calculated on a pooled loan basis, the yield that may beexpected credit losses are allocated to each loan within the pool. Any difference between the initial amortized cost basis and the unpaid principal balance of the loan represents a noncredit discount or premium, which is accreted (accretable yield) is limited(or amortized) into interest income over the life of the loan. Subsequent changes to the excess ofallowance for credit losses on PCD loans are recorded through the Company’s estimate of undiscounted cash flows expected to be collected over the Company’s initial investment in the loan. The excess of contractual cash flows over the cash flows expected to be collected may not be recognized as an adjustment to yield, loss, or a valuation allowance. Subsequent increases in cash flows expected to be collected generally are recognized prospectively through adjustment of the loan’s yield over the remaining life. Subsequent decreases to cash flows expected to be collected are recognized as impairmentprovision for credit losses. The Company may not carry over or create a valuation allowance in the initial accounting for loans acquired under these circumstances. For purchased loans that are not deemed impaired atto have experienced more than insignificant credit deterioration since origination, any discounts or premiums included in the acquisition date, fair value adjustments attributable to both credit and interest ratespurchase price are accreted (or amortized) over the contractual life of the individual loan. For additional information, see "Note 3.5. Loans, Leases and Allowance for Credit Losses" of these Notes to Consolidated Financial Statements.
DeferredIn applying the effective yield method to loans, the Company generally applies the contractual method whereby loan fees andcollected for the origination of loans less direct loan origination costs (net of deferred loan fees), as well as premiums and discounts and certain purchase accounting fair value adjustments, are amortized over the contractual life of the loan through interest income. If a loan has scheduled payments, the amortization of the net deferred loan fee is calculated using the interest method over the contractual life of the loan. If a loan does not have scheduled payments, such as a line of credit, the net deferred loan fee is recognized as interest income on a straight-line basis over the contractual life of the loan commitment. Commitment fees based on a percentage of a customer’s unused line of credit and fees related to standby letters of credit are recognized over the commitment period. When loans are repaid, any remaining unamortized balances of premiums, discounts, or net deferred fees are recognized as interest income.
Conversely, with respect to loans originated under the PPP, the Company incorporates projected prepayments in calculating effective yield. As a result, net deferred fees are accreted into interest income faster than would be the case when applying the contractual method based upon the timing and amount of estimated forgiven loan balances.
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Non-accrual loans:Table of Contents
Nonaccrual loans
When a borrower discontinues making payments as contractually required by the note, the Company must determine whether it is appropriate to continue to accrue interest. The Company ceases accruing interest income when the loan has become delinquent by more than 90 days or when management determines that the full repayment of principal and collection of interest according to contractual terms is no longer likely. Past due status is based on the contractual terms of the loan. The Company may decide to continue to accrue interest on certain loans more than 90 days delinquent if the loans are well secured by collateral and in the process of collection.
For all HFI loan types, when a loan is placed on non-accrualnonaccrual status, all interest accrued but uncollected is reversed against interest income in the period in which the status is changed, and the Company makes a loan-level decision to apply either the cash basis or cost recovery method. The Company recognizesmay recognize income on a cash basis when a payment is received and only for those non-accrualnonaccrual loans for which the collection of the remaining principal balance is not in doubt. Under the cost recovery method, subsequent payments received from the customer are applied to principal and generally no further interest income is recognized until the loan principal has been paid in full or until circumstances have changed such that payments are again consistently received as contractually required.
Impaired loans: A loan is identified as impaired Loans are returned to accrual status when it is no longer probable that interest and principal will be collected according to the contractual termsall of the original loan agreement. Impaired loansprincipal and interest amounts contractually due are measured for reserve requirements in accordance with ASC 310, Receivables, based on the present value of expectedbrought current and future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral less applicable disposition costs if the loan is collateral dependent. The amount of an impairment reserve, if any, and any subsequent changespayments are recorded as a provision for credit losses. Losses are recorded as a charge-off when losses are confirmed. In addition to management's internal loan review process, regulators may from time to time direct the Company to modify loan grades, loan impairment calculations, or loan impairment methodology.reasonably assured.

Troubled Debt Restructured Loans:Loans
A TDR loan is a loan inon which the Company, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that the Company would not otherwise consider. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed to assess the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. The evaluation is performed in accordance with the Company's internal underwriting policy. The loan terms that have beenmay be modified or restructured due to a borrower’s financial situation include, but are not limited to, a reduction in the stated interest rate, an extension of the maturity or renewal of the loan at an interest rate below current market, a reduction in the face amount of the debt, a reduction in the accrued interest, or deferral of interest payments. A TDR loan is also considered impaired. A TDR loan may be returned to accrual status when the loan is brought current, has performed in accordance with the contractual restructured terms for a reasonable period of time (generally six months), and the ultimate collectability of the total contractual restructured principal and interest is no longer in doubt. However, such loans continue to be considered impaired. Consistent with regulatory guidance, a TDR loan that is subsequently modified in another restructuring agreement but has shown sustained performance and classification as a TDR, will be removed from TDR status provided that the modified terms were market-based at the time of modification.
The CARES Act, signed into law on March 27, 2020, permitted financial institutions to suspend requirements under GAAP for loan modifications to borrowers affected by COVID-19 that would otherwise be characterized as TDRs and suspend any determination related thereto if (i) the loan modification was made between March 1, 2020 and December 31, 2020 and (ii) the applicable loan was not more than 30 days past due as of December 31, 2019. The Consolidated Appropriations Act, 2021 extended these provisions through January 1, 2022. In addition, federal bank regulatory authorities issued guidance to encourage financial institutions to make loan modifications for borrowers affected by COVID-19 and assured financial institutions that they will neither receive supervisory criticism for such prudent loan modifications, nor be required by examiners to automatically categorize COVID-19-related loan modifications as TDRs. The Company has been applying this guidance to qualifying loan modifications.
Credit quality indicators
Loans are regularly reviewed to assess credit quality indicators and to determine appropriate loan classification and grading in accordance with applicable bank regulations. The Company’s risk rating methodology assigns risk ratings ranging from 1 to 9, where a higher rating represents higher risk. The Company differentiates its loan segments based on shared risk characteristics for which expected credit losses are measured on a pool basis.
The nine risk rating categories can generally be described by the following groupings for loans:
"Pass" (grades 1 through 5): TheCompany has five pass risk ratings, which represent a level of credit quality that ranges from having no well-defined deficiency or weakness to some noted weakness; however, the risk of default on any loan classified as pass is expected to be remote. The five pass risk ratings are described below:
Minimal risk. Consist of loans that are fully secured either with cash held in a deposit account at the Bank or by readily marketable securities with an acceptable margin based on the type of security pledged.
Low risk. Consist of loans with a high investment grade rating equivalent.
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Modest risk. Consist of loans where the credit facility greatly exceeds all policy requirements or with policy exceptions that are appropriately mitigated. A secondary source of repayment is verified and considered sustainable. Collateral coverage on these loans is sufficient to fully cover the debt as a tertiary source of repayment. Debt of the borrower is low relative to borrower’s financial strength and ability to pay.
Average risk. Consist of loans where the credit facility meets or exceeds all policy requirements or with policy exceptions that are appropriately mitigated. A secondary source of repayment is available to service the debt. Collateral coverage is more than adequate to cover the debt. The borrower exhibits acceptable cash flow and moderate leverage.
Acceptable risk. Consist of loans with an acceptable primary source of repayment, but a less than preferable secondary source of repayment. Cash flow is adequate to service debt, but there is minimal excess cash flow. Leverage is moderate or high.
"Special mention"(grade 6): These are generally assets that possess potential weaknesses that warrant management's close attention. These loans may involve borrowers with adverse financial trends, higher debt-to-equity ratios, or weaker liquidity positions, but not to the degree of being considered a “problem loan” where risk of loss may be apparent. Loans in this category are usually performing as agreed, although there may be non-compliance with financial covenants.
"Substandard" (grade 7): These assets are characterized by well-defined credit weaknesses and carry the distinct possibility that the Company will sustain some loss if such weakness or deficiency is not corrected. All loans 90 days or more past due and all loans on nonaccrual status are considered at least "Substandard," unless extraordinary circumstances would suggest otherwise.
"Doubtful"(grade 8): These assets have all the weaknesses inherent in those classified as "Substandard" with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable, but because of certain known factors that may work to the advantage and strengthening of the asset (for example, capital injection, perfecting liens on additional collateral and refinancing plans), classification as an estimated loss is deferred until a more precise status may be determined. Due to the high probability of loss, loans classified as "Doubtful" are placed on nonaccrual status.
"Loss"(grade 9): These assets are considered uncollectible and having such little recoverable value that it is not practical to defer writing off the asset. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practicable or desirable to defer writing off the asset, even though partial recovery may be achieved in the future.
Allowance for credit losses on HFI loans
On January 1, 2020, the Company adopted ASC Topic 326, which changed the impairment model for most financial assets carried at amortized cost from an incurred loss model to an expected loss model. The discussion below reflects the current expected credit loss model methodology. Prior to January 1, 2020, the allowance for credit losses on loans was based on incurred credit losses in accordance with accounting policies disclosed in "Note 1. Summary of Significant Accounting Policies" in the accompanying Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.
Credit risk is inherent in the business of extending loans and leases to borrowers for whichand is continuously monitored by management and reflected within the Company must maintain an adequate allowance for credit losses. The allowance for credit losses is established through a provisionan estimate of life-of-loan losses for credit losses recorded to expense. Loans are charged against the Company's loans HFI. The allowance for credit losses when management believesis a valuation account that is deducted from the contractual principal oramortized cost basis of a loan to present the net amount expected to be collected on the loan. Accrued interest willreceivable on these loans, which is included in other assets on the Consolidated Balance Sheet, is excluded from the estimate of expected credit losses. Expected recoveries of amounts previously written off and expected to be written off are included in the valuation account and may not exceed the aggregate of amounts previously written off and expected to be collected. Subsequent recoveries, if any, are credited to the allowance. The allowance is an amount believed adequate to absorb estimated probable losses on existing loans that may become uncollectable, based on evaluation of the collectability of loans and prior credit loss experience, together with other factors.written off. The Company formally re-evaluates and establishes the appropriate level of the allowance for credit losses on a quarterly basis.
The allowance consists of specific and general components. The specific allowance applies to impaired loans. For impaired collateral dependent loans,Determining the reserve is calculated based on the collateral value, net of estimated disposition costs. Generally, the Company obtains an independent collateral valuation analysis for each loan over a specified dollar threshold every 12 months. Loans not collateral dependent are evaluated based on the expected future cash flows discounted at the original contractual interest rate.
The general allowance covers all non-impaired loans and incorporates several quantitative and qualitative factors, which are used for allappropriateness of the Company's portfolio segments. Quantitative factors include company-specific, 10-year historical net charge-offs stratifiedallowance is complex and requires judgment by loans with similar characteristics. Qualitative factors include: 1) levelsmanagement about the effect of and trends in delinquencies and impaired loans; 2) levels of and trends in charge-offs and recoveries; 3) trends in volume and terms of loans; 4) changes in underwriting standards or lending policies; 5) experience, ability, depth of lending staff; 6) national and local economic trends and conditions; 7) changes in credit concentrations; 8) out-of-market exposures; 9) changes in quality of loan review system; and 10) changes in the value of underlying collateral.
Due to the credit concentrationmatters that are inherently uncertain. In future periods, evaluations of the Company'soverall loan portfolio or particular segments of the loan portfolio, in real estate secured loans,light of the value of collateral is heavily dependent on real estate valuesfactors and forecasts then prevailing, may result in Arizona, Nevada, and California. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in economic or other conditions. In addition, regulators, as an integral part of their examination processes, periodically review the Bank's allowance for credit losses and may requirecredit loss expense in those future periods. The allowance level is influenced by loan volumes, mix, loan performance metrics, asset quality characteristics, delinquency status, historical credit loss experience, and the Bankinputs and assumptions in economic forecasts, such as macroeconomic inputs, length of reasonable and supportable forecast periods, and reversion methods. The methodology for estimating the amount of expected credit losses reported in the allowance for credit losses has two basic components: first, an asset-specific component involving individual loans that do not share similar risk characteristics with other loans and the measurement of expected credit losses for such individual loans and; second, a pooled component for estimated expected credit losses for loans that share similar risk characteristics.
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Loans that do not share risk characteristics with other loans
Loans that do not share risk characteristics with other loans are evaluated on an individual basis. Loans evaluated individually are not included in the collective evaluation. These loans consist of loans with unique features or loans that no longer share risk characteristics with other pooled loans. The process for determining whether a loan should be evaluated on an individual basis begins with determination of credit rating. With the exception of residential loans, all accruing loans graded substandard or worse with a total commitment of $1.0 million or more are assigned a reserve based on an individual evaluation. For these loans, the allowance is based primarily on the fair value of the underlying collateral, utilizing independent third-party appraisals.
Loans that share similar risk characteristics with other loans
In estimating the component of the allowance for credit losses for loans that share similar risk characteristics with other loans, such loans are segregated into loan segments. The Company's primary portfolio segments align with the methodology applied in estimating the allowance for credit losses under CECL. Loans are designated into loan segments based on loans pooled by product types, business lines, and similar risk characteristics or areas of risk concentration.
In determining the allowance for credit losses, the Company derives an estimate of expected credit losses primarily using an expected loss methodology that incorporates risk parameters (probability of default, loss given default, and exposure at default), which are derived from various vendor models, internally-developed statistical models, or non-statistical estimation approaches. Probability of default is projected in these models or estimation approaches using a single economic scenario and were developed to make adjustmentsincorporate relevant information about past events, current conditions, and reasonable and supportable forecasts. With the exception of the Company's residential loan segment, the Company's PD models share a common definition of default, which include loans that are 90 days past due, on nonaccrual status, have a charge-off, or obligor bankruptcy. Input reversion is used for all loan segment models, except for the commercial and industrial and CRE, owner-occupied loan segments. Output reversion is used for the commercial and industrial and CRE, owner-occupied loan segments by incorporating, after the forecast period, a one-year linear reversion to the allowance based on their judgment about information availablelong-term reversion rate in year three through the remaining life of the loans within the respective segments. LGDs are typically derived from the Company's historical loss experience. However, for the residential, warehouse lending, and municipal and nonprofit loan segments, where the Company has either zero (or near zero) losses, or has a limited loss history through the last economic downturn, certain non-modeled methodologies are employed to themestimate LGD. Factors utilized in calculating average LGD vary for each loan segment and are further described below. Exposure at default refers to the Company's exposure to loss at the time of their examination. Management regularly reviewsborrower default. For revolving lines of credit, the Company incorporates an expectation of increased line utilization for a higher EAD on defaulted loans based on historical experience. For term loans, EAD is calculated using an amortization schedule based on contractual loan terms, adjusted for a prepayment rate assumption. Prepayment trends are sensitive to interest rates and the macroeconomic environment. Fixed rate loans are more influenced by interest rates, whereas variable rate loans are more influenced by the macroeconomic environment. After the quantitative expected loss estimates are calculated, management then adjusts these estimates to incorporate considerations of current trends and conditions that are not captured in the quantitative loss estimates, through the use of qualitative and/or environmental factors.
The following provides credit quality indicators and risk elements most relevant in monitoring and measuring the allowance for credit losses on loans for each of the loan portfolio segments identified:
Warehouse lending
The warehouse lending portfolio segment consists of mortgage warehouse lines, MSR financing facilities, and note finance loans, which have a monitored borrowing base to mortgage companies and similar lenders and are primarily structured as commercial and industrial loans. The collateral for these loans is primarily comprised of residential whole loans and MSRs, with the borrowing base of these loans tightly monitored and controlled by the Company. The primary support for these loans takes the form of pledged collateral, with secondary support provided by the capacity of the financial institution. The collateral-driven nature of these loans distinguish them from traditional commercial and industrial loans. These loans are impacted by interest rate shocks, residential lending rates, prepayment assumptions, and formulaegeneral real estate stress. As a result of the unique loan characteristics, limited historical default and loss experience, and the collateral nature of this loan portfolio segment, the Company uses a non-modeled approach to estimate expected credit losses, leveraging grade information, grade migration history, and management judgment.
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Municipal and nonprofit
The municipal and nonprofit portfolio segment consists of loans to local governments, government-operated utilities, special assessment districts, hospitals, schools and other nonprofits. These loans are generally, but not exclusively, entered into for the purpose of financing real estate investment or for refinancing existing debt and are primarily structured as commercial and industrial loans. Loans are supported by taxes or utility fees, and in some cases tax liens on real estate, operating revenue of the institution, or other collateral support the loans. While unemployment rates and the market valuation of residential properties have an effect on the tax revenues supporting these loans, these loans tend to be less cyclical in comparison to similar commercial loans due to reliance on diversified tax bases. The Company uses a non-modeled approach to estimate expected credit losses for this portfolio segment, leveraging grade information and historical municipal default rates.
Tech & innovation
The tech & innovation portfolio segment is comprised of commercial loans that are originated within this business line and are not collateralized by real estate. The source of repayment of these loans is generally expected to be the income that is generated from the business. Expected credit losses for this loan segment are estimated using both a vendor model and an internally-developed model. These models incorporate market level and company-specific factors such as financial statement variables, adjusted for the current stage of the credit cycle and for the Company's loan performance data such as delinquency, utilization, maturity, and size of the loan commitment under specific macroeconomic scenarios to produce a probability of default. Macroeconomic variables include the Dow Jones Index, credit spread between the BBB Bond Yield and 10-Year Treasury Bond Yield, unemployment rate, and CBOE VIX Index quarterly high. LGD and the prepayment rate assumption for EAD for this loan segment are driven by unemployment levels.
Equity fund resources
The equity fund resources portfolio segment is comprised of commercial loans to private equity and venture capital funds. The primary source of repayment of these loans is typically uncalled capital commitments from institutional investors and high net worth individuals. The models used to estimate expected credit losses for this loan segment are the same as those used for the tech & innovation portfolio segment.
Other commercial and industrial
The other commercial and industrial segment is comprised of commercial and industrial loans that are not originated within the Company's specialty business lines and are not collateralized by real estate. The models used to estimate expected credit losses for this loan segment are the same as those used for the tech & innovation portfolio segment.
Commercial real estate, owner-occupied
The CRE, owner-occupied portfolio segment is comprised of commercial loans that are collateralized by real estate, where the borrower has a business that occupies the property. These loans are typically entered into for the purpose of providing real estate finance or improvement. The primary source of repayment of these loans is the income generated by the business and where rental or sale of the property may provide secondary support for the loan. These loans are sensitive to general economic conditions as well as the market valuation of CRE properties. The probability of default estimate for this loan segment is modeled using the same model as the commercial and industrial loan segment. LGD for this loan segment is driven by property appreciation and the prepayment rate assumption for EAD is driven by unemployment levels.
Hotel franchise finance
The Hotel franchise finance segment is comprised of loans that are originated within this business line and are collateralized by real estate, where the owner is not the primary tenant. These loans are typically entered into for the purpose of financing or the improvement of commercial investment properties. The primary source of repayment of these loans are the rents paid by tenants and where the sale of the property may provide secondary support for the loan. These loans are sensitive to the market valuation of CRE properties, rental rates, and general economic conditions. The vendor model used to estimate expected credit losses for this loan segment projects probabilities of default and exposure at default based on multiple macroeconomic scenarios by modeling how macroeconomic conditions affect the commercial real estate market. Real estate market factors utilized in this model include vacancy rate, rental growth rate, net operating income growth rate, and commercial property price changes for each specific property type. The model then incorporates loan and property-level characteristics including debt coverage, leverage, collateral size, seasoning, and property type. LGD for this loan segment is derived from a non-modeled approach that is driven by property appreciation and the prepayment rate assumption for EAD is driven by the property appreciation for fixed rate loans and unemployment levels for variable rate loans.
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Other commercial real estate, non-owner occupied
The other commercial real estate, non-owner occupied segment is comprised of loans that are not originated within the Company's specialty business lines and are collateralized by real estate, where the owner is not the primary tenant. The model used to estimate expected credit losses for this loan segment is the same as the model used for the Hotel franchise finance portfolio segment.
Residential
The residential loan portfolio segment is comprised of loans collateralized primarily by first liens on 1-4 residential family properties and home equity lines of credit that are collateralized by either first liens or junior liens on residential properties. The primary source of repayment of these loans is the value of the property and the capacity of the owner to make payments on the loan. Unemployment rates and the market valuation of residential properties will impact the ultimate repayment of these loans. The residential mortgage loan model is a vendor model that projects probability of default, loss given default severity, prepayment rate, and exposure at default to calculate expected losses. The model is intended to capture the borrower's payment behavior during the lifetime of the residential loan by incorporating loan level characteristics such as loan type, coupon, age, loan-to-value, and credit score and economic conditions such as Home Price Index, interest rate, and unemployment rate. A default event for residential loans is defined as 60 days or more past due, with property appreciation as the driver for LGD results. The prepayment rate assumption for exposure at default for residential loans is based on industry prepayment history.
Probability of default for HELOCs is derived from an internally-developed model that projects PD by incorporating loan level information such as FICO score, lien position, balloon payments, and macroeconomic conditions such as property appreciation. LGD for this loan segment is driven by property appreciation and lien position. Exposure at default for HELOCs is calculated based on utilization rate assumptions using a non-modeled approach and also incorporates management judgment.
Construction and land development
The construction and land portfolio segment is comprised of loans collateralized by land or real estate, which are entered into for the purpose of real estate development. The primary source of repayment of these loans is the eventual sale or refinance of the completed project and where claims on the property provide secondary support for the loan. These loans are impacted by the market valuation of CRE and residential properties and general economic conditions that have a higher sensitivity to real estate markets compared to other real estate loans. Default risk of a property is driven by loan-specific drivers, including loan-to-value, maturity, origination date, and the MSA in which the property is located, among other items. The variables used in determining the allowanceinternally-developed model include loan level drivers such as origination loan-to-value, loan maturity, and makes adjustments if required to reflectmacroeconomic drivers such as property appreciation, MSA level unemployment rate, and national GDP growth. LGD for this loan segment is driven by property appreciation. The prepayment rate assumption for EAD is driven by the current risk profileproperty appreciation for fixed rate loans and unemployment levels for variable rate loans.
Other
This portfolio consists of those loans not already captured in one of the portfolio.aforementioned loan portfolio segments, which include, but may not be limited to, overdraft lines for treasury services, credit cards, consumer loans not collateralized by real estate, and small business loans collateralized by residential real estate. The consumer and small business loans are supported by the capacity of the borrower and the valuation of any collateral. General economic factors such as unemployment will have an effect on these loans. The Company uses a non-modeled approach to estimate expected credit losses, leveraging average historical default rates. LGD for this loan segment is driven by unemployment levels and lien position. The prepayment rate assumption for EAD is driven by the BBB corporate spread for fixed rate loans and unemployment levels for variable rate loans.
Transfers of financial assets
Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed surrendered when the: 1) assets have been isolated from the Company; 2) transferee obtains the right to pledge or exchange the transferred assets; and 3) Company no longer maintains effective control over the transferred assets through an agreement to repurchase the transferred assets before maturity.

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Premises and equipment
Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed principally byusing the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the term of the lease or the estimated life of the improvement, whichever is shorter. Depreciation and amortization is computed using the following estimated lives: 
Years
Bank premises31
Furniture, fixtures, and equipment3 - 10
Leasehold improvements (1)3 - 10
(1)Depreciation is recorded over the lesser of the relevant 3 to 10 year term or the remaining life of the lease.
(1)Depreciation is recorded over the lesser of the relevant 3 to 10-year term or the remaining life of the lease.
Management periodically reviews premises and equipment in order to determine if facts and circumstances suggest that the value of an asset is not recoverable.
Off-balance sheet credit exposures, including unfunded loan commitments
The Company maintains a separate allowance for credit losses on off-balance-sheet credit exposures, including unfunded loan commitments, financial guarantees, and letters of credit, which is classified in other liabilities on the Consolidated Balance Sheet. The allowance for credit losses on off-balance sheet credit exposures is adjusted through increases or decreases to the provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur, an estimate of exposure at default that is derived from utilization rate assumptions using a non-modeled approach, and PD and LGD estimates that are derived from the same models and approaches for the Company's other loan portfolio segments described in the Allowance for credit losses on HFI loans section within this note as these unfunded commitments share similar risk characteristics with these loan portfolio segments. No credit loss estimate is recorded for off-balance sheet credit exposures that are unconditionally cancellable by the Company or for undrawn amounts under such arrangements that may be drawn prior to the cancellation of the arrangement.
Mortgage servicing rights
The Company acquired MSRs as part of the AmeriHome acquisition and continues to generate new MSRs from its mortgage banking business. When the Company sells mortgage loans in the secondary market and retains the right to service these loans, a servicing right asset is capitalized at the time of sale when the benefits of servicing are deemed to be greater than adequate compensation for performing the servicing activities. MSRs represent the then-current fair value of future net cash flows expected to be realized from performing servicing activities. The Company has elected to subsequently measure MSRs at fair value and report changes in fair value in current period income as a component of Net loan servicing revenue in the Consolidated Income Statement.
The Company may in the ordinary course of business sell MSRs and will recognize, as of the trade date, a gain or loss on the sale equal to the difference between the carrying value of the transferred MSRs and the value of the assets received as consideration. The Company subsequently derecognizes MSRs when substantially all of the risks and rewards of ownership are irrevocably passed to the transferee and any protection provisions retained by the Company are minor and can be reasonably estimated, which typically occurs on the settlement date. Protection provisions are considered to be minor if the obligation created by such provisions is estimated to be no more than 10 percent of the sales price and the Company retains the risk of prepayment for no more than 120 days. The Company records an estimated liability for retained protection provisions as of the trade date and continues to remeasure this liability until settlement, with any changes in the estimated liability recorded in earnings. In addition, fees to transfer loans associated with the sold MSRs to a new servicer are also recorded on the settlement date. Gains or losses on sales of MSRs, net of retained protection provisions, and transfer fees are included in Net loan servicing revenue in the Consolidated Income Statement.
Leases (lessee)
At inception, contracts are evaluated to determine whether the contract constitutes a lease agreement. For contracts that are determined to be an operating lease, a corresponding ROU asset and operating lease liability are recorded in separate line items on the Consolidated Balance Sheet. A ROU asset represents the Company’s right to use an underlying asset during the lease term and a lease liability represents the Company’s commitment to make contractually obligated lease payments. Operating lease ROU assets and liabilities are recognized at the commencement date of the lease and are based on the present value of lease payments over the lease term. The measurement of the operating lease ROU asset includes any lease payments made and is reduced by lease incentives that are paid or are payable to the Company. Variable lease payments that depend on an index or
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rate such as the Consumer Price Index are included in lease payments based on the rate in effect at the commencement date of the lease. Lease payments are recognized on a straight-line basis over the lease term as part of occupancyOccupancy expense overin the lease term.Consolidated Income Statements.
As the rate implicit in the lease is not readily determinable, the Company's incremental collateralized borrowing rate is used to determine the present value of lease payments. This rate gives consideration to the applicable FHLB collateralized borrowing rates and is based on the information available at the commencement date. The Company has elected to apply the short-term lease measurement and recognition exemption to leases with an initial term of 12 months or less; therefore, these leases are not recorded on the Company’s Consolidated Balance Sheet, but rather, lease expense is recognized over the lease term on a straight-line basis. The Company’s lease agreements may include options to extend or terminate the lease. These options are included in the lease term when it is reasonably certain that the options will be exercised.
In addition to the package of practical expedients, theThe Company also elected the practical expedient that allows lessees to makemade an accounting policy election to not separate non-lease components from the associated lease component, and instead account for them all together as part of the applicable lease component. This practical expedient can be elected separately for each underlying class of asset. The majority of the Company’s non-lease components such as common area maintenance, parking, and taxes are variable, and are expensed as incurred. Variable payment amounts are determined in arrears by the landlord depending on actual costs incurred.
Goodwill and other intangible assets
The Company records as goodwill the excess of the purchase price in a business combination over the fair value of the identifiable net assets acquired in accordance with applicable guidance. The Company performs its annual goodwill and intangibles impairment tests as of October 1 each year, or more often if events or circumstances indicate that the carrying value may not be recoverable. The Company can first elect to assess, through qualitative factors, whether it is more likely than not that goodwill is impaired. If the qualitative assessment indicates potential impairment, a quantitative impairment test is necessary.performed. If, based on the quantitative test, a reporting unit's carrying amount exceeds its fair value, a goodwill impairment charge for this difference is recorded to current period earnings as part of non-interest expense.
ThePrior to the acquisition of AmeriHome, the Company’s intangible assets consistconsisted primarily of core deposit intangible assets that are being amortized over periods ranging from five to 10 years. See "Note 2. Mergers, Acquisitions and Dispositions" of these Notes to Consolidated Financial Statements for discussion of the intangible assets acquired as part of the AmeriHome acquisition.
The Company considers the remaining useful lives of its core deposit intangible assets each reporting period, as required by ASC 350, Intangibles—Goodwill and Other, to determine whether events and circumstances warrant a revision to the remaining period of amortization. If the estimate of an intangible asset’s remaining useful life has changed, the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. The Company has not revised its estimates of the useful lives of its core deposit intangiblesintangible assets during the years ended December 31, 2019, 2018,2021, 2020, or 2017.2019.

Low income housing and renewable energy tax credits
The Company holds ownership interests in limited partnerships and limited liability companies that invest in affordable housing and renewable energy projects. These investments are designed to generate a return primarily through the realization of federal tax credits and deductions, which may be subject to recapture by taxing authorities if compliance requirements are not met. The Company accounts for its low income housing investments using the proportional amortization method. Renewable energy projects are accounted for under the deferral method, whereby the investment tax credits are reflected as an immediate reduction in income taxes payable and the carrying value of the asset in the period that the investment tax credits are claimed. See "Note 14.17. Income Taxes" of these Notes to Consolidated Financial Statements for further discussion.
The Company evaluates its interests in these entities to determine ifwhether it has a variable interest and whether it is required to consolidate these entities. A variable interest is an investment or other interest that will absorb portions of an entity's expected losses or receive portions of the entity's expected residual returns. If the Company determines that it has a variable interest in an entity, it evaluates whether such interest is in a variable interest entity.VIE. A VIE is broadly defined as an entity where either: 1) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of an entity that most significantly impact the entity's economic performance or 2) the equity investment at risk is insufficient to finance that entity's activities without additional subordinated financial support. The Company is required to consolidate any VIE when it is determined to be the primary beneficiary of the VIE's operations.
A variable interest holder is considered to be the primary beneficiary of a VIE if it has both the power to direct the activities of a VIE that most significantly impact the entity's economic performance and has the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE. The Company’s assessment of whether it is the primary beneficiary of a VIE includes consideration of various factors such as: 1) the Company's ability to direct the activities
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that most significantly impact the entity's economic performance; 2) its form of ownership interest; 3) its representation on the entity's governing body; 4) the size and seniority of its investment; and 5) its ability and the rights of other investors to participate in policy making decisions and to replace the manager of and/or liquidate the entity. The Company is required to evaluate whether to consolidate a VIE both at inception and on an ongoing basis as changes in circumstances require reconsideration.
The Company’s investments in qualified affordable housing and renewable energy projects meet the definition of a VIE as the entities are structured such that the limited partner investors lack substantive voting rights. The general partner or managing member has both the power to direct the activities that most significantly impact the economic performance of the entities and the obligation to absorb losses or the right to receive benefits that could be significant to the entities. Accordingly, as a limited partner, the Company is not the primary beneficiary and is not required consolidate these entities.
Bank owned life insurance
BOLI is carried at its cash surrender value with changes recorded in other non-interest income in the Consolidated Income Statements. The face amount of the underlying policies including death benefits was $359.0$462.5 million and $358.7$465.8 million as of December 31, 20192021 and 2018,2020, respectively. There are no loans offset against cash surrender values, and there are no restrictions as to the use of proceeds.
Customer repurchase agreementsCredit linked notes
The Company enters into repurchase agreements with customers, whereby it pledges securities against overnight investments made fromCredit linked notes are structured to effectively transfer the customer’s excess collected funds. The Company records theserisk of first losses on a reference pool of loans and are considered to be free standing credit enhancements. These notes are recorded at the amount of cashthe proceeds received, net of debt issuance costs. In addition, as the credit guarantee component of these notes is considered to be free standing, the allowance for credit losses measured on the reference pool of loans in connectionaccordance with ASC 326 is not reduced by the transaction.credit guarantee. Rather, a contra debt balance equal to the estimated allowance for credit losses on the reference pool of loans is recorded, which reduces the carrying value of the notes. The initial contra debt balance and subsequent adjustments are recorded with a corresponding gain or loss on recovery from credit guarantees recognized in earnings.
Stock compensation plans
The Company has the Incentive Plan, as amended, which is described more fully in "Note 10.13. Stockholders' Equity" of these Notes to Consolidated Financial Statements. Compensation expense for stock options andon non-vested restricted stock awards is based on the fair value of the award on the measurement date which, for the Company, is the date of the grant and is recognized ratably over the service period of the award. Forfeitures are estimated at the time of the award grant and revised in subsequent periods if actual forfeitures differ from those estimates. The Company utilizes the Black-Scholes option-pricing model to calculate the fair value of stock options. The fair value of non-vested restricted stock awards is the market price of the Company’s stock on the date of grant.
The Company's performance stock units have a cumulative EPS target and a TSR performance measure component. The TSR component is a market-based performance condition that is separately valued as of the date of the grant. A Monte Carlo valuation model is used to determine the fair value of the TSR performance metric, which simulates potential TSR outcomes over the performance period and determines the payouts that would occur in each scenario. The resulting fair value of the TSR component is based on the average of these results. Compensation expense related to the TSR component is based on the fair value determination on the date of the grant and is not subsequently revised based on actual performance. Compensation expense on the EPS component for these awards is based on the fair value (market price of the Company's stock on the date of the grant) of the award. Compensation expense related to both the TSR and EPS components is recognized ratably over the service period of the award.
See "Note 10.13. Stockholders' Equity" of these Notes to Consolidated Financial Statements for further discussion of stock options and restricted stock awards.

Dividends
WAL is a legal entity separate and distinct from its subsidiaries. As a holding company with limited significant assets other than the capital stock of its subsidiaries, WAL's ability to pay dividends depends primarily upon the receipt of dividends or other capital distributions from its subsidiaries. The Company's subsidiaries' ability to pay dividends to WAL is subject to, among other things, their individual earnings, financial condition, and need for funds, as well as federal and state governmental policies and regulations applicable to WAL and each of those subsidiaries, which limit the amount that may be paid as dividends without prior approval. In addition, the terms and conditions of other securities the Company issues may restrict its ability to pay dividends to holders of the Company's common stock. For example, if any required payments on outstanding trust preferred securities are not made, WAL would be prohibited from paying cash dividends on its common stock.
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Preferred stock
On September 22, 2021, the Company issued an aggregate of 12,000,000 depositary shares, each representing a 1/400th ownership interest in a share of the Company’s 4.250% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Shares, Series A, par value $0.0001 per share, with a liquidation preference of $25 per Depositary Share (equivalent to $10,000 per share of Series A preferred stock). The Company's Series A preferred stock is perpetual preferred stock that is not subject to any mandatory redemption, resulting in classification as permanent equity. Dividends on preferred stock are recognized on the declaration date and are recorded as a reduction of retained earnings.
Treasury shares
The Company separately presents treasury shares, which represent shares surrendered to the Company equal in value to the statutory payroll tax withholding obligations arising from the vesting of employee restricted stock awards. Treasury shares are carried at cost.
Common stock repurchases
On December 11, 2018, theThe Company has previously adopted its common stock repurchase program,programs pursuant to which the Company was authorized to repurchase up to $250.0 millionhas repurchased shares of its shares ofoutstanding common stock, throughthe most recent of which expired in December 31, 2019.2020. All shares repurchased under the plan arewere retired upon settlement. The Company has elected the method to allocate the excess of the repurchase price over the par value of its common stock between APIC and retained earnings, with theearnings. The portion allocated to APIC is limited to the amount of APIC that was recorded at the time that the shares were initially issued, which iswas calculated on a last-in, first-out basis. The Company's
Sales of common stock repurchaseunder ATM program was renewed through December 2020, authorizing
On June 3, 2021, the Company to repurchaseentered into a distribution agency agreement with J.P. Morgan Securities LLC, under which the Company may sell up to an additional $250.0 million4,000,000 shares of its outstanding common stock.stock on the NYSE. The Company pays the distribution agents a mutually agreed rate, not to exceed 2% of the gross offering proceeds of the shares sold pursuant to the distribution agency agreement. The common stock is sold at prevailing market prices at the time of the sale or at negotiated prices and, as a result, prices will vary. Any sales under the ATM program are made pursuant to a prospectus dated May 14, 2021 and a prospectus supplement filed with the SEC in an offering of shares from the Company's shelf registration statement on Form S-3 (No. 333-256120). On November 18, 2021, the distribution agency agreement was amended to add Piper Sandler & Co. as an agent with J.P. Morgan Securities LLC. See "Note 13. Stockholders' Equity" of these Notes to Consolidated Financial Statements for further discussion of this program.
Derivative financial instruments
The Company uses interest-rateinterest rate swaps to mitigate interest-rate risk associated with changes to the fair value of certain fixed-rate financial instruments (fair value hedges).
The Company recognizes derivatives as assets or liabilities on the Consolidated Balance Sheet at their fair value in accordance with ASC 815, Derivatives and Hedging. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. Derivative instruments designated in a hedge relationship to mitigate exposure to changes in the fair value of an asset or liability attributable to a particular risk, such as interest rate risk, are considered fair value hedges.
Changes in the fair value of a derivative that is designated and qualifies as a fair value hedge, along with changes in the fair value of the hedged asset or liability that are attributable to the hedged risk, are recorded in current-period earnings. Changes in the fair value of derivatives not considered to be highly effective in hedging the change in fair value of the hedged item are recognized in earnings as non-interest income during the period of the change.
The Company documents its hedge relationships, including identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction after the derivative contract is executed. At inception, the Company performs a quantitative assessment to determine whether the derivatives used in hedging transactions are highly effective (as defined in the guidance) in offsetting changes in the fair value of the hedged item. Retroactive effectiveness is assessed, as well as the continued expectation that the hedge will remain effective prospectively. After the initial quantitative assessment is performed, on a quarterly basis, the Company performs a qualitative hedge effectiveness assessment. This assessment takes into consideration any adverse developments related to the counterparty's risk of default and any negative events or circumstances that affect the factors that originally enabled the Company to assess that it could reasonably support, qualitatively, an expectation that the hedging relationship was and will continue to be highly effective. The Company discontinues hedge accounting prospectively when it is determined that a hedge is no longer highly effective. When hedge accounting is discontinued on a fair value hedge that no longer qualifies as an effective hedge, the derivative instrument continues to be reported at fair value on the Consolidated Balance Sheet, but the carrying amount of the hedged item is no longer adjusted for future changes in fair value. The adjustment to the carrying amount of the hedged item that existed at the date hedge accounting is discontinued is amortized over the remaining life of the hedged item into earnings.
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Changes in the fair value of a derivative that is designated and qualifies as a fair value hedge, along with changes in the fair value of the hedged asset or liability that are attributable to the hedged risk, are recorded in the same line item as the offsetting loss or gain on the related interest rate swaps during the period of change. For loans, the gain or loss on the hedged item is included in interest income and for subordinated debt, the gain or loss on the hedged items is included in interest expense.
Derivative instruments that are not designated as hedges, so called free-standing derivatives, are reported on the Consolidated Balance Sheet at fair value and the changes in fair value are recognized in earnings as non-interest income during the period of change.

With the acquisition of AmeriHome, the Company's economic hedging volume has substantially increased. The Company enters into commitments to purchase mortgage loans that will be held for sale. These loan commitments, described as IRLCs, qualify as derivative instruments, except those that are originated rather than purchased, and intended for HFI classification. As of December 31, 2021, all IRLCs qualify as derivative instruments. Changes in fair value associated with changes in interest rates are economically hedged by utilizing forward sale commitments and interest rate futures. These hedging instruments are typically entered into contemporaneously with IRLCs. Loans that have been or will be purchased or originated may be used to satisfy the Company's forward sale commitments. In addition, derivative financial instruments are also used to economically hedge the Company's MSR portfolio. Changes in the fair value of derivative financial instruments that hedge IRLCs and loans HFS are included in Net gain on loan origination and sale activities in the Consolidated Income Statement. Changes in the fair value of derivative financial instruments that hedge MSRs are included in Net loan servicing revenue in the Consolidated Income Statement.
The Company may in the normal course of business purchase a financial instrument or originate a loan that contains an embedded derivative instrument. Upon purchasing the instrument or originating the loan, the Company assesses whether the economic characteristics of the embedded derivative are clearly and closely related to the economic characteristics of the remaining component of the financial instrument (i.e., the host contract) and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When it is determined that the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract and a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is separated from the host contract and carried at fair value. However, in cases where the host contract is measured at fair value, with changes in fair value reported in current earnings, or the Company is unable to reliably identify and measure an embedded derivative for separation from its host contract, the entire contract is carried on the Consolidated Balance Sheet at fair value and is not designated as a hedging instrument.
Off-balance sheet instruments
In the ordinary course of business, the Company has enteredenters into off-balance sheet financial instrument arrangements consisting of commitments to extend credit and standby letters of credit. Such financial instruments are recorded in the Consolidated Financial StatementsBalance Sheets when they are funded. They involve,These off-balance sheet financial instruments impact, to varying degrees, elements of credit risk in excess of amounts recognized on the Consolidated Balance Sheet. Losses could be experienced when the Company is contractually obligated to make a payment under these instruments and must seek repayment from the borrower, which may not be as financially sound in the current period as they were when the commitment was originally made. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract and, in certain instances, may be unconditionally cancelable. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company enters into credit arrangements that generally provide for the termination of advances in the event of a covenant violation or other event of default. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the party. The commitments are collateralized by the same types of assets used as loan collateral.
As with outstanding loans, the Company applies qualitative factors and utilization rates to its off-balance sheet obligations in determining an estimate of losses inherent in these contractual obligations. The estimate for credit losses on off-balance sheet instruments is included in other liabilities and the charge to income that establishes this liability is included in non-interest expense.
The Company also has off-balance sheet arrangements related to its derivative instruments. Derivative instruments are recognized in the Consolidated Financial StatementsBalance Sheets at fair value and their notional values are carried off-balance sheet. See "Note 12.15. Derivatives and Hedging Activities" of these Notes to Consolidated Financial Statements for further discussion.
Business combinations
Business combinations are accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method, the acquiring entity in a business combination recognizes all of the acquired assets and assumed liabilities at their estimated fair values as of the date of acquisition. Any excess of the purchase price over the fair value of net assets and other identifiable intangible assets acquired is recorded as goodwill. To the extent the fair value of net assets acquired, including identified intangible assets, exceeds the purchase price, a bargain purchase gain is recognized. Changes to estimated fair values from a business combination are recognized as an adjustment to goodwill during the measurement period and are recognized in the proper reporting period in which the adjustment amounts are determined. Results of operations of an acquired business are included in the Consolidated Income Statement from the date of acquisition. Acquisition-related costs, including conversion and restructuring charges, are expensed as incurred.

Fair values of financial instruments
The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities. ASC 820, Fair Value Measurement, establishes a framework for measuring fair value and a three-level valuation hierarchy for disclosure of fair value measurement, as well as enhancesand also sets forth disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The Company uses various valuation approaches, including market, income, and/or cost approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by
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requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would consider in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs, as follows:
•Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
•Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, prepayment speeds, volatilities, etc.) or model-based valuation techniques where all significant assumptions are observable, either directly or indirectly, in the market.
•Level 3 - Valuation is generated from model-based techniques where one or more significant inputs are not observable, either directly or indirectly, in the market. These unobservable assumptions reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques may include use of matrix pricing, discounted cash flow models, and similar techniques.
The availability of observable inputs varies based on the nature of the specific financial instrument. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, forFor disclosure purposes, the lowest level input that is significant to the fair value measurement determines the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Fair value is a market-based measure considered from the perspective of a market participant who may purchase the asset or assume the liability, rather than an entity-specific measure. When market assumptions are available, ASC 820 requires that the Company to make assumptions regardingconsider the assumptions that market participants would use to estimate the fair value of the financial instrument at the measurement date.
ASC 825, Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value.
Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction at December 31, 20192021 and 2018.2020. The estimated fair value amounts for December 31, 20192021 and 20182020 have been measured as of period-end, and have not been re-evaluated or updated for purposes of these Consolidated Financial Statements subsequent to those dates. As such, the estimated fair values of these financial instruments subsequent to the reporting date may be different than the amounts reported at period-end.
The information in "Note 16.19. Fair Value Accounting" of these Notes to Consolidated Financial Statements should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only required for a limited portion of the Company’s assets and liabilities.
Due to the wide range of valuation techniques and the degree of subjectivity used in making the estimate, comparisons between the Company’s disclosures and those of other companies or banks may not be meaningful.

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:
Cash, cash equivalents, and restricted cash
The carrying amounts reported on the Consolidated Balance Sheet for cash and due from banks approximate their fair value.
Money market investments
The carrying amounts reported on the Consolidated Balance Sheet for money market investments approximate their fair value.
Investment securities
The fair values of U.S. treasury and certain other debt securities as well as publicly-traded CRA investments and exchange-listed preferred stock trust preferred securities, and certain corporate debt securities are based on quoted market prices and are categorized as Level 1 in the fair value hierarchy.
The fair values of debt securities are primarily determined based on matrix pricing. Matrix pricing is a mathematical technique that utilizes observable market inputs including, for example, yield curves, credit ratings, and prepayment speeds. Fair values determined
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using matrix pricing are generally categorized as Level 2 in the fair value hierarchy. For a small subset of securities,In addition to matrix pricing, the Company uses other pricing sources, are used, including observed prices on publicly-tradedpublicly traded securities and dealer quotes.quotes, to estimate the fair value of debt securities, which are also categorized as Level 2 in the fair value hierarchy.
Restricted stock
WAB is a memberRestricted stock consists of the Federal Reserve System and the FHLB and, accordingly, maintains investments in the capital stock of the FRB and the FHLB. WAB also maintains an investment in its primary correspondent bank. These investments are carried at cost sinceAs no ready market exists for them and they have no quoted market value. The Company conducts a periodic review and evaluation of its restricted stock to determine if any impairment exists. Thevalue, the fair values of these investments have been categorized as Level 2 in the fair value hierarchy.
Loans HFS
Government-insured or guaranteed and agency-conforming loans HFS are salable into active markets. Accordingly, the fair value of these loans is based on quoted market or contracted selling prices or a market price equivalent, which are categorized as Level 2 in the fair value hierarchy.
The fair value of non-agency loans HFS as well as certain loans that become nonsalable into active markets due to the identification of a defect is determined based on valuation techniques that utilize Level 3 inputs.
Loans HFI
The fair value of loans is estimated based on discounted cash flows using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality and adjustments that the Company believes a market participant would consider in determining fair value based on a third partythird-party independent valuation. As a result, the fair value for loans is categorized as Level 23 in the fair value hierarchy, excluding impaired loans, which arehierarchy.
Mortgage servicing rights
The fair value of MSRs is estimated using a discounted cash flow model that incorporates assumptions that a market participant would use in estimating the fair value of servicing rights, including, but not limited to, option adjusted spread, conditional prepayment rate, servicing fee rate, and cost to service. As a result, the fair value for MSRs is categorized as Level 3.3 in the fair value hierarchy.
Accrued interest receivable and payable
The carrying amounts reported on the Consolidated Balance Sheet for accrued interest receivable and payable approximate their fair value.values.
Derivative financial instruments
All derivatives are recognized on the Consolidated Balance Sheets at their fair value. The fair value for derivatives is determined based on market prices, broker-dealer quotations on similar products, or other related input parameters. As a result, the fair values have been categorized as Level 2 invaluation methodologies used to estimate the fair value hierarchy.of derivative instruments varies by type. Treasury futures and options, Eurodollar futures, and swap futures are measured based on valuation techniques using Level 1 Inputs from exchange-provided daily settlement quotes. Interest rate swaps and forward purchase and sales contracts are measured based on valuation techniques using Level 2 inputs, such as quoted market price, contracted selling price, or market price equivalent. IRLCs are measured based on valuation techniques that consider loan type, underlying loan amount, maturity date, note rate, loan program, and expected settlement date, with Level 3 inputs for the servicing release premium and pull-through rate. These measurements are adjusted at the loan level to consider the servicing release premium and loan pricing adjustment specific to each loan. The base value is then adjusted for the pull-through rate. The pull-through rate and servicing fee multiple are unobservable inputs based on historical experience.
Deposits
The fair value disclosed for demand and savings deposits is by definition equal to the amount payable on demand at theirthe reporting date (that is, their carrying amount), which the Company believesas these deposits do not have a market participant would consider in determining fair value.contractual term. The carrying amount for variable-ratevariable rate deposit accounts approximates their fair value. Fair values for fixed-ratefixed rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on these deposits. The fair value measurement of the deposit liabilities is categorized as Level 2 in the fair value hierarchy.
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FHLB advances and customer repurchase agreements
The fair values of the Company’s borrowings are estimated using discounted cash flow analyses, based on the market rates for similar types of borrowing arrangements. The carrying value of FHLB advances and customer repurchase agreements approximate their fair values due to their short durations and have been categorized as Level 2 in the fair value hierarchy due to their short durations.hierarchy.

Credit linked notes
The fair value of credit linked notes is based on observable inputs, when available, and as such credit linked notes are categorized as Level 2 liabilities. Because the notes are variable rate debt, the fair value approximates carrying value.
Subordinated debt
The fair value of subordinated debt is based on the market rate for the respective subordinated debt security. Subordinated debt has been categorized as Level 2 in the fair value hierarchy.
Junior subordinated debt
Junior subordinated debt is valued based on a discounted cash flow model which uses as inputsthe Treasury Bond rates and the 'BB' and 'BBB' rated financial index.indexes as inputs. Junior subordinated debt has been categorized as Level 3 in the fair value hierarchy.
Off-balance sheet instruments
The fair value of the Company’s off-balance sheet instruments (lending commitments and letters of credit) is based on quoted fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, and the counterparties’ credit standing.
Income taxes
The Company is subject to income taxes in the United States and files a consolidated federal income tax return with all of its subsidiaries, with the exception of BW Real Estate, Inc. Deferred income taxes are recorded to reflect the effects of temporary differences between the financial reporting carrying amounts of assets and liabilities and their income tax bases using enacted tax rates that are expected to be in effect when the taxes are actually paid or recovered. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.
Net deferred tax assets are recorded to the extent that these assets will more-likely-than-not be realized. In making these determinations, all available positive and negative evidence is considered, including scheduled reversals of deferred tax liabilities, tax planning strategies, projected future taxable income, and recent operating results. If it is determined that deferred income tax assets to be realized in the future are in excess of their net recorded amount, an adjustment to the valuation allowance will be recorded, which will reduce the Company's provision for income taxes.
A tax benefit from an unrecognized tax benefit may be recognized when it is more-likely-than-not that the position will be sustained upon examination, including related appeals or litigation, based on technical merits. Income tax benefits must meet a more-likely-than-not recognition threshold at the effective date to be recognized.
Interest and penalties related to unrecognized tax benefits are recognized as part of the provision for income taxes in the Consolidated Income Statement. Accrued interest and penalties are included in the related tax liability line with other liabilities on the Consolidated Balance Sheets.Sheet. See "Note 14.17. Income Taxes" of these Notes to Consolidated Financial Statements for further discussion on income taxes.
Non-interest income
Non-interest income includes revenue associated with mortgage banking and commercial banking activities, investment securities, equity investments, and bank owned life insurance. These non-interest income streams are primarily generated by different types of financial instruments held by the Company for which there is specific accounting guidance and therefore, are not within the scope of ASC 606, Revenue from Contracts with Customers.
Non-interest income amounts within the scope of ASC 606 include service charges and fees, income fromsuccess fees related to equity investments, and debit and credit card income, foreign currency income, income from bank owned life insurance, lending related income, net gain or loss on sales of investment securities, net unrealized gains or losses on assets measured at fair value, and other income.interchange fees. Service charges and fees consist of fees earned from performance of account analysis, general account services, and other deposit account services. These fees are recognized as the related services are provided in accordance with ASC 606, Revenue from Contracts with Customers. Income from equity investments includes gains on equity warrant assets, SBIC equity income,provided. Success fees are one-time fees detailed as part of certain loan agreements and success fees.are earned immediately upon occurrence of a triggering event. Card income includes fees earned from customer use of debit and credit cards, interchange income from merchants, and international charges. Card income is generally within the scope of ASC 310, Receivables; however, certain processing transactions for merchants, such as interchange fees, are within the scope of ASC 606. Foreign currency income represents fees earned onThe Company generally receives payment for its services during the differential between purchasesperiod or at the time services are provided and, sales of foreign currency on behalf of the Company’s clients. Income from bank owned life insurance is accounted for in accordance with ASC 325, Investments - Other. Lending related income includes fees earned from gainstherefore, does not have material contract asset or losses on the sale of loans, SBA income, and letter of credit fees. Gains and losses on the sale of loans and SBA income are recognized pursuant to ASC 860, Transfers and Servicing. Net unrealized gains or losses on assets measuredliability balances at fair value represent fair value changes in equity securities and are accounted for in accordance with ASC 321, Investments - Equity Securities. Fees related to standby letters of credit are accounted for in accordance with ASC 440, Commitments. Other income includes operating lease income, which is recognized on a straight-line basis over the lease term in accordance with ASC 840, Leases. Net gain or loss on sales / valuations of repossessed and other assets is presented as a component of non-interest expense, but may also be presented as a component of non-interest income in the event that a net gain is recognized. Net gain or loss on sales of repossessed and other assets are accounted for in accordance with ASC 610, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets.period end. See "Note 22.25. Revenue from Contracts with Customers" of these Notes to Consolidated Financial Statements for further details related to the nature and timing of revenue recognition for non-interest income revenue streams within the scope of the newthis standard.

100
Recent accounting pronouncements
In June 2016,

101
2. MERGERS, ACQUISITIONS AND DISPOSITIONS
On April 7, 2021, the FASBCompany completed its acquisition of Aris, the parent company of AmeriHome, and certain other parties, pursuant to which, Aris merged with and into an indirect subsidiary of WAB. As a result of the merger, AmeriHome is now a wholly-owned indirect subsidiary of the Company and will continue to operate as AmeriHome Mortgage, a Western Alliance Bank company. AmeriHome is a leading national business-to-business mortgage acquirer and servicer. The acquisition of AmeriHome complements the Company’s national commercial businesses with a mortgage franchise that allows the Company to expand mortgage-related offerings to existing clients and diversifies the Company’s revenue profile by expanding sources of non-interest income.
Total cash consideration of $1.2 billion was paid in exchange for all of the issued guidance within ASU 2016-13, Measurementand outstanding membership interests of Credit Losses on Financial Instruments. The new standard significantly changesAris. AmeriHome's results of operations have been included in the impairment modelCompany's results beginning April 7, 2021 and are reported as part of the Consumer Related segment. Acquisition/restructure expenses related to the AmeriHome acquisition of $15.3 million for most financialthe year ended December 31, 2021 were included as a component of non-interest expense in the Consolidated Income Statement, of which approximately $3.4 million are acquisition related costs as defined by ASC 805.
This transaction was accounted for as a business combination under the acquisition method of accounting. Assets purchased and liabilities assumed were recorded at their respective acquisition date estimated fair values. During the measurement period (not to exceed one year from the acquisition date), the fair values of assets thatacquired and liabilities assumed are measured at amortized cost, including off-balance sheet credit exposures, fromsubject to adjustment if additional information becomes available to indicate a more accurate or appropriate value for an incurred loss model to an expected loss model. The amendments in ASU 2016-13 to Topic 326, Financial Instruments - Credit Losses, require that an organization measure all expected credit lossesasset or liability. During the year ended December 31, 2021, the Company adjusted its initial provisional estimates for financialcertain identified assets held at the reporting dateand liabilities based on historical experience, currentnew available information regarding conditions and reasonable and supportable forecasts. The ASU also requires enhanced disclosures, including qualitative and quantitative disclosures that provide additional information aboutexisted as of the amounts recorded in the financial statements. Additionally, the ASU amends the accounting for credit losses on AFS debt securities and purchased financial assets with credit deterioration. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.acquisition date. The Company has completed its implementationrecognized a decrease of the new CECL standard, in all material respects, as model findings have been addressed, the Company's internal control CECL framework has been implemented, and accounting policies and governance processes have been finalized.
The following table summarizes the estimated allowance for credit losses related$29.3 million to financial assets and off-balance sheet credit exposures upon adoption of ASC 326:
 January 1, 2020
 Pre-ASC 326 Adoption Post-ASC 326 Adoption Impact of ASC 326 Adoption
 (in millions)
Assets:     
Allowance for credit losses on HTM securities     
Tax-exempt$—
 $3
 $3
      
Allowance for credit losses on loans$168
 $187
 $19
      
Liabilities:     
Off-balance sheet credit exposures$9
 $24
 $15
As the impact to the Company was not significant, management elected to take the full charge to regulatory capital at the adoption date.
In August 2018, the FASB issued guidance within ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendments within ASU 2018-13 remove, modify, and supplement the disclosure requirements for fair value measurements. Disclosure requirements that were removed include: the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels,MSRs as a result of adjustments to certain model inputs and the valuation processes for Level 3 fair value measurements. The amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. Additional disclosure requirements include: the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. With the exception of the above additional disclosure requirements, which will be applied prospectively, all other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of this guidance is not expected to have a significant impact on the Company's Consolidated Financial Statements.
In August 2018, the FASB issued guidance within ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Accordingly, the amendments in this Update require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an assetfinal price adjustments related to MSR sales contemplated prior to the service contract and which costs to expense. The amendments in this Update also require that the capitalized implementation costs of a hosting arrangement that is a service contract be expensed over the term of the hosting arrangement. Presentation requirements include: expenseacquisition. In addition, insignificant measurement period adjustments were recorded related to the capitalized implementation costs should be presented in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement, payments for capitalized implementation costs in the statement of cash flows should be classified in the same manner as payments made for fees associated with the hosting element,loans HFS, operating right-of-use asset and capitalized implementation costs in the statement of financial position should be presented in the same line item that a prepayment for the fees of the associated

hosting arrangement would be presented. The amendments in this ASU should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The amendments in this ASU are effective for fiscal years,operating lease liability, intangible assets, deferred tax asset, other assets, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of this guidance is not expected to have a significant impact on the Company's Consolidated Financial Statements.
In April 2019, the FASB issued guidance within ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The amendments in ASU 2019-04 clarify or correct the guidance in these Topics. With respect to Topic 326, ASU 2019-04 addresses a number of issues as it relates to the CECL standard including consideration of accrued interest, recoveries, variable-rate financial instruments, prepayments, and extension and renewal options, among other things, in theliabilities. These measurement of expected credit losses. The amendments to Topic 326 have the same effective dates as ASU 2016-13 and are not expected to have a significant impact on the Company’s Consolidated Financial Statements. With respect to Topic 815, Derivatives and Hedging, ASU 2019-04 clarifies issues related to partial-term hedges, hedged debt securities, and transitioning from a quantitative method of assessing hedge effectiveness to a more simplified method. The Company does not have partial-term hedges or any hedged debt securities and the transition issues discussed in the ASU 2019-04 are not applicable to the Company. Accordingly, the amendments to Topic 815 will not have an impact on the Company's Consolidated Financial Statements. With respect to Topic 825, Financial Instruments, on recognizing and measuring financial instruments, ASU 2019-04 addresses: 1) the scope of the guidance; 2) the requirement for remeasurement under ASC 820 when using the measurement alternative; 3) certain disclosure requirements; and 4) which equity securities have to be remeasured at historical exchange rates. The amendments to Topic 825 are effective for interim and annual reporting periods beginning after December 15, 2019 and are not expected to have a material impact on the Company’s Consolidated Financial Statements.
In May 2019, the FASB issued guidance within ASU 2019-05, Financial Instruments - Credit Losses, to provide entities with an option to irrevocably elect the fair value option for eligible financial assets measured at amortized cost. The election is to be applied on an instrument-by-instrument basis upon adoption of Topic 326 and is not available for either AFS or HTM debt securities. The amendments in ASU 2019-05 should be applied on a modified-retrospective basis through a cumulative-effect adjustment to the opening balance of retained earnings as of the date that an entity adopts the amendments in ASU 2016-13. The Company did not elect this fair value option as part of its adoption of ASU 2016-13 on January 1, 2020.
In November 2019, the FASB issued guidance within ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses. The amendments in ASU 2019-11 clarify or address specific issues about certain aspects of the amendments in ASU 2016-13, Measurement of Credit Losses on Financial Instruments. These issues include measurement and reporting requirements related to: 1) the allowance for credit losses for purchased assets with credit deterioration; 2) prepayment assumptions on existing troubled debt restructurings; 3) extension of disclosure relief for accrued interest receivable balances; and 4) expected credit losses on collateralized financial assets. The adoption of ASU 2019-11 is concurrent with ASU 2016-13 and, adoption of these amendments on January 1, 2020,period adjustments did not have a significant impact on the income statement. The fair value of acquired assets and assumed liabilities are considered final as of December 31, 2021, with the exception of MSRs.
The Company merged AmeriHome into WAB effective April 7, 2021. The fair value amounts of identifiable assets acquired and liabilities assumed are as follows:
April 7, 2021
(in millions)
Assets acquired:
Cash and cash equivalents$207.2 
Loans held for sale3,552.9 
Mortgage servicing rights1,347.0 
Premises and equipment, net11.3 
Operating right of use asset18.9 
Identified intangible assets141.0 
Loans eligible for repurchase2,744.7 
Deferred tax asset6.6 
Other assets236.0 
Total assets$8,265.6 
Liabilities assumed:
Other borrowings$3,633.9 
Operating lease liability18.9 
Liability for loans eligible for repurchase2,744.7 
Other liabilities151.1 
Total liabilities6,548.6 
Net assets acquired$1,717.0 
Consideration paid
Cash (1)$1,231.6 
Elimination of pre-existing debt686.8 
Total consideration$1,918.4 
Goodwill$201.4 
(1)    The Company entered into a final settlement agreement with the seller in December 2021 and paid an additional $11.0 million based on AmeriHome's final closing balance sheet as of the acquisition date.
102
Loans acquired consisted of loans HFS, whose carrying value at the acquisition date was determined to approximate fair value. In contemplation of the acquisition and the regulatory capital impact of MSRs on the Company's capital ratios, in March 2021, AmeriHome entered into commitments to sell certain MSRs and related servicing advances. See "Note 6. Mortgage Servicing Rights" for further discussion of these sales. The sale of these MSRs also reduced the balance of loans eligible for repurchase as the Company no longer has the right to repurchase these loans when it is not the servicer. Subsequent to the acquisition, the Company repurchased substantially all of the remaining loans eligible for repurchase, resulting in a reclassification of these repurchased loans to loans HFS. See "Note 4. Loans Held for Sale" of these Notes to Consolidated Financial Statements.Statements for additional detail related to acquired loans.
In December 2019,connection with the FASB issued guidance within ASU 2019-12, Income Taxes (Topic 740): Simplifyingacquisition, the Accounting for Income Taxes. The amendmentsCompany acquired identifiable intangible assets totaling $141.0 million, as detailed in ASU 2019-12 are intended to reduce the costtable below:
Acquisition Date Fair ValueEstimated Useful Life
(in millions)(in years)
Correspondent customer relationships$76.0 20
Operating licenses55.5 40
Trade name9.5 20
Total141.0 
Goodwill in the amount of $201.4 million was recognized and complexity of applying ASC 740. The amendments that are applicableallocated entirely to the Company address: 1) franchiseConsumer Related segment. Goodwill represents the strategic, operational, and other taxes partially based on income; 2) step-up in basisfinancial benefits expected from the acquisition, including expansion of the Company's mortgage offerings, diversification of its revenue sources, and post-acquisition synergies from integrating AmeriHome’s operating platform, as well as the value of the acquired workforce. Approximately $185.0 million of goodwill in a business combination; 3) allocation of tax expense in separate entity financial statements; and 4) interim recognition of enactment of tax laws or rate changes. The amendments to Topic 740 are effective for interim and annual reporting periods beginning after December 15, 2020 and are notis expected to have a material impact onbe deductible for tax purposes.
The following table presents pro forma information as if the Company’s Consolidated Financial Statements.
Recently adopted accounting guidance
In February 2016, the FASB issued guidance within ASU 2016-02, Leases. The amendments in ASU 2016-02 to Topic 842, Leases, require lessees to recognize the lease assets and lease liabilities arising from operating leases in the statement of financial position. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The Company adopted the amendments to Topic 842AmeriHome acquisition was completed on January 1, 2019 using2020. The pro forma information includes adjustments for interest income and interest expense on existing loan agreements between WAL and AmeriHome prior to acquisition, the modified retrospective approach. The Company elected the transition option issued under ASU 2018-11, Leases (Topic 842) Targeted Improvements, which allows entities to continue to apply the legacy guidance in ASC 840, Leases, to prior periods, including disclosure requirements. Accordingly, prior period financial results and disclosures have not been adjusted. The Company also elected to apply the package of practical expedients permitting entities to forgo reassessment of: 1) expired or existing contracts that may contain leases; 2) lease classification of expired or existing leases; and 3) initial direct costs for any existing leases. The Company established internal controls and implemented lease accounting software to facilitate the preparation of financial information and disclosures related to leases. The most significant impact of MSR sales contemplated in connection with the new standard onacquisition, amortization of intangible assets arising from the Company’s Consolidated Financial Statements was theacquisition, recognition of a ROU assetstock compensation expense for awards issued to certain AmeriHome executives, transaction costs, and lease liability for operating leases for whichrelated income tax effects. The pro forma information is not necessarily indicative of the Company is the lessee. The accounting for finance and operating leases for which the Company is the lessor remains substantially unchanged. Upon adoption of this guidance on January 1, 2019, the Company recorded

a ROU asset and corresponding lease liability of $42.5 million and $46.1 million, respectively, on the Consolidated Balance Sheet. No cumulative effect adjustment to retained earnings resulted from adoption of this guidance. The new standard did not have a material impact on the Company’s results of operations or cash flows.
In March 2017,as they would have been had the FASB issued guidance within ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities. The amendments in ASU 2017-08 to Subtopic 310-20, Receivables-Nonrefundable Fees and Other Costs, shorten the amortization period for certain purchased callable debt securities held at a premium to the earliest call date, which more closely align the amortization period of premiums and discounts to expectations incorporated in market pricingtransactions been effected on the underlying securities. Under current GAAP, entities generally amortize the premium as an adjustmentassumed dates.
Year Ended December 31,
20212020
(in millions)
Interest income$1,679.9 $1,322.6 
Non-interest income470.5 902.7 
Net income909.7 931.2 
103
In June 2018, the FASB issued guidance within ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting. The amendments in ASU 2018-07 to Topic 718, Compensation-Stock Compensation, are intended to align the accounting for share-based payment awards issued to employees and nonemployees. Changes to the accounting for nonemployee awards include: 1) equity classified share-based payment awards issued to nonemployees will now be measured on the grant date, instead of the previous requirement to remeasure the awards through the performance completion date; 2) for performance conditions, compensation cost associated with the award will be recognized when achievement of the performance condition is probable, rather than upon achievement of the performance condition; and 3) the current requirement to reassess the classification (equity or liability) for nonemployee awards upon vesting will be eliminated, except for awards in the form of convertible instruments. The new guidance also clarifies that any share-based payment awards issued to customers should be evaluated under ASC 606, Revenue from Contracts with Customers. The Company's share-based payment awards to nonemployees consist only of grants made to the Company's BOD as compensation solely related to the individual's role as a Director. As such, in accordance with ASC 718, the Company accounts for these share-based payment awards to its Directors in the same manner as share-based payment awards for its employees. Accordingly, the adoption of this guidance did not have an impact on the accounting for the Company's share-based payment awards to its Directors.
In July 2018, the FASB issued guidance within ASU 2018-09, Codification Improvements. The amendments in ASU 2018-09 are intended to clarify or correct unintended guidance in the FASB Codification and affect a wide variety of Topics in the Codification. The topics that are applicable to the Company include: 1) debt modifications and extinguishments; 2) stock compensation; and 3) derivatives and hedging. For debt modifications and extinguishments, the amendment clarifies that, in an early extinguishment of debt for which the fair value option has been elected, the net carrying amount of the extinguished debt is equal to its fair value at the reacquisition date, and upon extinguishment, the cumulative amount of the gain or loss on the extinguished debt that resulted from changes in instrument-specific credit risk should be presented in net income. The Company has junior subordinated debt that is recorded at fair value at each reporting period due to election of the FVO. Accordingly, if, in the future, the Company chooses to repay this debt prior to its contractual maturity, this amendment would be applicable. For stock compensation, the amendment clarifies that excess tax benefits or tax deficiencies should be recognized in the period in which the amount of the tax deduction is determined, which is typically when an award is exercised (in the case of share options) or vests (in the case of non-vested stock awards). The Company already records excess tax benefits or tax deficiencies in the periods in which the tax deduction is determined. Therefore, adoption of this amendment did not have an effect on the Company's accounting for excess tax benefits or tax deficiencies. For derivatives and hedging, previous guidance permits derivatives to be offset only when all four conditions (including the intent to set off) are met. This amendment clarifies that the intent to set off is not required to offset fair value amounts recognized for derivative instruments that are executed with the same counterparty under a master netting agreement. This amendment did not have an effect on the offsetting of the Company's derivative assets and liabilities.



2.3. INVESTMENT SECURITIES
The carrying amounts and fair values of investment securities at December 31, 20192021 and 20182020 are summarized as follows: 
December 31, 2021
Amortized CostGross Unrealized GainsGross Unrealized (Losses)Fair Value
(in millions)
Held-to-maturity
Private label residential MBS$216.9 $— $(1.6)$215.3 
Tax-exempt890.2 43.2 (2.3)931.1 
Total HTM securities$1,107.1 $43.2 $(3.9)$1,146.4 
Available-for-sale debt securities
CLO$926.0 $0.5 $(0.3)$926.2 
Commercial MBS issued by GSEs68.2 0.9 (0.6)68.5 
Corporate debt securities382.7 9.2 (9.0)382.9 
Private label residential MBS1,528.7 3.5 (24.2)1,508.0 
Residential MBS issued by GSEs2,027.5 7.3 (41.4)1,993.4 
Tax-exempt1,145.1 71.2 (1.2)1,215.1 
U.S. treasury securities13.0 — — 13.0 
Other75.3 11.0 (4.6)81.7 
Total AFS debt securities$6,166.5 $103.6 $(81.3)$6,188.8 
Equity securities
CRA investments$45.1 $— $(0.5)$44.6 
Preferred stock107.1 7.7 (0.9)113.9 
Total equity securities$152.2 $7.7 $(1.4)$158.5 
 December 31, 2019December 31, 2020
 Amortized Cost Gross Unrealized Gains Gross Unrealized (Losses) Fair ValueAmortized CostGross Unrealized GainsGross Unrealized (Losses)Fair Value
 (in thousands)(in millions)
Held-to-maturity        Held-to-maturity
Tax-exempt $485,107
 $31,303
 $(149) $516,261
Tax-exempt$568.8 $43.0 $— $611.8 
        
Available-for-sale debt securities        Available-for-sale debt securities
CDO $50
 $10,092
 $—
 $10,142
CLOCLO$146.9 $— $— $146.9 
Commercial MBS issued by GSEs 95,062
 366
 (1,175) 94,253
Commercial MBS issued by GSEs80.8 3.8 — 84.6 
Corporate debt securities 105,015
 112
 (5,166) 99,961
Corporate debt securities271.1 4.8 (5.7)270.2 
Municipal securities 7,494
 279
 —
 7,773
Private label residential MBS 1,129,985
 3,572
 (4,330) 1,129,227
Private label residential MBS1,461.7 15.7 (0.5)1,476.9 
Residential MBS issued by GSEs 1,406,594
 9,283
 (3,817) 1,412,060
Residential MBS issued by GSEs1,462.5 27.9 (3.8)1,486.6 
Tax-exempt 530,729
 24,548
 (422) 554,855
Tax-exempt1,109.3 78.1 — 1,187.4 
Trust preferred securities 32,000
 —
 (4,960) 27,040
U.S. government sponsored agency securities 10,000
 —
 —
 10,000
U.S. treasury securities 999
 —
 —
 999
OtherOther54.1 7.3 (5.5)55.9 
Total AFS debt securities $3,317,928
 $48,252
 $(19,870) $3,346,310
Total AFS debt securities$4,586.4 $137.6 $(15.5)$4,708.5 
        
Equity securities        Equity securities
CRA investments $52,805
 $—
 $(301) $52,504
CRA investments$53.1 $0.3 $— $53.4 
Preferred stock 82,514
 3,881
 (198) 86,197
Preferred stock107.0 7.3 (0.4)113.9 
Total equity securities $135,319
 $3,881
 $(499) $138,701
Total equity securities$160.1 $7.6 $(0.4)$167.3 

Securities with carrying amounts of approximately $2.2 billion and $778.0 million at December 31, 2021 and 2020, respectively, were pledged for various purposes as required or permitted by law.
  December 31, 2018
  Amortized Cost Gross Unrealized Gains Gross Unrealized (Losses) Fair Value
  (in thousands)
Held-to-maturity        
Tax-exempt $302,905
 $3,163
 $(7,420) $298,648
         
Available-for-sale debt securities        
CDO $50
 $15,277
 $—
 $15,327
Commercial MBS issued by GSEs 106,385
 82
 (6,361) 100,106
Corporate debt securities 105,029
 —
 (5,649) 99,380
Private label residential MBS 948,161
 945
 (24,512) 924,594
Residential MBS issued by GSEs 1,564,181
 1,415
 (35,472) 1,530,124
Tax-exempt 542,086
 4,335
 (7,753) 538,668
Trust preferred securities 32,000
 —
 (3,383) 28,617
U.S. government sponsored agency securities 40,000
 —
 (1,812) 38,188
U.S. treasury securities 1,996
 —
 (12) 1,984
Total AFS debt securities $3,339,888
 $22,054
 $(84,954) $3,276,988
         
Equity securities        
CRA investments $52,210
 $—
 $(1,068) $51,142
Preferred stock 65,954
 148
 (2,183) 63,919
Total equity securities $118,164
 $148
 $(3,251) $115,061
104

The Company conducts an OTTI analysis on a quarterly basis. The initial indication of OTTI is a decline infollowing tables summarize the market value below the amount recorded for an investment, and taking into account the severity and duration of the decline. Another potential indication of OTTI is a downgrade below investment grade. In determining whether an impairment is OTTI, the Company considers the length of time and the extent to which the market value has been below cost, recent events specific to the issuer, including investment downgrades by rating agencies and economic conditions of its industry, and the Company’s ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery.
ForCompany's debt securities, for the purpose of an OTTI analysis, the Company also considers the cause of the price decline (general level of interest rates, credit spreads, and industry and issuer-specific factors), whether downgrades by bond rating agencies have occurred, the issuer’s financial condition, near-term prospects, and current ability to make future payments in a timely manner, as well as the issuer’s ability to service debt, and any change in agencies’ ratings at the evaluation date from the acquisition date and any likely imminent action.
At December 31, 2019 and 2018, the Company’s unrealized losses relate primarily to market interest rate increases since the securities' original purchase date. The total number of AFS securities in an unrealized loss position at December 31, 2019 is 158, compared to 3732021 and 2020, aggregated by major security type and length of time in a continuous unrealized loss position:
December 31, 2021
Less Than Twelve MonthsMore Than Twelve MonthsTotal
Gross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair Value
(in millions)
Available-for-sale debt securities
CLO$0.3 $170.7 $— $— $0.3 $170.7 
Commercial MBS issued by GSEs0.6 19.5 — — 0.6 19.5 
Corporate debt securities9.0 107.0 — — 9.0 107.0 
Private label residential MBS24.2 1,250.0 — — 24.2 1,250.0 
Residential MBS issued by GSEs32.6 1,355.7 8.8 142.1 41.4 1,497.8 
Tax-exempt1.2 141.4 — — 1.2 141.4 
Other— 2.0 4.6 27.4 4.6 29.4 
Total AFS securities$67.9 $3,046.3 $13.4 $169.5 $81.3 $3,215.8 
December 31, 2020
Less Than Twelve MonthsMore Than Twelve MonthsTotal
Gross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair Value
(in millions)
Available-for-sale debt securities
Corporate debt securities$0.1 $17.3 $5.6 $94.3 $5.7 $111.6 
Private label residential MBS0.5 149.7 — — 0.5 149.7 
Residential MBS issued by GSEs3.8 231.9 — — 3.8 231.9 
Other— — 5.5 26.5 5.5 26.5 
Total AFS securities$4.4 $398.9 $11.1 $120.8 $15.5 $519.7 
The total number of AFS debt securities in an unrealized loss position at December 31, 2018.2021 is 179, compared to 49 at December 31, 2020.
On a quarterly basis, the Company performs an impairment analysis on its AFS debt securities that are in an unrealized loss position at the end of the period to determine whether credit losses should be recognized on these securities. Qualitative considerations made by the Company in its impairment analysis are further discussed below.
Government Issued Securities
Commercial and residential MBS are issued by either government agencies or GSEs. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies, and have a long history of no credit losses. Further, principal and interest payments on these securities continue to be made on a timely basis.
Non-Government Issued Securities
Qualitative factors used in the Company's credit loss assessment of its securities that are not issued and guaranteed by the U.S. government include consideration of any adverse conditions related to a specific security, industry, or geographic region of its securities, any credit ratings below investment grade, the payment structure of the security and the likelihood of the issuer to be able to make payments that increase in the future, and failure of the issuer to make any scheduled principal or interest payments.
For the Company's corporate debt and tax-exempt securities, the Company also considers various metrics of the issuer including days of cash on hand, the ratio of long-term debt to total assets, the net change in cash between reporting periods, and consideration of any breach in covenant requirements. The Company's corporate debt securities continue to be highly rated, issuers continue to make timely principal and interest payments, and the unrealized losses on these security portfolios primarily relate to changes in interest rates and other market conditions that are not considered to be credit-related issues. The Company continues to receive timely principal and interest payments on its tax-exempt securities and the majority of these issuers have revenues pledged for payment of debt service prior to payment of other types of expenses.
For the Company's private label residential MBS, which consist of non-agency collateralized mortgage obligations that are secured by pools of residential mortgage loans, the Company also considers metrics such as securitization risk weight factor,
105
current credit support, whether there were any mortgage principal losses resulting from defaults in payments on the underlying mortgage collateral, and the credit default rate over the last twelve months. These securities primarily carry investment grade credit ratings, principal and interest payments on these securities continue to be made on a timely basis, and credit support for these securities is considered adequate.
The Company's CLO portfolio consists of highly rated securitization tranches, containing pools of medium to large-sized corporate, high yield bank loans. These are variable rate securities that have an investment grade rating of Single-A or better. The Company has reviewedincreased its investment in these securities for which thereover the past year and unrealized losses on these securities are primarily a function of the differential from the offer price and the valuation mid-market price as well as changes in interest rates.
Unrealized losses on the Company's other securities portfolio relate to taxable municipal and trust preferred securities. The Company is an unrealized loss in accordance withcontinuing to receive timely principal and interest payments on its accounting policy for OTTI describedtaxable municipal securities, these securities continue to be highly rated, and the number of days of cash on hand is strong. The Company's trust preferred securities are investment grade and the issuers continue to make timely principal and interest payments.
Based on the qualitative factors noted above and determinedas the Company does not intend to sell these securities and it is more likely than not that there are 0 impairment charges forthe Company will not be required to sell the securities prior to their anticipated recovery, no credit losses have been recognized on these securities during the years ended December 31, 2019, 2018,2021 and 2017. The Company does not consider any securities to be other-than-temporarily impaired2020. In addition, as of December 31, 20192021 and 2018. 2020, no allowance for credit losses on the Company's AFS securities has been recognized.
The credit loss model under ASC 326-20, applicable to HTM debt securities, requires recognition of lifetime expected credit losses through an allowance account at the time the security is purchased.
The following table presents a rollforward by major security type of the allowance for credit losses on the Company's HTM debt securities:
Year Ended December 31, 2021
Balance,
December 31, 2020		Recovery of Credit LossesWrite-offsRecoveriesBalance,
December 31, 2021
(in millions)
Held-to-maturity debt securities
Tax-exempt$6.8 $(1.6)$— $— $5.2 
Year Ended December 31, 2020:
Balance,
January 1, 2020		Provision for Credit LossesWrite-offsRecoveriesBalance
December 31, 2020
(in millions)
Held-to-maturity debt securities
Tax-exempt$2.7 $4.1 $— $— $6.8 
No assurance can be made that OTTI willallowance has been recognized on the Company's HTM private label residential MBS as losses are not occurexpected due to the Company holding a senior position in future periods.these securities.
Information pertaining toAccrued interest receivable on HTM securities with gross unrealized lossestotaled $3.0 million and $2.0 million at December 31, 20192021 and 2018, aggregated2020, respectively, and is excluded from the estimate of expected credit losses.
106
The following tables summarize the carrying amount of the Company’s investment ratings position as of December 31, 2021 and 2020, which are updated quarterly and used to monitor the credit quality of the Company's securities: 
December 31, 2021
AAASplit-rated AAA/AA+AA+ to AA-A+ to A-BBB+ to BBB-BB+ and belowUnratedTotals
(in millions)
Held-to-maturity
Private label residential MBS$— $— $— $— $— $— $216.9 $216.9 
Tax-exempt— — — — — — 890.2 890.2 
Total HTM securities (1)$— $— $— $— $— $— $1,107.1 $1,107.1 
Available-for-sale debt securities
CLO$45.0 $— $635.6 $245.6 $— $— $— $926.2 
Commercial MBS issued by GSEs— 68.5 — — — — — 68.5 
Corporate debt securities— — — 45.3 318.7 18.9 — 382.9 
Private label residential MBS1,419.6 — 87.4 — 0.9 — 0.1 1,508.0 
Residential MBS issued by GSEs— 1,993.4 — — — — — 1,993.4 
Tax-exempt43.2 40.4 469.1 628.9 — — 33.5 1,215.1 
U.S. treasury securities— 13.0 — — — — — 13.0 
Other— — 12.1 10.0 30.2 9.6 19.8 81.7 
Total AFS securities (1)$1,507.8 $2,115.3 $1,204.2 $929.8 $349.8 $28.5 $53.4 $6,188.8 
Equity securities
CRA investments$— $27.3 $— $— $— $— $17.3 $44.6 
Preferred stock— — — — 79.3 20.2 14.4 113.9 
Total equity securities (1)$— $27.3 $— $— $79.3 $20.2 $31.7 $158.5 
(1)Where ratings differ, the Company uses an average of the available ratings by major credit agencies.
December 31, 2020
AAASplit-rated AAA/AA+AA+ to AA-A+ to A-BBB+ to BBB-BB+ and belowUnratedTotals
(in millions)
Held-to-maturity
Tax-exempt (1)$— $— $— $— $— $— $568.8 $568.8 
Available-for-sale debt securities
CLO$— $— $139.6 $7.3 $— $— $— $146.9 
Commercial MBS issued by GSEs— 84.6 — — — — — 84.6 
Corporate debt securities— — 19.2 28.1 194.5 28.4 — 270.2 
Private label residential MBS1,385.5 — 90.1 0.1 0.3 0.9 — 1,476.9 
Residential MBS issued by GSEs— 1,486.6 — — — — — 1,486.6 
Tax-exempt44.3 57.3 454.7 599.3 — — 31.8 1,187.4 
Other— — 12.3 — 29.1 6.9 7.6 55.9 
Total AFS securities (1)$1,429.8 $1,628.5 $715.9 $634.8 $223.9 $36.2 $39.4 $4,708.5 
Equity securities
CRA investments$— $27.8 $— $— $— $— $25.6 $53.4 
Preferred stock— — — — 73.2 39.0 1.7 113.9 
Total equity securities (1)$— $27.8 $— $— $73.2 $39.0 $27.3 $167.3 
(1)Where ratings differ, the Company uses an average of the available ratings by major credit agencies.
A security is considered to be past due once it is 30 days contractually past due under the terms of the agreement. As of December 31, 2021, there were no investment category and lengthsecurities that were past due. In addition, the Company does not have a significant amount of time that individualinvestment securities have been in a continuous loss position follows: on nonaccrual status as of December 31, 2021.
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 December 31, 2019
 Less Than Twelve Months More Than Twelve Months Total
 Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value
 (in thousands)
Held-to-maturity           
Tax-exempt$149
 $24,325
 $—
 $—
 $149
 $24,325
            
Available-for-sale debt securities           
Commercial MBS issued by GSEs$85
 $9,035
 $1,090
 $54,604
 $1,175
 $63,639
Corporate debt securities—
 —
 5,166
 94,834
 5,166
 94,834
Private label residential MBS1,776
 337,285
 2,554
 258,791
 4,330
 596,076
Residential MBS issued by GSEs1,740
 385,643
 2,077
 150,419
 3,817
 536,062
Tax-exempt422
 67,150
 —
 —
 422
 67,150
Trust preferred securities—
 —
 4,960
 27,040
 4,960
 27,040
Total AFS securities$4,023
 $799,113
 $15,847
 $585,688
 $19,870
 $1,384,801

 December 31, 2018
 Less Than Twelve Months More Than Twelve Months Total
 Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value
 (in thousands)
Held-to-maturity debt securities           
Tax-exempt$3,868
 $91,095
 $3,552
 $69,991
 $7,420
 $161,086
            
Available-for-sale debt securities           
Commercial MBS issued by GSEs$—
 $—
 $6,361
 $98,275
 $6,361
 $98,275
Corporate debt securities16
 5,013
 5,633
 94,367
 5,649
 99,380
Private label residential MBS5,173
 217,982
 19,339
 537,316
 24,512
 755,298
Residential MBS issued by GSEs1,363
 141,493
 34,109
 1,215,490
 35,472
 1,356,983
Tax-exempt3,562
 209,767
 4,191
 72,382
 7,753
 282,149
Trust preferred securities—
 —
 3,383
 28,617
 3,383
 28,617
U.S. government sponsored agency securities—
 —
 1,812
 38,188
 1,812
 38,188
U.S. treasury securities—
 —
 12
 1,984
 12
 1,984
Total AFS securities$10,114
 $574,255
 $74,840
 $2,086,619
 $84,954
 $2,660,874
Table of Contents

The amortized cost and fair value of the Company's debt securities as of December 31, 2019,2021, by contractual maturities, are shown below. MBS are shown separately as individual MBS are comprised of pools of loans with varying maturities. Therefore, these securities are listed separately in the maturity summary.
  December 31, 2019
  Amortized Cost Estimated Fair Value
  (in thousands)
Held-to-maturity    
Due in one year or less $7,330
 $7,384
After one year through five years 17,414
 17,947
After ten years 460,363
 490,930
Total HTM securities $485,107
 $516,261
     
Available-for-sale    
Due in one year or less $999
 $999
After one year through five years 14,765
 14,971
After five years through ten years 149,236
 144,996
After ten years 521,287
 549,804
Mortgage-backed securities 2,631,641
 2,635,540
Total AFS securities $3,317,928
 $3,346,310

The following tables summarize the carrying amount of the Company’s investment ratings position as of December 31, 2019 and 2018:
  December 31, 2019
  AAA Split-rated AAA/AA+ AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Unrated Totals
  (in thousands)
Held-to-maturity debt securities                
Tax-exempt $—
 $—
 $—
 $—
 $—
 $—
 $485,107
 $485,107
                 
Available-for-sale debt securities                
CDO $—
 $—
 $—
 $—
 $—
 $10,142
 $—
 $10,142
Commercial MBS issued by GSEs —
 94,253
 —
 —
 —
 —
 —
 94,253
Corporate debt securities —
 —
 —
 66,530
 33,431
 —
 —
 99,961
Municipal securities —
 —
 —
 —
 —
 —
 7,773
 7,773
Private label residential MBS 1,096,909
 —
 30,675
 181
 288
 1,174
 —
 1,129,227
Residential MBS issued by GSEs —
 1,412,060
 —
 —
 —
 —
 —
 1,412,060
Tax-exempt 52,610
 2,856
 327,657
 171,732
 —
 —
 —
 554,855
Trust preferred securities —
 —
 —
 —
 27,040
 —
 —
 27,040
U.S. government sponsored agency securities —
 10,000
 —
 —
 —
 —
 —
 10,000
U.S. treasury securities —
 999
 —
 —
 —
 —
 —
 999
Total AFS securities (1) $1,149,519
 $1,520,168
 $358,332
 $238,443
 $60,759
 $11,316
 $7,773
 $3,346,310
                 
Equity securities                
CRA investments $—
 $25,375
 $—
 $—
 $—
 $—
 $27,129
 $52,504
Preferred stock —
 —
 —
 —
 82,851
 2,105
 1,241
 86,197
Total equity securities (1) $—
 $25,375
 $—
 $—
 $82,851
 $2,105
 $28,370
 $138,701

(1)Where ratings differ, the Company uses an average of the available ratings by major credit agencies.
  December 31, 2018
  AAA Split-rated AAA/AA+ AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Unrated Totals
  (in thousands)
Held-to-maturity debt securities                
Tax-exempt $—
 $—
 $—
 $—
 $—
 $—
 $302,905
 $302,905
                 
Available-for-sale debt securities                
CDO $—
 $—
 $—
 $—
 $—
 $15,327
 $—
 $15,327
Commercial MBS issued by GSEs —
 100,106
 —
 —
 —
 —
 —
 100,106
Corporate debt securities —
 —
 —
 66,515
 32,865
 —
 —
 99,380
Private label residential MBS 887,520
 —
 34,342
 343
 947
 1,442
 —
 924,594
Residential MBS issued by GSEs —
 1,530,124
 —
 —
 —
 —
 —
 1,530,124
Tax-exempt 66,160
 12,146
 306,409
 152,330
 —
 —
 1,623
 538,668
Trust preferred securities —
 —
 —
 —
 28,617
 —
 —
 28,617
U.S. government sponsored agency securities —
 38,188
 —
 —
 —
 —
 —
 38,188
U.S. treasury securities —
 1,984
 —
 —
 —
 —
 —
 1,984
Total AFS securities (1) $953,680
 $1,682,548
 $340,751
 $219,188
 $62,429
 $16,769
 $1,623
 $3,276,988
                 
Equity securities                
CRA investments $—
 $25,375
 $—
 $—
 $—
 $—
 $25,767
 $51,142
Preferred stock —
 —
 —
 —
 45,771
 3,693
 14,455
 63,919
Total equity securities (1) $—
 $25,375
 $—
 $—
 $45,771
 $3,693
 $40,222
 $115,061

(1)Where ratings differ, the Company uses an average of the available ratings by major credit agencies.

Securities with carrying amounts of approximately $962.5 million and $788.4 million at December 31, 2019 and 2018, respectively, were pledged for various purposes as required or permitted by law.
December 31, 2021
Amortized CostEstimated Fair Value
(in millions)
Held-to-maturity
Due in one year or less$40.7 $40.7 
After one year through five years18.1 18.0 
After ten years831.4 872.4 
Mortgage-backed securities216.9 215.3 
Total HTM securities$1,107.1 $1,146.4 
Available-for-sale
Due in one year or less$14.0 $14.0 
After one year through five years119.2 115.8 
After five years through ten years760.4 765.2 
After ten years1,648.5 1,723.9 
Mortgage-backed securities3,624.4 3,569.9 
Total AFS securities$6,166.5 $6,188.8 
The following table presents gross gains and losses on sales of investment securities: 
Year Ended December 31,
202120202019
(in millions)
Available-for-sale securities
Gross gains$8.4 $0.4 $3.1 
Gross losses— (0.2)— 
Net gains on AFS securities$8.4 $0.2 $3.1 
Equity securities
Gross gains$0.1 $— $— 
Gross losses(0.2)— — 
Net losses on equity securities$(0.1)$— $— 
  Year Ended December 31,
  2019 2018 2017
  (in thousands)
Available-for-sale securities      
Gross gains $3,152
 $8,074
 $3,204
Gross losses —
 (7,738) (861)
Net gains (losses) on AFS securities $3,152
 $336
 $2,343
       
Equity securities      
Gross gains $—
 $—
 $—
Gross losses —
 (7,992) —
Net gains (losses) on equity securities $—
 $(7,992) $—

During the year ended December 31, 2021, the Company sold certain AFS securities as part of the Company's interest rate management actions to secure gains on tax-exempt municipal securities that were purchased at a discount at the onset of the pandemic. These securities had a carrying value of $160.6 million and a net gain of $8.4 million was recognized on the sale of these securities. The Company did not have significant investment security sale activity during the year ended December 31, 2020.
During the year ended December 31, 2019, the Company sold certain AFS securities as part of a portfolio re-balancing initiative. These securities had a carrying value of $147.2 million and a net gain of $3.2$3.1 million was recognized on the sale of these securities. During the year ended December 31, 2019,In addition, the Company also sold one of its securities classified as HTM. The security had a par value of $10.0 million and no gain or loss was realized upon the sale. The sale of this HTM security was made as a result of significant deterioration in the issuer’s creditworthiness, representative of a change in circumstance contemplated in ASC 320-10-25 that would not call into question the Company’s intent to hold other debt securities to maturity in the future. Accordingly, management concluded that the Company’s remaining HTM securities continue to be appropriately classified as such.
During

108
4. LOANS HELD FOR SALE
The Company acquired loans HFS initially as part of the year endedAmeriHome acquisition and, as part of its ongoing mortgage banking business, the Company continues to purchase and originate residential mortgage loans with the intention to sell these loans at a later date. The following is a summary of loans held for sale by type:
December 31, 2021
(in millions)
Government-insured or guaranteed:
EBO (1)$1,692.8
Non-EBO1,396.6
Total government-insured or guaranteed3,089.4
Agency-conforming2,482.9
Non-agency62.8
Total loans HFS$5,635.1
(1)    EBO loans are delinquent loans repurchased under the terms of the GNMA MBS program that can be resold when loans are brought current.
As of December 31, 2018,2021, there were no loans HFS that were pledged to secure warehouse borrowings.
The following is a summary of the Company sold certain available-for-sale securities with a carryingNet gain on loan purchase, origination, and sale activities:
Year Ended December 31, 2021
(in millions)
Mortgage servicing rights capitalized upon sale of loans$763.8
Net proceeds from sale of loans (1)(465.3)
Provision for and change in estimate of liability for losses under representations and warranties, net(0.6)
Change in fair value of loans held for sale(0.3)
Change in fair value of derivatives related to loans HFS:
Unrealized (loss) on derivatives(69.9)
Realized gain on derivatives20.1
Total change in fair value of derivatives(49.8)
Net gain on loans held for sale$247.8
Loan acquisition and origination fees78.4
Net gain on loan origination and sale activities$326.2
(1)     Represents the difference between cash proceeds received upon settlement and loan basis.
109

3.5. LOANS, LEASES AND ALLOWANCE FOR CREDIT LOSSES
The composition of the Company’s held for investmentCompany's HFI loan portfolio is as follows:
  December 31,
  2019 2018
  (in thousands)
Commercial and industrial $9,382,043
 $7,762,642
Commercial real estate - non-owner occupied 5,245,634
 4,213,428
Commercial real estate - owner occupied 2,316,913
 2,325,380
Construction and land development 1,952,156
 2,134,753
Residential real estate 2,147,664
 1,204,355
Consumer 57,083
 70,071
Loans, net of deferred loan fees and costs 21,101,493
 17,710,629
Allowance for credit losses (167,797) (152,717)
Total loans HFI $20,933,696
 $17,557,912

December 31,
20212020
(in millions)
Warehouse lending$5,155.9 $4,340.2 
Municipal & nonprofit1,579.2 1,728.8 
Tech & innovation1,417.8 1,403.0 
Equity fund resources3,829.8 1,145.3 
Other commercial and industrial6,465.7 5,911.2 
CRE - owner occupied1,723.7 1,909.3 
Hotel franchise finance2,534.0 1,983.9 
Other CRE - non-owner occupied3,951.8 3,640.2 
Residential9,242.8 2,378.5 
Construction and land development3,005.8 2,429.4 
Other168.9 183.2 
Total loans HFI39,075.4 27,053.0 
Allowance for credit losses(252.5)(278.9)
Total loans HFI, net of allowance$38,822.9 $26,774.1 
Loans that are held for investmentclassified as HFI are stated at the amount of unpaid principal, adjusted for net deferred fees and costs, premiums and discounts purchase accounting fair value adjustments,on acquired and purchased loans, and an allowance for credit losses. Net deferred loan fees of $85.7 million and $75.4 million reduced the carrying value of loans as of December 31, 20192021 and 2018 total $47.7 million and $36.3 million, respectively, which is a reduction in the carrying value of loans.2020, respectively. Net unamortized purchase premiums on secondary market loan purchases total $29.9acquired and purchased loans of $184.8 million and $2.0$26.0 million as of December 31, 2019 and 2018, respectively. Total loans held for investment are also net of interest rate and credit marks on acquired loans, which are a net reduction inincreased the carrying value of loans. Interest rate marks were $3.8 million and $7.1 million as of December 31, 2019 and 2018, respectively. Credit marks were $6.5 million and $14.6 million as of December 31, 2019 and 2018, respectively.
As of December 31, 2019, the Company also had $21.8 million of HFS loans. There were 0 HFS loans as of December 31, 2018.2021 and 2020, respectively.
Nonaccrual and Past Due Loans
Loans are placed on nonaccrual status when management determines that the full repayment of principal and collection of interest according to contractual terms is no longer likely, generally when the loan becomes 90 days or more past due.
The following table presents the contractual agingtables present nonperforming loan balances by loan portfolio segment:
December 31, 2021
Nonaccrual with No Allowance for Credit LossNonaccrual with an Allowance for Credit LossTotal NonaccrualLoans Past Due 90 Days or More and Still Accruing
(in millions)
Tech & innovation$2.1 $11.2 $13.3 $— 
Equity fund resources— 0.6 0.6 — 
Other commercial and industrial12.7 3.4 16.1 — 
CRE - owner occupied11.6 1.4 13.0 — 
Other CRE - non-owner occupied11.3 1.8 13.1 — 
Residential— 15.1 15.1 — 
Construction and land development1.0 — 1.0 — 
Other0.2 0.2 0.4 — 
Total$38.9 $33.7 $72.6 $— 
110
  December 31, 2019
  Current 30-59 Days
Past Due		 60-89 Days
Past Due		 Over 90 Days Past Due Total
Past Due		 Total
  (in thousands)
Commercial and industrial $9,376,377
 $2,501
 $637
 $2,528
 $5,666
 $9,382,043
Commercial real estate            
Owner occupied 2,316,165
 624
 —
 124
 748
 2,316,913
Non-owner occupied 5,007,644
 4,661
 —
 11,913
 16,574
 5,024,218
Multi-family 221,416
 —
 —
 —
 —
 221,416
Construction and land development            
Construction 1,176,908
 —
 —
 —
 —
 1,176,908
Land 775,248
 —
 —
 —
 —
 775,248
Residential real estate 2,134,346
 7,627
 1,721
 3,970
 13,318
 2,147,664
Consumer 57,083
 —
 —
 —
 —
 57,083
Total loans $21,065,187
 $15,413
 $2,358
 $18,535
 $36,306
 $21,101,493

  December 31, 2018
  Current 30-59 Days
Past Due		 60-89 Days
Past Due		 Over 90 days
Past Due		 Total
Past Due		 Total
  (in thousands)
Commercial and industrial $7,753,111
 $3,187
 $416
 $5,928
 $9,531
 $7,762,642
Commercial real estate            
Owner occupied 2,320,321
 4,441
 —
 618
 5,059
 2,325,380
Non-owner occupied 4,051,837
 —
 —
 —
 —
 4,051,837
Multi-family 161,591
 —
 —
 —
 —
 161,591
Construction and land development            
Construction 1,382,664
 —
 —
 —
 —
 1,382,664
Land 751,613
 —
 476
 —
 476
 752,089
Residential real estate 1,182,933
 9,316
 4,010
 8,096
 21,422
 1,204,355
Consumer 69,830
 —
 —
 241
 241
 70,071
Total loans $17,673,900
 $16,944
 $4,902
 $14,883
 $36,729
 $17,710,629

The following table presents the recorded investment in non-accrual loans and loans past due ninety days or more and still accruing interest by class of loans: 
  December 31, 2019 December 31, 2018
  Non-accrual loans Loans past due 90 days or more and still accruing Non-accrual loans Loans past due 90 days or more and still accruing
  Current Past Due/
Delinquent		 Total
Non-accrual		  Current Past Due/
Delinquent		 Total
Non-accrual		 
  (in thousands)
Commercial and industrial $19,080
 $5,421
 $24,501
 $—
 $7,639
 $7,451
 $15,090
 $—
Commercial real estate                
Owner occupied 4,418
 124
 4,542
 —
 —
 —
 —
 594
Non-owner occupied 7,265
 11,913
 19,178
 —
 —
 —
 —
 —
Multi-family —
 —
 —
 —
 —
 —
 —
 —
Construction and land development              
Construction 2,147
 —
 2,147
 —
 —
 476
 476
 —
Land —
 —
 —
 —
 —
 —
 —
 —
Residential real estate 1,231
 4,369
 5,600
 —
 552
 11,387
 11,939
 —
Consumer —
 —
 —
 —
 —
 241
 241
 —
Total $34,141
 $21,827
 $55,968
 $—
 $8,191
 $19,555
 $27,746
 $594

December 31, 2020
Nonaccrual with No Allowance for Credit LossNonaccrual with an Allowance for Credit LossTotal NonaccrualLoans Past Due 90 Days or More and Still Accruing
(in millions)
Municipal & nonprofit$1.9 $— $1.9 $— 
Tech & innovation9.6 3.9 13.5 — 
Other commercial and industrial10.9 6.3 17.2 — 
CRE - owner occupied34.5 — 34.5 — 
Other CRE - non-owner occupied36.5 — 36.5 — 
Residential11.4 — 11.4 — 
Other0.1 0.1 0.2 — 
Total$104.9 $10.3 $115.2 $— 
The reduction in interest income associated with loans on non-accrualnonaccrual status was approximately $2.2$5.3 million, $2.3$5.0 million, and $2.4$2.2 million for the years ended December 31, 2019, 2018,2021, 2020, and 2017, respectively.
The Company utilizes an internal asset classification system as a means of reporting problem and potential problem loans. Under the Company’s risk rating system, the Company classifies problem and potential problem loans as Special Mention, Substandard, Doubtful, and Loss. Substandard loans include those characterized by well-defined weaknesses and carry the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful, or risk rated eight, have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The final rating of Loss covers loans considered uncollectible and having such little recoverable value that it is not practical to defer writing off the asset. Loans that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses that warrant management’s close attention, are deemed to be Special Mention. Risk ratings are updated, at a minimum, quarterly.

The following tables present loans held for investment by risk rating: 
  December 31, 2019
  Pass Special Mention Substandard Doubtful Loss Total
  (in thousands)
Commercial and industrial $9,265,823
 $65,893
 $49,878
 $449
 $—
 $9,382,043
Commercial real estate            
Owner occupied 2,265,566
 9,579
 41,768
 —
 —
 2,316,913
Non-owner occupied 4,913,007
 64,161
 47,050
 —
 —
 5,024,218
Multi-family 221,416
 —
 —
 —
 —
 221,416
Construction and land development            
Construction 1,157,169
 17,592
 2,147
 —
 —
 1,176,908
Land 773,868
 1,380
 —
 —
 —
 775,248
Residential real estate 2,141,336
 366
 5,962
 —
 —
 2,147,664
Consumer 57,073
 10
 —
 —
 —
 57,083
Total $20,795,258
 $158,981
 $146,805
 $449
 $—
 $21,101,493
  December 31, 2019
  Pass Special Mention Substandard Doubtful Loss Total
  (in thousands)
Current (up to 29 days past due) $20,785,118
 $158,907
 $120,897
 $265
 $—
 $21,065,187
Past due 30 - 59 days 8,263
 58
 7,092
 —
 —
 15,413
Past due 60 - 89 days 1,481
 16
 861
 —
 —
 2,358
Past due 90 days or more 396
 —
 17,955
 184
 —
 18,535
Total $20,795,258
 $158,981
 $146,805
 $449
 $—
 $21,101,493
  December 31, 2018
  Pass Special Mention Substandard Doubtful Loss Total
  (in thousands)
Commercial and industrial $7,574,506
 $61,202
 $126,356
 $578
 $—
 $7,762,642
Commercial real estate            
Owner occupied 2,255,513
 12,860
 57,007
 —
 —
 2,325,380
Non-owner occupied 4,030,350
 12,982
 8,505
 —
 —
 4,051,837
Multi-family 161,591
 —
 —
 —
 —
 161,591
Construction and land development            
Construction 1,378,624
 1,210
 2,830
 —
 —
 1,382,664
Land 751,012
 —
 1,077
 —
 —
 752,089
Residential real estate 1,191,571
 527
 12,257
 —
 —
 1,204,355
Consumer 69,755
 75
 241
 —
 —
 70,071
Total $17,412,922
 $88,856
 $208,273
 $578
 $—
 $17,710,629
  December 31, 2018
  Pass Special Mention Substandard Doubtful Loss Total
  (in thousands)
Current (up to 29 days past due) $17,400,616
 $87,264
 $186,020
 $—
 $—
 $17,673,900
Past due 30 - 59 days 11,255
 1,580
 4,109
 —
 —
 16,944
Past due 60 - 89 days 719
 12
 3,767
 404
 —
 4,902
Past due 90 days or more 332
 —
 14,377
 174
 —
 14,883
Total $17,412,922
 $88,856
 $208,273
 $578
 $—
 $17,710,629


The table below reflects the recorded investment in loans classified as impaired: 
  December 31,
  2019 2018
  (in thousands)
Impaired loans with a specific valuation allowance under ASC 310 (1) $20,979
 $986
Impaired loans without a specific valuation allowance under ASC 310 (2) 95,324
 111,266
Total impaired loans $116,303
 $112,252
Valuation allowance related to impaired loans $(2,776) $(681)

(1)Includes 0 TDR loans at December 31, 2019, and 2018.
(2)Includes TDR loans of $38.9 million and $44.5 million at December 31, 2019 and 2018, respectively.
The following table presents impaired loans by class: 
  December 31,
  2019 2018
  (in thousands)
Commercial and industrial $48,984
 $63,896
Commercial real estate    
Owner occupied 17,736
 6,530
Non-owner occupied 35,538
 12,407
Multi-family —
 —
Construction and land development    
Construction 2,147
 —
Land 6,274
 9,403
Residential real estate 5,600
 19,744
Consumer 24
 272
Total $116,303
 $112,252

A valuation allowance is established for an impaired loan when the fair value of the loan is less than the recorded investment. In certain cases, portions of impaired loans are written down to realizable value instead of establishing a valuation allowance and are included, when applicable, in the table above as “Impaired loans without a specific valuation allowance under ASC 310.” However, before concluding that an impaired loan needs no associated valuation allowance, an assessment is made to consider all available and relevant information for the method used to evaluate impairment and the type of loan being assessed. The valuation allowance disclosed above is included in the allowance for credit losses reported on the Consolidated Balance Sheets as of December 31, 2019 and 2018.

The following table presents average investment in impaired loans by loan class: 
  Year Ended December 31,
  2019 2018 2017
  (in thousands)
Commercial and industrial $45,223
 $52,496
 $33,519
Commercial real estate      
Owner occupied 15,829
 7,682
 18,692
Non-owner occupied 25,163
 15,375
 22,000
Multi-family —
 —
 —
Construction and land development      
Construction 13,315
 —
 —
Land 7,716
 9,547
 13,558
Residential real estate 13,882
 19,425
 16,893
Consumer 159
 300
 204
Total $121,287
 $104,825
 $104,866

The average investment in TDR loans for the years ended December 31, 2019, 2018, and 2017 was $52.9 million, $51.2 million, and $55.5 million, respectively.
The following table presents interest income on impairedan aging analysis of past due loans by class: 
  Year Ended December 31,
  2019 2018 2017
  (in thousands)
Commercial and industrial $1,857
 $2,113
 $1,077
Commercial real estate      
Owner occupied 815
 491
 677
Non-owner occupied 821
 937
 1,074
Multi-family —
 —
 —
Construction and land development      
Construction 715
 —
 —
Land 474
 566
 699
Residential real estate 329
 381
 516
Consumer 1
 2
 3
Total $5,012
 $4,490
 $4,046

The Company is not committed to lend significant additional funds on these impaired loans.
The following table summarizes nonperforming assets: 
  December 31,
  2019 2018
  (in thousands)
Non-accrual loans (1) $55,968
 $27,746
Loans past due 90 days or more on accrual status —
 594
Accruing troubled debt restructured loans 28,356
 36,458
Total nonperforming loans 84,324
 64,798
Other assets acquired through foreclosure, net 13,850
 17,924
Total nonperforming assets $98,174
 $82,722

(1)Includes non-accrual TDR loans of $10.6 million and $8.0 million at December 31, 2019 and 2018, respectively.


Loans Acquired with Deteriorated Credit Quality
Changes in the accretable yield for loans acquired with deteriorated credit quality are as follows:
  Year Ended December 31,
  2019 2018 2017
  (in thousands)
Balance, at beginning of period $3,767
 $9,324
 $15,177
Additions due to acquisition —
 —
 —
Reclassifications from non-accretable to accretable yield (1) —
 683
 2,086
Accretion to interest income (570) (1,018) (2,797)
Reversal of fair value adjustments upon disposition of loans (923) (5,222) (5,142)
Balance, at end of period $2,274
 $3,767
 $9,324

(1)The primary drivers of reclassification from non-accretable to accretable yield resulted from changes in estimated cash flows.
Allowance for Credit Losses
The following table summarizes the changes in the allowance for credit losses by portfolio type: 
  Year Ended December 31,
  Construction and Land Development Commercial Real Estate Residential Real Estate Commercial and Industrial Consumer Total
  (in thousands)
2019            
Beginning Balance $22,513
 $34,829
 $11,276
 $83,118
 $981
 $152,717
Charge-offs 141
 139
 594
 8,120
 128
 9,122
Recoveries (91) (909) (412) (4,265) (25) (5,702)
Provision 1,431
 11,674
 2,620
 3,039
 (264) 18,500
Ending balance $23,894
 $47,273
 $13,714
 $82,302
 $614
 $167,797
2018            
Beginning Balance $19,599
 $31,648
 $5,500
 $82,527
 $776
 $140,050
Charge-offs 1
 233
 1,038
 15,034
 114
 16,420
Recoveries (1,433) (1,237) (947) (2,427) (43) (6,087)
Provision 1,482
 2,177
 5,867
 13,198
 276
 23,000
Ending balance $22,513
 $34,829
 $11,276
 $83,118
 $981
 $152,717
2017            
Beginning Balance $21,175
 $25,673
 $3,851
 $73,333
 $672
 $124,704
Charge-offs —
 2,269
 447
 8,186
 102
 11,004
Recoveries (1,229) (2,897) (1,778) (3,112) (84) (9,100)
Provision (2,805) 5,347
 318
 14,268
 122
 17,250
Ending balance $19,599
 $31,648
 $5,500
 $82,527
 $776
 $140,050


The following table presents impairment method information related to loans and allowance for credit losses by loan portfolio segment:
December 31, 2021
Current30-59 Days
Past Due		60-89 Days
Past Due		Over 90 days
Past Due		Total
Past Due		Total
(in millions)
Warehouse lending$5,155.9 $— $— $— $— $5,155.9 
Municipal & nonprofit1,579.2 — — — — 1,579.2 
Tech & innovation1,417.8 — — — — 1,417.8 
Equity fund resources3,829.8 — — — — 3,829.8 
Other commercial and industrial6,465.7 — — — — 6,465.7 
CRE - owner occupied1,723.7 — — — — 1,723.7 
Hotel franchise finance2,534.0 — — — — 2,534.0 
Other CRE - non-owner occupied3,951.8 — — — — 3,951.8 
Residential9,190.4 50.7 1.7 — 52.4 9,242.8 
Construction and land development3,005.8 — — — — 3,005.8 
Other168.8 0.1 — — 0.1 168.9 
Total loans$39,022.9 $50.8 $1.7 $— $52.5 $39,075.4 
  Commercial Real Estate-Owner Occupied Commercial Real Estate-Non-Owner Occupied Commercial and Industrial Residential Real Estate Construction and Land Development Consumer Total Loans
  (in thousands)
Loans as of December 31, 2019;            
Recorded Investment              
Impaired loans with an allowance recorded $—
 $11,913
 $6,919
 $—
 $2,147
 $—
 $20,979
Impaired loans with no allowance recorded 17,736
 23,625
 42,065
 5,600
 6,274
 24
 95,324
Total loans individually evaluated for impairment 17,736
 35,538
 48,984
 5,600
 8,421
 24
 116,303
Loans collectively evaluated for impairment 2,296,342
 5,159,921
 9,333,059
 2,142,045
 1,943,735
 57,059
 20,932,161
Loans acquired with deteriorated credit quality 2,835
 50,175
 —
 19
 —
 —
 53,029
Total recorded investment $2,316,913
 $5,245,634
 $9,382,043
 $2,147,664
 $1,952,156
 $57,083
 $21,101,493
Unpaid Principal Balance            
Impaired loans with an allowance recorded $—
 $11,949
 $9,844
 $—
 $2,262
 $—
 $24,055
Impaired loans with no allowance recorded 18,681
 24,738
 43,848
 5,708
 6,413
 52
 99,440
Total loans individually evaluated for impairment 18,681
 36,687
 53,692
 5,708
 8,675
 52
 123,495
Loans collectively evaluated for impairment 2,297,168
 5,177,477
 9,312,100
 2,113,893
 1,963,116
 57,383
 20,921,137
Loans acquired with deteriorated credit quality 3,577
 60,191
 —
 72
 —
 —
 63,840
Total unpaid principal balance $2,319,426
 $5,274,355
 $9,365,792
 $2,119,673
 $1,971,791
 $57,435
 $21,108,472
Related Allowance for Credit Losses            
Impaired loans with an allowance recorded $—
 $1,219
 $1,050
 $—
 $507
 $—
 $2,776
Impaired loans with no allowance recorded —
 —
 —
 —
 —
 —
 —
Total loans individually evaluated for impairment —
 1,219
 1,050
 —
 507
 —
 2,776
Loans collectively evaluated for impairment 13,842
 32,114
 81,252
 13,714
 23,387
 614
 164,923
Loans acquired with deteriorated credit quality —
 98
 —
 —
 —
 —
 98
Total allowance for credit losses $13,842
 $33,431
 $82,302
 $13,714
 $23,894
 $614
 $167,797
December 31, 2020
Current30-59 Days
Past Due		60-89 Days
Past Due		Over 90 days
Past Due		Total
Past Due		Total
(in millions)
Warehouse lending$4,340.2 $— $— $— $— $4,340.2 
Municipal & nonprofit1,728.8 — — — — 1,728.8 
Tech & innovation1,403.0 — — — — 1,403.0 
Equity fund resources1,145.3 — — — — 1,145.3 
Other commercial and industrial5,911.0 0.2 — — 0.2 5,911.2 
CRE - owner occupied1,909.3 — — — — 1,909.3 
Hotel franchise finance1,983.9 — — — — 1,983.9 
Other CRE - non-owner occupied3,640.2 — — — — 3,640.2 
Residential2,368.0 9.1 1.4 — 10.5 2,378.5 
Construction and land development2,429.4 — — — — 2,429.4 
Other182.7 0.4 0.1 — 0.5 183.2 
Total loans$27,041.8 $9.7 $1.5 $— $11.2 $27,053.0 

  Commercial Real Estate-Owner Occupied Commercial Real Estate-Non-Owner Occupied Commercial and Industrial Residential Real Estate Construction and Land Development Consumer Total Loans
  (in thousands)
Loans as of December 31, 2018;            
Recorded Investment              
Impaired loans with an allowance recorded $—
 $—
 $623
 $363
 $—
 $—
 $986
Impaired loans with no allowance recorded 6,530
 12,407
 63,273
 19,381
 9,403
 272
 111,266
Total loans individually evaluated for impairment 6,530
 12,407
 63,896
 19,744
 9,403
 272
 112,252
Loans collectively evaluated for impairment 2,314,871
 4,121,464
 7,698,746
 1,184,592
 2,125,350
 69,799
 17,514,822
Loans acquired with deteriorated credit quality 3,979
 79,557
 —
 19
 —
 —
 83,555
Total recorded investment $2,325,380
 $4,213,428
 $7,762,642
 $1,204,355
 $2,134,753
 $70,071
 $17,710,629
Unpaid Principal Balance              
Impaired loans with an allowance recorded $—
 $—
 $1,482
 $363
 $—
 $—
 $1,845
Impaired loans with no allowance recorded 11,852
 18,155
 103,992
 27,979
 25,624
 10,632
 198,234
Total loans individually evaluated for impairment 11,852
 18,155
 105,474
 28,342
 25,624
 10,632
 200,079
Loans collectively evaluated for impairment 2,314,871
 4,121,464
 7,698,746
 1,184,592
 2,125,350
 69,799
 17,514,822
Loans acquired with deteriorated credit quality 5,315
 95,680
 4,352
 72
 —
 —
 105,419
Total unpaid principal balance $2,332,038
 $4,235,299
 $7,808,572
 $1,213,006
 $2,150,974
 $80,431
 $17,820,320
Related Allowance for Credit Losses            
Impaired loans with an allowance recorded $—
 $—
 $621
 $60
 $—
 $—
 $681
Impaired loans with no allowance recorded —
 —
 —
 —
 —
 —
 —
Total loans individually evaluated for impairment —
 —
 621
 60
 —
 —
 681
Loans collectively evaluated for impairment 14,286
 20,456
 82,488
 11,216
 22,513
 981
 151,940
Loans acquired with deteriorated credit quality —
 87
 9
 —
 —
 —
 96
Total allowance for credit losses $14,286
 $20,543
 $83,118
 $11,276
 $22,513
 $981
 $152,717


111
Credit Quality Indicators
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually to classify the loans as to credit risk. This analysis is performed on a quarterly basis. The risk rating categories are described in "Note 1. Summary of Significant Accounting Policies" of these Notes to Consolidated Financial Statements. The following tables present risk ratings by loan portfolio segment and origination year. The origination year is the year of origination or renewal.
Term Loan Amortized Cost Basis by Origination YearRevolving Loans Amortized Cost BasisTotal
December 31, 202120212020201920182017Prior
(in millions)
Warehouse lending
Pass$242.6 $12.5 $— $— $— $— $4,900.8 $5,155.9 
Special mention— — — — — — — — 
Classified— — — — — — — — 
Total$242.6 $12.5 $— $— $— $— $4,900.8 $5,155.9 
Municipal & nonprofit
Pass$129.5 $195.0 $101.2 $52.9 $219.3 $877.8 $3.5 $1,579.2 
Special mention— — — — — — — — 
Classified— — — — — — — — 
Total$129.5 $195.0 $101.2 $52.9 $219.3 $877.8 $3.5 $1,579.2 
Tech & innovation
Pass$762.6 $157.1 $101.1 $6.1 $— $0.6 $334.4 $1,361.9 
Special mention26.0 4.7 — — — — 8.1 38.8 
Classified3.0 5.2 7.5 — — — 1.4 17.1 
Total$791.6 $167.0 $108.6 $6.1 $— $0.6 $343.9 $1,417.8 
Equity fund resources
Pass$9.0 $1.7 $— $0.3 $2.2 $0.2 $3,816.4 $3,829.8 
Special mention— — — — — — — — 
Classified— — — — — — — — 
Total$9.0 $1.7 $— $0.3 $2.2 $0.2 $3,816.4 $3,829.8 
Other commercial and industrial
Pass$2,910.8 $360.0 $387.1 $210.3 $80.2 $97.8 $2,306.0 $6,352.2 
Special mention5.4 26.7 22.0 17.6 0.1 — 15.0 86.8 
Classified— 10.1 5.6 2.2 1.4 0.2 7.2 26.7 
Total$2,916.2 $396.8 $414.7 $230.1 $81.7 $98.0 $2,328.2 $6,465.7 
CRE - owner occupied
Pass$417.2 $198.5 $220.1 $190.4 $278.0 $322.4 $55.6 $1,682.2 
Special mention— — 0.3 10.1 — 1.5 0.4 12.3 
Classified2.2 2.6 1.0 4.6 8.0 10.7 0.1 29.2 
Total$419.4 $201.1 $221.4 $205.1 $286.0 $334.6 $56.1 $1,723.7 
Hotel franchise finance
Pass$721.3 $205.3 $658.8 $332.2 $135.5 $63.5 $123.0 $2,239.6 
Special mention— — 87.6 51.1 — — — 138.7 
Classified30.3 — 99.2 15.9 10.3 — — 155.7 
Total$751.6 $205.3 $845.6 $399.2 $145.8 $63.5 $123.0 $2,534.0 
Other CRE - non-owner occupied
Pass$1,398.2 $754.8 $673.0 $278.8 $185.8 $283.5 $315.1 $3,889.2 
Special mention14.8 — 9.8 — — 1.7 — 26.3 
Classified— — 4.2 4.5 0.3 16.4 10.9 36.3 
Total$1,413.0 $754.8 $687.0 $283.3 $186.1 $301.6 $326.0 $3,951.8 
112
Term Loan Amortized Cost Basis by Origination YearRevolving Loans Amortized Cost BasisTotal
December 31, 202120212020201920182017Prior
(in millions)
Residential
Pass$7,459.3 $1,018.4 $395.5 $201.3 $41.6 $75.5 $36.1 $9,227.7 
Special mention— — — — — — — — 
Classified8.9 0.9 3.6 0.5 0.1 1.1 — 15.1 
Total$7,468.2 $1,019.3 $399.1 $201.8 $41.7 $76.6 $36.1 $9,242.8 
Construction and land development
Pass$957.6 $632.3 $394.0 $112.2 $3.5 $0.1 $869.8 $2,969.5 
Special mention— 22.5 — — 5.6 — — 28.1 
Classified1.0 4.3 0.6 — — — 2.3 8.2 
Total$958.6 $659.1 $394.6 $112.2 $9.1 $0.1 $872.1 $3,005.8 
Other
Pass$15.7 $11.6 $3.7 $4.3 $4.4 $82.0 $46.4 $168.1 
Special mention— — — — — 0.1 — 0.1 
Classified— — 0.1 0.1 — 0.5 — 0.7 
Total$15.7 $11.6 $3.8 $4.4 $4.4 $82.6 $46.4 $168.9 
Total by Risk Category
Pass$15,023.8 $3,547.2 $2,934.5 $1,388.8 $950.5 $1,803.4 $12,807.1 $38,455.3 
Special mention46.2 53.9 119.7 78.8 5.7 3.3 23.5 331.1 
Classified45.4 23.1 121.8 27.8 20.1 28.9 21.9 289.0 
Total$15,115.4 $3,624.2 $3,176.0 $1,495.4 $976.3 $1,835.6 $12,852.5 $39,075.4 

Term Loan Amortized Cost Basis by Origination YearRevolving Loans Amortized Cost BasisTotal
December 31, 202020202019201820172016Prior
(in millions)
Warehouse lending
Pass$135.2 $— $0.9 $1.6 $0.1 $— $4,202.4 $4,340.2 
Special mention— — — — — — — — 
Classified— — — — — — — — 
Total$135.2 $— $0.9 $1.6 $0.1 $— $4,202.4 $4,340.2 
Municipal & nonprofit
Pass$219.3 $156.6 $81.6 $231.2 $129.1 $905.6 $3.5 $1,726.9 
Special mention— — — — — — — — 
Classified— — — 1.9 — — — 1.9 
Total$219.3 $156.6 $81.6 $233.1 $129.1 $905.6 $3.5 $1,728.8 
Tech & innovation
Pass$595.5 $205.9 $76.4 $— $0.9 $— $481.7 $1,360.4 
Special mention10.7 4.6 — — — — — 15.3 
Classified25.2 2.0 — — — — 0.1 27.3 
Total$631.4 $212.5 $76.4 $— $0.9 $— $481.8 $1,403.0 
Equity fund resources
Pass$14.2 $1.5 $0.5 $2.0 $— $— $1,127.1 $1,145.3 
Special mention— — — — — — — — 
Classified— — — — — — — — 
Total$14.2 $1.5 $0.5 $2.0 $— $— $1,127.1 $1,145.3 
Other commercial and industrial
Pass$2,069.5 $819.8 $447.7 $250.7 $99.7 $114.6��$1,935.7 $5,737.7 
Special mention2.2 52.1 32.1 22.1 1.7 0.2 34.3 144.7 
Classified0.9 8.4 3.2 1.6 9.7 0.8 4.2 28.8 
Total$2,072.6 $880.3 $483.0 $274.4 $111.1 $115.6 $1,974.2 $5,911.2 
113
Term Loan Amortized Cost Basis by Origination YearRevolving Loans Amortized Cost BasisTotal
December 31, 202020202019201820172016Prior
(in millions)
CRE - owner occupied
Pass$252.2 $307.1 $302.1 $402.4 $148.4 $323.5 $39.5 $1,775.2 
Special mention0.9 12.4 9.3 24.3 4.4 10.5 22.4 84.2 
Classified1.4 7.5 4.8 8.5 6.2 19.5 2.0 49.9 
Total$254.5 $327.0 $316.2 $435.2 $159.0 $353.5 $63.9 $1,909.3 
Hotel franchise finance
Pass$161.6 $792.0 $464.1 $139.9 $— $101.5 $162.6 $1,821.7 
Special mention— 32.7 56.9 27.3 — 18.2 — 135.1 
Classified8.9 — — 12.6 2.1 3.5 — 27.1 
Total$170.5 $824.7 $521.0 $179.8 $2.1 $123.2 $162.6 $1,983.9 
Other CRE - non-owner occupied
Pass$1,032.6 $912.5 $560.8 $384.3 $164.7 $208.4 $281.0 $3,544.3 
Special mention1.4 — 7.0 5.4 1.0 7.4 — 22.2 
Classified7.4 26.4 — 20.3 6.5 13.1 — 73.7 
Total$1,041.4 $938.9 $567.8 $410.0 $172.2 $228.9 $281.0 $3,640.2 
Residential
Pass$759.5 $869.3 $402.0 $108.9 $113.8 $74.1 $39.5 $2,367.1 
Special mention— — — — — — — — 
Classified— 4.4 5.9 1.1 — — — 11.4 
Total$759.5 $873.7 $407.9 $110.0 $113.8 $74.1 $39.5 $2,378.5 
Construction and land development
Pass$677.8 $704.2 $429.6 $15.4 $1.2 $15.0 $537.4 $2,380.6 
Special mention8.5 0.4 38.0 — — — 0.4 47.3 
Classified— — 1.5 — — — — 1.5 
Total$686.3 $704.6 $469.1 $15.4 $1.2 $15.0 $537.8 $2,429.4 
Other
Pass$21.1 $15.6 $14.5 $5.8 $1.8 $75.8 $45.7 $180.3 
Special mention— — 0.1 1.7 — 0.5 — 2.3 
Classified— 0.1 0.2 — 0.1 0.2 — 0.6 
Total$21.1 $15.7 $14.8 $7.5 $1.9 $76.5 $45.7 $183.2 
Total by Risk Category
Pass$5,938.5 $4,784.5 $2,780.2 $1,542.2 $659.7 $1,818.5 $8,856.1 $26,379.7 
Special mention23.7 102.2 143.4 80.8 7.1 36.8 57.1 451.1 
Classified43.8 48.8 15.6 46.0 24.6 37.1 6.3 222.2 
Total$6,006.0 $4,935.5 $2,939.2 $1,669.0 $691.4 $1,892.4 $8,919.5 $27,053.0 
Troubled Debt Restructurings
A TDR loan is a loan on which the Company, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that the Company would not otherwise consider. The loan terms that have been modified or restructured due to a borrower’s financial situation include, but are not limited to, a reduction in the stated interest rate, an extension of the maturity or renewal of the loan at an interest rate below current market, a reduction in the face amount of the debt, a reduction in the accrued interest, or deferral of interest payments. The majority of the Company's modifications are extensions in terms or deferral of payments which result in no lost principal or interest followed by reductions in interest rates or accrued interest. A TDR loan is also considered impaired. Consistent with regulatory guidance, a TDR loan that is subsequently modified in another restructuring agreement but has shown sustained performance and classification as a TDR, will be removed from TDR status provided that the modified terms were market-based at the time of modification.
The following table presents informationCARES Act, signed into law on March 27, 2020, permitted financial institutions to suspend requirements under GAAP for loan modifications to borrowers affected by COVID-19 that would otherwise be characterized as TDRs and suspend any determination related thereto if (i) the financial effectsloan modification was made between March 1, 2020 and December 31, 2020 and (ii) the applicable loan was not more than 30 days past due as of TDR loans by class for the periods presented:December 31, 2019. The Consolidated Appropriations Act, 2021 extended these provisions through January 1, 2022. In addition, federal bank regulatory authorities issued guidance to
114
  Year Ended December 31, 2019
  Number of Loans Pre-Modification Outstanding Recorded Investment Forgiven Principal Balance Lost Interest Income Post-Modification Outstanding Recorded Investment Waived Fees and Other Expenses
  (dollars in thousands)
Commercial and industrial 4
 $11,451
 $—
 $—
 $11,451
 $—
Commercial real estate            
Owner occupied 2
 2,026
 —
 —
 2,026
 —
Non-owner occupied 2
 11,546
 —
 —
 11,546
 —
Multi-family —
 —
 —
 —
 —
 —
Construction and land development            
Construction 1
 17,022
 —
 —
 17,022
 —
Land —
 —
 —
 —
 —
 —
Residential real estate —
 —
 —
 —
 —
 —
Consumer —
 —
 —
 —
 —
 —
Total 9
 $42,045
 $—
 $—
 $42,045
 $—
  Year Ended December 31, 2018
  Number of Loans Pre-Modification Outstanding Recorded Investment Forgiven Principal Balance Lost Interest Income Post-Modification Outstanding Recorded Investment Waived Fees and Other Expenses
  (dollars in thousands)
Commercial and industrial 11
 $35,132
 $—
 $—
 $35,132
 $—
Commercial real estate            
Owner occupied —
 —
 —
 —
 —
 —
Non-owner occupied —
 —
 —
 —
 —
 —
Multi-family —
 —
 —
 —
 —
 —
Construction and land development            
Construction —
 —
 —
 —
 —
 —
Land —
 —
 —
 —
 —
 —
Residential real estate 1
 294
 —
 —
 294
 —
Consumer —
 —
 —
 —
 —
 —
Total 12
 $35,426
 $—
 $—
 $35,426
 $—

  Year Ended December 31, 2017
  Number of Loans Pre-Modification Outstanding Recorded Investment Forgiven Principal Balance Lost Interest Income Post-Modification Outstanding Recorded Investment Waived Fees and Other Expenses
  (dollars in thousands)
Commercial and industrial 11
 $3,513
 $—
 $—
 $3,513
 $—
Commercial real estate            
Owner occupied —
 —
 —
 —
 —
 —
Non-owner occupied 3
 2,993
 —
 —
 2,993
 —
Multi-family —
 —
 —
 —
 —
 —
Construction and land development            
Construction —
 —
 —
 —
 —
 —
Land —
 —
 —
 —
 —
 —
Residential real estate 1
 122
 —
 —
 122
 —
Consumer —
 —
 —
 —
 —
 —
Total 15
 $6,628
 $—
 $—
 $6,628
 $—
encourage financial institutions to make loan modifications for borrowers affected by COVID-19 and assured financial institutions that they will neither receive supervisory criticism for such prudent loan modifications, nor be required by examiners to automatically categorize COVID-19-related loan modifications as TDRs. The Company applied this guidance to qualifying loan modifications through December 31, 2021. As of December 31, 2021, the Company has outstanding modifications on HFI commercial loans that met these conditions with a net balance of $152.8 million, none of which involve loan payment deferrals. Further, residential HFI mortgage loans in forbearance have a net balance of $22.2 million as of December 31, 2021.
The following table presents TDR loans:
December 31, 2021December 31, 2020
Number of LoansRecorded InvestmentNumber of LoansRecorded Investment
(dollars in millions)
Tech & innovation2 $2.1 4 $20.4 
Other commercial and industrial7 6.2 9 22.9 
CRE - owner occupied1 0.5 4 2.6 
Hotel franchise finance— — 2 5.5 
Other CRE - non-owner occupied5 11.0 3 10.2 
Construction and land development1 1.0 — — 
Total16 $20.8 22 $61.6 
The allowance for credit losses on TDR loans by class for whichtotaled zero and $2.7 million as of December 31, 2021 and 2020, respectively. As of December 31, 2021, there waswere no outstanding commitments on TDR loans, compared to $0.6 million as of December 31, 2020.
During the year ended December 31, 2021, the Company had 9 new TDR loans with a payment defaultrecorded investment of $12.5 million at the end of the period, compared to 17 new TDR loans during the period: 
  Year Ended December 31,
  2019 2018 2017
  Number of Loans Recorded Investment Number of Loans Recorded Investment Number of Loans Recorded Investment
  (dollars in thousands)
Commercial and industrial —
 $—
 —
 $—
 1
 $87
Commercial real estate            
Owner occupied —
 —
 —
 —
 1
 135
Non-owner occupied —
 —
 —
 —
 1
 308
Multi-family —
 —
 —
 —
 —
 —
Construction and land development            
Construction —
 —
 —
 —
 2
 1,119
Land —
 —
 —
 —
 —
 —
Residential real estate 2
 371
 —
 —
 1
 48
Consumer —
 —
 —
 —
 —
 —
Total 2
 $371
 —
 $—
 6
 $1,697

year ended December 31, 2020, with a recorded investment of $37.3 million at the end of the period. No principal amounts were forgiven and there were no waived fees or other expenses resulting from these TDR loans.
A TDR loan is deemed to have a payment default when it becomes past due 90 days under the modified terms, goes on non-accrual,nonaccrual status, or is restructured again. Payment defaults, along with other qualitative indicators, are considered by management in the determination of the allowance for credit losses.
At During the year ended December 31, 20192021, there was 1 commercial and 2018, commitments outstandingindustrial loan with a recorded investment of $2.1 million at the end of the period for which there was a payment default within 12 months following the modification, which resulted in a charge-off of $2.0 million. During the year ended December 31, 2020, there were 3 loans with a recorded investment of $5.8 million at the end of the period for which there was a payment default. There was no increase to the allowance for credit losses or a charge-off that resulted from these TDR redefaults during the year ended December 31, 2020.
Collateral-Dependent Loans
The following table presents the amortized cost basis of collateral-dependent loans by loan portfolio segment:
December 31,
20212020
Real Estate CollateralOther CollateralTotalReal Estate CollateralOther CollateralTotal
(in millions)
Tech & innovation$— $— $— $— $27.3 $27.3 
Other commercial and industrial— 12.5 12.5 — 23.6 23.6 
CRE - owner occupied23.0 — 23.0 42.6 — 42.6 
Hotel franchise finance155.7 — 155.7 27.1 — 27.1 
Other CRE - non-owner occupied31.6 — 31.6 73.7 — 73.7 
Construction and land development3.9 — 3.9 1.5 — 1.5 
Other— 0.1 0.1 — 0.4 0.4 
Total$214.2 $12.6 $226.8 $144.9 $51.3 $196.2 
115
The Company did not identify any significant changes in the extent to which collateral secures its collateral dependent loans, whether in the form of general deterioration or from other factors during the period ended December 31, 2021.
Allowance for Credit Losses
The allowance for credit losses consists of the allowance for credit losses on TDRfunded HFI loans and an allowance for credit losses on unfunded loan commitments. The allowance for credit losses on HTM securities is estimated separately from loans, see "Note 3. Investment Securities" of these Notes to Consolidated Financial Statements for further discussion. Management considers the level of allowance for credit losses to be a reasonable and supportable estimate of expected credit losses inherent within the Company's HFI loan portfolio as of December 31, 2021.
The below tables reflect the activity in the allowance for credit losses on HFI loans by loan portfolio segment, which includes an estimate of future recoveries:
Year Ended December 31, 2021
Balance,
December 31, 2020		Provision for (Recovery of) Credit LossesWrite-offsRecoveriesBalance,
December 31, 2021
(in millions)
Warehouse lending$3.4 $(0.4)$— $— $3.0 
Municipal & nonprofit15.9 (2.2)— — 13.7 
Tech & innovation33.4 (6.2)2.0 (0.5)25.7 
Equity fund resources1.9 7.7 — — 9.6 
Other commercial and industrial94.7 14.0 7.4 (2.3)103.6 
CRE - owner occupied18.6 (8.0)— — 10.6 
Hotel franchise finance43.3 (2.1)— (0.3)41.5 
Other CRE - non-owner occupied39.9 (22.5)2.0 (1.5)16.9 
Residential0.8 11.2 — (0.5)12.5 
Construction and land development22.0 (9.5)— — 12.5 
Other5.0 (2.5)0.2 (0.6)2.9 
Total$278.9 $(20.5)$11.6 $(5.7)$252.5 
Year Ended December 31, 2020
Balance,
January 1, 2020		Provision for (Recovery of) Credit LossesWrite-offsRecoveriesBalance,
December 31, 2020
(in millions)
Warehouse lending$0.2 $3.2 $— $— $3.4 
Municipal & nonprofit17.4 (1.5)— — 15.9 
Tech & innovation21.0 23.5 11.1 — 33.4 
Equity fund resources1.4 0.5 — — 1.9 
Other commercial and industrial95.8 1.8 6.4 (3.5)94.7 
CRE - owner occupied10.4 8.3 0.2 (0.1)18.6 
Hotel franchise finance14.1 29.2 — — 43.3 
Other CRE - non-owner occupied10.5 29.8 2.1 (1.7)39.9 
Residential3.8 (3.1)0.3 (0.4)0.8 
Construction and land development6.2 15.7 — (0.1)22.0 
Other6.1 (0.9)0.3 (0.1)5.0 
Total$186.9 $106.5 $20.4 $(5.9)$278.9 
Accrued interest receivable on loans totaled $0.2$197.6 million and $1.5$142.1 million respectively.at December 31, 2021 and 2020, respectively, and is excluded from the estimate of credit losses.

116
In addition to the allowance for credit losses on funded HFI loans, the Company maintains a separate allowance for credit losses related to off-balance sheet credit exposures, including unfunded loan commitments. This allowance is included in Other liabilities on the Consolidated Balance Sheets.
The below table reflects the activity in the allowance for credit losses on unfunded loan commitments:
Year Ended December 31,
20212020
(in millions)
Balance, beginning of period$37.0 $9.0 
Beginning balance adjustment from adoption of CECL— 15.1 
Provision for (recovery of) credit losses0.6 12.9 
Balance, end of period$37.6 $37.0 
The following tables disaggregate the Company's allowance for credit losses on funded HFI loans and loan balances by measurement methodology:
December 31, 2021
LoansAllowance
Collectively Evaluated for Credit LossIndividually Evaluated for Credit LossTotalCollectively Evaluated for Credit LossIndividually Evaluated for Credit LossTotal
(in millions)
Warehouse lending$5,155.9 $— $5,155.9 $3.0 $— $3.0 
Municipal & nonprofit1,579.2 — 1,579.2 13.7 — 13.7 
Tech & innovation1,400.8 17.0 1,417.8 22.9 2.8 25.7 
Equity fund resources3,829.8 — 3,829.8 9.6 — 9.6 
Other commercial and industrial6,442.7 23.0 6,465.7 101.1 2.5 103.6 
CRE - owner occupied1,699.3 24.4 1,723.7 10.6 — 10.6 
Hotel franchise finance2,378.3 155.7 2,534.0 30.7 10.8 41.5 
Other CRE - non-owner occupied3,917.3 34.5 3,951.8 16.9 — 16.9 
Residential9,242.8 — 9,242.8 12.5 — 12.5 
Construction and land development2,997.6 8.2 3,005.8 12.5 — 12.5 
Other168.6 0.3 168.9 2.9 — 2.9 
Total$38,812.3 $263.1 $39,075.4 $236.4 $16.1 $252.5 
December 31, 2020
LoansAllowance
Collectively Evaluated for Credit LossIndividually Evaluated for Credit LossTotalCollectively Evaluated for Credit LossIndividually Evaluated for Credit LossTotal
(in millions)
Warehouse lending$4,340.2 $— $4,340.2 $3.4 $— $3.4 
Municipal & nonprofit1,726.9 1.9 1,728.8 15.9 — 15.9 
Tech & innovation1,375.8 27.2 1,403.0 29.5 3.9 33.4 
Equity fund resources1,145.3 — 1,145.3 1.9 — 1.9 
Other commercial and industrial5,883.1 28.1 5,911.2 90.3 4.4 94.7 
CRE - owner occupied1,857.9 51.4 1,909.3 18.6 — 18.6 
Hotel franchise finance1,927.0 56.9 1,983.9 40.4 2.9 43.3 
Other CRE - non-owner occupied3,553.6 86.6 3,640.2 39.9 — 39.9 
Residential2,367.1 11.4 2,378.5 0.8 — 0.8 
Construction and land development2,427.9 1.5 2,429.4 22.0 — 22.0 
Other182.6 0.6 183.2 5.0 — 5.0 
Total$26,787.4 $265.6 $27,053.0 $267.7 $11.2 $278.9 
117
Loan Purchases and Sales
Loan purchases and syndications during the years ended December 31, 2021 and 2020 totaled $12.3 billion and $2.7 billion, respectively. Loan purchases of $8.8 billion and $1.6 billion during the years ended December 31, 2021 and 2020 primarily consisted of residential loan purchases. In addition, the Company had loan syndications of $3.5 billion and $1.1 billion during the years ended December 31, 2021 and 2020 mainly attributed to capital call lines. There were no loans purchased with more-than-insignificant deterioration in credit quality during the years ended December 31, 2021 and 2020.
During the year ended December 31, 2021, the Company sold loans with a carrying value of $551.2 million and recognized a net gain of $7.2 million on these loan sales. During the year ended December 31, 2020, the Company sold loans with a carrying value of $77.3 million, resulting in a net gain of $1.7 million on these sales.
6. MORTGAGE SERVICING RIGHTS
The Company has a residentialacquired MSRs as part of the AmeriHome acquisition and continues to generate new MSRs from its mortgage acquisition program, in which it partners with strategic third parties to execute flow and bulk residential loan purchases that meet the Company's goals and underwriting criteria.banking business. The following table presents these residentialthe changes in fair value of the Company's MSR assets and other secondaryinformation related to its servicing portfolio:
Year Ended December 31, 2021
(in millions)
Beginning balance$—
Acquired in AmeriHome acquisition1,347.0
Additions from loans sold with servicing rights retained763.8
MSRs sold(1,270.7)
Change in fair value(2.5)
Realization of cash flows(139.6)
Balance, December 31, 2021$698.0
Unpaid principal balance of mortgage loans serviced for others$54,347.6
Changes in fair value are recorded as part of Net loan servicing revenue in the Consolidated Income Statement. Due to the regulatory capital impact of MSRs on capital ratios, the Company sells certain MSRs and related servicing advances in the normal course of business. During the period from the AmeriHome acquisition date through December 31, 2021, the Company completed sales of MSRs and related servicing advances with an aggregate net sales price of $1.3 billion and UPB of loans underlying these sales of $97.2 billion. As of December 31, 2021, the Company has a remaining receivable balance related to holdbacks on these sales for pending servicing transfers of $82.5 million, which was recorded as part of Other assets on the Consolidated Balance Sheet.
The Company receives loan servicing fees, net of subservicing costs, based on the UPB of the underlying loans. Loan servicing fees are collected from payments made by borrowers. The Company may receive 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 $138.9 million for the period from the acquisition date through December 31, 2021, which are recorded as part of 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 loan purchasesforeclosed real estate properties. The Company is entitled to recover all or a portion of the advances from borrowers of reinstated and salesperforming 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 December 31, 2021, net servicing advances totaled $81.6 million, which is recorded as part of Other assets on the Consolidated Balance Sheet.
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The following presents the effect of hypothetical changes in the fair value of MSRs caused by loan portfolio segment: assumed immediate changes in interest rates, discount rates, and prepayment speeds that are used to determine fair value:
  Year Ended December 31,
  2019 2018
  (in thousands)
Loan purchases    
Commercial and industrial $1,014,894
 $690,122
Commercial real estate - non-owner occupied 49,211
 —
Construction and land development 34,490
 27,517
Residential real estate 1,434,812
 883,179
Total $2,533,407
 $1,600,818
     
Loan sales    
Carrying value $98,963
 $66,477
Gain on sale 690
 2,638

December 31, 2021
(in millions)
Fair value of mortgage servicing rights$698.0
Increase (decrease) in fair value resulting from:
Interest rate change of 50 basis points
Adverse change(61.6)
Favorable change39.9
Discount rate change of 50 basis points
Increase(13.3)
Decrease13.8
Conditional prepayment rate change of 1%
Increase(21.5)
Decrease23.8
Cost to service change of 10%
Increase(9.6)
Decrease9.6
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, the effect of a variation in a particular assumption is calculated without changing any other assumptions, whereas a change in one factor may result in changes to another. Accordingly, no assurance can be given that actual results would be consistent with the results of these estimates. As a result, actual future changes in MSR values may differ significantly from those reported.
4.
7. PREMISES AND EQUIPMENT
 The following is a summary of the major categories of premises and equipment:
 December 31,
 20212020
 (in millions)
Bank premises$91.6 $92.0 
Land and improvements32.4 33.0 
Furniture, fixtures, and equipment99.6 68.2 
Leasehold improvements41.5 29.7 
Construction in progress42.7 17.4 
Total307.8 240.3 
Accumulated depreciation and amortization(125.9)(106.2)
Premises and equipment, net$181.9 $134.1 
  December 31,
  2019 2018
  (in thousands)
Bank premises $91,574
 $89,930
Land and improvements 32,954
 32,954
Furniture, fixtures, and equipment 53,621
 42,729
Leasehold improvements 28,477
 25,919
Construction in progress 10,449
 6,302
Total 217,075
 197,834
Accumulated depreciation and amortization (91,237) (78,360)
Premises and equipment, net $125,838
 $119,474
Depreciation expense totaled $20.7 million, $15.2 million, and $13.5 million for the years ended December 31, 2021, 2020, and 2019, respectively.
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5.8. LEASES
Adoption of ASU 2016-02, Leases
On January 1, 2019, the Company adopted the amendments to ASC 842, Leases, which requires lessees to recognize lease assets and liabilities arising from operating leases on the balance sheet. The Company adopted the new lease guidance using the modified retrospective approach and elected the transition option issued under ASU 2018-11, Leases (Topic 842) Targeted Improvements, allowing entities to continue to apply the legacy guidance in ASC 840, Leases, to prior periods, including disclosure requirements. Accordingly, prior period financial results and disclosures have not been adjusted.
The Company has operating leases under which it leases its branch offices, corporate headquarters, other offices, and data facility centers. Upon adoption of the new lease guidance, on January 1, 2019, the Company recorded a ROU asset and corresponding lease liability of $42.5 million and $46.1 million, respectively, on the Consolidated Balance Sheet. As of December 31, 2019,2021, the Company's operating lease ROU asset and operating lease liability totaled $72.6$133.0 million and $78.1$142.8 million, respectively. The increase in the operating lease ROU asset and the operating lease liability from the adoption date is due to execution of multiple office lease extensions and new office lease agreements subsequent to the adoption date. A weighted average discount rate of 2.14%, 2.80%, and 3.08% was used in the measurement of the ROU asset and lease liability as of December 31, 2019.2021, 2020, and 2019 respectively.
The Company's leases have remaining lease terms of one to 11nine years, with a weighted average lease term of 7.5 years, 7.7 years, and 8.4 years at December 31, 2019.2021, 2020, 2019, respectively. Some leases include multiple five-year renewal options. The Company’s decision to exercise these renewal options is based on an assessment of its current business needs and market factors at the time of the renewal. Currently, the Company has

no leases for which the option to renew is reasonably certain and therefore, options to renew were not factored into the calculation of its ROU asset and lease liability as of December 31, 2019.2021.
The following is a schedule of the Company's operating lease liabilities by contractual maturity as of December 31, 2019:2021:
  (in thousands)
2020 $12,369
2021 10,413
2022 9,224
2023 9,060
2024 9,007
Thereafter 40,072
Total lease payments $90,145
Less: imputed interest 12,033
Total present value of lease liabilities $78,112

(in millions)
2022$15.1 
202320.7 
202422.7 
202518.3 
202619.3 
Thereafter60.2 
Total lease payments$156.3 
Less: imputed interest13.5 
Total present value of lease liabilities$142.8 
The Company also has additional operating leases for its corporate headquartersa new branch and a branch locationother office locations that have not yet commenced as of December 31, 2019.2021. The aggregate future commitment related to the additional leases total $3.1$36.9 million. These operating leases will commence within the next 12 months and will have lease terms ofbetween five and 11 years.
Total operating lease costs of $12.9$18.8 million and other lease costs of $4.0$3.8 million, which include common area maintenance, parking, and taxes during the year ended December 31, 2019,2021, were included as part of occupancy expense. For the year ended December 31, 2020, total operating lease costs and other lease costs were $14.0 million and $3.9 million, respectively, and for the year ended December 31, 2019, were $12.9 million and $4.0 million, respectively. Short-term lease costs were not material for the year ended December 31, 2019. For the years ended December 31, 20182021, 2020, and 2017, rent expense associated with the Company's operating leases totaled $11.0 million and $10.4 million, respectively.2019.
The below table shows the supplemental cash flow information related to the Company's operating leases for the yearyears ended December 31, 2021, 2020, and 2019:
Year Ended December 31,
202120202019
(in millions)
Cash paid for amounts included in the measurement of operating lease liabilities$16.3 $13.0 $12.4 
Right-of-use assets obtained in exchange for new operating lease liabilities76.7 11.8 43.7 
  (in thousands)
Cash paid for amounts included in the measurement of operating lease liabilities $12,435
Right-of-use assets obtained in exchange for new operating lease liabilities 43,681
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6.9. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill represents the excess consideration paid for net assets acquired in a business combination over their fair value. Goodwill and other intangible assets acquired in a business combination that are determined to have an indefinite useful life are not subject to amortization, but are subsequently evaluated for impairment at least annually. The Company hashad goodwill of $491.3 million and $289.9 million as of December 31, 2019, which has been allocated to the Nevada, Northern California, Technology & Innovation,2021 and HFF operating segments.2020, respectively.
The Company performs its annual goodwill and intangibles impairment tests as of October 1 of each year, or more often if events or circumstances indicate that the carrying value may not be recoverable. During the years endedA qualitative impairment assessment is not required for a reporting unit with a zero or negative carrying amount. As of December 31, 2019, 2018,2021 and 2017, there were no events or circumstances that indicated2020, the Company's Commercial reporting unit (which is the same as the Commercial reporting segment) had a negative carrying amount and an interim impairment testallocated goodwill balance of goodwill or other intangible assets was necessary and, based$289.9 million. Based on the Company's annual goodwill and intangibles impairment tests as of October 1 of each of theseduring the years ended December 31, 2021, 2020, and 2019, it was determined that goodwill and intangible assets are not impaired.

The following is a summary of the Company's acquired intangible assets:
  December 31, 2019 December 31, 2018
  Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
  (in thousands)
Subject to amortization            
Core deposit intangibles $14,647
 $7,284
 $7,363
 $14,647
 $5,737
 $8,910
             
  December 31, 2019 December 31, 2018
  Gross Carrying Amount Impairment Net Carrying Amount Gross Carrying Amount Impairment Net Carrying Amount
  (in thousands)
Not subject to amortization            
Trade name $350
 $—
 $350
 $350
 $—
 $350

December 31, 2021December 31, 2020
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
(in millions)
Subject to amortization
Core deposit intangibles$14.6 $10.2 $4.4 $14.6 $8.8 $5.8 
Customer relationship intangibles2.5 0.6 1.9 2.5 0.1 2.4 
Correspondent customer relationships76.0 2.8 73.2 — — — 
Trade name - AmeriHome9.5 0.4 9.1 — — — 
Operating licenses55.5 1.0 54.5 — — — 
$158.1 $15.0 $143.1 $17.1 $8.9 $8.2 
December 31, 2021December 31, 2020
Gross Carrying AmountImpairmentNet Carrying AmountGross Carrying AmountImpairmentNet Carrying Amount
(in millions)
Not subject to amortization
Trade name - Bridge Bank$0.4 $— $0.4 $0.4 $— $0.4 
As of December 31, 2019,2021, the Company's core deposit intangible assets had a weighted average estimated useful life of 5.5 years. The Company's remaining core deposit intangible assets consist of those acquired in the acquisition of Bridge and are being amortized using an accelerated amortization method over a period of 1026.2 years. Amortization expense recognized on amortizable intangibles totaled $1.5$6.1 million $1.6 million,for the year ended December 31, 2021, and $2.1$1.6 million for the years ended December 31, 2019, 2018,2020 and 2017, respectively.2019.
Below is a summary of future estimated aggregate amortization expense:
 December 31, 2021
 (in millions)
2022$7.5 
20237.4 
20247.4 
20256.6 
20265.7 
Thereafter108.5 
Total$143.1 
  December 31, 2019
  (in thousands)
2020 $1,494
2021 1,433
2022 1,364
2023 1,289
2024 1,206
Thereafter 577
Total $7,363
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7.10. DEPOSITS
The table below summarizes deposits by type: 
  December 31,
  2019 2018
  (in thousands)
Non-interest-bearing demand deposits $8,537,905
 $7,456,141
Interest-bearing transaction accounts 2,760,865
 2,555,609
Savings and money market accounts 9,120,747
 7,330,709
Time certificates of deposit ($250,000 or more) 1,426,133
 1,009,900
Other time deposits 950,843
 825,088
Total deposits $22,796,493
 $19,177,447

 December 31,
 20212020
 (in millions)
Non-interest-bearing demand deposits$21,353.4 $13,463.3 
Interest-bearing transaction accounts6,924.0 4,396.4 
Savings and money market accounts17,278.6 12,413.4 
Time certificates of deposit ($250,000 or more)523.0 602.0 
Other time deposits1,533.0 1,055.4 
Total deposits$47,612.0 $31,930.5 
The summary of the contractual maturities for all time deposits as of December 31, 20192021 is as follows: 
  December 31,
  (in thousands)
2020 $2,259,182
2021 105,237
2022 7,953
2023 3,502
2024 1,102
Total $2,376,976

December 31,
(in millions)
2022$1,932.4 
2023102.2 
202417.4 
20252.9 
20261.1 
Total$2,056.0 
WAB is a participant in the Promontory Interfinancial Network, a network that offers deposit placement services such as CDARS and ICS, which offer products that qualify large deposits for FDIC insurance. Federal banking law and regulation places restrictions on depository institutions regarding brokered deposits because of the general concern that these deposits are not relationship-based and are at a greater risk of being withdrawn, thus posing liquidity risk for institutions that gather brokered deposits in significant amounts. At December 31, 20192021 and 2018,2020, the Company had $407.7$729.2 million and $322.9$496.4 million, respectively, of reciprocal CDARS deposits and $661.8 million$1.8 billion and $706.9 million,$1.3 billion, respectively, of ICS deposits. At December 31, 2019 and 2018, theThe Company also had $1.1$1.8 billion and $718.2$554.8 million respectively, of wholesale brokered deposits. deposits at December 31, 2021 and 2020, respectively.
In addition, non-interest-bearing deposits for which the Company provides account holders with earnings credits or referral fees totaled $3.1totaled $10.8 billion and $2.3and $5.9 billion at December 31, 20192021 and 2018,2020, respectively. The Company incurred $30.5$27.4 million and $18.0$17.0 million in deposit related costs on these deposits during the years ended December 31, 20192021 and 2018,2020, respectively.

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11. OTHER BORROWINGS
The following table summarizes the Company’s borrowings as of December 31, 20192021 and 2018:2020: 
December 31,
20212020
(in millions)
Short-Term:
Federal funds purchased$675.0 $— 
FHLB advances— 5.0 
Customer repurchase agreements16.6 16.0 
Secured borrowings35.3 — 
Total short-term borrowings$726.9 $21.0 
Long-Term:
AmeriHome senior notes, net of fair value adjustment$317.9 $— 
Credit linked notes, net of debt issuance costs457.1 — 
Total long-term borrowings$775.0 $— 
Total other borrowings$1,501.9 $21.0 
  December 31,
  2019 2018
  (in thousands)
Short-Term:    
Federal funds purchased $—
 $256,000
FHLB advances —
 235,000
Total short-term borrowings $—
 $491,000
Short-Term Borrowings

Federal Funds Lines of Credit
The Company maintains federal fund lines of credit totaling $1.2$2.8 billion as of December 31, 2019,2021, which have rates comparable to the federal funds effective rate plus 0.10% to 0.20%. As of December 31, 2019, there were 02021, outstanding balances on the Company's lines of credit. As of December 31, 2018, outstanding balances on these federal fund lines of credit totaled $256.0$675.0 million. As of December 31, 2020, there were no outstanding balances on the Company's federal fund lines of credit.
FHLB Advances
The Company also maintains secured lines of credit with the FHLB and the FRB. The Company’s borrowing capacity is determined based on collateral pledged, generally consisting of investment securities and loans, at the time of the borrowing. The Company has a PPP lending facility with the FRB that allows the Company to pledge loans originated under the PPP in return for dollar for dollar funding from the FRB, which would provide up to $416.0 million in additional credit. The amount of available credit under the PPP lending facility will decline each period as these loans are paid down. At December 31, 2019,2021, the Company had 0 short-term FHLB overnight advances. Atno amounts outstanding under its line of credit or its PPP lending facility with the FRB and had no borrowings under its lines of credit with the FHLB. As of December 31, 2018, short-term2021 and 2020, the Company had additional available credit with the FHLB advances of $235.0 million had an interest rateapproximately $7.8 billion and $4.0 billion, respectively, and with the FRB of 2.56%.approximately $3.4 billion and $2.7 billion, respectively.
Repurchase Agreements
Other short-term borrowing sources available to the Company include customer repurchase agreements, which have a weighted average rate of 0.15% and totaled $16.7$16.6 million and $22.4$16.0 million as of December 31, 20192021 and 2018,2020, respectively. The weighted average rate on customer repurchase agreements was 0.15% as of December 31, 2021 and 2020.
Secured Borrowings
Transfers of loans HFS not qualifying for sales accounting treatment, resulted in recognition of secured borrowings of $35.3 million at December 31, 2021.
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Warehouse Borrowings
The Company assumed warehouse borrowing lines of credit as part of the AmeriHome acquisition, which are used to finance the acquisition of loans through the use of repurchase agreements. Repurchase agreements operate as financings under which the Company transfers loans to secure these borrowings. The borrowing amounts are based on the attributes of the collateralized loans and are defined in the repurchase agreement of each warehouse lender. The Company retains beneficial ownership of the transferred loans and will receive the loans from the lender upon full repayment of the borrowing. The repurchase agreements may require the Company to transfer additional assets to the lender in the event the estimated fair value of the existing transferred loans declines.
As of December 31, 2019 and 2018,2021, the Company had additional availableaccess to approximately $1.0 billion in uncommitted warehouse funding, of which no amounts were drawn.
Long-Term Borrowings
AmeriHome Senior Notes
Prior to the Company's acquisition of AmeriHome, in October 2020, AmeriHome issued senior notes with an aggregate principal amount of $300.0 million, maturing on October 26, 2028. The senior notes accrue interest at a rate of 6.50% per annum, paid semiannually. The senior notes contain provisions that allow for redemption of up to 40% of the original aggregate principal amount of the notes during the first three years after issuance at a price equal to 106.50%, plus accrued and unpaid interest. After this three-year period, AmeriHome may redeem some or all of the senior notes at a price equal to 103.25% of the outstanding principal amount, plus accrued and unpaid interest. In 2025, the redemption price of these senior notes declines to 100% of the outstanding principal balance. The carrying amount of the senior notes includes a fair value adjustment (premium) of $19.3 million recognized as of the acquisition date that is being amortized over the term of the notes. As of December 31, 2021, the carrying value of these notes totaled $317.9 million.
Credit Linked Notes
On June 28, 2021, the Company issued $242.0 million aggregate principal amount of senior unsecured credit linked notes, which were recorded net of $2.9 million in debt issuance costs. The notes mature on December 30, 2024 and accrue interest at a rate equal to three-month LIBOR plus 5.50% (which will convert to SOFR upon the discontinuation of LIBOR in June 2023), payable quarterly. The notes effectively transfer the risk of first losses on a $1.9 billion reference pool of the Company's warehouse loans to the purchasers of the notes. In the event of a failure to pay by the relevant mortgage originator, insolvency of the relevant mortgage originator, or restructuring of such loans that results in a loss on a loan included in the reference pools, the principal balance of the notes will be reduced to the extent of such loss and a gain on recovery of credit guarantees will be recognized within non-interest income in the Consolidated Income Statement. The purchasers of the notes have the option to acquire the underlying mortgage loan collateralizing the reference warehouse line of credit in the event of obligor default.
On December 29, 2021, the Company issued $227.6 million aggregate principal amount of senior unsecured credit linked notes, which were recorded net of $2.8 million in debt issuance costs. There are six classes of these notes, each with an interest rate of SOFR plus a spread, that ranges from 3.15% to 8.50% (or, a weighted average spread of 4.67%), maturing on July 25, 2059. The notes effectively transfer the FHLBrisk of approximately $4.5first losses on a $4.6 billion reference pool of the Company's loans purchased under its residential mortgage purchase program to the purchasers of the notes. The principal and $2.5 billion, respectively,interest payable on the notes may be reduced by a portion of the Company's loss on such loans if one of the following occurs with respect to a covered loan: (i) realized losses incurred by the Company on a loan following a liquidation of the loan or certain other events, or (ii) a modification of the loan resulting in a reduction in payments. The aggregate losses, if any, for each payment date will be allocated to reduce the class principal amount and with(for modifications) the FRBcurrent interest of approximately $1.1 billionthe notes in reverse order of class priority.
Losses on the warehouse lines of credit and $1.3 billion, respectively.residential mortgages have not generally been significant. As of December 31, 2021, the carrying value of these notes totaled $457.1 million.
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12. QUALIFYING DEBT
Subordinated Debt
The Parent has $175.0 million ofCompany's subordinated debentures, which were recorded net of issuance costs of $5.5 million, and mature July 1, 2056. Beginning on or after July 1, 2021,debt issuances are detailed in the Company may redeem the debentures,tables below:
December 31, 2021
DescriptionIssuance DateMaturity DateInterest RatePrincipalDebt Issuance Costs at Origination
(in millions)
WAL fixed-to-variable-rate (1)June 2021June 15, 20313.00 %$600.0 $8.1 
WAB fixed-to-variable-rate (2)May 2020June 1, 20305.25 %225.0 3.1 
$825.0 $11.2 
December 31, 2020
DescriptionIssuance DateMaturity DateInterest RatePrincipalDebt Issuance Costs at Origination
(in millions)
WAL fixed-rate (3)June 2016July 1, 20566.25 %$175.0 $5.5 
WAB fixed-to-variable-rate (4)June 2015July 15, 20253.44 %75.0 1.8 
WAB fixed-to-variable-rate (2)May 2020June 1, 20305.25 %225.0 3.1 
$475.0 $10.4 
(1)    Notes are redeemable, in whole or in part, beginning on June 15, 2026 at their principal amount plus accrued and unpaid interest. The notes also convert to a variable rate on this date, which is expected to be three-month SOFR plus 225 basis points.
(2)    Debt is redeemable, in whole or in part, on or after June 1, 2025 at its principal amount plus accrued and unpaid interest and has a fixed interest rate of 5.25% through June 1, 2025 and then converts to a variable rate per annum equal to three-month SOFR plus 512 basis points.
(3)    Debentures became redeemable on July 1, 2021 at their principal amount plus any accrued and unpaid interest. TheDuring the year ended December 31, 2021 the debentures have a fixed interest rate of 6.25% per annum.were redeemed in full.
WAB has $150.0 million of subordinated debt, which was recorded net of debt issuance costs of $1.8 million, and matures(4)    Debt became redeemable on July 15, 2025. 2020, at its principal amount plus accrued and unpaid interest. During the year ended December 31, 2021, the remaining $75 million was redeemed in full.
The subordinated debt has a fixed interest rate of 5.00% through June 30, 2020 and then converts to a variable rate of 3.20% plus three-month LIBOR through maturity.
To hedgeCompany hedged the interest rate risk on the Company'sits 2015 and 2016 subordinated debt issuances, the Company entered intoissuance with fair value interest rate hedges with receive(receive fixed/pay variable swaps.
swaps). These hedges were terminated during the year ended December 31, 2021 in connection with the redemptions of these subordinated debentures. The carrying value of all subordinated debt issuances, which includesincluded the fair value of the related hedges, totals $319.2totaled $815.1 million and $299.4$469.8 million at December 31, 20192021 and 2018,2020, respectively.


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Junior Subordinated Debt
The Company has formed or acquired through acquisition 8eight statutory business trusts, which exist for the exclusive purpose of issuing Cumulative Trust Preferred Securities.
The Company's junior subordinated debt has contractual balances and maturity dates as follows: 
December 31,
Name of TrustMaturity20212020
At fair value(in millions)
BankWest Nevada Capital Trust II2033$15.5 $15.5 
Intermountain First Statutory Trust I203410.3 10.3 
First Independent Statutory Trust I20357.2 7.2 
WAL Trust No. 1203620.6 20.6 
WAL Statutory Trust No. 220375.2 5.2 
WAL Statutory Trust No. 320377.7 7.7 
Total contractual balance66.5 66.5 
FVO on junior subordinated debt0.9 (0.6)
Junior subordinated debt, at fair value$67.4 $65.9 
At amortized cost
Bridge Capital Holdings Trust I2035$12.4 $12.4 
Bridge Capital Holdings Trust II20365.1 5.1 
Total contractual balance17.5 17.5 
Purchase accounting adjustment, net of accretion (1)(4.2)(4.5)
Junior subordinated debt, at amortized cost$13.3 $13.0 
Total junior subordinated debt$80.7 $78.9 
    December 31,
Name of Trust Maturity 2019 2018
At fair value   (in thousands)
BankWest Nevada Capital Trust II 2033 $15,464
 $15,464
Intermountain First Statutory Trust I 2034 10,310
 10,310
First Independent Statutory Trust I 2035 7,217
 7,217
WAL Trust No. 1 2036 20,619
 20,619
WAL Statutory Trust No. 2 2037 5,155
 5,155
WAL Statutory Trust No. 3 2037 7,732
 7,732
Total contractual balance   66,497
 66,497
FVO on junior subordinated debt   (4,812) (17,812)
Junior subordinated debt, at fair value   $61,685
 $48,685
At amortized cost      
Bridge Capital Holdings Trust I 2035 $12,372
 $12,372
Bridge Capital Holdings Trust II 2036 5,155
 5,155
Total contractual balance   17,527
 17,527
Purchase accounting adjustment, net of accretion (1)   (4,845) (5,155)
Junior subordinated debt, at amortized cost   $12,682
 $12,372
       
Total junior subordinated debt   $74,367
 $61,057

(1)The purchase accounting adjustment is being accreted over the remaining life of the trusts, pursuant to accounting guidance.
(1)The purchase accounting adjustment is being accreted over the remaining life of the trusts, pursuant to accounting guidance.
With the exception of debt issued by Bridge Capital Trust I and Bridge Capital Trust II, junior subordinated debt is recorded at fair value at each reporting date due to the FVO election made by the Company under ASC 825. The Company did not make the FVO election for the junior subordinated debt acquired as part of the Bridge acquisition. Accordingly, the carrying value of these trusts does not reflect the current fair value of the debt and includes a fair market value adjustment established at acquisition that is being accreted over the remaining life of the trusts.
The carrying value of junior subordinated debt was $80.7 million and $78.9 million as of December 31, 2021 and 2020, respectively. The weighted average interest rate of all junior subordinated debt as of December 31, 20192021 was 4.25%2.55%, which is equal to three-month LIBOR plus the contractual spread of 2.34%, compared to a weighted average interest rate of 5.15%2.58% at December 31, 2018.2020. Subsequent to June 30, 2023, interest rates on the Company's junior subordinated debt will be based on SOFR.
In the event of certain changes or amendments to regulatory requirements or federal tax rules, the debt is redeemable in whole. The obligations under these instruments are fully and unconditionally guaranteed by the Company and rank subordinate and junior in right of payment to all other liabilities of the Company. Based on guidance issued by the FRB, the Company's securities continue to qualify as Tier 1 Capital.

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13. STOCKHOLDERS' EQUITY
Stock-Based Compensation
Restricted Stock Awards
The Incentive Plan, as amended, gives the BOD the authority to grant up to 10.511.8 million in stock awards consisting of unrestricted stock, stock units, dividend equivalent rights, stock options (incentive and non-qualified), stock appreciation rights, restricted stock, and performance and annual incentive awards. The Incentive Plan limits the maximum number of shares of common stock that may be awarded to any person eligible for an award to 300,000 per calendar year and also limits the total compensation (cash and stock) that can be awarded to a non-employee director to $600,000 in any calendar year. Stock awards available for grant at December 31, 20192021 were 2.93.0 million.
Restricted stock awards granted to employees generally vest over a three-year3-year period. Stock grants made to non-employee WAL directors in 2019 became2021 were fully vested on July 1, 2019.2021. The Company estimates the compensation cost for stock grants based upon the grant date fair value. Stock compensation expense is recognized on a straight-line basis over the requisite service period for the entire award. Stock compensation expense related to restricted stock awards and stock options granted to employees are included in Salaries and employee benefits in the Consolidated Income Statement. For restricted stock awards granted to WAL directors, the related stock compensation expense is included in Legal, professional, and directors' fees. For the year ended December 31, 2019,2021, the Company recognized $17.4$22.9 million in stock-based compensation expense related to these stock grants, compared to $16.6$20.3 million in 2018, and $14.3$17.4 million in 2017.during the years ended December 31, 2020 and 2019, respectively.
In addition, the Company previously granted shares of restricted stock to certain members of executive management that had both performance and service conditions that affect vesting. There were 0no such grants made during the years ended December 31, 20192021, 2020, and 2018;2019, however expense iswas still being recognized through June 30, 2021 for the grantsa grant made in 2017 as they also havewith a three-yearfour-year vesting period. For the year ended December 31, 2019, theThe Company recognized $1.9$0.6 million in stock-based compensation expense related to these performance-based restricted stock grants through June 30, 2021, the end of the vesting period, compared to $2.5$1.2 million in 2018, and $2.3$1.9 million in 2017.during the years ended December 31, 2020 and 2019, respectively.
A summary of the status of the Company’s unvested shares of restricted stock and changes during the years then ended is presented below: 
  December 31,
  2019 2018
  Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value
  (in thousands, except per share amounts)
Balance, beginning of period 1,027
 $47.53
 1,142
 $36.96
Granted 516
 46.04
 425
 58.02
Vested (469) 39.60
 (477) 32.31
Forfeited (114) 50.80
 (63) 43.62
Balance, end of period 960
 $49.98
 1,027
 $47.53

 December 31,
 20212020
 SharesWeighted Average Grant Date Fair ValueSharesWeighted Average Grant Date Fair Value
 (in millions, except per share amounts)
Balance, beginning of period1.0 $50.12 1.0 $49.98 
Granted0.4 83.56 0.4 51.53 
Vested(0.4)53.50 (0.4)51.86 
Forfeited(0.1)59.24 0.0 49.79 
Balance, end of period0.9 $63.53 1.0 $50.12 
The total weighted average grant date fair value of all stock awards, including the performance-based restricted stock awards, granted during the years ended December 31, 2021, 2020, and 2019 2018, and 2017 was $23.7$35.4 million, $24.7$22.7 million, and $26.1$23.7 million, respectively. The total fair value of restricted stock that vested during the years ended December 31, 2021, 2020, and 2019 2018, and 2017 was $21.3$34.2 million, $27.4$19.6 million, and $29.1$21.3 million, respectively.
As of December 31, 2019,2021, there was $23.0$28.0 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Incentive Plan. That cost is expected to be recognized over a weighted average period of 1.622.0 years.

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Performance Stock Units
The Company grants performance stock units to members of its executive management performance stock units that do not vest unless the Company achieves a specified cumulative EPS target and a TSR performance measure over a three-year performance period. The number of shares issued will vary based on the cumulative EPS target and relative TSR performance factor that is achieved. The Company estimates the cost of performance stock units based upon the grant date fair value and expected vesting percentage over the three-year performance period. For the year ended December 31, 2019,2021, the Company recognized $6.9$10.4 million in stock-based compensation expense related to these performance stock units, compared to $6.4$7.1 million and $6.5$6.9 million in stock-based compensation expense for such units in 2018during the years ended December 31, 2020 and 2017,2019, respectively.
The three-year performance period for the 20162019 grant ended on December 31, 2018, and the Company's cumulative EPS for the performance period exceeded the level required for a maximum award under the terms of the grant. As a result, executive management members were entitled to the maximum award of 202,776 shares, which was paid out in the first quarter of 2019.
The three-year performance period for the 2017 grant ended on December 31, 2019,2021, and the Company's cumulative EPS and TSR performance measure for the performance period exceeded the level required for a maximum award under the terms of the grant. As a result, 163,901203,646 shares will become fully vested and distributed to executive management in the first quarter of 2020.2022.
CommonThe three-year performance period for the 2018 grant ended on December 31, 2020, and the Company's cumulative EPS and TSR performance measure for the performance period exceeded the level required for a maximum award under the terms of the grant. As a result, 152,418 shares became fully vested and were distributed to executive management in the first quarter of 2021.
Preferred Stock Repurchase
On December 12, 2018,September 15, 2021, the Company announced that it had adopted a common stock repurchase plan,entered into an underwriting agreement, pursuant to which the Company was authorizedagreed to repurchaseissue and sell an aggregate of 12,000,000 depositary shares, each representing a 1/400th ownership interest in a share of the Company’s 4.250% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Shares, Series A, par value $0.0001 per share, with a liquidation preference of $25 per depositary share (equivalent to $10,000 per share of Series A preferred stock).
The Company received net proceeds of $294.5 million from the issuance of preferred stock during the year ended December 31, 2021. On December 14, 2021, the Company declared the first quarterly cash dividend of $0.29 per depositary share, for a total dividend payment to preferred shareholders of $3.5 million, paid on December 30, 2021.
Common Stock Issuances
Pursuant to ATM Distribution Agreement
On June 3, 2021, the Company entered into a distribution agency agreement with J.P. Morgan Securities LLC, under which the Company may sell up to $250 million4,000,000 shares of its shares of common stock through December 31, 2019. on the NYSE. The Company pays the distribution agents a mutually agreed rate, not to exceed 2% of the gross offering proceeds of the shares sold pursuant to the distribution agency agreement. The common stock will be sold at prevailing market prices at the time of the sale or at negotiated prices and, as a result, prices will vary. Sales under the ATM program are being made pursuant to a prospectus dated May 14, 2021 and a prospectus supplement filed with the SEC in an offering of shares from the Company's shelf registration statement on Form S-3 (No. 333-256120). On November 18, 2021, the distribution agency agreement was amended to add Piper Sandler & Co. as an agent with J.P. Morgan Securities LLC.
During the year ended December 31, 2019,2021, the Company repurchased 2,822,402sold 3.1 million shares under the ATM program at a weighted-average selling price of $106.41 per share for gross proceeds of $333.4 million. Total related offering costs were $2.3 million, of which $2.0 million relates to compensation costs paid to J.P. Morgan Securities LLC and Piper Sandler & Co.
Registered Direct Offering
The Company sold 2.3 million shares of its common stock pursuant toin a registered direct offering during the repurchase plan.year ended December 31, 2021. The shares were repurchased at a weighted average pricesold for $91.00 per share for aggregate net proceeds of $42.53, for a total payment of $120.1$209.2 million.
Common Stock Repurchase
The Company's common stock repurchase program, was renewed throughwhich expired on December 31, 2020, authorizingauthorized the Company to repurchase up to an additional $250.0 million of its outstanding common stock. Effective April 17, 2020, the Company temporarily suspended its stock repurchase program. Prior to this decision and pursuant to the repurchase plan, the Company repurchased 2.1 million shares of its common stock at a weighted average price of $34.65 for a total payment of $71.6 million during the year ended December 31, 2020. There were no share repurchases during the year ended December 31, 2021.
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Cash Dividend on Common Shares
During the year ended December 31, 2019,2021, the Company's Board of DirectorsCompany declared twoand paid quarterly cash dividends of $0.25 per share for the first two quarters of common stock, totaling $51.3the year and increased the quarterly cash dividend to $0.35 per share for the last two quarters of the year, for a total dividend payment to shareholders of $124.1 million. During the year ended December 31, 2020, the Company declared and paid a quarterly cash dividend of $0.25 per share, for a total dividend payment to shareholders of $101.3 million.
Treasury Shares
Treasury share purchases represent shares surrendered to the Company equal in value to the statutory payroll tax withholding obligations arising from the vesting of employee restricted stock awards. During the year ended December 31, 2019,2021, the Company purchased treasury shares of 210,657180,607 at a weighted average price of $45.80$86.63 per share, compared to 223,125165,489 shares at a weighted average price per share of $57.88$50.80 in 2018,2020, and 269,865210,657 shares at a weighted average price per share of $51.16$45.80 in 2017.2019.

11.14. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table summarizes the changes in accumulated other comprehensive income (loss) by component, net of tax, for the periods indicated: 
Unrealized holding gains (losses) on AFSUnrealized holding gains (losses) on SERPUnrealized holding gains (losses) on junior subordinated debtImpairment loss on securitiesTotal
 Unrealized holding gains (losses) on AFS Unrealized holding gains (losses) on SERP Unrealized holding gains (losses) on junior subordinated debt Impairment loss on securities Total(in millions)
 (in thousands)
Balance, December 31, 2016 $(14,916) $121
 $9,956
 $144
 $(4,695)
Other comprehensive income (loss) before reclassifications 6,334
 264
 (3,604) —
 2,994
Amounts reclassified from AOCI (1,444) —
 —
 —
 (1,444)
Net current-period other comprehensive income (loss) 4,890
 264
 (3,604) —
 1,550
Balance, December 31, 2017 $(10,026) $385
 $6,352
 $144
 $(3,145)
Balance, January 1, 2018 (1) (12,556) 469
 7,740
 144
 (4,203)
Other comprehensive (loss) income before reclassifications (40,808) (77) 5,693
 —
 (35,192)
Amounts reclassified from accumulated other comprehensive income 5,773
 —
 —
 —
 5,773
Net current-period other comprehensive (loss) income (35,035) (77) 5,693
 —
 (29,419)
Balance, December 31, 2018 $(47,591) $392
 $13,433
 $144
 $(33,622)Balance, December 31, 2018$(47.5)$0.4 $13.4 $0.1 $(33.6)
Other comprehensive income (loss) before reclassifications 71,222
 (412) (9,804) —
 61,006
Other comprehensive income (loss) before reclassifications71.2 (0.4)(9.8)— 61.0 
Amounts reclassified from AOCI (2,232) —
 —
 (144) (2,376)Amounts reclassified from AOCI(2.3)— — (0.1)(2.4)
Net current-period other comprehensive income (loss) 68,990
 (412) (9,804) (144) 58,630
Net current-period other comprehensive income (loss)68.9 (0.4)(9.8)(0.1)58.6 
Balance, December 31, 2019 $21,399
 $(20) $3,629
 $—
 $25,008
Balance, December 31, 2019$21.4 $— $3.6 $— $25.0 
Other comprehensive income (loss) before reclassificationsOther comprehensive income (loss) before reclassifications70.9 (0.3)(3.1)— 67.5 
Amounts reclassified from accumulated other comprehensive incomeAmounts reclassified from accumulated other comprehensive income(0.2)— — — (0.2)
Net current-period other comprehensive income (loss)Net current-period other comprehensive income (loss)70.7 (0.3)(3.1)— 67.3 
Balance, December 31, 2020Balance, December 31, 2020$92.1 $(0.3)$0.5 $— $92.3 
Other comprehensive (loss) income before reclassificationsOther comprehensive (loss) income before reclassifications(69.0)— (1.2)— (70.2)
Amounts reclassified from AOCIAmounts reclassified from AOCI(6.4)— — — (6.4)
Net current-period other comprehensive (loss) incomeNet current-period other comprehensive (loss) income(75.4)— (1.2)— (76.6)
Balance, December 31, 2021Balance, December 31, 2021$16.7 $(0.3)$(0.7)$— $15.7 

(1)As adjusted for adoption of ASU 2016-01 and ASU 2018-02. The cumulative effect of adoption of this guidance at January 1, 2018 resulted in an increase to retained earnings of $1.1 million and a corresponding decrease to accumulated other comprehensive income.
The following table presents reclassifications out of accumulated other comprehensive income: 
Year Ended December 31,
Income Statement Classification202120202019
(in millions)
Gain on sales of AFS debt securities, net$8.5 $0.2 $3.1 
Income tax expense(2.1)— (0.7)
Net of tax$6.4 $0.2 $2.4 
  Year Ended December 31,
Income Statement Classification 2019 2018 2017
  (in thousands)
Gain (loss) on sales of investment securities, net $3,152
 $(7,656) $2,343
Income tax (expense) benefit (776) 1,883
 (899)
Net of tax $2,376
 $(5,773) $1,444
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12.15. DERIVATIVES AND HEDGING ACTIVITIES
The Company is a party to various derivative instruments.instruments, including those derivative instruments assumed from the AmeriHome acquisition. Derivative instruments are contracts between two or more parties that have a notional amount and an underlying variable, require a small or no initial investment, and allow for the net settlement of positions. A derivative’s notional amount serves as the basis for the payment provision of the contract and takes the form of units, such as shares or dollars. A derivative’s underlying variable is a specified interest rate, security price, commodity price, foreign exchange rate, index, or other variable. The interaction between the notional amount and the underlying variable determines the number of units to be exchanged between the parties and influences the fair value of the derivative contract.
The primary typetypes of derivatives that the Company uses are interest rate swaps.swaps, forward purchase and sale commitments, and interest rate futures. Generally, these instruments are used to help manage the Company's exposure to interest rate risk related to IRLCs and its inventory of loans HFS and MSRs and also to meet client financing and hedging needs.
Derivatives are recorded at fair value on the Consolidated Balance Sheets, after taking into account the effects of bilateral collateral and master netting agreements. These agreements allow the Company to settle all derivative contracts held with the same counterparty on a net basis, and to offset net derivative positions with related cash collateral, where applicable.
As of December 31, 2019, 2018,2021, 2020, and 2017,2019, the Company does not have any outstanding cash flow hedges.
Derivatives Designated in Hedge Relationships
The 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 and volatility of net interest income and EVE to interest rate fluctuations. 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 another interesta variable rate, index.or from a variable rate to a fixed rate.
The Company has entered into pay fixed/receive variable interest rate swaps designated as fair value hedges of certain fixed rate loans. 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 LIBOR and will convert to SOFR upon the discontinuation of LIBOR in June 2023.
The Company also has also entered into pay fixed/receive fixed/pay variable interest rate swaps, designated as fair value hedges on itsusing the last-of-layer method to manage the exposure to changes in fair value associated with fixed rate subordinated debt offerings. As a result,loans, resulting from changes in the designated benchmark interest rate (federal funds rate). These last-of-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 is payingidentified as the hedged item. Under these interest rate swap contracts, the Company receives a floatingvariable rate and pays a fixed rate on the outstanding notional amount. During the year ended December 31, 2021, the Company completed a partial discontinuation of three month LIBOR plus 3.16%one of its last-of-layer hedges, which reduced the total hedged amount on these hedges from $1.0 billion to $880.0 million. The $1.2 million cumulative basis adjustment on the discontinued portion was allocated across the remaining pool upon termination of the hedge and is receiving semi-annual fixed payments of 5.00% to matchbeing amortized over the payments on the $150.0 million subordinated debt. For theremaining loan term.
The Company had a receive fixed/pay variable interest rate swap, designated as a fair value hedge on the Parent'sits fixed rate $175.0 million subordinated debentures issued on June 16, 2016, which was terminated during the year ended December 31, 2021 in connection with the full redemption of the subordinated debentures. The Company is payingpaid a floatingvariable rate of three- monththree-month LIBOR plus 3.25% and is receivingreceived quarterly fixed payments atof 6.25% to match the payments on the debt.
Derivatives Not Designated in Hedge Relationships
Management also enters into certain foreign exchange derivative contracts and back-to-back interest rate swaps thatwhich are not designated as accounting hedges. Foreign exchange derivative contracts include spot, forward, and forward window, and swap contracts. The purpose of these derivative contracts is to mitigate foreign currency risk on transactions entered into, or on behalf of customers. Contracts with customers, along with the related derivative trades that the Company places, are both remeasured at fair value, and are referred to as economic hedges since they economically offset the Company's exposure. The Company's back-to-back interest rate swaps are used to allow customers to manage long-term interest rate risk.

As it relates to its mortgage banking business, the Company also uses derivative financial instruments to manage exposure to interest rate risk related to IRLCs, and its inventory of loans HFS and MSRs. The Company economically hedges the changes in fair value associated with changes in interest rates generally by utilizing forward sale commitments and interest rate futures.
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As of December 31, 20192021 and 2018,2020, the following amounts are reflected on the Consolidated Balance SheetSheets related to cumulative basis adjustments for fair value hedges:
December 31, 2021December 31, 2020
Carrying Value of Hedged Assets/(Liabilities)Cumulative Fair Value Hedging Adjustment (1)Carrying Value of Hedged Assets/(Liabilities)Cumulative Fair Value Hedging Adjustment (1)
(in millions)
Loans HFI, net of deferred loan fees and costs (2)$1,390.7 $38.5 $1,587.1 $85.5 
Qualifying debt— — (247.6)(2.7)
  December 31, 2019 December 31, 2018
  Carrying Value of Hedged Assets/(Liabilities) Cumulative Fair Value Hedging Adjustment (1) Carrying Value of Hedged Assets/(Liabilities) Cumulative Fair Value Hedging Adjustment (1)
  (in thousands)
Loans - HFI, net of deferred loan fees and costs $578,063
 $53,292
 $650,428
 $23,039
Qualifying debt (319,197) 401
 (299,401) 19,691
(1)    Included in the carrying value of the hedged assets/(liabilities)
(1)Included in the carrying value of the hedged assets/(liabilities)
(2)    Includes last-of-layer derivative instruments, with $880.0 million designated as the hedged amount (from a closed portfolio of prepayable fixed rate loans with a carrying value of $1.4 billion and $1.9 billion as of December 31, 2021 and 2020, respectively). The cumulative basis adjustment included in the carrying value of these hedged items totaled $15.7 million and $0.6 million as of December 31, 2021 and 2020, respectively. The basis adjustment related to the discontinued portion was $1.0 million as of December 31, 2021.
For the Company's derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings in the same line item as the offsetting loss or gain on the related interest rate swaps. For loans, the gain or loss on the hedged item is included in interest income and for subordinated debt, the gain or loss on the hedged itemitems is included in interest expense.expense, as shown in the table below.
Year Ended December 31,
202120202019
Income Statement ClassificationGain/(Loss) on SwapsGain/(Loss) on Hedged ItemGain/(Loss) on SwapsGain/(Loss) on Hedged ItemGain/(Loss) on SwapsGain/(Loss) on Hedged Item
(in millions)
Interest income$44.8 $(45.6)$(32.2)$32.2 $(30.3)$30.3 
Interest expense(2.7)2.7 3.1 (3.1)19.3 (19.3)

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Fair Values, Volume of Activity, and Gain/Loss Information Related to Derivative Instruments
The following table summarizes the fair valuesvalue of the Company's derivative instruments on a gross and net basis as of December 31, 2019, 2018,2021, 2020, and 2017.2019. The change in the notional amounts of these derivatives from December 31, 20172019 to December 31, 20192021 indicates the volume of the Company's derivative transaction activity during these periods. The derivative asset and liability balances are presented on a gross basis, prior to the application of bilateral collateral and master netting agreements. Total derivative assets and liabilities are adjusted to take into account the impact of legally enforceable master netting agreements that allow the Company to settle all derivative contracts with the same counterparty on a net basis and to offset the net derivative position with the related cash collateral. Where master netting agreements are not in effect or are not enforceable under bankruptcy laws, the Company does not adjust those derivative amounts with counterparties.
 December 31, 2021December 31, 2020December 31, 2019
 Fair ValueFair ValueFair Value
Notional
Amount		Derivative AssetsDerivative LiabilitiesNotional
Amount		Derivative AssetsDerivative LiabilitiesNotional
Amount		Derivative AssetsDerivative Liabilities
(in millions)
Derivatives designated as hedging instruments:
Fair value hedges
Interest rate swaps (1)$1,382.8 $13.8 $54.5 $1,689.9 $3.3 $86.1 $863.0 $1.8 $55.5 
Total$1,382.8 $13.8 $54.5 $1,689.9 $3.3 $86.1 $863.0 $1.8 $55.5 
Derivatives not designated as hedging instruments (2):
Foreign currency contracts$180.1 $0.2 $1.4 $119.2 $0.7 $1.2 $6.7 $— $— 
Forward purchase contracts11,713.5 8.1 18.0 — — — — — — 
Forward sales contracts17,358.5 15.8 17.7 — — — — — — 
Futures purchase contracts (3)218,053.7 — — — — — — — — 
Futures sales contracts (3)229,040.0 — — — — — — — — 
Interest rate lock commitments3,033.2 11.0 1.6 — — — — — — 
Interest rate swaps4.1 0.1 0.1 3.5 0.2 0.2 2.9 0.1 0.1 
Total$479,383.1 $35.2 $38.8 $122.7 $0.9 $1.4 $9.6 $0.1 $0.1 
Margin1.2 6.5 — — — — — — 
Total, including margin$479,383.1 $36.4 $45.3 $122.7 $0.9 $1.4 $9.6 $0.1 $0.1 
(1)Interest rate swap amounts include a notional amount of $880 million and $1.0 billion related to the last-of-layer hedges at December 31, 2021 and 2020, respectively.
(2)Relate to economic hedging arrangements.
(3)The Company enters into forward purchase and sales contracts that are subject to daily remargining and almost all of which are based on three-month LIBOR to hedge against its MSR valuation exposure. The notional amount on these contracts is substantial as these contracts have a duration of only 0.25 years and are intended to cover the longer duration of MSR hedges.

132
The fair value of derivative contracts, after taking into account the effects of master netting agreements, is included in other assets or other liabilities on the Consolidated Balance Sheets, as indicatedsummarized in the following table:table below:
December 31, 2021December 31, 2020December 31, 2019
Gross amount of recognized assets (liabilities)Gross offsetNet assets (liabilities)Gross amount of recognized assets (liabilities)Gross offsetNet assets (liabilities)Gross amount of recognized assets (liabilities)Gross offsetNet assets (liabilities)
(in millions)
Derivatives subject to master netting arrangements:
Assets
Forward purchase contracts$7.9 $— $7.9 $— $— $— $— $— $— 
Forward sales contracts15.5 — 15.5 — — — — — — 
Interest rate swaps13.8 — 13.8 3.3 — 3.3 1.8 — 1.8 
Margin1.2 — 1.2 — — — — — — 
Netting— (28.4)(28.4)— (0.6)(0.6)— — — 
$38.4 (28.4)$10.0 $3.3 $(0.6)$2.7 $1.8 $— $1.8 
Liabilities
Forward purchase contracts$(17.7)$— $(17.7)$— $— $— $— $— $— 
Forward sales contracts(17.6)— (17.6)— — — — — — 
Interest rate swaps(54.5)— (54.5)(86.1)— (86.1)(55.5)— (55.5)
Margin(6.5)— (6.5)— — — — — — 
Netting— 28.4 28.4 — 0.6 0.6 — — — 
$(96.3)28.4 $(67.9)$(86.1)$0.6 $(85.5)$(55.5)$— $(55.5)
Derivatives not subject to master netting arrangements:
Assets
Foreign currency contracts$0.2 $— $0.2 $0.7 $— $0.7 $— $— $— 
Forward purchase contracts0.2 — 0.2 — — — — — — 
Forward sales contracts0.3 — 0.3 — — — — — — 
Interest rate lock commitments11.0 — 11.0 — — — — — — 
Interest rate swaps0.1 — 0.1 0.2 — 0.2 0.1 — 0.1 
$11.8 — $11.8 $0.9 $— $0.9 $0.1 $— $0.1 
Liabilities
Foreign currency contracts$(1.4)$— $(1.4)$(1.2)$— $(1.2)$— $— $— 
Forward purchase contracts(0.3)— (0.3)— — — — — — 
Forward sales contracts(0.1)— (0.1)— — — — — — 
Interest rate lock commitments(1.6)— (1.6)— — — — — — 
Interest rate swaps(0.1)— (0.1)(0.2)— (0.2)(0.1)— (0.1)
$(3.5)— $(3.5)$(1.4)$— $(1.4)$(0.1)$— $(0.1)
Total derivatives and margin
Assets$50.2 $(28.4)$21.8 $4.2 $(0.6)$3.6 $1.9 $— $1.9 
Liabilities$(99.8)$28.4 $(71.4)$(87.5)$0.6 $(86.9)$(55.6)$— $(55.6)
 December 31, 2019 December 31, 2018 December 31, 2017
   Fair Value   Fair Value   Fair Value
 Notional
Amount		 Derivative Assets Derivative Liabilities Notional
Amount		 Derivative Assets Derivative Liabilities Notional
Amount		 Derivative Assets Derivative Liabilities
 (in thousands)
Derivatives designated as hedging instruments:              
Fair value hedges                 
Interest rate swaps$862,952
 $1,778
 $55,471
 $965,705
 $2,162
 $44,892
 $993,432
 $1,703
 $53,581
Total862,952
 1,778
 55,471
 965,705
 2,162
 44,892
 993,432
 1,703
 53,581
Netting adjustments (1)—
 21
 21
 —
 2,162
 2,162
 —
 896
 896
Net derivatives in the balance sheet$862,952
 $1,757
 $55,450
 $965,705
 $—
 $42,730
 $993,432
 $807
 $52,685
                  
Derivatives not designated as hedging instruments:              
Foreign currency contracts$6,711
 $44
 $18
 $49,690
 $454
 $201
 $85,335
 $1,232
 $983
Interest rate swaps2,932
 81
 81
 2,378
 27
 27
 36,969
 776
 776
Total$9,643
 $125
 $99
 $52,068
 $481
 $228
 $122,304
 $2,008
 $1,759
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The following table summarizes the net gain (loss) on derivatives included in income:
(1)Netting adjustments represent the amounts recorded to convert the Company's derivative balances from a gross basis to a net basis Year Ended December 31, 2021
(in accordance with the applicable accounting guidance.millions)
Net gain (loss) on loan origination and sale activities:
Interest rate lock commitments$1.0 
Forward contracts(52.2)
Other contracts1.4 
Total gain$(49.8)
Net loan servicing revenue:
Forward contracts$(4.2)
Options contracts(0.3)
Futures contracts(23.9)
Total (loss) gain$(28.4)


Counterparty Credit Risk
Like other financial instruments, derivatives contain an element of credit risk. This risk is measured as the expected positive replacement value of the contracts. Management generally enters into bilateral collateral and master netting agreements that provide for the net settlement of all contracts with the same counterparty. Additionally, management monitors counterparty credit risk exposure on each contract to determine appropriate limits on the Company's total credit exposure across all product types. In general,types, which may require the Company hasto post collateral to counterparties when these contracts are in a zero credit threshold with regardnet liability position and conversely, for counterparties to derivative exposure with counterparties.post collateral to the Company when these contracts are in a net asset position. Management reviews the Company's collateral positions on a daily basis and exchanges collateral with counterparties in accordance with standard ISDA documentation and other related agreements. The Company generally posts or holds collateral in the form of cash deposits or highly rated securities issued by the U.S. Treasury or government-sponsored enterprises, such as GNMA, FNMA, and FHLMC. The total collateral netted against net derivative liabilities totaled $55.5 million at December 31, 2019, $44.9 million at December 31, 2018, and $53.6 million at December 31, 2017.
The following table summarizes the Company's largest exposure to an individual counterparty at the dates indicated:
  December 31,
  2019 2018 2017
  (in thousands)
Largest gross exposure (derivative asset) to an individual counterparty $1,757
 $1,411
 $893
Collateral posted by this counterparty 1,610
 —
 —
Derivative liability with this counterparty —
 23,906
 40,340
Collateral pledged to this counterparty —
 25,761
 60,476
Net exposure after netting adjustments and collateral $147
 $—
 $—

Credit Risk Contingent Features
Management has entered into certain derivative contracts that requirepledged by the Company to post collateral to the counterparties when these contracts are in a net liability position. Conversely, the counterparties may be required to post collateral when these contracts are in a net asset position. The amount of collateral to be posted is based on the amount of the net liabilityfor its derivatives designated as hedging instruments totaled $67.1 million, $117.8 million, and exposure thresholds. As$52.5 million as of December 31, 2019, 2018,2021, 2020, and 2017, the aggregate fair value of all derivative contracts with credit risk contingent features (i.e., those containing collateral posting provisions) held by the Company that were in a net liability position totaled $55.5 million, $44.9 million, and $53.6 million, respectively. As of December 31, 2019, the Company was in an over-collateralized net position of $29.2 million after considering $84.7 million of collateral held in the form of cash and securities. As of December 31, 2018 and 2017, the Company was in an over-collateralized position of $7.6 million and $25.0 million, respectively.
13.16. EARNINGS PER SHARE
Diluted EPS is based on the weighted average outstanding common shares during the period, including common stock equivalents. Basic EPS is based on the weighted average outstanding common shares during the period.
The following table presents the calculation of basic and diluted EPS: 
  Year Ended December 31,
  2019 2018 2017
  (in thousands, except per share amounts)
Weighted average shares - basic 102,667
 104,669
 104,179
Dilutive effect of stock awards 466
 701
 818
Weighted average shares - diluted 103,133
 105,370
 104,997
Net income $499,171
 $435,788
 $325,492
Earnings per share - basic 4.86
 4.16
 3.12
Earnings per share - diluted 4.84
 4.14
 3.10

 Year Ended December 31,
 202120202019
 (in millions, except per share amounts)
Weighted average shares - basic102.7 100.2 102.7 
Dilutive effect of stock awards0.6 0.3 0.4 
Weighted average shares - diluted103.3 100.5 103.1 
Net income available to common stockholders$895.7 $506.6 $499.2 
Earnings per share - basic8.72 5.06 4.86 
Earnings per share - diluted8.67 5.04 4.84 
The Company had 0no anti-dilutive stock options outstanding as of December 31, 20192021 and 2018.2020.

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14.
17. INCOME TAXES
The provision for income taxes charged to operations consists of the following: 
  Year Ended December 31,
  2019 2018 2017
  (in thousands)
Current $110,184
 $91,249
 $37,854
Deferred (5,129) (16,709) 88,471
Total tax provision $105,055
 $74,540
 $126,325

 Year Ended December 31,
 202120202019
 (in millions)
Current$181.8 $141.0 $110.1 
Deferred42.0 (25.1)(5.1)
Total tax provision$223.8 $115.9 $105.0 
The reconciliation between the statutory federal income tax rate and the Company’s effective tax rate is summarized as follows: 
  Year Ended December 31,
  2019 2018 2017
  (in thousands)
Income tax at statutory rate $126,888
 $107,169
 $158,136
Increase (decrease) resulting from:      
State income taxes, net of federal benefits 11,004
 9,015
 9,765
Tax-exempt income (19,527) (18,322) (26,403)
Change in federal rate applied to deferred items —
 —
 (10,411)
Federal NOL and other carryback items —
 (15,341) —
Excise tax —
 (137) 9,689
Investment tax credits (15,000) (6,673) (7,361)
Other, net 1,690
 (1,171) (7,090)
Total tax provision $105,055
 $74,540
 $126,325

Year Ended December 31,
202120202019
(in millions)
Income tax at statutory rate$235.8 $130.7 $126.9 
Increase (decrease) resulting from:
State income taxes, net of federal benefits35.8 13.9 11.0 
Tax-exempt income(25.6)(21.7)(19.6)
Investment tax credits(15.9)(13.9)(15.0)
Other, net(6.3)6.9 1.7 
Total tax provision$223.8 $115.9 $105.0 
For the years ended December 31, 2019, 2018,2021, 2020, and 20172019 the Company's effective tax rate was 17.39%19.9%, 14.61%18.6%, and 27.96%17.4%, respectively. The increase in the effective tax rate from 20182020 to 20192021 is primarily due primarily to management's decision duringan increase in pretax book income and state income taxes associated with the third quarter of 2018 to carryback its 2017 federal NOLs.AmeriHome acquisition which were not fully offset by growth in permanent tax benefit items for the year. The decreaseincrease in the effective tax rate from 20172019 to 20182020 is due primarily to tax expense associated with the decreasesurrender of BOLI, no valuation allowance release in the federal statutory rate effective in 2018, a reduction in excise taxes,2020, and management's decisionreturn to carryback its 2017 federal NOLs. The reduction in excise taxes from 2017 to 2018 resulted from not deferring WAB's 2018 dividend from BW Real Estate as was the case in 2017. The Company's 2017 federal NOLs resulted from the accelerationprovision adjustments.

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The cumulative tax effects of the primary temporary differences are shown in the following table:
 December 31,December 31,
 2019 201820212020
 (in thousands)(in millions)
Deferred tax assets:  Deferred tax assets:
Allowance for credit losses $44,809
 $42,833
Allowance for credit losses$81.0 $84.6 
Lease liability (1) 20,264
 —
Stock-based compensation 7,351
 8,718
Net operating loss carryovers 5,619
 6,255
Unrealized loss on AFS securities —
 16,047
Lease liabilityLease liability38.6 21.1 
Premises and equipmentPremises and equipment10.0 — 
Accrued expensesAccrued expenses9.8 3.6 
Passthrough incomePassthrough income9.1 8.4 
Insurance premiumsInsurance premiums— 18.9 
Other 19,361
 20,687
Other34.9 29.1 
Total gross deferred tax assets 97,404
 94,540
Total gross deferred tax assets183.4 165.7 
Deferred tax asset valuation allowance —
 (2,373)Deferred tax asset valuation allowance— — 
Total deferred tax assets 97,404
 92,167
Total deferred tax assets183.4 165.7 
Deferred tax liabilities:    Deferred tax liabilities:
Right of use asset (1) (18,823) —
Mortgage servicing rightsMortgage servicing rights(57.6)— 
Right of use assetRight of use asset(36.0)(19.2)
Deferred loan costsDeferred loan costs(15.5)(12.8)
Leasing basis differencesLeasing basis differences(12.3)(11.1)
IRC section 50(d) incomeIRC section 50(d) income(7.7)(9.8)
Estimated loss reserveEstimated loss reserve(7.6)(17.5)
Unearned premiumsUnearned premiums(7.2)(16.8)
Insurance premiumsInsurance premiums(6.0)— 
Unrealized gain on AFS securities (7,264) —
Unrealized gain on AFS securities(5.7)(31.2)
Unrealized gain on junior subordinated debt (1,229) (5,833)
Deferred loan costs (10,789) (9,528)
Insurance premiums (4,514) (6,527)
Premises and equipment (8,372) (1,201)Premises and equipment— (7.6)
Estimated loss reserve (14,890) (31,592)
50(d) income (6,792) (1,624)
Other (6,706) (3,872)Other(6.9)(8.4)
Total deferred tax liabilities (79,379) (60,177)Total deferred tax liabilities(162.5)(134.4)
Deferred tax assets, net $18,025
 $31,990
Deferred tax assets, net$20.9 $31.3 

(1)Upon adoption of ASC 842 on January 1, 2019, a lease liability DTA and a right of use asset DTL were established and totaled $9.7 million and $9.1 million, respectively. While there may be significant changes in the separate DTA and DTL balances of these two items, the aggregate effect of these two changes will generally offset and therefore are not discussed as significant changes to the net deferred balance.
Deferred tax assets and liabilities are included in the Consolidated Financial Statements at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be reversed. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.
Net deferred tax assets decreased $14.0$10.4 million to $18.0$20.9 million from December 31, 2018. This2020. The overall decrease in net deferred tax assets was due to an increase in deferred tax liabilities, not fully offset by an increase in deferred tax assets. The increase in deferred tax liabilities from December 31, 2020 is primarily attributable to an increase in mortgage servicing rights from AmeriHome operations and a decrease in deferred insurance premiums related to the result ofCompany’s insurance captive, which was in a deferred tax asset position in the prior year. These increases were offset in part by a decrease in deferred tax liabilities related to a decrease in the fair market value of AFS securities. In addition, there wasThe increase in deferred tax assets from December 31, 2020 is primarily attributable to a large decreasechange in tax planning strategy pertaining to the overall estimated loss reserve, which was largely offset by increases to DTLs related todepreciation election on premises and equipment, and income associated withwhich was in a deferred tax credits for lease pass-through transactions (50(d) income).
liability position in the prior year. Although realization is not assured, the Company believes that the realization of the recognized net deferred tax asset of $18.0$20.9 million at December 31, 20192021 is more-likely-than-not based on expectations as to future taxable income and based on available tax planning strategies that could be implemented if necessary to prevent a carryover from expiring.
As of December 31, 2019,2021 and 2020, the Company has 0no deferred tax valuation allowance. As of December 31, 2018, the Company had a deferred tax valuation allowance of $2.4 million related to net capital loss carryovers.
As of December 31, 2019,2021, the Company’s gross federal NOL carryovers, all of which are subject to limitations under Section 382 of the IRC, totaled $45.8$41.1 million, for which a deferred tax asset of $5.5$4.5 million has been recorded, reflecting the expected benefit of these federal NOL carryovers remaining after application of the Section 382 limitation. The Company also has varying gross amounts ofdoes not currently have any remaining state NOL carryovers, primarily in Arizona. The gross Arizona NOL carryovers totaled approximately $2.2 million. A deferred tax asset of $0.2 million has been recorded to reflect the expected benefit of all state NOL carryovers remaining. If not utilized, a portion of the federal and state NOL carryovers will begin to expire in 2024. As of December 31, 2019, the Company had 0 federal tax credit carryovers and $1.4 million of state tax credit carryovers. If not utilized, a portion of the state tax credit carryovers will begin to expire in 2023. In management’s opinion, it is more-likely-than-not that the results of future operations will generate sufficient taxable income to realize all of the deferred tax benefits related to these NOL and tax credit carryovers.

The Company files income tax returns in the U.S. federal jurisdiction and in various states. With few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations by tax authorities for years before 2015.2017.
When tax returns are filed, it is highly certain that most positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the Consolidated Financial Statements in the period in which, based on all available evidence, management believes it is more-likely-than-not that the position will be sustained
136
upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits on the accompanying Consolidated Balance Sheets along with any associated interest and penalties payable to the taxing authorities upon examination.
The total gross activity of unrecognized tax benefits related to the Company's uncertain tax positions are shown in the following table:
 December 31,
 2019 2018
 (in thousands)
Beginning balance$484
 $1,038
Gross increases   
Tax positions in prior periods—
 —
Current period tax positions1,255
 —
Gross decreases   
Tax positions in prior periods—
 (247)
Settlements—
 (307)
Lapse of statute of limitations—
 —
Ending balance$1,739
 $484

December 31,
20212020
(in millions)
Beginning balance$3.4 $1.7 
Gross increases
Tax positions in prior periods0.8 — 
Current period tax positions2.2 2.2 
Gross decreases
Tax positions in prior periods— — 
Settlements— (0.1)
Lapse of statute of limitations— (0.4)
Ending balance$6.4 $3.4 
During the year ended December 31, 2019,2021, the Company added a new current year position, which resulted in a tax detriment of $0.8$2.5 million, inclusive of interest and penalties.
As of December 31, 20192021 and 2018,2020, the total amount of unrecognized tax benefits, net of associated deferred tax benefits, that would impact the effective tax rate, if recognized, is $1.1$5.1 million and $0.3$2.1 million, respectively. The Company anticipatesdoes not anticipate that $0.1 million of theany unrecognized tax benefits will be resolved within the next 12 months.
During the years ended December 31, 2019, 2018,2021, 2020, and 2017,2019, the Company recognized 0no additional amounts for interest and penalties. As of December 31, 20192021 and 2018,2020, the Company has no accrued total liabilities of $0.1 million for penalties and 0 amounts for interest.
LIHTC and renewable energy projects
As discussed in "Note 1. Summary of Significant Accounting Policies," the Company holds ownership interests in limited partnerships and limited liability companies that invest in affordable housing and renewable energy projects. These investments are designed to generate a return primarily through the realization of federal tax credits and deductions. The limited liability entities are considered to be VIEs; however, as a limited partner, the Company is not the primary beneficiary and is not required to consolidate these entities.
At December 31, 2019,2021, the Company’s exposure to loss as a result of its involvement in these entities was limited to $487.3$676.5 million, which reflects the Company’s recorded investment in these projects, net of certain unfunded capital commitments, and previously recorded tax credits which remain subject to recapture by taxing authorities. During the years ended December 31, 2019, 2018,2021, 2020, and 2017,2019, the Company did not provide financial or other support to these entities that was not contractually required.
Investments in LIHTC and renewable energy total $409.4$631.3 million and $369.6$405.6 million as of December 31, 20192021 and 2018,2020, respectively. Unfunded LIHTC and renewable energy obligations are included as part of otherOther liabilities on the Consolidated Balance SheetSheets and total $191.0$360.8 million and $196.3$151.7 million as of December 31, 20192021 and 2018,2020, respectively. For the years ended December 31, 2021, 2020, and 2019, 2018, and 2017, $41.5$49.5 million, $35.9$49.2 million, and $25.4$41.5 million of amortization related to LIHTC investments was recognized as a component of income tax expense, respectively.

137
18. COMMITMENTS AND CONTINGENCIES
Unfunded Commitments and Letters of Credit
The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and letters of credit. They involve, to varying degrees, elements of credit risk in excess of amounts recognized on the Consolidated Balance Sheets.
Lines of credit are obligations to lend money to a borrower. Credit risk arises when the borrower's current financial condition may indicate less ability to pay than when the commitment was originally made. In the case of letters of credit, the risk arises from the potential failure of the customer to perform according to the terms of a contract. In such a situation, the third party might draw on the letter of credit to pay for completion of the contract and the Company would look to its customer to repay these funds with interest. To minimize the risk, the Company uses the same credit policies in making commitments and conditional obligations as it would for a loan to that customer.
Letters of credit and financial guarantees are commitments issued by the Company to guarantee the performance of a customer to a third party in borrowing arrangements. The Company generally has recourse to recover from the customer any amounts paid under the guarantees. Typically, letters of credit issued have expiration dates within one year.
A summary of the contractual amounts for unfunded commitments and letters of credit are as follows: 
  December 31,
  2019 2018
  (in thousands)
Commitments to extend credit, including unsecured loan commitments of $895,175 at December 31, 2019 and $770,114 at December 31, 2018 $8,348,421
 $7,556,741
Credit card commitments and financial guarantees 302,909
 237,312
Letters of credit, including unsecured letters of credit of $5,850 at December 31, 2019 and $21,879 at December 31, 2018 175,778
 390,161
Total $8,827,108
 $8,184,214

December 31,
 20212020
 (in millions)
Commitments to extend credit, including unsecured loan commitments of $1,199.8 at December 31, 2021 and $1,077.2 at December 31, 2020$13,396.3 $9,425.2 
Credit card commitments and financial guarantees306.3 291.5 
Letters of credit, including unsecured letters of credit of $12.9 at December 31, 2021 and $9.9 at December 31, 2020198.1 186.9 
Total$13,900.7 $9,903.6 
The following table represents the contractual commitments for lines and letters of credit by maturity at December 31, 2019:2021: 
    Amount of Commitment Expiration per Period
  Total Amounts Committed Less Than 1 Year 1-3 Years 3-5 Years After 5 Years
  (in thousands)
Commitments to extend credit $8,348,421
 $2,873,303
 $3,170,848
 $1,299,506
 $1,004,764
Credit card commitments and financial guarantees 302,909
 302,909
 —
 —
 —
Letters of credit 175,778
 156,375
 18,786
 617
 —
Total $8,827,108
 $3,332,587
 $3,189,634
 $1,300,123
 $1,004,764

Amount of Commitment Expiration per Period
Total Amounts CommittedLess Than 1 Year1-3 Years3-5 YearsAfter 5 Years
(in millions)
Commitments to extend credit$13,396.3 $3,652.0 $6,235.1 $2,322.1 $1,187.0 
Credit card commitments and financial guarantees306.3 306.3 — — — 
Letters of credit198.1 190.7 3.0 4.4 — 
Total$13,900.7 $4,149.0 $6,238.1 $2,326.5 $1,187.0 
Commitments to extend credit are agreements to lend to a customer provided that there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company enters into credit arrangements that generally provide for the termination of advances in the event of a covenant violation or other event of default. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the party. The commitments are collateralized by the same types of assets used as loan collateral.
The Company has exposure to credit losses from unfunded commitments and letters of credit. As funds have not been disbursed on these commitments, they are not reported as loans outstanding. Credit losses related to these commitments are included in otherOther liabilities as a separate loss contingency and are not included in the allowance for credit losses reported in "Note 3.5. Loans, Leases and Allowance for Credit Losses" of these Consolidated Financial Statements. This loss contingency for unfunded loan commitments and letters of credit was $9.0$37.6 million and $8.2$37.0 million as of December 31, 20192021 and 2018,2020, respectively. Changes to this liability are adjusted through other expensethe provision for credit losses in the Consolidated Income Statements.Statement.

138
Concentrations of Lending Activities
The Company’s lending activities are driven in large part by the customers served in the market areas where the Company has branch offices in the states of Arizona, Nevada, and California. Despite the geographic concentration of lending activities, the Company does not have a single external customer from which it derives 10% or more of its revenues. The Company monitors concentrations within fourthree broad categories: geography, industry, product, and collateral. The Company's loan portfolio includes significant credit exposure to the CRE market. As of December 31, 20192021 and 2018,2020, CRE related loans accounted for approximately 45%29% and 49%38% of total loans, respectively. Substantially all of these loans are secured by first liens with an initial loan-to-value ratio of generally not more than 75%. Approximately 31%23% and 36%28% of these CRE loans, excluding construction and land loans, were owner occupiedowner-occupied as of December 31, 20192021 and 2018,2020, respectively.
Contingencies
The Company is involved in various lawsuits of a routine nature that are being handled and defended in the ordinary course of the Company’s business. Expenses are being incurred in connection with these lawsuits, but in the opinion of management, based in part on consultation with outside legal counsel, the resolution of these lawsuits and associated defense costs will not have a material impact on the Company’s financial position, results of operations, or cash flows.
16.19. FAIR VALUE ACCOUNTING
The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, the income approach, and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability. ASC 825 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 825 are described in "Note 1. Summary of Significant Accounting Policies" of these Notes to Consolidated Financial Statements.
In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally-developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the Company’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Furthermore, the reported fair value amounts have not been comprehensively revalued since the presentation dates, and therefore, estimates of fair value after the balance sheet date may differ significantly from the amounts presented herein. A more detailed description of the valuation methodologies used for assets and liabilities measured at fair value is set forth below. Transfers between levels in the fair value hierarchy are recognized as of the end of the month following the event or change in circumstances that caused the transfer.
Under ASC 825, the Company elected the FVO treatment for junior subordinated debt issued by WAL. This election is irrevocable and results in the recognition of unrealized gains and losses on these items at each reporting date. These unrealized gains and losses are recognized as part of other comprehensive incomeOCI rather than earnings. The Company did not elect FVO treatment for the junior subordinated debt assumed in the Bridge Capital Holdings acquisition.
For the years ended December 31, 2021, 2020, and 2019, 2018, and 2017, unrealized gains and losses from fair value changes on junior subordinated debt were as follows:
Year Ended December 31,
202120202019
(in millions)
Unrealized losses$(1.5)$(4.2)$(13.0)
Changes included in OCI, net of tax(1.2)(3.1)(9.8)
  Year Ended December 31,
  2019 2018 2017
  (in thousands)
Unrealized gains/(losses) $(13,001) $7,550
 $(5,824)
Changes included in OCI, net of tax (9,804) 5,693
 (3,604)
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Fair value on a recurring basis
Financial assets and financial liabilities measured at fair value on a recurring basis include the following:
AFS debt securities: Securities classified as AFS are reported at fair value utilizing Level 1 and Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include quoted prices in active markets, dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the bond’s terms and conditions, among other things.
Equity securities: Preferred stock and CRA investments are reported at fair value primarily utilizing Level 1 inputs.
Independent pricing service: The Company's independent pricing service provides pricing information on the majority of the Company's Level 1 and Level 2 AFS debt securities. For a small subset of securities, other pricing sources are used, including observed prices on publicly-traded securities and dealer quotes. Management independently evaluates the fair value measurements received from the Company's third-party pricing service through multiple review steps. First, management reviews what has transpired in the marketplace with respect to interest rates, credit spreads, volatility, and mortgage rates, among other things, and develops an expectation of changes to the securities' valuations from the previous quarter. Then, management selects a sample of investment securities and compares the values provided by its primary third-party pricing service to the market values obtained from secondary sources, including other pricing services and safekeeping statements, and evaluates those with notable variances. In instances where there are discrepancies in pricing from various sources and management expectations, management may manually price securities using currently observed market data to determine whether they can develop similar prices or may utilize bid information from broker dealers. Any remaining discrepancies between management's review and the prices provided by the vendor are discussed with the vendor and/or the Company's other valuation advisors.
InterestLoans HFS: Government-insured or guaranteed and agency-conforming loans HFS are salable into active markets. Accordingly, the fair value of these loans is based on quoted market or contracted selling prices or a market price equivalent, which are categorized as Level 2 in the fair value hierarchy.
The fair value of EBO loans, private label loans, and loans that are delinquent or have an underwriting defect are valued using Level 3 inputs since they lack active markets.
Mortgage servicing rights: MSRs are measured based on valuation techniques using Level 3 inputs. The Company uses a discounted cash flow model that incorporates assumptions that market participants would use in estimating the fair value of servicing rights, including, but not limited to, option adjusted spread, conditional prepayment rate, swaps:servicing fee rate, recapture rate, and cost to service.
Derivative financial instruments: Treasury futures and options, Eurodollar futures, and swap futures are measured based on valuation techniques using Level 1 inputs from exchange-provided daily settlement quotes. Forward purchase and sales contracts are measured based on valuation techniques using Level 2 inputs, such as quoted market price, contracted selling price, or market price equivalent. Interest rate swaps are reported at fair value utilizing Level 2 inputs. The Company obtains dealer quotations to value its interest rate swaps. IRLCs are measured based on valuation techniques that consider loan type, underlying loan amount, maturity date, note rate, loan program, and expected settlement date, with Level 3 inputs for the servicing release premium and pull-through rate. These measurements are adjusted at the loan level to consider the servicing release premium and loan pricing adjustment specific to each loan. The base value is then adjusted for the pull-through rate. The pull-through rate and servicing fee multiple are unobservable inputs based on historical experience.
Junior subordinated debt: The Company estimates the fair value of its junior subordinated debt using a discounted cash flow model which incorporates the effect of the Company’s own credit risk in the fair value of the liabilities (Level 3). The Company’s cash flow assumptions are based on contractual cash flows as the Company anticipates that it will pay the debt according to its contractual terms.


140
The fair value of assets and liabilities measured at fair value on a recurring basis was determined using the following inputs as of the periods presented: 
Fair Value Measurements at the End of the Reporting Period Using:
Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		Fair Value
(in millions)
December 31, 2021
Available-for-sale debt securities
CLO$— $926.2 $— $926.2 
Commercial MBS issued by GSEs— 68.5 — 68.5 
Corporate debt securities— 382.9 — 382.9 
Private label residential MBS— 1,508.0 — 1,508.0 
Residential MBS issued by GSEs— 1,993.4 — 1,993.4 
Tax-exempt— 1,215.1 — 1,215.1 
U.S. treasury securities13.0 — — 13.0 
Other27.4 54.3 — 81.7 
Total AFS debt securities$40.4 $6,148.4 $— $6,188.8 
Equity securities
CRA investments$27.4 $17.2 $— $44.6 
Preferred stock113.9 — — 113.9 
Total equity securities$141.3 $17.2 $— $158.5 
Loans HFS$— $3,894.2 $45.5 $3,939.7 
Mortgage servicing rights— — 698.0 698.0 
Derivative assets (1)— 39.2 11.0 50.2 
Liabilities:
Junior subordinated debt (2)$— $— $67.4 $67.4 
Derivative liabilities (1)— 98.2 1.6 99.8 
  Fair Value Measurements at the End of the Reporting Period Using:
  Quoted Prices in Active Markets for Identical Assets
(Level 1)		 Significant Other Observable Inputs
(Level 2)		 Significant Unobservable Inputs
(Level 3)		 Fair Value
  (in thousands)
December 31, 2019        
Assets:        
Available-for-sale debt securities        
CDO $—
 $10,142
 $—
 $10,142
Commercial MBS issued by GSEs —
 94,253
 —
 94,253
Corporate debt securities 5,127
 94,834
 —
 99,961
Municipal securities —
 7,773
 —
 7,773
Private label residential MBS —
 1,129,227
 —
 1,129,227
Residential MBS issued by GSEs —
 1,412,060
 —
 1,412,060
Tax-exempt —
 554,855
 —
 554,855
Trust preferred securities 27,040
 —
 —
 27,040
U.S. government sponsored agency securities —
 10,000
 —
 10,000
U.S. treasury securities —
 999
 —
 999
Total AFS debt securities $32,167
 $3,314,143
 $—
 $3,346,310
Equity securities        
CRA investments $52,504
 $—
 $—
 $52,504
Preferred stock 86,197
 —
 —
 86,197
Total equity securities $138,701
 $—
 $—
 $138,701
Loans - HFS $—
 $21,803
 $—
 $21,803
Derivative assets (1) —
 1,903
 —
 1,903
Liabilities:        
Junior subordinated debt (2) $—
 $—
 $61,685
 $61,685
Derivative liabilities (1) —
 55,570
 —
 55,570
(1)Derivative assets and liabilities relate to interest rate swaps, see "Note 12. Derivatives and Hedging Activities." In addition, the carrying value of loans is increased by $53,292 and the net carrying value of subordinated debt is decreased by $401 as of December 31, 2019 for the effective portion of the hedge, which relates to the fair value of the hedges put in place to mitigate against fluctuations in interest rates.
(2)Includes only the portion of junior subordinated debt that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.

(1)See "Note 15. Derivatives and Hedging Activities." In addition, the carrying value of loans is increased by $38.5 million as of December 31, 2021 for the effective portion of the hedge, which relates to the fair value of the hedges put in place to mitigate against fluctuations in interest rates.
(2)Includes only the portion of junior subordinated debt that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.
  Fair Value Measurements at the End of the Reporting Period Using:
  
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
Fair
Value
  (in thousands)
December 31, 2018        
Assets:        
Available-for-sale debt securities        
CDO $—
 $15,327
 $—
 $15,327
Commercial MBS issued by GSEs —
 100,106
 —
 100,106
Corporate debt securities —
 99,380
 —
 99,380
Private label residential MBS —
 924,594
 —
 924,594
Residential MBS issued by GSEs —
 1,530,124
 —
 1,530,124
Tax-exempt —
 538,668
 —
 538,668
Trust preferred securities —
 28,617
 —
 28,617
U.S. government sponsored agency securities —
 38,188
 —
 38,188
U.S. treasury securities —
 1,984
 —
 1,984
Total AFS debt securities $—
 $3,276,988
 $—
 $3,276,988
Equity securities        
CRA investments $51,142
 $—
 $—
 $51,142
Preferred stock 63,919
 —
 —
 63,919
Total equity securities $115,061
 $—
 $—
 $115,061
Derivative assets (1) $—
 $2,643
 $—
 $2,643
Liabilities:        
Junior subordinated debt (2) $—
 $—
 $48,684
 $48,684
Derivative liabilities (1) —
 45,120
 —
 45,120

(1)Derivative assets and liabilities relate to interest rate swaps, see "Note 12. Derivatives and Hedging Activities." In addition, the carrying value of loans is increased by $23,039 and the net carrying value of subordinated debt is decreased by $19,691 as of December 31, 2018, which relates to the effective portion of the hedges put in place to mitigate against fluctuations in interest rates.
(2)Includes only the portion of junior subordinated debt that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.
141
 Fair Value Measurements at the End of the Reporting Period Using:
Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		Fair
Value
 (in millions)
December 31, 2020
Assets:
Available-for-sale debt securities
CLO$— $146.9 $— $146.9 
Commercial MBS issued by GSEs— 84.6 — 84.6 
Corporate debt securities— 270.2 — 270.2 
Private label residential MBS— 1,476.9 — 1,476.9 
Residential MBS issued by GSEs— 1,486.6 — 1,486.6 
Tax-exempt— 1,187.4 — 1,187.4 
Other26.5 29.4 — 55.9 
Total AFS debt securities$26.5 $4,682.0 $— $4,708.5 
Equity securities
CRA investments$27.8 $25.6 $— $53.4 
Preferred stock113.9 — — 113.9 
Total equity securities$141.7 $25.6 $— $167.3 
Derivative assets (1)$— $4.2 $— $4.2 
Liabilities:
Junior subordinated debt (2)$— $— $65.9 $65.9 
Derivative liabilities (1)— 87.5 — 87.5 
(1)See "Note 15. Derivatives and Hedging Activities." In addition, the carrying value of loans is increased by $85.5 million and the net carrying value of subordinated debt is decreased by $2.7 million as of December 31, 2020, which relates to the effective portion of the hedges put in place to mitigate against fluctuations in interest rates.
(2)Includes only the portion of junior subordinated debt that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.
For the years ended December 31, 2019, 2018,2021, 2020, and 2017,2019, the change in Level 3 liabilities measured at fair value on a recurring basis included in OCI was as follows: 
Junior Subordinated Debt
Year Ended December 31,
202120202019
(in millions)
Beginning balance$(65.9)$(61.7)$(48.7)
Change in fair value (1)(1.5)(4.2)(13.0)
Ending balance$(67.4)$(65.9)$(61.7)
  Junior Subordinated Debt
  Year Ended December 31,
  2019 2018 2017
  (in thousands)
Beginning balance $(48,684) $(56,234) $(50,410)
Change in fair value (1) (13,001) 7,550
 (5,824)
Ending balance $(61,685) $(48,684) $(56,234)
(1)
(1)Unrealized gains/(losses) attributable to changes in the fair value of junior subordinated debt are recorded as part of OCI, net of tax, and totaled $(9.8) million, $5.7 million, and $(3.6) million for the years ended December 31, 2019, 2018, and 2017, respectively.

For Level 3 liabilities measured at fair value on a recurring basisof junior subordinated debt are recorded as part of OCI, net of tax, and totaled $(1.2) million, $(3.1) million, and $(9.8) million for the years ended December 31, 2021, 2020, and 2019, and 2018, therespectively.
The significant unobservable inputs used in the fair value measurements of these Level 3 liabilities were as follows: 
December 31, 2021Valuation TechniqueSignificant Unobservable InputsInput Value
(in millions)
Junior subordinated debt$67.4 Discounted cash flowImplied credit rating of the Company2.61 %
  December 31, 2019 Valuation Technique Significant Unobservable Inputs Input Value
  (in thousands)      
Junior subordinated debt $61,685
 Discounted cash flow Implied credit rating of the Company 5.09%
  December 31, 2018 Valuation Technique Significant Unobservable Inputs Input Value
  (in thousands)      
Junior subordinated debt $48,684
 Discounted cash flow Implied credit rating of the Company 7.82%
December 31, 2020Valuation TechniqueSignificant Unobservable InputsInput Value
(in millions)
Junior subordinated debt$65.9 Discounted cash flowImplied credit rating of the Company2.87 %
The significant unobservable inputinputs used in the fair value measurement of the Company’s junior subordinated debt as of December 31, 20192021 and 20182020 was the implied credit risk for the Company,Company. As of December 31, 2021 and 2020, the implied credit risk spread was calculated as the difference between the average of the 15-year 'BB' and 'BBB' rated financial indexindexes over the corresponding swap index.
142
As of December 31, 2019,2021, the Company estimates the discount rate at 5.09%2.61%, which represents an implied credit spread of 3.18%2.40% plus three-month LIBOR (1.91%(0.21%). As of December 31, 2018,2020, the Company estimated the discount rate at 7.82%2.87%, which was a 5.01%2.64% credit spread plus three-month LIBOR (2.81%(0.24%).
The change in Level 3 assets and liabilities measured at fair value on a recurring basis included in income was as follows:
Year Ended December 31, 2021
Loans held for saleMortgage servicing rightsNet interest rate lock commitments (1)
(in millions)
Balance, December 31, 2020$— $— $— 
Acquired in AmeriHome acquisition0.7 1,347.0 23.7 
Purchases and additions131.7 763.8 23,045.4 
Settlement of interest rate lock commitments upon acquisition or origination of loans HFS— — (23,054.3)
Sales and payments(93.4)(1,270.7)— 
Transfers from Level 2 to Level 37.3 — — 
Transfers from Level 3 to Level 2(0.8)— — 
Change in fair value— (2.5)(5.4)
Realization of cash flows— (139.6)— 
Balance, December 31, 2021$45.5 $698.0 $9.4 
Unrealized (losses) gains included in income related to assets held at period end$0.1 $(19.5)$9.4 
(1)    Interest rate lock commitment asset and liability positions are presented net.

The significant unobservable inputs used in the fair value measurements of these Level 3 assets and liabilities were as follows:
December 31, 2021
Asset/liabilityKey inputsRangeWeighted average
Mortgage servicing rights:Option adjusted spread (in basis points)553 - 735600
Conditional prepayment rate (1)9.9% - 20.7%15.2
Recapture rate20.0% - 20.0%20
Servicing fee rate (in basis points)25.0 - 50.029.5
Cost to service$84 - $9186
Loans held for sale:Whole loan spread to TBA price (in basis points)(3.65) - (2.86)(3.3)
Interest rate lock commitments:Servicing fee multiple3.6 - 5.44.6
Pull-through rate75% - 100%90
(1)    Lifetime total prepayment speed annualized.
The following is a summary of the difference between the aggregate fair value and the aggregate UPB of loans HFS for which the fair value option has been elected:
December 31, 2021
Fair valueUnpaid principal balanceDifference
(in millions)
Loans held for sale:
Current through 89 days delinquent$3,937.5 $3,807.3 $130.2 
90 days or more delinquent2.2 2.2 — 
Total$3,939.7 $3,809.5 $130.2 
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Fair value on a nonrecurring basis
Certain assets are measured at fair value on a nonrecurring basis. That is, the assets are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment)credit deterioration). The following table presents such assets carried on the balance sheetConsolidated Balance Sheet by caption and by level within the ASC 825 hierarchy:
  Fair Value Measurements at the End of the Reporting Period Using
  Total 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Active Markets for Similar Assets
(Level 2)
 
Unobservable Inputs
(Level 3)
  (in thousands)
As of December 31, 2019        
Impaired loans with specific valuation allowance $18,203
 $—
 $—
 $18,203
Impaired loans without specific valuation allowance (1) 92,069
 —
 —
 92,069
Other assets acquired through foreclosure 13,850
 —
 —
 13,850
As of December 31, 2018        
Impaired loans with specific valuation allowance $305
 $—
 $—
 $305
Impaired loans without specific valuation allowance (1) 91,821
 —
 —
 91,821
Other assets acquired through foreclosure 17,924
 —
 —
 17,924
 Fair Value Measurements at the End of the Reporting Period Using
 TotalQuoted Prices in Active Markets for Identical Assets
(Level 1)		Active Markets for Similar Assets
(Level 2)		Unobservable Inputs
(Level 3)
 (in millions)
As of December 31, 2021
Loans HFI$216.0 $— $— $216.0 
Other assets acquired through foreclosure11.7 — — 11.7 
As of December 31, 2020
Loans HFI$187.3 $— $— $187.3 
Other assets acquired through foreclosure1.4 — — 1.4 

(1)Net of loan balances with charge-offs of $3.3 million and $19.4 million as of December 31, 2019 and 2018, respectively.
For Level 3 assets measured at fair value on a nonrecurring basis as of December 31, 20192021 and 2018,2020, the significant unobservable inputs used in the fair value measurements were as follows:
December 31, 2021Valuation Technique(s)Significant Unobservable InputsRange
(in millions)
Loans HFI$216.0Collateral methodThird party appraisalCosts to sell6.0% to 10.0%
Discounted cash flow methodDiscount rateContractual loan rate3.0% to 6.0%
Scheduled cash collectionsProbability of default0% to 20.0%
Proceeds from non-real estate collateralLoss given default0% to 70.0%
Other assets acquired through foreclosure11.7Collateral methodThird party appraisalCosts to sell4.0% to 10.0%
 December 31, 2019 Valuation Technique(s) Significant Unobservable Inputs Range
 (in thousands)        
Impaired loans$110,272
 Collateral method Third party appraisal Costs to sell 4.0% to 10.0%
 Discounted cash flow method Discount rate Contractual loan rate 4.0% to 7.0%
  Scheduled cash collections Probability of default 0% to 20.0%
  Proceeds from non-real estate collateral Loss given default 0% to 70.0%
Other assets acquired through foreclosure13,850
 Collateral method Third party appraisal Costs to sell 4.0% to 10.0%

 December 31, 2018 Valuation Technique(s) Significant Unobservable Inputs Range
 (in thousands)        
Impaired loans$92,126
 Collateral method Third party appraisal Costs to sell 4.0% to 10.0%
 Discounted cash flow method Discount rate Contractual loan rate 4.0% to 7.0%
  Scheduled cash collections Probability of default 0% to 20.0%
  Proceeds from non-real estate collateral Loss given default 0% to 70.0%
Other assets acquired through foreclosure17,924
 Collateral method Third party appraisal Costs to sell 4.0% to 10.0%
December 31, 2020Valuation Technique(s)Significant Unobservable InputsRange
(in millions)
Loans HFI$187.3 Collateral methodThird party appraisalCosts to sell4.0% to 10.0%
Discounted cash flow methodDiscount rateContractual loan rate2.0% to 7.0%
Scheduled cash collectionsProbability of default0% to 20.0%
Proceeds from non-real estate collateralLoss given default0% to 70.0%
Other assets acquired through foreclosure1.4 Collateral methodThird party appraisalCosts to sell4.0% to 10.0%
Impaired loans:Loans HFI: Loans measured at fair value on a nonrecurring basis include collateral dependent loans. The specific reserves for collateral dependent impairedthese loans are based on collateral value, net of estimated disposition costs and other identified quantitative inputs. Collateral value is determined based on independent third-party appraisals or internally-developed discounted cash flow analyses. Appraisals may utilize a single valuation approach or a combination of approaches, including comparable sales and the income approach. Fair value is determined, where possible, using market prices derived from an appraisal or evaluation, which are considered to be Level 2. However, certain assumptions and unobservable inputs are often used by the appraiser, therefore qualifying the assets as Level 3 in the fair value hierarchy. In addition, when adjustments are made to an appraised value to reflect various factors such as the age of the appraisal or known changes in the market or the collateral, such valuation inputs are considered unobservable and the fair value measurement is categorized as a Level 3 measurement. Internal discounted cash flow analyses are also utilized to estimate the fair value of impairedthese loans, which considers internally-developed, unobservable inputs such as discount rates, default rates, and loss severity.
Total Level 3 impairedcollateral dependent loans had an estimated fair value of $110.3$216.0 million and $92.1$187.3 million at December 31, 20192021 and 2018, respectively. Impaired loans with a specific valuation allowance had a gross estimated fair value2020, respectively, net of $21.0 million and $1.0 million at December 31, 2019 and 2018, respectively, which was reduced by a specific valuation allowance of $2.8$10.8 million and $0.7$8.9 million at December 31, 2021 and 2020, respectively.
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Other assets acquired through foreclosure: Other assets acquired through foreclosure consist of properties acquired as a result of, or in-lieu-of, foreclosure. These assets are initially reported at the fair value determined by independent appraisals using appraised value less estimated cost to sell. Such properties are generally re-appraised every 12 months. Theretwelve months and there is risk for subsequent volatility. Costs relating to the development or improvement of the assets are capitalized and costs relating to holding the assets are charged to expense.
Fair value is determined, where possible, using market prices derived from an appraisal or evaluation, which are considered to be Level 2. However, certain assumptions and unobservable inputs are often used by the appraiser, therefore qualifying the assets as Level 3 in the fair value hierarchy. When significant adjustments are based on unobservable inputs, such as when a current appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the resulting fair value measurement has been categorized as a Level 3 measurement. The Company had $13.9$11.7 million and $17.9$1.4 million of such assets at December 31, 20192021 and 2018,2020, respectively.
Credit vs. non-credit losses
Under the provisionsFair Value of ASC 320, Investments-Debt and Equity Securities, OTTI is separated into the amount of total impairment related to the credit loss and the amount of the total impairment related to all other factors. The amount of the total OTTI related to the credit loss is recognized in earnings. The amount of the total impairment related to all other factors is recognized in OCI.
For the years ended December 31, 2019, 2018, and 2017, the Company determined that there were 0 securities that experienced credit losses.
There is no OTTI balance recognized in comprehensive income as of December 31, 2019 and 2018.

FAIR VALUE OF FINANCIAL INSTRUMENTSFinancial Instruments
The estimated fair value of the Company’s financial instruments is as follows: 
December 31, 2021
Carrying AmountFair Value
Level 1Level 2Level 3Total
(in millions)
Financial assets:
Investment securities:
HTM$1,107.1 $— $1,146.4 $— $1,146.4 
AFS6,188.8 40.4 6,148.4 — 6,188.8 
Equity securities158.5 141.3 17.2 — 158.5 
Derivative assets50.2 — 39.2 11.0 50.2 
Loans HFS5,635.1 — 3,894.2 1,760.2 5,654.4 
Loans HFI, net38,822.9 — — 39,218.2 39,218.2 
Mortgage servicing rights698.0 — — 698.0 698.0 
Accrued interest receivable227.9 — 227.9 — 227.9 
Financial liabilities:
Deposits$47,612.0 $— $47,615.5 $— $47,615.5 
Other borrowings1,501.9 — 1,518.4 — 1,518.4 
Qualifying debt895.8 — 857.3 81.3 938.6 
Derivative liabilities99.8 — 98.2 1.6 99.8 
Accrued interest payable9.2 — 9.2 — 9.2 
  December 31, 2019
  Carrying Amount Fair Value
   Level 1 Level 2 Level 3 Total
  (in thousands)
Financial assets:          
Investment securities:          
HTM $485,107
 $—
 $516,261
 $—
 $516,261
AFS 3,346,310
 32,167
 3,314,143
 —
 3,346,310
Equity securities 138,701
 138,701
 —
 —
 138,701
Derivative assets 1,903
 —
 1,903
 —
 1,903
Loans, net 20,955,499
 —
 —
 21,256,462
 21,256,462
Accrued interest receivable 108,694
 —
 108,694
 —
 108,694
Financial liabilities:          
Deposits $22,796,493
 $—
 $22,813,265
 $—
 $22,813,265
Customer repurchase agreements 16,675
 —
 16,675
 —
 16,675
Qualifying debt 393,563
 —
 332,635
 74,155
 406,790
Derivative liabilities 55,570
 —
 55,570
 —
 55,570
Accrued interest payable 24,661
 —
 24,661
 —
 24,661

December 31, 2020
Carrying AmountFair Value
Level 1Level 2Level 3Total
(in millions)
Financial assets:
Investment securities:
HTM$568.8 $— $611.8 $— $611.8 
AFS4,708.5 26.5 4,682.0 — 4,708.5 
Equity securities167.3 141.7 25.6 — 167.3 
Derivative assets4.2 — 4.2 — 4.2 
Loans HFI, net26,774.1 — — 27,231.0 27,231.0 
Accrued interest receivable166.1 — 166.1 — 166.1 
Financial liabilities:
Deposits$31,930.5 $— $31,935.9 $— $31,935.9 
Other borrowings21.0 — 21.0 — 21.0 
Qualifying debt548.7 — 488.1 79.3 567.4 
Derivative liabilities87.5 — 87.5 — 87.5 
Accrued interest payable11.0 — 11.0 — 11.0 
  December 31, 2018
  Carrying Amount Fair Value
   Level 1 Level 2 Level 3 Total
  (in thousands)
Financial assets:          
Investment securities:          
HTM $302,905
 $—
 $298,648
 $—
 $298,648
AFS 3,276,988
 —
 3,276,988
 —
 3,276,988
Equity securities 115,061
 115,061
 —
 —
 115,061
Derivative assets 2,643
 —
 2,643
 —
 2,643
Loans, net 17,557,912
 —
 16,857,852
 92,126
 16,949,978
Accrued interest receivable 101,275
 —
 101,275
 —
 101,275
Financial liabilities:          
Deposits $19,177,447
 $—
 $19,188,216
 $—
 $19,188,216
Customer repurchase agreements 22,411
 —
 22,411
 —
 22,411
Other borrowings 491,000
 —
 491,000
 —
 491,000
Qualifying debt 360,458
 —
 323,572
 57,924
 381,496
Derivative liabilities 45,120
 —
 45,120
 —
 45,120
Accrued interest payable 20,463
 —
 20,463
 —
 20,463
145
Interest rate risk
The Company assumes interest rate risk (the risk to the Company’s earnings and capital from changes in interest rate levels) as a result of its normal operations. As a result, the fair values of the Company’s financial instruments, as well as its future net interest income, will change when interest rate levels change and that change may be either favorable or unfavorable to the Company.
Interest rate risk exposure is measured using interest rate sensitivity analysis to determine the Company's change in EVE and net interest income resulting from hypothetical changes in interest rates. If potential changes to EVE and net interest income resulting from hypothetical interest rate changes are not within the limits established by the BOD, the BOD may direct management to adjust the asset and liability mix to bring interest rate risk within BOD-approved limits.
WAB has an ALCO charged with managing interest rate risk within the BOD-approved limits. Limits are structured to preclude an interest rate risk profile that does not conform to both management and BOD risk tolerances without ALCO approval. There

is also ALCO reporting at the Parent level for reviewing interest rate risk for the Company, which gets reported to the BOD and its Finance and Investment Committee.
Fair value of commitments
The estimated fair value of standby letters of credit outstanding at December 31, 20192021 and 2018 is insignificant.2020 approximates zero as there have been no significant changes in borrower creditworthiness. Loan commitments on which the committed interest rates are less than the current market rate are also insignificant at December 31, 20192021 and 2018.2020.
146
17.20. REGULATORY CAPITAL REQUIREMENTS
The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements could trigger certain mandatory or discretionary actions that, if undertaken, could have a direct material effect on the Company’s business and financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
In connection with its adoption of CECL on January 1, 2020, the Company elected the five-year CECL transition option that delays the estimated impact on regulatory capital resulting from the adoption of CECL. As a result of this election, the estimated impact of CECL on regulatory capital relative to regulatory capital determined under the prior incurred loss methodology has been delayed for two years, followed by a three-year transition period to phase out the aggregate amount of capital benefit provided during the initial two-year delay. As a result, capital ratios and amounts as of December 31, 2021 exclude the impact of the increased allowance for credit losses related to the adoption of ASC 326.
As of December 31, 20192021 and 2018,2020, the Company and the Bank's capital ratios exceeded the well-capitalized thresholds, as defined by the federal banking agencies. The actual capital amounts and ratios for the Company and the Bank are presented in the following tables as of the periods indicated:
Total CapitalTier 1 CapitalRisk-Weighted AssetsTangible Average AssetsTotal Capital RatioTier 1 Capital RatioTier 1 Leverage RatioCommon Equity
Tier 1
(dollars in millions)
December 31, 2021
WAL$5,499.0 $4,444.3 $44,697.0 $56,972.9 12.3 %9.9 %7.8 %9.1 %
WAB5,119.9 4,657.5 44,726.1 56,961.6 11.4 10.4 8.2 10.4 
Well-capitalized ratios10.0 8.0 5.0 6.5 
Minimum capital ratios8.0 6.0 4.0 4.5 
December 31, 2020
WAL$3,872.0 $3,158.2 $31,015.4 $34,349.3 12.5 %10.2 %9.2 %9.9 %
WAB3,619.4 3,078.2 31,140.6 34,367.0 11.6 9.9 9.0 9.9 
Well-capitalized ratios10.0 8.0 5.0 6.5 
Minimum capital ratios8.0 6.0 4.0 4.5 
  Total Capital Tier 1 Capital Risk-Weighted Assets Tangible Average Assets Total Capital Ratio Tier 1 Capital Ratio Tier 1 Leverage Ratio Common Equity
Tier 1
  (dollars in thousands)
                 
December 31, 2019                
WAL $3,257,874
 $2,775,390
 $25,390,142
 $26,110,275
 12.8% 10.9% 10.6% 10.6%
WAB 3,030,301
 2,703,549
 25,452,261
 26,134,431
 11.9
 10.6
 10.3
 10.6
Well-capitalized ratios         10.0
 8.0
 5.0
 6.5
Minimum capital ratios         8.0
 6.0
 4.0
 4.5
                 
December 31, 2018                
WAL $2,897,356
 $2,431,320
 $21,983,976
 $22,204,799
 13.2% 11.1% 10.9% 10.7%
WAB 2,628,650
 2,317,745
 22,040,765
 22,209,700
 11.9
 10.5
 10.4
 10.5
Well-capitalized ratios         10.0
 8.0
 5.0
 6.5
Minimum capital ratios         8.0
 6.0
 4.0
 4.5
With the acquisition of AmeriHome, the Company is also required to maintain specified levels of capital to remain in good standing with certain federal government agencies, including FNMA, FHLMC, GNMA, and HUD. These capital requirements are generally tied to the unpaid balances of loans included in the Company's servicing portfolio or loan production volume. Noncompliance with these capital requirements can result in various remedial actions up to, and including, removing the Company's ability to sell loans to and service loans on behalf of the respective agency. The Company believes that it is in compliance with these requirements as of December 31, 2021.
147

18.21. EMPLOYEE BENEFIT PLANS
The Company has a qualified 401(k) employee benefit plan for all eligible employees. Participants are able to defer between 1% and 75% (up to a maximum of $19,000$19,500 for those under 50 years of age and up to a maximum of $25,000$26,000 for those over 50 years of age in 2019)2021) of their annual compensation. The Company may elect to match a discretionary amount each year, which is 75%was 100% of the first 6%5% of the participant’s compensation deferred into the plan.plan during the year ended December 31, 2021. The Company’s contributions to this plan total $6.2totaled $12.0 million, $5.6$7.1 million, and $3.1$6.2 million for the years ended December 31, 2019, 2018,2021, 2020, and 2017,2019, respectively.
In addition, the Company maintainshas a non-qualified 401(k) restoration plan for the benefit of executives of the Company and certain affiliates. Participants are able to defer a portion of their annual salary and receive a matching contribution based primarily on the contribution structure in effect under the Company’s 401(k) plan, but without regard to certain statutory limitations applicable under the 401(k) plan. The Company’s total contribution to the restoration plan was $0.1 million for the years ended December 31, 2019, 2018, and 2017.
In connection with the Bridge acquisition, the Company assumed Bridge's SERP, which is an unfunded noncontributory defined benefit pension plan. The SERP provides retirement benefits to certain Bridge officers based on years of service and final average salary. The Company uses aprojected benefit obligation was $13.1 million as of December 31, measurement date for this plan.
The following table reflects the accumulated benefit obligation2021 and funded status$13.6 million as of the SERP:
  December 31,
  2019 2018
  (in thousands)
Change in benefit obligation    
Benefit obligation at beginning of period $9,991
 $8,891
Service cost 632
 614
Interest cost 569
 512
Actuarial losses/(gains) 834
 41
Expected benefits paid (270) (67)
Projected benefit obligation at end of year $11,756
 $9,991
Unfunded projected/accumulated benefit obligation (11,756) (9,991)
Additional liability $—
 $—
     
Weighted average assumptions to determine benefit obligation    
Discount rate 5.25% 5.75%
Rate of compensation increase 3.00% 3.00%

The componentsDecember 31, 2020, all of netwhich was unfunded. Net periodic benefit cost recognizedtotaled $1.1 million for each of the yearyears ended December 31, 20192021, 2020 and 2018 and the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost during 2020 are as follows:2019.
  Year Ended December 31,
  2020 2019 2018
  (in thousands)
Components of net periodic benefit cost      
Service cost $511
 $632
 $614
Interest cost 612
 569
 512
Amortization of prior service cost 19
 64
 103
Amortization of actuarial (gains)/losses (35) (159) (164)
Net periodic benefit cost $1,107
 $1,106
 $1,065
       
Other comprehensive income (cost) $(16) $(95) $(61)


19.22. RELATED PARTY TRANSACTIONS
Principal stockholders, directors, and executive officers of the Company, their immediate family members, and companies they control or own more than a 10% interest in, are considered to be related parties. In the ordinary course of business, the Company engages in various related party transactions, including extending credit and bank service transactions. All related party transactions are subject to review and approval pursuant to the Company's Related Party Transactionsrelated party transactions policy.
Federal banking regulations require that any extensions of credit to insiders and their related interests not be offered on terms more favorable than would be offered to non-related borrowers of similar creditworthiness. The following table summarizes the aggregate activity infor such loans for the periods indicated:loans:
  Year Ended December 31,
  2019 2018
  (in thousands)
Balance, beginning $4,580
 $5,918
New loans —
 —
Advances 323
 —
Repayments and other (1,091) (1,338)
Balance, ending $3,812
 $4,580

Year Ended December 31,
20212020
(in millions)
Balance, beginning$3.3 $3.8 
New loans— — 
Advances— — 
Repayments and other(3.3)(0.5)
Balance, ending$— $3.3 
None of these loans are past due, on non-accrual status or have been restructured to provide a reduction or deferral of interest or principal because of deterioration in the financial position of the borrower. There were no loans to a related party that were considered classified loans at December 31, 20192021 or 2018.2020. The interest income associated with these loans was approximately $0.1 million for the year ended December 31, 2021 and $0.2 million $0.3 million and $0.5 million for each of the years ended December 31, 2019, 2018,2020 and 2017, respectively.2019.
Loan commitments outstanding with related parties totaled approximately $10.6$7.0 million and $30.7$10.3 million at December 31, 20192021 and 2018,2020, respectively.
The Company also accepts deposits from related parties, which totaled $100.1$101.3 million and $87.9$156.9 million at December 31, 20192021 and 2018,2020, respectively, with related interest expense totalingof approximately $0.3 million during the year ended December 31, 2019, and $0.2 million during each of the years ended December 31, 20182021 and 2017.2020, and $0.3 million during the year ended December 31, 2019.
Donations, sponsorships, and other payments to related parties totaled less than $1.0 million during each of the years ended December 31, 20192021, 2020, and 2017 and totaled $8.1 million during the year ended December 31, 2018. Total related party payments2019.

148
During the year ended December 31, 2018, the Company sold an OREO property to a related party with a carrying value $0.9 million and recognized a loss of $0.2 million on the sale.

20.23. PARENT COMPANY FINANCIAL INFORMATION
The condensed financial statements of the holding company are presented in the following tables:
WESTERN ALLIANCE BANCORPORATION
Condensed Balance Sheets 
 December 31, December 31,
 2019 2018 20212020
 (in thousands) (in millions)
ASSETS:  ASSETS:
Cash and cash equivalents $75,885
 $115,721
Cash and cash equivalents$79.0 $55.5 
Money market investments —
 7
Investment securities - AFS 12,767
 16,454
Investment securities - AFS0.5 5.1 
Investment securities - equity 47,123
 49,824
Investment securities - equity41.5 49.8 
Investment in bank subsidiaries 3,063,470
 2,568,027
Investment in bank subsidiaries5,433.6 3,493.5 
Investment in non-bank subsidiaries 52,337
 80,019
Investment in non-bank subsidiaries66.6 49.9 
Other assets 22,488
 27,200
Other assets22.5 18.0 
Total assets $3,274,070
 $2,857,252
Total assets$5,643.7 $3,671.8 
LIABILITIES AND STOCKHOLDERS' EQUITY:    LIABILITIES AND STOCKHOLDERS' EQUITY:
Qualifying debt $242,000
 $211,376
Qualifying debt$673.0 $251.5 
Accrued interest and other liabilities 15,322
 32,142
Accrued interest and other liabilities8.0 6.8 
Total liabilities 257,322
 243,518
Total liabilities681.0 258.3 
Total stockholders’ equity 3,016,748
 2,613,734
Total stockholders’ equity4,962.7 3,413.5 
Total liabilities and stockholders’ equity $3,274,070
 $2,857,252
Total liabilities and stockholders’ equity$5,643.7 $3,671.8 
WESTERN ALLIANCE BANCORPORATION
Condensed Income Statements 
 Year Ended December 31,
 202120202019
 (in millions)
Income:
Dividends from subsidiaries$50.0 $160.0 $134.0 
Interest income3.2 3.1 2.8 
Non-interest income13.4 4.7 5.1 
Total income66.6 167.8 141.9 
Expense:
Interest expense19.5 10.6 14.6 
Non-interest expense31.9 19.7 19.5 
Total expense51.4 30.3 34.1 
Income before income taxes and equity in undistributed earnings of subsidiaries15.2 137.5 107.8 
Income tax benefit7.4 4.5 5.7 
Income before equity in undistributed earnings of subsidiaries22.6 142.0 113.5 
Equity in undistributed earnings of subsidiaries876.6 364.6 385.7 
Net income899.2 506.6 499.2 
Dividends on preferred stock3.5 — — 
Net income available to common stockholders$895.7 $506.6 $499.2 
  Year Ended December 31,
  2019 2018 2017
  (in thousands)
Income:      
Dividends from subsidiaries $134,000
 $152,116
 $97,264
Interest income 2,818
 2,905
 2,547
Non-interest income 5,112
 761
 2,470
Total income 141,930
 155,782
 102,281
Expense:      
Interest expense 14,554
 13,949
 11,459
Non-interest expense 19,543
 19,025
 16,293
Total expense 34,097
 32,974
 27,752
Income before income taxes and equity in undistributed earnings of subsidiaries 107,833
 122,808
 74,529
Income tax benefit 5,628
 10,436
 5,229
Income before equity in undistributed earnings of subsidiaries 113,461
 133,244
 79,758
Equity in undistributed earnings of subsidiaries 385,710
 302,544
 245,734
Net income $499,171
 $435,788
 $325,492
149

Western Alliance Bancorporation
Condensed Statements of Cash Flows
Year Ended December 31,
202120202019
(in millions)
Cash flows from operating activities:
Net income$899.2 $506.6 $499.2 
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net undistributed earnings of subsidiaries(876.6)(364.6)(385.7)
Junior subordinated debt change in fair value(0.1)— — 
Loss on extinguishment of debt5.9 — — 
Other operating activities, net(1.4)8.0 9.9 
Net cash provided by operating activities27.0 150.0 123.4 
Cash flows from investing activities:
Purchases of securities(16.0)(6.9)(10.8)
Principal pay downs, calls, maturities, and sales proceeds of securities28.6 7.7 19.0 
Capital contributions to subsidiaries(1,139.3)— — 
Other investing activities, net— 1.2 — 
Net cash (used in) provided by investing activities(1,126.7)2.0 8.2 
Cash flows from financing activities:
Net proceeds from issuance of subordinated debt591.9 — — 
Common stock repurchases— (71.6)(120.2)
Redemption of subordinated debt(176.0)— — 
Proceeds from issuance of common stock in offerings, net540.3 — — 
Cash dividends paid on common and preferred stock(127.6)(101.3)(51.3)
Proceeds from issuance of preferred stock, net294.5 — — 
Other financing activities, net0.1 0.5 0.1 
Net cash provided by (used in) financing activities1,123.2 (172.4)(171.4)
Net increase (decrease) in cash and cash equivalents23.5 (20.4)(39.8)
Cash and cash equivalents at beginning of year55.5 75.9 115.7 
Cash and cash equivalents at end of year$79.0 $55.5 $75.9 
 Year Ended December 31,
 2019 2018 2017
 (in thousands)
Cash flows from operating activities:     
Net income$499,171
 $435,788
 $325,492
Adjustments to reconcile net income to net cash provided by operating activities:     
Equity in net undistributed earnings of subsidiaries(385,710) (302,544) (245,734)
Other operating activities, net9,885
 (5,889) 16,921
Net cash provided by operating activities123,346
 127,355
 96,679
Cash flows from investing activities:     
Purchases of securities(10,841) (44,409) (11,765)
Principal pay downs, calls, maturities, and sales proceeds of securities19,032
 11,362
 23,196
Capital contributions to subsidiaries—
 —
 (50,000)
Other investing activities, net7
 (7) —
Net cash provided by (used in) investing activities8,198
 (33,054) (38,569)
Cash flows from financing activities:     
Share repurchases(120,131) (35,688) —
Other financing activities, net80
 554
 (12,965)
Dividends paid on common stock(51,329) —
 —
Net cash used in financing activities(171,380) (35,134) (12,965)
Net (decrease) increase in cash and cash equivalents(39,836) 59,167
 45,145
Cash and cash equivalents at beginning of year115,721
 56,554
 11,409
Cash and cash equivalents at end of year$75,885
 $115,721
 $56,554


150

21.24. SEGMENTS
The Company's reportable segments are aggregated based primarilywith a focus on geographic location,products and services offered and markets served. The Company's regional segments, which include Arizona, Nevada, Southern California, and Northern California, provide full serviceconsist of three reportable segments:
•Commercial segment: provides commercial banking and relatedtreasury management products and services to their respective markets. The operations from the regional segments correspond to the following banking divisions: ABA in Arizona, BONsmall and FIB in Nevada, TPB in Southern California, and Bridge in Northern California.
The Company's NBL segments providemiddle-market businesses, specialized banking services to sophisticated commercial institutions and investors within niche markets. The Company's NBL reportable segments include HOA Services, Public & Nonprofit Finance, Technology & Innovation, HFF,industries, as well as financial services to the real estate industry.
•Consumer Related segment: offers consumer banking services, such as residential mortgage banking, and Other NBLs. These NBLs are managed centrally and are broadercommercial banking services to enterprises in geographic scope than the Company's other segments, though still predominately located within the Company's core market areas.consumer-related sectors.
The •Corporate & Other segmentsegment: consists of corporate-relatedthe Company's investment portfolio, Corporate borrowings and other related items, income and expense items not allocated to the Company'sour other reportable segments, and inter-segment eliminations.
The Company's segment reporting process begins with the assignment of all loan and deposit accounts directly to the segments where these products are originated and/or serviced. Equity capital is assigned to each segment based on the risk profile of their assets and liabilities. With the exception of goodwill, which is assigned a 100% weighting, equity capital allocations ranged from 0% to 12%20% during the year, with a funds credit provided for the use of this equity as a funding source.year. Any excess or deficient equity not allocated to segments based on risk is assigned to the Corporate & Other segment.
Net interest income, provision for credit losses, and non-interest expense amounts are recorded in their respective segmentsegments to the extent that the amounts are directly attributable to those segments. Net interest income is recorded in each segment on a TEB with a corresponding increase in income tax expense, which is eliminated in the Corporate & Other segment.
Further, net interest income of a reportable segment includes a funds transfer pricing process that matches assets and liabilities with similar interest rate sensitivity and maturity characteristics. Using this funds transfer pricing methodology, liquidity is transferred between users and providers. A net user of funds has lending/investing in excess of deposits/borrowings and a net provider of funds has deposits/borrowings in excess of lending/investing. A segment that is a user of funds is charged for the use of funds, while a provider of funds is credited through funds transfer pricing, which is determined based on the average life of the assets or liabilities in the portfolio. Residual funds transfer pricing mismatches are allocable to the Corporate & Other segment and presented as part of net interest income.
NetThe net income amountsamount for each reportable segment is further derived by the use of expense allocations. Certain expenses not directly attributable to a specific segment are allocated across all segments based on key metrics, such as number of employees, number of transactions processed for loans and deposits, and average loan balances, and average deposit balances. These types of expenses include information technology, operations, human resources, finance, risk management, credit administration, legal, and marketing.
Income taxes are applied to each segment based on the effective tax rate for the geographic location of the segment. Any difference in the corporate tax rate and the aggregate effective tax rates in the segments are adjusted in the Corporate & Other segment.

151
The following is a summary of operating segment balance sheet information for the periods indicated:
Consolidated CompanyCommercialConsumer RelatedCorporate & Other
At December 31, 2021:(in millions)
Assets:
Cash, cash equivalents, and investment securities$8,057.3 $12.9 $82.4 $7,962.0 
Loans held for sale5,635.1 — 5,635.1 — 
Loans, net of deferred fees and costs39,075.4 25,092.4 13,983.0 — 
Less: allowance for credit losses(252.5)(226.0)(26.5)— 
Total loans38,822.9 24,866.4 13,956.5 — 
Other assets acquired through foreclosure, net11.7 11.7 — — 
Goodwill and other intangible assets, net634.8 294.7 340.1 — 
Other assets2,820.8 253.8 1,278.1 1,288.9 
Total assets$55,982.6 $25,439.5 $21,292.2 $9,250.9 
Liabilities:
Deposits$47,612.0 $30,466.8 $15,362.9 $1,782.3 
Borrowings and qualifying debt2,381.1 — 353.2 2,027.9 
Other liabilities1,026.9 233.4 138.2 655.3 
Total liabilities51,020.0 30,700.2 15,854.3 4,465.5 
Allocated equity:4,962.6 2,588.0 1,596.2 778.4 
Total liabilities and stockholders' equity$55,982.6 $33,288.2 $17,450.5 $5,243.9 
Excess funds provided (used)— 7,848.7 (3,841.7)(4,007.0)
Consolidated CompanyCommercialConsumer RelatedCorporate
   Regional Segments

 Consolidated Company Arizona Nevada Southern California Northern California
At December 31, 2019: (in millions)
At December 31, 2020:At December 31, 2020:(in millions)
Assets:          Assets:
Cash, cash equivalents, and investment securities $4,471.2
 $1.8
 $9.0
 $2.3
 $2.2
Cash, cash equivalents, and investment securities$8,176.5 $12.0 $45.6 $8,118.9 
Loans, net of deferred loan fees and costs 21,123.3
 3,847.9
 2,252.5
 2,253.9
 1,311.2
Less: allowance for credit losses (167.8) (31.6) (18.0) (18.3) (9.7)
Loans, net of deferred fees and costsLoans, net of deferred fees and costs27,053.0 20,245.8 6,798.2 9.0 
Less: allowance for loan lossesLess: allowance for loan losses(278.9)(263.4)(15.4)(0.1)
Total loans 20,955.5
 3,816.3
 2,234.5
 2,235.6
 1,301.5
Total loans26,774.1 19,982.4 6,782.8 8.9 
Other assets acquired through foreclosure, net 13.9
 —
 13.0
 0.9
 —
Other assets acquired through foreclosure, net1.4 1.4 — — 
Goodwill and other intangible assets, net 297.6
 —
 23.2
 —
 154.6
Goodwill and other intangible assets, net298.5 296.1 2.4 — 
Other assets 1,083.7
 48.6
 59.4
 15.0
 19.8
Other assets1,210.5 257.0 96.6 856.9 
Total assets $26,821.9
 $3,866.7
 $2,339.1
 $2,253.8
 $1,478.1
Total assets$36,461.0 $20,548.9 $6,927.4 $8,984.7 
Liabilities:          Liabilities:
Deposits $22,796.5
 $5,384.7
 $4,350.1
 $2,585.3
 $2,373.6
Deposits$31,930.5 $21,448.0 $9,936.8 $545.7 
Borrowings and qualifying debt 393.6
 —
 —
 —
 —
Borrowings and qualifying debt553.7 — — 553.7 
Other liabilities 615.1
 17.8
 11.9
 1.2
 15.9
Other liabilities563.3 170.4 3.3 389.6 
Total liabilities 23,805.2
 5,402.5
 4,362.0
 2,586.5
 2,389.5
Total liabilities33,047.5 21,618.4 9,940.1 1,489.0 
Allocated equity: 3,016.7
 453.6
 301.0
 253.3
 312.5
Allocated equity:3,413.5 1,992.2 579.1 842.2 
Total liabilities and stockholders' equity $26,821.9
 $5,856.1
 $4,663.0
 $2,839.8
 $2,702.0
Total liabilities and stockholders' equity$36,461.0 $23,610.6 $10,519.2 $2,331.2 
Excess funds provided (used) —
 1,989.4
 2,323.9
 586.0
 1,223.9
Excess funds provided (used)— 3,061.7 3,591.8 (6,653.5)
152
  National Business Lines  
  HOA
Services		 Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance Other NBLs Corporate & Other
Assets: (in millions)
Cash, cash equivalents, and investment securities $—
 $—
 $—
 $—
 $10.1
 $4,445.8
Loans, net of deferred loan fees and costs 237.2
 1,635.6
 1,552.0
 1,930.8
 6,098.7
 3.5
Less: allowance for credit losses (2.0) (13.7) (12.6) (12.6) (49.3) —
Total loans 235.2
 1,621.9
 1,539.4
 1,918.2
 6,049.4
 3.5
Other assets acquired through foreclosure, net —
 —
 —
 —
 —
 —
Goodwill and other intangible assets, net —
 —
 119.7
 0.1
 —
 —
Other assets 1.2
 18.3
 7.3
 8.8
 64.3
 841.0
Total assets $236.4
 $1,640.2
 $1,666.4
 $1,927.1
 $6,123.8
 $5,290.3
Liabilities:            
Deposits $3,210.1
 $0.1
 $3,771.5
 $—
 $36.9
 $1,084.2
Borrowings and qualifying debt —
 —
 —
 —
 —
 393.6
Other liabilities 1.8
 52.9
 0.1
 —
 2.8
 510.7
Total liabilities 3,211.9
 53.0
 3,771.6
 —
 39.7
 1,988.5
Allocated equity: 84.5
 131.6
 317.5
 158.5
 494.3
 509.9
Total liabilities and stockholders' equity $3,296.4
 $184.6
 $4,089.1
 $158.5
 $534.0
 $2,498.4
Excess funds provided (used) 3,060.0
 (1,455.6) 2,422.7
 (1,768.6) (5,589.8) (2,791.9)

    Regional Segments

 Consolidated Company Arizona Nevada Southern California Northern California
At December 31, 2018: (in millions)
Assets:          
Cash, cash equivalents, and investment securities $4,259.7
 $2.5
 $10.9
 $2.5
 $3.0
Loans, net of deferred loan fees and costs 17,710.6
 3,647.9
 2,003.5
 2,161.1
 1,300.2
Less: allowance for credit losses (152.7) (30.7) (18.7) (19.8) (10.7)
Total loans 17,557.9
 3,617.2
 1,984.8
 2,141.3
 1,289.5
Other assets acquired through foreclosure, net 17.9
 0.8
 13.9
 —
 —
Goodwill and other intangible assets, net 299.2
 —
 23.2
 —
 155.5
Other assets 974.8
 46.9
 57.8
 14.2
 23.9
Total assets $23,109.5
 $3,667.4
 $2,090.6
 $2,158.0
 $1,471.9
Liabilities:          
Deposits $19,177.4
 $5,090.2
 $3,996.4
 $2,347.5
 $1,839.1
Borrowings and qualifying debt 851.5
 —
 —
 —
 —
Other liabilities 466.9
 10.4
 14.5
 4.5
 12.2
Total liabilities 20,495.8
 5,100.6
 4,010.9
 2,352.0
 1,851.3
Allocated equity: 2,613.7
 441.0
 277.4
 242.9
 304.1
Total liabilities and stockholders' equity $23,109.5
 $5,541.6
 $4,288.3
 $2,594.9
 $2,155.4
Excess funds provided (used) —
 1,874.2
 2,197.7
 436.9
 683.5
  National Business Lines  
  HOA
Services		 Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance Other NBLs Corporate & Other
Assets: (in millions)
Cash, cash equivalents, and investment securities $—
 $—
 $—
 $—
 $—
 $4,240.8
Loans, net of deferred loan fees and costs 210.0
 1,547.5
 1,200.9
 1,479.9
 4,154.9
 4.7
Less: allowance for credit losses (1.9) (14.2) (10.0) (8.5) (38.2) —
Total loans 208.1
 1,533.3
 1,190.9
 1,471.4
 4,116.7
 4.7
Other assets acquired through foreclosure, net —
 —
 —
 —
 —
 3.2
Goodwill and other intangible assets, net —
 —
 120.4
 0.1
 —
 —
Other assets 0.9
 20.1
 6.3
 7.2
 37.1
 760.4
Total assets $209.0
 $1,553.4
 $1,317.6
 $1,478.7
 $4,153.8
 $5,009.1
Liabilities:            
Deposits $2,607.2
 $—
 $2,559.0
 $—
 $—
 $738.0
Borrowings and qualifying debt —
 —
 —
 —
 —
 851.5
Other liabilities 2.1
 25.2
 0.1
 0.4
 49.6
 347.9
Total liabilities 2,609.3
 25.2
 2,559.1
 0.4
 49.6
 1,937.4
Allocated equity: 70.7
 123.9
 268.7
 122.3
 340.0
 422.7
Total liabilities and stockholders' equity $2,680.0
 $149.1
 $2,827.8
 $122.7
 $389.6
 $2,360.1
Excess funds provided (used) 2,471.0
 (1,404.3) 1,510.2
 (1,356.0) (3,764.2) (2,649.0)

The following is a summary of operating segment income statement information for the periods indicated:
Consolidated CompanyCommercialConsumer Related (1)Corporate & Other
Year Ended December 31, 2021:(in millions)
Net interest income$1,548.8 $1,181.7 $603.4 $(236.3)
(Recovery of) provision for credit losses(21.4)(30.6)11.0 (1.8)
Net interest income (expense) after provision for credit losses1,570.2 1,212.3 592.4 (234.5)
Non-interest income404.2 65.1 317.6 21.5 
Non-interest expense851.4 415.9 413.9 21.6 
Income (loss) before income taxes1,123.0 861.5 496.1 (234.6)
Income tax expense (benefit)223.8 206.6 120.1 (102.9)
Net income (loss)$899.2 $654.9 $376.0 $(131.7)
    Regional Segments

 Consolidated Company Arizona Nevada Southern California Northern California
Year Ended December 31, 2019: (in thousands)
Net interest income $1,040,412
 $249,083
 $161,801
 $131,053
 $95,697
Provision for (recovery of) credit losses 18,500
 3,181
 545
 1,243
 (500)
Net interest income after provision for credit losses 1,021,912
 245,902
 161,256
 129,810
 96,197
Non-interest income 65,095
 7,169
 12,021
 4,149
 8,591
Non-interest expense (482,781) (96,578) (62,276) (60,310) (51,709)
Income (loss) before income taxes 604,226
 156,493
 111,001
 73,649
 53,079
Income tax expense (benefit) 105,055
 39,124
 23,310
 20,621
 14,862
Net income $499,171
 $117,369
 $87,691
 $53,028
 $38,217
(1)    Includes the financial results of AmeriHome following the acquisition on April 7, 2021, which contributed approximately 40% and 25% to net revenue and net income for the Consumer Related segment, respectively.

Consolidated CompanyCommercialConsumer RelatedCorporate
Year Ended December 31, 2020:(in millions)
Net interest income$1,166.9 $999.7 $302.5 $(135.3)
Provision for (recovery of) credit losses123.6 128.6 (9.0)4.0 
Net interest income (expense) after provision for credit losses1,043.3 871.1 311.5 (139.3)
Non-interest income70.8 50.5 1.6 18.7 
Non-interest expense491.6 308.9 92.6 90.1 
Income (loss) before income taxes622.5 612.7 220.5 (210.7)
Income tax expense (benefit)115.9 147.6 52.3 (84.0)
Net income (loss)$506.6 $465.1 $168.2 $(126.7)
Consolidated CompanyCommercialConsumer RelatedCorporate & Other
Year Ended December 31, 2019:(in millions)
Net interest income$1,040.4 $837.2 $209.0 $(5.8)
Provision for credit losses19.3 11.1 7.4 0.8 
Net interest income (expense) after provision for credit losses1,021.1 826.1 201.6 (6.6)
Non-interest income65.1 50.4 1.4 13.3 
Non-interest expense482.0 320.6 96.7 64.7 
Income (loss) before income taxes604.2 555.9 106.3 (58.0)
Income tax expense (benefit)105.0 134.7 24.8 (54.5)
Net income$499.2 $421.2 $81.5 $(3.5)
  National Business Lines  
  HOA
Services		 Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance Other NBLs Corporate & Other
  (in thousands)
Net interest income $86,594
 $13,342
 $130,299
 $52,905
 $125,467
 $(5,829)
Provision for (recovery of) credit losses 60
 57
 2,844
 3,790
 7,280
 —
Net interest income after provision for credit losses 86,534
 13,285
 127,455
 49,115
 118,187
 (5,829)
Non-interest income 367
 —
 14,267
 —
 5,269
 13,262
Non-interest expense (37,078) (7,617) (47,974) (9,180) (44,561) (65,498)
Income (loss) before income taxes 49,823
 5,668
 93,748
 39,935
 78,895
 (58,065)
Income tax expense (benefit) 11,459
 1,304
 21,562
 9,185
 18,146
 (54,518)
Net income $38,364
 $4,364
 $72,186
 $30,750
 $60,749
 $(3,547)
153


    Regional Segments

 Consolidated Company Arizona Nevada Southern California Northern California
Year Ended December 31, 2018: (in thousands)
Net interest income $915,879
 $224,754
 $148,085
 $115,561
 $92,583
Provision for (recovery of) credit losses 23,000
 2,235
 (2,447) 2,292
 1,809
Net interest income (expense) after provision for credit losses 892,879
 222,519
 150,532
 113,269
 90,774
Non-interest income 43,116
 7,689
 11,326
 3,800
 9,932
Non-interest expense (425,667) (91,161) (62,536) (57,735) (52,574)
Income (loss) before income taxes 510,328
 139,047
 99,322
 59,334
 48,132
Income tax expense (benefit) 74,540
 34,824
 20,951
 16,709
 13,565
Net income $435,788
 $104,223
 $78,371
 $42,625
 $34,567
  National Business Lines  
  HOA
Services		 Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance Other NBLs Corporate & Other
  (in thousands)
Net interest income $67,154
 $15,149
 $105,029
 $55,332
 $80,073
 $12,159
Provision for (recovery of) credit losses 281
 (1,101) 5,657
 3,275
 11,046
 (47)
Net interest income (expense) after provision for credit losses 66,873
 16,250
 99,372
 52,057
 69,027
 12,206
Non-interest income 614
 158
 14,121
 13
 2,076
 (6,613)
Non-interest expense (32,390) (8,120) (41,159) (9,603) (26,822) (43,567)
Income (loss) before income taxes 35,097
 8,288
 72,334
 42,467
 44,281
 (37,974)
Income tax expense (benefit) 8,072
 1,905
 16,637
 9,768
 10,184
 (58,075)
Net income $27,025
 $6,383
 $55,697
 $32,699
 $34,097
 $20,101
    Regional Segments
  Consolidated Company Arizona Nevada Southern California Northern California
Year Ended December 31, 2017: (in thousands)
Net interest income (expense) $784,664
 $198,622
 $145,001
 $109,177
 $85,360
Provision for (recovery of) credit losses 17,250
 1,153
 (4,724) 100
 4,575
Net interest income (expense) after provision for credit losses 767,414
 197,469
 149,725
 109,077
 80,785
Non-interest income 45,344
 4,757
 9,135
 3,396
 10,000
Non-interest expense (360,941) (76,118) (61,066) (51,808) (48,387)
Income (loss) before income taxes 451,817
 126,108
 97,794
 60,665
 42,398
Income tax expense (benefit) 126,325
 49,317
 34,133
 25,529
 17,591
Net income $325,492
 $76,791
 $63,661
 $35,136
 $24,807
  National Business Lines  
  HOA
Services		 Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance Other NBLs Corporate & Other
  (in thousands)
Net interest income (expense) $54,102
 $28,485
 $82,473
 $56,961
 $65,908
 $(41,425)
Provision for (recovery of) credit losses 341
 593
 2,821
 4,493
 9,729
 (1,831)
Net interest income (expense) after provision for credit losses 53,761
 27,892
 79,652
 52,468
 56,179
 (39,594)
Non-interest income 558
 —
 8,422
 52
 1,772
 7,252
Non-interest expense (28,289) (8,522) (36,726) (10,166) (20,550) (19,309)
Income (loss) before income taxes 26,030
 19,370
 51,348
 42,354
 37,401
 (51,651)
Income tax expense (benefit) 9,676
 6,317
 19,255
 15,883
 14,000
 (65,376)
Net income $16,354
 $13,053
 $32,093
 $26,471
 $23,401
 $13,725


22.25. REVENUE FROM CONTRACTS WITH CUSTOMERS
ASC 606, Revenue from Contracts with Customers, requires revenue to be recognized at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to a customer. ASC 606 applies to all contracts with customers to provide goods or services in the ordinary course of business, except for contracts that are specifically excluded from its scope. The majority of the Company’s revenue streams including interest income, credit and debit card fees, income from equity investments, including warrants and SBIC equity income, income from bank owned life insurance, foreign currency income, lending related income, and gains and losses on sales of investment securities are outside the scope of ASC 606. Revenue streams including service charges and fees, interchange fees on credit and debit cards, and success fees are within the scope of ASC 606.
Disaggregation of Revenue
The following table represents a disaggregation of revenue from contracts with customers for the periods indicated along with the reportable segment for each revenue category:
    Regional Segments
  Consolidated Company Arizona Nevada Southern California Northern California
Year Ended December 31, 2019 (in thousands)
Revenue from contracts with customers:          
Service charges and fees $23,353
 $4,781
—
$8,131
—
$3,012
 $3,885
Debit and credit card interchange (1) 5,839
 1,151
—
1,212
—
583
 2,859
Success fees (2) 1,580
 —
—
—
—
—
 —
Other income 288
 15
—
14
—
5
 65
Total revenue from contracts with customers $31,060
 $5,947
 $9,357
 $3,600
 $6,809
Revenues outside the scope of ASC 606 (3) 34,035
 1,222
 2,664
 549
 1,782
Total non-interest income $65,095
 $7,169
 $12,021
 $4,149
 $8,591
  National Business Lines  
  HOA Services Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance Other NBLs Corporate & Other
Year Ended December 31, 2019 (in thousands)
Revenue from contracts with customers:            
Service charges and fees $329
 $—
 $3,211
 $—
 $4
 $—
Debit and credit card interchange (1) 34
 —
 —
 —
 —
 —
Success fees (2) —
 —
 1,580
 —
 —
 —
Other income 3
 —
 4
 —
 171
 11
Total revenue from contracts with customers $366
 $—
 $4,795
 $—
 $175
 $11
Revenues outside the scope of ASC 606 (3) 1
 —
 9,472
 —
 5,094
 13,251
Total non-interest income $367
 $—
 $14,267
 $—
 $5,269
 $13,262

(1)Included as part of Card income in the Consolidated Income Statement.
(2)Included as part of Income from equity investments in the Consolidated Income Statement.
(3)
Amounts are accounted for under separate guidance. Refer to discussion of revenue sources not subject to ASC 606 under the Non-interest income section in "Note 1. Summary of Significant Accounting Policies."


    Regional Segments
  Consolidated Company Arizona Nevada Southern California Northern California
Year Ended December 31, 2018 (in thousands)
Revenue from contracts with customers:          
Service charges and fees $22,295
 $3,902
 $8,151
 $2,666
 $3,795
Debit and credit card interchange (1) 6,801
 1,132
 1,379
 650
 3,616
Success fees (2) 3,335
 —
 —
 —
 96
Other income 626
 181
 194
 59
 161
Total revenue from contracts with customers $33,057
 $5,215
 $9,724
 $3,375
 $7,668
Revenues outside the scope of ASC 606 (3) 10,059
 2,474
 1,602
 425
 2,264
Total non-interest income $43,116
 $7,689
 $11,326
 $3,800
 $9,932
  National Business Lines  
  HOA Services Public & Nonprofit Finance Technology & Innovation Hotel Franchise Finance Other NBLs Corporate & Other
Year Ended December 31, 2018 (in thousands)
Revenue from contracts with customers:            
Service charges and fees $585
 $—
 $3,201
 $—
 $—
 $(5)
Debit and credit card interchange (1) 24
 —
 —
 —
 —
 —
Success fees (2) —
 —
 3,239
 —
 —
 —
Other income 4
 —
 —
 —
 1
 26
Total revenue from contracts with customers $613
 $—
 $6,440
 $—
 $1
 $21
Revenues outside the scope of ASC 606 (3) 1
 158
 7,681
 13
 2,075
 (6,634)
Total non-interest income $614
 $158
 $14,121
 $13
 $2,076
 $(6,613)
(1)Included as part of Card income in the Consolidated Income Statement.
(2)Included as part of Income from equity investments in the Consolidated Income Statement.
(3)Amounts are accounted for under separate guidance. Refer to discussion of revenue sources not subject to ASC 606 under the Non-interest income section in "Note 1. Summary of Significant Accounting Policies."
Performance Obligations
Many of the services the Company performs for its customers are ongoing, and either party may cancel at any time. The fees for these contracts are dependent upon various underlying factors, such as customer deposit balances, and as such may be considered variable. The Company’s performance obligations for these services are satisfied as the services are rendered and payment is collected on a monthly, quarterly, or semi-annual basis. Other contracts with customers are forFor services to be provided at a point in time, and fees are recognized at the time such services are rendered. The Company had no material unsatisfied performance obligations as of December 31, 2019. The revenue streams within the scope of ASC 606 are described in further detail below.2021 or 2020.
Service Charges and Fees
The Company performs deposit account services for its customers, which include analysis and treasury management services, use of safe deposit boxes, check upcharges, and other ancillary services. The depository arrangements the Company holds with its customers are considered day-to-day contracts with ongoing renewals and optional purchases, and as such, the contract duration does not extend beyond the services performed. Due to the short-term nature of such contracts, the Company generally recognizes revenue for deposit related fees as services are rendered. From time to time, the Company may waive certain fees for its customers. The Company considers historical experience when recognizing revenue from contracts with customers, and may reduce the transaction price to account for fee waivers or refunds.
Debit and Credit Card Interchange
When a credit or debit card issued by the Company is used to purchase goods or services from a merchant, the Company earns an interchange fee. Interchange fees on credit and debit cards are included as part of Commercial banking related income in the Consolidated Income Statements. The Company considers the merchant its customer in these transactions as the Company provides the merchant with the service of enabling the cardholder to purchase the merchant’s goods or services with increased convenience, and it enables the merchants to transact with a class of customer that may not have access to sufficient funds at the time of purchase. The Company acts as an agent to the payment network by providing nightly settlement services between the payment network and the merchant. This transmission of data and funds represents the Company’s performance obligation and is performed nightly. As the payment network

is in direct control of setting the rates, and the Company is actingacts as an agent, the interchange fee isagent. Interchange fees are recorded net of expenses as the services are provided.
Success Fees
Success fees are one-time fees detailed as part of certain loan agreements and are earned immediately upon occurrence of a triggering event.event and are included as part of Income from equity investments in the Consolidated Income Statements. Examples of triggering events includeinclude: a borrower obtaining its next round of funding, an acquisition, or completion of a public offering. Success fees are variable consideration as the transaction price can vary and is contingent on the occurrence or non-occurrence of a futuretriggering event. As
Revenues within the considerationscope of ASC 606 totaled $37.6 million, $29.9 million, and $31.1 million for the years ended December 31, 2021, 2020, and 2019, respectively.
26. SUBSEQUENT EVENTS
On January 25, 2022, the Company completed the acquisition of Digital Settlement Technologies LLC, doing business as Digital Disbursements, a digital payments platform for the class action legal industry. The acquisition of Digital Disbursements is highly susceptibleexpected to factors outsideextend the Company's digital payment efforts by providing a digital payments platform for the class action market and broader legal industry.
Due to the limited time since the closing of the Company’s influenceacquisition, the valuation efforts and uncertainty about the amount of consideration is not expected to be resolved for an extended period of time, the variable consideration is constrained and is not recognized until the achievement of the triggering event.
Principal versus Agent Considerations
When more than one party is involved in providing goods or services to a customer, ASC 606 requires the Company to determine whether it is the principal or an agent in these transactions by evaluating the nature of its promise to the customer. An entity is a principal and therefore records revenue on a gross basis, if it controls a promised good or service before transferring that good or service to the customer. An entity is an agent and records as revenue the net amount it retains for its agency services if its role is to arrange for another entity to provide the goods or services. The Company most commonly acts as a principal and records revenue on a gross basis, except in certain circumstances. As an example, revenues earned from interchange fees, in which the Company acts as an agent,related acquisition accounting are recorded as non-interest income, net of the related expenses paid to the principal.
Contract Balances
The timing of revenue recognition may differ from the timing of cash settlements or invoicing to customers. The Company records contract liabilities, or deferred revenue, when payments from customers are received or due in advance of providing services to customers. The Company generally receives payments for its services during the period orincomplete at the time services are provided,of filing of these Consolidated Financial Statements. As a result, the Company is unable to provide amounts recognized as of the acquisition date for major classes of assets and therefore does not have material contract liability balances at period-end.liabilities acquired. The Company records contractwill record the assets or receivables when revenue is recognized prior to receipt of cash from the customer. Accounts receivable totals $1.6 millionacquired and $1.4 millionliabilities assumed at their fair values as of December 31, 2019the acquisition date.
154
Item 9.Changes in and December 31, 2018, respectively,Disagreements with Accountants on Accounting and are presented in Other Assets on the Consolidated Balance Sheets.

23. QUARTERLY FINANCIAL DATA (UNAUDITED)Financial Disclosure
  Year Ended December 31, 2019
  Fourth Quarter Third Quarter Second Quarter First Quarter
  (in thousands, except per share amounts)
Interest income $315,420
 $315,608
 $302,848
 $291,168
Interest expense 43,447
 49,186
 48,167
 43,832
Net interest income 271,973
 266,422
 254,681
 247,336
Provision for credit losses 4,000
 4,000
 7,000
 3,500
Net interest income after provision for credit losses 267,973
 262,422
 247,681
 243,836
Non-interest income 16,027
 19,441
 14,218
 15,410
Non-interest expense (129,699) (125,955) (114,213) (112,914)
Income before provision for income taxes 154,301
 155,908
 147,686
 146,332
Income tax expense 26,236
 28,533
 24,750
 25,536
Net income $128,065
 $127,375
 $122,936
 $120,796
Earnings per share:        
Basic $1.26
 $1.25
 $1.19
 $1.16
Diluted $1.25
 $1.24
 $1.19
 $1.16
  Year Ended December 31, 2018
  Fourth Quarter Third Quarter Second Quarter First Quarter
  (in thousands, except per share amounts)
Interest income $281,968
 $265,216
 $251,602
 $234,697
Interest expense 38,455
 31,178
 27,494
 20,477
Net interest income 243,513
 234,038
 224,108
 214,220
Provision for credit losses 6,000
 6,000
 5,000
 6,000
Net interest income after provision for credit losses 237,513
 228,038
 219,108
 208,220
Non-interest income 13,611
 4,418
 13,444
 11,643
Non-interest expense (111,129) (113,841) (102,548) (98,149)
Income before provision for income taxes 139,995
 118,615
 130,004
 121,714
Income tax expense 20,909
 7,492
 25,325
 20,814
Net income $119,086
 $111,123
 $104,679
 $100,900
Earnings per share:        
Basic $1.14
 $1.06
 $1.00
 $0.97
Diluted $1.13
 $1.05
 $0.99
 $0.96


Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.Controls and Procedures.
Item 9A.Controls and Procedures.
As of the end of the period covered by this Annual Report on Form 10-K, an evaluation was carried out by the Company’s management, with the participation of its CEO and CFO, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e), under the Exchange Act). As permitted by guidance provided by the staff of the U.S. Securities and Exchange Commission, the scope of management's assessment of internal control over financial reporting as of December 31, 2021 has excluded the Company's wholly-owned subsidiary, AmeriHome Mortgage Company, LLC, which was acquired on April 7, 2021. Based upon that evaluation, the Company’s CEO and CFO concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report. No changes were made to the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of WAL is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s CEO and CFO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
As of December 31, 2019,2021, management assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in “Internal Control-Integrated Framework” issued by the COSO in 2013. The scope of the Company's assessment of the design and effectiveness of AmeriHome Mortgage Company LLC's internal control over financial reporting for the year ended December 31, 2021 excluded this acquired business. AmeriHome's total assets and total revenue as of and for the year ended December 31, 2021 represented 13% and 12% of total consolidated assets and revenue, respectively. This acquired business will be included in management's assessment of the effectiveness of the Company's internal controls over financial reporting as of December 31, 2022. Based on this assessment, management determined that the Company maintained effective internal control over financial reporting as of December 31, 2019,2021, based on those criteria.
RSM US LLP, the independent registered public accounting firm that audited the Consolidated Financial Statements of the Company included in this Annual Report on Form 10-K, has audited the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019.2021. Their report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019,2021, is included herein.

155
Report of Independent Registered Public Accounting Firm 
To the Stockholders and the Board of Directors of
Western Alliance Bancorporation 
Opinion on the Internal Control Over Financial Reporting
We have audited Western Alliance Bancorporation and Subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2019,2021, based on criteria established in Internal Control - Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019,2021, based on criteria established in Internal Control - Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets as of December 31, 20192021 and 2018,2020, and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 20192021 of the Company and our report, dated March 2, 2020,February 25, 2022, expressed an unqualified opinion.
As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded AmeriHome Mortgage Company, LLC from its assessment of internal control over financial reporting as of December 31, 2021, because it was acquired by the Company in a purchase business combination on April 7, 2021. We have also excluded AmeriHome Mortgage Company, LLC from our audit of internal control over financial reporting. AmeriHome Mortgage Company, LLC is a wholly owned subsidiary whose total assets and net income represent approximately 13% and 12%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2021.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company'scompany’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company'scompany’s internal control over financial reporting includes those policies and procedures thatthat: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company'scompany’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ RSM US LLP
Phoenix, ArizonaLos Angeles, California
March 2, 2020

Item 9B.Other Information
On February 25, 2020, the BOD2022
156
Under the Plan, certain executives, including WAL’s named executive officers, who are designated by the BOD and who enter into individual participation agreements (“Executives”) are eligible to participate in the Plan and to receive severance and certain other payments under the circumstances set forth in the Plan.Item 9B.Other Information
The Plan generally providesNot applicable.
Item 9C.Disclosure Regarding Foreign Jurisdictions that severance benefits will be paid upon (i) the termination of an Executive’s employment for unsatisfactory work performance (“Poor Performance”) that does not provide grounds for termination with Cause (as defined in the Plan), (ii) the termination of an Executive’s employment without Cause (other than a termination for Poor Performance), (iii) a retirement at or after age sixty with at least ten years of continuous service (a “Qualified Retirement”), and (iv) the termination of an Executive’s employment without Cause (other than a termination for Poor Performance) or by the Executive for Good Reason (as defined in the Plan), in either case within the twenty-four month period following a Change in Control (as defined in the Plan) (a “Change in Control Termination”).Prevent Inspections
Under the Plan, in the event of a qualifying termination of employment in any of the circumstances described above, and contingent upon the Executive’s execution of a binding release agreement and waiver of claims, the Executive will be entitled to receive accrued benefits, payable in accordance with WAL’s normal payroll practice, and the severance and other payments set forth in the Plan. Following a termination for Poor Performance, the Executive will receive a lump sum cash payment in an amount equal to nine months of the Executive’s annual base salary for the year in which the termination occurs. Following a termination without Cause (other than a termination for Poor Performance), the Executive will receive (i) a lump sum cash payment in an amount equal to one-and-a-half times the Executive’s annual base salary for the year in which the termination occurs, plus (ii) a lump sum cash payment in an amount equal to WAL’s portion of premiums paid for continuation coverage for up to twenty-four months following termination of employment pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (the “COBRA Premium Payment”). Following a Qualified Retirement, the Executive will be entitled to receive a lump sum cash payment of a pro rata amount of the Executive’s annual bonus for the year in which the Qualified Retirement occurs, based on WAL’s actual projected performance at the time of the Qualified Retirement.Not applicable.
Following a Change in Control Termination, the Executive will receive (i) a lump sum cash payment in an amount equal to the sum of (a) two times the Executive’s annual base salary (using the greater of the base salary for the year in which the Change in Control occurs or the year in which the termination occurs), and (b) two times the Executive’s target annual bonus (using the greater of the annual bonus for the year in which the Change in Control occurs or the year in which the termination occurs), plus (ii) a lump sum cash payment in an amount equal to the COBRA Premium Payment. In addition, upon a Change in Control, each Executive will receive any unpaid annual bonus that was earned by the Executive in the year prior to the year in which the Change in Control occurs, regardless of whether the Executive’s employment is terminated.
In order to be eligible to receive benefits under the Plan, each Executive must comply with the confidentiality, non-solicitation and non-disparagement covenants set forth in the Plan. In addition, an Executive whose employment terminates due to a Qualified Retirement or a Change in Control Termination must also comply with the non-competition covenants set forth in the Plan. If any amount or benefits to be paid or provided to an Executive under the Plan or any other arrangement would trigger the excise tax imposed on “excess parachute payments,” the Executive’s payments and benefits will be reduced to the one dollar less than the amount that would cause the payments and benefits to be subject to the excise tax, unless the Executive would be better off (on an after-tax basis) receiving all payments and benefits and paying all applicable excise and income taxes.
The foregoing description is a summary of the material terms of the Plan and related participation agreements. This summary does not purport to be complete and is qualified in its entirety by reference to the full and complete terms of the Plan and form of participation agreement, copies of which are filed as Exhibit 10.8 and Exhibit 10.13, respectively, to this Annual Report on Form 10-K and are incorporated herein by reference.

PART III 
Item 10.Directors, Executive Officers and Corporate Governance
Item 10.Directors, Executive Officers and Corporate Governance
The information required by this item is incorporated by reference fromin the Company’s Definitive Proxy Statement prepared for the 20202022 Annual Meeting of Stockholders to be held on June 11, 2020.14, 2022, which contains information concerning this item under the captions Corporate Governance, Executive Officers, and Delinquent Section 16(a) Reports, is incorporated herein by reference.
Item 11.Executive Compensation
Item 11.Executive Compensation
The information required by this item is incorporated by reference fromin the Company’s Definitive Proxy Statement prepared for the 20202022 Annual Meeting of Stockholders to be held on June 11, 2020.14, 2022, which contains information concerning this item under the captions Executive Compensation - Compensation Discussion and Analysis, Compensation Tables and CEO Pay Ratio, is incorporated herein by reference.
Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is incorporated by reference fromin the Company’s Definitive Proxy Statement prepared for the 20202022 Annual Meeting of Stockholders to be held on June 11, 2020.14, 2022, which contains information concerning this item under the caption Security Ownership of Certain Beneficial Owners, Directors and Executive Officers, is incorporated herein by reference.
Item 13.Certain Relationships and Related Transactions, and Director Independence
Item 13.Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated by reference fromin the Company’s Definitive Proxy Statement prepared for the 20202022 Annual Meeting of Stockholders to be held on June 11, 2020.14, 2022, which contains information concerning this item under the caption Certain Transactions with Related Parties and Director Independence, is incorporated herein by reference.
Item 14.Principal Accountant Fees and Services
Item 14.Principal Accountant Fees and Services
The information required by this item is incorporated by reference fromin the Company’s Definitive Proxy Statement prepared for the 20202022 Annual Meeting of Stockholders to be held on June 11, 2020.14, 2022, which contains information concerning this item under the caption Independent Auditors - Fees and Services, is incorporated herein by reference.
PART IV
Item 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(1)The following financial statements are incorporated by reference from Item 8 hereto:
Item 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(1)The following financial statements are incorporated by reference from Item 8 hereto:
73
70
Consolidated Balance Sheets as of December 31, 20192021 and 20182020
7277
7378
7579
7680
7781
Notes to Consolidated Financial Statements
79
(2)Financial Statement Schedules
Not applicable.

EXHIBITS
3.1
83
(2)Financial Statement Schedules
Not applicable.

157
Table of Contents
EXHIBITS
1.1
1.2
3.1
3.2
3.3
3.4
3.5
4.1*3.6
4.1 *
4.2
4.3
4.4
Form of Senior Debt Indenture (incorporated by reference to Exhibit 4.2 of Western Alliance's Form S-3 filed with the SEC on May 7, 2015).
4.54.4
4.64.5
4.74.6
4.84.7
4.8
4.9
4.10
4.11
4.12
10.1
4.910.2
10.1
Western Alliance 2005 Stock Incentive Plan, as amended (incorporated by reference to Appendix G of the Registrant's definitive Proxy Statement on Schedule 14A filed with the Commission on April 2, 2014). ±
10.2
Bridge Capital Holdings 2006 Equity Incentive Plan (incorporated by reference to Exhibit 4.11 of Western Alliance's Form S-8 filed with the SEC on July 2, 2015). ±
10.3
10.4
158
Table of Contents
10.5
10.6
10.7
10.8*10.8
10.9
10.10
10.11
10.1010.12

10.1110.13
10.14
10.12*
10.13*
Form of participation agreement under the Company's Change in Control Severance Plan. ±
10.14*
Form of Performance-Based Stock Unit Agreement pursuant to the Company's 2005 Stock Incentive Plan.Plan (incorporated by reference to Exhibit 10.14 of Western Alliance's Form 10-K filed with the SEC on March 2, 2020). ±
10.15*10.15
21.1*
23.1*
24.1*
31.1*
31.2*
32**
101.INS*101*XBRL Instance Document.The following materials from Western Alliance’s Annual Report on Form 10-K Report for the year ended December 31, 2020, formatted in Inline XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Income Statements, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.
101.SCH*104*The cover page of Western Alliance's Annual Report on Form 10-K for the year ended December 31, 2021, formatted in Inline XBRL Taxonomy Extension Schema Document.
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document.
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB*XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document.(contained in Exhibit 101).

*     Filed herewith.
**    Furnished herewith.
±     Management contract or compensatory arrangement.
Certain instruments defining the rights of holders of AmeriHome's 6.5% senior notes (principal amount of $300 million) due 2028 are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. The Company hereby undertakes to furnish to the SEC, upon request, copies of any such instruments.
Stockholders may obtain copies of exhibits by writing to: Dale Gibbons, Western Alliance Bancorporation, One East Washington Street Suite 1400, Phoenix, AZ 85004.
Item 16.FORM 10-K SUMMARY
Item 16.FORM 10-K SUMMARY
Not applicable.

159
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 
WESTERN ALLIANCE BANCORPORATION
February 25, 2022WESTERN ALLIANCE BANCORPORATION
By:
March 2, 2020By:/s/ Kenneth A. Vecchione
Kenneth A. Vecchione
Chief Executive Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kenneth A. Vecchione and Dale Gibbons, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully and to all intents and purposes as he or she might or could do in person hereby ratifying and confirming all that said attorneys-in-fact and agents, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant in their listed capacities on March 2, 2020.February 25, 2022.


160
NameTitle
/s/ Kenneth A. VecchionePresident and Chief Executive Officer
Kenneth A. Vecchione(Principal Executive Officer)
/s/ Robert SarverExecutive Chairman
Robert Sarver
NameTitle
/s/ Kenneth A. VecchionePresident and Chief Executive Officer
Kenneth A. Vecchione
/s/ Robert SarverExecutive Chairman
Robert Sarver
/s/ Dale GibbonsVice Chairman and Chief Financial Officer
Dale Gibbons(Principal Financial Officer)
/s/ J. Kelly Ardrey Jr.Senior Vice President and Chief Accounting Officer
J. Kelly Ardrey Jr.(Principal Accounting Officer)
/s/ Bruce D. BeachDirector
Bruce D. Beach
/s/ Juan FiguereoDirector
Juan Figuereo
/s/ Howard GouldDirector
Howard Gould
/s/ Steven J. HiltonDirector
Steven J. Hilton
/s/ Marianne Boyd JohnsonDirector
Marianne Boyd Johnson
/s/ Robert LattaDirector
Robert Latta
/s/ Todd MarshallDirector
Todd Marshall
/s/ Adriane C. McFetridgeDirector
Adriane C. McFetridge

/s/ James NaveDirector
James Nave
/s/ Michael PatriarcaDirector
Michael Patriarca
/s/ Bryan SegediDirector
Bryan Segedi
/s/ Donald D. SnyderDirector
Donald D. Snyder
/s/ Sung Won SohnDirector
Sung Won Sohn


152
161