EARNINGS CALL 1st Quarter 2022 APRIL 22, 2022
Forward-Looking Statements This presentation contains forward-looking statements that relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Examples of forward-looking statements include, among others, statements we make regarding our expectations with regard to our business, financial and operating results, future economic performance and dividends. The forward-looking statements contained herein reflect our current views about future events and financial performance and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from historical results and those expressed in any forward-looking statement. Some factors that could cause actual results to differ materially from historical or expected results include, among others: the risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and the Company’s subsequent Quarterly Reports on Form 10-Q, each as filed with the Securities and Exchange Commission; the potential adverse effects of unusual and infrequently occurring events such as the COVID-19 pandemic and any governmental or societal responses thereto; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; the impact on financial markets from geopolitical conflicts such as the war between Russia and Ukraine; inflation, interest rate, market and monetary fluctuations; increases in competitive pressures among financial institutions and businesses offering similar products and services; higher defaults on our loan portfolio than we expect; changes in management’s estimate of the adequacy of the allowance for credit losses; legislative or regulatory changes or changes in accounting principles, policies or guidelines; supervisory actions by regulatory agencies which may limit our ability to pursue certain growth opportunities, including expansion through acquisitions; additional regulatory requirements resulting from our continued growth; management’s estimates and projections of interest rates and interest rate policy; the execution of our business plan; and other factors affecting the financial services industry generally or the banking industry in particular. Any forward-looking statement made by us in this presentation is based only on information currently available to us and speaks only as of the date on which it is made. We do not intend and disclaim any duty or obligation to update or revise any industry information or forward-looking statements, whether written or oral, that may be made from time to time, set forth in this press release to reflect new information, future events or otherwise. Non-GAAP Financial Measures This presentation contains both financial measures based on GAAP and non-GAAP based financial measures, which are used where management believes them to be helpful in understanding the Company’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the Company’s press release as of and for the quarter ended March 31, 2022. These 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. 2
1st Quarter 2022 | Financial Highlights Earnings & Profitability Q1-22 Q4-21 Q1-21 Net Income $240.1 $246.0 $192.5 Net Revenue $555.8 $561.0 $337.0 Pre Provision Net Revenue1 $307.2 $323.2 $202.0 Net Interest Margin 3.32% 3.33% 3.37% Efficiency Ratio1 44.1% 41.8% 39.1% ROAA 1.64% 1.69% 1.93% ROTCE1 23.9% 25.8% 24.2% Balance Sheet & Capital Total Loans $41,119 $39,075 $28,711 Total Deposits $52,160 $47,612 $38,393 CET1 Ratio 9.0% 9.1% 10.3% TCE Ratio1 6.7% 7.3% 7.9% Tangible Book Value per Share1 $37.13 $37.84 $33.02 Asset Quality Provision for (Recovery of) Credit losses $9.0 $13.2 $(32.4) Net Charge-Offs $0.2 $1.4 $1.4 Net Charge-Offs/Avg. Loans 0.00% 0.02% 0.02% Total Loan ACL/Funded Loans3 0.73% 0.74% 0.97% NPAs2/Total Assets 0.17% 0.15% 0.27% Net Income $240.1 million EPS $2.22 PPNR1 Q1: $307.2 million 52% YoY ROTCE1 23.9% Loan Growth Q1: $2.0 billion 43% YoY Deposit Growth Q1: $4.5 billion 36% YoY Tangible Book Value PER SHARE1 $37.13 12% YoY NPAs2/ Total Assets 0.17% 3 Dollars in millions, except EPS 1) Refer to slide 2 for further discussion of Non-GAAP financial measures. 2) Nonperforming assets includes nonaccrual loans and repossessed assets. 3) Ratio includes an allowance for credit losses of $9.5 million as of March 31, 2022 related to a $5.4 billion pool of loans covered under two separate credit linked notes. Highlights
Quarterly Income Statement Net Interest Income decreased $1.1 million, primarily from two fewer business days and the quarterly capture of credit linked notes issued in December 2021 Non-Interest Income decreased $4.1 million, driven by mark to market losses on equity securities and lower recovery from credit guarantees • $13.7 billion loan production in Q1 (59% purchase / 41% refinance), down 25% compared to Q4 and 35% to Q1 2021 • Gain on Sale margin2 of 21 bps in Q1, compared to 28 bps in Q4 • $65.5 billion in servicing portfolio UPB Salaries and Employee Benefits increased $17.7 million due to lower cost deferrals, seasonal compensation factors, and increased headcount Provision for Credit Losses of $9.0 million primarily due to loan growth 4 1 2 3 Dollars in millions, except EPS Q1 2022 Highlights 1) Refer to slide 2 for further discussion of Non-GAAP financial measures. 2) Gain on Sale margin represents spread as of the interest rate lock commitment date. 4 Q1-22 Q4-21 Q1-21 Net Interest Income $449.5) $450.6) $317.3) Mortgage Banking Related Income 78.0) 75.5) -) Other 28.3) 34.9) 19.7) Non-Interest Income $106.3) $110.4) $19.7) Net Revenue $555.8) $561.0) $337.0) Salaries and Employee Benefits (138.3) (120.6) (83.7) Other (110.3) (117.2) (51.3) Non-Interest Expense $ (248.6) $ (237.8) $ (135.0) Pre-Provision Net Revenue1 $307.2) $323.2) $202.0) (Provision for) Recovery of Credit Losses (9.0) (13.2) 32.4) Pre-Tax Income $298.2) $310.0) $234.4) Income Tax (58.1) (64.0) (41.9) Net Income $240.1) $246.0) $192.5) Dividends on Preferred Stock (3.2) (3.5) -) Net Income Available to Common Stockholders $236.9) $242.5) $192.5) Diluted Shares 106.6) 104.5) 101.4) Earnings Per Share $2.22) $2.32) $1.90) 1 3 4 2
Total Investments and Yield Interest Bearing Deposits and Cost Loans and HFI Yield Deposits, Borrowings & Cost of Liability Funding Net Interest Drivers 5 • Loan yields decreased 5 bps following continued mix shift into residential loans and lower prepayment and PPP fees • Yield on Loans Held for Sale of 3.14%, increased from 3.04% in Q4 • Cost of interest-bearing deposits increased 1 bps, and total cost of funds increased 2 bps to 0.27% due to higher cost on short-term borrowings and qualifying debt $20.9 $21.8 $24.2 $26.3 $28.6 $17.5 $20.1 $21.1 $21.3 $23.5$0.6 $1.8 $2.1 $2.4 $1.7 0.19% 0.27% 0.28% 0.25% 0.27% Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 $20.9 $21.8 $24.2 $26.3 $28.6 0.22% 0.22% 0.21% 0.20% 0.21% Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 $7.9 $7.8 $7.7 $7.5 $8.3 2.37% 2.47% 2.46% 2.51% 2.77% Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Non-Interest Bearing Deposits Total Borrowings Q1 2022 Highlights $28.7 $30.0 $34.8 $39.1 $41.1 $4.8 4.59% 4.48% 4.28% 4.03% 3.98% Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Loans Loans, HFS $4.5 $6.5 Interest Bearing Deposits Interest Bearing Deposits Dollars in billions, unless otherwise indicated Total Investments $5.6
$317.3 $370.5 $410.4 $450.6 $449.5 3.37% 3.51% 3.43% 3.33% 3.32% Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Net Interest Income 6 • Net Interest Income decreased $1.1 million, or 0.2%, over prior quarter primarily due to two fewer business days and interest expense on credit linked notes issued in December 2021 • Average Earning Assets grew $1.2 billion, or 8.5% annualized • NIM decreased 1 bps, driven by greater proportion of earning assets held in cash and loan mix migration to residential loans, partially offset by higher investment and HFS yields • Cash / avg. earning assets increased to 3.7%, compared to 2.3% in Q4 • Avg. securities + cash / avg. earnings assets increased to 17%, compared to 16% in Q4 • Loans, including Loans HFS / avg. earning assets decreased to 83%, down from 84% in Q4 Net Interest Income and Net Interest Margin Average Earning Assets & Average Yield Net Interest Income Net Interest Margin Q1 2022 Highlights Dollars in millions Dollars in billions Cash & Other Securities Loans Held for Sale Loans Average Yield 15% 4%2% $26.7 $28.2 $31.5 $36.6 $39.6 $5.3 $7.3 $9.2 $6.5 $6.5 $7.8 $7.7 $7.6 $7.7 $5.9 $1.9 $1.9 $1.3 $2.0 3.55% 3.77% 3.70% 3.57% 3.58% $39.1 $43.2 $48.4 $54.7 $55.8 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 14% 11% 71% 14% 17% 67% 17% 68%
Net Interest Income in a Rising Rate Environment 7 Highlights • WAL expects a 6.8% increase in NII under a 100bps rate shock on a static balance sheet • Nearly 57% of loans (ex-HFS) are contractually variable ($23.3 billion) • 72% of variable rate loans have rate floors • 80% of variable rate loans with rate floors are at floors, down from 94% in Q4 • Loans at floors will incrementally come off of floors with successive Federal Funds Rate increases • 84% of loans at floors will move off their floors after 100bps rise in rates Rate Increase Incremental Loan Balance Cumulative Variable Rate Loans Off Floors +25 bps $2.8 billion 25% +50 bps $2.9 billion 51% +75 bps $2.3 billion 72% +100 bps $1.4 billion 84% +150 bps $1.2 billion 95% Rate Floor Schedule NII Sensitivity – Shock Scenario, +200 bps NII Sensitivity – Shock Scenario, +100 bps 6.8% >25% 12 months Static Balance Sheet Growth Balance Sheet 15.4% >40% 12 months Static Balance Sheet Growth Balance Sheet
Expenses and Efficiency1 8 • Efficiency ratio1 increased 230 bps to 44.1% compared to the prior quarter and increased 500 bps from the same period last year • Higher efficiency ratio1 was driven by the modest decline in non interest income and a marginal increase in seasonal salary and employee benefit costs, which were partially offset by lower other expenses Non-Interest Expenses and Efficiency Ratio Dollars in millions $135.0 $244.8 $233.8 $237.8 $248.6 39.1% 47.5% 42.0% 41.8% 44.1% Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Non-Interest Expenses Efficiency Ratio Q1 2022 Highlights 1) Refer to slide 2 for further discussion of Non-GAAP financial measures.
Pre-Provision Net Revenue1, Net Income, and ROA 9 • PPNR1 decreased $16.0 million from the prior quarter and increased $105.2 million, or 52.1%, from the same period last year • PPNR ROA1 decreased 13 bps from the prior quarter and increased 7 bps from the same period last year as balance sheet growth outpaced PPNR • ROA decreased 5 bps from the prior quarter and 29 bps from the same period last year PPNR, Net Income & ROA Dollars in millions $202.0 $261.7 $314.7 $323.2 $307.2 $192.5 $223.8 $236.9 $246.0 $240.1 2.03% 2.18% 2.43% 2.23% 2.10% 1.93% 1.86% 1.83% 1.69% 1.64% Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 PPNR Net Income PPNR ROA ROA Q1 2022 Highlights 1) Refer to slide 2 for further discussion of Non-GAAP financial measures.
Loans increased $2.0 billion, or 21.2% annualized and $12.4 billion, or 43.2% over prior year Deposits increased $4.5 billion, or 38.7% annualized and $13.8 billion, or 35.9% over prior year Borrowings decreased $672 million over prior quarter from a $675 million reduction in overnight borrowings Shareholders’ Equity increased $49 million as a function of net income and common stock issuances, offset by dividends and losses on AFS securities recorded in OCI Tangible Book Value/Share1 decreased $0.71, over prior quarter and increased $4.11, or 12.4%, over prior year Consolidated Balance Sheet 10 1 2 3 Q1-22 Q4-21 Q1-21 Investments & Cash $10,879 $8,057 $13,235 Loans, HFS 4,762 5,635 - Loans HFI, net 41,119 39,075 28,711 Allowance for Loan Losses (258) (253) (247) Mortgage Servicing Rights 950 698 - Goodwill and Intangibles 698 635 298 Other Assets 2,426 2,136 1,400 Total Assets $60,576 $55,983 $43,397 Deposits $52,160 $47,612 $38,393 Borrowings 1,726 2,398 $565 Other Liabilities 1,678 1,010 $726 Total Liabilities $55,564 $51,020 $39,684 Shareholders’ Equity $5,012 $4,963 $3,713 Total Liabilities and Equity $60,576 $55,983 $43,397 Tangible Book Value Per Common Share1 $37.13 $37.84 $33.02 1 2 5 Dollars in millions Q1 2022 Highlights 1) Refer to slide 2 for further discussion of Non-GAAP financial measures. 3 4 5 4
Five Quarter Loan Growth and Composition 11 $12.4 Billion Year-Over-Year Growth Quarter-over-quarter loan growth of $2.0 billion driven by (in millions): Residential & Consumer $1,994 CRE, Non-OO 323 Construction & Land 255 Offset by decrease in: C&I (436) CRE, OO (93) Total $2,043 Year-over-year loan growth of $12.4 billion driven by (in millions): Residential & Consumer $8,186 C&I 2,791 CRE, Non-OO 1,168 Construction & Land 510 Offset by decrease in: CRE, OO (247) Total $12,408 $15.1 $14.3 $16.5 $18.3 $17.9 $2.0 $2.0 $2.0 $1.9 $1.8 $5.7 $5.7 $5.9 $6.5 $6.8 $2.8 $2.9 $2.9 $3.0 $3.3 $3.1 $5.1 $7.5 $9.3 $11.3 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Residential & Consumer Construction & Land CRE, Non-Owner Occupied CRE, Owner Occupied Commercial & Industrial Dollars in billions, unless otherwise indicated Total Loans, HFI $28.7 $30.0 $34.8 $39.1 $41.1 Qtr. Change +$1.6 +$1.3 +$4.8 +$4.3 +$2.0 10.9% 9.6% 19.8% 7.2% 52.5% 43.4% 4.4% 16.7% 8.0% 27.5% Highlights 23.9% 7.7% 16.7% 4.9% 46.8% 1 PPP Payoffs $(228) Warehouse Lending (640) Other NBLs 223 Regional Banking 209 Total C&I Change $(436) Drivers of C&I Change (in millions): 1
$17.5 $20.1 $21.1 $21.4 $23.5 $3.9 $4.2 $5.0 $6.9 $8.3 $15.3 $15.8 $17.4 $17.3 $18.5 $1.7 $1.8 $1.8 $2.0 $1.8 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 CDs Savings and MMDA Interest Bearing DDA Non-Interest Bearing DDA Five Quarter Deposit Growth and Composition 12 $13.8 Billion Year-Over-Year Growth Quarter-over-quarter deposit growth of $4.5 billion driven by (in millions): Non-Interest Bearing DDA $2,167 Interest-Bearing DDA 1,344 Savings and MMDA 1,274 Offset by decrease in: CD (238) Total $4,547 Year-over-year deposit growth of $13.8 billion driven by (in millions): Non-Interest Bearing DDA $5,977 Interest-Bearing DDA 4,375 Savings and MMDA 3,277 CDs 137 Total $13,766 Dollars in billions, unless otherwise indicated Total Deposits $38.4 $41.9 $45.3 $47.6 $52.1 Qtr. Change +$6.5 +$3.5 +$3.4 +$2.3 +$4.5 4.4% 39.8% 10.1% 45.7% 45.1% 15.8% 35.6% 3.5% Highlights 4.3% 36.3% 14.5% 44.9%
$474 $405 $364 $331 $350 1.65% 1.35% 1.05% 0.85% 0.85% Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 $4 $4 $12 $12 $12 $114 $96 $78 $72 $91 $163 $138 $175 $216 $262 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Asset Quality 13 • Total Classified Assets of $365 million (60 bps to Total Assets) increased $64 million in Q1 • Classified Assets increased due to temporary impact of Omicron variant • Non-Performing Loans + OREO of $103 million (17 bps to Total Assets) increased by $19 million in Q1 • Borrowers remain stable, liquid and supported • Special Mention loans of $350 million (85 bps to Funded Loans) remain flat as percentage to Funded Loans • Over last 5+ years, less than 1% of Special Mention loans have migrated to loss Special Mention Loans Dollars in millions Classified Assets Special Mention Loans Asset Quality Ratios OREO Non-Performing Loans Classified Accruing Assets $281 $238 $265 $301 SM to Funded Loans 0.65% 0.49% 0.50% 0.54% 0.60% 0.27% 0.20% 0.17% 0.15% 0.17% Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Classified Assets to Total Assets Non-Performing Loans + OREO to Total Assets Q1 2022 Highlights $365
$2.1 $2.3 $3.3 $3.9 $2.6 ($0.7) ($2.2) ($0.3) ($2.5) ($2.4) $247 $233 $247 $253 $258 $33 $31 $32 $37 $43$9 $6 $5 $5 $3 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Credit Losses and ACL Ratios 14 • Provision expense of $9.0 million, driven by strong loan growth • Total Loan ACL / Funded Loans decreased 1 bps to 0.73% in Q1 as a result of continued loan growth in low loss segments • Total Loan ACL4 / Funded Loans less loans covered by credit linked notes is 0.84% • Net Charge-Offs of $0.2 million, approximately 0 bps, compared to $1.4 million, 2 bps, in Q4 Dollars in millions Allowance for Credit Losses Gross Charge-offs and Recoveries Loan ACL Adequacy Ratios2 Total Loan ACL/Funded Loans Less Covered CLN Loans Total Loan ACL/Funded Loans3 Allowance for Loan & Lease Losses Unfunded Loan Commits.1 HTM Securities Gross Charge Offs Recoveries Q1 2022 Highlights 1) Included as a component of other liabilities on the balance sheet. 2) Total Loan ACL includes allowance for unfunded commitments. 3) Ratio includes an allowance for credit losses of $9.5 million as of March 31, 2022 related to an $5.4 billion pool of loans covered under 2 separate credit linked notes. 4) This is a non-GAAP ratio, refer to slide 2 for further discussion of Non-GAAP financial measures. Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 0.97% 0.88% 0.80% 0.74% 0.73% 0.93% 0.85% 0.89% 0.84% Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 0.97%
Capital Accumulation 15 Regulatory Capital Levels • Exceed “well-capitalized” levels and are stable after the initial impact of the AmeriHome transaction • CET1 at 9.0% Tangible Common Equity / Tangible Assets1 • TCE / TA decreased 600 bps from the prior quarter to 6.7% due to asset growth and AOCI loss impact Capital Actions • Issued $108 million of common stock (1.3 million shares) under ATM program Robust Common Capital Levels Regulatory Capital 10.3% 9.2% 8.7% 9.1% 9.0% 7.9% 7.1% 6.9% 7.3% 6.7% Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 CET1 Ratio TCE/TA1 Q1 2022 Highlights 1) Refer to slide 2 for further discussion of Non-GAAP financial measures Total RBC RatioTier 1 RatioLeverage Ratio 8.8% 7.3% 7.9% 7.8% 8.0% 10.6% 9.4% 9.6% 9.9% 9.8% 12.6% 12.8% 12.6% 12.3% 12.0% Q1-21 Q2-21 Q3-21 Q4-21 Q1-22
Tangible Book Value Growth 16 Tangible Book Value per Share1 • TBVPS decreased $0.71 to $37.13 from prior quarter • Increased 12.4% year-over-year • Decreased 1.9% quarter-over-quarter, non-annualized • 18.6% CAGR since year end 2016 • TBVPS has increased 2.5x that of peers over the last 5 years • Quarterly common stock cash dividend of $0.35 per share Long-Term Growth in TBV per Share1 Highlights 1) Refer to slide 2 for further discussion of Non-GAAP financial measures 2) MRQ is Q1-22 for WAL and Q4-21 for WAL Peers Note: Peers consist of 29 major exchange traded US banks with total assets between $25B and $150B as of December 31, 2021, excluding target banks of pending acquisitions; S&P Global Market Intelligence. 2016 2017 2018 2019 2020 2021 MRQ WAL WAL with Dividends Added Back Peer Avg Peer Avg with Dividends Added Back 2 165% 145% 58% 70%
Management Outlook Balance Sheet Growth Net Interest Income Pre-Provision Net Revenue Capital and Liquidity 17
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