KBRA Affirms Ratings for Western Alliance Bancorporation

KBRA affirms the senior unsecured debt rating of BBB+, the subordinated debt rating of BBB, the preferred stock rating of BBB-, and the short-term debt rating of K2 for Western Alliance Bancorporation (NYSE: WAL; or "the company"), as well as the deposit and senior unsecured debt ratings of A-, the subordinated debt rating of BBB+, and the short-term deposit and debt ratings of K2 for Western Alliance Bank (“the bank”). KBRA also affirms the BBB+ Issuer rating for Western Alliance Trust Company, N.A., a wholly-owned subsidiary of WAL, as well as the A- Issuer rating for AmeriHome Mortgage Company, LLC, which remains a subsidiary of the bank. Additionally, KBRA affirms the BBB preferred stock rating for BW Real Estate, Inc., a majority-owned REIT subsidiary of the bank. The Outlook for all long-term ratings is Stable.

Key Credit Considerations

WAL’s fairly consistent operating performance (core ROA of >1% and RORWA of >1.6%, respectively, for FY25) as well as balance sheet trends – principally, strong core deposit flows, enhanced overall liquidity and internal core capital generation – have done well to support its ratings. WAL continues to benefit from a strong management team that has demonstrated multi-year success executing its business model, with diverse commercial verticals that supplement core middle-market banking; having produced favorable risk-adjusted returns. Also significant to WAL’s enhanced creditor profile has been the maintenance of core capital measures that include a CET1 ratio of 11%.

With respect to deposit flows, WAL’s $77 billion of total deposits at YE25 were up $11 billion from the prior year; ~2x the $5 billion year-over-year increase in loans HFI. Deposits were up an additional ~$5.6 billion in 1Q26 from the seasonally softer 4Q. Equally important, WAL has made substantial progress remixing its deposit base; reducing substantial brokered balances, along with the relative amount of reciprocal deposits that were necessary to enhance liquidity during 2023. Beyond the considerably larger, and what we consider to be more durable deposit base that reflects materially lower uninsured / uncollateralized balances, WAL’s favorable earning asset liquidity positions the company well from this vantage point. Furthermore, we expect WAL’s core funding profile to continue to improve as it executes on various commercial strategic deposit initiatives.

Regarding the company’s recent-year strategic earning asset focus, beyond the noted bolstered liquidity elements, WAL has effectively reduced select loan exposures determined to be more transactional in nature, including some contraction in the scale of its C&D book during 2024 and 2025; a recent driver of somewhat lower relative aggregate Investor CRE exposure. WAL’s material NDFI exposure remains weighted towards residential mortgage companies; including both traditional warehouse funding, as well as MSR facilities. For this segment of NDFI exposure, as well as the broader portfolio, we consider the company’s credit risk management framework and execution associated with it positively. A recent increase in credit costs associated with two large NDFI exposures are considered to be idiosyncratic, and not indicative of any broader asset quality or risk management issues.

Rating Sensitivities

Positive rating momentum could emerge from continued demonstration of solid core earnings power, positive client core deposit trends, and better-than-peer prospective credit loss performance. Any meaningful slippage in core funding profile, combined with evidence of reduced core earnings (and therefore inability to maintain similar core capitalization) could pressure ratings.

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