WESTERN ALLIANCE BANCORPORATIONWAL
WESTERN ALLIANCE BANCORPORATION Commitments Disclosure
18. COMMITMENTS AND CONTINGENCIES
Unfunded Commitments and Letters of Credit
The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and letters of credit. They involve, to varying degrees, elements of credit risk in excess of amounts recognized on the Consolidated Balance Sheet.
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arises when the borrower's current financial condition may indicate less ability to pay than when the commitment was originally made.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.
A summary of the contractual amounts for unfunded commitments and letters of credit are as follows:
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in millions) | ||||||||||||||
Commitments to extend credit, including unsecured loan commitments of $1,034 and $860 at December 31, 2025 and 2024, respectively | $ | 15,420 | $ | 13,546 | ||||||||||
| Credit card commitments and financial guarantees | 813 | 585 | ||||||||||||
Letters of credit, including unsecured letters of credit of $2 at December 31, 2025 and 2024 | 598 | 437 | ||||||||||||
| Total | $ | 16,831 | $ | 14,568 | ||||||||||
The following table represents the contractual commitments for lines and letters of credit by maturity at December 31, 2025:
| 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 | $ | 15,420 | $ | 2,953 | $ | 6,776 | $ | 2,487 | $ | 3,204 | ||||||||||||||||||||||
| Credit card commitments and financial guarantees | 813 | 813 | — | — | — | |||||||||||||||||||||||||||
| Letters of credit | 598 | 218 | 296 | 26 | 58 | |||||||||||||||||||||||||||
| Total | $ | 16,831 | $ | 3,984 | $ | 7,072 | $ | 2,513 | $ | 3,262 | ||||||||||||||||||||||
Commitments to extend credit are agreements to lend to a customer provided 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. As commitments may expire without being fully 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 ACL reported in "Note 4. Loans, Leases and Allowance for Credit Losses" of these Consolidated Financial Statements. This loss contingency for unfunded loan commitments and letters of credit was $49.6 million and $39.5 million as of December 31, 2025 and 2024, respectively. Changes to this liability are adjusted through the provision for credit losses in the Consolidated Income Statement.
Commitments to Invest in Renewable Energy Projects
The Company has off-balance sheet commitments to invest in renewable energy projects, as described in "Note 17. Income Taxes" of these Consolidated Financial Statements, subject to the underlying project meeting certain milestones. These conditional commitments totaled $21 million and $6 million as of December 31, 2025 and 2024, respectively.
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 of lending activities at the product and borrower relationship level. Commercial and industrial loans made up 48% and 43% of the Company's HFI loan portfolio as of December 31, 2025 and 2024, respectively. The Company's loan portfolio includes significant credit exposure to the CRE market. As of December 31, 2025 and 2024, CRE related loans accounted for approximately 27% and 30% of total loans, respectively. Approximately 14% and 16% of these CRE loans, excluding construction and land loans, were owner-occupied as of December 31, 2025 and 2024, respectively. No borrower relationships at both the commitment and funded loan level exceeded 5% of total loans HFI as of December 31, 2025 and 2024.
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.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 23, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Feb 26, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Feb 16, 2016 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.