Western Alliance Bancorporation (WAL) Earnings Call Transcript & Summary

Please welcome, Miles Pondelik.

Good morning, everyone. I'm Miles Pondelik, Head of Investor Relations and Corporate Strategy. Welcome to Western Alliance Bank Corporation's Inaugural Investor Day Conference. As you'll see today, Western Alliance has built a high-performing national bank through disciplined execution, purposeful diversification and continuous innovation. That combination has driven durable earnings and returns, and we believe positions us to continue to create long-term shareholder value. Please note that today's presentation is available to download and via webcast through the company's website at www.westernalliancebankcorporation.com. In addition to Ken Vecchione, our President and Chief Executive Officer, and Vishal Idnani, Chief Financial Officer, we have a number of executive officers and senior leaders here today to talk to you about our company. Throughout the presentation, we have 2, 10-minute Q&A sessions with specific business leaders as well as a 30-minute session at the end of the day, with senior leadership, we hope to use that time to ask relevant questions about the business and about their areas of expertise. Now the fun part. Before Ken takes the stage, please note that today's presentation contains forward-looking statements, which are subject to risks and uncertainties and assumptions, except as required by law, the company does not undertake any obligation to update any forward-looking statements. For a more complete discussion of the risks and certainties that could cause actual results to differ materially from any forward-looking statement, please refer to the company's SEC filings, including the Form 8-K filed this morning, which are available on the company's website. Now please join me in welcoming Ken Vecchione to kick off Western Alliance's 2026 Investor Day.

Well, good morning, everyone. First, let me say that during all our practice sessions, no one on the management team gave me a round of applause when I stepped up. So right now, I just feel I'm way, way ahead of the curve, and thank you all for coming. So for those that I haven't met yet, I'm Ken Vecchione. I'm President and Chief Executive Officer of Western Alliance Bank, and I've served in that capacity since 2018. Today is an opportunity to meet more of our executive and business leadership team and to understand what really makes our bank tick. And what drives our superior growth and financial returns we report quarter after quarter. Our theme for the day is where "diversification meets innovation". And we will connect that theme directly to our strategy, our operating model and our performance. You'll hear today from the leaders who run our major businesses and functions, including our Chief Banking Officer, Chief Risk and Chief Credit Officer, Chief Information Officer and Chief Financial Officer, along with many of the other senior executives who lead our specialty verticals. By the end of today's discussion, you will have a clear understanding of how Western Alliance Bank delivers industry-leading PPNR and durable revenue growth through the launch and maturation of multiple S-curve businesses and how those businesses position us to achieve our medium-term financial targets. You will see how we continue to drive industry-leading deposit and loan growth while diversifying risk, maintaining strong credit discipline and consistently expanding return on average assets and return on tangible common equity over the coming years. We will also demonstrate how we grow the size of a high-performing regional bank organically each year without relying on acquisitions by targeting thoughtful, regional expansion driven by client growth. You will learn how we have built several industry jewels within Western Alliance and how we intentionally cross-pollinate our businesses to deepen client relationships and enhance lifetime value. In addition, we will outline how we generate capital to support balance sheet expansion while maintaining targeted CET1 ratios and continuing share repurchases as loan loss reserves continue to move higher from greater C&I loan growth. And finally, we will highlight our entrepreneurial organic growth culture, consistently delivers strong, sustainable profitability and returns and how our entire management team remains fully committed to the shared vision we are presenting today. So with all that as a preamble, let's get started. Western Alliance is a premier national commercial bank with durable earnings and superior growth. And that combination is the product of deliberate strategy and disciplined execution. As of March 31, 2026, we had $99 billion in total assets. And we serve commercial clients in all 50 states. Our results speak to the strength of our model, 15% (sic) [ 15.3% ] return on average tangible common equity, 1.12% return on average assets and 23% (sic) [ 23.1% ] year-over-year EPS growth in 2025. We have paired that profitability with efficiency and disciplined growth, including a 50% (sic) [ 50.2% ] adjusted efficiency ratio and a 9.3% loan growth for 2025. Importantly, these results are supported by a fortified balance sheet and liquidity position, including $83 billion of deposits, a 72% (sic) [ 71% ] loan-to-deposit ratio and $9 billion of total capital. The reason we believe our earnings are durable is that our diversified line of business and S-curve strategy are designed to create multiple engines of earnings growth rather than relying on any single business or external growth driver. We are on the verge of crossing $100 billion in assets and the bank has materially changed since we were founded as a Nevada focused community bank. Our evolution, especially coming out of the GFC era, reinforced a core priority that still guides us today. Diversification and bringing differentiated value to clients through sector expertise and superior client service. The headline takeaway from this slide is simple. We built this franchise through disciplined execution primarily organic growth and continuous investment in scalable capabilities that support a national commercial platform. Since 2018, my priority has been building a premier national commercial bank with the scale and operating model to keep compounding from here. We are building a bank that can grow and endure in all business conditions and economic environments and become the preeminent and only large commercial bank in the industry. Western Alliance you will learn today is where diversification meets innovation. Our nearly 30-year history reflects consistent expansion evolving from a community bank to a regional bank to a national bank demonstrating the scalability of our business model. Over the past 3 decades, we have scaled with purpose. And today, Western Alliance is the 16th largest U.S. commercial bank by assets. We did not grow for size's sake. We grew because we have a disciplined approach to existing and new business generation, and we scale where we see durable client demand and attractive risk-adjusted returns. Our scale matters because it strengthens our competitive positioning, expands the markets we can serve, improves operating leverage helps distribute technology and investment spend and support a more durable earnings profile, without compromising credit or risk management discipline. At its core, Western Alliance is a commercial bank with 75% of our loans to commercial clients competing through deep sector expertise and a relationship model focused on solving client needs. The bank is organized into 3 primary components. Our commercial bank franchise is structured similarly to many of our competitors. However, we benefit from entering these verticals later than our peers, which allows us to build the businesses deliberately. Delivering high service levels, leveraging more modern, efficient technology and having senior management take an active role in securing new business from the outset. Our second engine is deposit initiatives, which represents 37% of our deposit mix. These are technology-enabled verticals embedded directly in client workflows, including Specialty Escrow channels, HOA Banking and Consumer digital, which create growth opportunities, most banks will find difficult to replicate. Mortgage banking adds meaningful earnings diversification across rate and economic cycles through a differentiated platform, packaging and selling GSE-approved loans, a high-quality consumer residential mortgage portfolio further contributes to stability with high FICO scores and low risk, add the $8 billion in residential CLNs and you can see why our LLR, loan loss reserve, is appropriate. Together, this purposeful diversification anchored by our relationship model, drives retention, client product expansion, PPNR and reduces earnings volatility -- sorry, reduces earnings volatility, enabling Western Alliance to compound durable performance during through cycles. Western Alliance has a broad national footprint, which often surprises investors. We have intentionally built a national bank that is not reliant on any single region while remaining proud of our origins in the Southwest. The specialty loan and deposit verticals you will learn about today provide the template for our national expansion. While many competitors have pursued growth through acquisition in the Southeast, we have taken a different approach. We have organically built a strong regional franchise with approximately $8 billion in loans and $11 billion in deposits. In the Southeast and Texas, we have planted our flag and continue to grow loans and deposits by serving our commercial clients. Regional growth was not accidental. Our business lines have followed our best clients and expertise into these markets, creating beachheads where we can dedicate additional resources and continue to expand in a disciplined way. We continue to see exciting opportunities in the Southeast and Texas. The organic S-curve strategy has helped build leadership positions in high-value specialty markets, including HOA Banking, AmeriHome, Innovation Banking, Corporate Trust and Hotel Franchise Finance, along with recognized innovation in Digital Disbursements. I'd like to take a moment to focus on management leadership. Western Alliance's successful track record is a direct reflection of the management team you will meet today. Most members of our senior leadership team have long tenures at the bank and are seasoned banking veterans who have navigated multiple market disruptions, economic cycles and periods of industry and market consolidation. They are resourceful, resilient and relentless. The success and growth we have achieved is not accidental. They require driven, accomplished individuals with the energy and the discipline to consistently compound results year after year. I genuinely enjoy working with this team. They enjoy working with one another. And together, they have built a bank that is truly special and distinct. It will be my pleasure to introduce them to you today. With respect to my tenure as CEO, I, of course, serve at the pleasure of the Board. That said, I have no interest in slowing down or missing the opportunity to continue building -- continue building and organically expanding this bank. Since joining the management in 2010, my objective has been to build an institution that can endure through all cycles. Quite simply, I'm having too much fun to stop now. But at the same time, good governance requires thoughtful and disciplined succession planning. The Board reviews and discusses succession planning at every meeting and ensures our senior leaders have opportunities to continue rounding out their experience in preparation for the next steps in their careers. Our differentiated business model with complementary business lines strengthens the entire enterprise by sustaining earnings momentum across cycles. First is commercial banking, our original core competence. This is where narrow and deep client focus continues to drive powerful organic client growth. We're also continuing to create new expertise-driven specialty verticals, including specialty escrow deposit businesses and commercial lending in areas like aerospace and defense, entertainment and media and our newest, recently launched health care vertical. We grow these businesses through sector expertise and our client relationship model. Second, is AmeriHome, our correspondent mortgage platform. It provides countercyclical earnings hedged through originations and servicing. And importantly, AmeriHome also brings interconnectivity across the national mortgage ecosystem, including retail relationships that provide early refinance market access. Third, is Corporate Trust, a differentiated funding and fee platform that provides institutional trustee capabilities beyond the core bank and connects well to our lender finance platform. In just 3 years since launch, we are now the sixth largest CLO trustee in the entire country. We've built deep structured credit relationships across institutional capital markets, thanks to 3 things: an industry-leading proprietary technology platform, best-in-class client service and of course, deep expertise. The takeaway is that these platforms diversify earnings, deepen client relationships and reinforce resilience across cycles. Through the continuous efforts to innovate and provide helpful client solutions, the bank continues to diversify. Now foundational to how Western Alliance grows loans and deposits faster than our peers is our S-curve growth strategy, where we fuel enterprise performance by consistently developing new businesses that sustain an S-curve of growth. As one business matures, another gains momentum. And this is a repeatable framework we have used to launch and scale new businesses. Step one, we start by identifying established industry verticals with underserved growth potential. We assess client needs, market gaps and alignment with Western Alliance strengths and risk appetite. We pick markets where we can provide unique client value, effectively scale and defend our leading position once established. Step 2, we determine the implementation strategy. We build policies, establish underwriting frameworks and put in place the right leadership and operating model. We then leverage technology as a key enabler by identifying and deploying solutions that support client business models. Step 3 is launch. We launch at a controlled pace so we can closely monitor and refine credit quality, deposit flows and controls along the way. And step 4, once proven, we accelerate growth in a disciplined manner, all the time managing balances and profitability until the business becomes a repeatable contributor to enterprise value. This is Western Alliance's superpower that produces superior results and success. The flagship S-curve proof point at Western Alliance is HOA Banking. A market-leading deposit-rich vertical fortified by deep and a growing client base and continued innovation. The business has approximately $11 billion of deposits and leading market share, supported by sustained outperformance and growth. Despite being one of our oldest business lines, HOA deposits have grown at a 25% CAGR since 2013. And after 13 years, the HOA business has yet to see growth flatten. Now later today, we're going to spotlight this business for you. The HOA S-curve is not a one-off phenomenon. It sits inside a broader S-curve deposit strategy built on a consistent playbook. Since 2009, we've launched 7 deposit verticals, nearly one every other year, each focused on a specific line of business where we identify a clear competitive differentiator and an opportunity to establish leadership. A review of the compounded growth rates show that none of these businesses have experienced a flattening of growth. In fact, as Dale will demonstrate shortly, our newer deposit verticals, Corporate Trust, Business Escrow Services and Digital Asset banking are generating accelerating growth rates that exceed those of our existing deposit verticals while generating lower cost deposits. This accelerated growth is a key driver in bending the deposit and interest expense curve over time. Taken together, this disciplined, repeatable approach to launching differentiated deposit verticals compounds into scalable, low-cost funding that supports net interest margin, improves operating leverage and sustains strong PPNR performance. Now I want to show that the same S-curve discipline that applies on the lending side, using Resort Finance, so I want to show that the same S-curve strategy we use on the deposit side can be used on the loan side using Resort Finance, our first S-curve product launch as an example. Resort Finance is a proven specialty vertical with $1.8 billion of loans, and it demonstrates how focused specialization can produce scalable, capital-efficient returns. It also illustrates what we look for in specialty lending, -- few competitors, pricing stability, high operating leverage and minimal risk of credit losses. I want to stop here and say you're all thinking, how can there be few competitors? Well, let me tell you, there are. In resort lending, maybe 3 or 4 competitors. In innovation that we will hear about a little later on, maybe only 4 or 5 competitors. In homebuilding, national builders, there's maybe only 4 or 5 significant competitors. And those competitors or lack of competitors gives us pricing discipline and/or pricing stability along with producing great operating leverage. Since 2012, pre-provision net revenue for resort finance has compounded 14% on average, demonstrating how opportunistic diversification can produce scalable, capital-efficient returns. By the way, resort lending has never had a loss, and the group running resort lending has not had a loss in 35 years. In fact, they've never had a loss. And I'll add just one other fun fact to this business. Its direct efficiency ratio: less than 7%. Now moving to the broader lending portfolio. Our S-curve philosophy and approach are clearly on display. Few competitors develop business lines that offer the same combination of pricing stability and at times, pricing power while operating with high leverage and minimal credit losses. Mortgage banking, builder finance and the previously discussed resort lending are examples of verticals that have never experienced a loss. Most other lending verticals have incurred only modest losses. Now the exception to this is our office portfolio within institutional CRE, which Lynne Herndon, our Chief Credit Officer, will address a little later. Overall, the consistent performance of the portfolio reflects strong underwriting discipline grounded in deep industry expertise. The question we are most frequently asked is why other banks do not follow the same S-curve model. And there are several reasons for this. First, the strategy is easy to articulate. It is difficult to execute. Second, business development officers and business operators are drawn to our company because they have a direct access to senior management and are provided with the tools, the technology support and the capital allocation needed to grow their businesses. Third, we compensate very fairly, rewarding not only the business individuals drive, but also their commitment to being a strong corporate citizen who promotes cross-organizational growth. This helps explain why very few business development officers have left our company. And finally, many banks remain oriented towards an acquisition-driven growth model, believing scale is best achieved through size. At Western Alliance, our goal is not simply to get bigger, but to get better and institutions focused on acquisitions often struggle to shift to an organic growth mindset. The combination of this S-curve approach and the management capabilities have driven our industry-leading growth and long-term value creation. We consistently deliver top-tier growth with strong returns compared with peers as the positioning of the left chart highlights. And our superior tangible book value growth of 17%, approximately 3.6x peers underscores a track record of long-term shareholder value creation. Our strong tangible book value growth highlights a track record of shareholder value creation, as I said, and these results affirm our strategy that we have executed on since we began rolling out our specialized business units. From the outset, disciplined execution has been central to our approach as we pursue attractive risk-adjusted returns. While our P/E multiple has lagged our peers, our earnings generation has been consistent and resilient, even though -- even through the most challenging of periods. In our view, the intrinsic value of the enterprise exceeds the current market capitalization. Moreover, the strategies we expect to roll out and execute over the next several years have the potential to further elevate that multiple, all while maintaining a disciplined risk profile and avoiding excessive risk taking. Since 2011, Western Alliance's total shareholder return of over 1,000% okay, 1,000% has exceeded our peer median by 3.5x. This significant outperformance coincides with the expansion of the bank into numerous specialty businesses outside of our original geographic footprint. The bank's developing businesses have produced superior returns over the past 10 years, superior loan growth, superior deposit growth and asset quality performance that is equal or better than peers. Strong underwriting standards and risk management are viewed as a competitive advantage inside the company that has provided durable earnings and consistent return metrics. Starting with getting to know your client, consistent underwriting standards, active management and commercial line specialization and expertise drives asset quality performance. Our underwriting standards and diversified loan book have resulted in only 10 basis points of charge-offs over the past decade. compared to 22 basis points for peers. Over the last 5 years, our net charge-offs were only 17 basis points despite the recent fraud charge-offs as that compares to 18 basis points for peers. West Alliance is built to outperform, and the reason starts with client value. We win because we deliver what our clients value most, expertise, responsiveness and solutions that fit their business needs. We are specialists, not generalists, focused on defined high-value commercial verticals, and that specialization is hard to replicate. We are one bank with broad capabilities, offering a wide range of solutions across lending, deposits and fees, and that full platform approach deepens relationships and drives client retention and expansion. We compete on differentiated capabilities. We bring timely decision-making, senior management engagement and pair it all with technology-backed service that enhances client experience. Added together, specialization, relationship depth, disciplined execution and technology creates a durable competitive moat and the S-curve engine can scale growth without sacrificing or risking or without sacrificing underwriting or risk management discipline. Finally, the bank's management team is clearly aligned around a shared strategy and vision. There is strong accountability to our stated tactical and operating goals, evidenced by our consistent historical performance. And just as importantly, we have a genuine affinity for one another and operate as a true team. working together, succeeding together with compensation aligned across the company to the same metrics and overall business performance. We have a clear path to top quartile growth and returns, and this is not aspirational. It is driven by 6 visible, repeatable engines. First, we continue to scale proven businesses through our S-curve strategy. Second, our deposit franchise provides diversified funding that supports margin expansion through further deposit and optimization. Third, we are expanding our commercial banking platform in high-growth markets while continuing to grow fee income across the franchise. We also benefit from our mortgage banking flywheel with AmeriHome well positioned to capture volume and margins as rates decline and offers a countercyclical protection. And finally, we see meaningful operating leverage as we continue to optimize technology, drive efficiency and see loan loss reserves rise as loan composition shifts. Together, these drivers support our medium-term targets of 16% to 17% return on average tangible common equity and 1.2% to 1.3% return on average assets and an adjusted efficiency ratio of approximately 48%. These return metrics do not reflect several meaningful more recent developments. Specifically, they do not capture the implications of the Basel III notice of proposed rulemaking, right, further stock repurchase programs or the benefit of higher mortgage fee income driven by lower interest rates. We believe the current earnings power and capital flexibility of the franchise should support this guidance. The business strategies you'll hear through the rest of the day will lay out exactly how we plan to achieve these financial results. Although Western Alliance is a high-quality franchise with a compelling valuation that consistently generates industry-leading PPNR and tangible book value per share, along with a fortified balance sheet and a clear path to generating upper teens return on average tangible common equity in the future. This strongly supports our viewpoint that the intrinsic value of the enterprise exceeds the current market capitalization. With that, I'll welcome the first of our leaders of our firm to the stage to give you a look behind the curtain at what I believe what makes Western Alliance one of the best banks in the country. So I'm going to ask Dale Gibbons to come on up, and thank you all very much, and thank you again for being here.

Please welcome, Dale Gibbons.

Good morning. Great to see you all. I'm Dale Gibbons, and I started my banking career as a part-time teller while I was still in school when there were 4x as many banks as there are today. I was CFO at Western Alliance for 20 years, then I elected to move to promote our innovative deposit businesses. The expertise of our teams, coupled with our technological agility have made us winners in these verticals. They give us stable low-cost funding, which I have learned from banking's decades-long consolidation is the most important foundational element of a strong financial institution franchise. Today, I'll walk through our deposit initiatives business, a core performance engine for the bank that drives improved funding mix and lower costs. This strengthens PPNR while also establishing repeatable compounding fee income streams that will support expanding ROA and ROE. At its foundation, the business is about building high-quality deposit franchises through a combination of deep client relationships and purpose-built solutions that embed us directly into our clients operating environments. For these businesses, we zero in on creating fulsome multifaceted ties in each vertical that becomes its own ecosystem. There are 4 key messages I'd like to highlight. First, integrated relationships. Rather than focusing on building a moat around one product, it's the integrated solution that truly becomes embedded. This produces deeper client relationships and value-added services that drive stickier, more durable deposits over time. Next, intentional design. This is how we enable the integration. Technology is really the key to our success with proprietary solutions for clients that often streamline the operations of our clients' clients. Third, repeatable execution. We've done this a dozen times and have a deliberate repeatable process for identifying and developing winning solutions. Ken mentioned this in his discussion of the S-curves. This is disciplined growth. We continually debate new ideas and queue those most actionable for staggered implementation. This has given our lower-cost deposit growth channels -- perpetual adolescence as one channel approaches the top of its growth curve, another is just getting started on its growth spurt. And finally, scalable, efficient expansion. This model delivers a full solution for clients while also enabling cost-efficient scalability. In some cases, it broadens our clients' reach with white-labeled solutions that they market to their clients. Consistently, we are expanding our market share in these endeavors that are designed to compound from inception. Deposit Initiatives represent a major growth driver of our overall deposit base. The business contributes over half of bank-wide deposit growth while representing 37% of the bank's total deposits, all at a cost under 2%. But importantly, as Ken mentioned, this is not about growth for growth's sake. These initiatives are central to the bank's strategy of improving our funding mix as these lower-cost sectors are growing 3x as fast as the bank overall. And this is where our S-curve model becomes critical. It allows us to build and scale new verticals in a way that structurally reduces reliance on more traditional and often more expensive sources of liquidity. In addition, these businesses are not purely balance sheet driven. They are increasingly contributing to fee income with strong momentum in areas like Juris Banking's claims settlement service. More broadly, they strengthen the diversity and resilience of our overall funding base by reducing reliance on ECR-heavy mortgage banking deposits. We've built leading positions across a set of high-value specialized deposit verticals. Each of these businesses is intentionally designed to be difficult to replicate with low balance volatility largely because we are deeply ingrained in our clients' workflows. Across the portfolio, we operate multiple distinct verticals with intentionally limited overlap, which gives us several independent growth channels rather than relying on a single strategy. While most of these initiatives are business focused, we do have a consumer digital offering that also plays an important role. It serves as a liquidity lever from fluctuations in banking activity while evolving from a third-party service model into a broader in-house product and service platform. Our oldest and largest deposit vertical is HOA Banking, which had a seasonally strong Q1 deposit growth of over 30% annualized. Juris Banking grew over 45% on an annual basis in the first quarter. And while its funding cost is presently higher than others, the business also contributes the highest proportion of fee income stemming from its digital disbursements business. Digital Assets grew more slowly in Q1 at a 13% annualized rate as we have been focused on enhancing the functionality of our 24/7 cash settlement service. As this project was completed in April, we now look to reaccelerate its growth trajectory. This business is our fastest-growing initiative from inception. Corporate trust deposits were also up over 30% last quarter to $1.5 billion, which excludes another $400 million that is carried off balance sheet. Business escrow deposits were flat in Q1 at $1.2 billion, but are expected to resume growth again this quarter. This vertical has the lowest cost of funds of all of these initiatives. Consumer digital balances were essentially flat in the first quarter, consistent with its role as a scalable source of market rate liquidity. Planned feature and functionality enhancements in 2027 are expected to ignite an S-curve growth trajectory for this line. One of the most important aspects of this model is the consistency of our growth. We're seeing clear compounding expansion across verticals with each new business adding to the overall S-curve of the platform. Not surprisingly, the growth trend of newer verticals generally have higher slopes than more established channels. But what's particularly notable is that newer lines are scaling faster than earlier ones did at the same point in their life cycle. For example, Digital Assets and Corporate Trust have demonstrated significantly higher early-stage expansion rates. At the same time, our more mature HOA and Juris Banking lines continue to deliver strong, sustained growth. We have a proven ability to identify, recruit, launch, test and scale new businesses with strong performance. Turning to 2 of our more scaled businesses, Business Escrow and Corporate Trust, our strong franchises are -- that combine durable deposit balances and compounding fee income avenues with relatively -- with relationship-driven growth and meaningful cross-sell opportunities. The more complex the transaction, the more valuable our role. In Business Escrow, we serve as a critical infrastructure partner for such transactions, having supported nearly 2,000 mergers and acquisitions through earnout, rep and warranty and other escrow structures as they sell to larger corporations. Our services are core to the deal process as we work closely with strategic buyers and private equity sponsors from solicitation through closing and beyond. Our success includes supporting transactions of all the industry leaders such as OpenAI, Boston Scientific and Instacart as well as many other public and private companies. Deposits per transaction have grown significantly in the past year, reflecting a shift toward higher value and more complex deals, which in turn support cost-efficient scaling and PPNR acceleration. However, our role extends well beyond holding funds. We provide tailored paying agent solutions, escrow structuring, post-close administration, driving repeat engagements and long-term client relationships. These services support a growing fee income model driven by transaction-based economics and the breadth of services delivered around each deal. As deal complexity increases, these engagements create natural cross-sell opportunities and deepen client relationships over time. This same relationship-centric model carries through to our Corporate Trust operation. Our innovative tech-first platform is purpose-built to support complex structured products. Corporate Trust has delivered sustained growth, scaling to $1.5 billion in deposits alongside fee income expansion driven by continuous innovation, repeat mandates and deeper client penetration. As client platforms grow, our Corporate Trust operating model drives long-tenured relationships and repeat engagements resulting in durable activity linked deposits over time. That said, what truly differentiates Corporate Trust is its dual role alongside Lender Finance, serving not only as a revenue and deposit engine, but also as a structural risk management mitigant embedded directly within the same transaction. You'll hear from our Corporate Trust and Lender Finance leaders on this business later today. Looking ahead, we see additional growth runway as we expand the platform into municipal trust and it's another impetus for growth with more to follow in the coming year. Importantly, across both businesses, growth is rooted in trust with long-standing client relationships that business leaders often built over decades and bring with them from their prior work experience. Our Digital Asset platform is an example of how we apply S-curve models to emerging complex markets. We believe that the convergence of value trusted fiat currencies and the instantaneous transaction speeds of blockchain provide a compelling case for the digital asset space and stablecoins in particular. Today, our Digital Asset business holds approximately $2 billion in deposits across more than 130 clients with an average balance of around $15 million, reflecting a clear institutional focus. Client deposits are diversified across institutional use cases, including stablecoin reserves, operating funds and company savings balances, supporting the deposit durability within the vertical itself and reflecting how deeply ingrained we are in our client workflows. Our approach here is deliberate and iterative. We test, learn and validate demand before scaling. But what truly sets us apart is that we have led with regulatory readiness as a core design principle from the outset, building a platform that meets institutional and supervisory expectations while remaining agile in a moving market, a balance that has proven difficult for many peers and has been a meaningful differentiator for us. At the same time, as regulatory clarity improves, institutional activity is increasingly gravitated toward bank partners with established compliant infrastructure, positioning the digital asset sector for acceleration. And consistent with our broader deposit initiatives, we maintain clear boundaries, ensuring no single business becomes a predominant source of liquidity nor will we hold digital assets on our balance sheet. We're not chasing growth at the expense of risk. This brings us to Juris Banking, our specialized settlement payments and escrow platform for the legal industry, supporting the secure administration and distribution of funds across complex litigation matters, mass tort and bankruptcy. Juris Banking is a prime example of a franchise generating both strong deposit growth and scaled fee income, creating a more diversified and resilient earnings stream. This growth is driven by our strategic partnerships and a leading digital payments platform whose AI-enhanced was recognized anti-fraud capabilities by American Banker's Innovation of the Year for 2025 in the cybersecurity and fraud category. These capabilities enable us to scale efficiently across complex settlement and disbursement use cases, creating infrastructure that is difficult to replicate. We have become the leading distributor of digital settlement payments, processing 31 million in 2025, 6x the number we did just 4 years prior. Across payment rails, we distribute funds via PayPal and Venmo while also using traditional bank systems. And we are the nation's leading business-to-consumer funds distributor on the Zelle network. Reinforcing our scale and rooted position in our client work streams. Building on this foundation, we recently launched NewLaw Banking, a new S-curve extension of the still climbing Juris Banking S-curve, expanding our offering into comprehensive end-to-end banking solution, purpose-built for law firms. This evolution builds upon our settlements foundation by extending into working capital, credit and treasury management products, strengthening existing relationships and fostering new ones while driving incremental fee income and lower deposit costs. Importantly, the economics of Juris and NewLaw are complementary. Juris carries higher deposit costs and generates outsized fee income, while NewLaw introduces a source of lower funding but with more standard fee income potential. Together, these capabilities illustrate our core deposit initiatives model in action, purpose-built technology-enabled solutions that integrate deeply into our client workflows and scale through disciplined execution. We don't just serve clients, we become part of how they operate. Stepping back, Juris reinforces how this model creates long-term value through sticky deposits, diversified funding sources and durable fee income as we stack S-curves. We scale revenue without scaling cost. One of the clearest examples of this model in action, as Ken mentioned, is our largest and most seasoned deposit initiative, Homeowners Association Banking. HOA Banking exemplifies our Solve Today, Succeed Tomorrow approach by pairing near-term execution with long-term scalability. To provide an overview of our HOA Banking business, I'm pleased to introduce Craig Huntington. Craig joined us with the inception of the HOA business from the then-largest depository for HOAs. He brought in our first account and now leads the division that has grown to be the industry leader.

Awesome. Thank you, Dale. Like you, I have a real passion for our deposit franchises. Western Alliance Bank holds a clear leadership position in the large and growing HOA Banking market, a market that adds 3,000 to 4,000 potential association clients annually. We've had 34 consecutive quarters of deposit growth. And based on my experience and knowledge of competitors in the space, we are the largest HOA deposit-focused banking program in the United States. I'll say that again, 34 consecutive quarters of deposit growth, largest in the space. Over the last decade, we've made this a true technology business through constant innovation, and we are deeply integrated into the managed companies servicing HOAs. Companies choose us because we make it easier for them to service their clients as an integrated part of the HOA Banking ecosystem. We support our partners through the complete HOA financial experience from collecting and processing millions of HOA assessments each month to providing funding for new roofs or more exciting projects like playgrounds and clubhouses that bring communities together. The business is also attractive because of its inherent stickiness. This stickiness results in a very low attrition rate driven by 3 key relationships within the ecosystem. First, we maintain a deep relationship with the management company. Second, the management company delivers our advanced deposit and treasury management services directly to the association, establishing an additional banking relationship at the HOA level. And third, the association's assessment collection process typically connects us directly to the homeowner through our various accounts receivable payment channels. Unwinding our banking relationship impacts everyone in this ecosystem, the management company, the association and the homeowner. No one wants to unwind these relationships. Even as Western Alliance's original S-curve, HOA Banking remains early in its journey with significant runway ahead as deposits, clients and penetration continue to grow. We think of ourselves as being in the right business in the right markets with the right clients. According to the Community Association Institute, in 2025, 66% of homes built and 81% of homes sold were in community associations. Many municipalities also now encourage and in some circumstances, even require that new homes be built in community associations. So we'll continue to see outpaced market growth. Migration across the U.S. has also driven significant growth in the South and Southeast housing markets, where states like Texas and Florida are outpacing the rest of the country in HOA growth. As you can see by the map, we are already positioned to take advantage of these markets. This is further evidenced by 73% of HOA Banking deposits being concentrated across markets with leading association growth. We also attract the right clients from large self-managed HOAs to startups building their business to the largest and most sophisticated public and privately held management companies. These clients grow and expand. And as I often say, smart management companies choose Western Alliance Bank and smart managed companies outpace the growth of the competition. We are not just growing our business alone, our customers are also growing our business. What emerges is multiple reinforcing S-curves and a true powerful growth engine. We win when we take market share from competitors. We win again when our smart management company partners onboard new associations, and we win yet again when our management company partners acquire other management companies. This growth engine and reinforcing S-curves can be seen in the number of individual HOAs that we bank, which has grown at a 12% CAGR since 2021. At the same time, and adding a fourth S-curve, we continue to deepen wallet penetration within our installed base. The average deposit per HOA grows at a 6% CAGR since '21. Together, these dynamics create a compounding growth story that demonstrates clear organic runway without needing a new playbook. Our purpose-built technology is also embedded in the clients' workflow. Our platform integrates into the managed company's electronic recordkeeping system, making accounts receivable -- excuse me, making accounts receivable, reconciliation and other banking services smarter, faster and easier. These integrations and payment systems increase switching costs and improve retention as the platform extends the banking and payment ecosystem directly into the managed company's office. It's important to think of this as a true platform business, not just a deposit book. I love this business and could spend the entire morning talking about how great our HOA Banking program is, but it's probably best that you hear it from one of our customers. [Presentation]

We'll now open the floor for a 5 to 10-minute Q&A session on these initiatives if you have any questions. I think we have somebody with a microphone.

Ryan Kenny with Morgan Stanley. When you think about the deposit initiatives, are there any segments or markets geographically where the competition is getting more intense? And how are you addressing higher competition?

Well, there are. I mean, I think it depends on areas that are maybe in the news a little bit where they have some really tangible types of directions, like HOA, would be one of those. Our digital assets is kind of all over the place. So there are people getting into that space. I'm sure you've heard about that. Others, though, are maybe a little bit sleepier in terms of what we've done in Corporate Trust and Business Escrow, those aren't new concepts, but we brought in team members that understand exactly what the clients want. And they go to them, when they join us, we give them basically the ability to underwrite what they believe needs to be done from a technological perspective. And then they call them and say, "You know what, all those things have frustrated you about ABC institution. I've got them taken care of here." And that's really been a driver for something that is otherwise, there's -- those businesses have been around for some period of time.

And think about your footprint, you're moving from a regional bank to more national. Are there any areas nationally where you need more density in your footprint?

Well, we could always use more density. I think that where we are, we're into where the places are where people are moving to. We talked about the Southeast and Texas, also even in the West. And so, yes, I mean, I think we're going to the -- maybe the better places first. But yes, but sure, there's -- geez, it's a big country. There's a lot of opportunity.

Yes. No, I don't think we have a good density in the Southeast and the HOA space, particularly.

Chris McGratty from KBW. Dale, if I look at Slide 29, the HOA business is -- you've grown to be $11 billion. Which of the incubators, if you will, has the greatest potential to be where HOA is in the next 5 years?

Gosh, we've got some people here that manage these, and they would probably argue about which one they can be with. And without naming a name, the manager of our Corporate Trust operation had a $40 billion deposit portfolio. And obviously, that institution or -- actually, it's Wells Fargo is larger. And so there are some elements there. But we see trajectories that I think will take all of these to 8 figures that -- the one that Craig Lee manages is already.

Tony Elian, JPMorgan. Dale, on the deposit initiatives, I think it was a few quarters ago, you talked about how the lower cost sources should help improve the mix of ECRs away from the higher cost into lower cost. Can you give us an update on this effort and when we on the outside can start to see progress on the funding mix being improved?

Yes. So it's interesting. The mortgage banking operation is our largest kind of deposit sector, and it's really given us some good growth in terms of the liabilities that we've been able to deploy in terms of earning assets. That said, I think -- I want a more distributed model. I think one of the strong points about Western Alliance is, it's like, it's got different things. It's not reliant upon one particular category, one particular situation or whatever cycle that we can all -- we can keep going and have that diversification, both in funding as well as in assets. And so we're not going to be necessarily reducing the dollar balances within mortgage warehouse, but they will fall as a percentage of the balance sheet overall as we grow as that becomes a little more flat. We've talked about that even in this quarter, we expect to see some of those balances leave because of things we're doing on pricing and ECRs in particular. So -- and yet, those that we're talking about here today and the deposit initiatives have blue sky in front of them. They have resources and technology to be able to execute so that we can take advantage of that blue sky. So I think you will see it. It is a multiyear type of process, but it begins now.

Timur Braziler with UBS. Lots of conversation right now on just deposit costs in a higher for longer environment. And I'm just wondering with some of your particularly lower cost categories, like escrow, like HOA, what's the incremental risk from things like AI, kind of smart repricing, those types of dynamics? Is there an inherently higher risk, maybe, in some of those lower cost categories from costs creeping higher, maybe at an accelerated rate?

Well, we're employing AI to make these better, as I alluded to one regarding kind of the cybersecurity situation. So we think that we're ahead of that curve in terms of what that can drive. But again, it is about these technological solutions. We stay on top of them with dedicated teams for each of these verticals of IT resources. So it's like, oh, so and so is doing this, does that make sense? Is that something we should do? Can we do it better?

Yes. I think in the HOA space, I would add that I think AI could be a tailwind for us in terms of our -- our customers are going to be looking for banks that have the expertise to support them in more ways with the advent of AI or the increased usage of AI. So if anything, it could drive additional deposits to us.

David Smith, Truist Securities. Dale, you mentioned some tech innovations on the retail digital deposits potentially getting an S-curve there next year. Given your growth aspirations for the other deposit initiatives, like, is that something that's really needed? Or do you have outsized plans from a loan growth side where you would need that extra funding? Could you just expand on that a little bit, please?

Yes. I'm not particularly interested in expanding a vertical into something that provides market rate liquidity per se. I think it's a good channel to be able to have. It can be a valve that we can pull in at various times. And if you pay a market rate there, I mean, the balances are averaged about $45,000, money just comes. And it's really impervious to other things that might disturb, say, deposit flows for an institution like the news cycle or something like that. So I think that's a good channel to do. We have an idea that we're probably not going to discuss today, but we'll get into next year, in terms of how I believe we can take that deposit vertical as we're bringing it in-house, we've looked at what do all these other players have in terms of feature functionality on their initiative. How can we beat that? I think we can beat it substantially. And I think we have a method to be able to find clients, potential clients nationwide to be able to deliver that. So that's something on the come. But I expect that, that will be a lower cost initiative over time. But we'll probably always have kind of a higher cost element to it. I want to differentiate it such that they don't necessarily kind of compete or cannibalize each other.

Janet Lee from TD Cowen. Where does digital asset banking deposit stands in terms of your strategic deposit priority? And could you just give us more color around what kind of platform this is and what kind of institutional clients are using this for? Whether it's the mix or how it's just being used? Is there like a separate platform?

There is. It's basically APIs. And you would -- household names, the largest exchanges in the country, the largest stablecoin issuers in the country. We have a relationship here. And we provide -- maybe the key element is we provide 24/7 processing for them because, as you know, exchanges operate 24/7. And so they can come to us within our walled garden and say, "You know what, I'm somebody who wants to buy X dollars of Solana." That's going to come in. It's going to come in and they're going to want to be able to pay for that, say, with a stablecoin. And that can happen midnight on Saturday. That's a key feature that they -- these institutions need. I personally believe that really what's going to happen is that it's so compelling in terms of the audit capabilities, the speed, the data tracking you can do with stablecoins in particular, where you're not depending -- well, what's Bitcoin going to be worth? It really doesn't matter. We know what the dollar is, everyone uses a dollar, and we're going to be able to support that such that you can make these transactions. I know there's other ways to do this in terms of -- but like Swift, Swift takes like 3 days to send money to somebody in South Africa. I can do this using USDC in 12 seconds.

All right. Thank you, everyone. Time is up for this. We're going to take an abbreviated break now and then be back, I think, in about 5 minutes or so to kick off the next section. [Break]

Good morning, everyone. I'm Tim Bruckner, Chief Banking Officer for Commercial Banking. I've been with Western Alliance for over 10 years now. Prior to assuming the President role, I was the Chief Credit Officer for the bank. I came to Western Alliance from much larger banks to be part of this great story. I was attracted by the dynamic management team and the entrepreneurial spirit of the bank. During this time, we've grown the bank from $17 billion when I joined to nearly $100 billion today. 2026, what a year. We've had a lot of changing landscape in banking and a lot of changing landscape in the economy. Now let's talk a little bit about how we're winning in this market and how we'll continue to win and build share as we move forward. In Commercial Banking, we're building on the strong operational, strategic and risk foundation of the very successful National Scope business segments that you've heard about today. In these segments, we address very specific client needs and with expert products, technology and people, we create a protective moat around the clients that we serve. We're leading our peers in one of the most competitive sectors and the most competitive economy in the world, the very bedrock of capitalism. As you know, our industry is exacting and unforgiving. If all you have is price, the market doesn't give you any lasting advantage. Our strategy is built on adding value, integrating with critical business processes and achieving a defensible yet differentiated high-value experience in very specific segments. This is how we time and time again achieve and sustain above peer performance, replicating our business model as we add new segments. Execution of this approach is what results in the S-curve performance that Ken and our team has so passionately spoken about today. As we move through this presentation, I'd like to anchor on 4 key messages. This is a relationship model. First and foremost, strategic differentiation is at the core of this model. And as we differentiate, we go narrow and deep with our customers, not broad and generic. That's how we protect these returns. That's how we create durability in the relationship. None of this happens third without technology and process. The technology, product and process enhancements are now fully enabling cross-sell across the franchise. We combine these into a solutions-based approach. This allows us to meet our returns through structure and solving problems, not just chasing volume. These elements are foundational in driving the long-term differentiation, defending from competition, maximizing value for our shareholders and building this bank that we've come to love. Commercial Banking is the single largest component of our banking franchise, and we're on a proven path to scale. This represents the majority of our earning assets and a growing share of our deposits. Scale alone isn't the point. It's really how we grow that matters. We're scaling through specialization, disciplined credit and a model designed to monetize the full relationship, not just loans. We do this right as we demonstrated, our margins will expand as they have, and our customer relationships will become deeper. This sets us apart from our peers who often prioritize growth for growth's sake. I want to talk through our story. This captures both our journey as well as our path forward. Over the last several years, we've intentionally rebuilt commercial banking. We've rebuilt the engine, investing heavily in what matters most. We've upgraded technology, strengthened our treasury management capabilities, and we've significantly top-graded our talent, expanding all the while into specialty industries where we can retain competitive advantage and margin. We expand geographically using our specialty businesses. This way, when we arrive in new markets, we arrive as well-known experts in the industry with deep ties to key industry players. Looking ahead, the focus is very repeatable. We build a stronger funding base, go deeper in specialty verticals where relationship and capability matter. We build durable ties with our customer, expand fee income, investing all the while selectively in talent and geography. This demonstrates improved economics through deeper connection and deeper share of our clients' revenue. Three complementing business segments make up Commercial Banking: the Specialty Commercial Group, the Community Banking and our Commercial Real Estate Finance unit. Structure is not about silos. Here, each segment has a clear value proposition, matched with business process and excellent technology with accountable leadership at the head of each business that understands our framework and is accountable to achieving our common goals. This alignment allows us to be best-in-class for very different client needs while operating on a common relationship and risk framework across the bank. Community Banking anchors the franchise with over 26,000 long-standing relationships that we've gained as a bank over the last 20 years. With the changes we've made, we built a model to cross-sell through treasury management, deposit and credit products, expanding and deepening these relationships. Specialty Commercial Banking serves as the primary engine of funding strength, while representing 54% of total banking deposits and 39% of our loans, Commercial Banking is on right now one of the fastest paths for growth. Commercial Real Estate complements with strong through-cycle returns. Never before have we had an opportunity like we have right now to capitalize on the advancements in technology like we're seeing with integrated AI and our connectivity that we have through the deep AI connections that you've heard about today. This business has been a low-cost deposit engine for Western Alliance for a number of years. And through intelligent, deliberate realignment and upgrade of our processes and platforms, community banking is being repositioned into a client-focused deposit powerhouse for the entire bank. Combining local bankers with strong digital payments, treasury capabilities and industry-leading integrated customer interfaces allows us to scale revenue with customers that already know and recognize us as well as our strong value proposition. Refining our processes with deeper connectivity to technology allows us to accelerate customer acquisition and drive deposit growth. The objective is very simple: lead the relationship, solve the complex business needs, do this with integrated solutions and earn the right to be the client's primary bank. When we do that well, clients consolidate their banking relationships with us. Today, this segment provides a foundational leg to our funding platform while providing over $13 billion of the lowest cost deposits that we have in the bank. These are sticky, low cost and very broad. Specialty Banking is powered by specialized capabilities where we go narrow and deep. This is where you see the strategy that we talk about the most. We don't play at the category level in this segment. We play at the niche level. These are verticals where expertise matters, where tailored client solutions, speed and consistency are demonstrated through all cycles. Our models pair specialized bankers with credit and embedded treasury and payments, creating durable relationships that scale over time. This has allowed the collective group to demonstrate growth well above market and well above our peers. Our well-established units in this segment still maintain growth rates over 12% annually and the newer units that we'll talk about are doubling or tripling year-over-year as they build on a lower base. By focusing on delivering value to a specific segment, we demonstrate that we can deliver outsized growth, presence, client satisfaction and retention when compared to our peers. In the last 2 years, we've launched and grown Aerospace and Defense, Entertainment and Media and Food and Agriculture and our Healthcare group. Also of note in this segment is where we have this model employed, we also experienced some of the lowest risk profile. Collectively, this segment is among the lowest in the bank. Most of these segments have no loss in their history and gaming, as an example, is less than 2 basis points over a 10-year period. That's a strong indication of the intersection of specific management and dynamic leadership in the specialty units. Commercial Real Estate finance is a specialized capability set. It's not a broad commercial real estate lending platform. We focus in this segment on narrow-defined appetites, homebuilder finance, resort finance, hotel franchise finance and institutional and commercial real estate where we reduce our exposure in office. We play in spaces where structure, sponsorship and repeatability really matter. Though there's not a significant cross-sell opportunity in this segment, this is structured and disciplined credit that complements the broader commercial franchise. This offers some of the highest risk-adjusted returns across the segment, though we'll remain active in this space for the strong returns in our targeted appetites, Commercial Real Estate will actually decrease as a percentage of total loans as we continue to build our full relationship book that we've been talking about. Growing up in a rural environment, I learned early that if you're not cutting wood, you'd better be sharpening your axe. Preparation is what make speed look effortless. This represents the center of the model shift that we began to make a few years ago. As credit spreads compress, the winners will be the banks that monetize relationships through operating deposits, payment rails and fee-based services. We saw this and spent the last 3 years rebuilding our capability by rethinking our processes, upgrading our talent and significantly upgrading our platforms. We're now in the top quartile of product capability in the niche segments we've targeted. Treasury management, merchant services, cards and global markets work together to deepen relationships and improve economics, all while strengthening funding quality and diversity. We brought the right capabilities that are specific to sectors, and we've -- and this has given us the ability to attract and retain our clients. The proof is in this slide. This is a lot of work that started several years ago, and we look at it today, we've got 74% increase in ACH revenue, 42% on Positive pay. We've doubled our fee-based income in commercial banking over a 2-year period. We're on a great trajectory with a strong foundation in this space. And we're seeing it now in the numbers, and it's something that as a bank, we're very, very proud of. We talked a little bit about growth, and I appreciate the questions that we had earlier. We follow our strength into the markets that we serve. When we see the sweep from West into some of the Eastern markets, these are following our key businesses. We land in a market as well-known experts. When you're good at something, you don't need to tell everybody that you're good at it. Your track record speaks for itself, and your customers will expand your presence for you. This is what we've learned with our approach. We deliberately scale into markets where we're recognized by virtue of a market-aligned strategy in one of our specialty platforms. From there, we build out and broaden with our additional platforms. We focus on geographies where we already have density and competitive advantage. You heard about some of that in Ken's presentation today, then we leverage our presence through additional segments. None of this works as well as it works here without having dynamic industry-specific experts leading each of our businesses. I want to introduce you today to Mike Lederman, a 25-year veteran of the tech industry. He runs our Investor Defandant segment. He's been with us since the acquisition of Bridge Bank, and he's going to talk a little bit more about how we do this at the business level. Thanks, Mike.

Well, good morning, everybody. My name is Mike Lederman. I run our Innovation Banking Group. I've been with the bank, as Tim said, for over 20 years. I'm based in our San Francisco office. As you may know, lending to emerging growth innovation companies is a very specialized business. There's only a handful of banks that we regularly compete with. Many banks have tried to start innovation banking practices and have learned the hard way that it is not an easy thing to do. We've been successful in this business based on our tenure in the space and the quality of our innovation banking leadership team, which averages 25 years of industry experience. Today, I'm going to focus on how Innovation Banking has become a scaled, high-quality growth platform built to perform across cycles while delivering strong risk-adjusted returns for Western Alliance. Innovation Banking and Tech Sponsor Finance are not new businesses for us. We've been active in this market for over 2 decades. Today, the platform supports nearly 1,800 client relationships and over $5 billion in loans across the innovation economy. We lend primarily to revenue-generating businesses with strong institutional backing. Over 97% of our loan clients are backed by venture capital or private equity firms. The portfolio is well diversified across Innovation Banking, Sponsor Finance and Fund Banking and across stages, sectors and geographies. While we love the business, we also want to be mindful of the inherent risk, and thus, loan sizes are deliberately controlled with an average of $4.6 million. While credit losses do occur, our historical average loss is only 30 basis points and warrant income has historically exceeded the group's net charge-offs. The combined economics of lending, deposits, fees and equity participation enhance long-term profitability. What really differentiates this platform is full life cycle coverage combined with relationship continuity. We support companies from early growth through liquidity events, which enables us to retain the relationship as they scale. We work hand-in-hand with the Private Client group to bank the founders and the management teams of our clients. Clients benefit from a single relationship manager over their entire time with the bank, which improves transparency, underwriting quality and long-term retention. We think about the market across 4 stages: early, emerging, growth and later stage. As you can see here, most of our portfolio lies in the emerging and later stages, which helps mitigate the risks associated with this business by focusing on established and growing companies with operating and financial flexibility. Importantly, we also bank the sponsors behind these companies through our Fund Banking Group, which strengthens information flow and alignment across the ecosystem. Our Fund Banking clients utilize loan products such as capital call or subscription line facilities. This enables us to underwrite the sponsors themselves and how they do business. This continuity drives better credit outcomes and creates a defensible relationship-based franchise rather than a transactional one. Risk in this business is actively managed and not passively held. The portfolio is characterized by relatively short loan durations, frequent monitoring and regular re-underwriting. Loans naturally delever over time and exposures are reassessed as companies raise capital, adjust strategy or move through their life cycle. Our underwriting places heavy emphasis on the total addressable market, the quality of the investor syndicate, the strength of the management team, access to capital and liquidity runway. This is reviewed monthly to track ongoing performance to plan. This approach has allowed us to maintain strong credit performance through multiple economic cycles. Key topic today, of course, is AI and its impact on software companies. We do not view AI as a systemic risk to our portfolio. Most of our software exposure is low leverage, mission-critical solutions with strong institutional sponsors. In many cases, AI enhances product value and efficiency. Risk is controlled through defined maturities, covenant structures, amortization, cash flow sweeps and enterprise value analysis. Software is evolving and much of our software portfolio is AI native. Thus, AI tends to support and enhance functionality and efficiency rather than disrupt their core business model. In summary, Innovation Banking is a scaled cycle-tested growth platform with diversified exposure and disciplined underwriting. We've shown strong credit performance supported by active portfolio management. This group provides a meaningful driver of growth and attractive risk-adjusted returns for the bank. As I mentioned earlier, our strategy is to expand relationships with our clients to support their growth. Let's hear directly from Hadrian about their experience with us. [Presentation]

Please welcome, Brent Edgecumbe.

Good morning, everyone. I'm Brent Edgecumbe. Together with Jocelyn Lynch, we oversee the Lender Finance and Corporate Trust business. This is a deliberately conservative business. It's built to generate consistent returns, fee income while controlling credit risk through stress cycles. First, over the past 9 years, we've built a strong institutional relationships that drive repeat persistent deal flow. Second, we've created a differentiated middle market structure integrated with Corporate Trust. Third, our exposure is diversified and institutional with highly structured facilities that limit risk. Fourth, this is a scaled repeatable platform with proven loss performance -- proven low loss performance. And finally, this business resilience is not driven by underwriting a loan, but by the embedded structural protections. Stepping back, the structured products market is well tested through cycles. According to Moody's, in the 30-year history of CLOs, no A-rated tranche has ever experienced a loss, and our business focuses on AA and AAA attach points. Attach point is an industry term describing how much equity cushion is below you in the facility. Let me ground that in performance. In our portfolio, we've had no criticized assets in the lending book. Our borrowers, the private credit managers we lend to, are averaging just 50 basis points of loss, which compares favorably to the broader BDC space, which is currently reporting about 2.5% of default. We lend to large institutional private credit managers with over $100 billion of AUM on average. These are not emerging platforms. They're diversified institutional organizations with established processes. As well, my senior team averages more than 20 years of lending experience. We came up as credit investors first and moved into structured products deliberately. This was largely because we saw documentation weaken in parts of the broadly syndicated loan market. This background matters when we sit across private credit managers. We understand their underlying risks and where downside protection really comes from. It allows us to structure facilities that work for their funds and remain defensively positioned for the bank. And candidly, negotiating with other lenders who share a credit mindset rather than sponsors pushing for leverage leads to better outcomes. We intentionally focus on core middle market managers, those who are using modest leverage and stronger covenant packages. This has been very important in the current market where a lot of the upper middle market managers have moved into the high net worth channels, which have made up most of the redemptions that you've seen. So as a result, our portfolio has experienced very low redemption activity. In fact, across the roughly 30 managers we lend to, only 2 received redemption requests and both of those remained well within liquidity and structural limits. And lastly, on this slide, I want to point out that 85% of the time we lend to a fund, we receive a trust mandate that drives a deposit-to-loan ratio currently north of 50%. Diversification is also a real strength here. Across the roughly 50 facilities that we lend to, we have exposure to more than 2,000 underlying operating companies. No single obligor is more than $30 million funded and the average exposure is under $2 million. As you can see from the pie chart, our sector exposure is balanced as well. Technology represents just 11%, software is under 5%, and recurring revenue models represent less than half of 1%. This is a very granular portfolio of cash flow-oriented middle-market loans. Advance rates tell another important part of the story. In public markets, AA CLOs will typically advance about 65% to 68% against collateral, and our facilities are typically capped at 65%. But once eligibility rules, concentration limits and marks are applied, our effective advance rates are around 53%. That creates over 40% first loss buffer on loan collateral before considering the equity ownership of sponsors, which can often double the amount of equity capital beneath our tranche. That means for us to lose $1 in our facilities, the PE investment has to be completely wiped out and then the diversified pool of first lien loans has to take greater than 40% losses. Losses, not defaults. Duration matters, too. Most of these loans are structured with a 3-year reinvestment period, but since facilities are effectively renegotiated every 2 years, which gives us the opportunity to get out of these loans early if we don't like performance. The main reason we do that is managers lack of leverage discipline. And we don't renew and we have a demonstrated track record of doing so. When you look at the distribution of our customer types, it's primarily core middle market borrowers who are structuring more traditional loans with full covenant package. A key metric that we look for in our facilities is look through leverage. That is our advance rate times the leverage of the underlying obligors. For the life of this business, it is averaged below 2.5x. The underlying obligor average leverage is roughly 4.5x. We land at 53%. The math is pretty easy. As well, interest coverage is a healthy 2.3x at the underlying company level. These are conservative metrics for this market, and they reflect our sustained alignment with disciplined managers. The way we reduce risk here is mechanical. Let me walk you through all the controls and protections and how exposure comes down before defaults, not after. Our borrowing bases are remarked dynamically. Each facility is structured with multiple concentration limit. We have controls for the largest obligors, largest industries. We cap all the key risk buckets: CCC, second lien, covenant-light, PIK. For example, right now, in our portfolio, fully PIKing borrowers make up less than 1% of our collateral. And if any of these buckets are exceeded, the eligibility automatically comes out of the borrowing base. As well deteriorating loans are removed from eligibility based on negative movements in individual leverage or interest coverage, which triggers rapid exposure management. And last, if needed, cash sweeps activate without debate. None of this is discretionary. There are multiple independent layers of control, each operating autonomously. And because we control the cash flow through the trust structure, compliance isn't negotiated, it's enforced. Monitoring frequency is another core differentiator for us. Daily, we receive cash funding and collections reporting. And because trust controls the cash flow, we know same day if one of these underlying obligors misses a payment. Over the past year, it's actually happened 3 times. In each case, the trust team alerted us that morning, the asset was automatically redeemed and eligible was removed from our borrowing base. And by the end of the day, the asset manager itself reported with a remediation plan involving both the borrower and the equity sponsor. That's what we mean by exposure reducing before the default. It's driven by the structure, not discussion. Monthly, all of our borrowing bases are recalculated, compliance certificates are delivered and any intra-month draws trigger new borrowing bases automatically. Quarterly, we conduct full obligor reviews for the portfolio with trend analysis reported to a broad internal audience. And as I said before, underperforming collateral is at that point, remarked and often removed from eligibility well before losses materialize. In fact, one of the more visible defaults that made headlines late last year involved an obligor that we remarked and migrated out of our collateral pool a full 8 months before the default occurred. By the time losses were recognized elsewhere, our exposure was zero. Then annually, the entire control framework, collateral cash flows, processes is reviewed by a big 4 auditor for each facility. This isn't a backward-looking credit review. It's real-time exposure management. And that brings me to Jocelyn, who leads our trust platform and makes this level of oversight possible.

Thanks, Brent. Well, good morning, and thank you for joining us. My name is Jocelyn Lynch, and I'm the CEO and President of the Western Alliance Trust Company. I have over 30 years of experience in both trust and custodial capacity, working both at BNY and Wells Fargo. Myself and a number of my colleagues joined our firm, the Western Alliance Trust Company about 4 years ago with a clear objective to build a state-of-the-art corporate trust technology platform to support the rapidly expanding loan and structured credit market. Western Alliance was eager to expand into this business, recognizing a clear opportunity to invest in people, technology and a platform that larger providers just had overlooked. Most importantly, they understood the powerful combination of this business would turn out to be with our lender finance book Brent just spoke about. We went live roughly 3 years ago, initially focused on bilateral lending structures and then expanded into the CLO servicing market in 2024. Today, we serve a broad set of institutional clients, including hedge funds and investment banking partners with approximately -- what is with approximately a $1.5 trillion addressable market. Corporate Trust has quietly become one of the most differentiated franchises at the bank and really reflects the kind of specialized sector-focused verticals Ken talked about earlier today. Over a relatively short period of time, we have scaled from a modest capability into a top-tier national CLO trust franchise, supported by a highly experienced team of approximately 50 professionals and a modern technology infrastructure designed for complex structured products, something that our competition just lags behind. Today, we rank as the sixth largest CLO trustee in the U.S., which is notable given we only began servicing CLOs in 2024. Existing providers have been in this space and market for over up to 20 years. Importantly, this growth has been intentional, not opportunistic. So how did we do it? We invested early in systems, governance and specialized expertise to ensure we could scale without sacrificing control or client service. That strategy is clearly reflected in the numbers. Deposits have grown from roughly $200 million in 2023 when we started to $1.5 billion at the end of 2025. Fee revenue has increased meaningfully as well, driven by both higher transaction volume and deeper client penetration, which is up 200% just in 2025. And overall activity continues to scale rapidly with transaction volumes and mandates growing well over 100% year-over-year. As of today, we have 237 transactions with over $52 billion of assets and track over 5,000 loans. And many of these transactions come with sticky balances, 5% to 10%. And these deals typically refinance after 2 to 3 years, meaning our deals will roll off at a minimum 5 to 7 years and many times much longer. What's equally important is the quality and durability of this growth. Much of our expansion has come from repeat mandates with existing clients, reflecting a sticky relationship-driven franchise where trust, execution and consistency matter. And we have only scratched the surface of this $1.5 trillion market. And this is not a stand-alone or ancillary product. Corporate Trust now services approximately 60% of our Lender Finance portfolio, meaning it is deeply embedded in the same ecosystem where we deploy balance sheet capital. That proximity drives stronger client connectivity, better coordination across products and reinforces our positioning as a full-service partner in the structured and private credit markets. Beyond growth, Corporate Trust plays a critical role in how we monitor and manage risk across the platform, and it is a key part of the disciplined risk and credit approach we've been talking about throughout the day. As a trustee, we sit directly on top of the same collateral pools that lender finance lends against, but from an independent and structurally senior vantage point. At a fundamental level, our role is to ensure each transaction operates in strict accordance with the governing documents, including covenant compliance, collateral eligibility and cash flow distribution mechanics. We provide daily, monthly and quarterly reporting, collect and reconcile principal and interest payments on the collateral and perform ongoing monitor of each underlying loan in that pool. This creates a continuous independent validation layer for the bank. Each time collateral is added or modified, we perform a third-party borrowing base verification, allowing us to identify inconsistencies or emerging markets -- or emerging risks early in the life cycle of the transaction. More broadly, the role provides real-time visibility into collateral performance, cash movements and structural compliance, which is critical in the structured credit environment. In practice, this means credit by credit stress, concentration changes or performance deterioration often surfaces quickly at the trust level, well before they translate into broader portfolio impacts. That independence is key. We are not part of the underwriting process. We operate as an objective control function, enforcing deal structure exactly as written while enabling transparent information flow back to the lending teams we support. The result is a better-informed credit oversight, stronger governance and earlier risk identification without changing who we lend to or how we deploy capital. In closing, ultimately, Corporate Trust is both a commercial engine and a structural differentiator for the bank. It drives deposits, fee income and client stickiness, while at the same time, enhancing our risk management framework and visibility across the Lender Finance portfolio. Few institutions have this level of embedded connectivity across both sides of the balance sheet. Our strong client relationships, integrated trust oversight and structural, not discretionary risk control come together to support durable fee-based earnings and create a repeatable, low loss growth engine for the bank. We believe that, that positions us uniquely as well, as structured credit markets continue to grow and evolve. Thank you.

Please welcome, David Bernard.

Good morning, everybody. I'm David Bernard, and I lead our Specialized Mortgage Finance business. This is my 13th year at Western Alliance Bank, and I've been in mortgage finance sector for 23 years. I'm proud to say the strategic growth of our business has been one of the bank's most notable successes. We have purposely focused our business to maximize holistic client relationships, resulting in a business that has grown steadily from its inception and is self-funded. We know this business deeply. Our close hands-on relationships with clients, combined with a disciplined focus on collateral quality and controls has allowed us to operate this platform for 15 years without a single credit loss. That track record is not accidental. It reflects how deliberately this franchise has been built and managed. Mortgage market is large and highly specialized. Most of our customers, midsized mortgage bankers are called on by 3 or 4 groups from large banks or have one product relationship with smaller banks. Their relationships with banks tends to be highly transactional. We started this business not by selling a product, but by telling prospective clients that we wanted to be their full-service bank to help them grow their own businesses. "Our account officer wants to be your banker." This disciplined strategy to continuously deepen client relationships through enhanced products has resulted in us being one of the leading full-service providers to the mortgage industry and our customers. We have multipronged relationships with customers that generate stable earnings even when the market is soft. We have an embedded upside when rates fall as the businesses we operate are scalable and offer significant operating leverage. Our mortgage banking business consists of complementary countercyclical businesses that are entirely self-funded. Mortgage banking makes up a meaningful contributor to the bank's loans and deposits. Many of our relationships start with a low-risk warehouse line where we become familiar with each other. The relationship often expands to MSR financing. As part of providing MSR financing, we require the customer to maintain custodial account deposits with the bank. Through our dedicated treasury management team, we do an exceptional job with the custodial deposits based on a deep expertise with the product. As the relationship grows, we often win the core operating account business. When the bank acquired AmeriHome in 2021, that added an important new dimension to our product offering. We can buy loans at scale. Today, WAL can fund your loans, we can buy your loans, we can finance your MSRs and most importantly, we can handle all of your treasury management needs. We started the Specialized Mortgage Services business by entering warehouse lending in 2010 after the GFC. Liquidity was tight and other banks had exited the business, which created an opportunity for us. Today, this business represents $3.5 billion in loan balances and $900 million in deposits. Warehouse lending is the anchor product that allows us to interact with our customers every single day. I want to emphasize, we are not a price leader. We are a leader in creating value for our clients through these custom mortgage solutions and by delivering superior execution. Our go-to-market strategy focuses on the fact that we understand the mortgage business and are a stable through-cycle partner. We shine during tough markets. One of the best measures of success in this business is the strength of our relationships. Our top 20 clients have been with Western Alliance for an average of more than 10 years. That longevity speaks to the value we provide and the trust we've built over time. Importantly, this is not a static franchise. While we continue to serve large, long-tenured clients, we've also been very successful in expanding our small and midsized client base, in particular, with treasury management, growing these relationships at a rate more than 5x faster than our largest customers. That diversification has strengthened the overall franchise through lower costs with stable and growing clients. As Ken mentioned during our last earnings call, and, I believe, Ryan, to answer one of your questions from earlier, the depth of our client relationships is what allows us to effectively execute on this strategy and engage constructively with clients. We are actively working to finesse deposit balances to increase profitability, whether that means moving excess liquidity outside of the bank or repricing deposits to better reflect relationship economics. And this is where tenure matters. Many of these relationships span a decade or more, which allows us to approach optimization collaboratively. We are not disrupting relationships. We are evolving them in a way that works for both sides. These are symbiotic relationships and as our clients grow and adapt, so do we. Optimizing the size, cost and predictability of deposits within the mortgage warehouse business will remain an ongoing focus, but always executed with discipline, transparency and respect for the long-term value of these relationships. MSR Finance. In 2013, WAL entered -- expanded from warehouse lending and entered MSR financing with some of our best customers. We were an early reentrant into the market after the GFC and are an acknowledged expert in financing, the MSR asset. AmeriHome, one of the largest manufacturers and sellers of MSR assets, contribute significantly to our reputation as a sophisticated player in the space. Today, we have over 45 active MSR customers with loan balances of $4 billion and deposit balances of $14 billion. The lending business enjoys good margins and is fully funded with the custodial accounts. From a credit perspective, we like the business because the bank provides reasonable leverage on an asset that generates strong and predictable cash flows. Our deals have strong debt service coverage. Also, the collateral is highly liquid in the event the borrower has an issue. We also like the fact the business is countercyclical and a natural hedge on the borrower's origination business. When rates are rising and loan volume is falling, MSRs become more valuable. When rates are falling and the MSR becomes slightly less valuable, their origination business is picking up. We're lending them more money on warehouse finance. Looking forward, as the bank approaches $100 billion and AmeriHome has operated successfully under the bank's umbrella for 5 years now, we have strong opportunities to grow and scale this vertical through synergies with AmeriHome, given their central position in the mortgage ecosystem as the largest bank-owned correspondent originator. As a result, we believe we can generate incremental lending, treasury and fee income opportunities in this business. Let me illustrate the client journey through the growth of 3 relationships where the bank has executed its relationship strategy. Let's walk through the first one. This relationship started as an inbound request from a customer looking for a warehouse line to grow their warehouse capacity for their business. During negotiations, we saw they were a little tight on cash, but had an unlevered MSR position. We did a two-fer, proposed an MSR line along with the warehouse line. We closed on both transactions and moved the custodial accounts seamlessly. A couple of years later, we won their operating account business. They were reluctant to enter the non-QM market or nonqualified mortgage market after the GFC, having had a few repurchases of Alt-A loans. We co-developed a program with strong underwriting guidelines and have bought $2 billion of non-QM loans into our portfolio over the years. More recently, they have developed a strong relationship with AmeriHome and have sold us $2.7 billion in agency and FHA loans. On top of that, we've handled opportunistic owner-occupied real estate transactions as well as some personal deposit business. I think depicting our business sales process as a journey is an accurate way to describe how we approach our customers. We are always probing, but we never push too hard. We stay in constant contact with the customer and wait for the right time to make the sale. However, our goal over time is to build out a full-service banking relationship with each and every one of our customers. I'd now like to share a client testimonial that highlights how the partnerships we fostered go beyond providing capital and plays a meaningful role in enabling our clients' growth and long-term success. [Presentation]

Please welcome, Josh Adler.

Hello, everyone. I'm excited to be here today to talk to you about AmeriHome Mortgage. I'm Josh Adler, CEO, and one of the original founders at AmeriHome. Before I get into the details of AmeriHome, let me start with 4 key messages that I'd like you to take away from this. First, AmeriHome is a scaled, efficient, diversified mortgage platform. We are not a traditional mortgage originator, but a capital markets-driven loan conduit with leading share in the correspondent channel. Second, our business model is designed to perform across different rate environments. Our loan production and our servicing portfolio act as natural counterbalances to each other. Third, we benefit from real structural advantages, including our scale, our technology, the funding cost and liquidity benefits we get from being part of the bank. And fourth, we see a lot of upside from here, which could come from more favorable rate environment and from several growth initiatives that we have going right now. So with those themes in mind, let me walk you through the business. At its core, AmeriHome is a scaled, efficient, diversified capital markets-driven platform. We've been in business now for over a decade. And today, we operate 2 primary businesses: Loan Production business, Loan Servicing business. We primarily operate in the correspondent channel, purchasing closed loans from over -- about 800 mortgage companies nationwide. And at this point, our mature model allows us to grow very efficiently by adding only minimal variable costs, which gives us a lot of operating leverage. And as a result, we are the sixth largest mortgage lender in the U.S. We're the second largest correspondent lender. We have about a 10% market share in the correspondent channel. We basically operate a $60 billion a year loan conduit, where we are primarily securitizing loans and retaining servicing. We primarily buy conforming conventional agency and government loans. And really importantly, this is where our structural advantages really start to add up. Because we sit inside Western Alliance, we finance loans at a low cost before we sell them. Our servicing assets are self-funded using very low cost of deposits. usually average around 20 basis points. And on top of that, we get the liquidity of a bank, which are all very meaningful economic advantages, especially versus our mostly nonbank competitors. So how do we make money? This is really where our balanced earnings model comes into play. We generate revenue from 3 primary sources. First, gain on sale from our loan purchase and sale activity. In correspondent, we're bidding on $1.5 billion to $2 billion in loans every day. We use internally developed AI models to optimize both our pricing, maximize our production revenue. We also have a retail call center where we originate loans directly to support refi activity in our servicing portfolio. We've also incorporated AI models in this channel to help us optimize our lead sourcing. Really, these end up being our most profitable loans. Second, we make money from secondary marketing trading activities. Our scale allows us multiple options to get at best execution and maximize profitability, whether it's through securitization or whole loan sales or creating custom securities for the Street, we are really wired to seek out every basis point available. Having scale is a real execution advantage, bigger pools trade better. Finally, our servicing portfolio, we generate reoccurring fee income from our servicing port. We usually keep that servicing portfolio between $75 billion and $80 billion in size. So if you look at last year, about 43% of our revenue came from that initial gain on sale, 34% came from trading activities and 23% came from servicing fee income. It's really that earnings diversification that enables our business model to perform across cycles. Our earnings profile does change depending on the interest rate environment, which is really the centerpiece of our story and ties directly to my second message around through-the-cycle performance. Our 2 businesses, Loan Production and Servicing act as a natural macro hedge within the business. So when rates fall, we see our production volumes increase, income increases, our margins can expand. But on the servicing side, our income does decline as short-term prepayment speeds increase. Flip side, when rates go up, our production slows, but we make more money in servicing. So I should point out that we are set up to really balance out the bank's interest earnings profile across the entire enterprise. So the way we're set up, AmeriHome does much better when rates go lower. We really outperform on that side. If you look at where we're sitting in the market today, we've been above a 6% mortgage rate for a few years now. And in fact, 27% of the mortgages outstanding have rates above 6%, which creates a meaningful market opportunity if rates move below 6%, which is where we were headed at the beginning of this year before the Iran war started, which hopefully will end soon. It's important to note that this macro hedge can have timing mismatches, though. MSR values are adjusted daily with changes in rates and production can come in over time in the correspondent channel. That can happen 30 to 60 days after a rate move. So we don't completely rely on the macro hedge to manage our earnings risk and volatility. We also financially hedge the MSR to create even better earnings stability. For our servicing business, we have never wanted to bet on interest rates. Instead, we want to focus on earning the yield of our MSR port. We hedge to protect our earnings from changes that can happen to MSR valuations when interest rates change. Our MSR hedging program has really been effective, 99.9% effective actually, over the life of the company, which reflects a long-standing, disciplined financial risk management approach and shows the high value that we put on stability of earnings even in volatile markets. Finally, let me come back to my fourth key message, our upside from here. And there's really 3 dimensions to that. First, scalability. We have a highly scalable mortgage platform with significant embedded operating leverage. There's really a few reasons for that. Our mature correspondent dominated model now operates at a variable marginal cost, meaning that when market volumes increase, we can scale efficiently without having a proportional increase in our overall expenses. We have a technology-enabled platform. We've invested heavily in automation and AI, particularly in pricing and our operational workflows. We're really able to increase volume without a material increase in head count which drives margin expansion. Second, market upside. I've touched on that a little earlier. If we get a move back down below 6%, we see a significant opportunity for increased origination volumes, margin expansion with our operating leverage, but we also have a lot of opportunity in our call center for higher revenue refinance activity, thanks to low-cost leads that we get from that portfolio. And then finally, we have a number of structural growth opportunities underway. We are expanding into non-agency now and non-QM products, which is about 15% of the market. It's a way to get more market share from our clients. We've been expanding our trading capabilities into a private label securitization. In fact, we did our first deal in beginning of April using agency collateral actually. And this is really going to be a great platform that we can leverage for our non-agency products as soon as those get to scale. But really in looking at our biggest opportunity out there that we're evaluating is entry into the wholesale channel. This is about 20% of the market overall and a great way to leverage our current platform with a new revenue source. So we are really just beginning at the beginning of the S-curves for all of these growth initiatives. They build on our existing infrastructure and our client relationships. We're excited about those. So let me close by just coming back to my 4 key messages. First, this is a scaled, efficient platform with a leading position in the correspondent channel. Second, this business is designed to perform across all rate cycles. We really have a balanced business model that lines up well with the bank's overall interest rate profile. Third, we have some real structural advantages from scale, technology and bank ownership, that really drive superior economics, especially versus our mainly nonbank competitors. And fourth, we see meaningful growth upside from here, both from a cyclical rate recovery and our growth initiatives. And when you put all that together, we believe AmeriHome represents a high-quality, scalable mortgage business with really stable earnings power and significant upside from here. So thank you for that -- for your time. We're going to take a few minutes, set up some chairs and do Q&A. So thank you. [Break]

We will now begin a Q&A session with our executive team.

Team is on the clock. Any questions in the audience? Tony, we'll start with you.

Tony Elian, JPMorgan. For Tim, on Slide 45, you outlined the different -- the 8 different specialty businesses you have on the lending side. Does that feel like the right number? Are you exploring entering any others? And what characteristics would you be looking for?

Great question. I'm going to start by answering or at least identifying the characteristics of why Healthcare, why Aerospace and Defense, why -- we picked these most recent segments in part because of their strong stability, their core component representation of GDP. And then we identify the niches in those segments where we can actually utilize a lot of the capabilities that we've built. So when I say we're in food and agriculture, for example, we're in the aspects of food and agriculture where we can use our supply chain capabilities and leverage those as opposed to leveraging a credit only. So we're in leaf and root vegetables in the West Coast. We're not in large wholesale commodity-based segments. We still gain the segment stability of the core GDP sector alignment. So in no way are we stopping, but we'll employ similar philosophies as we grow and add additional segments. Each will be thoughtful. Each will have a defensible core need that we're meeting and satisfying where we believe our margin could be retained over time. And we stick to that approach you'll see a much more broad-based commercial bank. This gives us the diversity we want, the granularity and takes the beta out of the portfolio performance.

Next question?

Ryan Kenny with Morgan Stanley. Thank you for walking through the multiple structural protections on the Lender Finance side. Clearly, it's a focus of the investor community right now. So just wondering, are there any changes in loan structure over the last year or so that you're making? Any signs of stress and any changes in risk appetite over the last year or so?

Yes. I'd say the main trend is as we've seen -- it's really very recently, just the last quarter or 2 that you've seen default rates start to tick up a little bit. And so what I've noticed on our behalf and on the behalf of some other managers is that when we remark names on a quarterly basis, the marks are getting more severe, right? If you overlay a macro assumption that the market is weaker, when you might have marked a name to $0.50 on the dollar from par if it was -- leverage was going up, now you're going to mark to 0 or $0.20. That's been the main change. Structurally, the documents haven't really moved much, like when we've actually talked to arrangers and counsel about this to make sure like you're seeing everybody's deals, our terms moving. And the way AA, AAA loan documents have been structured is very consistent for almost a decade.

Timur Braziler, UBS. It looked like yesterday in the 10-Q, there was a mortgage finance loan that showed up on the problem loan list. Any additional color you could provide on that $68 million credit?

David, do you want to...

Yes, I can take that. Thanks for the question. So that loan was a borrowing base customer in our note finance business. And the asset, in particular, is really kind of a special mention asset. But for the -- given the timing, we had to mention it. This is really not any kind of a headline news. It's just the timing had us mention it. So loans kind of flow in and out of special mention as we work with the customers. Generally, we give them a little time if they have to remediate loans that they pledge to the borrowing base and depose them, whether they pay them down, they sell them or they're restructuring their loans. So just unfortunate timing, but really a no news update from us.

David, that's a great indication of the real difference between regulatory and bank methodology and nonbanks. That's a situation where we're extremely well secured. The asset performance at the asset level is not in question. The operating performance was below expectations in that case, which precipitates a downgrade and, of course, the elevation of remediation activities, but a well-secured transaction.

David, you mentioned to me about the security of the collateral, what -- how many times you think you're good?

We have very strong collateral position and a cash collateral position, I think, 4x.

Next question? David?

Brent, Jocelyn, could you speak a little bit about lessons learned from some of the credit events over the past couple of quarters, how the underwriting and monitoring process has changed as a result?

Well, you can start on the credit side and I'll talk about monitoring.

Yes, I'll talk on the credit side. It was market practice mainly to do most of your work on your borrower, right, which would be an asset manager of sorts. Given the fraud that the market has experienced, we've now really embarked on doing the work that we expect our managers to do as well. So I mentioned in my slides, that our whole process per facility is audited by a big 4 every year. And so instead of just auditing our managers' process, we're actually doing the underlying work of that manager now, too. It's a little extra money, but it's not that material to actually do test calls underlying collateral, and making sure we've really buttoned up everything. The loss that we had also wasn't in a traditional trust structure was in an adjacent ABL business. And so in the core middle market business, you have true control over cash flows, which was differentiated with that other business.

I might add on to that, just because anything like this, particularly in our bank isn't something that happens just at the line of business level. Early in my career, and I somehow realize I'm now older than probably most of the people in the room, came as a surprise. Earlier in my career, I was pulled into work on Montgomery Ward's bankruptcy. And a very senior executive walked in the room and said something I'll never forget. You're about to get the most expensive MBA that anyone ever received. That's something that our organization carries through in situations like this. So you've got the intersection of a robust and well-developed second line. You've got a very effective credit team. And then over the back of all that, you've got the third line, our internal audit that comes over the top and make sure that we're all working in concert. So I really -- I want to say to this group, you can bet, we got a heck of an education and that we put that into practice and that we've closed as a result, the loopholes or potential cracks that can let something like this happen. I did want to say that.

I'd just say, in general, over the last 2 or 3 quarters, I work with most of the major investment banks that are doing private credit lending to collateral pools. And I will say a number of them have been more aggressive around making sure that we're providing the daily reporting that they're looking at it. So that's been a trend that I've seen from my perspective.

Time for one last question.

Janet Lee from TD Cowen. For the Innovation Banking segment, that loan has been growing very nicely over the past couple of years, and you've noted the risk around software and AI is limited. Could you comment around how the credit quality metrics, whether that's potential problem loans or criticized has been evolving in that segment over the past couple of years? And what gives you comfort to say that the risk is limited?

Yes, why don't you go ahead and take that?

Sure. So I'd say it's measured. It's very similar risk. It hasn't really increased over the last few years as our loan growth has increased. I think part of the reason for that is the way we actively manage our portfolio, combined with very strong sponsor relationships that provide that early identification and communication of any potential problems that we can address before they occur. So this is a very actively managed portfolio. It does have, very similar to David's comment, transitory special mention credits are part of the process, but that doesn't necessarily mean it's elevated credit risk. It's just that early identification.

Mike, anything on just your RML trend.

Yes. Remaining Months Liquidity, RML, is a huge part of our tracking mechanism to ensure that our clients have significant runway prior to the next equity round. Many times, a venture-backed company will use our debt to extend runway in between rounds. And so RML, Remaining Months Liquidity, might drop and then it's going to increase again as that next round closes. That's a very common practice. And that has a lot to do with our internal grading as RML might decrease. And then as it increases, it's an upgrade.

I'd just add, over the back of that, we have very sophisticated valuation methodology that apply to all the subsectors within Mike's business segment. And as the landscape changes in the economy, we make those adjustments out in front of how we fund each component of the business. That's been a big component of how we mitigate loss.

Great. Thank you, everyone. We're going to take about a 10-minute break now before our next session. [Break]

Please welcome, Emily Nachlas.

Good morning, everyone. I'm Emily Nachlas. I've been the Chief Risk Officer here at Western Alliance since 2019. I spent the last 25 years working in risk management organizations of both regional and large banks throughout the U.S. I'm pleased to be here today to share how our risk infrastructure is not only keeping pace with our growth, but actively enabling it. Let me start by anchoring us on 3 key principles that define our approach to risk. First, our risk culture is a franchise asset. It's why clients trust us. Responsibility for risk ownership sits with the business, supported by independent oversight. This model is intentional. It ensures decisions are made by teams with deep expertise and direct accountability. Second, risk management serves as a competitive advantage that enables safe growth and innovation. Strong risk discipline allows us to pursue opportunities in a controlled and informed manner. By clearly understanding our risk appetite, we support innovation while operating within well-defined risk tolerances. And third, our risk oversight, internal controls and governance framework are effective and have been designed to be scalable. These processes are embedded across the organization and continuously enhanced to keep pace with the size and complexity of the bank. As the franchise grows, the framework grows with it. Building on these principles, let me talk about how risk management functions as a strategic differentiator. Our risk taking is deliberate and measured. We maintain a balanced approach to risk and return supported by appropriate expertise. Our risk appetite is clearly defined and embedded into strategy from top-down strategic planning to the day-to-day programs. Risk is not a separate function. It's integrated into how decisions are made. Our risk framework enables sound and agile business growth. As we've grown from $50 billion in assets in 2021 to $99 billion today, our risk and control programs have evolved alongside the business. We have a proven LFI-ready infrastructure that ensures second line of defense oversight across the capital, liquidity, governance and internal control components, all subject to robust oversight from our engaged Board of Directors. Enhancements to the control environment implemented over the past few years are operating sustainably and integrated with risk appetite to guide disciplined growth. Regulators have clear visibility into how we identify risk, make decisions and execute, which supports confidence as the organization continues to scale. And finally, our proactive approach creates strategic advantage. Risk and revenue capabilities are developed in tandem, allowing risk oversight to support decision-making rather than slow it down. We analyze new products and services in real time, reducing friction, clarifying trade-offs and enabling timely informed action. Risk helps the business get to yes with the appropriate guardrails. Altogether, this is how risk management supports growth, reinforces resilience and strengthens the franchise. Since 2021, the risk organization has been deliberately preparing for the bank's next stage of growth, positioning us to move from a smaller regional franchise to a well-designed and prepared Category 4 LFI. We've operationalized a sustainable risk management framework with LFI-ready risk identification, measurement and mitigation components. Our remaining LFI-related preparations are centered around regulatory reporting submissions and data program enhancements, all of which are on track to be completed within the regulatory time lines. Although regulatory tailoring changes are expected in the near future, we have continued our efforts to be ready now. Our entire organization is ready now. We've added senior risk leaders with LFI experience, leaders who have operated in more complex regulatory environments and understand what good looks like at scale, while remaining aligned with the bank's entrepreneurial spirit. Risk currently represents 7% of the total company employees, which is in line with other LFI organizations. We invested heavily in our credit risk and loan review function, building an enterprise-wide independent oversight program that conducts ongoing loan level reviews and portfolio surveillance across all lending businesses. This team provides credible challenge on reserves, concentrations and capital stress. The structure and operating model are fully aligned with large bank supervisory expectations and ensure we remain scalable, resilient and LFI-ready as the balance sheet grows. We've strengthened our oversight across capital, liquidity, interest rate risk and mortgage capital markets over the past few years as well. The focus for the financial risk management team centers around monitoring, measuring and assessing risk that ties directly to the company's financials. Also, we've integrated stress testing and scenario analysis into our risk limit framework, which allows for independent challenge of assumptions and results. And we developed the BSA/AML Financial Crime Center of Excellence, combining deep expertise with scalable processes and technology to support growth across products, geographies and client types, all while maintaining strong consistent controls. Collectively, this work established a strong, durable LFI-ready risk foundation. As we look to 2026 and beyond, the focus shifts from building risk programs to optimizing and enabling growth. We're driving optimization through the targeted use of AI. This includes automating and streamlining manual processes, improving the reliability of data, increasing efficiencies and enabling teams to focus more on analytical judgment and decision support. Risk is prioritizing high-impact use cases within BSA, appraisals, loan review and enterprise risk management. Another priority is strengthening alignment between strategy and business expansion. Integration between risk appetite, strategic planning and business expansion continues to evolve, ensuring growth initiatives are evaluated through a consistent risk lens, supported by appropriate controls from the outset. Overall, this next phase is about building on the LFI-ready infrastructure already in place to support growth, improve efficiency and enable innovation while maintaining the same level of risk discipline and oversight that has supported the bank's previous growth. And now I'll welcome Lynne to the stage. Thank you.

Good morning, everyone, and thank you for coming. Hello. My name is Lynne Herndon, and I am Western Alliance's Chief Credit Officer. I have over 35 years of banking experience in a variety of sales and credit roles. Following a long tenure at BBVA and PNC, I assumed my current role in January of 2024. Western Alliance's asset quality performance over the prior 15 years has been very strong on an absolute basis and compared to peers. This performance is notable because it coincides with the bank's robust growth and expansion into new business lines and markets. I attribute these results to our significant product and industry expertise as well as the careful evolution of the composition and growth of our loan portfolio. I am excited to explain the drivers of our successful credit track record in more detail and most important, while we expect our performance to remain better to in line relative to our peer banks even with our stronger growth trajectory. Diversification, deep expertise and disciplined underwriting are the key contributors to our strong asset quality track record. First, our portfolio construction is intentional and highlighted by limited single-sector concentration. We operate in many low loss categories, making the inherent risk characteristics of the portfolio very manageable. Second, our diversification is reinforced by deep sector expertise. This product and industry expertise that is so important to our strong revenue growth is also embedded in our credit team, which informs how we evaluate credit opportunities. Third, specialty vertical knowledge produces better underwriting, credit decisioning and diligent portfolio management. Our adherence to lending with low advance rates and requiring significant equity upfront from our borrowers is applied across the loan portfolio. Our expert credit team has considerable experience at larger institutions, which is critical to making decisions that lead to low loss outcomes. Collectively, these best practices have delivered strong historical credit quality and position Western Alliance to perform well through the cycle. Our loan portfolio stands at $59.1 billion with no single nonresidential segment exceeding 15% and with most others below 10%. This diversification and granularity provide multiple avenues to achieve our growth objectives. Therefore, if an industry or product type experiences reduced credit demand or competitive pressures which make loan pricing and/or structure unappealing, we can maintain discipline and modulate growth in specific areas without impeding overall growth. This means we can effectively manage through isolated credit deterioration with no individual part of the portfolio having outsized influence on our overall performance. Furthermore, approximately 2/3 of these sectors have experienced little to no historical losses. Let me repeat that. 67% of our portfolio categories have produced virtually no losses in the history of the bank due to our strong collateral and underwriting practices. We have materially reshaped the loan book by growing C&I loans since 2010. C&I has grown from 19% to 48%, while CRE has moved from 52% to 21%. The emphasis on C&I growth reflects the sector expertise we have cultivated across the bank to capitalize on attractive risk-adjusted opportunities within certain industries as opposed to arbitrarily deemphasizing CRE and residential simply just to change the mix. Here, you can see the result of this transformation, which is a more resilient, capital-efficient portfolio. I want to highlight that as we launch into new sectors, most recently in industries like aerospace and defense, entertainment and media and health care. We have hired experts, both on the sales and credit side, who bring deep relationships as well as industry and product knowledge to drive good business development and credit decisioning outcomes. These capabilities result in a sound and swift process for our borrowers, which make Western Alliance an appealing bank partner across our client base. Our commercial loan portfolio is also geographically diverse. Our top 10 states represent 79% of this portfolio. The breadth and depth of our business lines have extended our reach throughout the country. While we have leading market share in our traditional regional footprint in Arizona and Nevada and significant market share in California, we also have meaningful exposure in Texas, New York and across the higher-growth Southeastern states. Tim mentioned it earlier, but we are utilizing our industry expertise to drive growth across these geographies, building a foundational presence with centers of competence. We are leveraging well-developed and proven business and credit risk strategies to support market expansion in areas with strong commercial growth opportunities. Highly disciplined underwriting and ongoing portfolio monitoring are hallmarks of our credit strategy. To accomplish this, we employ a variety of levers. One, we prioritize collateral and structure over yield. We first make the credit decision and then we determine if the return is acceptable. Two, we screen clients and sponsors selectively. We favor businesses with repeat customers and proven track records. Three, deep vertical knowledge on both the sales and credit teams support prudent loan growth and performance. Also, informed monitoring of trends allows us to identify credit weakness early. And four, obligor limits and underlying sources of cash flow are important factors to determine deal size. Said differently, we have lower limits for single asset, single source of repayment loans and higher limits for diversified collateral pools with multiple diverse sources of repayment. Here, we highlight 2 topical sectors that while not new to Western Alliance, have unique portfolio characteristics, which minimize credit losses and make the loans attractive to the bank. In each of these businesses, there are unique key drivers of successful performance. We customize our underwriting, structuring and ongoing monitoring to facilitate the best outcomes. It's not a one approach that's all philosophy, it's a customized approach that allows the bank to better manage credit risk. Let's highlight a few points. Our Note Finance business began in 2012 with a loan-to-balance average of 48% and a loan-to-value average of 22%. We maintain significant coverage for these facilities, along with multiple exit paths for the bank. Lender finance is primarily structured borrowing base credits to middle market companies with higher leverage. The diversification in the number of obligors as well as industries, coupled with low attachment points provide ample cushion before we experience a loss and therefore, minimize risk of facility default. The low average commitment and average funding of 48% and 22% -- sorry, excuse me, of $4 million and $2 million, respectively, speak to the granularity of the portfolio. And finally, a third-party trustee managing cash flow and cash trap, if necessary, ensures the repayment of the facility in an accelerated fashion. As I just spoke about businesses whose loans are characterized as loans to non-depository financial institutions, I think it's illustrated to take another look at the NDFI comparison metrics we have included in earnings presentations for several quarters. Here, you see our limited exposure to non-mortgage credit intermediaries and private equity funds. For Western Alliance, our business credit intermediary exposure consists primarily of our lender finance book, which Brent has already discussed. The granularity, diversification, low duration and structural protections in this portfolio continue to make us comfortable banking with these clients. Western Alliance has a long-standing track record of outperformance compared to peers for several important credit quality metrics. Whether it's special mention, classified or criticized, which is the combination of the 2, we have outpaced peers over the past decade. This performance was maintained through several periods of stress, and we view these credit outcomes validating our risk return balance. Taking a closer look at criticized loans, Western Alliance's peak quarterly criticized loan ratio over the last 10 years or 40 quarters is lowest among 22 peers, underscoring the result of our disciplined underwriting and credit decisions through multiple stress environments. Not only are peaks lower, but average criticized loan levels are also below peers, reflecting consistency, sustainability and durability of our credit performance. These data points reinforce that growth has not come at the expense of credit quality. Instead, credit quality has complemented growth through the years. Let's speak about charge-offs now. As you know, we reported 2 fraud-related charge-offs in Q1, along with business-as-usual-related charge-offs of 39 basis points. Inclusive of these numbers, Western Alliance's 5-year average net charge-off rate is 17 basis points, which is in line with peer median and achieved with loan growth higher than peers. As the bank has been shifting its mix to higher C&I, our charge-off rate has increased, but still remains in line with our peers. Our loan loss reserve has accordingly also moved higher. We do intend to pursue recoveries aggressively on the 2 fraud-related charge-offs, but emphasize that these recoveries will not occur in the near term. Today, our office portfolio represents only 4% of the total portfolio. Our strategy for office entails significant upfront equity of 40% to 45% and deliberate client selection with proven track records. Our loans have performance triggers, both to qualify for an extension and also to monitor along the way with re-margin as an option to remedy lack of performance. Western Alliance made the decision to extend loans post-COVID, again, with our significant upfront equity and our proven sponsor track record. As a result of the slow return to work in states like California, some of the bank's 2020 to 2022 vintage assets experienced declines in value due to slow leasing as well as higher cap and interest rates, influencing stabilization periods and ultimate values. The asset mentioned in our subsequent event disclosure in the Q1 10-Q is of this vintage. The loan was a year away from maturity when we learned of the borrower's decision to no longer support the asset. While we are disappointed in this outcome, I want to remind you that churn, and I call that credit standing credits out, is normal. To that end, I want to share some positive updates on 6 loans that demonstrate our confidence in nonaccrual loans declining in the second half of 2026. One, we accepted an LOI to purchase a property that's funded by a $60 million loan. This was also noted in the 10-Q. Two, we are holding active LOI discussions on 3 assets that are currently in NPLs. Three, a sponsor has agreed now to resume payments on another NPL, which will lead to an upgrade after a short period of performance. And four, we are working on a modification on another NPL that will result in an upgrade to pass. These updates are emblematic of the accelerated resolution strategy we expect to be more evident in our asset quality metrics later this year. We will continue to track leasing and risk rate accordingly as well as follow our appraisal practices. As it stands today, over 85% of this vintage that I have mentioned has either performed, i.e., debt yield greater than 10%, then modified with re-margins to debt levels of acceptable performance or is rated non-pass as we work with the sponsors for acceptable resolution. I'd also like to point out that CoStar data indicates office values across key MSAs have been bottoming since 2025 with near-term appreciation expected to resume shortly. We have seen this very trend in our reappraisals. To put it more plainly, we are working through the primary driver of our nonperforming loans and see notable improvement in NPLs on the horizon for the second half of 2026. With 67% of our portfolio consisting of loans and no to minimal loss areas, it's not surprising to see the risk profile of our portfolio is inherently among the lowest in our peer group. Using the scoring system identified in the left-hand table, we compared our loan portfolio with peers using regulatory data from year-end. Our risk score of 1.43 approximates the best scoring peer. In conclusion, Western Alliance's credit quality remains stable for all the reasons that I have highlighted today. We expect criticized loan levels to remain in line or better than the peer median just as they are today and charge-offs, exclusive of the 2 fraud-related events, to be around the midpoint of our 25 to 35 basis point guidance for 2026. Thank you.

Please welcome Sonny Sonnenstein.

Good morning. By way of background, I've been at the bank a little over 1.5 years, bringing a deep industry background and LFI experience to leading our technology teams. Over the course of this morning, you've heard how we leverage technology to create innovative value propositions that allow us to win. Let me give you some insights on how we do that. There are 3 key messages I want you to take away from this morning. One, we've built a strong modern technology foundation to serve and protect our clients now and in the future. Two, we take a business-led technology-enabled approach that creates distinctive advantages for the bank. Our investments in our technology building blocks are a key enabler of how we grow and win while keeping the marginal cost of expansion low. Third, our technology and AI investments position us to drive innovation, productivity and growth now and into the future. Let's start with our technology foundation. We've made significant investments in technology talent, infrastructure and leadership. Let me give you some proof points on this. Since 2022, our technology spend has increased 90%, and our IT as a percentage of OpEx and revenue is in alignment with peers. Since I joined, we've added 70% more senior engineering talent, significantly strengthening our software delivery capabilities. And in addition to myself, we've added a new CISO with significant G-SIB experience in the last few months, and we've added numerous other leaders in tech and cyber with LFI and extensive tech and cyber experience. Turning to the right-hand side of the page. To support and protect our national franchise, our technology operating model with tech hubs in Columbus, Dallas and Phoenix allows us to operate on a 24/7/365 basis. In other words, at the pace of the modern world of finance and banking. Let's move on to how we build technology that creates distinctive advantage, drives efficiency and lowers the marginal cost of growth. Through our modernization and automation efforts, we've been able to change the mix of run, which is maintenance support, infrastructure network, things like that, versus grow, building new and enhanced capabilities. And we expect to focus more and more of our resources on growing the future. Let me give you some a bit of more context than even what's on the slide. In 2022, this ratio stood at 80:20. In 2024, it stood at 75:25. In 2026, today, it stands at 70:30, and I've established a long-term target of 50:50 for the organization. We've made this pivot through our modernization efforts that have established a strong technology foundation and more recently through our automation and optimization efforts that make our run operation more efficient. This also lowers risk, frees up capacity to invest in growth and ultimately will drive improved operating leverage. Turning to the investment. Of the $250 million we've invested in technology over the last 3 years, about 20% has been spent on data and applications in support of our LFI readiness. The majority of the spending has gone to enhanced data capabilities, to give you a sense of the scale. We've added over 1,000 data elements to our cloud-based enterprise data platform, which should have benefits well beyond LFI. We've also enhanced our financial systems, we put in a new treasury system and a new regulatory reporting platform. In short, we're ready to cross over $100 billion. Turning to the bottom right, run the bank. I want to focus on the modern technology for the bank we've established. We have 100% of our business applications in the cloud or in a hosted environment. About 50% of that is SaaS and PaaS, about 50% of that is in our private cloud. Within the private cloud, half of those are commercial off-the-shelf software and half of them are custom in-house built applications. We leverage SaaS, PaaS and commercial off-the-shelf, which represents about 75% of our application estate for commodity capabilities. It allows us to be efficient with our spend and put the remaining focus of our software build efforts into our S-curve specialty businesses. I will say also being in the cloud gives us the things you expect from the cloud: scalability, resiliency, security, efficiency, but more importantly, for the future, it gives us proximity to existing and emerging AI capabilities. I'll come back to AI in a bit. Pivoting to grow the bank. Significant investments in our building blocks improve our speed to market responsiveness and reduce the marginal cost of growth. So our building blocks include investments in a fully integrated modern payments hub, an advanced API gateway with a set of open banking and purpose-built API capabilities and advanced data and AI capabilities. This allows us to create innovative digital platforms, build distinctive AI-based capabilities and to leverage AI-driven capabilities that result in tight operating linkages between the bank and our clients. This allows us to build long-term relationships and minimize attrition. Let me give you an example of how these building blocks come to life. You heard from Dale earlier today about our settlement businesses. Well, in there, we use our APIs and payment hub foundation to enable Juris Banking to offer more settlement payment options than others, Zelle B2C, PayPal, Venmo, ACH Check and an ever-growing array of options. At the very low incremental cost to build that solution, it's a real advantage for the bank. And I will say many of the elements for that build will be reusable as we continue to innovate in other businesses. Think of the building blocks as LEGO blocks. What we've built is a set of LEGO blocks that we can put together for different businesses. So as we come up with new S-curve ideas, we're able to support them from a technology standpoint. As you've heard throughout the morning, we use technology to differentiate via tailored platforms that allow us to deliver on our S-curve strategy. One of the keys to our success is that we dedicate persistent teams to persistent capabilities. Our agile continuous delivery teams are aligned to each business to allow for continuous, not episodic investment and innovation based on customer feedback. We often co-create our solutions with our clients to make sure we're adding features and capabilities that they most want and need. Since you've already heard about many of our S-curve specialty businesses and the role technology plays today, let me share a bit more about how we win with people, process and technology and business escrow services. The bank started the business with the idea that technology would be a key differentiator in this space. This is a market where clients care about certainty, transparency and speed, especially in M&A-related transactions. We've built a technology-enabled escrow platform that digitizes onboarding, transaction setup and ongoing administration. Complex escrows are established quickly with deferred workflows -- defined workflows and a strong controls rather than manual one-off processes. All stakeholders, buyers, sellers, advisers, have real-time secure visibility into balances and activity through our client portal, which reduces friction and operational risk for them. Because escrow events are workflow-driven, we can support large balances over extended durations with real operating leverage. The result is a better client experience and stable low-cost deposits for the bank. Let's pivot to my third key message for today that our technology and AI investments drive innovation, productivity and growth. All right. It's Investor Day, it's 2026. There had to be an AI slide, right? So this is it. Let me -- I want to focus on 2 aspects of our AI transformation, what we've accomplished and where we're headed. Speaking to today, our AI capabilities have been rolled out across the bank to 100% of our employees with an estimated $10 million in productivity gains saved from 150,000 employee hours in the last 12 months. In addition, all of my technologists have access to AI coding tools, which I believe will allow us to continue to accelerate our ability to innovate and differentiate across all our business lines, but especially in our S-curve businesses. We continue to make investments in these capabilities and training to drive personal and team productivity, and we believe we're just scratching the surface of what's possible with AI. A big part of what's possible is found in the burgeoning use of agents. And I'll give you a window into this with 2 examples. The first example are 3 agents that we built to support our bankers and customer support specialists in our branch and small business banking. First one is called Solution Pilot. This handles the operational and technical questions bankers face every day: process questions, system questions, documentation support. The second one is called Sales Pilot, which is a sales assistant and tutor all-in-one. It helps bankers research clients, identify opportunities and build stronger discovery conversations. The third one is called Relationship Pilot, and this allows a banker to answer 6 or 7 questions about a client. And in a couple of minutes, they have a full picture of the client with opportunities, next best actions, call and e-mail scripts, a relationship health summary and a page we're really ready to take into a client conversation. So far, the reception by the bankers using these tools have been really positive, and we expect great outcomes from them. The second example I'll share is a more sophisticated multi-agent solution that takes thousands of pages of documents we get from our third-party vendors, financial docs, security docs at all, analyzes those documents and prepares the data for human-in-the-loop reviews by our subject matter experts. What used to take 36 to 48 hours per vendor, now takes 10 to 20 minutes. I will say the same base capability is actually being used for credit agreement reviews and data extraction and corporate trust, and in about 5 or 6 other areas today with many numerous use cases we expect over -- across the bank over time. Speaking to tomorrow and turning to the bottom row, we think there are significant opportunities in 4 areas where AI will have a significant impact. The first is a lending life cycle redesign and reimagination, where we expect to see significant cycle time improvement. The second is in financial crimes and risk management. An example of this is our use of AI in -- to prevent fraud in our Juris DST settlement payment business. The third area is cyber threat monitoring. We're going to protect ourselves from AI with AI. I know that sounds strange, but that's kind of where we're at in the world these days. Last one is market and customer insights. And this is an example of how we use AI in AmeriHome for pricing and lead identification, which can improve our recapture rates. So we see a lot of other opportunities to drive several opportunities with market and customer insights. We have a clear road map with some near-term priorities. And as Ken said, we've got priority 1A, 1B and 1C. 1A is our targeted deposit growth businesses where we continue to invest in technology, particularly digital assets, corporate trust, business escrow services, which supports lower cost deposit growth and PPNR expansion. 1B is expanding our AI use cases to drive efficiency across the bank. And 1C is hardening our cyber defenses against the evolving AI threat. Our medium-term priorities see us moving from foundational capabilities to accelerated innovation and AI-enabled products supporting meaningful improvements in operating leverage. Now before I turn it over to Vishal, I'll remind you of the 3 key takeaways from my section. One, we've built a strong modern technology foundation to serve and protect our clients. Two, we build technology that creates distinctive advantage, drives efficiency and lowers the marginal cost of growth. Three, our technology and AI investments drive innovation, productivity and growth for the bank as we continue to build on our S-curve philosophy. These are the keys that will enable us to continue to be the bank where diversification meets innovation. Thank you.

Please welcome Vishal Idnani.

Good morning, everyone. I'm Vishal Idnani, Chief Financial Officer. I want to thank each of you for attending our inaugural Investor Day. We really appreciate your interest in our company. I joined Western Alliance in October of last year and shortly thereafter stepped into the CFO role in January. Before joining Western Alliance, I was at JPMorgan for close to 2 decades, where I covered the banking sector extensively. So what drew me to coming to work at Western Alliance? I would say, first off, I really believe in the differentiated and diverse business model that we have here; two, I think consistent execution from the management team; and three, I think the bank has a very strong track record of delivering peer-leading growth and returns. For my presentation this morning, I want to talk about what we've done to fortify the balance sheet, how those accomplishments are leading to durable earnings and why I believe there is a compelling financial outlook from here. So, I'd like to begin with 6 key messages that I'd like you to take away from the presentation this morning. First, we have fortified the balance sheet. There has been a transformational change in capital, liquidity and deposits. Two, earnings momentum is accelerating in the business, and we think this is going to continue going forward because of strong operating leverage. Three, I really hope today we've given you a peek under the hood at these diversified growth engines that we have and why they actually lead to peer-leading PPNR and tangible book value growth. Four, our earnings are resilient across a wide variety of both rate and credit cycles. We have intentionally structured AmeriHome to act as a natural countercyclical buffer to our naturally asset-sensitive balance sheet. Five, we think there is a disconnect between our valuation and the core fundamentals that we see in the business, and I'll spend some time on that. And finally, we would like to give you a view on where we're planning to take the company, what does the medium-term outlook look like and why we see a clear line of sight to a sustainable and achievable 16% to 17% return on average tangible common equity. All right. Let me get started here. As I mentioned, I wanted to talk about capital liquidity and deposits. Starting with capital, what you will see is our CET1 over the past 3 years has increased by 1.7% to 11%, and we are now currently operating at our target capital level going forward. Our total capital ratio has increased by even more, up 2.3%, now at 14.4%. Moving to the center of the page, what you will see from a liquidity perspective is we were running at a 97% HFI loan-to-deposit ratio. Today, that is down to 71.5%. I think at this point, we have overshot our target on the loan-to-deposit ratio. And what you will hear me talking about later is how we're going to increase that back to the 77% to 80% range. If you look at the bottom middle here, cash and securities, today, represent close to 30% of our balance sheet. That has more than doubled from 3 years ago. And what's important is we've increased the capital and liquidity, but we've also improved the quality of the deposit base. So if you look here on the top right, our insured and collateralized deposits today represent over 70% of the deposit base, that's up 25 points. How are we able to achieve this deposit quality? We have grown specialized deposit verticals by close to $20 billion across the 6 differentiated verticals that Dale walked you through earlier this morning. What's even more impressive about that is 5 of those 6 verticals are new over the past couple of years. I'd now like to spend a minute on how our capital levels compare to peers. For reference throughout this section, when I refer to peers, we took the 22 publicly traded banks with assets between $50 billion to $300 billion in assets. Our CET1 is in line with the peer median at 11%, and our total capital ratio sits in the top quartile amongst this peer group. Also, when you compare our capital ratios to the regulatory minimums of 7 and 10.5 percentage points, we're sitting on north of $2 billion in excess capital. That is supported by our strong liquidity position. Today, the bank is sitting on over $40 billion in access to liquidity between both on-balance sheet and off-balance sheet sources. That is largely backed by our available-for-sale securities portfolio. This portfolio is largely AFS. It's not HTM. It's comprised mostly of treasury and agency-backed securities. It's got a short duration at 2.5 years and an average yield of 4.5%. Importantly, we do not have a large mark on our AOCI portfolio compared to some of the other regional banks. And we demonstrated this again in the first quarter where we were actually able to take in $50 million in securities gains, and we reinvested those proceeds at actually a higher reinvestment rate. So with that, I'd like to close out takeaway number one, which is I believe the balance sheet has been fortified. There's been a transformational change. And what this will allow us to do going forward is now we're going to optimize the balance sheet and the income statement given the change we have. So let's pivot to earnings momentum. This page shows you a variety of metrics on our income statement. And what I want you to take away is there has been broad-based earnings momentum across this income statement. First off, our net interest income is up 11% CAGR over the past 2 years. What I'm particularly excited about is the fee income. Our fee income has more than doubled from a couple of years ago, and the CAGR on that is 55%. When you put the net interest income and the fee income together, our total revenue is up 16% CAGR over the past 2 years. That is even further compounded by our PPNR, which has been up 20%. In fact, last year, we hit record PPNR of $1.43 billion. And stepping to the bottom line, both our net income and EPS grew at a 16% CAGR. Now how are we able to achieve these metrics? It is largely based on our ability to take operating leverage out of the business. So last year, for example, in 2025, we grew revenue dollars by 4x what the expense base grew. What that means from an efficiency ratio perspective is that our stated efficiency ratio was down by 430 bps, while our adjusted efficiency ratio, which excludes deposit costs that sit in our noninterest expense, was down 3 percentage points, down from 53% to 50%. How does our efficiency ratio compare versus the peer group? Our adjusted efficiency ratio at 50% sits in the top quartile versus peers. And if you were to look at just take the dollars of expenses over average assets, as you can see here on this bottom chart, we have the second lowest cost structure across the $50 billion to $300 billion banks, and that is largely because we have a branch-light and scalable business model. So with that, I'd like to close out our earnings momentum. And now I want to talk to you about the diversified businesses you've heard our different leaders talk about today. The reason we're in all these different businesses is because it allows us to be a top quartile grower on both loans and deposits. Whereas a lot of the other regional banks are dependent on M&A to drive growth, we do not need to do that. Let me start with the deposit side. In 2025, we grew the deposit base 16%. That is 5x what the regional bank peers were able to do. And putting that in dollars, that was $10.8 billion in deposit growth, while we took down brokered deposits by $1.4 billion. So we're not just focused on deposit growth, we're focused on the quality of that growth. And when you pull back the lens over a longer time period over the past 10 years, we've grown deposits at a 20% CAGR. When you move to the loan side of the balance sheet, we are a top quartile loan grower, both last year and over the past 10 years. What is really important about this is that the growth is diversified. It is diversified by geography, it is diversified by product, and it is diversified by sector and industry. We love our national business model because this is the beauty of it. We are able to go across the country and see what are the best risk-adjusted returns, in which sectors and geographies, and we're able to dynamically allocate capital to where we think we can get the best return. Now this growth is not just growth for growth's sake. It translates into 2 key metrics, which we believe are fundamental to shareholder value creation. First off, PPNR growth. Over the past 10 years, we've grown PPNR by 18%. That is a full 10 percentage points above the peer median. And when you move to tangible book value, unsurprisingly, tangible book value per share has moved in lockstep with that, up 17%, close to 3x what the peer median has done from a tangible book value growth perspective. I'd now like to move toward the resiliency of our earnings. So what you will see on this page is regardless of a variety of different rate environments, we think the business is set to perform well. On this page, you have at the top half, some of the standard scenarios that we're used to showing the Street, such as the ramp up 100 bps or down 100 bps. But we've also modeled a couple of other scenarios such as the bull flattener, bull steepener and a more adverse stagflation scenario. The first thing I would tell you about our rate sensitivity is when you look at the net interest income, we remain asset sensitive, as you will see in that page. But we tend to -- as we're managing the business, we tend to focus on earnings at risk. What's the difference? Two key things. Earnings at risk also captures the fee income in AmeriHome's business, and it also captures the ECR deposit dynamics that sit in our noninterest expense base. So we think that's the more appropriate way to think about what earnings would do. When you look at this analysis, regardless of the rate scenario we've modeled here, our earnings at risk is either stable or improving. I'll give you one example here, and it goes to what Josh was talking about earlier today. AmeriHome acts as a very nice countercyclical buffer to our naturally asset-sensitive balance sheet. So for example, in this first row, if rates go down 100 bps, our NII would go down as the loan portfolio is tied closer to the shorter end of the curve, we'd lose some NII. But if you look at our earnings at risk, it's going to be up 1.7 percentage points because we're going to outperform on the origination side with AmeriHome's business. I also want to spend some time talking about what would happen under a capital stress scenario. So on this page, we went and took the 2026 CCAR severely adverse assumptions, and we actually added some idiosyncratic items to make it even worse from a housing perspective. I've listed all the assumptions on the left, but I'll give you a couple of the high-level ones. Unemployment goes to north of 10%. You see significant declines in home prices and CRE. When you put these assumptions together, what does it mean for losses? It is about 5 percentage points of losses, 5.3, and that represents about $3 billion in pretax losses. Now because of our strong PPNR generation that can help offset some of these losses, what you see on our capital ratios is CET1 and total capital go down by about 2 percentage points in this scenario. The stress test, as you know, is over a 9-quarter period. And so these ratios represent the minimum over that period, which would be 9% and 12.5% for CET1 and total capital, respectively. We believe our income statement and balance sheet are resilient across a wide variety of environments. Now, I want to kind of bring a lot of these things together and put up on the screen kind of the scorecard for 2025. So this is Western Alliance versus the peers I mentioned. And what you will see is we are either in the top quartile or top half on a lot of these metrics. Starting with the balance sheet, you will see we grew deposits #1, and we grew loans #3. We grew both PPNR and fee income second in the group. Our expense base on adjusted basis was the second lowest. We grew EPS #6. And last year, we grew tangible book value ex AOCI as the #1 grower last year. And finally, we did that while having the sixth highest return on average tangible common equity at 15%. Now why do I walk through this? We believe there's a disconnect between the fundamental performance that we have when you contrast it to where the valuation sits, where we sit in the bottom quartile on both a price to earnings and price to tangible book value basis. Now I know what you're all thinking. He's a former investment banker, is there any way we're getting out of this section without a regression? Well, I do not want to disappoint. So here's the regressions. On the left side, I think we have the very well-established relationship between returns in the banking space and valuation. The higher returns, the higher the valuation. As many of you have seen, we sit at a material discount to sort of what the regression line would imply. I think one of the key things we're focused on as we optimize the balance sheet going forward is, is there an opportunity over the near and medium term to bridge this gap. We are also looking at one other item, which you will see on the right side of this page, which is the correlation between what we've been able to do with EPS returns over the long run, the last 15 years versus stock price performance. Okay. Now, I would like to address 2 things head on that we tend to hear in the context of the valuation. The first one is the absolute level of reserves and the second one is the cost of funding and the ECR-related deposits. So, let me start with the absolute level of reserves. Today, our total ACL to funded loans is 87 basis points. We believe, as you heard from Lynne, that number is reflective of the risk that sits in the portfolio. So for example, if you make one simple adjustment, we have $8 billion of residential loans that are covered by 3 credit-linked notes. If we were to take a loss up to the first 5 percentage points on those mortgages, it would be absorbed by cash that sits on the balance sheet given the structure. If you simply make that adjustment, our ACL would move up to 1%. We also have numerous loan categories on the balance sheet, such as mortgage warehouse loans, capital call lines, where both Western Alliance has never taken a loss, and I'm not aware of any of our peers who've taken a loss in this business away from fraud. So, when you start factoring in the mix of these loans, we think our reserve looks closer to the 140 level. So, let me throw out a couple of other statistics for you. First, if you were to take our RWA to assets, right, just straight regulatory definition, we're sitting at 64%, that is the third lowest RWA to assets among all banks between $50 billion to $300 billion in assets. And it is because 30% of our balance sheet sits in cash and securities and 25% of our loan book sits in low LTV, high FICO residential mortgages. So, we do think it is important to not only look at the absolute level, but to look at what sits in the underlying portfolio. I think Lynne did a nice job earlier, kind of showed you a different view with the composite risk score as well. So with that, I want to move to the second one, which is the funding cost. Now I acknowledge and appreciate we've got some work to do here, and I think what you're hearing from us is that journey has begun. In the first quarter, we put up $5.6 billion of deposit growth, and we now are very close already to hitting our target for the year at $8 billion. So what you're going to see from us going forward is an optimization of the deposit base. As David Bernard talked about, these are very important relationships to the bank. They've been with us for a long time. So we're going to do this in the appropriate fashion. I know there are a lot of questions around the direction of the ECR deposits. I try to do the best I put on the right side of this page to give you some direction on where we're taking this. I want to be very clear, this will not happen overnight. It's going to be deliberate. It's going to take multiple years to get there, and we're going to do it in a very methodological fashion. And I think we will get there. But here, what we're putting up on here is specialty escrow is going to continue the mix. These are the changes in mix. We'll go up 4 to 7 percentage points. Commercial banking and HOA are going to go up as a mix perspective. And what's going to come down is mortgage banking, the mix will come down somewhere between 2 to 4 percentage points Consumer Digital and Corporate/Brokered would go down by 3 to 4 points. To help you think about what this means from a profitability perspective, we think the NIM will move up from here, and we're targeting something in the 3.60% to 3.70% range. So that is the color we would give you on where we're taking the deposit base. Now the last section I want to walk you through is what is the outlook for the business. I want to start with the near-term. So on this page, we have the 2026 guidance that we gave you with earnings. I want to emphasize here, this guidance is exactly the same as a couple of weeks ago. We have not changed guidance since earnings. I do want to reiterate a couple of numbers, which I will reaffirm for the year. We are still on track to do $6 billion of HFI loan growth this year, and we're on track to hit our $8 billion deposit growth target. On the net charge-offs, even with what you saw in the 10-Q yesterday, we reaffirm our guidance range for the year in the 25 to 35 bps range. We've been saying for a while now, we do think charge-offs and the nonaccruals will be elevated in the first 2 quarters. As you heard from Lynne, there are multiple things we're working on. She talked about 6 specific loans, which is why we're confident that towards the back end of the year, we'll see some relief on the nonaccrual side. The other thing I want to flag as you're thinking about earnings for '26, I would look at the trajectory from last year. Our earnings do tend to ramp up over the course of the year. So, I would just look at that as you're thinking about the model going forward. Now moving towards the medium term, we are now establishing our medium-term targets. First, is the return on average tangible common equity. As I mentioned, our goal here is we wanted an achievable and sustainable return on average tangible common equity, and we think we can get there in that 16% to 17% range. That would be supported by a return on average assets in the 1.20% to 1.30% range and by an adjusted efficiency ratio of about 48 percentage points. Now, I wanted to spend a minute on how we're thinking about capital allocation going forward. We are going to continue to be a disciplined and dynamic allocator of capital. First off, we look to reinvest in the business. Given we've got this national reach across the country; we will put up the capital where we think we can get the best returns, and if we see an interesting opportunity to start a new S-curve or another business that can grow to be a significant part over the coming years, we will do that. On the dividend side, we're going to continue to grow dividends in line with historical precedents. Finally, on share repurchases, I think you will see here that we're going to talk about a target going forward that's dividends and buybacks in the 20% to 25% range. I do think that will be a part of the story going forward because now we have reached our target capital of 11%. And when we don't have the right opportunity on the loan side or on the business side and given what I talked about on the valuation, we would be active on the share repurchase side. So we're going to dynamically move on the capital deployment. Finally, if you bring all these pieces together now, and we've talked about a lot of them over the course of the presentation, this is the waterfall walk for ROE of how we get from 15.3% to that 16% to 17% range. We really think there is a clear line of sight to getting there, and there are 4 key levers. The first one is on the lower cost of deposits. And as you will see, it is one of the largest drivers to getting us there. With the deposit remixing we talked about, pushing down the deposit costs, we think we can get the NIM into that 3.60% to 3.70% range. Two, fee income is going to continue to be a priority for us. We talked about Josh's business with AmeriHome, the Juris income, treasury management with Tim Bruckner on the commercial banking side. We're going to target getting fee income to revenue in that 18% to 20% range. Three, Sonny talked about some of the things we're doing on the technology side to help the different businesses. We're enabling technology across the platform. We think we'll be in that 48% adjusted efficiency ratio. And finally, we think there's a lot of optimization we can do on the balance sheet. The loan-to-deposit ratio is too low today. We're targeting that to be in the 77% to 80% range. Total capital deployment in that 20% to 25%. And when we talk about the medium term, we are factoring in about $200 million to $300 million in cumulative share buybacks in this fourth lever. Now importantly, I walked you through what is in the 16% to 17%. Let me walk you through what we did not include. We do think there are tailwinds at our back, and there are multiple macro and regulatory items that could push us to the higher end or above this ROE range. First off, as you're all aware, the Basel III proposal is underway. The comment period is going on. On a preliminary basis, what we have estimated is we would get about 80 bps of RWA relief if the proposal were to go through the way it is today. We could reinvest that capital in the business. We could buy it back, but that 80 bps is not factored into the guidance I just provided you. Another thing that we're going back and forth on is the treatment of MSRs. As you know, we have a $1.5 billion MSR on the balance sheet. It is currently risk-weighted at 250%. There is dialogue going on about could that drop to 150% or 100%. Illustratively, if the MSR were to drop from 250% to 1%, that is an additional 40 basis points of CET1 capital that would be created. Moving to the second bucket, the tailoring rules. Now I know we keep talking about at some point, they're going to raise the $100 billion. We haven't seen it yet. All indications point to at some point later this year, it would happen. What we would tell you about the $100 billion is, as Emily talked about, we're prepared to cross the $100 billion, right? Given the growth profile of the bank, we've always planned to cross this and be ready for it. If they do push the $100 billion up, I think it will give us a little bit more flexibility and maybe will come with some modest expense savings. Finally, we think there is a big opportunity if we see sort of a refi boom. The current administration is very focused on home affordability. And we're currently sitting with mortgage rates around the 6.50% range. But Josh talked about it earlier. 27% of the mortgages are sitting now above 6%. And I will tell you, in the mortgage business in February, when rates dipped below 6% for 2 to 3 days, we really saw the business start to take off. So if we see the long end of the curve coming down, we think there's material upside in the mortgage business. Now to wrap up, I want to just talk about what are the key messages we walked you through over the course of today. First, Western Alliance is a scaled national commercial bank built around specialized verticals. And that model is delivering consistent above-tier growth and top-tier returns. That growth is supported by a structural funding advantage where technology-enabled deposit platforms are driving durable, lower cost and highly scalable funding. We've built a differentiated mortgage platform where AmeriHome and related businesses create a countercyclical earnings flywheel supporting client growth, fee generation and resilience across different rate environments. All of this is paired with disciplined credit and risk management and supported by deep sector expertise and a model that has proven resilient across cycles. Across the platform, technology is enabling speed, scalability and operating leverage, allowing us to continue improving profitability as we grow. So when you step back, this is a high-quality franchise with a fortified balance sheet, strong earnings momentum and a clear line of sight to a sustainable 16% to 17% return on average tangible common equity. And importantly, we do not believe that level of performance is fully reflected in the valuation today. Finally, this is being executed by an experienced battle-tested leadership team with a strong track record of delivering through cycles. So overall, I believe we are very well positioned for growth going forward. And ultimately, that's what we believe defines Western Alliance, where diversification meets innovation. I want to thank you all for your attention and for joining us today. We're going to take a short break, and then the management team and I will be back up on stage to take all of your questions. Thank you very much. [Break]

We will now begin a Q&A session with our executive team.

So I guess Miles and his team have a few mics. First, I just want to say a big thank you to the management team. We rehearsed this boy, several times on Sunday, several times on Monday. And the best we did was like 90 minutes over. So the fact that we got this inside of just being 3 minutes over, big accomplishment here. But anyway, we're open to all the questions you want, fire away, and we'll answer.

Andrew Terrell with Stephens here. Vishal, thank you for all the commentary around the profitability targets. I was just curious, you laid out the upside scenarios and what could go your way and maybe lead you to the top end or outperform. What do you see as headwinds potentially to the 16% to 17% ROATCE targets?

Yes. absolutely. It's a good question, Andrew. Thank you for it. I think obviously, as we've talked about, right, there's a bunch of different variability in the business. I think we do have AmeriHome at a 15% growth rate for this year. If this war continues, rates stay where they are, like there could be some potential risk there on the mortgage side. I think we feel very confident at the 15% right now. But I think that business is rate sensitive. I also hope, Andrew, that we've shown you that our earnings at risk even with different rate environments is still extremely resilient. I think the other thing you've seen, obviously, is we're very focused on the credit side, and we're committed to delivering sort of multiple clean quarters.

Jared Shaw at Barclays. As we look at the expectation for growth in C&I lending over the medium term, how should we think about the provision reserve growing over time? And should we think about that as a provision as part of average loans? Or what's the target as that loan portfolio continues to transition?

Yes. I'm happy to start there, the team can add. As I mentioned, from an allowance perspective, we're at the 87 bps total ACL to funded loans. What we have said and we're continuing to say is we can -- you can expect to see the trajectory of that and the direction to continue to move upwards. We do tend to reserve more on the C&I side than some of the low-risk categories. So as Tim and the business continue to push and make progress on the C&I side, you will see that ACL continue to drift up. In the near term, what we've been saying is that 87 is going to move to the low 90s before the end of the year, right? So that's kind of our near-term target, and that's largely driven by the mix shift on the loan side.

Matthew Clark, Piper Sandler. Just wanted to maybe clarify your definition of medium term. And it does -- because it sounds like the deposit remixing is going to take some time. I just want to get a sense for can you get -- obviously, you're starting to work your way there, but can you fully achieve that range without...

Thank you for the question, Matthew. I would define the medium term, call it, 2.5 to 3 years. That's the plan. And I think what's very important on these targets is we're not just trying to hit them once. The point of these targets is they're meant to be achievable when we have clear line of sight and we sustainably want to put up ROE in that range. And I would think about the medium term as 2.5 to 3 years from now.

Matthew, you did bring up something you said deposit costs and that's going to take some time. And so first, let me say, I think we're going to have to learn how to finesse our way through this because we're dealing with some of our larger clients. That's number one. Number two, deposit cost is just an input into our overall operating expenses. And when you think about deposit costs, especially in warehouse lending that David Bernard talked about, we have 6 different relationships with a lot of our warehouse lending clients. There's the warehouse lending line, MSR line, note finance line. We also have their corporate accounts and treasury management services. We can buy loans and put them on our portfolio or they could sell loans to Josh, and he can then package them off and sell them out. So deposit cost is just an expense line item. What we manage is the overall relationship and the value of the relationship. And so while everyone sometimes says, gee, look at deposit costs are going up, you don't say or you should say, look at PPNR, look what PPNR is doing. So if we have to sometimes overpay a little bit, which we're not happy about, and we're trying to work that number down. But if deposit costs rise a little bit, look at the total PPNR line item and see how that's moving. And that's what we're really focused on. But yes, deposit optimization is going to be one of our top priorities for the next couple of years.

Ben Gerlinger, Citi. It seems -- it's pretty clear that credit is the elephant in the room in terms of your earnings multiple. And with the most recent 10-Q, you've had a life science. Now through digging, it seems like you have 2 other life science relationships, one is better positioned. But it gets to the broader question, when you look through your list, I know you gave some guidance of resolution near term, some legally might take a little bit longer. How do you get investors comfortable that this list might not see net new additions or any new additions at all as you work through the next, call it, 2 years of progression on a cleanup perspective?

So we wanted to be more transparent today that you saw us give you a little bit more in particular about that office vintage from 2020 to 2022. I would tell you that we do have the life science buildings within that particular portfolio. And we are 85% through, as I mentioned, either performing, already modified and/or rated non-pass. The property mentioned in the 10-Q was one of those. We have 2 others that are out there. One of them is 100% leased. Another one has a primary tenant by a very, very strong well-heeled tenant with borrower support. We're actually in the process of modifying that loan to allow additional time for runway leasing. So we don't see any risk in those assets other than what we have already identified in the 10-Q.

I'd like to add something on the subsequent event that we disclosed the other day. First that property has an all-in cost of about $200 million, right? Our loan is $99 million. So the first $100 million that's going to be wiped out is going to be sponsor equity. That's number one. Number two, we focus on tangible book value and growing tangible book and we have had a practice and I think some success in taking in these credits or these properties, putting them in REO, leasing them up and then selling them out. So for those that want to go back and check, I think it was the second quarter of 2025, where REO topped out around 213, 214 and then it dropped down to about 130, right? We've been doing just that. We're taking these properties. We lease them up ourselves, sponsors are usually slow, but we're faster in taking action. Plus think of ourselves as venture funds, if you will. If we're taking in a property at 50% off of current cost to build, and our price to lease up could be less than what the market is, and we can lease that up and then we can grow it. And so that's another way that we attack these properties. And so you should think about that as we begin to unfold what our strategy will be around this particular property. It will not -- it should not be foreign to you if we decide to take it in and then lease it up ourselves.

Just a follow up to Ben's question. So you left the 2026 charge-off outlook unchanged. Does that mean you don't expect any material loss from that life science loan? Or is it still too early to determine the financial impact? And do you have a specific reserve on that?

Yes. So we have an appraisal that's in process. We do not have value back on that particular building yet. But I would say, based on what we've experienced in the rest of the portfolio, we kind of watched how that works out. That's why we continue to say that even with that, we think that the 25 to 35 basis points is still the right guidance for the year.

I want to just give a little more color to that question. So in Q2, I think our outlook is you should expect around the same dollar amount as we had in Q1 in terms of charge-offs, right? Embedded in that number when we gave you that guidance was a designation for unknown losses that come in. And so if there is an appraisal shortfall on this property, it will go against this designated -- undesignated amount inside of the charge-off forecast.

Okay. And then more broadly on credit. So you've had the handful of one-offs, including the 10-Q disclosure yesterday. Anything you're doing different on credit risk management, assessing certain loan portfolios, maybe new deeper dives, just taking a fresher look at where your credit and risk management more broadly stands?

Yes, I'll start off and then I'll let some of my colleagues jump in. So relative to the 2 frauds, we had both our second line of defense take a very deep dive on those 2 items, and we also had an outside firm come in. And their conclusions were as follows: One, the underlying credit origination process was good, okay? Where we fell short was even though we followed customary and standard practices of the industry, those practices could be improved. And we found the weaknesses, and we have improved them and we've changed our guidelines along those lines. Emily, you want to add something on that?

I mean the only thing I'd add is the second line does do about a 40% to 45% penetration rate on all of the loans within the book. So they do a very, very deep dive. They do it every quarter. It's not once every 2 or 3 years. It's every quarter they're looking at that level of detail. And so they're doing horizontal reviews across the board to see where they can make improvements. But...

And that's all part of the LFI preparation. So we actually go deeper in our credit review than our examiners do when they come in. So it's just to be prepared.

I'd add one thing to that, though. You asked, are you doing anything different? We're a learning organization. Everything that we do advises how we move forward. You pay the price too long in banking of being wrong on something. So of course, in office, we're not active in office. In the other areas, we've made adjustments to how we assess counterparty, counterparty risk and agency provisions for activities within that, that deeply shape how we move forward. So we're not at all tone-deaf to anything that we're hearing here. And I just reiterate, we're talking about 2 areas, very focused areas of the bank.

I'll give you a couple of interesting facts that are interesting. One, in the fraud that relates to note finance. Note finance over the last 10 years has made $450 million of direct PPNR, $450 million over 10 years. We took one $26 million charge-off, which the story has still yet to be told on that, and we believe that we have a method to get back a recovery on that. So $450 million over 10 years, one $26 million charge-off, which we think we'll recover something on. That's all the same type of Rod Carew-type of baseball statistics that you love. So put that one there. The second one is I'm going to cut the onion a little bit finer, and I'll let my General Counsel make a faith at me if I'm wrong about this. So I'll look at her as I begin to say that -- she's already making a face. So she probably knows where I want to go and she's probably shaking her head, please don't do that. But the second item is a breach of contract, and it's a little bit different. And we acted very responsible, very quickly to have that loan significantly paid down by 2/3. And that story hasn't been told, and we will aggressively pursue even though we can't talk about the item because it's in litigation, but we will aggressively pursue capture there, recaptured. I do okay? Okay. I thought I was going to be brought up to HR after this, to be honest with you.

Gary Tenner, D.A. Davidson. Dale, I had a bigger picture question for you with your new role on the deposit side and some comments around digital assets earlier. Just curious for your thoughts around the Clarity Act and agentic commerce and how you think that could impact the opportunities on the digital asset side over time and Western Alliance in particular?

This has been a fast-moving space. And I do think kind of getting the architecture around it solid, kind of reinforced so that people know what the rules are is going to be helpful in terms of having this sector kind of accelerate. So I'm looking forward to Clarity Act resolution in terms of what this looks like, I think, is helpful. We're really focused on being in a position to be at the nexus of where action happens. I think if we are in a place where it's like, hey, you want to get something 24/7 in terms of liquidity, you can come to us. We can give you fiat and this type of thing, and we can give you options based upon whatever you might have on the crypto side that, as I said, we don't hold. So for us, it's like we're kind of, I don't know, neutral in terms of kind of how this plays out. I mean, because what we're interested in is being the servicer for these types of activities in terms of what transpires. So I do think having more structure around this is generally a good thing.

David Smith, Truist Securities. On the capital front, the 80 basis points potentially freed up from the Basel III reforms is nice, but how are you thinking about the potential usability of a nominally higher CET1 ratio versus what might be expected from you on, say, a TCE basis from regulators or clients or the market being held just to the same TCE standard that you are today regardless of a nominally higher CET1?

I think we obviously manage the 2 metrics. The one, we actually think on the CET1 at 11%, we're being a little bit conservative because I think when you look at the commentary that's out there, it feels like pure banks are maybe pushing now more to the 10.5% range. I think obviously, we will take happily sort of any regulatory relief we can get on the RWA side and figure out what's the best way to deploy it. I think after thinking about the businesses and what are the core S-curves where you can deploy them, I think you could see us redeploy that into higher share repurchases going forward. But we do appreciate your point on we also need to manage the TCE to TA. And I think that also depends on the AOCI position and other things that would happen on the balance sheet. I do think the TCE to TA, there is that disconnect right now a little bit because we do have 64% RWA to assets. We are sitting on a lot of cash and securities when you think about the TCE to TA ratio.

Second derivative of the deposit optimization may be moving deposits off the balance sheet, which will help that ratio as well. So we don't talk about that as much, but I think that's the second benefit.

And then on the lending front, clearly, it's a very diverse lending book in terms of the variety of segments with a lot of niche businesses. It does seem like at least some of them can lend themselves towards larger loan sizes. Can you share anything about the granularity from a client perspective, how many loans or relationships are $100 million plus, $200 million plus, et cetera?

No. Okay? I think that's more from a competitive front that we won't do that. But Lynne, why don't you talk about how we look at it from a credit record?

Yes. So I would say that our executive team and senior loan committee meet at least annually, if not twice a year, to discuss what we call our direct obligor size, which is what you're referencing there. And I mentioned it a little bit in my presentation. Single asset, single source of repayment, we're going to have a lower obligor size there. If there is a collateral pool with multiple sources of repayment, we might edge up a little bit higher indirect obligor size. But we are very focused on that. And I will tell you, just recently, a couple of months ago, we were shifting some a little bit down and some a little bit up based on what we saw in the sector and the performance in the portfolio. So it is something that we constantly revisit to make sure that it is within the credit risk appetite of the bank.

I will add something that's interesting, and I talk to other CEOs of similar-sized banks. And I think we're a little bit different. First, for our large loans, which is anything over $25 million has to go to the senior loan committee. Lynne heads the senior loan committee. First thing, no one person's yes vote is more important than anyone else's. Number two, there are 7 people on the senior loan committee sitting up here -- it's Dale, Lynne, Bruckner, myself, Tim Boothe is out there, Mike Riley, I don't know if Steve Dean is somewhere floating around here. But anyway, there are 7 of us, right? We all 7 have to say yes. There's no 6-1 or 5-2 vote. If one person says no, we take it very seriously, and we either try to address the issues that person has or that person may convince us otherwise, okay? Now I will say there is one no vote that's a little bit greater than all the other votes. And I've only exercised that once and something I didn't like in a particular -- a narrow vertical. But absent that, we all 7 have to say yes. And the other thing I'll say that I think is different, all the other banks, I don't know of another CEO and their top senior management team that, A, goes out and visits these clients before loans are granted. And I don't know of another CEO, at least the ones I've talked to, that sits on the loan committee and also reads 400 to 500 pages of loan docs over a long weekend, every weekend like all of us do to debate it. And I think that's what gives us a lot of our strength. And so we understand these loans, and we put a lot of pressure, I think, on the people that present to know their facts when they present to us so we can give final approval. And I think that's a little bit different, and I don't think that really gets a lot of play, but it goes to the credit discipline of the company.

Can we get a mic over here to Janet, please? And then...

This is Juan Recalde from Wells Fargo. This question is from Mike Mayo. For each of you, what's the biggest risk to your plans? You seem confident but sometimes plans don't pan out.

There was the question, what's the risk, what...?

The biggest risk that you see to your plans?

I'm sorry, the greatest risk...

The biggest risk.

The biggest risk.

Each of our plans or to our collective plan.

Do you want to start?

Yes, I'm happy to start. I think from my perspective, with the financial targets and just trying to think about where we're going to be over the medium term -- it's the thing I can't control, which is sort of what happens on the macro side. Is there some other disruption somewhere in the world? Does something happen to oil prices? Are we going to have another drastic move in rates? I'd say what I hope you took away from the presentation was we're trying to prepare the balance sheet and income statement for a wide variety of macro events, credit cycles, stress rate environments. But to me, that's what keeps me up at night. Like you wake up one morning, something has happened somewhere and there's a drastic change in the macro environment.

Stepping way back from the presentation today, there's some common elements and threads that went through everything that we saw and talked about. One, our foundation is built on diversity, on discrete revenue streams attached deeply to customer needs. That extends through on the lending side as it does on the deposit side. In each case, is that value proposition, the need that we make creates a defensible moat. The other thing that you'll see is as we move forward, everything we talked about is also building on that diversity. We don't put too many eggs in one basket simply put. And I think it's that diversity that allows us to really play best in any situation, as opposed to depending on 1 or 2 things to happen in the macro economy to make it work for us. So we have to be the best in any situation. And yes, we're positioning through diversity, through diversity in the portfolio, through a very active now syndication capability to reduce our per deal exposure and add granularity, but we're positioned stronger than we ever have been for anything that hits us.

I would say that for the deposit businesses, what really we're interested in is I want to continue to be able to stack these in terms of these new verticals. And we have some other ideas that we have not pursued yet. Maybe it's in part because we can only do so much, and we do want to stagger, kind of, the implementation. But I think the biggest challenge we have or the biggest risk we might have is, can we find the right team? I'm going to not describe it, but there is one deposit business that at least Ken and I had wanted to do for 5, 7 years that I think really has a lot of potential. We have not been able to find the team that can execute that. And really, what's important in terms of how we've been able to be successful in those already is we got people that knew what they were doing already, and that's been really a key in terms of not making mistakes on getting these things implemented and out of the gate.

Chris McGratty from KBW. Ken and Dale, you guys were leaders in optimizing the balance sheet in '23 and '24. The question I get a lot is, are you getting paid for the growth that you're putting on the balance sheet today? So I guess going back to your conversation that you have at the Board level, what would it take for you to pivot the capital priorities to be perhaps more buyback near term, hit your targets, valuation improves and then kind of flex it a little bit over the medium term?

So I think that's a very fair question and it's something that does come up at the Board, and it's something that we discuss among ourselves. So the first thing I'll say is this mini strategic plan that Vishal discussed, our loan growth is a little bit less than what it historically has been. So that's the first place you'll see some change. Second, while there have been many companies that have pivoted to have much lower loan growth and a stronger buyback, the stock performance total shareholder return, I should say, has not been better than ours, right? And so I think that proves our point, whether it be through tangible book value or total shareholder return that find taking the money and putting it into opportunities to grow the balance sheet prudently, responsibly in a thoughtful and sound way long term that produces the best results for shareholders. And when we sit and we talk about these things, and we talk about them a lot, we talk about building this enduring lasting bank that will be here well after all of us move on with our careers. And to do that, you've got to be very thoughtful in the verticals that we play in, both on the deposit side to get the liquidity to grow and then on the loan side. But it is an interesting question. We do talk about it. And to be honest with you, in Q1, you saw the pivot, you saw -- we just looked at the stock and the stock should not be in the high 60s. And we said, wait a minute, we'll slow down HFI growth. We took in held-for-sale growth, which we were able to get more interest income. And for those that remember our Q1 earnings from Q4 to Q1, our net interest income was flat, which for 2 days less, that's pretty remarkable. We have a higher net interest margin, and we bought back $50 million of share. So we do think about capital management. We do actively manage through it. But your question, Chris, I think, is a little bit more longer in terms of duration and how we think. And we think we've proven that concentrating on sound and safe and thoughtful long-term organic growth seems to work out best for our shareholders.

Janet Lee from TD Cowen. I can see that you're very frustrated with your multiple in your stock considering the growth that you've had for many years. Just given that you have 10, 20 different verticals in your national business lines as well as just overall for the bank, would you consider slowing your growth a little bit more and should pivot more towards the regional bank that may be perceived as carrying a lower risk profile from the Street?

And I'll start off and Bruck will -- is probably dying to jump in. Part of what we do is in a lot of other people's regional banks. I just -- we're not doing all that, that's so much different, okay? We talk about these lines of business a little bit more. But this is what commercial banking is, right? And I don't think we're any more -- I think we're less complicated than some of the larger $200 billion, $300 billion banks that have a wealth management business, that have a consumer finance business. We just particularly concentrate as a stand-alone commercial bank, right, looking at different opportunities to move and adjust capital and liquidity as we see the appropriate returns. And for us, boy, that is just so second nature for us. And I think your question relates a little bit to Chris' question about slowing down. It's not about complication for us. It's about where the best returns are. Tim, did you want to jump in?

I want to really kind of build on that comment. We are capitalists. We're efficient allocators of capital in everything that we do. That's the duty to our shareholders. That's the duty to our employees. Vishal on the second to the last slide showed some things coming down and some other things going up. Among those was commercial banking will increase in share. We have the ability now to increase in share in commercial banking because it's proportionately more profitable than it was for us. And this is the core of regional banking, includes our community, our specialty commercial, our end market real estate. It's more profitable because we went back and did the hard work to rebuild those engines. So around treasury management, around payment capabilities to strengthen our syndication capabilities to add granularity to that book. As that continues to become more attractive, we can maintain a pace in income with less reliance on some of these other areas. So a more efficient utilization of capital comes out of that.

I will say what I find humorous, if I could say, use that word, is as a group, I would say all the analysts in the audience, how you project out our EPS year-over-year. So for example, in '25, we took in about $23 million of gains because we were able to time the market, put on some swaps and macro hedges that work very much in our favor. And during a particular quarter, when we announced our earnings, many of you will say, well, we're not counting that because that's not repeatable. By the way, we repeated it in every single quarter since we started doing it. But let me just accept that. It's not repeatable. And then we get to the year-end and we look at what you guys are projecting for consensus and you start with all those gains in it and then you grow the earnings up to a certain level. So there's some days I think that you don't want us to slow down as much as you ask that question all the time. Now we don't generate our EPS and our forecast based on your consensus, but we are very conscious of it, and we still would like to equal or beat. But to be honest with you, your consensus is way up here, and we have to work hard to get there. It's not an easy -- to tell you the truth, lower your consensus and if you really believe that, and I'd rather come in and everyone beat and raise. But when we just get to where we are and we're exhausted, and we pat ourselves on the back. I'm sorry, we have parties -- oh, man, I can't believe we got to this number. And even this past quarter, we got to $2.22 adjusted when before the war started $2.18. And even with $2.18, we were saying, man, that's going to be up. That's going to be up. That's a great quarter if we get to $2.18. And we get to $2.22 and like we're exhausted and we didn't get much credit for getting to $2.22. So I'll just say that a little bit as -- I'm using you as a proxy for all the other analysts. Sometimes it comes out of both sides of your mouth, and I'm not certain what you want. And by the way, if we were to say here today that we're cutting back our growth, boom, the stock drops dramatically. So we try to manage through all this is what I'm saying.

That's very fair.

Thank you for letting me have a moment, okay, to vent. I appreciate it. Normally, they send me to a person I have to lie down on the couch to pay about $300, but this is much, much better. And you all get lunch for listening.

That's totally fair. If I could squeeze in just one more quick question. What was the rationale -- what is the rationale behind purchasing the $13 million senior lien loan, nonperforming loan on the Cantor position? And what does that do to potential collateral position?

You want to take that?

Yes. So obviously, we've been working diligently on the resolution for that loan. And the original premise was that there was value that would have absolutely supported, right, all of our first liens. We've now discovered that due to fraud, there are some liens that are ahead of us. We've completed our review of those properties. We have updated appraisals. We've also updated the liens. And now we're much more laser-focused on which are the ones that we want to take, obviously, through foreclosure and sale in order for our loan to be repaid. And in those instances, for those assets that have value and have what we're calling meaningful leftover value after a first lien, we wanted to have that first lien so that we could control the disposition of the asset and maximize the value that we're getting through that sale. So what you're seeing us doing is protecting our liens that we have there for the assets where we know there is value that will assist in the full -- the repayment of that outstanding loan balance. We did take a charge because we're not going to go after every single one of them initially, although we will try to recover on every single property that's there. And then we are going to circle back and pursue the guarantors because we believe with the Bad Boy fraud carve-out guarantee that we have, they are 100% liable for that loss, and we intend to go after that for recoveries. But we did not factor that into the analysis with the charge that we took in the first quarter.

If I could be so bold, it's actually good news because what it means is that the liens in front of us turned out to be a little smaller than they thought we were going to be. And when we had the appraisals done, the property was worth a little bit more. And so it's like, yes, you know what, we want to protect our interest. We got to bump out number one where we should have been all along.

Yes.

And Lynne, is it fair to say that we may repeat this process again if we find there's extra incremental value to certain properties that could help pay off the majority of the loans, not all of these properties are equal, that we would do this again, right?

That's correct.

And so I think when you look at our NPLs, if you could think about it as what is an NPL that was a loan that we generated versus something we purchased to protect ourselves. That's the way we think about it as well.

But we're only doing it because, again, to Dale's point, the appraisals validated that there were value in the properties to repay the liens that were there.

Again Timur Braziler, UBS. I think my biggest takeaway from today is just meeting the depths on the team. And I'm just wondering maybe if you want to use this opportunity to talk to potential succession planning and then maybe as a corollary to that, to this morning's announcement about Steve Curley leaving the bank and how that might impact said succession planning.

Yes. So Steve got a great offer to become a CEO of a small bank on the East Coast. We wish him the best of luck. Part of our succession planning is exactly that with the Board. And actually, it's through the Governance Committee and the Governance Committee reports to the Board every quarter, and then we talk about this a lot in the executive session. It's disappointing that Steve left. I'm glad he's leaving for a better job. It goes to show the type of quality of senior management team that we have sitting in front of you and also in the audience. But we prepare for those types of things, and that's been a constant contact. I'm not going anywhere, as I said, that may have influenced Steve a little bit to not wait around, okay? Looking around if I had a bad cough, maybe there was a different possibility. Come in, measure my curtains in the office. But Steve had some -- in all services, Steve had a desire to lead a company. He's very well qualified. He'll be missed. But where is David? David started with Steve creating the Warehouse Lending Group. And David runs all of the Warehouse Lending Group, okay? Sonny also reported to Steve, but stand-alone running our tech and innovation and IT. I think we've got a very strong senior bench. And if I didn't show up tomorrow, the Board knows exactly what to do and how to move forward. And in fact, to be honest with you, there was a couple of months that I had to step away. And what happened? The bank grew 23% year-over-year because of this entire leadership team and the people that are out there. I like the succession planning that we do, and it's very helpful and the Board holds me to that, and I have to be very well prepared at every Board meeting. Thank you for asking the question.

Ryan Kenny with Morgan Stanley. Thank you for a very thorough day. One of the questions that everyone in this room is always grappling with is where we are in the environment and in the economic cycle. And we've seen C&I loan growth and demand really accelerate across the industry over the last few quarters. Ken, you mentioned that you're a very active CEO on the ground meeting with key clients. What's really the mood on the ground? How sustainable is the demand and C&I growth that we've seen accelerate?

Yes. So I'll give my answer and all the other folks that have been out meeting with clients. From a commercial side, the clients still have their animal spirits. They're still building and developing and thinking for the future. They haven't slowed down their business materially. We, of course, worry about as bankers, all the macroeconomic and geopolitical events that are happening. We haven't seen that yet at all. And yes, and I was just -- I'll be honest with you, I was on the road with Brent 3, 4 weeks ago, just as soon as a lot of the news of the private credit was breaking. And so we get out there real quickly and the credit portfolios of all our clients are performing well. And then our portfolio is performing better than our clients' portfolios are. So we haven't seen that weakness, and we've seen -- still seen a lot of appetite to grow their business. And by the way, this is what plays into -- I bet we haven't rehearsed this, but Tim will now take you through all the different lines of business where we find opportunities. Back to Janet, your question -- back to your question.

Thanks, Ken.

There he is.

Yes. I went through it in the presentation. I'll touch on it a little more deep here. Look at the BBB spreads, high-yield spreads and mortgage spreads. We're in a tightened environment, one of the tightest we've seen. Meanwhile, and that has been sustained over the last 12 months -- this bank is making more money in commercial banking and community banking than it has at any other point. And that's because we've really focused our team on the value proposition on the full relationship. This is not -- sure, you win sometimes with loans. But this is not a lead with loan business strategy. This is a strategy where we engage in segments where we have a compelling value proposition. We're deeply tied to the industry with recognized professionals. If we don't have that, you know what, when spreads are this tight, you don't even win with long. And we're still winning, we're still growing, and we expect that, that can continue. In fact, it's actually accelerating when you get into what we're doing in the newer segments in Food and Agriculture, in Healthcare, in Aerospace and Defense, some of which are actually buoyed a bit by what's going on in the economy right now. So we're optimistic. You'll see us continue to add dimension, breadth and depth to our business as opposed to watch our business, as it exists, fare in a changing economy.

There are no more questions. I think we'll wrap it up, Ken.

Yes. Listen, thank you. This is the first time we did this. I hope you found it interesting. I hope you understand how we think, how we run the business, what's inside the business, why we're comfortable with our projected credit performance, why we're comfortable with looking out and hitting our return on average assets and return on average tangible common equity guides. And we just thank you very much for attending, and there's lunch, and then we're spread out through the room, and we're happy to continue to answer any questions that you have. But thank you all very much for coming today.