Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2020	Feb. 19, 2021	Jun. 30, 2020
Entity Information [Line Items]
Document Annual Report	true
Document Transition Report	false
Title of 12(b) Security	Common Stock, $0.0001 Par Value
Entity Address, Address Line One	One E. Washington Street, Suite 1400
Entity Address, City or Town	Phoenix
Entity Address, State or Province	AZ
Entity Incorporation, State or Country Code	DE
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY
Entity Registrant Name	WESTERN ALLIANCE BANCORPORATION
City Area Code	602
Local Phone Number	389-3500
Entity Central Index Key	0001212545
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		101,097,102
Entity Shell Company	false
Entity Public Float			$ 3,540
Entity File Number	001-32550
Entity Tax Identification Number	88-0365922
Entity Address, Postal Zip Code	85004
ICFR Auditor Attestation Flag	true
Common Stock [Member]
Entity Information [Line Items]
Trading Symbol	WAL
Security Exchange Name	NYSE
Subordinated Debt [Member]
Entity Information [Line Items]
Title of 12(b) Security	6.25% Subordinated Debentures due 2056
Trading Symbol	WALA
Security Exchange Name	NYSE

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Dec. 31, 2020	Dec. 31, 2019
Assets:
Cash and due from banks	$ 174.2	$ 186.0
Interest-bearing deposits in other financial institutions	2,497.5	248.6
Cash, cash equivalents and restricted cash	2,671.7	434.6
Available-for-sale Securities	4,708.5	3,346.3
Investment securities - HTM, at amortized cost; fair value of $516,261 at December 31, 2019 and $298,648 at December 31, 2018	568.8	485.1
Debt Securities, Held-to-maturity, Allowance for Credit Loss	(6.8)	0.0
Debt Securities, Held-to-maturity, Net	562.0	485.1
Investment securities - equity	167.3	138.7
Investments in restricted stock, at cost	67.0	66.5
Loans - HFS	0.0	21.8
Loans:
Loans and Leases Receivable, Net of Deferred Income	27,053.0	21,101.5
Less: allowance for credit losses	(278.9)	(167.8)
Loans and Leases Receivable, Net Amount, Total	26,774.1	20,933.7
Premises and equipment, net	134.1	125.8
Operating lease right of use asset	72.5	72.6
Bank owned life insurance	176.3	174.0
Goodwill and intangible assets, net	298.5	297.6
Deferred tax assets, net	31.3	18.0
Investments in LIHTC and renewable energy	405.6	409.4
Other assets	392.1	297.8
Total assets	36,461.0	26,821.9
Deposits:
Non-interest-bearing demand	13,463.3	8,537.9
Interest-bearing	18,467.2	14,258.6
Total deposits	31,930.5	22,796.5
Customer repurchase agreements	16.0	16.7
Other borrowings	5.0	0.0
Qualifying debt	548.7	393.6
Operating lease liability	79.9	78.1
Other liabilities	467.4	520.3
Total liabilities	33,047.5	23,805.2
Commitments and contingencies (Note 15)
Stockholders’ equity:
Common Stocks, Including Additional Paid in Capital	1,390.9	1,374.1
Treasury stock, at cost (2,003,873 shares at December 31, 2019 and 1,793,231 shares at December 31, 2018)	(71.1)	(62.7)
Accumulated other comprehensive income	92.3	25.0
Retained earnings	2,001.4	1,680.3
Total stockholders’ equity	3,413.5	3,016.7
Total liabilities and stockholders’ equity	36,461.0	26,821.9
Debt Securities, Available-for-sale, Amortized Cost	4,586.4	3,317.9
Debt Securities, Held-to-maturity, Fair Value	$ 611.8	$ 516.3
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000,000	200,000,000
Common Stock, Shares, Issued	103,013,290	104,527,544
Treasury Stock, Shares	2,169,397	2,003,873

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions	Dec. 31, 2020	Dec. 31, 2019
Debt Securities, Available-for-sale, Amortized Cost	$ 4,586.4	$ 3,317.9
Debt Securities, Held-to-maturity, Fair Value	$ 611.8	$ 516.3
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	103,013,290	104,527,544

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Interest income:
Loans, including fees	$ 1,144.3	$ 1,093.0	$ 910.6
Investment securities	107.8	111.9	106.8
Dividends and other	9.7	20.1	16.1
Total interest income	1,261.8	1,225.0	1,033.5
Interest expense:
Deposits	70.4	158.4	90.5
Qualifying debt	23.9	23.4	22.3
Other short-term borrowings	0.6	2.8	4.8
Total interest expense	94.9	184.6	117.6
Net interest income	1,166.9	1,040.4	915.9
Provision for credit losses	123.6	19.3	25.0
Net interest income after provision for credit losses	1,043.3	1,021.1	890.9
Non-interest income:
Service charges and fees	23.3	23.3	22.3
Income from equity investments	12.7	8.3	8.6
Card income	6.5	7.0	8.0
Foreign currency income	5.6	5.0	4.8
Income from bank owned life insurance	10.2	3.9	3.9
Lending related income and gains (losses) on sale of loans, net	1.0	3.2	4.3
Gain (loss) on sales of investment securities, net	0.2	3.1	(7.6)
Fair value gain (loss) adjustments on assets measured at fair value, net	3.8	5.1	(3.6)
Other income	7.5	6.2	2.4
Total non-interest income	70.8	65.1	43.1
Non-interest expense:
Salaries and employee benefits	303.6	279.3	253.2
Legal, professional, and directors' fees	42.2	37.0	28.7
Occupancy	34.1	32.6	29.4
Deposit costs	18.5	31.7	18.9
Data processing	35.7	30.6	22.7
Insurance	13.3	11.9	14.0
Loan and repossessed asset expenses	7.1	7.6	4.6
Business development	5.5	7.0	6.0
Marketing	4.1	4.2	3.8
Card expense	2.2	2.2	4.3
Intangible amortization	1.6	1.6	1.6
Net (gain) loss on sales / valuations of repossessed and other assets	(1.5)	3.8	0.0
Other expense	25.2	32.5	36.5
Total non-interest expense	491.6	482.0	423.7
Income before provision for income taxes	622.5	604.2	510.3
Income tax expense	115.9	105.0	74.5
Net income	$ 506.6	$ 499.2	$ 435.8
Earnings per share:
Basic	$ 5.06	$ 4.86	$ 4.16
Diluted	$ 5.04	$ 4.84	$ 4.14
Weighted average number of common shares outstanding:
Basic	100,200	102,700	104,700
Diluted	100,500	103,100	105,400

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax	$ 67,500	$ 61,000	$ (35,200)
OCI, Debt Securities, Available-for-Sale, Unrealized Holding Gain (Loss), before Adjustment, after Tax	70,900	71,200	(40,800)
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax	300	400	100
OCI, Debt Securities, Available-for-Sale, Unrealized Holding Gain (Loss), before Adjustment, Tax	(23,100)	(23,200)	13,400
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, Tax	100	100	0
Other Comprehensive Income (Loss), Financial Liability, Fair Value Option, Unrealized Gain (Loss) Arising During Period, Tax	1,100	3,200	(1,900)
Realized gain on sale of securities, tax	0	(700)	1,800
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax	(200)	(2,400)	5,800
Net Income (Loss) Attributable to Parent	506,600	499,200	435,800
Other comprehensive income (loss), net:
OCI, Debt Securities, Available-for-Sale, Unrealized Holding Gain (Loss), before Adjustment, after Tax	70,900	71,200	(40,800)
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax	300	400	100
Change in unrealized gain (loss) on junior subordinated debt, net of tax	(3,100)	(9,800)	5,700
Amount reclassified from accumulated other comprehensive income	200	2,400	(5,800)
Net other comprehensive income (loss)	67,300	58,600	(29,400)
Accumulated other comprehensive income	92,300	25,000	(33,600)
Comprehensive income	573,900	557,800	406,400
Realized gain on sale of securities, tax	0	(700)	1,800
Unrealized holding gains (losses) on AFS
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax	70,900	71,200	(40,800)
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax	(200)	(2,300)	5,800
Other comprehensive income (loss), net:
Net other comprehensive income (loss)	70,700	68,900	(35,000)
Accumulated other comprehensive income	92,100	21,400	(47,500)
Accumulated Gain (Loss), Financial Liability, Fair Value Option, Attributable to Parent [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax	(3,100)	(9,800)	5,700
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax	0	0	0
Other comprehensive income (loss), net:
Net other comprehensive income (loss)	(3,100)	(9,800)	5,700
Accumulated other comprehensive income	500	3,600	13,400
Impairment loss on securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax	0	0	0
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax	0	(100)	0
Other comprehensive income (loss), net:
Net other comprehensive income (loss)	0	(100)	0
Accumulated other comprehensive income	0	0	100
Supplemental Employee Retirement Plan [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax	(300)	(400)	(100)
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax	0	0	0
Other comprehensive income (loss), net:
Net other comprehensive income (loss)	(300)	(400)	(100)
Accumulated other comprehensive income	$ (300)	$ 0	$ 400

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Statement of Comprehensive Income [Abstract]
Realized gain on sale of securities, tax	$ 0	$ (700)	$ 1,800

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid in Capital [Member]	Treasury Stock [Member]	AOCI Attributable to Parent [Member]	Accumulated (Deficit) [Member]
Beginning balance at Dec. 31, 2017	$ 2,229,700	$ 0	$ 1,424,600	$ (40,200)	$ (3,100)	$ 848,400
Beginning balance, shares at Dec. 31, 2017		105,500,000
Net Income (Loss) Attributable to Parent	435,800					435,800
Restricted stock grants, net, shares		500,000
Restricted stock grants, net	$ 26,200		26,200
Share-based Payment Arrangement, Shares Withheld for Tax Withholding Obligation	223,125	200,000
Share-based Payment Arrangement, Decrease for Tax Withholding Obligation	$ 12,900			12,900
Stock Repurchased and Retired During Period, Shares		(900,000)
Stock Repurchased and Retired During Period, Value	(35,700)		(33,100)			(2,600)
Other comprehensive (loss) income, net	(29,400)				(29,400)
Ending balance at Dec. 31, 2018	2,613,700	$ 0	1,417,700	(53,100)	(33,600)	1,282,700
Ending balance, shares at Dec. 31, 2018		104,900,000
Net Income (Loss) Attributable to Parent	499,200					499,200
Restricted stock grants, net, shares		600,000
Restricted stock grants, net	$ 26,300		26,300
Share-based Payment Arrangement, Shares Withheld for Tax Withholding Obligation	210,657	200,000
Share-based Payment Arrangement, Decrease for Tax Withholding Obligation	$ 9,600			(9,600)
Stock Repurchased and Retired During Period, Shares	(2,822,402)	(2,800,000)
Stock Repurchased and Retired During Period, Value	$ (120,200)		(69,900)			(50,300)
Dividends, Common Stock, Cash	(51,300)					(51,300)
Other comprehensive (loss) income, net	58,600				58,600
Ending balance at Dec. 31, 2019	3,016,700	$ 0	1,374,100	(62,700)	25,000	1,680,300
Ending balance, shares at Dec. 31, 2019		102,500,000
Net Income (Loss) Attributable to Parent	506,600					506,600
Restricted stock grants, net, shares		600,000
Restricted stock grants, net	$ 29,100		29,100
Share-based Payment Arrangement, Shares Withheld for Tax Withholding Obligation	165,489	200,000
Share-based Payment Arrangement, Decrease for Tax Withholding Obligation	$ 8,400			8,400
Stock Repurchased and Retired During Period, Shares	(2,066,479)	(2,100,000)
Stock Repurchased and Retired During Period, Value	$ (71,600)		(12,300)			(59,300)
Dividends, Common Stock, Cash	(101,300)					(101,300)
Other comprehensive (loss) income, net	67,300				67,300
Ending balance at Dec. 31, 2020	3,413,500	$ 0	$ 1,390,900	$ (71,100)	$ 92,300	$ 2,001,400
Ending balance, shares at Dec. 31, 2020		100,800,000
Stock Repurchase Program, Authorized Amount	$ 250,000

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Cash flows from operating activities:
Net Income (Loss) Attributable to Parent	$ 506.6	$ 499.2	$ 435.8
Adjustments to reconcile net income to cash provided by operating activities:
Provision for credit losses	123.6	19.3	25.0
Depreciation and amortization	22.9	18.5	14.3
Stock-based compensation	28.7	26.2	25.7
Deferred income taxes	(25.1)	(5.1)	(16.7)
Amortization of net premiums for investment securities	28.2	17.1	14.2
Amortization of tax credit investments	49.2	41.5	35.9
Amortization of operating lease right of use asset	11.7	10.5	0.0
Amortization of Deferred Loan Origination Fees, Net	(51.2)	(42.7)	(40.4)
Life Insurance, Corporate or Bank Owned, Change in Value	(4.6)
Income from bank owned life insurance	(10.2)	(3.9)	(3.9)
(Gains) / Losses on:
Gain (loss) on sales of investment securities, net	0.2	3.1	(7.6)
Assets measured at fair value, net	(3.8)	(5.1)	3.6
Sale of loans	1.7	(0.7)	(2.6)
BOLI	(5.6)	0.0	0.0
Sales / valuations of repossessed and other assets, net	(1.5)	3.8	0.0
Changes in other assets and liabilities, net	(10.4)	142.3	42.5
Changes in other assets and liabilities, net
Net cash provided by operating activities	670.2	717.8	541.0
Investment securities - AFS
Purchases	(2,966.2)	(927.6)	(520.7)
Principal pay downs and maturities	1,515.5	785.7	425.2
Proceeds from sales	156.6	150.4	154.4
Purchases	(182.7)	(131.4)	(56.6)
Principal pay downs and maturities	17.4	21.6	9.0
Proceeds from sales	0.0	10.0	0.0
Purchases	(34.5)	(32.7)	(71.7)
Redemption of principal (reinvestment of dividends)	7.6	14.6	(0.6)
Proceeds from sales	0.0	0.0	48.6
Purchase of investment tax credits	(132.2)	(141.7)	(109.6)
Purchase of other investments	(0.9)	(9.1)	(4.5)
Proceeds from bank owned life insurance, net	5.9	0.0	1.7
Net increase in loans	(5,897.2)	(3,429.0)	(2,586.7)
Purchase of premises, equipment, and other assets, net	(26.8)	(33.8)	(1.9)
Net cash used in investing activities	(7,537.5)	(3,723.0)	(2,713.4)
Cash flows from financing activities:
Net increase in deposits	9,134.0	3,619.0	2,204.9
Net proceeds from issuance of subordinated debt	221.9	0.0	0.0
Redemption of subordinated debt	(75.0)	0.0	0.0
Net increase (decrease) in other borrowings	4.3	(496.7)	97.4
Payment, Tax Withholding, Share-based Payment Arrangement	7.9	9.6	12.4
Common stock repurchases	71.6	120.2	35.7
Cash dividends paid on common stock	101.3	51.3	0.0
Net cash provided by financing activities	9,104.4	2,941.2	2,254.2
Net increase (decrease) in cash, cash equivalents, and restricted cash	2,237.1	(64.0)	81.8
Cash, cash equivalents, and restricted cash at beginning of period	434.6	498.6	416.8
Cash, cash equivalents, and restricted cash at end of period	2,671.7	434.6	498.6
Cash paid (received) during the period for:
Interest	108.6	180.4	113.5
Income taxes, net	$ 44.2	$ (23.4)	$ 18.8

Deposits (Notes)

12 Months Ended

Dec. 31, 2020

Deposit [Abstract]

Deposits [Abstract]

7. DEPOSITS

The table below summarizes deposits by type:


	December 31,
	2020		2019
	(in millions)
Non-interest-bearing demand deposits	$	13,463.3	$	8,537.9
Interest-bearing transaction accounts	4,396.4		2,760.9
Savings and money market accounts	12,413.4		9,120.8
Time certificates of deposit ($250,000 or more)	602.0		1,426.1
Other time deposits	1,055.4		950.8
Total deposits	$	31,930.5	$	22,796.5

The summary of the contractual maturities for all time deposits as of December 31, 2020 is as follows:


	December 31,
	(in millions)
2021	$	1,515.8
2022	131.8
2023	6.5
2024	2.4
2025	0.9

Total	$	1,657.4

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

Deposits (Tables)

12 Months Ended

Dec. 31, 2020

Deposit [Abstract]

Schedule Of Deposits Table [Text Block]

The table below summarizes deposits by type:


	December 31,
	2020		2019
	(in millions)
Non-interest-bearing demand deposits	$	13,463.3	$	8,537.9
Interest-bearing transaction accounts	4,396.4		2,760.9
Savings and money market accounts	12,413.4		9,120.8
Time certificates of deposit ($250,000 or more)	602.0		1,426.1
Other time deposits	1,055.4		950.8
Total deposits	$	31,930.5	$	22,796.5

Scheduled Maturities Of Time Deposits Table [Text Block]

The summary of the contractual maturities for all time deposits as of December 31, 2020 is as follows:


	December 31,
	(in millions)
2021	$	1,515.8
2022	131.8
2023	6.5
2024	2.4
2025	0.9

Total	$	1,657.4

Deposits (Details) - USD ($) $ in Millions	12 Months Ended
Deposits (Details) - USD ($) $ in Millions	Dec. 31, 2020	Dec. 31, 2019
Deposit [Abstract]
Non-interest-bearing demand	$ 13,463.3	$ 8,537.9
Certificates of Deposit, CDARS	496.4	407.7
Non-interest-bearing demand	5,900.0	3,100.0
Time Deposit Maturities, Next Twelve Months	1,515.8
Time Deposit Maturities, Year Two	131.8
Time Deposit Maturities, Year Three	6.5
Time Deposit Maturities, Year Four	2.4
Time Deposit Maturities, Year Five	0.9
Time Deposits	1,657.4
Interest Bearing Deposit Demand	4,396.4	2,760.9
Deposits, Savings Deposits	12,413.4	9,120.8
Time Deposits, $250,000 or more	602.0	1,426.1
Time Deposits, Less than $250,000	1,055.4	950.8
Total deposits	31,930.5	22,796.5
Deposits, ICS	1,300.0	661.8
Deposits, Wholesale	554.8	1,100.0
Deposits costs, deposits with earnings credits	$ 17.0	$ 30.5

Stockholders' Equity Treasury shares (Details) - $ / shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Statement of Stockholders' Equity [Abstract]
Share-based Payment Arrangement, Shares Withheld for Tax Withholding Obligation	165,489	210,657	223,125
Equity, Class of Treasury Stock [Line Items]
Treasury Stock Acquired, Average Cost Per Share	$ 50.80	$ 45.80	$ 57.88

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Nature of operation

WAL is a bank holding company headquartered in Phoenix, Arizona, incorporated under the laws of the state of Delaware. WAL provides a full spectrum of deposit, lending, treasury management, international banking, and online banking products and services through its wholly-owned banking subsidiary, WAB.

WAB operates the following full-service banking divisions: ABA, BON, FIB, Bridge, and TPB. The Company also serves business customers through a national platform of specialized financial services. In addition, the Company has two non-bank subsidiaries LVSP, which held and managed certain OREO properties, and CSI, a captive insurance company formed and licensed under the laws of the State of Arizona and established as part of the Company's overall enterprise risk management strategy.

Basis of presentation

The accounting and reporting policies of the Company are in accordance with GAAP and conform to practices within the financial services industry. The accounts of the Company and its consolidated subsidiaries are included in the Consolidated Financial Statements.

Recent accounting pronouncements

Convertible Debt and Derivatives and Hedging

In August 2020, the FASB issued guidance within ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). The amendments in this update affect entities that issue convertible instruments and/or contracts indexed to and potentially settled in an entity’s own equity. The new ASU simplifies the convertible accounting framework through elimination of the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The amendments to Subtopics 470 and 815 are effective for interim and annual reporting periods beginning after December 15, 2021 and are not expected to have a material impact on the Company’s Consolidated Financial Statements.

Reference Rate Reform

In March 2020, the FASB issued guidance within ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, in response to the scheduled discontinuation of LIBOR on December 31, 2021. Since the issuance of this guidance, the publication cessation of U.S. dollar LIBOR has been extended to June 30, 2023. The amendments in this Update provide optional guidance designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, borrowings) necessitated by reference rate reform.

The following optional expedients for applying the requirements of certain Topics or Industry Subtopics in the Codification are permitted for contracts that are modified because of reference rate reform and that meet certain scope guidance: 1) modifications of contracts within the scope of Topics 310, Receivables, and 470, Debt, should be accounted for by prospectively adjusting the effective interest rate; 2) modifications of contracts within the scope of Topic 842, Leases, should be accounted for as a continuation of the existing contracts with no reassessments of the lease classification and the discount rate or remeasurements of lease payments that otherwise would be required under this Topic for modifications not accounted for as separate contracts; 3) modifications of contracts do not require an entity to reassess its original conclusion about whether that contract contains an embedded derivative that is clearly and closely related to the economic characteristics and risks of the host contract under Subtopic 815-15, Derivatives and Hedging- Embedded Derivatives; and 4) for other Topics or Industry Subtopics in the Codification, the amendments in this Update also include a general principle that permits an entity to consider contract modifications due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. An entity may make a one-time election to sell, transfer, or both sell and transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform and that are classified as held to maturity before January 1, 2020.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope in order to clarify that certain optional expedients and exceptions in Topic 848 apply to derivatives that are affected by the discounting transition. Specifically, certain provisions in Topic 848, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discount, or contract price alignment that is modified as a result of reference rate reform.

The amendments in these Updates are effective immediately for all entities and apply to contract modifications through December 31, 2022. The adoption of this accounting guidance is not expected to have a material impact on the Company's Consolidated Financial Statements.

Income Taxes

In December 2019, the FASB issued guidance within ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in ASU 2019-12 are intended to reduce the cost and complexity of applying ASC 740. The amendments that are applicable to the Company address: 1) franchise and other taxes partially based on income; 2) step-up in basis of goodwill in a business combination; 3) allocation of tax expense in separate entity financial statements; and 4) interim recognition of enactment of tax laws or rate changes. The amendments to Topic 740 are effective for interim and annual reporting periods beginning after December 15, 2020 and are not expected to have a material impact on the Company’s Consolidated Financial Statements.

Recently adopted accounting guidance

Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued guidance within ASU 2016-13, Measurement of Credit Losses on Financial Instruments. The new standard significantly changes the impairment model for most financial assets that are measured at amortized cost, including off-balance sheet credit exposures, from an incurred loss model to an expected loss model. The amendments in ASU 2016-13 to Topic 326, Financial Instruments - Credit Losses, require that an organization measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The ASU also requires enhanced disclosures, including qualitative and quantitative disclosures that provide additional information about the amounts recorded in the financial statements. Additionally, the ASU amends the accounting for credit losses on AFS debt securities and purchased financial assets with credit deterioration.

The Company adopted the amendments within ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. The Company's financial results for reporting periods beginning after January 1, 2020 are presented in accordance with ASC 326, while prior-period amounts continue to be reported in accordance with legacy GAAP. The Company recorded a cumulative effect adjustment to retained earnings, which resulted in a total decrease to retained earnings of $24.9 million as of January 1, 2020. This adjustment was due primarily to expected total losses under the new model in the Company's loan portfolio and, to a lesser extent, its off-balance sheet credit exposures.

The Company applied the prospective transition approach for loans purchased with credit deterioration that were previously classified as PCI and previously accounted for under ASC 310-30. In accordance with the new standard, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. As of January 1, 2020, the amortized cost basis of the PCD loans was adjusted to reflect an allowance for credit losses of $3.3 million. The remaining noncredit discount (based on the adjusted amortized cost basis) related to PCD loans of $1.1 million will be accreted into interest income at the loan's effective interest rate as of January 1, 2020. The Company has elected not to maintain its pools of loans accounted for under ASC 310-30.

The Company applied the prospective transition approach for debt securities for which other-than-temporary impairment had been recognized prior to January 1, 2020. As a result, the amortized cost basis remains the same before and after the effective date. The effective interest rate on these debt securities was not changed. Recoveries of amounts previously written off relating to improvements in cash flows after January 1, 2020 will be recorded in earnings when received.

The following table summarizes the estimated allowance for credit losses related to financial assets and off-balance sheet credit exposures and the corresponding impacts on the deferred tax asset and retained earnings upon adoption of ASC 326:


	January 1, 2020
	Pre-ASC 326 Adoption		Post-ASC 326 Adoption		Impact of ASC 326 Adoption
	(in millions)
Assets:
Allowance for credit losses on HTM securities	$	—	$	2.6	$	2.6
Allowance for credit losses on loans	167.8		186.9		19.1
Deferred tax asset	18.0		26.7		8.7
Liabilities:
Off-balance sheet credit exposures	$	9.0	$	24.0	$	15.1
Equity:
Retained earnings	$	1,680.3	$	1,655.4	$	(24.9)

Management has elected to take advantage of the capital relief option that delays the estimated impact of the adoption of ASC 326 on regulatory capital by up to two years, with a three-year transition period to phase out the cumulative benefit to regulatory capital provided during the two-year delay.

In April 2019, the FASB issued guidance within ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The amendments in ASU 2019-04 clarify or correct the guidance in these Topics. With respect to Topic 326, ASU 2019-04 addresses a number of issues as it relates to the CECL standard including consideration of accrued interest, recoveries, variable-rate financial instruments, prepayments, and extension and renewal options, among other things, in the measurement of expected credit losses. The amendments to Topic 326 were adopted concurrently with ASU 2016-13 and did not have a significant impact on the Company’s Consolidated Financial Statements. With respect to Topic 815, Derivatives and Hedging, ASU 2019-04 clarifies issues related to partial-term hedges, hedged debt securities, and transitioning from a quantitative method of assessing hedge effectiveness to a more simplified method. The Company does not have partial-term hedges or any hedged debt securities and the transition issues discussed in the ASU 2019-04 are not applicable to the Company. Accordingly, the amendments to Topic 815 did not have an impact on the Company's Consolidated Financial Statements. With respect to Topic 825, Financial Instruments, on recognizing and measuring financial instruments, ASU 2019-04 addresses: 1) the scope of the guidance; 2) the requirement for remeasurement under ASC 820 when using the measurement alternative for equity securities without readily determinable fair values; 3) certain disclosure requirements; and 4) which equity securities have to be remeasured at historical exchange rates. The amendments to Topic 825 were effective January 1, 2020 and did not have a material impact on the Company’s Consolidated Financial Statements.

In May 2019, the FASB issued guidance within ASU 2019-05, Financial Instruments - Credit Losses, to provide entities with an option to irrevocably elect the fair value option for eligible financial assets measured at amortized cost. The election is to be applied on an instrument-by-instrument basis upon adoption of Topic 326 and is not available for either AFS or HTM debt securities. The amendments in ASU 2019-05 should be applied on a modified-retrospective basis through a cumulative-effect adjustment to the opening balance of retained earnings as of the date that an entity adopts the amendments in ASU 2016-13. The Company did not elect this fair value option as part of its adoption of ASU 2016-13 on January 1, 2020.

In November 2019, the FASB issued guidance within ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses. The amendments in ASU 2019-11 clarify or address specific issues about certain aspects of the amendments in ASU 2016-13. These issues include measurement and reporting requirements related to: 1) the allowance for credit losses for purchased assets with credit deterioration; 2) prepayment assumptions on existing troubled debt restructurings; 3) extension of disclosure relief for accrued interest receivable balances; and 4) expected credit losses on collateralized financial assets. The adoption of ASU 2019-11 is concurrent with ASU 2016-13 and, adoption of these amendments on January 1, 2020, did not have a significant impact on the Company's Consolidated Financial Statements.

Fair Value Measurements

In August 2018, the FASB issued guidance within ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendments within ASU 2018-13 remove, modify, and supplement the disclosure requirements for fair value measurements. Disclosure requirements that were removed include: 1) the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; 2) the policy for timing of transfers between levels; and 3) the valuation processes for Level 3 fair value measurements. The amendments clarify that the measurement uncertainty disclosure is intended to communicate information about the uncertainty in measurement as of the reporting date. Additional disclosure requirements include: 1) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and 2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. With the exception of the above additional disclosure requirements, which will be applied prospectively, all other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments in this ASU did not have a significant impact on the Company's Consolidated Financial Statements.

Internal-Use Software

In August 2018, the FASB issued guidance within ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Accordingly, the amendments in this Update require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The amendments in this Update also require that the capitalized implementation costs of a hosting arrangement that is a service contract be expensed over the term of the hosting arrangement. Presentation requirements include: 1) expense related to the capitalized implementation costs should be presented in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement; 2) payments for capitalized implementation costs in the statement of cash flows should be classified in the same manner as payments made for fees associated with the hosting element; and 3) capitalized implementation costs in the statement of financial position should be presented in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented. The adoption of this guidance did not have a significant impact on the Company's Consolidated Financial Statements.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management's estimates and judgments are ongoing and are based on experience, current and expected future conditions, third-party evaluations and various other assumptions that management believes are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities, as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. Actual results may differ from those estimates and assumptions used in the Consolidated Financial Statements and related notes. Material estimates that are susceptible to significant changes in the near term, particularly to the extent that economic conditions worsen or persist longer than expected in an adverse state, relate to: the determination of the allowance for credit losses; certain assets and liabilities carried at fair value; and accounting for income taxes.

Principles of consolidation

As of December 31, 2020, WAL has the following significant wholly-owned subsidiaries: WAB and eight unconsolidated subsidiaries used as business trusts in connection with the issuance of trust-preferred securities.

The Bank has the following significant wholly-owned subsidiaries: WABT, which holds certain investment securities, municipal and nonprofit loans, and leases; WA PWI, which holds interests in certain limited partnerships invested primarily in low income housing tax credits and small business investment corporations; Helios Prime, which holds interests in certain limited partnerships invested in renewable energy projects; and BW Real Estate, Inc., which operates as a real estate investment trust and holds certain of WAB's real estate loans and related securities.

The Company does not have any other significant entities that should be consolidated. All significant intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Certain amounts reported in prior periods may have been reclassified in the Consolidated Financial Statements to conform to the current presentation. The reclassifications have no effect on net income or stockholders’ equity as previously reported.

Cash and cash equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks (including cash items in process of clearing), and federal funds sold. Cash flows from loans originated by the Company and customer deposit accounts are reported net.

The Company maintains deposit accounts with other banks, which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts.

Cash reserve requirements

Effective on March 26, 2020, the Board of Governors of the Federal Reserve System reduced the reserve requirement ratios to zero percent. Prior to this decision, depository institutions were required by law to maintain reserves against their transaction deposits. The Company's total reserve balance was approximately $164.1 million as of December 31, 2019.

Investment securities

Investment securities include debt and equity securities. Debt securities may be classified as HTM, AFS, or trading. The appropriate classification is initially decided at the time of purchase. Securities classified as HTM are those debt securities that the Company has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs, or general economic conditions. The sale of an HTM security within three months of its maturity date or after the majority of the principal outstanding has been collected is considered a maturity for purposes of classification and disclosure. Securities classified as AFS are securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as AFS would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, decline in credit quality, and regulatory capital considerations.

HTM securities are carried at amortized cost. AFS securities are carried at their estimated fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax. When AFS debt securities are sold, the unrealized gains or losses are reclassified from OCI to non-interest income. Trading securities are carried at their estimated fair value, with changes in fair value reported in earnings as part of non-interest income.

Equity securities are carried at their estimated fair value, with changes in fair value reported in earnings as part of non-interest income.

Interest income is recognized based on the coupon rate and includes the amortization of purchase premiums and the accretion of purchase discounts. Premiums and discounts on investment securities are generally amortized or accreted over the contractual life of the security using the interest method. For the Company's mortgage-backed securities, amortization or accretion of premiums or discounts are adjusted for anticipated prepayments. Gains and losses on the sale of investment securities are recorded on the trade date and determined using the specific identification method.

A debt security is placed on nonaccrual status at the time its principal or interest payments become 90 days past due. Interest accrued but not received for a security placed on nonaccrual is reversed against interest income.

Allowance for credit losses on investment securities

On January 1, 2020, the Company adopted the amendments within ASU 2016-13, which replaces the legacy US GAAP OTTI model with a credit loss model. The credit loss model under ASC 326-20, applicable to HTM debt securities, requires recognition of lifetime expected credit losses through an allowance account at the time the security is purchased. The Company measures expected credit losses on its HTM debt securities on a collective basis by major security type. The Company's HTM securities portfolio consists of low income housing tax-exempt bonds, which share similar risk characteristics with the Company's CRE, non-owner occupied or construction and land loan pools, given the similarity in underlying assets or collateral. Accordingly, expected credit losses on HTM securities are estimated using the same models and approaches as these loan pools, which utilize risk parameters (probability of default, loss given default, and exposure at default) in the measurement of expected credit losses. The historical data used to estimate probability of default and severity of loss in the event of default is derived or obtained from internal and external sources and adjusted for the expected effects of reasonable and supportable

forecasts over the expected lives of the securities on those historical losses. Accrued interest receivable on the HTM securities, which is included in other assets on the Consolidated Balance Sheet, is excluded from the estimate of expected credit losses.

The credit loss model under ASC 326-30, applicable to AFS debt securities, requires recognition of credit losses through an allowance account, but retains the concept from the OTTI model that credit losses are recognized once securities become impaired. For AFS debt securities, a decline in fair value due to credit loss results in recognition of an allowance for credit losses. Impairment may result from credit deterioration of the issuer or collateral underlying the security. The assessment of determining if a decline in fair value resulted from a credit loss is performed at the individual security level. Among other factors, the Company considers: 1) the extent to which the fair value is less than the amortized cost basis; 2) the financial condition and near term prospects of the issuer, including consideration of relevant financial metrics or ratios of the issuer; 3) any adverse conditions related to an industry or geographic area of an issuer; 4) any changes to the rating of the security by a rating agency; and 5) any past due principal or interest payments from the issuer. If an assessment of the above factors indicates that a credit loss exists, the Company records an allowance for credit losses for the excess of the amortized cost basis over the present value of cash flows expected to be collected, limited to the amount that the security's fair value is less than its amortized cost basis. Subsequent changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense. Interest accruals and amortization and accretion of premiums and discounts are suspended when the credit loss is recognized in earnings. Any interest received after the security has been placed on nonaccrual status is recognized on a cash basis. Accrued interest receivable on AFS securities, which is included in other assets on the Consolidated Balance Sheet, is excluded from the estimate of expected credit losses.

For each AFS security in an unrealized loss position, the Company also considers: 1) its intent to retain the security until anticipated recovery of the security's fair value; and 2) whether it is more-likely-than not that the Company would be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the debt security is written down to its fair value and the write-down is charged against the allowance for credit losses with any incremental impairment recorded in earnings.

Writeoffs are made through reversal of the allowance for credit losses and direct writeoff of the amortized cost basis of the AFS security. The Company considers the following events to be indicators that a writeoff should be taken: 1) bankruptcy of the issuer; 2) significant adverse event(s) affecting the issuer in which it is improbable for the issuer to make its remaining payments on the security; and 3) significant loss of value of the underlying collateral behind a security. Recoveries on debt securities, if any, are recorded in the period received.

Restricted stock

WAB is a member of the Federal Reserve System and, as part of its membership, is required to maintain stock in the FRB in a specified ratio to its capital. In addition, WAB is a member of the FHLB system and, accordingly, maintains an investment in capital stock of the FHLB based on the borrowing capacity used. These investments are considered equity securities with no actively traded market. Therefore, the shares are considered restricted investment securities. These investments are carried at cost, which is equal to the value at which they may be redeemed. The dividend income received from the stock is reported in interest income. The Company conducts a periodic review and evaluation of its restricted stock to determine if any impairment exists. No impairment has been recorded to date.

Loans held for sale

Loans held for sale consist of loans that the Company originates (or acquires) and intends to sell. These loans are carried at the lower of aggregate cost or fair value. Fair value is determined based on quoted fair market values or, when not available, discounted cash flows or appraisals of underlying collateral or the credit quality of the borrower. Gains and losses on the sale of loans are recognized pursuant to ASC 860, Transfers and Servicing. Interest income on these loans is accrued daily and loan origination fees and costs are deferred and included in the cost basis of the loan. The Company issues various representations and warranties associated with these loan sales. The Company has not experienced any losses as a result of these representations and warranties.

Loans held for investment

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost. Amortized cost is the amount of unpaid principal, adjusted for unamortized net deferred fees and costs, premiums and discounts, and writeoffs. In addition, the amortized cost of loans subject to a fair value hedge are adjusted for changes in value attributable to the effective portion of the hedged benchmark interest rate risk.

The Company may also purchase loans or acquire loans through a business combination. At the purchase or acquisition date, loans are evaluated to determine if there has been more than insignificant credit deterioration since origination. Loans that have

experienced more than insignificant credit deterioration since origination are referred to as PCD loans. In its evaluation of whether a loan has experienced more than insignificant deterioration in credit quality since origination, the Company takes into consideration loan grades, loan-to-values greater than policy limits, past due and nonaccrual status, and TDR loans. The Company may also consider external credit rating agency ratings for borrowers and for non-commercial loans, FICO score or band, probability of default levels, number of times past due, and standard deviations corresponding to FICO score or band. The initial estimate of credit losses on PCD loans is added to the purchase price on the acquisition date to establish the initial amortized cost basis of the loan; accordingly, the initial recognition of expected credit losses has no impact on net income. When the initial measurement of expected credit losses on PCD loans are calculated on a pooled loan basis, the expected credit losses are allocated to each loan within the pool. Any difference between the initial amortized cost basis and the unpaid principal balance of the loan represents a noncredit discount or premium, which is accreted (or amortized) into interest income over the life of the loan. Subsequent changes to the allowance for credit losses on PCD loans are recorded through the provision for credit losses. For purchased loans that are not deemed to have experienced more than insignificant credit deterioration since origination, any discounts or premiums included in the purchase price are accreted (or amortized) over the contractual life of the individual loan. For additional information, see "Note 3. Loans, Leases and Allowance for Credit Losses" of these Notes to Consolidated Financial Statements.

In applying the effective yield method to loans, the Company generally applies the contractual method whereby loan fees collected for the origination of loans less direct loan origination costs (net of deferred loan fees), as well as premiums and discounts and certain purchase accounting adjustments, are amortized over the contractual life of the loan through interest income. If a loan has scheduled payments, the amortization of the net deferred loan fee is calculated using the interest method over the contractual life of the loan. If a loan does not have scheduled payments, such as a line of credit, the net deferred loan fee is recognized as interest income on a straight-line basis over the contractual life of the loan commitment. Commitment fees based on a percentage of a customer’s unused line of credit and fees related to standby letters of credit are recognized over the commitment period. When loans are repaid, any remaining unamortized balances of premiums, discounts, or net deferred fees are recognized as interest income.

Conversely, with respect to loans originated under the PPP, the Company incorporates projected prepayments in calculating effective yield. As a result, net deferred fees are accreted into interest income faster than would be the case when applying the contractual method based upon the timing and amount of estimated forgiven loan balances. The Company expects that a majority of PPP loans will qualify for forgiveness under the SBA program, based on requested loan amounts largely representing qualifying expenses at the time of application.

Nonaccrual loans

When a borrower discontinues making payments as contractually required by the note, the Company must determine whether it is appropriate to continue to accrue interest. The Company ceases accruing interest income when the loan has become delinquent by more than 90 days or when management determines that the full repayment of principal and collection of interest according to contractual terms is no longer likely. Past due status is based on the contractual terms of the loan. The Company may decide to continue to accrue interest on certain loans more than 90 days delinquent if the loans are well secured by collateral and in the process of collection.

For all loan types, when a loan is placed on nonaccrual status, all interest accrued but uncollected is reversed against interest income in the period in which the status is changed, and the Company makes a loan-level decision to apply either the cash basis or cost recovery method. The Company may recognize income on a cash basis when a payment is received and only for those nonaccrual loans for which the collection of the remaining principal balance is not in doubt. Under the cost recovery method, subsequent payments received from the customer are applied to principal and generally no further interest income is recognized until the principal has been paid in full or until circumstances have changed such that payments are again consistently received as contractually required. Loans are returned to accrual status when all of the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Troubled Debt Restructured Loans

A TDR loan is a loan on which the Company, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that the Company would not otherwise consider. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. The evaluation is performed under the Company's internal underwriting policy. The loan terms that may be modified or restructured due to a borrower’s financial situation include, but are not limited to, a reduction in the stated interest rate, an extension of the maturity or renewal of the loan at an interest rate below current market, a reduction in the face amount of the debt, a reduction in the accrued interest, or deferral of interest payments. A TDR loan may be returned to accrual status when the loan is brought current, has performed in accordance with the contractual

restructured terms for a reasonable period of time (generally six months), and the ultimate collectability of the total contractual restructured principal and interest is no longer in doubt. Consistent with regulatory guidance, a TDR loan that is subsequently modified in another restructuring agreement but has shown sustained performance and classification as a TDR, will be removed from TDR status provided that the modified terms were market-based at the time of modification.

The CARES Act, signed into law on March 27, 2020, permits financial institutions to suspend requirements under GAAP for loan modifications to borrowers affected by COVID-19 that would otherwise be characterized as TDRs and suspend any determination related thereto if (i) the loan modification is made between March 1, 2020 and the earlier of December 31, 2020 or 60 days after the end of the coronavirus emergency declaration and (ii) the applicable loan was not more than 30 days past due as of December 31, 2019. In addition, federal bank regulatory authorities have issued guidance to encourage financial institutions to make loan modifications for borrowers affected by COVID-19 and have assured financial institutions that they will neither receive supervisory criticism for such prudent loan modifications, nor be required by examiners to automatically categorize COVID-19-related loan modifications as TDRs. The Company is applying this guidance to qualifying loan modifications.

Credit quality indicators

Loans are regularly reviewed to assess credit quality indicators and to determine appropriate loan classification and grading in accordance with applicable bank regulations. The Company’s risk rating methodology assigns risk ratings ranging from 1 to 9, where a higher rating represents higher risk. The Company differentiates its loan segments based on shared risk characteristics for which expected credit loss is measured on a pool basis.

The nine risk rating categories can be generally described by the following groupings for loans:

"Pass" (grades 1 through 5): The Company has five pass risk ratings, which represent a level of credit quality that ranges from no well-defined deficiency or weakness to some noted weakness; however, the risk of default on any loan classified as pass is expected to be remote. The five pass risk ratings are described below:

Minimal risk. These consist of loans that are fully secured either with cash held in a deposit account at the Bank or by readily marketable securities with an acceptable margin based on the type of security pledged.

Low risk. These consist of loans with a high investment grade rating equivalent.

Modest risk. These consist of loans where the credit facility greatly exceeds all policy requirements or with policy exceptions that are appropriately mitigated. A secondary source of repayment is verified and considered sustainable. Collateral coverage on these loans is sufficient to fully cover the debt as a tertiary source of repayment. Debt of the borrower is low relative to borrower’s financial strength and ability to pay.

Average risk. These consist of loans where the credit facility meets or exceeds all policy requirements or with policy exceptions that are appropriately mitigated. A secondary source of repayment is available to service the debt. Collateral coverage is more than adequate to cover the debt. The borrower exhibits acceptable cash flow and moderate leverage.

Acceptable risk. These consist of loans with an acceptable primary source of repayment, but a less than preferable secondary source of repayment. Cash flow is adequate to service debt, but there is minimal excess cash flow. Leverage is moderate or high.

"Special mention" (grade 6): Generally these are assets that possess potential weaknesses that warrant management's close attention. These loans may involve borrowers with adverse financial trends, higher debt-to-equity ratios, or weaker liquidity positions, but not to the degree of being considered a “problem loan” where risk of loss may be apparent. Loans in this category are usually performing as agreed, although there may be non-compliance with financial covenants.

"Substandard" (grade 7): These assets are characterized by well-defined credit weaknesses and carry the distinct possibility that the Company will sustain some loss if such weakness or deficiency is not corrected. All loans 90 days or more past due and all loans on nonaccrual status are considered at least "Substandard," unless extraordinary circumstances would suggest otherwise.

"Doubtful" (grade 8): These assets have all the weaknesses inherent in those classified as "Substandard" with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable, but because of certain known factors that may work to the advantage and strengthening of the asset (for example, capital injection, perfecting liens on additional collateral and refinancing plans), classification as an estimated loss is deferred until a more precise status may be determined. Due to the high probability of loss, loans classified as "Doubtful" are placed on nonaccrual status.

"Loss" (grade 9): These assets are considered uncollectible and having such little recoverable value that it is not practical to defer writing off the asset. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practicable or desirable to defer writing off the asset, even though partial recovery may be achieved in the future.

Allowance for credit losses on loans

Prior to January 1, 2020, the allowance for credit losses on loans was based on incurred credit losses in accordance with accounting policies disclosed in "Note 1. Summary of Significant Accounting Policies" in the accompanying Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

On January 1, 2020, the Company adopted the amendments within ASU 2016-13, Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets carried at amortized cost from an incurred loss model to an expected loss model. The discussion below reflects the current expected credit loss model methodology. Credit risk is inherent in the business of extending loans and leases to borrowers and is continuously monitored by management and reflected within the allowance for credit losses for loans. The allowance for credit losses is an estimate of life-of-loan losses for the Company's loans held for investment. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of a loan to present the net amount expected to be collected on the loan. Accrued interest receivable on loans, which is included in other assets on the Consolidated Balance Sheet, is excluded from the estimate of expected credit losses. Expected recoveries of amounts previously written off and expected to be written off are included in the valuation account and may not exceed the aggregate of amounts previously written off and expected to be written off. The Company formally re-evaluates and establishes the appropriate level of the allowance for credit losses on a quarterly basis.

Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In future periods, evaluations of the overall loan portfolio or particular segments of the loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance for credit losses and credit loss expense in those future periods. The allowance level is influenced by loan volumes, mix, loan performance metrics, asset quality characteristics, delinquency status, historical credit loss experience, and the inputs and assumptions in economic forecasts, such as macroeconomic inputs, length of reasonable and supportable forecast periods, and reversion methods. The methodology for estimating the amount of expected credit losses reported in the allowance for credit losses has two basic components: first, an asset-specific component involving individual loans that do not share risk characteristics with other loans and the measurement of expected credit losses for such individual loans and; second, a pooled component for estimated expected credit losses for pools of loans that share similar risk characteristics.

Loans that do not share risk characteristics with other loans

Loans that do not share risk characteristics with other loans are evaluated on an individual basis. Loans evaluated individually are not included in the collective evaluation. These loans consist of loans with unique features or loans that no longer share risk characteristics with other pooled loans. The process for determining whether a loan should be evaluated on an individual basis begins with determination of credit rating. All loans graded substandard or worse and all PCD loans, irrespective of credit rating, are assigned a reserve based on an individual evaluation. For these loans, the allowance is based primarily on the fair value of the underlying collateral, utilizing independent third-party appraisals.

Loans that share similar risk characteristics with other loans

In estimating the component of the allowance for credit losses for loans that share similar risk characteristics with other loans, such loans are segregated into loan segments. The Company's primary portfolio segments have changed due to adoption of the amendments within ASU 2016-13 to align with the methodology applied in estimating the allowance for credit losses under CECL. Loans are designated into loan segments based on loans pooled by product types, business lines, and similar risk characteristics or areas of risk concentration. Accordingly, the loan portfolio segments discussed below are based upon CECL-defined shared risk characteristics and are not comparable to the segments reported prior to adoption of the new accounting guidance.

In determining the allowance for credit losses, the Company derives an estimate of expected credit losses primarily using an expected loss methodology that incorporates risk parameters (probability of default, loss given default, and exposure at default), which are derived from various vendor models, internally-developed statistical models, or non-statistical estimation approaches. Probability of default is projected in these models or estimation approaches using multiple economic scenarios, whose outcomes are weighted based on the Company's economic outlook and were developed to incorporate relevant information about past events, current conditions, and reasonable and supportable forecasts. With the exception of the Company's residential loan segment, the Company's PD models share a common definition of default, which include loans that are 90 days past due, on nonaccrual status, have a writeoff, or obligor bankruptcy. Input reversion is used for all loan segment models, except for the

commercial and industrial and CRE, owner-occupied loan segments. Output reversion is used for the commercial and industrial and CRE, owner-occupied segments by incorporating, after the forecast period, a one-year linear reversion to the long-term reversion rate in year three through the remaining life of the loans within the respective segments. LGDs are typically derived from the Company's historical loss experience. However, for the residential, warehouse lending, and municipal and nonprofit loan segments, where the Company has either zero (or near zero) losses, or has a limited loss history through the last economic downturn, certain non-modeled methodologies are employed. Factors utilized in calculating average LGD vary for each loan segment and are further described below. Exposure at default refers to the Company's exposure to loss at the time of borrower default and is calculated using an amortization schedule based on contractual loan terms, adjusted for a prepayment rate assumption. Prepayment trends are sensitive to interest rates and the macroeconomic environment. Fixed rate loans are more influenced by interest rates, whereas variable rate loans are more influenced by the macroeconomic environment. After the quantitative expected loss estimates are calculated, management then adjusts these estimates to incorporate considerations of current trends and conditions that are not captured in the quantitative loss estimates, through the use of qualitative and/or environmental factors.

The following provides credit quality indicators and risk elements most relevant in monitoring and measuring the allowance for credit losses for each of the loan portfolio segments identified:

Warehouse lending

The warehouse lending portfolio segment consists of loans that have a monitored borrowing base to mortgage companies and similar lenders and are primarily structured as commercial and industrial loans. These loans are collateralized by real estate notes and mortgages or mortgage servicing rights and the borrowing base of these loans is tightly monitored and controlled by the Company. The primary support for the loan takes the form of pledged collateral, with secondary support provided by the capacity of the financial institution. The collateral-driven nature of these loans distinguish them from traditional commercial and industrial loans. These loans are impacted by interest rate shocks, residential lending rates, prepayment assumptions, and general real estate stress. As a result of the unique loan characteristics, limited historical default and loss experience, and the collateral nature of this loan portfolio segment, the Company uses a non-modeled approach to estimate expected credit losses, leveraging grade information, grade migration history, and management judgment.

Municipal and nonprofit

The municipal and nonprofit portfolio segment consists of loans to local governments, government-operated utilities, special assessment districts, hospitals, schools and other nonprofits. These loans are generally, but not exclusively, entered into for the purpose of financing real estate investment or for refinancing existing debt and are primarily structured as commercial and industrial loans. Loans are supported by taxes or utility fees, and in some cases tax liens on real estate, operating revenue of the institution, or other collateral support the loans. Unemployment rates and the market valuation of residential properties have an effect on the tax revenues supporting these loans; however, these loans tend to be less cyclical in comparison to similar commercial loans as these loans rely on diversified tax bases. The Company uses a non-modeled approach to estimate expected credit losses, leveraging grade information and historical municipal default rates.

Tech & Innovation

The Tech & Innovation portfolio segment is comprised of commercial loans that are originated within this business line and not collateralized by real estate. The source of repayment of these loans is generally expected to be the income that is generated from the business. The models used to estimate expected credit losses for this loan segment include a combination of a vendor model and an internally-developed model. These models incorporate both market level and company-specific factors such as financial statement variables, adjusted for the current stage of the credit cycle and for the Company's loan performance data such as delinquency, utilization, maturity, and size of the loan commitment under specific macroeconomic scenarios to produce a probability of default. Macroeconomic variables include the Dow Jones Index, credit spread between the BBB Bond Yield and 10-Year Treasury Bond Yield, unemployment rate, and CBOE VIX Index quarterly high. LGD and the prepayment rate assumption for EAD for this loan segment are driven by unemployment levels.

Other commercial and industrial

The other commercial and industrial segment is comprised of commercial and industrial loans that are not originated within the Company's specialty business lines and are not collateralized by real estate. The models used to estimate expected credit losses for this loan segment is the same as those used for the Tech & Innovation portfolio segment.

Commercial real estate, owner-occupied

The CRE, owner-occupied portfolio segment is comprised of commercial loans that are collateralized by real estate, where the primary source of repayment is the business that occupies the property. These loans are typically entered into for the purpose of providing real estate finance or improvement. The primary source of repayment of these loans is the income generated by the business and where rental or sale of the property may provide secondary support for the loan. These loans are sensitive to general economic conditions as well as the market valuation of CRE properties. The probability of default estimate for this loan segment is modeled using the same model as the commercial and industrial loan segment. LGD for this loan segment is driven by property appreciation and the prepayment rate assumption for EAD is driven by unemployment levels.

Hotel Franchise Finance

The Hotel Franchise Finance segment is comprised of loans that are originated within this business line and are collateralized by real estate, where the owner is not the primary tenant. These loans are typically entered into for the purpose of financing or the improvement of commercial investment properties. The primary source of repayment of these loans are the rents paid by tenants and where the sale of the property may provide secondary support for the loan. These loans are sensitive to the market valuation of CRE properties, rental rates, and general economic conditions. The vendor model used to estimate expected credit losses for this loan segment projects probabilities of default and exposure at default based on multiple macroeconomic scenarios by modeling how macroeconomic conditions affect the commercial real estate market. Real estate market factors utilized in this model include vacancy rate, rental growth rate, net operating income growth rate, and commercial property price changes for each specific property type. The model then incorporates loan and property-level characteristics including debt coverage, leverage, collateral size, seasoning, and property type. LGD for this loan segment is derived from a non-modeled approach that is driven by property appreciation and the prepayment rate assumption for EAD is driven by the property appreciation for fixed rate loans and unemployment levels for variable rate loans.

Other commercial real estate, non-owner occupied

The other commercial real estate, non-owner occupied segment is comprised of loans that are not originated within the Company's specialty business lines and are collateralized by real estate, where the owner is not the primary tenant. The model used to estimate expected credit losses for this loan segment is the same as the model used for the Hotel Franchise Finance portfolio segment.

Residential

The residential loan portfolio segment is comprised of loans collateralized primarily by first liens on 1-4 residential family properties and home equity lines of credit that are collateralized by either first liens or junior liens on residential properties. The primary source of repayment of these loans is the value of the property and the capacity of the owner to make payments on the loan. Unemployment rates and the market valuation of residential properties will impact the ultimate repayment of these loans. The residential mortgage loan model is a vendor model that projects probability of default, loss given default severity, prepayment rate, and exposure at default to calculate expected losses. The model is intended to capture the borrower's payment behavior during the lifetime of the residential loan by incorporating loan level characteristics such as loan type, coupon, age, loan-to-value, and credit score and economic conditions such as Home Price Index, interest rate, and unemployment rate. A default event for residential loans is defined as 60 days or more past due, with property appreciation as the driver for LGD results. The prepayment rate assumption for exposure at default for residential loans is based on industry prepayment history.

Probability of default for HELOCs is derived from an internally-developed model that projects PD by incorporating loan level information such as FICO score, lien position, balloon payments, and macroeconomic conditions such as property appreciation. LGD for this loan segment is driven by property appreciation and lien position. Exposure at default for HELOCs is calculated based on utilization rate assumptions using a non-modeled approach and incorporates management judgment.

Construction and land development

The construction and land portfolio segment is comprised of loans collateralized by land or real estate, which are entered into for the purpose of real estate development. The primary source of repayment of loans is the eventual sale or refinance of the completed project and where claims on the property provide secondary support for the loan. These loans are impacted by the market valuation of CRE and residential properties and general economic conditions that have a higher sensitivity to real estate markets compared to other real estate loans. Default risk of a property is driven by loan-specific drivers, including loan-to-value, maturity, origination date, and the MSA in which the property is located, among other items. The variables used in the internally-developed model include loan level drivers such as origination loan-to-value, loan maturity, and macroeconomic drivers such as property appreciation, MSA level unemployment rate, and national GDP growth. LGD for this loan segment is

driven by property appreciation. The prepayment rate assumption for EAD is driven by the property appreciation for fixed rate loans and unemployment levels for variable rate loans.

Other

This portfolio consists of those loans not already captured in one of the aforementioned loan portfolio segments, which include, but may not be limited to, overdraft lines for treasury services, credit cards, consumer loans not collateralized by real estate, and small business loans collateralized by residential real estate. The consumer and small business loans are supported by the capacity of the borrower and the valuation of any collateral. General economic factors such as unemployment will have an effect on these loans. The Company uses a non-modeled approach to estimate expected credit losses, leveraging average historical default rates. LGD for this loan segment is driven by unemployment levels and lien position. The prepayment rate assumption for EAD is driven by the BBB corporate spread for fixed rate loans and unemployment levels for variable rate loans.

Transfers of financial assets

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed surrendered when the: 1) assets have been isolated from the Company; 2) transferee obtains the right to pledge or exchange the transferred assets; and 3) Company no longer maintains effective control over the transferred assets through an agreement to repurchase the transferred assets before maturity.

Premises and equipment

Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed principally by the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the term of the lease or the estimated life of the improvement, whichever is shorter. Depreciation and amortization is computed using the following estimated lives:


						Years
Bank premises						31
Furniture, fixtures, and equipment						3 - 10
Leasehold improvements (1)						3 - 10

(1)Depreciation is recorded over the lesser of the relevant 3 to 10-year term or the remaining life of the lease.

Management periodically reviews premises and equipment in order to determine if facts and circumstances suggest that the value of an asset is not recoverable.

Off-balance sheet credit exposures, including unfunded loan commitments

The Company maintains a separate allowance for credit losses on off-balance-sheet credit exposures, including unfunded loan commitments, financial guarantees, and letters of credit, which is classified in other liabilities on the Consolidated Balance Sheet. The allowance for credit losses on off-balance sheet credit exposures is adjusted through increases or decreases to the provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur, an estimate of exposure at default that is derived from utilization rate assumptions using a non-modeled approach, and PD and LGD estimates that are derived from the same models and approaches for the Company's other loan portfolio segments described above as these unfunded commitments share similar risk characteristics with these loan portfolio segments. No credit loss estimate is reported for off-balance sheet credit exposures that are unconditionally cancellable by the Company or for undrawn amounts under such arrangements that may be drawn prior to the cancellation of the arrangement.

Leases (lessee)

At inception, contracts are evaluated to determine whether the contract constitutes a lease agreement. For contracts that are determined to be an operating lease, a corresponding ROU asset and operating lease liability are recorded in separate line items on the Consolidated Balance Sheet. A ROU asset represents the Company’s right to use an underlying asset during the lease term and a lease liability represents the Company’s commitment to make contractually obligated lease payments. Operating lease ROU assets and liabilities are recognized at the commencement date of the lease and are based on the present value of lease payments over the lease term. The measurement of the operating lease ROU asset includes any lease payments made and is reduced by lease incentives that are paid or are payable to the Company. Variable lease payments that depend on an index or rate such as the Consumer Price Index are included in lease payments based on the rate in effect at the commencement date of the lease. Lease payments are recognized on a straight-line basis as part of occupancy expense over the lease term.

As the rate implicit in the lease is not readily determinable, the Company's incremental collateralized borrowing rate is used to determine the present value of lease payments. This rate gives consideration to the applicable FHLB collateralized borrowing rates and is based on the information available at the commencement date. The Company has elected to apply the short-term lease measurement and recognition exemption to leases with an initial term of 12 months or less; therefore, these leases are not recorded on the Company’s Consolidated Balance Sheet, but rather, lease expense is recognized over the lease term on a straight-line basis. The Company’s lease agreements may include options to extend or terminate the lease. These options are included in the lease term when it is reasonably certain that the options will be exercised.

In addition to the package of practical expedients, the Company also elected the practical expedient that allows lessees to make an accounting policy election to not separate non-lease components from the associated lease component, and instead account for them all together as part of the applicable lease component. This practical expedient can be elected separately for each underlying class of asset. The majority of the Company’s non-lease components such as common area maintenance, parking, and taxes are variable, and are expensed as incurred. Variable payment amounts are determined in arrears by the landlord depending on actual costs incurred.

Goodwill and other intangible assets

The Company records as goodwill the excess of the purchase price in a business combination over the fair value of the identifiable net assets acquired in accordance with applicable guidance. The Company performs its annual goodwill and intangibles impairment tests as of October 1 each year, or more often if events or circumstances indicate that the carrying value may not be recoverable. The Company can first elect to assess, through qualitative factors, whether it is more likely than not that goodwill is impaired. If the qualitative assessment indicates potential impairment, a quantitative impairment test is necessary. If, based on the quantitative test, a reporting unit's carrying amount exceeds its fair value, a goodwill impairment charge for this difference is recorded to current period earnings as non-interest expense.

The Company’s intangible assets consist primarily of core deposit intangible assets that are amortized over periods ranging from five to 10 years. The Company considers the remaining useful lives of its core deposit intangible assets each reporting period, as required by ASC 350, Intangibles—Goodwill and Other, to determine whether events and circumstances warrant a revision to the remaining period of amortization. If the estimate of an intangible asset’s remaining useful life has changed, the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. The Company has not revised its estimates of the useful lives of its core deposit intangibles during the years ended December 31, 2020, 2019, or 2018.

Low income housing and renewable energy tax credits

The Company holds ownership interests in limited partnerships and limited liability companies that invest in affordable housing and renewable energy projects. These investments are designed to generate a return primarily through the realization of federal tax credits and deductions, which may be subject to recapture by taxing authorities if compliance requirements are not met. The Company accounts for its low income housing investments using the proportional amortization method. Renewable energy projects are accounted for under the deferral method, whereby the investment tax credits are reflected as an immediate reduction in income taxes payable and the carrying value of the asset in the period that the investment tax credits are claimed. See "Note 14. Income Taxes" of these Notes to Consolidated Financial Statements for further discussion.

The Company evaluates its interests in these entities to determine if it has a variable interest and whether it is required to consolidate these entities. A variable interest is an investment or other interest that will absorb portions of an entity's expected losses or receive portions of the entity's expected residual returns. If the Company determines that it has a variable interest in an entity, it evaluates whether such interest is in a variable interest entity. A VIE is broadly defined as an entity where either: 1) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of an entity that most significantly impact the entity's economic performance or 2) the equity investment at risk is insufficient to finance that entity's activities without additional subordinated financial support. The Company is required to consolidate any VIE when it is determined to be the primary beneficiary of the VIE's operations.

A variable interest holder is considered to be the primary beneficiary of a VIE if it has both the power to direct the activities of a VIE that most significantly impact the entity's economic performance and has the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE. The Company’s assessment of whether it is the primary beneficiary of a VIE includes consideration of various factors such as: 1) the Company's ability to direct the activities that most significantly impact the entity's economic performance; 2) its form of ownership interest; 3) its representation on the entity's governing body; 4) the size and seniority of its investment; and 5) its ability and the rights of other investors to participate in policy making decisions and to replace the manager of and/or liquidate the entity. The Company is required to evaluate whether to consolidate a VIE both at inception and on an ongoing basis as changes in circumstances require reconsideration.

The Company’s investments in qualified affordable housing and renewable energy projects meet the definition of a VIE as the entities are structured such that the limited partner investors lack substantive voting rights. The general partner or managing member has both the power to direct the activities that most significantly impact the economic performance of the entities and the obligation to absorb losses or the right to receive benefits that could be significant to the entities. Accordingly, as a limited partner, the Company is not the primary beneficiary and is not required consolidate these entities.

Bank owned life insurance

BOLI is carried at its cash surrender value with changes recorded in other non-interest income in the Consolidated Income Statements. The face amount of the underlying policies including death benefits was $465.8 million and $359.0 million as of December 31, 2020 and 2019, respectively. There are no loans offset against cash surrender values, and there are no restrictions as to the use of proceeds.

Customer repurchase agreements

The Company enters into repurchase agreements with customers, whereby it pledges securities against overnight investments made from the customer’s excess collected funds. The Company records these at the amount of cash received in connection with the transaction.

Stock compensation plans

The Company has the Incentive Plan, as amended, which is described more fully in "Note 10. Stockholders' Equity" of these Notes to Consolidated Financial Statements. Compensation expense on non-vested restricted stock awards is based on the fair value of the award on the measurement date which, for the Company, is the date of the grant and is recognized ratably over the service period of the award. Forfeitures are estimated at the time of the award grant and revised in subsequent periods if actual forfeitures differ from those estimates. The fair value of non-vested restricted stock awards is the market price of the Company’s stock on the date of grant.

The Company's performance stock units have a cumulative EPS target and a TSR performance measure component. The TSR component is a market-based performance condition that is separately valued as of the date of the grant. A Monte Carlo valuation model is used to determine the fair value of the TSR performance metric, which simulates potential TSR outcomes over the performance period and determines the payouts that would occur in each scenario. The resulting fair value of the TSR component is based on the average of these results. Compensation expense related to the TSR component is based on the fair value determination on the date of the grant and is not subsequently revised based on actual performance. Compensation expense on the EPS component for these awards is based on the fair value (market price of the Company's stock on the date of the grant) of the award. Compensation expense related to both the TSR and EPS components is recognized ratably over the service period of the award.

See "Note 10. Stockholders' Equity" of these Notes to Consolidated Financial Statements for further discussion of stock awards.

Dividends

WAL is a legal entity separate and distinct from its subsidiaries. As a holding company with limited significant assets other than the capital stock of its subsidiaries, WAL's ability to pay dividends depends primarily upon the receipt of dividends or other capital distributions from its subsidiaries. The Company's subsidiaries' ability to pay dividends to WAL is subject to, among other things, their individual earnings, financial condition, and need for funds, as well as federal and state governmental policies and regulations applicable to WAL and each of those subsidiaries, which limit the amount that may be paid as dividends without prior approval. In addition, the terms and conditions of other securities the Company issues may restrict its ability to pay dividends to holders of the Company's common stock. For example, if any required payments on outstanding trust preferred securities are not made, WAL would be prohibited from paying cash dividends on its common stock.

Treasury shares

The Company separately presents treasury shares, which represent shares surrendered to the Company equal in value to the statutory payroll tax withholding obligations arising from the vesting of employee restricted stock awards. Treasury shares are carried at cost.

Common stock repurchases

The Company has previously adopted common stock repurchase programs pursuant to which the Company has repurchased shares of its outstanding common stock, the most recent of which expired in December 2020. All shares repurchased under the plan were retired upon settlement. The Company has elected to allocate the excess of the repurchase price over the par value of its common stock between APIC and retained earnings, with the portion allocated to APIC limited to the amount of APIC that was recorded at the time that the shares were initially issued, which was calculated on a last-in, first-out basis.

Derivative financial instruments

The Company uses interest rate swaps to mitigate interest-rate risk associated with changes to the fair value of certain fixed-rate financial instruments (fair value hedges).

The Company recognizes derivatives as assets or liabilities on the Consolidated Balance Sheet at their fair value in accordance with ASC 815, Derivatives and Hedging. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. Derivative instruments designated in a hedge relationship to mitigate exposure to changes in the fair value of an asset or liability attributable to a particular risk, such as interest rate risk, are considered fair value hedges.

Changes in the fair value of a derivative that is designated and qualifies as a fair value hedge, along with changes in the fair value of the hedged asset or liability that are attributable to the hedged risk, are recorded in current period earnings. Changes in the fair value of derivatives not considered to be highly effective in hedging the change in fair value of the hedged item are recognized in earnings as non-interest income during the period of the change.

The Company documents its hedge relationships, including identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction after the derivative contract is executed. At inception, the Company performs a quantitative assessment to determine whether the derivatives used in hedging transactions are highly effective (as defined in the guidance) in offsetting changes in the fair value of the hedged item. Retroactive effectiveness is assessed, as well as the continued expectation that the hedge will remain effective prospectively. After the initial quantitative assessment is performed, on a quarterly basis, the Company performs a qualitative hedge effectiveness assessment. This assessment takes into consideration any adverse developments related to the counterparty's risk of default and any negative events or circumstances that affect the factors that originally enabled the Company to assess that it could reasonably support, qualitatively, an expectation that the hedging relationship was and will continue to be highly effective. The Company discontinues hedge accounting prospectively when it is determined that a hedge is no longer highly effective. When hedge accounting is discontinued on a fair value hedge that no longer qualifies as an effective hedge, the derivative instrument continues to be reported at fair value on the Consolidated Balance Sheet, but the carrying amount of the hedged item is no longer adjusted for future changes in fair value. The adjustment to the carrying amount of the hedged item that existed at the date hedge accounting is discontinued is amortized over the remaining life of the hedged item into earnings.

Derivative instruments that are not designated as hedges, so called free-standing derivatives, are reported on the Consolidated Balance Sheet at fair value and the changes in fair value are recognized in earnings as non-interest income during the period of change.

The Company may in the normal course of business purchase a financial instrument or originate a loan that contains an embedded derivative instrument. Upon purchasing the instrument or originating the loan, the Company assesses whether the economic characteristics of the embedded derivative are clearly and closely related to the economic characteristics of the remaining component of the financial instrument (i.e., the host contract) and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When it is determined that the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract and a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is separated from the host contract and carried at fair value. However, in cases where the host contract is measured at fair value, with changes in fair value reported in current earnings, or the Company is unable to reliably identify and measure an embedded derivative for separation from its host contract, the entire contract is carried on the Consolidated Balance Sheet at fair value and is not designated as a hedging instrument.

Off-balance sheet instruments

In the ordinary course of business, the Company has entered into off-balance sheet financial instrument arrangements consisting of commitments to extend credit and standby letters of credit. Such financial instruments are recorded in the Consolidated Financial Statements when they are funded. They involve, to varying degrees, elements of credit risk in excess of amounts recognized on the Consolidated Balance Sheet. Losses could be experienced when the Company is contractually obligated to make a payment under these instruments and must seek repayment from the borrower, which may not be as financially sound in the current period as they were when the commitment was originally made. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract and, in certain instances, may be unconditionally cancelable. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company enters into credit arrangements that generally provide for the termination of advances in the event of a covenant violation or other event of default. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the party. The commitments are collateralized by the same types of assets used as loan collateral.

The Company also has off-balance sheet arrangements related to its derivative instruments. Derivative instruments are recognized in the Consolidated Financial Statements at fair value and their notional values are carried off-balance sheet. See "Note 8. Derivatives and Hedging Activities" of these Notes to Consolidated Financial Statements for further discussion.

Business combinations

Business combinations are accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method, the acquiring entity in a business combination recognizes all of the acquired assets and assumed liabilities at their estimated fair values as of the date of acquisition. Any excess of the purchase price over the fair value of net assets and other identifiable intangible assets acquired is recorded as goodwill. To the extent the fair value of net assets acquired, including identified intangible assets, exceeds the purchase price, a bargain purchase gain is recognized. Changes to estimated fair values from a business combination are recognized as an adjustment to goodwill during the measurement period and are recognized in the proper reporting period in which the adjustment amounts are determined. Results of operations of an acquired business are included in the Consolidated Income Statement from the date of acquisition. Acquisition-related costs, including conversion and restructuring charges, are expensed as incurred.

Fair values of financial instruments

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities. ASC 820, Fair Value Measurement, establishes a framework for measuring fair value and a three-level valuation hierarchy for disclosure of fair value measurement, and also sets forth disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The Company uses various valuation approaches, including market, income, and/or cost approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would consider in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs, as follows:

•Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

•Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, prepayment speeds, volatilities, etc.) or model-based valuation techniques where all significant assumptions are observable, either directly or indirectly, in the market.

•Level 3 - Valuation is generated from model-based techniques where one or more significant inputs are not observable, either directly or indirectly, in the market. These unobservable assumptions reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques may include use of matrix pricing, discounted cash flow models, and similar techniques.

The availability of observable inputs varies based on the nature of the specific financial instrument. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires

more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Fair value is a market-based measure considered from the perspective of a market participant who may purchase the asset or assume the liability, rather than an entity-specific measure. When market assumptions are available, ASC 820 requires that the Company make assumptions regarding the assumptions that market participants would use to estimate the fair value of the financial instrument at the measurement date.

ASC 825, Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value.

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction at December 31, 2020 and 2019. The estimated fair value amounts for December 31, 2020 and 2019 have been measured as of period-end, and have not been re-evaluated or updated for purposes of these Consolidated Financial Statements subsequent to those dates. As such, the estimated fair values of these financial instruments subsequent to the reporting date may be different than the amounts reported at period-end.

The information in "Note 16. Fair Value Accounting" of these Notes to Consolidated Financial Statements should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only required for a limited portion of the Company’s assets and liabilities.

Due to the wide range of valuation techniques and the degree of subjectivity used in making the estimate, comparisons between the Company’s disclosures and those of other companies or banks may not be meaningful.

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:

Cash, cash equivalents, and restricted cash

The carrying amounts reported on the Consolidated Balance Sheet for cash and due from banks approximate their fair value.

Money market investments

The carrying amounts reported on the Consolidated Balance Sheet for money market investments approximate their fair value.

Investment securities

The fair values of CRA investments, exchange-listed preferred stock, trust preferred securities, and certain corporate debt securities are based on quoted market prices and are categorized as Level 1 in the fair value hierarchy.

The fair values of debt securities are primarily determined based on matrix pricing. Matrix pricing is a mathematical technique that utilizes observable market inputs including, for example, yield curves, credit ratings, and prepayment speeds. Fair values determined using matrix pricing are generally categorized as Level 2 in the fair value hierarchy. For a small subset of securities, other pricing sources are used, including observed prices on publicly-traded securities and dealer quotes.

Restricted stock

WAB is a member of the Federal Reserve System and the FHLB and, accordingly, maintains investments in the capital stock of the FRB and the FHLB. These investments are carried at cost since no ready market exists for them, and they have no quoted market value. The Company conducts a periodic review and evaluation of its restricted stock to determine if any impairment exists. The fair values of these investments have been categorized as Level 2 in the fair value hierarchy.

Loans

The fair value of loans is estimated based on discounted cash flows using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality and adjustments that the Company believes a market participant would consider in determining fair value based on a third-party independent valuation. As a result, the fair value for loans is categorized as Level 3 in the fair value hierarchy.

Accrued interest receivable and payable

The carrying amounts reported on the Consolidated Balance Sheet for accrued interest receivable and payable approximate their fair values.

Derivative financial instruments

All derivatives are recognized on the Consolidated Balance Sheets at their fair value. The fair value for derivatives is determined based on market prices, broker-dealer quotations on similar products, or other related input parameters. As a result, the fair values have been categorized as Level 2 in the fair value hierarchy.

Deposits

The fair value disclosed for demand and savings deposits is by definition equal to the amount payable on demand at their reporting date (that is, their carrying amount), as these deposits do not have a contractual term. The carrying amount for variable rate deposit accounts approximates their fair value. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on these deposits. The fair value measurement of the deposit liabilities is categorized as Level 2 in the fair value hierarchy.

FHLB advances and customer repurchase agreements

The fair values of the Company’s borrowings are estimated using discounted cash flow analyses, based on the market rates for similar types of borrowing arrangements. The FHLB advances and customer repurchase agreements have been categorized as Level 2 in the fair value hierarchy due to their short durations.

Subordinated debt

The fair value of subordinated debt is based on the market rate for the respective subordinated debt security. Subordinated debt has been categorized as Level 2 in the fair value hierarchy.

Junior subordinated debt

Junior subordinated debt is valued based on a discounted cash flow model which uses as inputs Treasury Bond rates and the 'BB' and 'BBB' rated financial indexes. Junior subordinated debt has been categorized as Level 3 in the fair value hierarchy.

Off-balance sheet instruments

The fair value of the Company’s off-balance sheet instruments (lending commitments and letters of credit) is based on quoted fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, and the counterparties’ credit standing.

Income taxes

The Company is subject to income taxes in the United States and files a consolidated federal income tax return with all of its subsidiaries, with the exception of BW Real Estate, Inc. Deferred income taxes are recorded to reflect the effects of temporary differences between the financial reporting carrying amounts of assets and liabilities and their income tax bases using enacted tax rates that are expected to be in effect when the taxes are actually paid or recovered. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

Net deferred tax assets are recorded to the extent that these assets will more-likely-than-not be realized. In making these determinations, all available positive and negative evidence is considered, including scheduled reversals of deferred tax liabilities, tax planning strategies, projected future taxable income, and recent operating results. If it is determined that deferred income tax assets to be realized in the future are in excess of their net recorded amount, an adjustment to the valuation allowance will be recorded, which will reduce the Company's provision for income taxes.

A tax benefit from an unrecognized tax benefit may be recognized when it is more-likely-than-not that the position will be sustained upon examination, including related appeals or litigation, based on technical merits. Income tax benefits must meet a more-likely-than-not recognition threshold at the effective date to be recognized.

Interest and penalties related to unrecognized tax benefits are recognized as part of the provision for income taxes in the Consolidated Income Statement. Accrued interest and penalties are included in the related tax liability line with other liabilities on the Consolidated Balance Sheet. See "Note 14. Income Taxes" of these Notes to Consolidated Financial Statements for further discussion on income taxes.

Non-interest incomeNon-interest income includes service charges and fees, income from equity investments, card income, foreign currency income, income from bank owned life insurance, lending related income, net gain or loss on sales of investment securities, net fair value gain or loss adjustments on assets measured at fair value, and other income. Service charges and fees consist of fees earned from performance of account analysis, general account services, and other deposit account services. These fees are recognized as the related services are provided in accordance with ASC 606, Revenue from Contracts with Customers. Income from equity investments includes gains on equity warrant assets, SBIC equity income, and success fees. Card income includes fees earned from customer use of debit and credit cards, interchange income from merchants, and international charges. Card income is generally within the scope of ASC 310, Receivables; however, certain processing transactions for merchants, such as interchange fees, are within the scope of ASC 606. Foreign currency income represents fees earned on the differential between purchases and sales of foreign currency on behalf of the Company’s clients. Income from bank owned life insurance is accounted for in accordance with ASC 325, Investments - Other. Lending related income includes fees earned from gains or losses on the sale of loans, SBA income, and letter of credit fees. Gains and losses on the sale of loans and SBA income are recognized pursuant to ASC 860, Transfers and Servicing. Net unrealized gains or losses on assets measured at fair value represent fair value changes in equity securities and are accounted for in accordance with ASC 321, Investments - Equity Securities. Fees related to standby letters of credit are accounted for in accordance with ASC 440, Commitments. Other income includes operating lease income, which is recognized on a straight-line basis over the lease term in accordance with ASC 842, Leases. Net gain or loss on sales/valuations of repossessed and other assets is presented as a component of non-interest expense, but may also be presented as a component of non-interest income in the event that a net gain is recognized. Net gain or loss on sales of repossessed and other assets are accounted for in accordance with ASC 610, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets. See "Note 22. Revenue from Contracts with Customers" of these Notes to Consolidated Financial Statements for further details related to the nature and timing of revenue recognition for non-interest income revenue streams within the scope of the standard.

Description of New Accounting Pronouncements Not yet Adopted

Recent accounting pronouncements

Convertible Debt and Derivatives and Hedging

In August 2020, the FASB issued guidance within ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). The amendments in this update affect entities that issue convertible instruments and/or contracts indexed to and potentially settled in an entity’s own equity. The new ASU simplifies the convertible accounting framework through elimination of the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The amendments to Subtopics 470 and 815 are effective for interim and annual reporting periods beginning after December 15, 2021 and are not expected to have a material impact on the Company’s Consolidated Financial Statements.

Reference Rate Reform

In March 2020, the FASB issued guidance within ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, in response to the scheduled discontinuation of LIBOR on December 31, 2021. Since the issuance of this guidance, the publication cessation of U.S. dollar LIBOR has been extended to June 30, 2023. The amendments in this Update provide optional guidance designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, borrowings) necessitated by reference rate reform.

The following optional expedients for applying the requirements of certain Topics or Industry Subtopics in the Codification are permitted for contracts that are modified because of reference rate reform and that meet certain scope guidance: 1) modifications of contracts within the scope of Topics 310, Receivables, and 470, Debt, should be accounted for by prospectively adjusting the effective interest rate; 2) modifications of contracts within the scope of Topic 842, Leases, should be accounted for as a continuation of the existing contracts with no reassessments of the lease classification and the discount rate or remeasurements of lease payments that otherwise would be required under this Topic for modifications not accounted for as separate contracts; 3) modifications of contracts do not require an entity to reassess its original conclusion about whether that contract contains an embedded derivative that is clearly and closely related to the economic characteristics and risks of the host contract under Subtopic 815-15, Derivatives and Hedging- Embedded Derivatives; and 4) for other Topics or Industry Subtopics in the Codification, the amendments in this Update also include a general principle that permits an entity to consider contract modifications due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. An entity may make a one-time election to sell, transfer, or both sell and transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform and that are classified as held to maturity before January 1, 2020.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope in order to clarify that certain optional expedients and exceptions in Topic 848 apply to derivatives that are affected by the discounting transition. Specifically, certain provisions in Topic 848, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discount, or contract price alignment that is modified as a result of reference rate reform.

The amendments in these Updates are effective immediately for all entities and apply to contract modifications through December 31, 2022. The adoption of this accounting guidance is not expected to have a material impact on the Company's Consolidated Financial Statements.

Income Taxes

In December 2019, the FASB issued guidance within ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in ASU 2019-12 are intended to reduce the cost and complexity of applying ASC 740. The amendments that are applicable to the Company address: 1) franchise and other taxes partially based on income; 2) step-up in basis of goodwill in a business combination; 3) allocation of tax expense in separate entity financial statements; and 4) interim recognition of enactment of tax laws or rate changes. The amendments to Topic 740 are effective for interim and annual reporting periods beginning after December 15, 2020 and are not expected to have a material impact on the Company’s Consolidated Financial Statements.

Accounting Standards Update and Change in Accounting Principle

Recently adopted accounting guidance

Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued guidance within ASU 2016-13, Measurement of Credit Losses on Financial Instruments. The new standard significantly changes the impairment model for most financial assets that are measured at amortized cost, including off-balance sheet credit exposures, from an incurred loss model to an expected loss model. The amendments in ASU 2016-13 to Topic 326, Financial Instruments - Credit Losses, require that an organization measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The ASU also requires enhanced disclosures, including qualitative and quantitative disclosures that provide additional information about the amounts recorded in the financial statements. Additionally, the ASU amends the accounting for credit losses on AFS debt securities and purchased financial assets with credit deterioration.

The Company adopted the amendments within ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. The Company's financial results for reporting periods beginning after January 1, 2020 are presented in accordance with ASC 326, while prior-period amounts continue to be reported in accordance with legacy GAAP. The Company recorded a cumulative effect adjustment to retained earnings, which resulted in a total decrease to retained earnings of $24.9 million as of January 1, 2020. This adjustment was due primarily to expected total losses under the new model in the Company's loan portfolio and, to a lesser extent, its off-balance sheet credit exposures.

The Company applied the prospective transition approach for loans purchased with credit deterioration that were previously classified as PCI and previously accounted for under ASC 310-30. In accordance with the new standard, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. As of January 1, 2020, the amortized cost basis of the PCD loans was adjusted to reflect an allowance for credit losses of $3.3 million. The remaining noncredit discount (based on the adjusted amortized cost basis) related to PCD loans of $1.1 million will be accreted into interest income at the loan's effective interest rate as of January 1, 2020. The Company has elected not to maintain its pools of loans accounted for under ASC 310-30.

The Company applied the prospective transition approach for debt securities for which other-than-temporary impairment had been recognized prior to January 1, 2020. As a result, the amortized cost basis remains the same before and after the effective date. The effective interest rate on these debt securities was not changed. Recoveries of amounts previously written off relating to improvements in cash flows after January 1, 2020 will be recorded in earnings when received.

The following table summarizes the estimated allowance for credit losses related to financial assets and off-balance sheet credit exposures and the corresponding impacts on the deferred tax asset and retained earnings upon adoption of ASC 326:


	January 1, 2020
	Pre-ASC 326 Adoption		Post-ASC 326 Adoption		Impact of ASC 326 Adoption
	(in millions)
Assets:
Allowance for credit losses on HTM securities	$	—	$	2.6	$	2.6
Allowance for credit losses on loans	167.8		186.9		19.1
Deferred tax asset	18.0		26.7		8.7
Liabilities:
Off-balance sheet credit exposures	$	9.0	$	24.0	$	15.1
Equity:
Retained earnings	$	1,680.3	$	1,655.4	$	(24.9)

Management has elected to take advantage of the capital relief option that delays the estimated impact of the adoption of ASC 326 on regulatory capital by up to two years, with a three-year transition period to phase out the cumulative benefit to regulatory capital provided during the two-year delay.

In April 2019, the FASB issued guidance within ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The amendments in ASU 2019-04 clarify or correct the guidance in these Topics. With respect to Topic 326, ASU 2019-04 addresses a number of issues as it relates to the CECL standard including consideration of accrued interest, recoveries, variable-rate financial instruments, prepayments, and extension and renewal options, among other things, in the measurement of expected credit losses. The amendments to Topic 326 were adopted concurrently with ASU 2016-13 and did not have a significant impact on the Company’s Consolidated Financial Statements. With respect to Topic 815, Derivatives and Hedging, ASU 2019-04 clarifies issues related to partial-term hedges, hedged debt securities, and transitioning from a quantitative method of assessing hedge effectiveness to a more simplified method. The Company does not have partial-term hedges or any hedged debt securities and the transition issues discussed in the ASU 2019-04 are not applicable to the Company. Accordingly, the amendments to Topic 815 did not have an impact on the Company's Consolidated Financial Statements. With respect to Topic 825, Financial Instruments, on recognizing and measuring financial instruments, ASU 2019-04 addresses: 1) the scope of the guidance; 2) the requirement for remeasurement under ASC 820 when using the measurement alternative for equity securities without readily determinable fair values; 3) certain disclosure requirements; and 4) which equity securities have to be remeasured at historical exchange rates. The amendments to Topic 825 were effective January 1, 2020 and did not have a material impact on the Company’s Consolidated Financial Statements.

In May 2019, the FASB issued guidance within ASU 2019-05, Financial Instruments - Credit Losses, to provide entities with an option to irrevocably elect the fair value option for eligible financial assets measured at amortized cost. The election is to be applied on an instrument-by-instrument basis upon adoption of Topic 326 and is not available for either AFS or HTM debt securities. The amendments in ASU 2019-05 should be applied on a modified-retrospective basis through a cumulative-effect adjustment to the opening balance of retained earnings as of the date that an entity adopts the amendments in ASU 2016-13. The Company did not elect this fair value option as part of its adoption of ASU 2016-13 on January 1, 2020.

In November 2019, the FASB issued guidance within ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses. The amendments in ASU 2019-11 clarify or address specific issues about certain aspects of the amendments in ASU 2016-13. These issues include measurement and reporting requirements related to: 1) the allowance for credit losses for purchased assets with credit deterioration; 2) prepayment assumptions on existing troubled debt restructurings; 3) extension of disclosure relief for accrued interest receivable balances; and 4) expected credit losses on collateralized financial assets. The adoption of ASU 2019-11 is concurrent with ASU 2016-13 and, adoption of these amendments on January 1, 2020, did not have a significant impact on the Company's Consolidated Financial Statements.

Fair Value Measurements

In August 2018, the FASB issued guidance within ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendments within ASU 2018-13 remove, modify, and supplement the disclosure requirements for fair value measurements. Disclosure requirements that were removed include: 1) the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; 2) the policy for timing of transfers between levels; and 3) the valuation processes for Level 3 fair value measurements. The amendments clarify that the measurement uncertainty disclosure is intended to communicate information about the uncertainty in measurement as of the reporting date. Additional disclosure requirements include: 1) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and 2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. With the exception of the above additional disclosure requirements, which will be applied prospectively, all other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments in this ASU did not have a significant impact on the Company's Consolidated Financial Statements.

Internal-Use Software

In August 2018, the FASB issued guidance within ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Accordingly, the amendments in this Update require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The amendments in this Update also require that the capitalized implementation costs of a hosting arrangement that is a service contract be expensed over the term of the hosting arrangement. Presentation requirements include: 1) expense related to the capitalized implementation costs should be presented in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement; 2) payments for capitalized implementation costs in the statement of cash flows should be classified in the same manner as payments made for fees associated with the hosting element; and 3) capitalized implementation costs in the statement of financial position should be presented in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented. The adoption of this guidance did not have a significant impact on the Company's Consolidated Financial Statements.

- Definition

The entire disclosure for change in accounting principle. Includes, but is not limited to, nature, reason, and method of adopting amendment to accounting standards or other change in accounting principle.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Receivables, Loans, Notes Receivable, and Others

12 Months Ended

Dec. 31, 2020

Receivables [Abstract]

Schedule of Held for Investment Loan Portfolio Composition of Loans, Leases and Allowance for Credit Losses


	December 31, 2020
	(in millions)
Warehouse lending	$	4,340.2
Municipal & nonprofit	1,728.8
Tech & Innovation	2,548.3
Other commercial and industrial	5,911.2
CRE - owner occupied	1,909.3

Hotel Franchise Finance	1,983.9
Other CRE - non-owned occupied	3,640.2
Residential	2,378.5
Construction and land development	2,429.4
Other	183.2
Total loans HFI	27,053.0
Allowance for credit losses	(278.9)
Total loans HFI, net of allowance	$	26,774.1

Impaired Loans by Loan Class


	December 31, 2020
	Number of Loans	Recorded Investment
	(dollars in millions)


Tech & Innovation	4	$	20.4
Other commercial and industrial	9	22.9
CRE - owner occupied	4	2.6

Hotel Franchise Finance	2	5.5
Other CRE - non-owned occupied	3	10.2



Total	22	$	61.6

Average Investment in Impaired Loans by Loan Class


	December 31, 2020
	Real Estate Collateral		Other Collateral		Total
	(in millions)
Warehouse lending	$	—	$	—	$	—
Municipal & nonprofit	—		—		—
Tech & Innovation	—		27.3		27.3
Other commercial and industrial	—		23.6		23.6
CRE - owner occupied	42.6		—		42.6

Hotel Franchise Finance	27.1		—		27.1
Other CRE - non-owned occupied	73.7		—		73.7
Residential	—		—		—
Construction and land development	1.5		—		1.5
Other	—		0.4		0.4
Total	$	144.9	$	51.3	$	196.2

Premises and Equipment (Notes)

12 Months Ended

Dec. 31, 2020

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

4. PREMISES AND EQUIPMENT

The following is a summary of the major categories of premises and equipment:


	December 31,
	2020		2019
	(in millions)
Bank premises	$	92.0	$	91.6
Land and improvements	33.0		32.9
Furniture, fixtures, and equipment	68.2		53.6
Leasehold improvements	29.7		28.5
Construction in progress	17.4		10.4
Total	240.3		217.0
Accumulated depreciation and amortization	(106.2)		(91.2)
Premises and equipment, net	$	134.1	$	125.8

Leases (Notes)

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Lessee, Operating Leases [Text Block]

5. LEASES

The Company has operating leases under which it leases its branch offices, corporate headquarters, other offices, and data facility centers. As of December 31, 2020, the Company's operating lease ROU asset and operating lease liability totaled $72.5 million and $79.9 million, respectively. A weighted average discount rate of 2.80% was used in the measurement of the ROU asset and lease liability as of December 31, 2020.

The Company's leases have remaining lease terms of one to 10 years, with a weighted average lease term of 7.7 years at December 31, 2020. Some leases include multiple five-year renewal options. The Company’s decision to exercise these renewal options is based on an assessment of its current business needs and market factors at the time of the renewal. Currently, the Company has no leases for which the option to renew is reasonably certain and therefore, options to renew were not factored into the calculation of its ROU asset and lease liability as of December 31, 2020.

The following is a schedule of the Company's operating lease liabilities by contractual maturity as of December 31, 2020:


	(in millions)
2021	$	12.5
2022	11.3
2023	12.0
2024	11.1
2025	10.6
Thereafter	32.3
Total lease payments	$	89.8
Less: imputed interest	9.9
Total present value of lease liabilities	$	79.9

The Company also has additional operating leases for increased space at its corporate headquarters and another office location that have not yet commenced as of December 31, 2020. The aggregate future commitment related to the additional leases total $13.3 million. These operating leases will commence within the next 12 months and will have lease terms between six and ten years.

Total operating lease costs of $14.0 million and other lease costs of $3.9 million, which include common area maintenance, parking, and taxes during the year ended December 31, 2020, were included as part of occupancy expense. Short-term lease costs were not material for the year ended December 31, 2020. For the years ended December 31, 2019 and 2018, rent expense associated with the Company's operating leases totaled $12.9 million and $11.0 million, respectively.

The below table shows the supplemental cash flow information related to the Company's operating leases for the year ended December 31, 2020:


	(in millions)
Cash paid for amounts included in the measurement of operating lease liabilities	$	13.0
Right-of-use assets obtained in exchange for new operating lease liabilities	11.8

Goodwill and Other Intangible Assets Goodwill and Other Intangible Assets (Notes)

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

6. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill represents the excess consideration paid for net assets acquired in a business combination over their fair value. Goodwill and other intangible assets acquired in a business combination that are determined to have an indefinite useful life are not subject to amortization, but are subsequently evaluated for impairment at least annually. The Company has goodwill of $289.9 million as of December 31, 2020.

The Company performs its annual goodwill and intangibles impairment tests as of October 1 each year, or more often if events or circumstances indicate that the carrying value may not be recoverable. While the Company’s stock price has experienced volatility and periodic declines in value during the pandemic, management did not consider this decline to be a triggering event that would indicate that an interim goodwill impairment test was necessary during 2020. Based on the Company's annual goodwill and intangibles impairment tests as of October 1 during the years ended December 31, 2020, 2019, and 2018, it was determined that goodwill and intangible assets are not impaired.

The following is a summary of the Company's acquired intangible assets:


	December 31, 2020						December 31, 2019
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(in millions)
Subject to amortization
Core deposit intangibles	$	14.6	$	8.8	$	5.8	$	14.6	$	7.3	$	7.3
Customer relationship intangibles	2.5		0.1		2.4		—		—		—
	$	17.1	$	8.9	$	8.2	$	14.6	$	7.3	$	7.3

	December 31, 2020						December 31, 2019
	Gross Carrying Amount		Impairment		Net Carrying Amount		Gross Carrying Amount		Impairment		Net Carrying Amount
	(in millions)
Not subject to amortization
Trade name	$	0.4	$	—	$	0.4	$	0.4	$	—	$	0.4

As of December 31, 2020, the Company's core deposit and customer relationship intangible assets had a weighted average estimated useful life of 4.6 years. The Company's core deposit intangible assets consist of those acquired in the acquisition of Bridge and are being amortized using an accelerated amortization method over a period of 10 years. The Company's customer relationship intangible assets relates to the purchase of a residential mortgage conduit platform during 2020 that is being amortized on a straight-line basis over a period of five years. Amortization expense recognized on amortizable intangibles totaled $1.6 million for each of the years ended December 31, 2020, 2019, and 2018.

Below is a summary of future estimated aggregate amortization expense:


	December 31, 2020
	(in millions)
2021	$	1.9
2022	1.9
2023	1.8
2024	1.7
2025	0.9

Total	$	8.2

Other Borrowings

12 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

Other Borrowings

8. OTHER BORROWINGS

The following table summarizes the Company’s borrowings as of December 31, 2020 and 2019:


	December 31,
	2020		2019
	(in millions)
Short-Term:

Federal funds purchased	$	—	$	—
FHLB advances	5.0		—

Total short-term borrowings	$	5.0	$	—

The Company maintains federal fund lines of credit totaling $2.5 billion as of December 31, 2020, which have rates comparable to the federal funds effective rate plus 0.10% to 0.20%. As of December 31, 2020, and 2019 there were no outstanding balances on the Company's federal fund lines of credit.

The Company also maintains secured lines of credit with the FHLB and the FRB. The Company’s borrowing capacity is determined based on collateral pledged, generally consisting of investment securities and loans, at the time of the borrowing. The Company has a PPP lending facility with the FRB that allows the Company to pledge loans originated under the PPP in return for dollar for dollar funding from the FRB, which would provide up to $1.5 billion in additional credit. The amount of available credit under the PPP lending facility will decline each period as these loans are paid down. At December 31, 2020, the Company had no amounts outstanding under its line of credit or its PPP lending facility with the FRB and had $5.0 million in borrowings under its lines of credit with the FHLB. As of December 31, 2020 and 2019, the Company had additional available credit with the FHLB of approximately $4.0 billion and $4.5 billion, respectively, and with the FRB of approximately $2.7 billion and $1.1 billion, respectively.

Other short-term borrowing sources available to the Company include customer repurchase agreements, which totaled $16.0 million and $16.7 million as of December 31, 2020 and 2019, respectively. The weighted average rate on customer repurchase agreements was 0.15% as of December 31, 2020 and 2019, respectively.

Qualifying Debt Qualifying Debt (Notes)

12 Months Ended

Dec. 31, 2020

Qualifying Debt Disclosure [Abstract]

Subordinated Borrowings Disclosure [Text Block]

9. QUALIFYING DEBT

Subordinated Debt

The Company's subordinated debt consists of three separate issuances. The Parent issued $175.0 million of subordinated debentures in June 2016, which were recorded net of issuance costs of $5.5 million, and mature July 1, 2056. Beginning on or after July 1, 2021, the Company may redeem the debentures, in whole or in part, at their principal amount plus any accrued and unpaid interest. The debentures have a fixed interest rate of 6.25% per annum.

In June 2015, WAB issued $150.0 million of subordinated debt, which was recorded net of debt issuance costs of $1.8 million, and matures July 15, 2025. The subordinated debt is currently redeemable by WAB, in whole or in part, for a price equal to the principal amount plus accrued and unpaid interest. The subordinated debt had a fixed interest rate of 5.00% through June 30, 2020, which then converted to a variable rate of 3.20% plus three-month LIBOR through maturity. On October 15, 2020, WAB redeemed $75 million of this subordinated debt issuance.

In May 2020, WAB issued $225.0 million of subordinated debt, which was recorded net of debt issuance costs of $3.1 million, and matures June 1, 2030. The subordinated debt is redeemable by WAB, in whole or in part, on or after June 1, 2025 and on every interest payment date thereafter, at a redemption price equal to the principal amount plus accrued and unpaid interest. The subordinated debt has a fixed interest rate of 5.25% through June 1, 2025 and then converts to a floating rate per annum equal to the three-month SOFR plus 512 basis points for each quarterly interest period during the floating rate period.

To hedge the interest rate risk on the Company's 2015 and 2016 subordinated debt issuances, the Company entered into fair value interest rate hedges with receive fixed/pay variable swaps.

The carrying value of all subordinated debt issuances, which includes the fair value of the related hedges, totals $469.8 million and $319.2 million at December 31, 2020 and 2019, respectively.

Junior Subordinated Debt

The Company has formed or acquired through acquisition eight statutory business trusts, which exist for the exclusive purpose of issuing Cumulative Trust Preferred Securities.

The Company's junior subordinated debt has contractual balances and maturity dates as follows:


		December 31,
Name of Trust	Maturity	2020		2019
At fair value		(in millions)
BankWest Nevada Capital Trust II	2033	$	15.5	$	15.5
Intermountain First Statutory Trust I	2034	10.3		10.3
First Independent Statutory Trust I	2035	7.2		7.2
WAL Trust No. 1	2036	20.6		20.6
WAL Statutory Trust No. 2	2037	5.2		5.2
WAL Statutory Trust No. 3	2037	7.7		7.7
Total contractual balance		66.5		66.5
FVO on junior subordinated debt		(0.6)		(4.8)
Junior subordinated debt, at fair value		$	65.9	$	61.7
At amortized cost
Bridge Capital Holdings Trust I	2035	$	12.4	$	12.4
Bridge Capital Holdings Trust II	2036	5.1		5.1
Total contractual balance		17.5		17.5
Purchase accounting adjustment, net of accretion (1)		(4.5)		(4.8)
Junior subordinated debt, at amortized cost		$	13.0	$	12.7

Total junior subordinated debt		$	78.9	$	74.4

(1)The purchase accounting adjustment is being accreted over the remaining life of the trusts, pursuant to accounting guidance.

With the exception of debt issued by Bridge Capital Trust I and Bridge Capital Trust II, junior subordinated debt is recorded at fair value at each reporting date due to the FVO election made by the Company under ASC 825. The Company did not make the FVO election for the junior subordinated debt acquired as part of the Bridge acquisition. Accordingly, the carrying value of these trusts does not reflect the current fair value of the debt and includes a fair market value adjustment established at acquisition that is being accreted over the remaining life of the trusts.

The weighted average interest rate of all junior subordinated debt as of December 31, 2020 was 2.58%, which is three-month LIBOR plus the contractual spread of 2.34%, compared to a weighted average interest rate of 4.25% at December 31, 2019.

In the event of certain changes or amendments to regulatory requirements or federal tax rules, the debt is redeemable in whole. The obligations under these instruments are fully and unconditionally guaranteed by the Company and rank subordinate and junior in right of payment to all other liabilities of the Company. Based on guidance issued by the FRB, the Company's securities continue to qualify as Tier 1 Capital.

Stockholders' Equity

12 Months Ended

Dec. 31, 2020

Stockholders' Equity Note [Abstract]

Stockholder's Equity

10. STOCKHOLDERS' EQUITY

Stock-Based Compensation

Restricted Stock Awards

The Incentive Plan, as amended, gives the BOD the authority to grant up to $11.8 million in stock awards consisting of unrestricted stock, stock units, dividend equivalent rights, stock options (incentive and non-qualified), stock appreciation rights, restricted stock, and performance and annual incentive awards. The Incentive Plan limits the maximum number of shares of common stock that may be awarded to any person eligible for an award to 300,000 per calendar year and also limits the total compensation (cash and stock) that can be awarded to a non-employee director to $600,000 in any calendar year. Stock awards available for grant at December 31, 2020 were $3.4 million.

Restricted stock awards granted to employees generally vest over a 3-year period. Stock grants made to non-employee WAL directors in 2020 were fully vested on July 1, 2020. The Company estimates the compensation cost for stock grants based upon the grant date fair value. Stock compensation expense is recognized on a straight-line basis over the requisite service period for the entire award. Stock compensation expense related to restricted stock awards granted to employees are included in Salaries and employee benefits in the Consolidated Income Statement. For restricted stock awards granted to WAL directors, related stock compensation expense is included in Legal, professional, and directors' fees. For the year ended December 31, 2020, the Company recognized $20.3 million in stock-based compensation expense related to these stock grants, compared to $17.4 million in 2019, and $16.6 million in 2018.

In addition, the Company previously granted shares of restricted stock to certain members of executive management that had both performance and service conditions that affect vesting. There were no such grants made during the years ended December 31, 2020 and 2019, however expense is still being recognized for a grant made in 2017 with a four-year vesting period. For the year ended December 31, 2020, the Company recognized $1.2 million in stock-based compensation expense related to these performance-based restricted stock grants, compared to $1.9 million in 2019, and $2.5 million in 2018.

A summary of the status of the Company’s unvested shares of restricted stock and changes during the years then ended is presented below:


	December 31,
	2020			2019
	Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value
	(in millions, except per share amounts)
Balance, beginning of period	1.0	$	49.98	1.0	$	47.53
Granted	0.4	51.53		0.5	46.04
Vested	(0.4)	51.86		(0.4)	39.60
Forfeited	0.0	49.79		(0.1)	50.80
Balance, end of period	1.0	$	50.12	1.0	$	49.98

The total weighted average grant date fair value of all stock awards, including the performance-based restricted stock awards, granted during the years ended December 31, 2020, 2019, and 2018 was $22.7 million, $23.7 million, and $24.7 million, respectively. The total fair value of restricted stock that vested during the years ended December 31, 2020, 2019, and 2018 was $19.6 million, $21.3 million, and $27.4 million, respectively.

As of December 31, 2020, there was $21.5 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Incentive Plan. That cost is expected to be recognized over a weighted average period of 1.7 years.

Performance Stock Units

The Company grants performance stock units to members of its executive management that do not vest unless the Company achieves a specified cumulative EPS target and a TSR performance measure over a three-year performance period. The number of shares issued will vary based on the cumulative EPS target and relative TSR performance factor that is achieved. The Company estimates the cost of performance stock units based upon the grant date fair value and expected vesting percentage over the three-year performance period. For the year ended December 31, 2020, the Company recognized $7.1 million in stock-based compensation expense related to these performance stock units, compared to $6.9 million and $6.4 million in stock-based compensation expense for such units in 2019 and 2018, respectively.

The three-year performance period for the 2018 grant ended on December 31, 2020, and the Company's cumulative EPS and TSR performance measure for the performance period exceeded the level required for a maximum award under the terms of the grant. As a result, 152,418 shares will become fully vested and distributed to executive management in the first quarter of 2021.

The three-year performance period for the 2017 grant ended on December 31, 2019, and the Company's cumulative EPS and TSR performance measure for the performance period exceeded the level required for a maximum award under the terms of the grant. As a result, 136,334 shares became fully vested and was distributed to executive management in the first quarter of 2020.

Common Stock Repurchase

The Company's common stock repurchase program was renewed through December 2020, authorizing the Company to repurchase up to $250.0 million of its outstanding common stock. Effective April 17, 2020, the Company temporarily suspended its stock repurchase program. Prior to this decision and pursuant to the repurchase plan, the Company repurchased 2,066,479 shares of its common stock at a weighted average price of $34.65 for a total payment of $71.6 million. During the year ended December 31, 2019, the Company repurchased 2,822,402 shares of its common stock at a weighted average price of $42.53 for a total payment of $120.2 million.

Cash Dividend

During the year ended December 31, 2020, the Company declared and paid a quarterly cash dividend of $0.25 per share, for a total dividend payment to shareholders of $101.3 million. During the year ended December 31, 2019, the Company declared and paid two quarterly cash dividend of $0.25 per share, for a total dividend payment to shareholders of $51.3 million.

Treasury Shares

Treasury share purchases represent shares surrendered to the Company equal in value to the statutory payroll tax withholding obligations arising from the vesting of employee restricted stock awards. During the year ended December 31, 2020, the Company purchased treasury shares of 165,489 at a weighted average price of $50.80 per share, compared to 210,657 shares at a weighted average price per share of $45.80 in 2019, and 223,125 shares at a weighted average price per share of $57.88 in 2018.

Accumulated Other Comprehensive Income

12 Months Ended

Dec. 31, 2020

Equity [Abstract]

Accumulated Other Comprehensive Income

11. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in accumulated other comprehensive income (loss) by component, net of tax, for the periods indicated:


	Unrealized holding gains (losses) on AFS		Unrealized holding gains (losses) on SERP		Unrealized holding gains (losses) on junior subordinated debt		Impairment loss on securities		Total
	(in millions)
Balance, December 31, 2017	$	(10.0)	$	0.4	$	6.4	$	0.1	$	(3.1)
Balance, January 1, 2018 (1)	(12.5)		0.5		7.7		0.1		(4.2)
Other comprehensive income (loss) before reclassifications	(40.8)		(0.1)		5.7		—		(35.2)
Amounts reclassified from AOCI	5.8		—		—		—		5.8
Net current-period other comprehensive income (loss)	(35.0)		(0.1)		5.7		—		(29.4)
Balance, December 31, 2018	$	(47.5)	$	0.4	$	13.4	$	0.1	$	(33.6)
Other comprehensive (loss) income before reclassifications	71.2		(0.4)		(9.8)		—		61.0
Amounts reclassified from accumulated other comprehensive income	(2.3)		—		—		(0.1)		(2.4)
Net current-period other comprehensive (loss) income	68.9		(0.4)		(9.8)		(0.1)		58.6
Balance, December 31, 2019	$	21.4	$	—	$	3.6	$	—	$	25.0
Other comprehensive income (loss) before reclassifications	70.9		(0.3)		(3.1)		—		67.5
Amounts reclassified from AOCI	(0.2)		—		—		—		(0.2)
Net current-period other comprehensive income (loss)	70.7		(0.3)		(3.1)		—		67.3
Balance, December 31, 2020	$	92.1	$	(0.3)	$	0.5	$	—	$	92.3

(1) As adjusted for adoption of ASU 2016-01 and ASU 2018-02. The cumulative effect of adoption of this guidance at January 1, 2018 resulted in an increase to retained earnings of $1.1 million and a corresponding decrease to accumulated other comprehensive income.

The following table presents reclassifications out of accumulated other comprehensive income:


	Year Ended December 31,
Income Statement Classification	2020		2019		2018
	(in millions)
Gain (loss) on sales of investment securities, net	$	0.2	$	3.1	$	(7.6)
Income tax (expense) benefit	—		(0.7)		1.8
Net of tax	$	0.2	$	2.4	$	(5.8)

Derivatives and Hedging

12 Months Ended

Dec. 31, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Activities

12. DERIVATIVES AND HEDGING ACTIVITIES

The Company is a party to various derivative instruments. Derivative instruments are contracts between two or more parties that have a notional amount and an underlying variable, require a small or no initial investment, and allow for the net settlement of positions. A derivative’s notional amount serves as the basis for the payment provision of the contract and takes the form of units, such as shares or dollars. A derivative’s underlying variable is a specified interest rate, security price, commodity price, foreign exchange rate, index, or other variable. The interaction between the notional amount and the underlying variable determines the number of units to be exchanged between the parties and influences the fair value of the derivative contract.

The primary type of derivatives that the Company uses are interest rate swaps. Generally, these instruments are used to help manage the Company's exposure to interest rate risk and meet client financing and hedging needs.

Derivatives are recorded at fair value on the Consolidated Balance Sheets, after taking into account the effects of bilateral collateral and master netting agreements. These agreements allow the Company to settle all derivative contracts held with the same counterparty on a net basis, and to offset net derivative positions with related cash collateral, where applicable.

As of December 31, 2020, 2019, and 2018, the Company does not have any outstanding cash flow hedges.

Derivatives Designated in Hedge Relationships

The Company utilizes derivatives that have been designated as part of a hedge relationship in accordance with the applicable accounting guidance to minimize the exposure to changes in benchmark interest rates and volatility of net interest income and EVE to interest rate fluctuations. The primary derivative instruments used to manage interest rate risk are interest rate swaps, which convert the contractual interest rate index of agreed-upon amounts of assets and liabilities (i.e., notional amounts) from either a fixed rate to a floating rate, or from a floating rate to a fixed rate.

The Company has entered into pay fixed/receive variable interest rate swaps designated as fair value hedges of certain fixed rate loans. As a result, the Company receives variable-rate interest payments in exchange for making fixed-rate payments over the lives of the contracts without exchanging the notional amounts.

During the year ended December 31, 2020, the Company entered into interest rate swap contracts, designated as fair value hedges using the last-of-layer method to manage the exposure to changes in fair value associated with fixed rate loans, resulting from changes in the designated benchmark interest rate (Federal Funds rate). These last-of-layer hedges provide the Company the ability to execute a fair value hedge of the interest rate risk associated with a portfolio of similar prepayable assets whereby the last dollar amount estimated to remain in the portfolio of assets is identified as the hedged item. Under these interest rate swap contracts, the Company receives a floating rate and pays a fixed rate on the outstanding notional amount.

The Company has also entered into receive fixed/pay variable interest rate swaps, designated as fair value hedges on its fixed rate 2015 and 2016 subordinated debt offerings. As a result, the Company was paying a floating rate of three-month LIBOR plus 3.16% and was receiving semi-annual fixed payments of 5.00% to match the payments on the $150.0 million subordinated debt. In July 2020, the interest payment on this subordinated debt issuance converted from a fixed rate to a floating rate, at which time, the Company unwound this swap. For the fair value hedge on the Parent's $175.0 million subordinated debentures issued on June 16, 2016, the Company is paying a floating rate of three-month LIBOR plus 3.25% and is receiving quarterly fixed payments of 6.25% to match the payments on the debt.

Derivatives Not Designated in Hedge Relationships

Management also enters into certain foreign exchange derivative contracts and back-to-back interest rate swaps which are not designated as accounting hedges. Foreign exchange derivative contracts include spot, forward, forward window, and swap contracts. The purpose of these derivative contracts is to mitigate foreign currency risk on transactions entered into, or on behalf of customers. Contracts with customers, along with the related derivative trades that the Company places, are both remeasured at fair value, and are referred to as economic hedges since they economically offset the Company's exposure. The Company's back-to-back interest rate swaps are used to manage long-term interest rate risk.

As of December 31, 2020 and 2019, the following amounts are reflected on the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges:


	December 31, 2020				December 31, 2019
	Carrying Value of Hedged Assets/(Liabilities)		Cumulative Fair Value Hedging Adjustment (1)		Carrying Value of Hedged Assets/(Liabilities)		Cumulative Fair Value Hedging Adjustment (1)
	(in millions)
Loans - HFI, net of deferred loan fees and costs (2)	$	1,587.1	$	85.5	$	578.1	$	53.3
Qualifying debt	(247.6)		(2.7)		(319.2)		0.4

(1) Included in the carrying value of the hedged assets/(liabilities)

(2) The Company designated $1.0 billion as the hedged amount (from a closed portfolio of prepayable fixed rate loans with a carrying value of $1.9 billion as of December 31, 2020) in this last-of-layer hedging relationship, which commenced in the fourth quarter of 2020.The cumulative basis adjustment included in the carrying value of these hedged items totaled $0.6 million as of December 31, 2020.

For the Company's derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings in the same line item as the offsetting loss or gain on the related interest rate swaps. For loans, the gain or loss on the hedged item is included in interest income and for subordinated debt, the gain or loss on the hedged item is included in interest expense, as shown in the table below.


	Year Ended December 31,
	2020				2019				2018
Income Statement Classification	Gain/(Loss) on Swaps		Gain/(Loss) on Hedged Item		Gain/(Loss) on Swaps		Gain/(Loss) on Hedged Item		Gain/(Loss) on Swaps		Gain/(Loss) on Hedged Item
	(in millions)
Interest income	$	(32.2)	$	32.2	$	(30.3)	$	30.3	$	18.8	$	(18.8)
Interest expense	3.1		(3.1)		19.3		(19.3)		(9.7)		9.7

Fair Values, Volume of Activity, and Gain/Loss Information Related to Derivative Instruments

The following table summarizes the fair values of the Company's derivative instruments on a gross and net basis as of December 31, 2020, 2019, and 2018. The change in the notional amounts of these derivatives from December 31, 2018 to December 31, 2020 indicates the volume of the Company's derivative transaction activity during these periods. The derivative asset and liability balances are presented on a gross basis, prior to the application of bilateral collateral and master netting agreements. Total derivative assets and liabilities are adjusted to take into account the impact of legally enforceable master netting agreements that allow the Company to settle all derivative contracts with the same counterparty on a net basis and to offset the net derivative position with the related collateral. Where master netting agreements are not in effect or are not enforceable under bankruptcy laws, the Company does not adjust those derivative amounts with counterparties. The fair value of derivative contracts, after taking into account the effects of master netting agreements, is included in other assets or other liabilities on the Consolidated Balance Sheets, as indicated in the following table:


	December 31, 2020						December 31, 2019						December 31, 2018
			Fair Value						Fair Value						Fair Value
	Notional Amount		Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities
	(in millions)
Derivatives designated as hedging instruments:
Fair value hedges
Interest rate swaps (1)	$	1,689.9	$	3.3	$	86.1	$	863.0	$	1.8	$	55.5	$	965.7	$	2.2	$	44.9
Total	1,689.9		3.3		86.1		863.0		1.8		55.5		965.7		2.2		44.9
Netting adjustments (2)	—		0.6		0.6		—		0.0		0.0		—		2.2		2.2
Net derivatives in the balance sheet	$	1,689.9	$	2.7	$	85.5	$	863.0	$	1.8	$	55.5	$	965.7	$	—	$	42.7

Derivatives not designated as hedging instruments:
Foreign currency contracts	$	119.2	$	0.7	$	1.2	$	6.7	$	0.0	$	0.0	$	49.7	$	0.5	$	0.2
Interest rate swaps	3.5		0.2		0.2		2.9		0.1		0.1		2.4		0.0		0.0
Total	$	122.7	$	0.9	$	1.4	$	9.6	$	0.1	$	0.1	$	52.1	$	0.5	$	0.2

(1)Interest rate swap amounts include a notional amount of $1.0 billion related to the last-of-layer hedges.

(2)Netting adjustments represent the amounts recorded to convert the Company's derivative balances from a gross basis to a net basis in accordance with the applicable accounting guidance.

Counterparty Credit Risk

Like other financial instruments, derivatives contain an element of credit risk. This risk is measured as the expected replacement value of the contracts. Management enters into bilateral collateral and master netting agreements that provide for the net settlement of all contracts with the same counterparty. Additionally, management monitors counterparty credit risk exposure on each contract to determine appropriate limits on the Company's total credit exposure across all product types, which may require the Company to post collateral to counterparties when these contracts are in a net liability position and conversely, for counterparties to post collateral to the Company when these contracts are in a net asset position. Management reviews the Company's collateral positions on a daily basis and exchanges collateral with counterparties in accordance with standard ISDA documentation and other related agreements. The Company generally posts or holds collateral in the form of cash deposits or highly rated securities issued by the U.S. Treasury or government-sponsored enterprises, such as GNMA, FNMA, and FHLMC. The total collateral pledged by the Company to counterparties exceeded its net derivative liabilities as of December 31, 2020, December 31, 2019, and December 31, 2018, resulting in excess collateral postings of $31.7 million, $29.2 million, and $7.6 million, respectively.

The following table summarizes the Company's largest exposure to an individual counterparty at the dates indicated:


	December 31,
	2020		2019		2018
	(in millions)
Largest gross exposure (derivative asset) to an individual counterparty	$	2.7	$	1.8	$	1.4
Collateral posted by this counterparty	—		1.6		—
Derivative liability with this counterparty	—		—		23.9
Collateral pledged to this counterparty	—		—		25.8
Net exposure after netting adjustments and collateral	$	2.7	$	0.1	$	—

Earnings per Share (Notes)

12 Months Ended

Dec. 31, 2020

Earnings Per Share [Abstract]

Earnings Per Share

13. EARNINGS PER SHARE

Diluted EPS is based on the weighted average outstanding common shares during the period, including common stock equivalents. Basic EPS is based on the weighted average outstanding common shares during the period.

The following table presents the calculation of basic and diluted EPS:


	Year Ended December 31,
	2020		2019		2018
	(in millions, except per share amounts)
Weighted average shares - basic	100.2		102.7		104.7
Dilutive effect of stock awards	0.3		0.4		0.7
Weighted average shares - diluted	100.5		103.1		105.4
Net income	$	506.6	$	499.2	$	435.8
Earnings per share - basic	5.06		4.86		4.16
Earnings per share - diluted	5.04		4.84		4.14

The Company had no anti-dilutive stock options outstanding as of December 31, 2020 and 2019.

Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

14. INCOME TAXES

The provision for income taxes charged to operations consists of the following:


	Year Ended December 31,
	2020		2019		2018
	(in millions)
Current	$	141.0	$	110.1	$	91.2
Deferred	(25.1)		(5.1)		(16.7)
Total tax provision	$	115.9	$	105.0	$	74.5

The reconciliation between the statutory federal income tax rate and the Company’s effective tax rate is summarized as follows:


	Year Ended December 31,
	2020		2019		2018
	(in millions)
Income tax at statutory rate	$	130.7	$	126.9	$	107.2
Increase (decrease) resulting from:
State income taxes, net of federal benefits	13.9		11.0		9.0

Tax-exempt income	(21.7)		(19.6)		(18.3)


Federal NOL and other carryback items	—		—		(15.4)



Investment tax credits	(13.9)		(15.0)		(6.7)

Other, net	6.9		1.7		(1.3)
Total tax provision	$	115.9	$	105.0	$	74.5

For the years ended December 31, 2020, 2019, and 2018 the Company's effective tax rate was 18.62%, 17.39%, and 14.61%, respectively. The increase in the effective tax rate from 2019 to 2020 is due primarily to tax expense associated with the surrender of bank owned life insurance, no valuation allowance release in 2020, and return to provision adjustments. The increase in the effective tax rate from 2018 to 2019 is due primarily to management's decision during the third quarter of 2018 to carryback its 2017 federal NOLs.

The cumulative tax effects of the primary temporary differences are shown in the following table:


	December 31,
	2020		2019
	(in millions)
Deferred tax assets:
Allowance for credit losses (1)	$	84.6	$	44.8
Lease liability	21.1		20.3
Stock-based compensation	6.9		7.4
Net operating loss carryovers	4.8		5.6

Insurance premiums	18.9		—
Passthrough income	8.4		3.4


Other	21.0		15.9
Total gross deferred tax assets	165.7		97.4
Deferred tax asset valuation allowance	—		—
Total deferred tax assets	165.7		97.4
Deferred tax liabilities:
Right of use asset	(19.2)		(18.8)
Unrealized gain on AFS securities	(31.2)		(7.3)

Deferred loan costs	(12.8)		(10.8)
Insurance premiums	—		(4.5)
Unearned premiums	(16.8)		—
Leasing basis differences	(11.1)		—

Premises and equipment	(7.6)		(8.4)
Estimated loss reserve	(17.5)		(14.9)
50(d) income	(9.8)		(6.8)
Other	(8.4)		(7.9)
Total deferred tax liabilities	(134.4)		(79.4)
Deferred tax assets, net	$	31.3	$	18.0

(1)Upon adoption of ASU 2016-13, Measurement of Credit Losses on Financial Instruments, on January 1, 2020, the Company recognized an increase to the DTA of $8.7 million, resulting from an increase in the allowance for credit losses.

Deferred tax assets and liabilities are included in the Consolidated Financial Statements at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be reversed. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

Net deferred tax assets increased $13.3 million to $31.3 million from December 31, 2019. This overall increase in net deferred tax assets was primarily the result of increases in the allowance for credit losses under the new CECL accounting guidance and deferred insurance premiums deduction which were not fully offset by additional unrealized gains on AFS securities and increases to unearned insurance premiums. Although realization is not assured, the Company believes that the realization of the recognized net deferred tax asset of $31.3 million at December 31, 2020 is more-likely-than-not based on expectations as to future taxable income and based on available tax planning strategies that could be implemented if necessary to prevent a carryover from expiring.

As of December 31, 2020 and 2019, the Company has no deferred tax valuation allowance.

As of December 31, 2020, the Company’s gross federal NOL carryovers, all of which are subject to limitations under Section 382 of the IRC, totaled $42.9 million, for which a deferred tax asset of $4.8 million has been recorded, reflecting the expected benefit of these federal NOL carryovers remaining after application of the Section 382 limitation. The Company does not currently have any remaining state NOL carryovers. The Company files income tax returns in the U.S. federal jurisdiction and in various states. With few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations by tax authorities for years before 2016.

When tax returns are filed, it is highly certain that most positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the Consolidated Financial Statements in the period in which, based on all available evidence, management believes it is more-likely-than-not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the

largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits on the accompanying Consolidated Balance Sheets along with any associated interest and penalties payable to the taxing authorities upon examination.

The total gross activity of unrecognized tax benefits related to the Company's uncertain tax positions are shown in the following table:


	December 31,
	2020		2019
	(in millions)
Beginning balance	$	1.7	$	0.5
Gross increases
Tax positions in prior periods	—		—
Current period tax positions	2.2		1.2
Gross decreases
Tax positions in prior periods	—		—
Settlements	(0.1)		—
Lapse of statute of limitations	(0.4)		—
Ending balance	$	3.4	$	1.7

During the year ended December 31, 2020, the Company added a new current year position, which resulted in a tax detriment of $1.1 million, inclusive of interest and penalties. The Company also settled a prior period position and removed positions due to lapse of statute which resulted in net tax benefits of $0.3 million, inclusive of interest and penalties.

As of December 31, 2020 and 2019, the total amount of unrecognized tax benefits, net of associated deferred tax benefits, that would impact the effective tax rate, if recognized, is $2.1 million and $1.1 million, respectively. The Company does not anticipate that the unrecognized tax benefits will be resolved within the next 12 months.

During the years ended December 31, 2020, 2019, and 2018, the Company recognized no additional amounts for interest and penalties. As of December 31, 2020 and 2019, the Company has accrued total liabilities of less than $0.1 million for penalties, and no amounts for interest.

LIHTC and renewable energy projects

As discussed in "Note 1. Summary of Significant Accounting Policies," the Company holds ownership interests in limited partnerships and limited liability companies that invest in affordable housing and renewable energy projects. These investments are designed to generate a return primarily through the realization of federal tax credits and deductions. The limited liability entities are considered to be VIEs; however, as a limited partner, the Company is not the primary beneficiary and is not required to consolidate these entities.

At December 31, 2020, the Company’s exposure to loss as a result of its involvement in these entities was limited to $538.8 million, which reflects the Company’s recorded investment in these projects, net of certain unfunded capital commitments, and previously recorded tax credits which remain subject to recapture by taxing authorities. During the years ended December 31, 2020, 2019, and 2018, the Company did not provide financial or other support to these entities that was not contractually required.

Investments in LIHTC and renewable energy total $405.6 million and $409.4 million as of December 31, 2020 and 2019, respectively. Unfunded LIHTC and renewable energy obligations are included as part of other liabilities on the Consolidated Balance Sheet and total $151.7 million and $191.0 million as of December 31, 2020 and 2019, respectively. For the years ended December 31, 2020, 2019, and 2018, $49.2 million, $41.5 million, and $35.9 million of amortization related to LIHTC investments was recognized as a component of income tax expense, respectively.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

Commitments and Contingencies

12 Months Ended

Dec. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

15. COMMITMENTS AND CONTINGENCIES

Unfunded Commitments and Letters of Credit

The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and letters of credit. They involve, to varying degrees, elements of credit risk in excess of amounts recognized on the Consolidated Balance Sheets.

Lines of credit are obligations to lend money to a borrower. Credit risk arises when the borrower's current financial condition may indicate less ability to pay than when the commitment was originally made. In the case of letters of credit, the risk arises from the potential failure of the customer to perform according to the terms of a contract. In such a situation, the third party might draw on the letter of credit to pay for completion of the contract and the Company would look to its customer to repay these funds with interest. To minimize the risk, the Company uses the same credit policies in making commitments and conditional obligations as it would for a loan to that customer.

Letters of credit and financial guarantees are commitments issued by the Company to guarantee the performance of a customer to a third party in borrowing arrangements. The Company generally has recourse to recover from the customer any amounts paid under the guarantees. Typically, letters of credit issued have expiration dates within one year.

A summary of the contractual amounts for unfunded commitments and letters of credit are as follows:


	December 31,
	2020		2019
	(in millions)
Commitments to extend credit, including unsecured loan commitments of $1,077.2 at December 31, 2020 and $895.2 at December 31, 2019	$	9,425.2	$	8,348.4
Credit card commitments and financial guarantees	291.5		302.9
Letters of credit, including unsecured letters of credit of $9.9 at December 31, 2020 and $5.9 at December 31, 2019	186.9		175.8
Total	$	9,903.6	$	8,827.1

The following table represents the contractual commitments for lines and letters of credit by maturity at December 31, 2020:


			Amount of Commitment Expiration per Period
	Total Amounts Committed		Less Than 1 Year		1-3 Years		3-5 Years		After 5 Years
	(in millions)
Commitments to extend credit	$	9,425.2	$	2,369.4	$	4,070.1	$	1,737.8	$	1,247.9
Credit card commitments and financial guarantees	291.5		291.5		—		—		—
Letters of credit	186.9		145.3		32.9		8.7		—
Total	$	9,903.6	$	2,806.2	$	4,103.0	$	1,746.5	$	1,247.9

Commitments to extend credit are agreements to lend to a customer provided that there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company enters into credit arrangements that generally provide for the termination of advances in the event of a covenant violation or other event of default. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the party. The commitments are collateralized by the same types of assets used as loan collateral.

The Company has exposure to credit losses from unfunded commitments and letters of credit. As funds have not been disbursed on these commitments, they are not reported as loans outstanding. Credit losses related to these commitments are included in other liabilities as a separate loss contingency and are not included in the allowance for credit losses reported in "Note 3. Loans, Leases and Allowance for Credit Losses" of these Consolidated Financial Statements. This loss contingency for unfunded loan commitments and letters of credit was $37.0 million and $9.0 million as of December 31, 2020 and 2019, respectively. Changes to this liability are adjusted through the provision for credit losses in the Consolidated Income Statement. In addition, upon adoption of ASU 2016-13 on January 1, 2020, the Company recorded an increase of $15.1 million to this liability, which was recorded as an adjustment to retained earnings, net of tax.

Concentrations of Lending Activities

The Company does not have a single external customer from which it derives 10% or more of its revenues. The Company monitors concentrations within three broad categories: industry, product, and collateral. The Company's loan portfolio includes significant credit exposure to the CRE market. As of December 31, 2020 and 2019, CRE related loans accounted for approximately 38% and 45% of total loans, respectively. Substantially all of these loans are secured by first liens with an initial loan-to-value ratio of generally not more than 75%. Approximately 28% and 31% of these CRE loans, excluding construction and land loans, were owner-occupied as of December 31, 2020 and 2019, respectively.

Contingencies

The Company is involved in various lawsuits of a routine nature that are being handled and defended in the ordinary course of the Company’s business. Expenses are being incurred in connection with these lawsuits, but in the opinion of management, based in part on consultation with outside legal counsel, the resolution of these lawsuits and associated defense costs will not have a material impact on the Company’s financial position, results of operations, or cash flows.

Fair Value Accounting

12 Months Ended

Dec. 31, 2020

Fair Value Disclosures [Abstract]

Fair Value Accounting

16. FAIR VALUE ACCOUNTING

The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, the income approach, and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability. ASC 825 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 825 are described in "Note 1. Summary of Significant Accounting Policies" of these Notes to Consolidated Financial Statements.

In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally-developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the Company’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Furthermore, the reported fair value amounts have not been comprehensively revalued since the presentation dates, and therefore, estimates of fair value after the balance sheet date may differ significantly from the amounts presented herein. A more detailed description of the valuation methodologies used for assets and liabilities measured at fair value is set forth below.

Under ASC 825, the Company elected the FVO treatment for junior subordinated debt issued by WAL. This election is irrevocable and results in the recognition of unrealized gains and losses on these items at each reporting date. These unrealized gains and losses are recognized as part of other comprehensive income rather than earnings. The Company did not elect FVO treatment for the junior subordinated debt assumed in the Bridge Capital Holdings acquisition.

For the years ended December 31, 2020, 2019, and 2018, unrealized gains and losses from fair value changes on junior subordinated debt were as follows:


	Year Ended December 31,
	2020		2019		2018
	(in millions)
Unrealized (losses)/gains	$	(4.2)	$	(13.0)	$	7.6
Changes included in OCI, net of tax	(3.1)		(9.8)		5.7

Fair value on a recurring basis

Financial assets and financial liabilities measured at fair value on a recurring basis include the following:

AFS securities: Securities classified as AFS are reported at fair value utilizing Level 1 and Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include quoted prices in active markets, dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the bond’s terms and conditions, among other things.

Equity securities: Preferred stock and CRA investments are reported at fair value primarily utilizing Level 1 inputs.

Independent pricing service: The Company's independent pricing service provides pricing information on the majority of the Company's Level 1 and level 2 AFS and equity securities. For a small subset of securities, other pricing sources are used, including observed prices on publicly-traded securities and dealer quotes. Management independently evaluates the fair value measurements received from the Company's third-party pricing service through multiple review steps. First, management reviews what has transpired in the marketplace with respect to interest rates, credit spreads, volatility, and mortgage rates, among other things, and develops an expectation of changes to the securities' valuations from the previous quarter. Then, management selects a sample of investment securities and compares the values provided by its primary third-party pricing service to the market values obtained from secondary sources, including other pricing services and safekeeping statements, and evaluates those with notable variances. In instances where there are discrepancies in pricing from various sources and management expectations, management may manually price securities using currently observed market data to determine whether they can develop similar prices or may utilize bid information from broker dealers. Any remaining discrepancies between management's review and the prices provided by the vendor are discussed with the vendor and/or the Company's other valuation advisors.

Interest rate swaps: Interest rate swaps are reported at fair value utilizing Level 2 inputs. The Company obtains dealer quotations to value its interest rate swaps.

Junior subordinated debt: The Company estimates the fair value of its junior subordinated debt using a discounted cash flow model which incorporates the effect of the Company’s own credit risk in the fair value of the liabilities (Level 3). The Company’s cash flow assumptions are based on contractual cash flows as the Company anticipates that it will pay the debt according to its contractual terms.

The fair value of assets and liabilities measured at fair value on a recurring basis was determined using the following inputs as of the periods presented:


	Fair Value Measurements at the End of the Reporting Period Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(in millions)
December 31, 2020
Assets:




Available-for-sale debt securities
CDO	$	—	$	6.9	$	—	$	6.9
CLO	—		146.9		—		146.9
Commercial MBS issued by GSEs	—		84.6		—		84.6
Corporate debt securities	—		270.2		—		270.2
Municipal (taxable) securities	—		22.5		—		22.5
Private label residential MBS	—		1,476.9		—		1,476.9
Residential MBS issued by GSEs	—		1,486.6		—		1,486.6
Tax-exempt	—		1,187.4		—		1,187.4
Trust preferred securities	26.5		—		—		26.5


Total AFS debt securities	$	26.5	$	4,682.0	$	—	$	4,708.5
Equity securities
CRA investments	$	27.8	$	25.6	$	—	$	53.4
Preferred stock	113.9		—		—		113.9
Total equity securities	$	141.7	$	25.6	$	—	$	167.3

Derivative assets (1)	$	—	$	4.2	$	—	$	4.2
Liabilities:
Junior subordinated debt (2)	$	—	$	—	$	65.9	$	65.9
Derivative liabilities (1)	—		87.5		—		87.5

(1)Derivative assets and liabilities relate primarily to interest rate swaps on loans and subordinated debt, see "Note 12. Derivatives and Hedging Activities." In addition, the carrying value of loans is increased by $85.5 million and the net carrying value of subordinated debt is increased by $2.7 million as of December 31, 2020 for the effective portion of the hedge, which relates to the fair value of the hedges put in place to mitigate against fluctuations in interest rates.

(2)Includes only the portion of junior subordinated debt that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.


	Fair Value Measurements at the End of the Reporting Period Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(in millions)
December 31, 2019
Assets:
Available-for-sale debt securities
CDO	$	—	$	10.1	$	—	$	10.1
Commercial MBS issued by GSEs	—		94.3		—		94.3
Corporate debt securities	5.1		94.8		—		99.9
Municipal (taxable) securities	—		7.8		—		7.8
Private label residential MBS	—		1,129.2		—		1,129.2
Residential MBS issued by GSEs	—		1,412.1		—		1,412.1
Tax-exempt	—		554.9		—		554.9
Trust preferred securities	27.0		—		—		27.0
U.S. government sponsored agency securities	—		10.0		—		10.0
U.S. treasury securities	—		1.0		—		1.0
Total AFS debt securities	$	32.1	$	3,314.2	$	—	$	3,346.3
Equity securities
CRA investments	$	52.5	$	—	$	—	$	52.5
Preferred stock	86.2		—		—		86.2
Total equity securities	$	138.7	$	—	$	—	$	138.7
Loans - HFS	$	—	$	21.8	$	—	$	21.8
Derivative assets (1)	—		1.9		—		1.9
Liabilities:
Junior subordinated debt (2)	$	—	$	—	$	61.7	$	61.7
Derivative liabilities (1)	—		55.6		—		55.6

(1)Derivative assets and liabilities relate primarily to interest rate swaps on loans and subordinated debt, see "Note 12. Derivatives and Hedging Activities." In addition, the carrying value of loans is increased by $53.3 million and the net carrying value of subordinated debt is decreased by $0.4 million as of December 31, 2019, which relates to the effective portion of the hedges put in place to mitigate against fluctuations in interest rates.

(2)Includes only the portion of junior subordinated debt that is recorded at fair value at each reporting period pursuant to the election of FVO treatment.

For the years ended December 31, 2020, 2019, and 2018, the change in Level 3 liabilities measured at fair value on a recurring basis was as follows:


	Junior Subordinated Debt
	Year Ended December 31,
	2020		2019		2018
	(in millions)
Beginning balance	$	(61.7)	$	(48.7)	$	(56.2)
Change in fair value (1)	(4.2)		(13.0)		7.5
Ending balance	$	(65.9)	$	(61.7)	$	(48.7)

(1)Unrealized gains/(losses) attributable to changes in the fair value of junior subordinated debt are recorded as part of OCI, net of tax, and totaled $(3.1) million, $(9.8) million, and $5.7 million for the years ended December 31, 2020, 2019, and 2018, respectively.

For Level 3 liabilities measured at fair value on a recurring basis as of December 31, 2020 and 2019, the significant unobservable inputs used in the fair value measurements were as follows:

December 31, 2020

Valuation Technique

Significant Unobservable Inputs

Input Value

(in millions)

Junior subordinated debt

$

65.9

Discounted cash flow

Implied credit rating of the Company

2.87

%

December 31, 2019

Valuation Technique

Significant Unobservable Inputs

Input Value

(in millions)

Junior subordinated debt

$

61.7

Discounted cash flow

Implied credit rating of the Company

5.09

%

The significant unobservable inputs used in the fair value measurement of the Company’s junior subordinated debt as of December 31, 2020 and 2019 consist of the implied credit risk for the Company. As of December 31, 2020, the implied credit risk spread was calculated as the difference between the average of the 15-year 'BB' and 'BBB' rated financial indexes over the corresponding swap index. As of December 31, 2019, the implied credit risk spread was calculated as the difference between the 15-year 'BB' rated financial index over the corresponding swap index.

As of December 31, 2020, the Company estimates the discount rate at 2.87%, which represents an implied credit spread of 2.64% plus three-month LIBOR (0.24%). As of December 31, 2019, the Company estimated the discount rate at 5.09%, which was a 3.18% credit spread plus three-month LIBOR (1.91%).

Fair value on a nonrecurring basis

Certain assets are measured at fair value on a nonrecurring basis. That is, the assets are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of credit deterioration). The following table presents such assets carried on the Consolidated Balance Sheet by caption and by level within the ASC 825 hierarchy:


	Fair Value Measurements at the End of the Reporting Period Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Active Markets for Similar Assets (Level 2)		Unobservable Inputs (Level 3)
	(in millions)
As of December 31, 2020
Loans	$	187.3	$	—	$	—	$	187.3
Other assets acquired through foreclosure	1.4		—		—		1.4
As of December 31, 2019
Loans	$	110.3	$	—	$	—	$	110.3
Other assets acquired through foreclosure	13.9		—		—		13.9

For Level 3 assets measured at fair value on a nonrecurring basis as of December 31, 2020 and 2019, the significant unobservable inputs used in the fair value measurements were as follows:

December 31, 2020

Valuation Technique(s)

Significant Unobservable Inputs

Range

(in millions)

Loans

$

187.3

Collateral method

Third party appraisal

Costs to sell

4.0% to 10.0%

Discounted cash flow method

Discount rate

Contractual loan rate

2.0% to 7.0%

Scheduled cash collections

Probability of default

0% to 20.0%

Proceeds from non-real estate collateral

Loss given default

0% to 70.0%

Other assets acquired through foreclosure

1.4

Collateral method

Third party appraisal

Costs to sell

4.0% to 10.0%

December 31, 2019

Valuation Technique(s)

Significant Unobservable Inputs

Range

(in millions)

Loans

$

110.3

Collateral method

Third party appraisal

Costs to sell

4.0% to 10.0%

Discounted cash flow method

Discount rate

Contractual loan rate

4.0% to 7.0%

Scheduled cash collections

Probability of default

0% to 20.0%

Proceeds from non-real estate collateral

Loss given default

0% to 70.0%

Other assets acquired through foreclosure

13.9

Collateral method

Third party appraisal

Costs to sell

4.0% to 10.0%

Loans: Loans measured at fair value on a nonrecurring basis include collateral dependent loans held for investment. The specific reserves for these loans are based on collateral value, net of estimated disposition costs and other identified quantitative inputs. Collateral value is determined based on independent third-party appraisals or internally-developed discounted cash flow analyses. Appraisals may utilize a single valuation approach or a combination of approaches, including comparable sales and the income approach. Fair value is determined, where possible, using market prices derived from an appraisal or evaluation, which are considered to be Level 2. However, certain assumptions and unobservable inputs are often used by the appraiser, therefore qualifying the assets as Level 3 in the fair value hierarchy. In addition, when adjustments are made to an appraised value to reflect various factors such as the age of the appraisal or known changes in the market or the collateral, such valuation inputs are considered unobservable and the fair value measurement is categorized as a Level 3 measurement. Internal discounted cash flow analyses are also utilized to estimate the fair value of these loans, which considers internally-developed, unobservable inputs such as discount rates, default rates, and loss severity.

Total Level 3 collateral dependent loans had an estimated fair value of $187.3 million and $110.3 million at December 31, 2020 and 2019, respectively, net of a specific valuation allowance of $8.9 million and $2.8 million at December 31, 2020 and 2019, respectively.

Other assets acquired through foreclosure: Other assets acquired through foreclosure consist of properties acquired as a result of, or in-lieu-of, foreclosure. These assets are initially reported at the fair value determined by independent appraisals using appraised value less estimated cost to sell. Such properties are generally re-appraised every twelve months. There is risk for subsequent volatility. Costs relating to the development or improvement of the assets are capitalized and costs relating to holding the assets are charged to expense.

Fair value is determined, where possible, using market prices derived from an appraisal or evaluation, which are considered to be Level 2. However, certain assumptions and unobservable inputs are often used by the appraiser, therefore qualifying the assets as Level 3 in the fair value hierarchy. When significant adjustments are based on unobservable inputs, such as when a current appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the resulting fair value measurement has been categorized as a Level 3 measurement. The Company had $1.4 million and $13.9 million of such assets at December 31, 2020 and 2019, respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value of the Company’s financial instruments is as follows:


	December 31, 2020
	Carrying Amount		Fair Value
			Level 1		Level 2		Level 3		Total
	(in millions)
Financial assets:
Investment securities:
HTM	$	568.8	$	—	$	611.8	$	—	$	611.8
AFS	4,708.5		26.5		4,682.0		—		4,708.5
Equity securities	167.3		141.7		25.6		—		167.3
Derivative assets	4.2		—		4.2		—		4.2
Loans, net	26,774.1		—		—		27,231.0		27,231.0
Accrued interest receivable	166.1		—		166.1		—		166.1
Financial liabilities:
Deposits	$	31,930.5	$	—	$	31,935.9	$	—	$	31,935.9
Customer repurchase agreements	16.0		—		16.0		—		16.0
Other borrowings	5.0		—		5.0		—		5.0
Qualifying debt	548.7		—		488.1		79.3		567.4
Derivative liabilities	87.5		—		87.5		—		87.5
Accrued interest payable	11.0		—		11.0		—		11.0


	December 31, 2019
	Carrying Amount		Fair Value
			Level 1		Level 2		Level 3		Total
	(in millions)
Financial assets:
Investment securities:
HTM	$	485.1	$	—	$	516.3	$	—	$	516.3
AFS	3,346.3		32.2		3,314.1		—		3,346.3
Equity securities	138.7		138.7		—		—		138.7
Derivative assets	1.9		—		1.9		—		1.9
Loans, net	20,955.5		—		—		21,256.5		21,256.5
Accrued interest receivable	108.7		—		108.7		—		108.7
Financial liabilities:
Deposits	$	22,796.5	$	—	$	22,813.3	$	—	$	22,813.3
Customer repurchase agreements	16.7		—		16.7		—		16.7


Qualifying debt	393.6		—		332.6		74.2		406.8
Derivative liabilities	55.6		—		55.6		—		55.6
Accrued interest payable	24.7		—		24.7		—		24.7

Interest rate risk

The Company assumes interest rate risk (the risk to the Company’s earnings and capital from changes in interest rate levels) as a result of its normal operations. As a result, the fair values of the Company’s financial instruments, as well as its future net interest income, will change when interest rate levels change and that change may be either favorable or unfavorable to the Company.

Interest rate risk exposure is measured using interest rate sensitivity analysis to determine the Company's change in EVE and net interest income resulting from hypothetical changes in interest rates. If potential changes to EVE and net interest income resulting from hypothetical interest rate changes are not within the limits established by the BOD, the BOD may direct management to adjust the asset and liability mix to bring interest rate risk within BOD-approved limits.

WAB has an ALCO charged with managing interest rate risk within the BOD-approved limits. Limits are structured to preclude an interest rate risk profile that does not conform to both management and BOD risk tolerances without ALCO approval. There is also ALCO reporting at the Parent level for reviewing interest rate risk for the Company, which gets reported to the BOD and its Finance and Investment Committee.

Fair value of commitments

The estimated fair value of standby letters of credit outstanding at December 31, 2020 and 2019 approximates zero as there have been no significant changes in borrower creditworthiness. Loan commitments on which the committed interest rates are less than the current market rate are insignificant at December 31, 2020 and 2019.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Financial Services, Banking and Thrift

12 Months Ended

Dec. 31, 2020

Banking and Thrift, Other Disclosures [Abstract]

Summary of Actual Capital Amount and Ratio

The actual capital amounts and ratios for the Company and the Bank are presented in the following tables as of the periods indicated:


	Total Capital		Tier 1 Capital		Risk-Weighted Assets		Tangible Average Assets		Total Capital Ratio		Tier 1 Capital Ratio		Tier 1 Leverage Ratio		Common Equity Tier 1
	(dollars in millions)

December 31, 2020
WAL	$	3,872.0	$	3,158.2	$	31,015.4	$	34,349.3	12.5	%	10.2	%	9.2	%	9.9	%
WAB	3,619.4		3,078.2		31,140.6		34,367.0		11.6		9.9		9.0		9.9
Well-capitalized ratios									10.0		8.0		5.0		6.5
Minimum capital ratios									8.0		6.0		4.0		4.5

December 31, 2019
WAL	$	3,257.9	$	2,775.4	$	25,390.1	$	26,110.3	12.8	%	10.9	%	10.6	%	10.6	%
WAB	3,030.3		2,703.5		25,452.3		26,134.4		11.9		10.6		10.3		10.6
Well-capitalized ratios									10.0		8.0		5.0		6.5
Minimum capital ratios									8.0		6.0		4.0		4.5

Regulatory Capital Requirements

17. REGULATORY CAPITAL REQUIREMENTS

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements could trigger certain mandatory or discretionary actions that, if undertaken, could have a direct material effect on the Company’s business and financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

In March 2020, the federal bank regulatory authorities issued an interim final rule that delays the estimated impact on regulatory capital resulting from the adoption of CECL. The interim final rule provides banking organizations that implement CECL before the end of 2020 the option to delay for two years the estimated impact of CECL on regulatory capital relative to regulatory capital determined under the prior incurred loss methodology, followed by a three-year transition period to phase out the aggregate amount of capital benefit provided during the initial two-year delay. The Company has elected the five-year CECL transition option in connection with its adoption of CECL on January 1, 2020. As a result, capital ratios and amounts as of December 31, 2020 exclude the impact of the increased allowance for credit losses related to the adoption of ASC 326.

As of December 31, 2020 and 2019, the Company and the Bank's capital ratios exceeded the well-capitalized thresholds, as defined by the federal banking agencies. The actual capital amounts and ratios for the Company and the Bank are presented in the following tables as of the periods indicated:


	Total Capital		Tier 1 Capital		Risk-Weighted Assets		Tangible Average Assets		Total Capital Ratio		Tier 1 Capital Ratio		Tier 1 Leverage Ratio		Common Equity Tier 1
	(dollars in millions)

December 31, 2020
WAL	$	3,872.0	$	3,158.2	$	31,015.4	$	34,349.3	12.5	%	10.2	%	9.2	%	9.9	%
WAB	3,619.4		3,078.2		31,140.6		34,367.0		11.6		9.9		9.0		9.9
Well-capitalized ratios									10.0		8.0		5.0		6.5
Minimum capital ratios									8.0		6.0		4.0		4.5

December 31, 2019
WAL	$	3,257.9	$	2,775.4	$	25,390.1	$	26,110.3	12.8	%	10.9	%	10.6	%	10.6	%
WAB	3,030.3		2,703.5		25,452.3		26,134.4		11.9		10.6		10.3		10.6
Well-capitalized ratios									10.0		8.0		5.0		6.5
Minimum capital ratios									8.0		6.0		4.0		4.5

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

+ References + Details

Employee Benefit Plan (Notes)

12 Months Ended

Dec. 31, 2020

Retirement Benefits [Abstract]

Employee Benefit Plans

18. EMPLOYEE BENEFIT PLANS

The Company has a qualified 401(k) employee benefit plan for all eligible employees. Participants are able to defer between 1% and 75% (up to a maximum of $19,500 for those under 50 years of age and up to a maximum of $26,000 for those over 50 years of age in 2020) of their annual compensation. The Company may elect to match a discretionary amount each year, which is 75% of the first 6% of the participant’s compensation deferred into the plan. The Company’s contributions to this plan total $7.1 million, $6.2 million, and $5.6 million for the years ended December 31, 2020, 2019, and 2018, respectively.

In addition, the Company maintains a non-qualified 401(k) restoration plan for the benefit of executives of the Company and certain affiliates. Participants are able to defer a portion of their annual salary and receive a matching contribution based primarily on the contribution structure in effect under the Company’s 401(k) plan, but without regard to certain statutory limitations applicable under the 401(k) plan. The Company’s total contribution to the restoration plan was $0.2 million for each of the years ended December 31, 2020 and $0.1 million for the years ended December 31, 2019 and 2018.

In connection with the Bridge acquisition, the Company assumed Bridge's SERP, an unfunded noncontributory defined benefit pension plan. The SERP provides retirement benefits to certain Bridge officers based on years of service and final average salary. The Company uses a December 31 measurement date for this plan.

The following table reflects the accumulated benefit obligation and funded status of the SERP:


	December 31,
	2020			2019
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of period	$	11.7		$	10.0
Service cost	0.6			0.6
Interest cost	0.6			0.6
Actuarial losses/(gains)	1.1			0.8
Expected benefits paid	(0.4)			(0.3)
Projected benefit obligation at end of year	$	13.6		$	11.7
Unfunded projected/accumulated benefit obligation	(13.6)			(11.7)
Additional liability	$	—		$	—

Weighted average assumptions to determine benefit obligation
Discount rate	5.25		%	5.25		%
Rate of compensation increase	3.00		%	3.00		%

The components of net periodic benefit cost recognized for the year ended December 31, 2020 and 2019 and the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost during 2021 are as follows:


	Year Ended December 31,
	2021		2020		2019
	(in millions)
Components of net periodic benefit cost
Service cost	$	0.5	$	0.6	$	0.6
Interest cost	0.6		0.6		0.6
Amortization of prior service cost	0.0		0.0		0.1
Amortization of actuarial (gains)/losses	0.0		(0.1)		(0.2)
Net periodic benefit cost	$	1.1	$	1.1	$	1.1

Other comprehensive income (cost)	$	0.0	$	(0.1)	$	(0.1)

Related Parties (Notes)

12 Months Ended

Dec. 31, 2020

Related Party Transactions

19. RELATED PARTY TRANSACTIONS

Principal stockholders, directors, and executive officers of the Company, their immediate family members, and companies they control or own more than a 10% interest in, are considered to be related parties. In the ordinary course of business, the Company engages in various related party transactions, including extending credit and bank service transactions. All related party transactions are subject to review and approval pursuant to the Company's Related Party Transactions policy.

Federal banking regulations require that any extensions of credit to insiders and their related interests not be offered on terms more favorable than would be offered to non-related borrowers of similar creditworthiness. The following table summarizes the aggregate activity in such loans for the periods indicated:


	Year Ended December 31,
	2020		2019
	(in millions)
Balance, beginning	$	3.8	$	4.6
New loans	—		—
Advances	—		0.3
Repayments and other	(0.5)		(1.1)
Balance, ending	$	3.3	$	3.8

None of these loans are past due, on non-accrual status or have been restructured to provide a reduction or deferral of interest or principal because of deterioration in the financial position of the borrower. There were no loans to a related party that were considered classified loans at December 31, 2020 or 2019. The interest income associated with these loans was approximately $0.2 million, $0.2 million and $0.3 million for the years ended December 31, 2020, 2019, and 2018, respectively.

Loan commitments outstanding with related parties totaled approximately $10.3 million and $10.6 million at December 31, 2020 and 2019, respectively.

The Company also accepts deposits from related parties, which totaled $156.9 million and $100.1 million at December 31, 2020 and 2019, respectively, with related interest expense totaling approximately $0.2 million, $0.3 million and $0.2 million during the year ended December 31, 2020, 2019, and 2018, respectively.

Donations, sponsorships, and other payments to related parties totaled less than $1.0 million during the years ended December 31, 2020, 2019 and totaled $8.1 million during the year ended December 31, 2018. Total related party payments of $8.1 million for the year ended December 31, 2018 include a donation to the Company's charitable foundation of $7.6 million, which consisted of a non-cash donation of OREO property of $6.9 million and a cash donation of $0.7 million.

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

Parent Company (Notes)

12 Months Ended

Dec. 31, 2020

Parent Company Financial Information [Abstract]

Parent Company Financial Information

20. PARENT COMPANY FINANCIAL INFORMATION

The condensed financial statements of the holding company are presented in the following tables:

WESTERN ALLIANCE BANCORPORATION

Condensed Balance Sheets


	December 31,
	2020		2019
	(in millions)
ASSETS:
Cash and cash equivalents	$	55.5	$	75.9

Investment securities - AFS	5.1		12.8
Investment securities - equity	49.8		47.1
Investment in bank subsidiaries	3,493.5		3,063.4
Investment in non-bank subsidiaries	49.9		52.3


Other assets	18.0		22.5
Total assets	$	3,671.8	$	3,274.0
LIABILITIES AND STOCKHOLDERS' EQUITY:

Qualifying debt	$	251.5	$	242.0
Accrued interest and other liabilities	6.8		15.3
Total liabilities	258.3		257.3
Total stockholders’ equity	3,413.5		3,016.7
Total liabilities and stockholders’ equity	$	3,671.8	$	3,274.0

WESTERN ALLIANCE BANCORPORATION

Condensed Income Statements


	Year Ended December 31,
	2020		2019		2018
	(in millions)
Income:
Dividends from subsidiaries	$	160.0	$	134.0	$	152.1
Interest income	3.1		2.8		2.9
Non-interest income	4.7		5.1		0.8
Total income	167.8		141.9		155.8
Expense:
Interest expense	10.6		14.6		13.9
Non-interest expense	19.7		19.5		19.0
Total expense	30.3		34.1		32.9
Income before income taxes and equity in undistributed earnings of subsidiaries	137.5		107.8		122.9
Income tax benefit	4.5		5.7		10.4
Income before equity in undistributed earnings of subsidiaries	142.0		113.5		133.3
Equity in undistributed earnings of subsidiaries	364.6		385.7		302.5
Net income	$	506.6	$	499.2	$	435.8

Western Alliance Bancorporation

Condensed Statements of Cash Flows


	Year Ended December 31,
	2020		2019		2018
	(in millions)
Cash flows from operating activities:
Net income	$	506.6	$	499.2	$	435.8
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net undistributed earnings of subsidiaries	(364.6)		(385.7)		(302.5)



Other operating activities, net	8.0		9.9		(5.9)
Net cash provided by operating activities	150.0		123.4		127.4
Cash flows from investing activities:
Purchases of securities	(6.9)		(10.8)		(44.4)
Principal pay downs, calls, maturities, and sales proceeds of securities	7.7		19.0		11.4




Other investing activities, net	1.2		—		—



Net cash provided by (used in) investing activities	2.0		8.2		(33.0)
Cash flows from financing activities:


Common stock repurchases	(71.6)		(120.2)		(35.7)




Cash dividends paid on common stock	(101.3)		(51.3)		—


Other financing activities, net	0.5		0.1		0.5

Net cash used in financing activities	(172.4)		(171.4)		(35.2)
Net (decrease) increase in cash and cash equivalents	(20.4)		(39.8)		59.2
Cash and cash equivalents at beginning of year	75.9		115.7		56.5
Cash and cash equivalents at end of year	$	55.5	$	75.9	$	115.7

Segments

12 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Segments

21. SEGMENTS

The Company has made changes to its reportable segments, which have been reflected in the Company's operating segment results as and for the year ended December 31, 2020. The Company's reportable segments are aggregated with a focus on products and services offered and consist of three reportable segments:

•Commercial segment: provides commercial banking and treasury management products and services to small and middle-market businesses, specialized banking services to sophisticated commercial institutions and investors within niche industries, as well as financial services to the real estate industry.

•Consumer Related segment: offers both commercial banking services to enterprises in consumer-related sectors and consumer banking services, such as residential mortgage banking.

•Corporate & Other segment: consists of the Company's investment portfolio, Corporate borrowings and other related items, income and expense items not allocated to our other reportable segments, and inter-segment eliminations.

The Company's segment reporting process begins with the assignment of all loan and deposit accounts directly to the segments where these products are originated and/or serviced. Equity capital is assigned to each segment based on the risk profile of their assets and liabilities. With the exception of goodwill, which is assigned a 100% weighting, equity capital allocations ranged from 0% to 12% during the year. Any excess or deficient equity not allocated to segments based on risk is assigned to the Corporate & Other segment.

Net interest income, provision for credit losses, and non-interest expense amounts are recorded in their respective segments to the extent that the amounts are directly attributable to those segments. Net interest income is recorded in each segment on a TEB with a corresponding increase in income tax expense, which is eliminated in the Corporate & Other segment.

Further, net interest income of a reportable segment includes a funds transfer pricing process that matches assets and liabilities with similar interest rate sensitivity and maturity characteristics. Using this funds transfer pricing methodology, liquidity is transferred between users and providers. A net user of funds has lending/investing in excess of deposits/borrowings and a net provider of funds has deposits/borrowings in excess of lending/investing. A segment that is a user of funds is charged for the use of funds, while a provider of funds is credited through funds transfer pricing, which is determined based on the average life of the assets or liabilities in the portfolio. Residual funds transfer pricing mismatches are allocable to the Corporate & Other segment and presented as part of net interest income.

The net income amount for each reportable segment is further derived by the use of expense allocations. Certain expenses not directly attributable to a specific segment are allocated across all segments based on key metrics, such as number of employees, number of transactions processed for loans and deposits, and average loan and deposit balances. These types of expenses include information technology, operations, human resources, finance, risk management, credit administration, legal, and marketing.

Income taxes are applied to each segment based on the effective tax rate for the geographic location of the segment. Any difference in the corporate tax rate and the aggregate effective tax rates in the segments are adjusted in the Corporate & Other segment.

The following is a summary of operating segment balance sheet information for the periods indicated:


	Consolidated Company		Commercial		Consumer Related		Corporate & Other
At December 31, 2020:	(in millions)
Assets:
Cash, cash equivalents, and investment securities	$	8,176.5	$	12.0	$	45.6	$	8,118.9
Loans, net of deferred loan fees and costs	27,053.0		20,245.8		6,798.2		9.0
Less: allowance for credit losses	(278.9)		(263.4)		(15.4)		(0.1)
Total loans	26,774.1		19,982.4		6,782.8		8.9
Other assets acquired through foreclosure, net	1.4		1.4		—		—
Goodwill and other intangible assets, net	298.5		296.1		2.4		—
Other assets	1,210.5		257.0		96.6		856.9
Total assets	$	36,461.0	$	20,548.9	$	6,927.4	$	8,984.7
Liabilities:
Deposits	$	31,930.5	$	21,448.0	$	9,936.8	$	545.7
Borrowings and qualifying debt	553.7		—		—		553.7
Other liabilities	563.3		170.4		3.3		389.6
Total liabilities	33,047.5		21,618.4		9,940.1		1,489.0
Allocated equity:	3,413.5		1,992.2		579.1		842.2
Total liabilities and stockholders' equity	$	36,461.0	$	23,610.6	$	10,519.2	$	2,331.2
Excess funds provided (used)	—		3,061.7		3,591.8		(6,653.5)


	Consolidated Company		Commercial		Consumer Related		Corporate & Other
At December 31, 2019:	(in millions)
Assets:
Cash, cash equivalents, and investment securities	$	4,471.2	$	15.4	$	10.1	$	4,445.7
Loans, net of deferred loan fees and costs	21,123.3		16,767.3		4,352.5		3.5
Less: allowance for credit losses	(167.8)		(134.2)		(33.6)		—
Total loans	20,955.5		16,633.1		4,318.9		3.5
Other assets acquired through foreclosure, net	13.9		13.9		—		—
Goodwill and other intangible assets, net	297.6		297.6		—		—
Other assets	1,083.7		202.6		40.1		841.0
Total assets	$	26,821.9	$	17,162.6	$	4,369.1	$	5,290.2
Liabilities:
Deposits	$	22,796.5	$	17,067.6	$	4,644.7	$	1,084.2
Borrowings and qualifying debt	393.6		—		—		393.6
Other liabilities	615.1		95.4		9.2		510.5
Total liabilities	23,805.2		17,163.0		4,653.9		1,988.3
Allocated equity:	3,016.7		2,060.0		446.8		509.9
Total liabilities and stockholders' equity	$	26,821.9	$	19,223.0	$	5,100.7	$	2,498.2
Excess funds provided (used)	—		2,060.4		731.6		(2,792.0)

The following is a summary of operating segment income statement information for the periods indicated:


	Consolidated Company		Commercial		Consumer Related		Corporate & Other
Year Ended December 31, 2020:	(in millions)
Net interest income	$	1,166.9	$	999.7	$	302.5	$	(135.3)
Provision for (recovery of) credit losses	123.6		128.6		(9.0)		4.0
Net interest income after provision for credit losses	1,043.3		871.1		311.5		(139.3)
Non-interest income	70.8		50.5		1.6		18.7
Non-interest expense	491.6		308.9		92.6		90.1
Income (loss) before income taxes	622.5		612.7		220.5		(210.7)
Income tax expense (benefit)	115.9		147.6		52.3		(84.0)
Net income	$	506.6	$	465.1	$	168.2	$	(126.7)


	Consolidated Company		Commercial		Consumer Related		Corporate & Other
Year Ended December 31, 2019:	(in millions)
Net interest income	$	1,040.4	$	837.2	$	209.0	$	(5.8)
Provision for credit losses	19.3		11.1		7.4		0.8
Net interest income (expense) after provision for credit losses	1,021.1		826.1		201.6		(6.6)
Non-interest income	65.1		50.4		1.4		13.3
Non-interest expense	482.0		320.6		96.7		64.7
Income (loss) before income taxes	604.2		555.9		106.3		(58.0)
Income tax expense (benefit)	105.0		134.7		24.8		(54.5)
Net income	$	499.2	$	421.2	$	81.5	$	(3.5)


	Consolidated Company		Commercial		Consumer Related		Corporate & Other
Year Ended December 31, 2018:	(in millions)
Net interest income	$	915.9	$	741.7	$	162.0	$	12.2
Provision for credit losses	25.0		18.9		4.2		1.9
Net interest income (expense) after provision for credit losses	890.9		722.8		157.8		10.3
Non-interest income	43.1		48.3		1.4		(6.6)
Non-interest expense	423.7		309.5		72.6		41.6
Income (loss) before income taxes	510.3		461.6		86.6		(37.9)
Income tax expense (benefit)	74.5		112.1		20.5		(58.1)
Net income	$	435.8	$	349.5	$	66.1	$	20.2

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Quarterly Financial Data (Notes)

12 Months Ended

Dec. 31, 2020

Quarterly Financial Data Disclosure [Abstract]

Quarterly Financial Information

23. QUARTERLY FINANCIAL DATA (UNAUDITED)


	Year Ended December 31, 2020
	Fourth Quarter		Third Quarter		Second Quarter		First Quarter
	(in millions, except per share amounts)
Interest income	$	331.6	$	304.8	$	318.2	$	307.2
Interest expense	16.8		20.1		19.8		38.2
Net interest income	314.8		284.7		298.4		269.0
(Recovery of) provision for credit losses	(34.2)		14.6		92.0		51.2
Net interest income after provision for credit losses	349.0		270.1		206.4		217.8
Non-interest income	23.8		20.6		21.3		5.1
Non-interest expense	(132.2)		(124.1)		(114.8)		(120.5)
Income before provision for income taxes	240.6		166.6		112.9		102.4
Income tax expense	47.0		30.8		19.6		18.5
Net income	$	193.6	$	135.8	$	93.3	$	83.9
Earnings per share:
Basic	$	1.94	$	1.36	$	0.93	$	0.83
Diluted	$	1.93	$	1.36	$	0.93	$	0.83


	Year Ended December 31, 2019
	Fourth Quarter		Third Quarter		Second Quarter		First Quarter
	(in millions, except per share amounts)
Interest income	$	315.4	$	315.6	$	302.9	$	291.1
Interest expense	43.4		49.2		48.2		43.8
Net interest income	272.0		266.4		254.7		247.3
Provision for credit losses	4.0		3.8		7.0		4.5
Net interest income after provision for credit losses	268.0		262.6		247.7		242.8
Non-interest income	16.0		19.3		14.4		15.4
Non-interest expense	(129.7)		(126.1)		(114.3)		(111.9)
Income before provision for income taxes	154.3		155.8		147.8		146.3
Income tax expense	26.2		28.5		24.8		25.5
Net income	$	128.1	$	127.3	$	123.0	$	120.8
Earnings per share:
Basic	$	1.26	$	1.25	$	1.19	$	1.16
Diluted	$	1.25	$	1.24	$	1.19	$	1.16

Subsequent Events

Feb. 16, 2021

Subsequent Events [Abstract]

Subsequent Events

On February 16, 2021, the Company entered into a definitive agreement with Aris Mortgage Holding Company, LLC ("Aris"), the parent company of AmeriHome Mortgage Company, LLC (“AmeriHome”), and certain other parties, pursuant to which Aris will merge with an indirect subsidiary of the Bank. Following the merger, AmeriHome will continue to use its trade name, continuing to operate as AmeriHome, a Western Alliance Bank company. Pursuant to the agreement, WAB will pay cash consideration of $275 million plus the adjusted tangible book value of Aris at closing, for an estimated aggregate cash consideration of $1.0 billion (inclusive of certain transaction expenses and management bonus payments) based on December 31, 2020 financial statements of Aris. James Furash, Chief Executive Officer of AmeriHome, and other founding management team members of AmeriHome will continue in their roles following the merger. The merger, which remains subject to required regulatory approvals, is expected to close in the second quarter of 2021.

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Repurchase Agreements, Collateral, Policy [Policy Text Block]

Customer repurchase agreements

The Company enters into repurchase agreements with customers, whereby it pledges securities against overnight investments made from the customer’s excess collected funds. The Company records these at the amount of cash received in connection with the transaction.

Share-based Payment Arrangement [Policy Text Block]

Stock compensation plans

The Company has the Incentive Plan, as amended, which is described more fully in "Note 10. Stockholders' Equity" of these Notes to Consolidated Financial Statements. Compensation expense on non-vested restricted stock awards is based on the fair value of the award on the measurement date which, for the Company, is the date of the grant and is recognized ratably over the service period of the award. Forfeitures are estimated at the time of the award grant and revised in subsequent periods if actual forfeitures differ from those estimates. The fair value of non-vested restricted stock awards is the market price of the Company’s stock on the date of grant.

The Company's performance stock units have a cumulative EPS target and a TSR performance measure component. The TSR component is a market-based performance condition that is separately valued as of the date of the grant. A Monte Carlo valuation model is used to determine the fair value of the TSR performance metric, which simulates potential TSR outcomes over the performance period and determines the payouts that would occur in each scenario. The resulting fair value of the TSR component is based on the average of these results. Compensation expense related to the TSR component is based on the fair value determination on the date of the grant and is not subsequently revised based on actual performance. Compensation expense on the EPS component for these awards is based on the fair value (market price of the Company's stock on the date of the grant) of the award. Compensation expense related to both the TSR and EPS components is recognized ratably over the service period of the award.

Dividends

WAL is a legal entity separate and distinct from its subsidiaries. As a holding company with limited significant assets other than the capital stock of its subsidiaries, WAL's ability to pay dividends depends primarily upon the receipt of dividends or other capital distributions from its subsidiaries. The Company's subsidiaries' ability to pay dividends to WAL is subject to, among other things, their individual earnings, financial condition, and need for funds, as well as federal and state governmental policies and regulations applicable to WAL and each of those subsidiaries, which limit the amount that may be paid as dividends without prior approval. In addition, the terms and conditions of other securities the Company issues may restrict its ability to pay dividends to holders of the Company's common stock. For example, if any required payments on outstanding trust preferred securities are not made, WAL would be prohibited from paying cash dividends on its common stock.

Treasury shares

The Company separately presents treasury shares, which represent shares surrendered to the Company equal in value to the statutory payroll tax withholding obligations arising from the vesting of employee restricted stock awards. Treasury shares are carried at cost.

Common stock repurchasesThe Company has previously adopted common stock repurchase programs pursuant to which the Company has repurchased shares of its outstanding common stock, the most recent of which expired in December 2020. All shares repurchased under the plan were retired upon settlement. The Company has elected to allocate the excess of the repurchase price over the par value of its common stock between APIC and retained earnings, with the portion allocated to APIC limited to the amount of APIC that was recorded at the time that the shares were initially issued, which was calculated on a last-in, first-out basis.

Nature of Operation

Nature of operation

WAL is a bank holding company headquartered in Phoenix, Arizona, incorporated under the laws of the state of Delaware. WAL provides a full spectrum of deposit, lending, treasury management, international banking, and online banking products and services through its wholly-owned banking subsidiary, WAB.

WAB operates the following full-service banking divisions: ABA, BON, FIB, Bridge, and TPB. The Company also serves business customers through a national platform of specialized financial services. In addition, the Company has two non-bank subsidiaries LVSP, which held and managed certain OREO properties, and CSI, a captive insurance company formed and licensed under the laws of the State of Arizona and established as part of the Company's overall enterprise risk management strategy.

Basis of Presentation

Basis of presentation

The accounting and reporting policies of the Company are in accordance with GAAP and conform to practices within the financial services industry. The accounts of the Company and its consolidated subsidiaries are included in the Consolidated Financial Statements.

Use of Estimates

Use of estimatesThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management's estimates and judgments are ongoing and are based on experience, current and expected future conditions, third-party evaluations and various other assumptions that management believes are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities, as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. Actual results may differ from those estimates and assumptions used in the Consolidated Financial Statements and related notes. Material estimates that are susceptible to significant changes in the near term, particularly to the extent that economic conditions worsen or persist longer than expected in an adverse state, relate to: the determination of the allowance for credit losses; certain assets and liabilities carried at fair value; and accounting for income taxes.

Principles of Consolidation

Principles of consolidation

As of December 31, 2020, WAL has the following significant wholly-owned subsidiaries: WAB and eight unconsolidated subsidiaries used as business trusts in connection with the issuance of trust-preferred securities.

The Bank has the following significant wholly-owned subsidiaries: WABT, which holds certain investment securities, municipal and nonprofit loans, and leases; WA PWI, which holds interests in certain limited partnerships invested primarily in low income housing tax credits and small business investment corporations; Helios Prime, which holds interests in certain limited partnerships invested in renewable energy projects; and BW Real Estate, Inc., which operates as a real estate investment trust and holds certain of WAB's real estate loans and related securities.

The Company does not have any other significant entities that should be consolidated. All significant intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Certain amounts reported in prior periods may have been reclassified in the Consolidated Financial Statements to conform to the current presentation. The reclassifications have no effect on net income or stockholders’ equity as previously reported.

Business Combinations

Business combinations

Business combinations are accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method, the acquiring entity in a business combination recognizes all of the acquired assets and assumed liabilities at their estimated fair values as of the date of acquisition. Any excess of the purchase price over the fair value of net assets and other identifiable intangible assets acquired is recorded as goodwill. To the extent the fair value of net assets acquired, including identified intangible assets, exceeds the purchase price, a bargain purchase gain is recognized. Changes to estimated fair values from a business combination are recognized as an adjustment to goodwill during the measurement period and are recognized in the proper reporting period in which the adjustment amounts are determined. Results of operations of an acquired business are included in the Consolidated Income Statement from the date of acquisition. Acquisition-related costs, including conversion and restructuring charges, are expensed as incurred.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and cash equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks (including cash items in process of clearing), and federal funds sold. Cash flows from loans originated by the Company and customer deposit accounts are reported net.

The Company maintains deposit accounts with other banks, which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts.

Investment Securities

Investment securities

Investment securities include debt and equity securities. Debt securities may be classified as HTM, AFS, or trading. The appropriate classification is initially decided at the time of purchase. Securities classified as HTM are those debt securities that the Company has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs, or general economic conditions. The sale of an HTM security within three months of its maturity date or after the majority of the principal outstanding has been collected is considered a maturity for purposes of classification and disclosure. Securities classified as AFS are securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as AFS would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, decline in credit quality, and regulatory capital considerations.

HTM securities are carried at amortized cost. AFS securities are carried at their estimated fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax. When AFS debt securities are sold, the unrealized gains or losses are reclassified from OCI to non-interest income. Trading securities are carried at their estimated fair value, with changes in fair value reported in earnings as part of non-interest income.

Equity securities are carried at their estimated fair value, with changes in fair value reported in earnings as part of non-interest income.

Interest income is recognized based on the coupon rate and includes the amortization of purchase premiums and the accretion of purchase discounts. Premiums and discounts on investment securities are generally amortized or accreted over the contractual life of the security using the interest method. For the Company's mortgage-backed securities, amortization or accretion of premiums or discounts are adjusted for anticipated prepayments. Gains and losses on the sale of investment securities are recorded on the trade date and determined using the specific identification method.

A debt security is placed on nonaccrual status at the time its principal or interest payments become 90 days past due. Interest accrued but not received for a security placed on nonaccrual is reversed against interest income.

Restricted Stock

Restricted stockWAB is a member of the Federal Reserve System and, as part of its membership, is required to maintain stock in the FRB in a specified ratio to its capital. In addition, WAB is a member of the FHLB system and, accordingly, maintains an investment in capital stock of the FHLB based on the borrowing capacity used. These investments are considered equity securities with no actively traded market. Therefore, the shares are considered restricted investment securities. These investments are carried at cost, which is equal to the value at which they may be redeemed. The dividend income received from the stock is reported in interest income. The Company conducts a periodic review and evaluation of its restricted stock to determine if any impairment exists. No impairment has been recorded to date.

Loans, Interest and Fees from Loans