- Complaint Filed this Morning, Initiating Legal Action to Collect Amount Owed
- Charging-Off Remaining LAM I Loan Balance of $126.4 Million
- Financial Impact Substantially Mitigated Through Realization of Securities Sale Gains & Expense Reductions
Western Alliance Bancorporation (the "Company") today announced that it has been informed by Jefferies Financial Group ("Jefferies") that payments of $126.4 million owed to Western Alliance Bank ("Bank") pursuant to a forbearance agreement will not be paid as agreed.
Earlier this morning, the Bank and its Collateral Agent filed a Complaint in New York Supreme Court against Jefferies, Leucadia Asset Management LLC ("LAM"), and affiliates (collectively, "Defendants") alleging breach of contract and fraud for Defendants' conduct related to a commercial loan collateralized by accounts receivable purchased from First Brands Group.
In September 2025, the Bank learned of failures by LAM's servicer, including allowing UCC financing statements to lapse on the receivables, that triggered loan defaults. In October 2025, the Bank entered into a forbearance agreement pursuant to which the Defendants agreed to cause full prepayment of principal on the loan to be completed by March 31, 2026. Defendants then made payments pursuant to the forbearance agreement from October 2025 to January 15, 2026, when the Bank received the most recent payment of $42.125 million. Defendants recently informed the Bank it would not receive the final two principal payments due in the first quarter of 2026.
Despite extensive efforts to pursue a constructive commercial resolution, after the Defendants failed to make the $42.1 million payment due on Friday, February 27, the Company concluded on Monday, March 2, 2026, that recording a charge-off for the entire remaining $126.4 million loan balance was appropriate. This charge-off will be matched by a provision of the same amount.
To offset the impact of this charge, management plans to execute a series of mitigating actions over the course of this year, including pursuing $50 million of securities gains, of which approximately $45 million have been realized quarter-to-date, as well as implementing $50 million of already identified, incremental expense savings that do not impede growth or operational capacity.
At this time, the Company continues to project another profitable quarter, supporting stable capital levels consistent with Western Alliance's long‑standing record of high performance.
Additionally, the Company's balance sheet remains in a strong position as demonstrated by the below metrics. Information is as of March 5, 2026, unless otherwise noted.
- CET1 capital of $7.0 billion or 11.0% and total risk-based capital of $9.2 billion or 14.5% as of December 31, 2025
- After-tax impact of this charge-off, net of year-to-date booked securities sale gains, would reduce the year-end 2025 CET1 ratio by only 7 basis points
- Pre-tax impact of this 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
- Insured and collateralized deposits representing approximately 75% of total deposits as of March 3, 2026
- Substantial on-balance sheet liquidity, including $21.5 billion of unencumbered high-quality liquid assets or approximately 23.2% of year-end 2025 assets
- Off-balance sheet borrowing capacity of $20 billion, which increases the combined liquidity position to over $40 billion
- Approximately $230 million remaining capacity in previously authorized $300 million share repurchase program
Login to comment