Good day, everyone. Welcome to the earnings call for Western Alliance Bancorporation for first quarter 2021. Our speakers today are Ken Vecchione, President and Chief Executive Officer, and Dale Gibbons, Chief Financial Officer. You may also view the presentation today via the webcast through the company's website at www.westernalliancebancorporation.com. The call will be recorded and made available for replay after 3:00 P.M. Eastern Time, April 16, through May 16, 2021 at 11:00 P.M. Eastern Time, by dialing in 1-800-585-8367, using conference ID number 9757965. The discussion during this call may contain forward-looking statements that relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historically facts. The forward-looking statements contained herein reflect our current views about future events and financial performance and are subject to risks, uncertainties, assumptions, and changes in circumstances that may cause our actual results to differ significantly from historical results and those expressed in any forward-looking statements. Factors that could cause actual results to differ materially from historical or expected results are included in this presentation, the related earnings release, and our filings with the Securities and Exchange Commission. Except as required by law, the company does not undertake any obligation to update any forward-looking statements. Now, for the opening remarks, I would now like to turn the call over to Mr. Ken Vecchione. Please go ahead. Good afternoon, welcome to Western Alliance first quarter earnings call. Joining me on the call today are Dale Gibbons and Tim Bruckner, our Chief Financial Officer and Chief Credit Officer. I will first provide an overview of our quarterly results and how we are managing the business in this current economic environment, and then Dale will walk you through the bank's financial performance. Afterwards, we'll open the line, and we will take your questions. The continued growth in Western Alliance's national commercial business strategy drove financial results and balance sheet growth to record quarterly highs to kick off 2021. Mirroring the company's strong fourth quarter performance and underlying fundamental trends, WAL earned net income of $192.5 million and earnings per share of $1.90 for the quarter, up $108 million year-over-year and nearly flat for Q4. Net revenue expanded four and a half times the rate of expenses, as improvement in asset quality and economic conditions drove a $32.4 million release in the loan loss reserve this quarter. Our focus continues to be on PPNR growth, which rose approximately 31% year-over-year to $202 million, while marginally lower than last quarter due to fewer days. Regarding the acquisition of AmeriHome, I am pleased that the closing took place approximately three weeks ahead of schedule. While personnel and technology integrations are minimal, we have begun to focus on balance sheet and funding synergies with the paydown of external credit lines. Additionally, we signed agreement for the sale of approximately $750 million of mortgage servicing rights to strong counterparties that will allow Western Alliance to retain substantially all the custodial deposits. We expect this to be completed in early May. AmeriHome was an attractive strategic acquisition, expanding Western Alliance's fee income and lowering the company's reliance on spread income while providing growth optionality to our commercial portfolio business. Turning to the first quarter balance sheet trends, outstanding quarterly loan and deposit growth of $1.7 billion and $6.5 billion respectively, lifted total assets to $43.4 billion, up 49% from the prior year. Our near-term focus on growing loans in low-risk asset classes was on display as loan growth was primarily driven by warehouse funding, residential loan purchases, and increased activity throughout our traditional banking and regional footprint. Our deposit growth was broad-based across our franchise, which pushed down our loan-to-deposit ratio to 75% and creates a strong funding foundation for ongoing loan and earnings growth from our commercial loan pipeline and the AmeriHome acquisition. The continued excess liquidity from our improving deposit franchise is at the expense of short-term NIM compression, but it's a trade-off we are willing to accept for long-term value creation. This impressive loan growth drove net interest income to $317.3 million, or $2.5 million higher than last quarter, and up 18% on a year-over-year basis. Quarterly net interest margin was 3.37%, down 47 basis points from the fourth quarter as we continued to deploy excess liquidity into loans and investment securities. Non-interest income totaled $19.7 million for the quarter, aided by $7.3 million of warrant income from Bridge Bank. Asset quality remained stable this quarter as the economic recovery gained steam. For the quarter, net loan charge-offs were $1.4 million, or 2 basis points on an annualized basis. Credit losses may not appear in any meaningful way as prior and proposed stimulus packages continue to positively impact consumer spending habits and many businesses were provided the liquidity to weather the pandemic. Finally, Western Alliance continues to generate significant excess capital, which grew tangible book value per share to $33.02, or 23.5% year-over-year-- for 23.5% year-over-year growth. We remain one of the most profitable banks in the industry with a return on average assets and return on average tangible common equity of 1.93% and 24.2%, respectively. This strong momentum, coupled with economic reopening, positions Western Alliance well for an industry-leading 2021. At this time, I'll let Dale take you through the financial performance. Thanks, Ken. For the quarter, Western Alliance generated net income of $192.5 million, or $1.90 per share, each down about 1% from the prior quarter. This is inclusive of reversal of credit loss provisions of $32.4 million due to continued improvement in economic forecasts relative to year-end 2020 and continued loan segments with historically very low loss rates. Additionally, merger expenses related to the AmeriHome acquisition of $400,000 were recognized. We expect total merger charges to be approximately $15 million, preponderance of which will be incurred in Q2 as integration continues. Net interest income grew to $2.5 million during the quarter to $317.3 million, an increase of 18% year-over-year, primarily as a result of our significant balance sheet growth. However, while average earning assets grew $5.7 billion, the relative proportion held in cash and lower yielding securities increased to approximately 32% in Q1 from 22% in Q4, which temporarily muted our interest income growth as we prepared to deploy excess liquidity into AmeriHome-generated assets and higher yielding commercial loans. Quarter-over-quarter, our loans to deposit ratio fell to 75% from 85% in Q4, as we proactively look to grow low-cost deposits as dry powder for future loan growth. Non-interest income fell to $4.1 million to $19.7 million from the prior quarter, mainly driven by smaller fair value gain adjustments in our securities measured at fair value, but partially offset by $7.3 million in warrant income. Non-interest expense increased to $2.8 million, mainly due to higher deposit costs as lower rates were offset by higher average balance levels. Continued balance sheet growth generating superior net interest income growth, pre-provision net revenue of $202 million, up over 30% from a year ago. Turning now to net interest drivers. As our strong core deposit growth continued throughout the quarter, we look to redeploy excess liquidity into the investment portfolio and loans. Total investments grew $2.4 billion for the quarter, or 43%, to $7.9 billion, compared to an average balance of $6.5 billion. Investment yields declined 24 basis points from the prior quarter to 2.37% due to lower reinvestment rates in the current environment. Similarly, on a linked quarter basis, linked loan yields declined eight basis points following ongoing mix shift toward residential loans and asset class with generally lower yields than the remainder of the portfolio and low credit risk. This was partially offset by modestly higher PPP fees, strong loan growth, and liquidity deployment towards the end of the quarter. Significantly, quarter-end balances for loans and investments were $3.3 billion higher than the average balances and yielded 3.5% more than our dep account. Higher income from this already deployed liquidity positions us well for Q2. Interest-bearing deposit costs were reduced by three basis points in Q1 to 22 due to ongoing repricing efforts and maturities of higher cost CDs. The spot rate for total deposits, which includes non-interest bearing, was 11 basis points. We expect funding costs have generally stabilized at these levels. Net interest income increased $2.5 million to $317.3 million during the quarter, 18% year-over-year, as higher loan and investment balances offset net interest margin compression. NIM declined 47 basis points to 337 as our purposeful strong deposit growth in advance of closing the AmeriHome acquisition negatively impacted the margin by 43 basis points. To put this in perspective, average securities and cash balances to interest-earning assets increased meaningfully in Q1 to 32% from 22%. Given our higher end quarter loan balances, healthy loan pipeline, and ability to deploy this excess liquidity over the coming quarters into higher yielding earning assets, we expect this margin drag to moderate while net interest income climbs. Additionally, a PPP loan yield of 4.9% benefited the NIM by 8 basis points, which was similar to the fourth quarter benefit. Cumulatively, over the remainder of 2021, we expect to recognize $15.4 million of PPP fees. Our efficiency ratio rose 90 basis points to 39.1%, an increase from 38.2% in Q4. This higher efficiency ratio was driven by a modest decline in non-interest income and an increase in expenses, partially offset by increased net interest income. Non-interest expense linked-quarter growth increased by 2.1%, driven by higher deposit fees related to the 82% annualized rise in deposit balances. Excluding PPP, net loan fees, and interest, the efficiency ratio for the quarter would have been 41%. Inclusive of AmeriHome, we expect the efficiency ratio to rise to the mid-40s this quarter. Pre-provision net revenue declined $4.4 million or 2.1% from the prior quarter, but increased 31% from the same period last year. This results in a PPNR ROA of 2.03% for the quarter, a decrease of 21 basis points compared to 2.24% for the year ago period, partially impacted by a much larger asset base. This continued strong performance in capital generation provides us significant flexibility to fund ongoing balance sheet growth, capital management actions, or meet credit demands. Balance sheet momentum continued during the quarter as loans increased $1.7 billion or 6.1% to $28.7 billion and deposit growth of $6.5 billion brought balances to $38.4 billion at quarter end. Inclusive of the second round of PPP funding, loans grew 24% year-over-year, while deposits grew approximately 55% year-over-year with our focus on low loan loss segments and DDA. In all, total assets have grown 49% year-over-year as we approach the $50 billion asset level, including AmeriHome. Tangible book value per share increased to $2.12 over the prior quarter to $33.02, an increase of $6.29 or 23.5% over the prior year, attributable to both net income and the common stock offering of 2.3 million shares completed during Q1 in anticipation of the AmeriHome acquisition. Our strong loan growth continues to benefit from flexible national commercial business strategy. The majority of the $1.7 billion in growth was driven by an increase in C&I loans of $746 million. Loan growth was also strong in residential real estate loans of $675 million, supplemented by construction loans of $337 million in CRE non-owner occupied loans of $27 million. Residential and consumer loans now comprise 10.9% of our loan portfolio, an increase from 9.9% a year ago. Within the C&I growth for the quarter and highlighting our focus on low-risk assets, mortgage warehouse loans grew to $562 million and round two PPP loans originations were $560 million, which were nearly offset by $479 million from round one, the payoffs. We continue to believe our ability to grow core deposits from diversified funding channels is our key to the firm's long-term value creation. Given the ability to deploy funds into attractive assets in the near term, we purposefully looked to expand balance sheet liquidity in Q1. Deposits grew $6.5 billion or 20% in the first quarter, driven by increases in non-interest-bearing DDA of $4.1 billion, which now comprise 46% of our deposit base and savings and money market of $2.9 billion. Market share gains in mortgage warehouse continue to be a significant driver of deposit growth during the quarter, along with robust activity in tech and innovation and seasonal inflows from HOA banking relationships developed during 2020. Our asset quality remains strong and borrowers are stable, liquid, and supported by strong sponsors. Total classified assets increased $57 million in Q1 to $281 million due to migration of a few borrowers in COVID-impacted industries such as travel, leisure, and entertainment as reopening continues, but at an uneven pace. We see the potential for these credits to be upgraded as travel and events increase in the coming quarters. Our non-performing loans plus OREO ratio declined to 27 basis points to total assets, and total classified assets rose four basis points to total assets to 0.65% compared to the ratio at the end of 2020. Special mention loans increased $23 million during the quarter to 1.65% of funded loans. As we've discussed before, SM loans are a result of our credit mitigation strategy to early identify, elevate, and apply heightened monitoring to loans or segments impacted by the current COVID environment and fluctuate as credits migrate in and out. We do not see credit losses emerging from special mention volatility. Regarding loan deferrals, as of quarter end, we had $6.5 million of deferrals, all of which are in low LTV residential loans. Quarterly net credit losses were modest at $1.4 million or 2 basis points of average loans compared to $3.9 million in the fourth quarter. Our loan ACL fell $36 million from the prior quarter to $280 million due to improvement in macroeconomic forecasts and loan growth in portfolio segments with low expected loss rates. In all, total loan ACL to funded loans declined 20 basis points to 97 basis points or 1.03% when excluding PPP loans. For comparison purposes, the loan ACL to funded loans was 84 basis points at year-end 2019 before CECL adoption. We continue to generate capital and maintain strong regulatory ratios with tangible common equity to total assets of 7.9%, weighed down this quarter by strong asset growth and a common equity Tier 1 ratio of 10.3%, an increase of 40 basis points during the quarter, mainly driven by our common stock offering and growth in low-risk assets. Inclusive of our quarterly cash dividend payment of $0.25 a share, our tangible book value per share rose $2.12 in the quarter to $33.02, an increase of 23% in the past year. I'll now hand the call back over to Ken. Thanks, Dale. Western Alliance is one of only a handful of growth banks in the industry, with double-digit loan growth, liquidity to fund the growth, strong improving net interest income that generates consistent peer-leading ROA and return on average tangible common equity, with steady asset quality and low net charge-offs. Going forward, based on our current pipelines, we expect loan and deposit growth of $1 billion-$1.5 billion per quarter, which will drive higher net interest income and PPNR growth. We expect NIM pressure to subside through the deployment of liquidity into attractive asset classes. One of the characteristics of AmeriHome that we found very attractive is that it provides a natural solution to WAL's excess liquidity. AmeriHome will be expanding its product array to include higher-yielding non-QM and jumbo loans that fit our established credit box. Placing and holding these loans on our balance sheet enhances our existing residential mortgage purchase program and is a worthy credit solution for the swift deployment of excess liquidity. To keep pace with balance sheet performance, our risk management programs and technology platforms are evolving, and expenses will rise. Will be offset by the revenue generated from excess liquidity deployment. There will be no drag on PPNR or EPS from these investments. Inclusive of AmeriHome, the efficiency ratio will rise to the mid-40s. Finally, our long-term asset quality and loan loss reserves are informed by the economic consensus forecast incorporating risks for tail economic events, which if consistent going forward, could imply a steady reserve balance. Depending on the timing and pace of the recovery, there could be some loan migration into the special mention category, but we do not expect material migration into substandard. We believe the provisions in excess of charge-offs since the pandemic began are more than sufficient to cover charge-offs through the cycle, as we do not see any indicators that imply material losses are on the horizon. To conclude, Western Alliance is well positioned for balance sheet growth with steady asset quality. PPNR should continue its upward trajectory from Q1, along with industry-leading return on assets and equity. At this time, Dale, Tim, and I are happy to take your questions. Thank you. At this time, we'd like to take any questions you might have for us today. If you would like to ask a question over the phone, simply press star then the number one on your telephone keypad. Again, that would be star then the number one on your telephone keypad. We have our first question from the line of Brock Vandervliet from UBS. Your line is now open. Great. Thanks very much. Dale, if you could review with the closing of AmeriHome, what does the debt paydown picture look like and how is that going to shape your ability to kind of soak up this excess liquidity in the near term? Yeah. We're doing that now. They had about a little over $3 billion worth of borrowings. We're pacing those out kind of going forward. I think that's going to be done say sometime in the second quarter. What we're also going to be getting from AmeriHome is we're going to be able to have a kind of ready deployment into mortgages that we would want to put on our balance sheet, and we'd prefer to have something that is low LTV but higher yielding, which pushes you toward kind of a non-QM solution, which they're going to be rolling that product out as well. As our ability to do that happens, and I think over the next couple of quarters, that's going to be the case. I mean, it wasn't random that we had this kind of massive deposit growth during the quarter. We let it go in terms of bringing in more deposits because now we have a near-term ready access to an almost limitless source of good quality asset deployment. I think you're going to see that in 2021. Okay. I think on AmeriHome, the gain on sale picture has darkened somewhat since you announced the deal. Can you give us any sense of what their gain on sale was in Q1 and how that may have compared to the prior quarter or prior year? We can't talk about their Q1 performance because they're part of a public enterprise with [inaudible] hasn't announced yet. What we did mention was AmeriHome has the ability to pivot. We expected that margins were going to be coming down. That is taking place today. They have also the ability to take what we call their win rate, which was about 7%, that is buying about 7% of the loans that they look at, and to increasing that. They've been doing that as well. They're pivoting appropriately, and we're standing by the $1.41 that we indicated AmeriHome was going to benefit us in 2021. I think you're going to see $0.30 - $0.35 of that in the second quarter, as we phase this in, including the thing you just inquired about, Brock, regarding being able to pay down their loans and stuff like that. We're in that process, but that's where we are. Hey, Brock, it's Ken. I just want to add a few things. If you recall back to our earnings call or our conference call in early February when we announced AmeriHome, we said that there were other opportunities to earn more than the accretion numbers that we provided. We held those back because of some uncertainty that we saw coming potentially with rising rates. We're using all of those as we intended to, in order to maintain our earnings estimates for AmeriHome. Got it. Okay. Appreciate the color. Thank you. We have our next question from the line of Casey Haire from Jefferies. Please go ahead. Great. Thanks. Good morning, guys. I wanted to touch on the deposit growth. Even with the updated, with bumping up the guide, this quarter, you really massively outperformed that. Just wondering, it feels like the environment is still right to continue to do that. Is it possible that the deposit growth is conservative based on the current environment, based on what you're seeing? You think it's conservative because we told you $800 million and we came in at $6.5 billion? Maybe. Maybe. Look, we bumped it up to $1 billion - $1.5 billion. We've been performing at this level or better for the last six to eight quarters. We have some real visibility into the pipeline based on either oral commitments or things we're just finishing up the paperwork on now. Yeah, there is a possibility to exceed both the deposit guide as well as the loan guide. Okay. On the cash balance at 15% on average in the quarter, and I realize that you guys did get to work in the back half of the quarter with securities and loans. But even with the pay down on the AmeriHome debt, you're still probably at around 7% of cash position. What is your target level? How comfortable are you driving that to what level? Yeah. The $1 billion -$1.5 billion is what we consider to be kind of a core number. As we deploy that and pull that number down, that number can fall substantially. Frankly the securities book is at least a third or 40% higher than it needs to be, too. That's better than cash, but not as good as some of these other loan-based alternatives. I do expect that we're going to have a couple of quarters where we're going to right size our loan deposit ratio. It wasn't that long ago that we were in the 90%s. We're down at 75%. Doing that means that loan growth will be well in excess of $1.5 billion as we increase that loan to deposit ratio. That's going to get underway in the not too distant future. Okay, great. Then just some follow-ups on the NIM side of things. The new money loan yields that you're seeing on mortgage as well as new money yields on securities purchases? Yeah. The securities purchases, the yields that we got was 2.20%. New loan yields that we're putting on are running about 20 - 25 basis points lower than what the average is. I think we are experiencing pricing pressure. I think that the velocities that the industry and the economy has come out of this pandemic has resulted in kind of reduced expectations for credit losses industry wide, and that's being reflected in price. Again, what we've got the ability to do is to drive volume and to shift our focus in terms of where the best kind of risk-adjusted returns will be. Okay. Just to clarify, Dale. 25 basis point, your existing loan yield in the quarter was around 4.6%. I would think resi mortgages is lower than that, right? Yeah, no, resi mortgages that we are putting on our books are around 3%. Got you. Okay. Thank you. Thank you. Your next question is from the line of Brad Milsaps from Piper Sandler. Your line is now open. Hey, good afternoon, guys. Hey, Brad. Just wanted to stick with some questions around AmeriHome. Just kind of curious how much the change in increase in loan guidance is related to you guys retaining more production from AmeriHome and if so, does that have any impact on kind of what AmeriHome would contribute on a standalone basis going forward, or is it all kind of interconnected? Well, our kind of our core number I wouldn't say is AmeriHome dependent. We've been buying mortgages from other sources that happened in the first quarter and last year. What AmeriHome gives us is a more profitable way to do that rather than going to other parties. We can kind of keep it all in the family. Also, kind of a ready full bore in terms of ability to do that. What we're going to get from AmeriHome is also on top of that is to be able to again, kind of right size our loan-to-deposit ratio in a way that's certainly accretive to net interest income. Yeah. I guess maybe asked differently, Dale, are the two sort of exclusive of one another? You're increasing loan guidance, but then you still think AmeriHome can contribute what it was going to when you initially announced this back in February. We increased our loan guidance irrespective of AmeriHome. That is that all of last year, we certainly didn't have AmeriHome, and we were in a pandemic, and never once were we under $1 billion. It's in part acknowledgment of that. We can do this without AmeriHome, but AmeriHome gives us, I don't know, more confidence to be able to execute a better price point for the residential real estate we pick up. They're going to be expanding their product line. That's going to give us kind of even more volume. AmeriHome doesn't affect the $1 billion - $1.5 billion, if that's kind of what you're getting at, Brad. Yeah. Got it. That's helpful. I know when you announced the deal, your intention was to sell some of the MSRs. Did this come in line with about what you were thinking? Sort of how does that impact their run rate in terms of gain on loan sale margin going forward? This is Ken. We actually sold the MSRs for more money than we had anticipated. We feel good about that in terms of the transaction. By getting this large amount off our books, it allows us to do smaller MSR transactions going forward, which we think we should get better pricing on. Okay, great. Thank you, guys. Thank you. Your next question is from the line of Chris McGratty from KBW. Please go ahead. Great. Thanks. Good afternoon. Dale, I'm wondering if you can parse out the $6.5 billion of deposit growth by your verticals, specifically tech and innovation, HOA, and kind of mortgage. The HOA group was up about-- let me look at that. Okay. The regions all in did about $1.9 billion. All right? Warehouse lending did about $2.1 billion. Tech and innovation did about $760 million. Our HOA business, just under $700 million. By the way, HOA did as much in this quarter as it did almost all of last year. Those are the big drivers of HOA-- of deposit growth, Chris. Okay, great. I should just add. I'm sorry, there's a couple other things in there, too, which we're excited about. We never give you the names of our new deposit businesses. Our deposit business one grew $500 million in Q1, and deposit business two, which we always said was well behind deposit business number one, grew $50 million. We're getting excited about what these businesses can do for us. That's great color. In terms of the C&I growth, maybe I missed it in your prepared remarks. I know last quarter you said that your guidance wasn't inclusive of growth in the warehouse, did you tell us what the warehouse balance changes were in the commercial book? I'm not certain of your question. Ask it again. Sure. The mortgage warehouse and how much of that in the lending side, how much of the growth this quarter was warehouse? Oh, okay. All right. The warehouse funding this quarter. We include three items in there. We include warehouse lending, MSR lending, and our note finance, which is a separate business, but we have it under warehouse lending. That collectively grew $560 million for this quarter. Okay. We came in with an understanding this year that we keep warehouse lending basically flat to its ending balance of 2020. We keep telling you, we keep winning share there, and it manifests itself here in Q1, as you can see. Okay. Thank you very much. Thank you. The next is Gary Tenner from D.A. Davidson. Please go ahead. Thanks. Good morning. Just a couple of questions. One, just kind of housekeeping on PPP. Can you give us what the average loans outstanding were for the quarter? We have about $1.5 billion in loans remaining. Right. Including two, of course. Right. Got you. Okay. In terms of as you're kind of thinking forward and knowing that obviously adding more resi-mortgage will change this, could you kind of just run through from a loan sensitivity perspective what amount of your loans are variable rate today and kind of status of in the money floors as we start thinking a little further out to prospective rate hikes? Today, the floors are active in the preponderance of our portfolio. We're behaving as if we're 80% fixed. We have an interesting asymmetrical profile whereby, if rates go lower, we see very little contraction of net interest income because of the rest of the floors. If rates rise, our loan yields become even more asset sensitive because they'll be lifting off of the floors kind of going forward. It's an asymmetrical benefit for us relative to where we are. Yeah, 80% of our book today is behaving as if it's fixed rate. Okay. Is it one rate hike, two rate hikes, until there's an actual upward benefit in those variable rate loan yields? Yeah. I mean, it's staggered. Some are immediate. Others are 100 basis points away. I would say on average, you're going to need to see probably two rate increases before you're going to start seeing kind of notable improvement in terms of loan yield. Okay. Even though these loans are variable, we're putting them on at the floor so that they're looking like they're fixed rate loans today. Okay, great. Just last question. You talked about mortgage warehouse and continuing to win business there and taking share, and obviously the warehouse deposit balances grew pretty significantly. Can you just talk about the kind of sensitivity of mortgage warehouse related deposits relative to overall mortgage volume? Warehouse lending, I think, started out 10, 12 years ago as an interesting idea, and we see if we can get another channel going. Something today where it's just a very important strategic weapon for us. It's delivering more in deposits than we anticipated because primarily of the service we deliver and the fact that we moved upscale, upmarket in dealing with some of the larger, more sophisticated clients. They're feeling more comfortable consolidating more and more of their deposits with us. All right? Some of the large clients, there's a disproportion between we have much more in deposits than we have in their loan balances. We're continuing to gain share on both the loan side and the deposit side. I just would say that some of the competitors that we normally see are just not performing as well as they should in terms of service levels. We've got, I think I said this maybe at the last earnings call, if you think of us as an airport, we've got planes circling overhead looking to land and give us their business. For us, it's a matter of how quickly we can onboard both the deposit and the loan business. I think it's important to note, to remember that the deposit balances aren't really the business. It's not operating accounts from these. Let's say the refi business contracts dramatically. That can affect the actual balances of that enterprise, but that is a very small piece of the deposit balances we have. The deposit balances we have that drive that number is the escrow relationships, and that's based upon the mortgage servicing that some of these enterprises own. You can see volatility in the origination side, but the MSRs drive the deposit balances, and that tends to be much more stable because people maintain mortgages on their house. Great. Thank you. Thank you. Your next question is from the line of Timur Braziler from Wells Fargo. Your line is now open. Hi. Good morning. This is just following up on that last mortgage warehouse discussion. I guess how sensitive is that business to a steepening yield curve, and if broader industry trends start to slow down, with the circling runway, is that kind of irrespective of what's happening industry-wide as you onboard new clients? Or if there is a broader slowdown, we should expect to see volumes and growth rates slow as well at Western Alliance? Good question there. When we came into 2021 in the planning year for our overall growth, we did not have warehouse lending stepping up in terms of balances. Obviously we had a good first quarter, and we're going to continue that trend going into quarters two, three, and four. What we're seeing is two things. One, there's just a natural rise in terms of taking market share with the clientele that we have today. On top of that, we will get a benefit from penetrating the AmeriHome client list. They've got, as I said, 720 clients. We've got about 100 or so that overlap, and we're going to be able to penetrate going into their clients. If you can picture that we go into one of the AmeriHome clients and say, "Look, we give you a line of credit," just call it $25 million for argument's sake, "and after you accumulate loans on that line, we'll also take you out of that line." That's a very powerful argument to offer sort of a two-for-one opportunity to the AmeriHome client. We haven't fully factored that into our numbers yet, but that gives us some confidence that we should be able to continue to grow our warehouse lending business on the loan side. Okay. That's helpful. As we start thinking about your new loan growth guidance, it shouldn't just be what you've been putting on existing, plus the rest of the increased guide coming directly from resi. We can actually see mortgage warehouse continue to ramp higher and be a larger component of that growth guidance as well. Well, I'm just going to clarify what you said. The $1 billion - $1.5 billion is basically business as we do it today. All right? You'll see our resi purchases continue, and you'll see warehouse lending grow as if we never had the AmeriHome acquisition. The AmeriHome acquisition, as we ramp that up, will provide either comfort to achieving that $1 billion - $1.5 billion, or if we do it really well, it will help us exceed that number. Okay, that's helpful. Thank you. On the residential side, I think in quarters past, you guys have talked about the concentration of 20%. Do you have a concentration limit in mind? I guess as we're building out what residential loan growth could look like, how big of the overall loan portfolio could we envision that becoming? Well, I think we can easily punch through 20%. The average bank our size is 30%. First Republic is just under 60%. What we like about the space is very good quality performance. Now we've got kind of an unlimited channel into that. There are some other kind of cross-sell opportunities, some of which we've talked about, that we can pick up. We're definitely going through 20% and towards the median, at least for now. That's a very strong book we have, right? 759 FICO, DTI of about between 34% and 36%. Below 70% LTV. We could probably give you a list of all the folks that have gone 90-day delinquents. It's usually just an unusual event, and we've not had a loss in the book. It really helps bring a lot of asset quality, good asset quality, to our loan composition. Okay, thank you. Just last one from me, back on the deposit side. I'm wondering how much of the growth, if any, is coming from the extension of the tax deadline and what that could look like for balances as customers go to pay tax bills in the next month or two. Yeah, that's more of a consumer phenomenon, I'd say. Our liquidity has been coming in strong all through 2020. Remember, 2020, we did $9.1 billion of liquidity, which far exceeded our best year ever. This quarter, we did $6.5 billion, which is just in one quarter. Okay. Thank you. Thank you. The next question is from the line of David Chiaverini from Wedbush Securities. Please go ahead. Hi, thanks. I wanted to ask about the pace of securities purchases. You had a strong ramp-up in the first quarter. Going forward, should we expect that pace to slow somewhat as you pay down debt with the closing of AmeriHome? Yes, it will absolutely slow. What we did is we've been sitting on a lot of growth from the fourth quarter, also the first quarter. We wanted to deploy some of that. Again, the balancing act we're trying to do is look, we can get 10 basis points if we keep it at the Fed. That's pretty meaningless. We can get 3% if we can put it out into low LTV whole loans, or we can go into the securities book, and as I said, we got 2.20%. It's a little bit of a compromise there because it is going to take us sometime within this year, but sometime to deploy the liquidity that we have and also the new deposit growth that we expect to continue to generate. Over time, yeah, I think our securities book can actually bleed down. I wouldn't expect to see that anytime soon. No, I think the growth in the book in the security side is largely behind us. We're using our current liquidity to pay off all of the AmeriHome debt and then also to begin to purchase non-QM mortgages through that channel. Great. That's helpful. Also wanted to follow up on the NIM commentary. You mentioned about how the drag should moderate going forward, and I see in the slide deck how the spot rate on loans is about 13 basis points lower than the portfolio average in the quarter. In terms of magnitude of being down, I guess, the clarification is to expect continued margin compression, but just not clearly as much as the 47 basis points in the first quarter. Is that the way to think about it? Yeah. Again, what we're focused on is we're focused on how do we increase the earning power of the company and translate that into EPS? Margin has very little to do with that. Earning power, we think, hey, low cost, stable core deposits that we can deploy into profitable assets. Gosh, I'd love to get 5% for that without risk. We're not seeing those opportunities at scale at that price point. What are we doing? Well, we're going to residential where we have unlimited, and that's 2 points less. If I add mortgage loans at 3% and our margin's at 3.37%, that's going to decrement that margin a little bit. Instead, if I think about it, I've got investments at 10 basis points of stuff that's already on the books, and I can put that out at 3%. That would help the margin, even though that spread is actually lower because I'm taking from 10 basis points to 300 basis points. The combination of those two things, is it possible the margin comes down a little bit? Yeah, I think that would actually be likely a good thing because what it really means is that we're continuing to move the fundamental footings of the balance sheet that we can then deploy into earning assets. I just want to add one other thing to what Dale said. Our focus on net interest income rather than NIM started in early 2018, so this is not a new phenomenon for us. We have thought about this since the early part of 2018, that this was the direction that we're going to take, which is prioritize net interest income growth over NIM. Simply said, net interest income is going to drive EPS. One of the things I'm very proud of this quarter, with two less days, we made more in net interest income than we made in Q4. Our strategy is being executed upon. As Dale said, our goal is to keep that net interest income looking robust for the next several quarters as we continue to deploy the excess liquidity and continue to upgrade our guidance as to what we're going to bring in. That all makes sense. A last housekeeping item. I think you mentioned merger charges. You're expecting roughly $15 million mostly in the second quarter. Is your expectation now that it's going to be in total lower than the $35 million that was discussed at the announcement of AmeriHome? Yes. Ken was alluding to that earlier in terms of the pricing that we got on the disposition of the MSR book. The preponderance of those fees that we're going to be incurring are basically de-conversion costs from our outsourced mortgage servicer to the purchaser. That transaction should close within the next few weeks. Got it. Thanks very much. Thank you. The next is Michael Young from Truist. Your line is now open. Hey, thanks. Good morning. Morning. Wanted to follow up, Ken, on your comments about the reserve level maybe maintaining more of a flat level going forward. Is that sort of on a relative basis to loans outstanding? In other words, I guess CECL impacts maybe are more muted and loan growth coming more from commercial going forward, so we're kind of staying more stable. That was really, it's a numerator, denominator thing. What I was trying to say is the balance is going to stay relatively flat. With the way we're growing, you could see the ratio drop. The balance, we think, will be relatively flat. A lot of that, as you know, with CECL is just driven by the economic outlook which would really move the numbers. What should not be lost upon our shareholders, investors, the analyst community, is that 42% of our portfolio is in loans or asset categories that we've never, ever had a loss on, or a loss in, I should say. That's what also drives the CECL calculation. Okay, great. Maybe just as a follow-up, just thinking about the pace of growth relative to capital. Capital levels got a little skinny even with the issuance this quarter. I know PPP kind of has an impact on the TCE ratio. Just should we think about you guys are willing to grow if growth is there and you'll raise capital as needed? Would you temper some of the mortgage growth areas that may be more of a flex area on the balance sheet to stay within kind of capital ratios? No, if we need capital to grow, I think you can look for us to do the right thing and raise capital. Okay. If I can sneak in one last one just for the AmeriHome, kind of on the books, I guess now. Ken, just trying to think about sort of the buy versus build equation going forward. You guys always have some deposit and loan growth verticals in the pipeline that you're building. Has this changed your view on that equation or what you'd like to do on a go-forward basis? No, not at all. The AmeriHome team has a couple of things that they like to look at in terms of new opportunities, and I mentioned non-QM channel, jumbo channel are just two of them that jump right out. But that's separate. That team can work on that as the commercial side of Western Alliance can work on other business opportunities. And we're continuing to work on those opportunities now and we're probably one of the few banks that is sitting here working on 2022's growth levels. That's how far out we are in what we think in terms of our pipeline and our visibility. Okay. Thank you. Thank you. Your next question is from Tim Coffey from Janney. Please go ahead. Great. Thank you, gentlemen. In the quarter, residential mortgages were about 40% of your net loan growth. Would you expect it to be that level going forward? Yeah. Yes, I think that's going to continue. As I mentioned, that's kind of the core piece. I think 40% is not a bad number. When we sop up our excess liquidity, it's going to skew much higher than that because a lot of that is going to be directly toward mortgage acquisitions. It's where we see something kind of well in excess of $1.5 billion. Okay. On the efficiency ratio, given the growth this last quarter, as you go through the year adding AmeriHome and such, do you think 45% is going to be kind of a new level for you? Yeah. It's going to be 45%, 46%-ish or something in there. Yeah, mid-40%s. I think that's kind of where it's currently stable at that level. Something under 50% for sure. Okay. Can you talk a little bit about what it is about Western Alliance that allows you to maintain kind of expense growth at a level well below asset growth? Let me try to. I think a lot of that, when we talk about our national commercial business line strategy, we generally talk about it in terms of the growth that it brings in, and that's very helpful to keeping the efficiency ratio low. These businesses are, for the most part, have very high operating leverage. That's one of the characteristics. There are several characteristics of the national strategy. Generally, very few competitors, pricing power or stability, great asset quality, and the fourth one we love is very high operating leverage. As the growth shifts over to that, coming from those national business lines, just the natural calculation of the efficiency ratio will keep us more moderate as compared to our peer group. The other thing is we're just growing revenues, as I said upfront, four times faster than expenses, and that too will keep the efficiency ratio in line. Great. Those are my questions. Thank you very much. Thanks. Thank you. The next question is from Jon Arfstrom from RBC Capital Markets. Your line is now open. Thanks. Good morning, everyone. Morning, Jon. Hey. Dale, question for you. Can you go back and review the loan-to-deposit comments you made earlier? Where you think you might sit at end of the second quarter and maybe end of the year? Can you help us with that a bit? Yeah. It's something we're trying to get underway now. I think that at the end of the second quarter, I expect we maybe will be close to where we are presently, maybe a little bit better with the $1 billion-$1.5 billion in growth in each. I think we're going to be able to get these kinds of new products out for AmeriHome maybe by the end of the second quarter into the third and t hen would they see billions of dollars certainly in volume, we can move rapidly on that. I personally would like to be in the 90% range back to loan-to-deposit ratio at the end of the year. If you take it where we are, where we right-sided that, where we have very substantial growth from just where we are as of 3/31. We had $3.4 billion of loan growth at a 3.5% spread. That's already in the books as of 3/31. That generates about nearly $10 million a month of increased PPNR just from deploying that out of liquidity. You add in AmeriHome with this. We expect to be at an EPS run rate of $9 as we exit 2021. I was going to ask later if you- I just want to punctuate what Dale said for a moment there. Jon, everyone's talking about the liquidity and loan-to-deposit ratio. We're talking about net interest margin versus net interest income. What Dale just said is the crux of how we're structured the business. That the $3.5 billion that we just put out and the $10 million that we're making a month pre-tax, $30 million a quarter, that is very powerful, and that's what leads us to have a certain degree of confidence along with the AmeriHome acquisition that we can exit the year at that $9 EPS run rate. Okay. I was going to ask if you think numbers should go up, but you answered that for me. I do want to ask one more question, and it won't be on deposits. Can you talk about lending outside of your national businesses, some of the pipeline trends and what you're seeing in construction, just as a kind of a gut check on what you're thinking on the overall economy? Yeah. Actually, what we're seeing inside of our footprint is exactly what we're seeing outside of our footprint. On the construction side, residential, that's very hot for us at this moment. Homes take five to seven months to build. They're extending out a little bit longer than that because of some labor shortages and some of the cost is a little bit higher. Once they're built, boom, they're sold rather quickly. One of our struggles, of course, is how do you keep those really good loans outstanding for a longer period of time? The construction side of single-family residences are really hot. Build-to-rent opportunities, which for us are mostly in our footprint more so than outside of our footprint. Arizona seems to be the build-to-rent capital. The outskirts of Phoenix in the West Valley seems to be very active, and we're doing a number of deals there. I'm going to lean on our Chief Credit Officer, who's been sitting here patiently and hasn't said a word, Tim Bruckner. Tim, do you want to comment on this? Well, sure. Residential and commercial book. I think there were definitely some things that sat on the shelf last year with the uncertainties of the pandemic, projects delayed. We're seeing that move forward. As we look out across 2021, we don't see any big shifts in loan demand. We see stability across the major group within our real estate portfolio. We're not seeing trends in rent payment that are alarming. We're seeing things that give us comfort. We're maintaining a very close and direct monthly or weekly dialogue even with our borrowers that gives us that information. I think outlook's very positive for us across all the segments of real estate, and not just residential. Okay. We're very active in the net migration in states, as you would expect, as they're seeing even more activity. I should have said, it does not only pertains to construction of single-family residences, but on the industrial side, we've started or financed a number of spec projects for industrial warehouses. Before the shell is even completed, they're already leased up, but no longer are they spec. They're all pre-leased. That's giving you an example of how hot the CRE market is right now. Yes. Yeah. Just a data point on that. That portfolio is stabilizing and has stabilized faster now than at any time in the past four years. Our portfolio. It is moving very quickly. Yeah. Jon, we didn't have time to give you a short answer. We hope the long one. No, that's fine. Fine. I guess just the one thing, you did flag this, and I want to make sure it's out there, but you did say you're expecting some movement in special mention and classified, but it doesn't sound like you're concerned about credit at all? The short answer is yes. We've looked around. We don't see anything on the horizon that's going to give us a little bit of trouble, and we feel good about where the asset quality is. Okay. All right. Thank you. Thank you. There are no further questions at this time. I will turn the call over back to Mr. Ken Vecchione. Thank you. Listen, thanks everyone for dialing in and listening to our story. We're feeling very good about it. We're very proud of the results. We look forward to talking to you in 90 days from now about the second quarter. Thanks again. Everyone enjoy their weekend. This concludes today's conference call. Thank you for participating. You may now disconnect. Have a great day.