Western Alliance Bancorporation has taken decisive action in response to an unpaid $126.4 million owed by Jefferies Financial Group. The company has filed a complaint against Jefferies and affiliates for breach of contract and fraud related to a commercial loan. Despite extensive efforts to resolve the issue, the company recorded a charge-off for the entire remaining loan balance.
To mitigate the financial impact, the company realized $45 million in securities sale gains quarter-to-date and plans to pursue an additional $5 million, as well as implementing $50 million in expense savings. The company's balance sheet remains strong, with CET1 capital of $7.0 billion or 11.0%, total risk-based capital of $9.2 billion or 14.5%, and insured and collateralized deposits representing approximately 75% of total deposits as of March 3, 2026.
The after-tax impact of the charge-off, net of year-to-date booked securities sale gains, would reduce the year-end 2025 CET1 ratio by only 7 basis points. Additionally, the pre-tax impact of the charge-off, net of year-to-date booked securities sale gains, represents less than 6% of 2025 pre-provision net revenue of $1.43 billion.
The company also has substantial on-balance sheet liquidity, including $21.5 billion of unencumbered high-quality liquid assets, representing approximately 23.2% of year-end 2025 assets, and off-balance sheet borrowing capacity of $20 billion. Furthermore, there is approximately $230 million remaining capacity in a previously authorized $300 million share repurchase program.
Despite these challenges, the company continues to project another profitable quarter, supporting stable capital levels consistent with its long-standing record of high performance. Following these announcements, the company's shares moved -1.62%, and are now trading at a price of $88.37. Check out the company's full 8-K submission here.
