Western Alliance Bancorporation (WAL) Status update summary

Background and breach details

• A loan to a Point Bonita Capital fund managed by Leucadia Asset Management (Jefferies subsidiary) was performing and had been reduced from $337M to $126M since August 2025.

• Jefferies directed Leucadia to cease payments on the remaining balance, breaching a forbearance agreement entered in October 2025.

• The forbearance agreement required five payments, three of which were made; the last two, totaling $126M, were not paid.

• Western Alliance filed a formal complaint in New York Supreme Court, alleging fraud, breach of contract, and seeking to pierce the corporate veil against Jefferies, Leucadia Asset Management, and affiliates.

• The loan was collateralized by accounts receivable from First Brands Group.

Legal and financial actions

• Charged off the remaining $126.4 million LAM I loan balance after Defendants failed to make agreed payments under a forbearance agreement.

• The charge-off will be matched by a provision of the same amount, with management pursuing legal remedies and evaluating other recovery pathways.

• The bank asserts the obligation to pay is absolute and will aggressively pursue recovery, including clawbacks of payments and fees.

Financial impact and mitigation

• A $126M charge-off and provision will be recorded, but the impact is largely offset by $50M in securities gains (with $45M already booked) and $50M in expense reductions.

• The remaining $26M shortfall is under review, with solutions expected by Q3, including growth, pricing, and fee initiatives.

• Expense reductions include operational efficiencies, moderating LFI readiness, delaying expansion projects, and optimizing technology/vendor programs.

• The after-tax impact of the charge-off, net of securities gains, is projected to reduce the CET1 ratio by only 7 basis points.

• Pre-tax impact, net of securities gains, represents less than 6% of 2025 pre-provision net revenue.