UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 16, 2014
WESTERN ALLIANCE BANCORPORATION
(Exact name of registrant as specified in its charter)
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Delaware | 001-32550 | 88-0365922 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
One E. Washington Street, Phoenix, Arizona 85004
(Address of principal executive offices) (Zip Code)
(602) 389-3500
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On October 16, 2014, Western Alliance Bancorporation (the “Company”) issued a press release reporting results for the fiscal quarter ended September 30, 2014 and posted on its website its third quarter 2014 Earnings Conference Call Presentation, which contains certain additional historical and forward-looking information relating to the Company. Copies of the press release and presentation slides are attached hereto as Exhibits 99.1 and 99.2, respectively.
The information in this report (including Exhibits 99.1 and 99.2 hereto) is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, is not subject to the liabilities of that section and is not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such filing.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
99.1 Press Release dated October 16, 2014.
99.2 Third Quarter 2014 Earnings Conference Call dated October 17, 2014.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| WESTERN ALLIANCE BANCORPORATION |
| (Registrant) |
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| /s/ Dale Gibbons | |
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| Dale Gibbons | |
| Executive Vice President and |
| Chief Financial Officer |
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Date: October 16, 2014 | |
Western Alliance Reports Third Quarter 2014 Net Income of $40.9 million, or $0.46 Per Share
PHOENIX--(BUSINESS WIRE)--October 16, 2014--Western Alliance Bancorporation (NYSE:WAL) announced today its financial results for the third quarter 2014.
Third Quarter 2014 Highlights:
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• | Net income of $40.9 million, compared to $35.5 million for the second quarter 2014 and $28.6 million for the third quarter 2013 |
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• | Earnings per share of $0.46, compared to $0.40 per share in the second quarter 2014 and $0.33 per share in the third quarter 2013 |
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• | Pre-tax, pre-provision operating earnings of $51.8 million, up from $47.4 million in the second quarter 2014 and up $42.1 million from the third quarter 20131 |
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• | Net interest margin of 4.43%, compared to 4.39% in the second quarter 2014 and 4.41% in the third quarter 2013 |
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• | Total loans of $7.93 billion, up $385 million from June 30, 2014 and up $1.41 billion from September 30, 2013 |
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• | Total deposits of $8.70 billion, up $228 million from June 30, 2014 and up $1.42 billion from September 30, 2013 |
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• | Nonperforming assets (nonaccrual loans and repossessed assets) remained flat at 1.23% of total assets compared to the second quarter 2014 and decreased from 1.72% in the third quarter 2013 |
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• | Net loan recoveries (annualized) to average loans outstanding of 0.15%, compared to 0.09% in the second quarter 2014 and 0.10% in the third quarter 2013 |
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• | Tier I Leverage Capital of 10.1% and Total Risk-Based Capital ratio of 12.2%, compared to 10.0% and 12.5% at June 30, 2014 and September 30, 2013, respectively |
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• | Total equity of $1.00 billion, up $45 million from June 30, 2014 and up $177 million from September 30, 2013 |
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• | Tangible book value per share, net of tax, of $9.53, up from $9.02 at June 30, 2014 and up from $7.57 at September 30, 20131 |
Financial Performance
"Through the hard work and dedication of our team, we again delivered very strong financial performance, with record revenue, efficiency, net income, and earnings per share," said Robert Sarver, Chairman and Chief Executive Officer of Western Alliance Bancorporation. "Our balance sheet momentum continued with double digit growth rates in loans and deposits, while maintaining a tight focus on expense control as operating costs were flat from the second quarter."
Sarver added, "Asset quality remains strong as we have experienced net recoveries in four of the last five quarters. And, despite our strong asset growth, tangible common equity climbed to 8.2% of tangible assets from 7.9% last quarter."
Income Statement
Net interest income was $98.1 million in the third quarter 2014, an increase of $4.2 million, or 4.4%, from $93.9 million in the second quarter of 2014 and an increase of $13.5 million, or 16.0%, compared to the third quarter 2013. The Company’s net interest margin increased in the third quarter 2014 to 4.43%, compared to 4.39% in the second quarter 2014 and 4.41% in the third quarter 2013. Interest income on the disposition of purchased credit impaired loans was $2.5 million in the third quarter of 2014, compared to $3.1 million for the second quarter 2014 and $1.3 million for the third quarter 2013.
Operating non-interest income was $5.7 million for the third quarter 2014, compared to $5.7 million in the second quarter of 2014 and $5.8 million for the third quarter of 2013.1
Net operating revenue was $103.7 million for the third quarter 2014, an increase of 4.1% compared to $99.6 million for the second quarter of 2014 and an increase of 14.8% compared to $90.4 million for the third quarter 2013.1
Operating non-interest expense was $52.0 million for the third quarter 2014, compared to $52.2 million for the second quarter of 2014 and $48.3 million for the third quarter of 2013.1 The Company’s operating efficiency ratio1 on a tax equivalent basis was 47.2% for the third quarter 2014, compared to 49.4% for the second quarter 2014 and 51.6% for the third quarter 2013.
Non-operating items for the third quarter 2014 consisted of a net gain on sales and valuations of repossessed and other assets of $2.0 million, unrealized gains on assets and liabilities measured at fair value of $0.9 million, and loss on extinguishment of debt of $0.5 million due to the Company's repurchase of $6.5 million in outstanding 10% senior note principal, due in 2015, whose carrying value is included in borrowings. Prior to the repurchase, the outstanding senior note principal balance was $64.9 million.
The Company had 1,120 full-time equivalent employees and 39 offices at September 30, 2014, compared to 1,023 full-time equivalent employees and 41 offices at September 30, 2013.
The Company views its pre-tax, pre-provision operating earnings as a key metric for assessing the Company’s earning power, which it defines as net operating revenue less operating non-interest expense. For the third quarter 2014, the Company’s pre-tax, pre-provision operating earnings were $51.8 million, up from $47.4 million in the second quarter 2014 and up from $42.1 million in the third quarter 2013.1
Balance Sheet
Gross loans totaled $7.93 billion at September 30, 2014, an increase of $385 million from June 30, 2014 and an increase of $1.41 billion from September 30, 2013. At September 30, 2014, the allowance for credit losses was 1.38% of total loans, compared to 1.40% at June 30, 2014 and 1.50% at September 30, 2013, reflecting an improvement in the Company’s asset quality profile and historical losses.
Deposits totaled $8.70 billion at September 30, 2014, an increase of $228 million from $8.47 billion at June 30, 2014 and an increase of $1.42 billion from $7.28 billion at September 30, 2013. Non-interest bearing deposits were $2.25 billion at September 30, 2014, compared to $2.28 billion at June 30, 2014 and $1.97 billion at September 30, 2013. Non-interest bearing deposits comprised 25.8% of total deposits at September 30, 2014, compared to 26.9% at June 30, 2014 and 27.1% at September 30, 2013. The proportion of savings and money market accounts decreased to 42.4% from 42.9% at June 30, 2014 and increased from 41.9% at September 30, 2013. Certificates of deposit as a percent of total deposits increased to 22.5% from 20.8% at June 30, 2014 and from 21.7% at September 30, 2013. The Company’s ratio of loans to deposits was 91.2% at September 30, 2014, compared to 89.1% at June 30, 2014 and 89.6% at September 30, 2013.
Stockholders’ equity at September 30, 2014 increased to $1.00 billion from $958 million at June 30, 2014 and increased $177 million from $827 million at September 30, 2013. In the second quarter 2014, the Company began issuing common stock under a $100 million at-the-market (ATM) public offering. However, no shares were sold in the third quarter 2014, compared to $2.6 million in net proceeds from the issuance of 115,866 shares of common stock in the second quarter 2014.
At September 30, 2014, tangible common equity, net of tax, was 8.2% of tangible assets1 and total risk-based capital was 12.2% of risk-weighted assets. The Company’s tangible book value per share1 was $9.53 at September 30, 2014, up 25.9% from September 30, 2013.
Total assets increased 2.6% to $10.29 billion at September 30, 2014 from $10.02 billion at June 30, 2014 and increased 15.3% from $8.92 billion at September 30, 2013.
Asset Quality
The provision for credit losses was $0.4 million for the third quarter 2014, compared to $0.5 million for the second quarter 2014 and zero for the third quarter 2013. Net loan recoveries in the third quarter 2014 were $2.8 million, or 0.15% of average loans (annualized), compared to$1.5 million, or 0.09% for the second quarter 2014. Net loan recoveries for the third quarter 2013 were $1.5 million, or 0.10% of average loans (annualized).
Nonaccrual loans increased $10.7 million to $75.1 million during the third quarter 2014, compared to the second quarter 2014. Loans past due 90 days and still accruing interest totaled $3.6 million at September 30, 2014, up from $3.0 million at June 30, 2014 and down from $5.5 million at September 30, 2013. Loans past due 30-89 days, still accruing interest totaled $16.5 million at quarter end, up from $5.1 million at June 30, 2014 and $8.7 million at September 30, 2013. Other assets acquired through foreclosure decreased to $51.8 million for the third quarter 2014, compared to $59.3 million for the second quarter 2014 and $76.5 million for the third quarter 2013.
As the Company’s capital increased, the ratio of classified assets to Tier I capital plus the allowance for credit losses, a common regulatory measure of asset quality, improved to 21% at September 30, 2014 from 31% at September 30, 2013.1
Segment Highlights
On December 31, 2013, the Company consolidated its three bank subsidiaries under one charter, Western Alliance Bank. As a result, the Company has redefined its operating segments to reflect the new organizational and internal reporting structure. Prior year segment information has not been recast to conform to the new segmentation methodology due to the impracticability of restating segments because of the change in legal structure at December 31, 2013. The new operating segments are as follows: Arizona, Nevada, California, Central Business Lines, and Corporate & Other.
The Company's reportable segments are aggregated primarily based on geographic location, services offered, and markets served. The Arizona, Nevada, and California segments provide full service banking and related services to their respective regions. The Company's Central Business Lines (CBL) segment provides banking services to niche markets. These CBLs are managed centrally and are broader in geographic scope, though still predominately within our core market areas. Corporate & Other consists of corporate-related items, income and expense items not allocated to our other reportable segments, and inter-segment eliminations.
Key management metrics for evaluating the performance of the Company's Arizona, Nevada, California and Central Business Lines segments include loan and deposit growth, asset quality, and pre-tax income.
Arizona reported a gross loan balance of $2.20 billion at September 30, 2014, an increase of $74 million during the quarter, and an increase of $180 million during the nine months ended September 30, 2014. Deposits were $2.08 billion at September 30, 2014, a decrease of $38 million during the quarter, and an increase of $77 million during the nine months ended September 30, 2014. Pre-tax income was $14.8 million and $44.7 million for the three and nine months ended September 30, 2014, respectively.
Nevada reported a gross loan balance of $1.68 billion at September 30, 2014, a decrease of $3 million during the quarter, and a decrease of $74 million during the nine months ended September 30, 2014. Deposits were $3.19 billion at September 30, 2014, an increase of $6 million during the quarter, and an increase of $271 million during the nine months ended September 30, 2014. Pre-tax income was $21.2 million and $55.4 million for the three and nine months ended September 30, 2014, respectively.
California reported a gross loan balance of $1.73 billion at September 30, 2014, an increase of $31 million during the quarter, and an increase of $110 million during the nine months ended September 30, 2014. Deposits were $2.35 billion at September 30, 2014, an increase of $289 million during the quarter, and an increase of $405 million during the nine months ended September 30, 2014. Pre-tax income was $13.4 million and $37.8 million for the three and nine months ended September 30, 2014, respectively.
Central Business Lines reported a gross loan balance of $2.26 billion at September 30, 2014, an increase of $313 million during the quarter, and an increase of $914 million during the nine months ended September 30, 2014. Deposits were $906 million at September 30, 2014, an increase of $20 million during the quarter, and an increase of $138 million during the nine months ended September 30, 2014. Pre-tax income was $9.6 million and $21.7 million for the three and nine months ended September 30, 2014, respectively.
Attached to this press release is summarized financial information for the quarter ended September 30, 2014.
Conference Call and Webcast
Western Alliance Bancorporation will host a conference call and live webcast to discuss its third quarter 2014 financial results at 12:00 p.m. ET on Friday, October 17, 2014. Participants may access the call by dialing 1-888-317-6003 and using passcode: 2466045 or via live audio webcast using the website link: http://services.choruscall.com/links/wal141017.html. The webcast is also available via the Company’s website at www.westernalliancebancorp.com. Participants should log in at least 15 minutes early to receive instructions. The call will be recorded and made available for replay after 2:00 p.m. ET October 17th through November 18th at 9:00 a.m. ET by dialing 1-877-344-7529 passcode: 10052772.
Use of Non-GAAP Financial Information
This press release contains both financial measures based on accounting principles generally accepted in the United States (“GAAP”) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding Western Alliance Bancorporation’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Early Adoption of Accounting Standards
Effective as of the first quarter 2014, the Company elected early adoption of Accounting Standards Codification 323-740, an amended Financial Accounting Standards Board standard related to accounting for low income housing tax credit investments. Under this amended standard, the amortization of the investment may now be calculated under the proportional amortization method and is included in income tax expense rather than as a separate line item in non-interest income. Prior period amounts have been adjusted to reflect the adoption of this new accounting guidance, which has resulted in an increase in non-interest income and income tax expense. See the supplemental schedule at the end of the Q1 2014 press release for additional detail on the impact that adoption of this standard has had on prior period financial information.
Cautionary Note Regarding Forward-Looking Statements
This release contains 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 historical facts. Examples of forward-looking statements include, among others, statements we make regarding guidance, outlook or expectations relating to our business, financial and operating results, and future economic performance. 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 statement. Some factors that could cause actual results to differ materially from historical or expected results include, among others: the risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; inflation, interest rate, market and monetary fluctuations; increases in competitive pressures among financial institutions and businesses offering similar products and services; higher defaults on our loan portfolio than we expect; changes in management’s estimate of the adequacy of the allowance for credit losses; legislative or regulatory changes or changes in accounting principles, policies or guidelines; supervisory actions by regulatory agencies which may limit our ability to pursue certain growth opportunities; management’s estimates and projections of interest rates and interest rate policy; the execution of our business plan; and other factors affecting the financial services industry generally or the banking industry in particular.
Any forward-looking statement made by us in this release is based only on information currently available to us and speaks only as of the date on which it is made. We do not intend and disclaim any duty or obligation to update or revise any industry information or forward-looking statements, whether written or oral, that may be made from time to time, set forth in this press release to reflect new information, future events or otherwise.
About Western Alliance Bancorporation
Western Alliance Bancorporation (NYSE:WAL) is a leading bank holding company providing comprehensive business banking and related financial services through its wholly-owned banking subsidiary, Western Alliance Bank (the "Bank"). With local teams of experienced bankers, the Bank provides a superior level of capabilities, products and services, to assist the growth of local businesses and the quality of life in the markets it serves. In addition to a centrally managed platform of specialized financial service units, the Bank operates full service banking divisions in its local markets as Alliance Bank of Arizona, Bank of Nevada, First Independent Bank and Torrey Pines Bank. Western Alliance Bancorporation is publicly traded on the New York Stock Exchange. Additional investor information can be accessed on the Investor Relations page of the Company's website, www.westernalliancebancorp.com.
1 See Reconciliation of Non-GAAP Financial Measures beginning on page 15.
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Western Alliance Bancorporation and Subsidiaries | | | | | | | | | | | | |
Summary Consolidated Financial Data | | | | | | | | | | | | |
Unaudited | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | At or for the Three Months Ended
September 30, | | At or for the Nine Months Ended
September 30, |
| | 2014 | | 2013 | | Change % | | 2014 | | 2013 | | Change % |
| | | | | | | | | | | | |
Selected Balance Sheet Data: | | | | | | | | | | | | |
(dollars in millions) | | | | | | | | | | | | |
Total assets | | $ | 10,288.8 |
| | $ | 8,920.5 |
| | 15.3 | % | | | | | | |
Loans, net of deferred fees | | 7,929.5 |
| | 6,516.3 |
| | 21.7 |
| | | | | | |
Securities and money market investments | | 1,597.3 |
| | 1,370.8 |
| | 16.5 |
| | | | | | |
Securities purchased under agreement to resell | | — |
| | 128.1 |
| | (100.0 | ) | | | | | | |
Total deposits | | 8,697.6 |
| | 7,275.3 |
| | 19.5 |
| | | | | | |
Borrowings | | 330.8 |
| | 394.1 |
| | (16.1 | ) | | | | | | |
Junior subordinated debt | | 41.8 |
| | 39.4 |
| | 6.1 |
| | | | | | |
Stockholders' equity | | 1,003.1 |
| | 826.5 |
| | 21.4 |
| | | | | | |
| | | | | | | | | | | | |
Selected Income Statement Data: | | | | | | | | | | | | |
(dollars in thousands) | | | | | | | | | | | | |
Interest income | | $ | 105,554 |
| | $ | 92,680 |
| | 13.9 | % | | $ | 306,228 |
| | $ | 265,073 |
| | 15.5 | % |
Interest expense | | 7,481 |
| | 8,121 |
| | (7.9 | ) | | 23,480 |
| | 22,159 |
| | 6.0 |
|
Net interest income | | 98,073 |
| | 84,559 |
| | 16.0 |
| | 282,748 |
| | 242,914 |
| | 16.4 |
|
Provision for loan losses | | 419 |
| | — |
| | 100.0 |
| | 4,426 |
| | 8,920 |
| | (50.4 | ) |
Net interest income after provision for credit losses | | 97,654 |
| | 84,559 |
| | 15.5 |
| | 278,322 |
| | 233,994 |
| | 18.9 |
|
Non-interest income | | 6,226 |
| | 4,129 |
| | 50.8 |
| | 16,834 |
| | 20,690 |
| | (18.6 | ) |
Non-interest expense | | 50,012 |
| | 49,675 |
| | 0.7 |
| | 152,177 |
| | 145,135 |
| | 4.9 |
|
Income from continuing operations before income taxes | | 53,868 |
| | 39,013 |
| | 38.1 |
| | 142,979 |
| | 109,549 |
| | 30.5 |
|
Income tax expense | | 12,949 |
| | 10,390 |
| | 24.6 |
| | 34,279 |
| | 25,838 |
| | 32.7 |
|
Income from continuing operations | | 40,919 |
| | 28,623 |
| | 43.0 |
| | 108,700 |
| | 83,711 |
| | 29.9 |
|
Loss from discontinued operations, net of tax | | — |
| | (29 | ) | | (100.0 | ) | | (1,158 | ) | | (160 | ) | | 623.8 |
|
Net income | | $ | 40,919 |
| | $ | 28,594 |
| | 43.1 | % | | $ | 107,542 |
| | $ | 83,551 |
| | 28.7 | % |
Diluted net income per common share from continuing operations | | $ | 0.46 |
| | $ | 0.33 |
| | 39.4 | % | | $ | 1.23 |
| | $ | 0.96 |
| | 28.1 | % |
Diluted net loss per common share from discontinued operations, net of tax | | $ | — |
| | $ | — |
| | | | $ | (0.01 | ) | | $ | (0.01 | ) | | |
Diluted net income per common share | | $ | 0.46 |
| | $ | 0.33 |
| | 39.4 | % | | $ | 1.22 |
| | $ | 0.95 |
| | 28.4 | % |
| | | | | | | | | | | | |
Common Share Data: | | | | | | | | | | | | |
Diluted net income per common share | | $ | 0.46 |
| | $ | 0.33 |
| | 39.4 | % | | $ | 1.22 |
| | $ | 0.95 |
| | 28.4 | % |
Book value per common share | | $ | 9.81 |
| | $ | 7.87 |
| | 24.7 | % | | | | | | |
Tangible book value per share, net of tax (1) | | $ | 9.53 |
| | $ | 7.57 |
| | 25.9 | % | | | | | | |
Average shares outstanding (in thousands): | | | | | | | | | | | | |
Basic | | 86,723 |
| | 85,799 |
| | 1.1 |
| | 86,495 |
| | 85,596 |
| | 1.1 |
|
Diluted | | 87,572 |
| | 86,769 |
| | 0.9 |
| | 87,345 |
| | 86,428 |
| | 1.1 |
|
Common shares outstanding | | 87,849 |
| | 87,099 |
| | 0.9 |
| | 87,849 |
| | 87,099 |
| | 0.9 |
|
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(1) See Reconciliation of Non-GAAP Financial Measures. | | | | | | | | | | | | |
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Western Alliance Bancorporation and Subsidiaries | | | | | | | | | | | | |
Summary Consolidated Financial Data (continued) | | | | | | | | | | | | |
Unaudited | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | At or for the Three Months Ended
September 30, | | At or for the Nine Months Ended
September 30, |
| | 2014 | | 2013 | | Change % | | 2014 | | 2013 | | Change % |
| | | | | | | | | | | | |
Selected Performance Ratios: | | | | | | | | | | | | |
Return on average assets (1) | | 1.63 | % | | 1.33 | % | | 22.6 | % | | 1.47 | % | | 1.34 | % | | 9.7 | % |
Return on average tangible common equity (2) | | 19.91 |
| | 17.50 |
| | 13.8 |
| | 18.66 |
| | 17.61 |
| | 6.0 |
|
Net interest margin (1) | | 4.43 |
| | 4.41 |
| | 0.5 |
| | 4.41 |
| | 4.38 |
| | 0.7 |
|
Net interest spread | | 4.30 |
| | 4.25 |
| | 1.2 |
| | 4.27 |
| | 4.22 |
| | 1.2 |
|
Efficiency ratio - tax equivalent basis (2) | | 47.20 |
| | 51.56 |
| | (8.5 | ) | | 49.16 |
| | 52.73 |
| | (6.8 | ) |
Loan to deposit ratio | | 91.17 |
| | 89.57 |
| | 1.8 |
| | | | | | |
| | | | | | | | | | | | |
Capital Ratios: | | | | | | | | | | | | |
Tangible equity (2) | | 9.5 | % | | 9.0 | % | | 5.6 | % | | | | | | |
Tangible common equity (2) | | 8.2 |
| | 7.4 |
| | 10.8 |
| | | | | | |
Tier 1 common equity (2) | | 9.0 |
| | 8.8 |
| | 2.3 |
| | | | | | |
Tier 1 Leverage ratio (3) | | 10.1 |
| | 10.0 |
| | 1.0 |
| | | | | | |
Tier 1 Risk Based Capital (3) | | 11.0 |
| | 11.2 |
| | (1.8 | ) | | | | | | |
Total Risk Based Capital (3) | | 12.2 |
| | 12.5 |
| | (2.4 | ) | | | | | | |
| | | | | | | | | | | | |
Asset Quality Ratios: | | | | | | | | | | | | |
Net (recoveries) charge-offs to average loans outstanding (1) | | (0.15 | )% | | (0.10 | )% | | 50.0 | % | | (0.09 | )% | | 0.14 | % | | (164.3 | )% |
Nonaccrual loans to gross loans | | 0.95 |
| | 1.18 |
| | (19.5 | ) | | | | | | |
Nonaccrual loans and repossessed assets to total assets | | 1.23 |
| | 1.72 |
| | (28.5 | ) | | | | | | |
Loans past due 90 days and still accruing to total loans | | 0.04 |
| | 0.08 |
| | (50.0 | ) | | | | | | |
Allowance for credit losses to gross loans | | 1.38 |
| | 1.50 |
| | (8.0 | ) | | | | | | |
Allowance for credit losses to nonaccrual loans | | 145.37 |
| | 127.67 |
| | 13.9 |
| | | | | | |
| | | | | | | | | | | | |
(1) Annualized for the three- and nine-month periods ended September 30, 2014 and 2013. | | | | | | |
(2) See Reconciliation of Non-GAAP Financial Measures. | | | | | | |
(3) Capital ratios are preliminary until the Call Reports are filed. | | | | | | |
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Western Alliance Bancorporation and Subsidiaries | | | | | | | | |
Condensed Consolidated Income Statements | | | | | | | | |
Unaudited | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2014 | | 2013 | | 2014 | | 2013 |
Interest income: | | (dollars in thousands) |
Loans | | $ | 94,436 |
| | $ | 83,994 |
| | $ | 271,823 |
| | $ | 239,812 |
|
Investment securities | | 10,535 |
| | 8,286 |
| | 32,754 |
| | 24,266 |
|
Federal funds sold and other | | 583 |
| | 400 |
| | 1,651 |
| | 995 |
|
Total interest income | | 105,554 |
| | 92,680 |
| | 306,228 |
| | 265,073 |
|
Interest expense: | |
| |
| |
| |
|
Deposits | | 5,172 |
| | 4,232 |
| | 14,767 |
| | 11,893 |
|
Borrowings | | 1,866 |
| | 3,429 |
| | 7,406 |
| | 8,885 |
|
Junior subordinated debt | | 443 |
| | 460 |
| | 1,307 |
| | 1,381 |
|
Total interest expense | | 7,481 |
| | 8,121 |
| | 23,480 |
| | 22,159 |
|
Net interest income | | 98,073 |
| | 84,559 |
| | 282,748 |
| | 242,914 |
|
Provision for credit losses | | 419 |
| | — |
| | 4,426 |
| | 8,920 |
|
Net interest income after provision for credit losses | | 97,654 |
| | 84,559 |
| | 278,322 |
| | 233,994 |
|
Non-interest income: | |
| |
| |
| |
|
Service charges | | 2,434 |
| | 2,425 |
| | 7,701 |
| | 7,408 |
|
Bank owned life insurance | | 1,136 |
| | 1,832 |
| | 3,044 |
| | 3,904 |
|
Gains (losses) on sales of investment securities, net | | 181 |
| | (1,679 | ) | | 384 |
| | (1,537 | ) |
Unrealized gains (losses) on assets and liabilities measured at fair value, net | | 896 |
| | (7 | ) | | (145 | ) | | (3,865 | ) |
Loss on extinguishment of debt | | (502 | ) | | — |
| | (502 | ) | | — |
|
Bargain purchase gain from acquisition | | — |
| | — |
| | — |
| | 10,044 |
|
Other | | 2,081 |
| | 1,558 |
| | 6,352 |
| | 4,736 |
|
Total non-interest income | | 6,226 |
| | 4,129 |
| | 16,834 |
| | 20,690 |
|
Non-interest expenses: | |
| |
| |
| |
|
Salaries and employee benefits | | 32,230 |
| | 28,689 |
| | 93,536 |
| | 83,363 |
|
Occupancy | | 4,500 |
| | 4,901 |
| | 13,510 |
| | 14,500 |
|
Legal, professional and directors' fees | | 3,022 |
| | 3,438 |
| | 10,853 |
| | 9,010 |
|
Data processing | | 2,109 |
| | 1,872 |
| | 7,184 |
| | 5,912 |
|
Insurance | | 1,996 |
| | 1,884 |
| | 6,476 |
| | 6,350 |
|
Loan and repossessed asset expenses | | 1,007 |
| | 1,136 |
| | 3,168 |
| | 3,453 |
|
Customer service | | 888 |
| | 677 |
| | 2,216 |
| | 2,037 |
|
Marketing | | 378 |
| | 585 |
| | 1,443 |
| | 1,962 |
|
Intangible amortization | | 281 |
| | 597 |
| | 1,180 |
| | 1,791 |
|
Net (gain) loss on sales and valuations of repossessed and other assets | | (1,956 | ) | | 371 |
| | (4,319 | ) | | (234 | ) |
Merger / restructure expense | | 15 |
| | 1,018 |
| | 198 |
| | 3,833 |
|
Other | | 5,542 |
| | 4,507 |
| | 16,732 |
| | 13,158 |
|
Total non-interest expense | | 50,012 |
| | 49,675 |
| | 152,177 |
| | 145,135 |
|
Income from continuing operations before income taxes | | 53,868 |
| | 39,013 |
| | 142,979 |
| | 109,549 |
|
Income tax expense | | 12,949 |
| | 10,390 |
| | 34,279 |
| | 25,838 |
|
Income from continuing operations | | $ | 40,919 |
| | $ | 28,623 |
| | $ | 108,700 |
| | $ | 83,711 |
|
Loss from discontinued operations, net of tax | | — |
| | (29 | ) | | (1,158 | ) | | (160 | ) |
Net income | | $ | 40,919 |
| | $ | 28,594 |
| | $ | 107,542 |
| | $ | 83,551 |
|
Preferred stock dividends | | 353 |
| | 352 |
| | 1,058 |
| | 1,058 |
|
Net income available to common stockholders | | $ | 40,566 |
| | $ | 28,242 |
| | $ | 106,484 |
| | $ | 82,493 |
|
Diluted net income per share | | $ | 0.46 |
| | $ | 0.33 |
| | $ | 1.22 |
| | $ | 0.95 |
|
|
| | | | | | | | | | | | | | | | | | | | |
Western Alliance Bancorporation and Subsidiaries | | | | | | | | | | |
Five Quarter Condensed Consolidated Income Statements | | | | | | | | | | |
Unaudited | | | | | | | | | | |
| | Three Months Ended |
| | Sep 30, 2014 | | Jun 30, 2014 | | Mar 31, 2014 | | Dec 31, 2013 | | Sep 30, 2013 |
| | (in thousands, except per share data) |
Interest income: | | | | | | | | | | |
Loans | | $ | 94,436 |
| | $ | 90,583 |
| | $ | 86,804 |
| | $ | 86,902 |
| | $ | 83,994 |
|
Investment securities | | 10,535 |
| | 10,894 |
| | 11,325 |
| | 10,137 |
| | 8,286 |
|
Federal funds sold and other | | 583 |
| | 496 |
| | 572 |
| | 543 |
| | 400 |
|
Total interest income | | 105,554 |
| | 101,973 |
| | 98,701 |
| | 97,582 |
| | 92,680 |
|
Interest expense: | | | |
| |
| |
| |
|
Deposits | | 5,172 |
| | 4,930 |
| | 4,665 |
| | 4,442 |
| | 4,232 |
|
Borrowings | | 1,866 |
| | 2,702 |
| | 2,838 |
| | 2,717 |
| | 3,429 |
|
Junior subordinated debt | | 443 |
| | 443 |
| | 421 |
| | 442 |
| | 460 |
|
Total interest expense | | 7,481 |
| | 8,075 |
| | 7,924 |
| | 7,601 |
| | 8,121 |
|
Net interest income | | 98,073 |
| | 93,898 |
| | 90,777 |
| | 89,981 |
| | 84,559 |
|
Provision for credit losses | | 419 |
| | 507 |
| | 3,500 |
| | 4,300 |
| | — |
|
Net interest income after provision for credit losses | | 97,654 |
| | 93,391 |
| | 87,277 |
| | 85,681 |
| | 84,559 |
|
Non-interest income: | | | |
| |
| |
| |
|
Service charges | | 2,434 |
| | 2,737 |
| | 2,530 |
| | 2,512 |
| | 2,425 |
|
Bank owned life insurance | | 1,136 |
| | 959 |
| | 949 |
| | 905 |
| | 1,832 |
|
Gains (losses) on sales of investment securities, net | | 181 |
| | (163 | ) | | 366 |
| | 342 |
| | (1,679 | ) |
Unrealized gains (losses) on assets and liabilities measured at fair value, net | | 896 |
| | 235 |
| | (1,276 | ) | | (2,618 | ) | | (7 | ) |
Loss on extinguishment of debt | | (502 | ) | | — |
| | — |
| | (1,387 | ) | | — |
|
Other | | 2,081 |
| | 2,005 |
| | 2,266 |
| | 1,803 |
| | 1,558 |
|
Total non-interest income | | 6,226 |
| | 5,773 |
| | 4,835 |
| | 1,557 |
| | 4,129 |
|
Non-interest expenses: | | | | | | | | | | |
Salaries and employee benefits | | 32,230 |
| | 31,751 |
| | 29,555 |
| | 30,071 |
| | 28,689 |
|
Occupancy | | 4,500 |
| | 4,328 |
| | 4,682 |
| | 4,626 |
| | 4,901 |
|
Legal, professional and directors' fees | | 3,022 |
| | 4,192 |
| | 3,639 |
| | 4,623 |
| | 3,438 |
|
Data processing | | 2,109 |
| | 2,401 |
| | 2,674 |
| | 2,040 |
| | 1,872 |
|
Insurance | | 1,996 |
| | 2,087 |
| | 2,393 |
| | 1,744 |
| | 1,884 |
|
Loan and repossessed asset expenses | | 1,007 |
| | 927 |
| | 1,234 |
| | 793 |
| | 1,136 |
|
Customer service | | 888 |
| | 708 |
| | 620 |
| | 860 |
| | 677 |
|
Marketing | | 378 |
| | 506 |
| | 559 |
| | 619 |
| | 585 |
|
Intangible amortization | | 281 |
| | 302 |
| | 597 |
| | 597 |
| | 597 |
|
Net (gain) loss on sales and valuations of repossessed and other assets | | (1,956 | ) | | 184 |
| | (2,547 | ) | | (2,153 | ) | | 371 |
|
Merger / restructure expense | | 15 |
| | 26 |
| | 157 |
| | 1,919 |
| | 1,018 |
|
Other | | 5,542 |
| | 5,004 |
| | 6,186 |
| | 5,392 |
| | 4,507 |
|
Total non-interest expense | | 50,012 |
| | 52,416 |
| | 49,749 |
| | 51,131 |
| | 49,675 |
|
Income from continuing operations before income taxes | | 53,868 |
| | 46,748 |
| | 42,363 |
| | 36,107 |
| | 39,013 |
|
Income tax expense | | 12,949 |
| | 10,706 |
| | 10,624 |
| | 3,992 |
| | 10,390 |
|
Income from continuing operations | | $ | 40,919 |
| | $ | 36,042 |
| | $ | 31,739 |
| | $ | 32,115 |
| | $ | 28,623 |
|
Loss from discontinued operations, net of tax | | — |
| | (504 | ) | | (654 | ) | | (701 | ) | | (29 | ) |
Net income | | $ | 40,919 |
| | $ | 35,538 |
| | $ | 31,085 |
| | $ | 31,414 |
| | $ | 28,594 |
|
Preferred stock dividends | | 353 |
| | 352 |
| | 353 |
| | 352 |
| | 352 |
|
Net income available to common stockholders | | $ | 40,566 |
| | $ | 35,186 |
| | $ | 30,732 |
| | $ | 31,062 |
| | $ | 28,242 |
|
| | | | | | | | | | |
Diluted net income per share | | $ | 0.46 |
| | $ | 0.40 |
| | $ | 0.35 |
| | $ | 0.36 |
| | $ | 0.33 |
|
|
| | | | | | | | | | | | | | | | | | | | |
Western Alliance Bancorporation and Subsidiaries | | | | | | | | | | |
Five Quarter Condensed Consolidated Balance Sheets | | | | | | | | | | |
Unaudited | | | | | | | | | | |
| | Sep 30, 2014 | | Jun 30, 2014 | | Mar 31, 2014 | | Dec 31, 2013 | | Sep 30, 2013 |
| | (in millions) |
Assets: | | | | | | | | | | |
Cash and due from banks | | $ | 258.8 |
| | $ | 379.3 |
| | $ | 354.8 |
| | $ | 305.5 |
| | $ | 380.9 |
|
Securities purchased under agreement to resell | | — |
| | — |
| | 111.1 |
| | — |
| | 128.1 |
|
Cash and cash equivalents | | 258.8 |
| | 379.3 |
| | 465.9 |
| | 305.5 |
| | 509.0 |
|
| | | |
| |
| |
| |
|
Securities and money market investments | | 1,597.3 |
| | 1,606.7 |
| | 1,671.2 |
| | 1,689.6 |
| | 1,370.8 |
|
Loans held for sale | | — |
| | — |
| | — |
| | — |
| | 25.4 |
|
Loans held for investment: | | | |
| |
| |
| |
|
Commercial | | 3,292.2 |
| | 3,027.7 |
| | 2,723.4 |
| | 2,478.2 |
| | 2,234.9 |
|
Commercial real estate - non-owner occupied | | 1,998.9 |
| | 1,940.0 |
| | 1,849.2 |
| | 1,841.1 |
| | 1,864.3 |
|
Commercial real estate - owner occupied | | 1,621.9 |
| | 1,605.0 |
| | 1,606.2 |
| | 1,561.9 |
| | 1,551.2 |
|
Construction and land development | | 677.1 |
| | 612.4 |
| | 553.7 |
| | 535.7 |
| | 459.8 |
|
Residential real estate | | 316.9 |
| | 328.1 |
| | 344.9 |
| | 350.3 |
| | 359.0 |
|
Consumer | | 33.0 |
| | 40.9 |
| | 38.3 |
| | 43.1 |
| | 29.8 |
|
Deferred fees, net | | (10.5 | ) | | (9.6 | ) | | (7.1 | ) | | (8.9 | ) | | (8.1 | ) |
Gross loans and deferred fees, net | | 7,929.5 |
| | 7,544.5 |
| | 7,108.6 |
| | 6,801.4 |
| | 6,490.9 |
|
Allowance for credit losses | | (109.2 | ) | | (105.9 | ) | | (103.9 | ) | | (100.1 | ) | | (97.9 | ) |
Loans, net | | 7,820.3 |
| | 7,438.6 |
| | 7,004.7 |
| | 6,701.3 |
| | 6,393.0 |
|
| | | | | | | | | | |
Premises and equipment, net | | 112.1 |
| | 109.6 |
| | 106.6 |
| | 105.6 |
| | 105.9 |
|
Other assets acquired through foreclosure, net | | 51.8 |
| | 59.3 |
| | 56.5 |
| | 66.7 |
| | 76.5 |
|
Bank owned life insurance | | 143.2 |
| | 142.5 |
| | 141.5 |
| | 140.6 |
| | 139.7 |
|
Goodwill and other intangibles, net | | 26.2 |
| | 26.5 |
| | 26.8 |
| | 27.4 |
| | 28.0 |
|
Other assets | | 279.1 |
| | 261.1 |
| | 273.4 |
| | 270.7 |
| | 272.2 |
|
Total assets | | $ | 10,288.8 |
| | $ | 10,023.6 |
| | $ | 9,746.6 |
| | $ | 9,307.4 |
| | $ | 8,920.5 |
|
Liabilities and Stockholders' Equity: | | | | | | | | | | |
Liabilities: | | | | | | | | | | |
Deposits: | | | | | | | | | | |
Non-interest bearing demand deposits | | $ | 2,246.7 |
| | $ | 2,278.8 |
| | $ | 2,093.6 |
| | $ | 2,200.0 |
| | $ | 1,972.5 |
|
Interest bearing: | | | |
| |
| |
| |
|
Demand | | 809.4 |
| | 794.8 |
| | 750.4 |
| | 709.8 |
| | 673.7 |
|
Savings and money market | | 3,685.0 |
| | 3,637.4 |
| | 3,672.3 |
| | 3,310.4 |
| | 3,050.0 |
|
Time certificates | | 1,956.5 |
| | 1,758.5 |
| | 1,632.7 |
| | 1,618.0 |
| | 1,579.1 |
|
Total deposits | | 8,697.6 |
| | 8,469.5 |
| | 8,149.0 |
| | 7,838.2 |
| | 7,275.3 |
|
Customer repurchase agreements | | 53.0 |
| | 53.7 |
| | 57.4 |
| | 71.2 |
| | 55.5 |
|
Total customer funds | | 8,750.6 |
| | 8,523.2 |
| | 8,206.4 |
| | 7,909.4 |
| | 7,330.8 |
|
Securities sold short | | — |
| | — |
| | 109.8 |
| | — |
| | 126.6 |
|
Borrowings | | 330.8 |
| | 337.5 |
| | 342.8 |
| | 341.1 |
| | 394.1 |
|
Junior subordinated debt | | 41.8 |
| | 42.7 |
| | 42.8 |
| | 41.9 |
| | 39.4 |
|
Accrued interest payable and other liabilities | | 162.5 |
| | 162.5 |
| | 150.0 |
| | 159.5 |
| | 203.1 |
|
Total liabilities | | 9,285.7 |
| | 9,065.9 |
| | 8,851.8 |
| | 8,451.9 |
| | 8,094.0 |
|
Stockholders' Equity | | | | | | | | | | |
Common stock and additional paid-in capital | | 807.2 |
| | 803.4 |
| | 795.3 |
| | 797.2 |
| | 792.2 |
|
Preferred stock | | 141.0 |
| | 141.0 |
| | 141.0 |
| | 141.0 |
| | 141.0 |
|
Retained earnings (accumulated deficit) | | 45.4 |
| | 4.8 |
| | (30.4 | ) | | (61.2 | ) | | (92.2 | ) |
Accumulated other comprehensive income (loss) | | 9.5 |
| | 8.5 |
| | (11.1 | ) | | (21.5 | ) | | (14.5 | ) |
Total stockholders' equity | | 1,003.1 |
| | 957.7 |
| | 894.8 |
| | 855.5 |
| | 826.5 |
|
Total liabilities and stockholders' equity | | $ | 10,288.8 |
| | $ | 10,023.6 |
| | $ | 9,746.6 |
| | $ | 9,307.4 |
| | $ | 8,920.5 |
|
|
| | | | | | | | | | | | | | | | | | | | |
Western Alliance Bancorporation and Subsidiaries | | | | | | | | | | |
Changes in the Allowance For Credit Losses | | | | | | | | | | |
Unaudited | | | | | | | | | | |
| | Three Months Ended |
| | Sep 30, 2014 | | Jun 30, 2014 | | Mar 31, 2014 | | Dec 31, 2013 | | Sep 30, 2013 |
| | (in thousands) |
Balance, beginning of period | | $ | 105,937 |
| | $ | 103,899 |
| | $ | 100,050 |
| | $ | 97,851 |
| | $ | 96,323 |
|
Provision for credit losses | | 419 |
| | 507 |
| | 3,500 |
| | 4,300 |
| | — |
|
Recoveries of loans previously charged-off: | | | | | | | | | | |
Commercial and industrial | | 1,053 |
| | 1,254 |
| | 922 |
| | 666 |
| | 2,242 |
|
Commercial real estate - non-owner occupied | | 1,226 |
| | 1,052 |
| | 83 |
| | 395 |
| | 273 |
|
Commercial real estate - owner occupied | | 553 |
| | 196 |
| | 477 |
| | 297 |
| | 149 |
|
Construction and land development | | 182 |
| | 498 |
| | 211 |
| | 273 |
| | 966 |
|
Residential real estate | | 768 |
| | 314 |
| | 553 |
| | 549 |
| | 430 |
|
Consumer | | 34 |
| | 191 |
| | 170 |
| | 179 |
| | 726 |
|
Total recoveries | | 3,816 |
| | 3,505 |
| | 2,416 |
| | 2,359 |
| | 4,786 |
|
Loans charged-off: | | | | | | | | | | |
Commercial and industrial | | 110 |
| | 1,039 |
| | 1,478 |
| | 621 |
| | 544 |
|
Commercial real estate - non-owner occupied | | 158 |
| | 99 |
| | 160 |
| | 2,268 |
| | 466 |
|
Commercial real estate - owner occupied | | 35 |
| | 230 |
| | 11 |
| | 238 |
| | 398 |
|
Construction and land development | | — |
| | 78 |
| | — |
| | 686 |
| | — |
|
Residential real estate | | 423 |
| | 523 |
| | 406 |
| | 281 |
| | 1,138 |
|
Consumer | | 285 |
| | 5 |
| | 12 |
| | 366 |
| | 712 |
|
Total loans charged-off | | 1,011 |
| | 1,974 |
| | 2,067 |
| | 4,460 |
| | 3,258 |
|
Net loan (recoveries) charge-offs | | (2,805 | ) | | (1,531 | ) | | (349 | ) | | 2,101 |
| | (1,528 | ) |
Balance, end of period | | $ | 109,161 |
| | $ | 105,937 |
| | $ | 103,899 |
| | $ | 100,050 |
| | $ | 97,851 |
|
| | | | | | | | | | |
Net (recoveries) charge-offs to average loans outstanding - annualized | | (0.15 | )% | | (0.09 | )% | | (0.02 | )% | | 0.13 | % | | (0.10 | )% |
Allowance for credit losses to gross loans | | 1.38 |
| | 1.40 |
| | 1.46 |
| | 1.47 |
| | 1.50 |
|
Nonaccrual loans | | $ | 75,092 |
| | $ | 64,345 |
| | $ | 70,401 |
| | $ | 75,681 |
| | $ | 76,641 |
|
Repossessed assets | | 51,787 |
| | 59,292 |
| | 56,450 |
| | 66,719 |
| | 76,475 |
|
Loans past due 90 days, still accruing | | 3,558 |
| | 3,001 |
| | 167 |
| | 1,534 |
| | 5,456 |
|
Loans past due 30 to 89 days, still accruing | | 16,500 |
| | 5,123 |
| | 11,087 |
| | 13,425 |
| | 8,689 |
|
Classified loans on accrual | | 107,776 |
| | 133,220 |
| | 125,903 |
| | 128,586 |
| | 144,041 |
|
Special mention loans | | 98,265 |
| | 90,534 |
| | 117,540 |
| | 129,965 |
| | 137,247 |
|
|
| | | | | | | | | | | | | | | | | | | | | | |
Western Alliance Bancorporation and Subsidiaries | | | | | | | | | | |
Analysis of Average Balances, Yields and Rates | | | | | | | | | | |
Unaudited | | | | | | | | | | | | |
| | Three Months Ended September 30, |
| | 2014 | | 2013 |
| | Average Balance | | Interest | | Average Yield / Cost | | Average Balance | | Interest | | Average
Yield / Cost |
| | ($ in millions) | | ($ in thousands) | | | | ($ in millions) | | ($ in thousands) | | |
Interest earning assets | | | | | | | | | | | | |
Loans (1) | | $ | 7,644.9 |
| | $ | 94,436 |
| | 5.18 | % | | $ | 6,306.4 |
| | $ | 83,994 |
| | 5.44 | % |
Securities (1) | | 1,575.7 |
| | 10,535 |
| | 3.11 |
| | 1,303.4 |
| | 8,286 |
| | 3.01 |
|
Federal funds sold and other | | 203.1 |
| | 583 |
| | 1.15 |
| | 364.6 |
| | 400 |
| | 0.44 |
|
Total interest earning assets | | 9,423.7 |
| | 105,554 |
| | 4.75 |
| | 7,974.4 |
| | 92,680 |
| | 4.81 |
|
Non-interest earning assets | | | | | | | | | | | | |
Cash and due from banks | | 137.6 |
| | | | | | 119.2 |
| | | | |
Allowance for credit losses | | (107.0 | ) | | | | | | (96.7 | ) | | | | |
Bank owned life insurance | | 142.7 |
| | | | | | 139.7 |
| | | | |
Other assets | | 458.3 |
| | | | | | 492.0 |
| | | | |
Total assets | | $ | 10,055.3 |
| | | | | | $ | 8,628.6 |
| | | | |
Interest-bearing liabilities | | | | | | | | | | | | |
Interest-bearing deposits: | | | | | | | | | | | | |
Interest-bearing transaction accounts | | $ | 810.3 |
| | $ | 400 |
| | 0.20 | % | | $ | 641.7 |
| | $ | 376 |
| | 0.23 | % |
Savings and money market | | 3,659.9 |
| | 2,809 |
| | 0.31 |
| | 2,828.1 |
| | 2,172 |
| | 0.31 |
|
Time certificates of deposit | | 1,763.8 |
| | 1,963 |
| | 0.45 |
| | 1,675.5 |
| | 1,684 |
| | 0.40 |
|
Total interest-bearing deposits | | 6,234.0 |
| | 5,172 |
| | 0.33 |
| | 5,145.3 |
| | 4,232 |
| | 0.33 |
|
Short-term borrowings | | 119.9 |
| | 219 |
| | 0.73 |
| | 182.7 |
| | 2,420 |
| | 5.30 |
|
Long-term debt | | 272.0 |
| | 1,647 |
| | 2.42 |
| | 392.1 |
| | 1,009 |
| | 1.03 |
|
Junior subordinated debt | | 42.7 |
| | 443 |
| | 4.15 |
| | 39.9 |
| | 460 |
| | 4.61 |
|
Total interest-bearing liabilities | | 6,668.6 |
| | 7,481 |
| | 0.45 |
| | 5,760.0 |
| | 8,121 |
| | 0.56 |
|
Non-interest-bearing liabilities | | | | | | | | | | | | |
Non-interest-bearing demand deposits | | 2,241.4 |
| | | | | | 1,931.1 |
| | | | |
Other liabilities | | 155.8 |
| | | | | | 114.7 |
| | | | |
Stockholders’ equity | | 989.5 |
| | | | | | 822.8 |
| | | | |
Total liabilities and stockholders' equity | | $ | 10,055.3 |
| | | | | | $ | 8,628.6 |
| | | | |
Net interest income and margin | | | | $ | 98,073 |
| | 4.43 | % | | | | $ | 84,559 |
| | 4.41 | % |
Net interest spread | | | | | | 4.30 | % | | | | | | 4.25 | % |
| | | | | | | | | | | | |
(1) Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $6,348 and $3,272 for the three months ended September 30, 2014 and 2013, respectively. |
|
| | | | | | | | | | | | | | | | | | | | | | |
Western Alliance Bancorporation and Subsidiaries | | | | | | | | | | |
Analysis of Average Balances, Yields and Rates | | | | | | | | | | |
Unaudited | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | Nine Months Ended September 30, |
| | 2014 | | 2013 |
| | Average Balance | | Interest | | Average Yield / Cost | | Average Balance | | Interest | | Average
Yield / Cost |
| | ($ in millions) | | ($ in thousands) | |
| | ($ in millions) | | ($ in thousands) | |
|
Interest earning assets | | | | | | | | | | | | |
Loans (1) | | $ | 7,241.6 |
| | $ | 271,823 |
| | 5.24 | % | | $ | 6,008.4 |
| | $ | 239,812 |
| | 5.42 | % |
Securities (1) | | 1,618.8 |
| | 32,754 |
| | 3.11 |
| | 1,294.3 |
| | 24,266 |
| | 3.05 |
|
Federal funds sold & other | | 235.2 |
| | 1,651 |
| | 0.94 |
| | 392.2 |
| | 995 |
| | 0.34 |
|
Total interest earnings assets | | 9,095.6 |
| | 306,228 |
| | 4.75 |
| | 7,694.9 |
| | 265,073 |
| | 4.76 |
|
Non-interest earning assets | | | | | | | | | | | | |
Cash and due from banks | | 138.9 |
| | | | | | 130.3 |
| | | | |
Allowance for credit losses | | (104.4 | ) | | | | | | (97.2 | ) | | | | |
Bank owned life insurance | | 141.8 |
| | | | | | 139.7 |
| | | | |
Other assets | | 450.3 |
| | | | | | 440.6 |
| | | | |
Total assets | | $ | 9,722.2 |
| | | | | | $ | 8,308.3 |
| | | | |
Interest-bearing liabilities | | | | | | | | | | | | |
Interest-bearing deposits: | | | | | | | | | | | | |
Interest bearing transaction accounts | | $ | 789.1 |
| | $ | 1,169 |
| | 0.20 | % | | $ | 625.8 |
| | $ | 1,047 |
| | 0.22 | % |
Savings and money market | | 3,566.0 |
| | 8,063 |
| | 0.30 |
| | 2,740.0 |
| | 6,090 |
| | 0.30 |
|
Time certificates of deposits | | 1,695.1 |
| | 5,535 |
| | 0.44 |
| | 1,570.5 |
| | 4,756 |
| | 0.40 |
|
Total interest-bearing deposits | | 6,050.2 |
| | 14,767 |
| | 0.33 |
| | 4,936.3 |
| | 11,893 |
| | 0.32 |
|
Short-term borrowings | | 174.2 |
| | 565 |
| | 0.43 |
| | 182.3 |
| | 2,848 |
| | 2.08 |
|
Long-term debt | | 284.6 |
| | 6,841 |
| | 3.20 |
| | 343.8 |
| | 6,037 |
| | 2.34 |
|
Junior subordinated debt | | 42.5 |
| | 1,307 |
| | 4.10 |
| | 37.6 |
| | 1,381 |
| | 4.90 |
|
Total interest-bearing liabilities | | 6,551.5 |
| | 23,480 |
| | 0.48 |
| | 5,500.0 |
| | 22,159 |
| | 0.54 |
|
Non-interest-bearing liabilities | | | | | | | | | | | | |
Non-interest-bearing demand deposits | | 2,114.4 |
| | | | | | 1,895.1 |
| | | | |
Other liabilities | | 120.3 |
| | | | | | 110.7 |
| | | | |
Stockholders’ equity | | 936.0 |
| | | | | | 802.5 |
| | | | |
Total liabilities and stockholders' equity | | $ | 9,722.2 |
| | | | | | $ | 8,308.3 |
| | | | |
Net interest income and margin | |
| | $ | 282,748 |
| | 4.41 | % | |
| | $ | 242,914 |
| | 4.38 | % |
Net interest spread | | | | | | 4.27 | % | |
| | | | 4.22 | % |
| | | | | | | | | | | | |
(1) Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $18,081 and $9,583 for the nine months ended September 30, 2014 and 2013, respectively. |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Western Alliance Bancorporation and Subsidiaries | | | | | | | | | | |
Operating Segment Results | | | | | | | | | | | | |
Unaudited | | | | | | | | | | | | |
| | Arizona | | Nevada | | California | | Central Business Lines | | Corporate & Other | | Consolidated Company |
| | (dollars in millions) |
As of September 30, 2014: | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | |
Cash, cash equivalents and investment securities | | $ | 2.1 |
| | $ | 5.3 |
| | $ | 2.3 |
| | $ | — |
| | $ | 1,846.4 |
| | $ | 1,856.1 |
|
Gross loans and deferred fees, net | | 2,204.9 |
| | 1,680.1 |
| | 1,725.7 |
| | 2,264.9 |
| | 53.9 |
| | 7,929.5 |
|
Less: allowance for credit losses | | (30.4 | ) | | (23.1 | ) | | (23.8 | ) | | (31.2 | ) | | (0.7 | ) | | (109.2 | ) |
Loans, net | | 2,174.5 |
| | 1,657.0 |
| | 1,701.9 |
| | 2,233.7 |
| | 53.2 |
| | 7,820.3 |
|
Other assets acquired through foreclosure, net | | 13.5 |
| | 19.2 |
| | — |
| | — |
| | 19.1 |
| | 51.8 |
|
Goodwill and other intangibles, net | | — |
| | 26.2 |
| | — |
| | — |
| | — |
| | 26.2 |
|
Other assets | | 44.6 |
| | 69.2 |
| | 41.0 |
| | 20.5 |
| | 359.1 |
| | 534.4 |
|
Total assets | | $ | 2,234.7 |
| | $ | 1,776.9 |
| | $ | 1,745.2 |
| | $ | 2,254.2 |
| | $ | 2,277.8 |
| | $ | 10,288.8 |
|
Liabilities: | | | | | | | | | | | | |
Deposits (1) | | $ | 2,077.4 |
| | $ | 3,193.8 |
| | $ | 2,349.9 |
| | $ | 906.0 |
| | $ | 170.5 |
| | $ | 8,697.6 |
|
Borrowings | | — |
| | — |
| | — |
| | — |
| | 330.8 |
| | 330.8 |
|
Other liabilities | | 21.2 |
| | 41.7 |
| | 10.8 |
| | 42.1 |
| | 141.5 |
| | 257.3 |
|
Total liabilities | | 2,098.6 |
| | 3,235.5 |
| | 2,360.7 |
| | 948.1 |
| | 642.8 |
| | 9,285.7 |
|
Allocated equity | | 236.9 |
| | 209.0 |
| | 197.0 |
| | 203.9 |
| | 156.3 |
| | 1,003.1 |
|
Liabilities and stockholders' equity | | $ | 2,335.5 |
| | $ | 3,444.5 |
| | $ | 2,557.7 |
| | $ | 1,152.0 |
| | $ | 799.1 |
| | $ | 10,288.8 |
|
Excess funds provided (used) | | 100.8 |
| | 1,667.6 |
| | 812.5 |
| | (1,102.2 | ) | | (1,478.7 | ) | | — |
|
| | | | | | | | | | | | |
No. of branches | | 10 |
| | 18 |
| | 11 |
| | — |
| | — |
| | 39 |
|
No. of full-time equivalent employees | | 216 |
| | 301 |
| | 223 |
| | 93 |
| | 287 |
| | 1,120 |
|
| | | | | | | | | | | | |
| | (in thousands) |
Three Months Ended September 30, 2014: | | | | | | | | | | | | |
Net interest income (expense) | | $ | 28,417 |
| | $ | 29,880 |
| | $ | 25,830 |
| | $ | 18,861 |
| | $ | (4,915 | ) | | $ | 98,073 |
|
Provision for (recovery of) credit losses | | 330 |
| | (3,040 | ) | | 96 |
| | 3,294 |
| | (261 | ) | | 419 |
|
Net interest income (expense) after provision for credit losses | | 28,087 |
| | 32,920 |
| | 25,734 |
| | 15,567 |
| | (4,654 | ) | | 97,654 |
|
Non-interest income | | 840 |
| | 2,239 |
| | 957 |
| | 513 |
| | 1,677 |
| | 6,226 |
|
Non-interest expense | | (14,174 | ) | | (13,986 | ) | | (13,254 | ) | | (6,477 | ) | | (2,121 | ) | | (50,012 | ) |
Income (loss) from continuing operations before income taxes | | 14,753 |
| | 21,173 |
| | 13,437 |
| | 9,603 |
| | (5,098 | ) | | 53,868 |
|
Income tax expense (benefit) | | 5,787 |
| | 7,411 |
| | 5,649 |
| | 3,601 |
| | (9,499 | ) | | 12,949 |
|
Net income | | $ | 8,966 |
| | $ | 13,762 |
| | $ | 7,788 |
| | $ | 6,002 |
| | $ | 4,401 |
| | $ | 40,919 |
|
| | | | | | | | | | | | |
| | (in thousands) |
Nine Months Ended September 30, 2014: | | | | | | | | | | | | |
Net interest income (expense) | | $ | 84,236 |
| | $ | 87,834 |
| | $ | 73,324 |
| | $ | 49,051 |
| | $ | (11,697 | ) | | $ | 282,748 |
|
Provision for (recovery of) credit losses | | 1,891 |
| | (5,935 | ) | | (921 | ) | | 8,931 |
| | 460 |
| | 4,426 |
|
Net interest income (expense) after provision for credit losses | | 82,345 |
| | 93,769 |
| | 74,245 |
| | 40,120 |
| | (12,157 | ) | | 278,322 |
|
Non-interest income | | 2,594 |
| | 6,880 |
| | 3,177 |
| | 1,238 |
| | 2,945 |
| | 16,834 |
|
Non-interest expense | | (40,271 | ) | | (45,248 | ) | | (39,639 | ) | | (19,625 | ) | | (7,394 | ) | | (152,177 | ) |
Income (loss) from continuing operations before income taxes | | 44,668 |
| | 55,401 |
| | 37,783 |
| | 21,733 |
| | (16,606 | ) | | 142,979 |
|
Income tax expense (benefit) | | 17,521 |
| | 19,392 |
| | 15,886 |
| | 8,150 |
| | (26,670 | ) | | 34,279 |
|
Income from continuing operations | | 27,147 |
| | 36,009 |
| | 21,897 |
| | 13,583 |
| | 10,064 |
| | 108,700 |
|
Loss from discontinued operations, net of tax | | — |
| | — |
| | — |
| | — |
| | (1,158 | ) | | (1,158 | ) |
Net income | | $ | 27,147 |
| | $ | 36,009 |
| | $ | 21,897 |
| | $ | 13,583 |
| | $ | 8,906 |
| | $ | 107,542 |
|
| | | | | | | | | | | | |
(1) Certain centrally-managed deposits from prior periods were re-allocated to specific regions to conform to current presentation. |
|
| | | | | | | | | | | | | | | | | | | |
Western Alliance Bancorporation and Subsidiaries | | | | | | | | | |
Reconciliation of Non-GAAP Financial Measures (Unaudited) | | | | | | | | | |
| | | | | | | | | |
Pre-Tax, Pre-Provision Operating Earnings by Quarter | | | | | | | | | |
| Three Months Ended |
| Sep 30, 2014 | | Jun 30, 2014 | | Mar 31, 2014 | | Dec 31, 2013 | | Sep 30, 2013 |
| (in thousands) |
Total non-interest income | $ | 6,226 |
| | $ | 5,773 |
| | $ | 4,835 |
| | $ | 1,557 |
| | $ | 4,129 |
|
Less: |
| | | | | | | | |
Gains (losses) on sales of investment securities, net | 181 |
| | (163 | ) | | 366 |
| | 342 |
| | (1,679 | ) |
Unrealized gains (losses) on assets and liabilities measured at fair value, net | 896 |
| | 235 |
| | (1,276 | ) | | (2,618 | ) | | (7 | ) |
Loss on extinguishment of debt | (502 | ) | | — |
| | — |
| | (1,387 | ) | | — |
|
Total operating non-interest income | 5,651 |
| | 5,701 |
| | 5,745 |
| | 5,220 |
| | 5,815 |
|
Add: net interest income | 98,073 |
| | 93,898 |
| | 90,777 |
| | 89,981 |
| | 84,559 |
|
Net operating revenue (1) | $ | 103,724 |
| | $ | 99,599 |
| | $ | 96,522 |
| | $ | 95,201 |
| | $ | 90,374 |
|
| | | | | | | | | |
Total non-interest expense | $ | 50,012 |
| | $ | 52,416 |
| | $ | 49,749 |
| | $ | 51,131 |
| | $ | 49,675 |
|
Less: | | | | | | | | | |
Net (gain) loss on sales and valuations of repossessed and other assets | (1,956 | ) | | 184 |
| | (2,547 | ) | | (2,153 | ) | | 371 |
|
Merger / restructure expense | 15 |
| | 26 |
| | 157 |
| | 1,919 |
| | 1,018 |
|
Total operating non-interest expense (1) | $ | 51,953 |
| | $ | 52,206 |
| | $ | 52,139 |
| | $ | 51,365 |
| | $ | 48,286 |
|
| | | | | | | | | |
Pre-tax, pre-provision operating earnings (2) | $ | 51,771 |
| | $ | 47,393 |
| | $ | 44,383 |
| | $ | 43,836 |
| | $ | 42,088 |
|
|
| | | | | | | | | | | | | | | | | | | |
Tangible Common Equity | | | | | | | | | |
| Sep 30, 2014 | | Jun 30, 2014 | | Mar 31, 2014 | | Dec 31, 2013 | | Sep 30, 2013 |
| (dollars and shares in thousands) |
Total stockholders' equity | $ | 1,003,122 |
| | $ | 957,664 |
| | $ | 894,804 |
| | $ | 855,498 |
| | $ | 826,472 |
|
Less: | | | | | | | | | |
Goodwill and intangible assets, net | 26,194 |
| | 26,475 |
| | 26,777 |
| | 27,374 |
| | 27,970 |
|
Total tangible stockholders' equity | 976,928 |
| | 931,189 |
| | 868,027 |
| | 828,124 |
| | 798,502 |
|
Less: | | | | | | | | | |
Preferred stock | 141,000 |
| | 141,000 |
| | 141,000 |
| | 141,000 |
| | 141,000 |
|
Total tangible common equity | 835,928 |
| | 790,189 |
| | 727,027 |
| | 687,124 |
| | 657,502 |
|
Add: | | | | | | | | | |
Deferred tax - attributed to intangible assets | 1,138 |
| | 1,138 |
| | 1,243 |
| | 1,452 |
| | 1,661 |
|
Total tangible common equity, net of tax | $ | 837,066 |
| | $ | 791,327 |
| | $ | 728,270 |
| | $ | 688,576 |
| | $ | 659,163 |
|
Total assets | $ | 10,288,824 |
| | $ | 10,023,587 |
| | $ | 9,746,623 |
| | $ | 9,307,342 |
| | $ | 8,920,449 |
|
Less: | | | | | | | | | |
Goodwill and intangible assets, net | 26,194 |
| | 26,475 |
| | 26,777 |
| | 27,374 |
| | 27,970 |
|
Tangible assets | 10,262,630 |
| | 9,997,112 |
| | 9,719,846 |
| | 9,279,968 |
| | 8,892,479 |
|
Add: | | | | | | | | | |
Deferred tax - attributed to intangible assets | 1,138 |
| | 1,138 |
| | 1,243 |
| | 1,452 |
| | 1,661 |
|
Total tangible assets, net of tax | $ | 10,263,768 |
| | $ | 9,998,250 |
| | $ | 9,721,089 |
| | $ | 9,281,420 |
| | $ | 8,894,140 |
|
Tangible equity ratio (3) | 9.5 | % | | 9.3 | % | | 8.9 | % | | 8.9 | % | | 9.0 | % |
Tangible common equity ratio (3) | 8.2 | % | | 7.9 | % | | 7.5 | % | | 7.4 | % | | 7.4 | % |
Common shares outstanding | 87,849 |
| | 87,774 |
| | 87,554 |
| | 87,186 |
| | 87,099 |
|
Tangible book value per share, net of tax (4) | $ | 9.53 |
| | $ | 9.02 |
| | $ | 8.32 |
| | $ | 7.90 |
| | $ | 7.57 |
|
|
| | | | | | | | | | | | | | | | | | | |
Western Alliance Bancorporation and Subsidiaries | | | | | | | | | |
Reconciliation of Non-GAAP Financial Measures (Unaudited) | | | | | | | | | |
| | | | | | | | | |
Efficiency Ratio | | | | | | | | | |
| Three Months Ended |
| Sep 30, 2014 | | Jun 30, 2014 | | Mar 31, 2014 | | Dec 31, 2013 | | Sep 30, 2013 |
| (in thousands) |
Total operating non-interest expense | $ | 51,953 |
| | $ | 52,206 |
| | $ | 52,139 |
| | $ | 51,365 |
| | $ | 48,286 |
|
Divided by: | | | | | | | | | |
Total net interest income | $ | 98,073 |
| | $ | 93,898 |
| | $ | 90,777 |
| | $ | 89,981 |
| | $ | 84,559 |
|
Add: | | | | | | | | | |
Tax equivalent adjustment | 6,348 |
| | 6,029 |
| | 5,705 |
| | 3,728 |
| | 3,272 |
|
Operating non-interest income | 5,651 |
| | 5,701 |
| | 5,745 |
| | 5,220 |
| | 5,815 |
|
| $ | 110,072 |
| | $ | 105,628 |
| | $ | 102,227 |
| | $ | 98,929 |
| | $ | 93,646 |
|
Efficiency ratio - tax equivalent basis (5) | 47.2 | % | | 49.4 | % | | 51.0 | % | | 51.9 | % | | 51.6 | % |
|
| | | | | | | |
Tier 1 Common Equity | | | |
| September 30, |
| 2014 | | 2013 |
| (in thousands) |
Stockholders' equity | $ | 1,003,122 |
| | $ | 826,472 |
|
Less: | | | |
Accumulated other comprehensive income (loss) | 9,483 |
| | (14,504 | ) |
Non-qualifying goodwill and intangibles | 25,056 |
| | 26,373 |
|
Other non-qualifying assets | — |
| | — |
|
Disallowed unrealized losses on equity securities | 1,011 |
| | 5,112 |
|
Add: | | | |
Qualifying trust preferred securities | 48,442 |
| | 46,918 |
|
Tier 1 capital (regulatory) (6) (9) | 1,016,014 |
| | 856,409 |
|
Less: | | | |
Qualifying trust preferred securities | 48,442 |
| | 46,918 |
|
Preferred stock | 141,000 |
| | 141,000 |
|
Estimated Tier 1 common equity (7) (9) | $ | 826,572 |
| | $ | 668,491 |
|
Divided by: | | | |
Estimated risk-weighted assets (regulatory) (7) (9) | $ | 9,216,875 |
| | $ | 7,630,125 |
|
Tier 1 common equity ratio (7) (9) | 9.0 | % | | 8.8 | % |
| | | |
Tier 1 Capital | | | |
| September 30, |
| 2014 | | 2013 |
| (in thousands) |
Classified assets | $ | 241,790 |
| | $ | 296,580 |
|
Divide: | | | |
Tier 1 capital (regulatory) (6) (9) | 1,016,014 |
| | 856,409 |
|
Plus: Allowance for credit losses | 109,161 |
| | 97,851 |
|
Total Tier 1 capital plus allowance for credit losses | $ | 1,125,175 |
| | $ | 954,260 |
|
Classified assets to Tier 1 capital plus allowance (8) (9) | 21 | % | | 31 | % |
|
| | | | | | | |
(1) We believe these non-GAAP measurements provide a useful indication of the cash generating capacity of the Company. |
(2) We believe this non-GAAP measurement is a key indicator of the earnings power of the Company. |
(3) We believe the non-GAAP ratios provide an important metric with which to analyze and evaluate financial condition and capital strength. |
(4) We believe this non-GAAP ratio improves the comparability to other institutions that have not engaged in acquisitions that resulted in recorded goodwill and other intangibles. |
(5) We believe this non-GAAP ratio provides a useful metric to measure the operating efficiency of the Company. |
(6) Under the current guidelines of the Federal Reserve and the Federal Deposit Insurance Corporation, Tier 1 capital consists of common stock, retained earnings, non-cumulative perpetual preferred stock, trust preferred securities up to a certain limit, and minority interests in certain subsidiaries, less most other intangible assets. |
(7) Tier 1 common equity is often expressed as a percentage of risk-weighted assets. Under the risk-based capital framework, a bank's balance sheet assets and credit equivalent amounts of off-balance sheet items are assigned to one of four broad risk categories. The aggregated dollar amount in each category is then multiplied by the risk weighting assigned to that category. The resulting weighted values from each of the four categories are added together and this sum is the risk-weighted assets total that, as adjusted, comprises the denominator (risk-weighted assets) to determine the Tier 1 capital ratio. Adjustments are made to Tier 1 capital to arrive at Tier 1 common equity. Tier 1 common equity is divided by the risk-weighted assets to determine the Tier 1 common equity ratio. We believe this non-GAAP ratio provides an important metric with which to analyze and evaluate financial condition and capital strength. |
(8) We believe this non-GAAP ratio provides an important regulatory metric to analyze asset quality. |
(9) Current quarter is preliminary until Call Reports are filed. |
CONTACT:
Western Alliance Bancorporation
Dale Gibbons, 602-952-5476
(NYSE: WAL) October 17, 2014 Western Alliance Bancorporation 3rd Quarter Earnings Call
2 Q3 2014 Financial Highlights q Q3 2014 net income of $40.9 million, EPS of $0.46, net operating revenue of $103.7 million q Total revenue growth of $4.1 million, compared to a decline in operating expenses of $0.3 million q Loan growth of $385 million to $7.93 billion, deposit growth of $228 million to $8.70 billion, and asset growth of $265 million to $10.29 billion q Q3 2014 tangible book value per share growth, net of tax, of $0.51 from $9.02 to $9.53 q Nonperforming assets (nonaccrual loans and repossessed assets) to total assets of 1.23%, net loan recoveries to average loans outstanding of 0.15% (annualized) q Tier 1 Leverage Capital ratio of 10.1% and Total Risk Based Capital ratio of 12.2% q ROA of 1.63% and ROTCE of 19.91%
3 Consolidated Financial Results Highlights q Year over year, total revenue increased 14.7%, while expenses rose 7.6% q OREO Gains of $2.0 as real estate prices continue to increase $ in millions, except EPS Q3-14 Q2-14 Q3-13 Net Interest Income $ 98.1 $ 93.9 $ 84.6 Operating Non-Interest Income 5.6 5.7 5.8 Net Operating Revenue $ 103.7 $ 99.6 $ 90.4 Operating Expenses (51.9 ) (52.2 ) (48.3 ) Pre-Tax, Pre-Provision Income $ 51.8 $ 47.4 $ 42.1 Provision for Credit Losses (0.4 ) (0.5 ) — Gains (Losses) on OREO and Other Assets 2.0 (0.2 ) (0.4 ) Debt Valuation and Other Fair Market Value Adjustments 0.9 0.2 — Loss on Extinguishment of Debt (0.5 ) — — Other 0.1 (0.2 ) (2.7 ) Pre-tax Income $ 53.9 $ 46.7 $ 39.0 Income Tax (12.9 ) (10.7 ) (10.4 ) Discontinued Operations — (0.5 ) — Net Income 40.9 35.5 28.6 Preferred Dividend (0.3 ) (0.4 ) (0.4 ) Net Income Available to Common $ 40.6 $ 35.1 $ 28.2 Average Diluted Shares Outstanding 87.6 87.3 86.8 Earnings Per Share $ 0.46 $ 0.40 $ 0.33
4 Revenue by Segment - $107.5 million $ in millions California $26.8 24.9% Nevada $32.1 29.9% Arizona $29.2 27.2% Central Business Lines $19.4 18.0% California $13.4 22.7% Nevada $21.2 35.9% Arizona $14.8 25.1% Central Business Lines $9.6 16.3% Pre-tax Income - $59.0 million Segment Reporting: Q3 2014 Revenue and Pre-tax Income* * Excludes Corporate & Other segment; results reported on a tax-equivalent basis
5 Consolidated Balance Sheet $ in millions q Loan/deposit ratio increased year over year from 89.6% to 91.2% q Allowance for Credit Losses increased $11 million year over year due to loan growth Highlights Q3-14 Q2-14 Q3-13 Investments & Cash $ 1,856 $ 1,986 $ 1,880 Total Loans 7,930 7,545 6,516 Allowance for Credit Losses (109 ) (106 ) (98 ) Other Assets 612 599 623 Total Assets $ 10,289 $ 10,024 $ 8,921 Deposits $ 8,698 $ 8,470 $ 7,275 Other Liabilities 588 596 819 Total Liabilities $ 9,286 $ 9,066 $ 8,094 Shareholders' Equity 1,003 958 827 Total Liabilities and Equity $ 10,289 $ 10,024 $ 8,921 Tangible Book Value Per Share $ 9.53 $ 9.02 $ 7.57
6 Segment Reporting: Loans and Deposits Q3 2014* Loans by Segment - $7.87 billion $ in billions California $2.35 27.5% Nevada $3.19 37.4% Arizona $2.08 24.4% Central Business Lines $0.91 10.7% Deposits by Segment - $8.53 billion California $1.73 22.0% Nevada $1.68 21.3% Arizona $2.20 28.0% Central Business Lines $2.26 28.7% * Excludes Corporate & Other segment; Central Business Lines include loans/deposits generated in AZ, CA and NV
7 Loan Portfolio Diversification Q3 2014 CRE Investor CRE Owner- Occupied Industrial 5% Office 6% Retail 7% Other 3% Industrial 5% Office 5% Retail 5% Other 4% Commercial Secured 8% Revolving Lines 4% SBA 3% Public Finance 8% < <
8 In-Footprint 84% Out-of-Footprint 16% Loan Portfolio Distribution Q3 2014 Distribution by Geography In-Footprint Out-of- Footprint Total Arizona 25.9 % 2.1 % 28.0 % California 20.1 % 1.8 % 21.9 % Nevada 20.9 % 0.4 % 21.3 % Public Finance 7.8 % 0.4 % 8.2 % Corporate Finance 1.2 % 4.3 % 5.5 % Equipment Finance 2.9 % 1.3 % 4.2 % Mortgage Warehouse Lending 2.4 % 1.3 % 3.7 % Non-Profit 1.7 % 1.7 % 3.4 % Resort Finance 1.0 % 2.0 % 3.0 % Community Association Lending 0.1 % 0.7 % 0.8 % Total 84.0 % 16.0 % 100.0 %
9 Loan Growth and Portfolio Composition $ in millions Commercial & Industrial CRE, Non- Owner Occupied CRE, Owner Occupied Residential and Consumer Construction & Land Highlights q Total loans increased 21.7%, or $1.41 billion year over year, led by C&I (47.4%, or $1.06 billion) and Construction & Land (46.1%, or $212 million) q Quarter over quarter loan growth driven by C&I (8.8%, or $266 million) and Construction & Land (10.3%, or $63 million), while Residential and Consumer continues to roll off in accordance with management plans $1.41 Billion Year Over Year Growth $6,516 $6,801 $7,109 $7,545 $7,930 Growth: +285 +308 +436 +385 6.4% 23.8% 28.5% 34.3% 7.0% 4.5% 20.4% 25.1% 41.5% 8.5% $414 $393 $383 $370 $351
10 Deposit Growth and Composition $ in millions Non-Int Bearing DDA NOW Savings & MMDA $7,275 $7,838 $8,149 $8,470 $8,698 Growth: +563 +311 +321 +228 Highlights q Total deposits increased 19.5% (or $1.42 billion year over year), mainly Savings & MMDA (20.8%, or $635 million) q Deposits grew $228 million quarter over quarter driven by CDs (11.3% or $198 million) 9.3% 21.7% 27.1% 41.9% 9.3% 22.5% 25.8% 42.4% $1.42 Billion Year Over Year Growth CDs
11 Cash and Due from Banks Net Interest Drivers $ in billions Loans and Yield Total Investments and Yield Interest Bearing Deposits and Cost of Funds $ in millions $381 $306 $355 $379 $259 $6.5 $6.8 $7.1 $7.5 $7.9 $1.4 $1.7 $1.7 $1.6 $1.6 $5.3 $5.6 $6.1 $6.2 $6.5
12 Net Interest Income and Accretion $ in millions Note: Disposition Accretion is the recognition of incremental credit and interest rate marks upon sale or disposition of a PCI loan; Normal Accretion is scheduled amortization of interest rate marks over the estimated remaining life of the loan pool Highlights q Net Interest Income increased $4.2 million (or 4 bps of NIM) quarter over quarter, benefiting from loan growth and an additional business day, offset by a $0.6 million reduction in disposition accretion Net Interest Revenue and NIM Purchased Credit Impaired Loan Accretion Disposition Accretion Normal Accretion Adjusted Net Interest Margin, excluding disposition accretion $84.6 $90.0 $90.8 $93.9 $98.1 $1.3 $2.5 $1.0 $3.1 $2.5 $2.4 $2.2 $2.4 $1.8 $1.6
13 Operating Expenses and Efficiency $ in millions Highlights q Efficiency ratio improved 220 basis points quarter over quarter due to increased total revenue and flat expenses q Year over year compensation increased as headcount rose approximately 9.5% in order to service 15.3% growth in assets q Professional fees include costs of IT upgrades Operating Expenses and Efficiency Ratio Breakdown of Operating Expenses Other Professional Fees + Data Processing Occupancy + Insurance Compensation $28.7 $30.1 $29.6 $31.8 $32.2 $48.3 $51.4 $52.1 $52.2 $52.0
14 Pre-Tax, Pre-Provision Operating Income, Net Income, and ROA $ in millions Pre-Tax, Pre-Provision Operating Income and ROA Net Income and ROA $42.1 $43.8 $44.4 $47.4 $51.8 $28.6 $31.4 $31.1 $35.5 $40.9
15 Adversely Graded Loans and Non-Performing Assets Organic Acquired* NPA’s Adversely Graded Loans * Net of credit and interest rate discounts from acquisitions of $11 million and $20 million, respectively, as of 9/30/14 $288 $51 Accruing TDRs total $90 million as of 9/30/2014 $324 $302 $294 $60 $282 $ in millions Special Mention Loans Classified Accruing Loans Non-Performing Loans OREO $76 $98 $110
16 Charge-Offs and Provision Highlights Gross Charge Offs and Recoveries Net Charge Offs (Recoveries) and Rate Provision for Credit Losses q Recoveries of $3.8 million exceeded gross charge-offs of $1.0 million, resulting in net recoveries of $2.8 million q Annualized net recovery rate was 0.15%, a 6 basis point improvement over prior quarter and 5 basis point improvement over prior year q Provision for credit losses of $0.4 million was the result of continued improvement in historical credit losses and favorable recovery trends $ in millions $3.3 $4.5 $2.1 $2.0 $1.0 $(4.8) $(2.4) $(2.4) $(3.5) $(3.8) $0.0 $4.3 $3.5 $0.5 $0.4 $(1.5) $2.1 $(0.3) $(1.5) $(2.8) Loan Loss Provision ALLL/Total Loans Net Charge Offs (Recoveries) Net Charge Off (Recovery) Rate Gross Charge Offs Recoveries
17 Regulatory Capital Regulatory Ratios and Tangible Common Equity Proforma Basel III Capital* $ in millions Tangible Common Equity, net of tax 837 Cumulative OCI Related to AFS and other 10 Basel I Tier 1 Common Equity 827 Disallowed FV TRUPS adjustment and DTA (22 ) Basel III Tier 1 Common Equity 805 Basel I Risk Based Assets 9,217 Plus 50% on Non-Accrual/ Pass due 19 Plus 20% on unfunded <1yr mat 43 Less disallowed Equity Securities (1 ) Basel III Risk Based Assets 9,278 Basel I Total Tier 1 Capital 1,016 Threshold deductions (14 ) Basel III Total Tier 1 Capital 1,002 Basel III Total Risk Based Capital 1,114 Basel III Total RBC 12.0 % Basel III Tier 1 RBC 10.8 % Basel III Tier 1 Leverage 10.0 % Basel III Tier 1 Common 8.7 % Total RBC Tier 1 RBC Tier 1 Leverage Tier 1 Common Tangible Common Equity * Based on 9/30/2014 balance sheet amounts. Basel III regulations are effective 1/1/2015.
18 Outlook 4th Quarter 2014 q Loan and Deposit Growth q Interest Margin q Operational Efficiency q Asset Quality
19 Forward-Looking Statements This presentation contains 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 historical facts. Examples of forward-looking statements include, among others, statements we make regarding guidance, outlook, or expectations relating to loan and deposit growth, interest margin, operating efficiency, and asset quality. 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 statement. Some factors that could cause actual results to differ materially from historical or expected results include, among others: the risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; inflation, interest rate, market and monetary fluctuations; increases in competitive pressures among financial institutions and businesses offering similar products and services; higher defaults on our loan portfolio than we expect; changes in management’s estimate of the adequacy of the allowance for credit losses; legislative or regulatory changes or changes in accounting principles, policies or guidelines; supervisory actions by regulatory agencies which may limit our ability to pursue certain growth opportunities; management’s estimates and projections of interest rates and interest rate policy; the execution of our business plan; and other factors affecting the financial services industry generally or the banking industry in particular. Any forward-looking statement made by us in this presentation is based only on information currently available to us and speaks only as of the date on which it is made. We do not intend and disclaim any duty or obligation to update or revise any industry information or forward-looking statements, whether written or oral, that may be made from time to time, set forth in this presentation to reflect new information, future events or otherwise.
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