Western Alliance Bancorporation (NYSE:WAL) (the "Company")
announced today its financial results for the second quarter
2015.
- Net income of $34.7 million and
earnings per share of $0.39
- Operating net income of $43.5 million
and earnings per share of $0.49, excluding merger charges, debt
valuation adjustments, gains on other real estate1, and operating
performance of Bridge Capital Holdings ("Bridge")
- Bridge merger, completed on June 30,
2015, increased total assets, gross loans, and deposits by $2.20
billion, $1.45 billion, and $1.74 billion, respectively
Second Quarter 2015 Highlights:
- Pre-tax, pre-provision operating
earnings of $59.9 million, up from $54.5 million in the first
quarter 2015, and up 26.3% from $47.4 million in the second quarter
20141
- Net operating revenue of $114.4
million, constituting year-over-year growth of 15.1%, or $15.0
million, compared to an increase in operating expenses of 4.9%, or
$2.6 million1
- Net interest margin of 4.41%, compared
to 4.35% in the first quarter 2015, and 4.39% in the second quarter
2014
- Efficiency ratio of 44.6%, compared to
46.7% in the first quarter 2015, and 49.3% in the second quarter
20141
- Total loans of $10.36 billion,
including $1.45 billion acquired from Bridge and loans held for
sale of $39 million, with organic loan growth for the quarter of
$95 million and $515 million for the first six months of 2015
- Total deposits of $11.41 billion,
including $1.74 billion acquired from Bridge, and organic deposit
growth flat during the second quarter and $734 million for the
first six months of 2015
- Nonperforming assets (nonaccrual loans
and repossessed assets) decreased to 0.88% of total assets, from
1.11% at March 31, 2015, and from 1.23% at June 30,
2014
- Net loan recoveries (annualized) to
average loans outstanding of 0.13%, compared to 0.06% in the first
quarter 2015, and 0.09% in the second quarter 2014
- Qualifying debt of $208 million, an
increase of $168 million from March 31, 2015 due to the
issuance of $150 million in subordinated debt and $11 million in
junior subordinated debt assumed in the Bridge merger
- Common Equity Tier 1 ratio of 9.1% and
Total Capital ratio of 12.2%, compared to 9.0% and 11.3%,
respectively, at March 31, 2015 under Basel III federal
regulatory standards, which became effective on January 1,
2015
- Stockholders' equity of $1.51 billion,
an increase of $463 million from March 31, 2015, including
$431 million related to the Bridge acquisition, and an increase of
$557 million from June 30, 2014
- Tangible book value per share, net of
tax, of $11.25, an increase of 4.9% from $10.72 at March 31,
2015, and an increase of 24.7% from $9.02 at June 30,
20141
Financial Performance
“Once again, Western Alliance delivered strong performance with
key metrics driving record operating earnings and efficiency in the
second quarter,” commented Robert Sarver, Chief Executive Officer
and Chairman of Western Alliance Bancorporation. “Our earnings
power, as measured by pre-tax, pre-provision income was up $12.5
million, or 26.3%, from a year ago. Our operating efficiency,
at under 45%, is among the best in the industry. We also
experienced our sixth consecutive quarter of net loan
recoveries.”
Sarver continued, “We are very pleased to welcome our new
colleagues from Bridge Bank. Bridge provides Western Alliance
with a strong Northern California presence and impressive lending
capabilities, particularly in the technology space, as well as new
fee revenue and low-cost deposit generation opportunities.
Combining these new opportunities with our existing performance
momentum, we are confident that our combined company will continue
to deliver superior results for our shareholders.”
Acquisition of Bridge Capital Holdings
Results include the acquisition of Bridge on June 30, 2015,
which increased total assets, gross loans, and deposits by $2.20
billion, $1.45 billion, and $1.74 billion, respectively. However,
the acquisition had no effect on the Company's results of
operations, except for merger charges incurred related to the
acquisition. Pursuant to accounting guidance, acquired net assets
are recorded at estimated fair value as of the acquisition date.
The estimated fair value of certain net assets are preliminary and
are subject to measurement period adjustments. The results of
operations from Bridge will be included in the Company's results
beginning on July 1, 2015.
Income Statement
Net interest income was $108.7 million in the second quarter
2015, an increase of $5.6 million from $103.1 million in the first
quarter 2015, and an increase of $14.8 million, or 15.8%, compared
to the second quarter 2014. The Company’s net interest margin
increased in the second quarter 2015 to 4.41%, compared to 4.35% in
the first quarter 2015, and 4.39% in the second quarter 2014.
Operating non-interest income was $5.7 million for both the
second and first quarters of 2015, compared to $5.5 million for the
second quarter 2014.1
Net operating revenue was $114.4 million for the second quarter
2015, compared to $108.8 million for the first quarter 2015, and an
increase of $15.0 million compared to $99.4 million for the second
quarter 2014.1
Operating non-interest expense was $54.6 million for the second
quarter 2015, compared to $54.2 million for the first quarter 2015,
and $52.0 million for the second quarter 2014.1 The Company’s
operating efficiency ratio1 on a tax equivalent basis was 44.6% for
the second quarter 2015, an improvement from 46.7% for the first
quarter 2015, and from 49.3% for the second quarter 2014.
The Company views its pre-tax, pre-provision operating earnings
as a key metric for assessing the Company’s earnings power, which
it defines as net operating revenue less operating non-interest
expense. For the second quarter 2015, the Company’s pre-tax,
pre-provision operating earnings were $59.9 million, up from $54.5
million in the first quarter 2015, and up 26.3% from $47.4 million
in the second quarter 2014.1
On June 29, 2015, Western Alliance Bank ("WAB"), the operating
subsidiary of the Company, issued $150.0 million of subordinated
debt at a fixed rate of 5.00% until July 15, 2020. After July 15,
2020 and through maturity or early redemption of the subordinated
notes, the notes will bear interest at a floating rate of 3.20%
above 90 day LIBOR. The subordinated debt is due July 15, 2025 and
was recorded net of related issuance costs of $1.6 million. Given
the pricing of 90 day LIBOR plus 3.20%, the Company reviewed the
methodology for calculating the estimated fair value of its
outstanding junior subordinated debt, which was priced at 30 day
LIBOR plus 5.96% as of March 31, 2015 under fair value option
accounting. Considering the significantly lower spread of WAB’s
newly issued subordinated debt, that the Company’s debt is junior
in subordination, and that the debt was issued by the parent
company rather than the insured depository, the Company adjusted
the spread for valuation purposes to 30 day LIBOR plus 4.69%, which
is between the 90 day LIBOR plus 3.20% rate achieved on the WAB
subordinated debt and 30 day LIBOR plus 5.96% rate that was
previously used. This spread reduction resulted in a non-cash,
non-recurring debt valuation loss of $7.7 million. This charge had
no effect on regulatory capital.
The other significant non-operating items for the second quarter
2015 consisted of merger / restructure expense of $7.8 million
incurred in connection with the acquisition of Bridge and a net
gain on sales and valuations of repossessed and other assets of
$1.2 million.
The Company had 1,411 full-time equivalent employees and 48
offices at June 30, 2015, compared to 1,112 employees and 39
offices at June 30, 2014.
Balance Sheet
Gross loans totaled $10.36 billion at June 30, 2015,
including $1.45 billion acquired from Bridge and loans held for
sale of $39 million, and organic loan growth of $515 million from
December 31, 2014. At June 30, 2015, the allowance for
credit losses was 1.11% of total loans, compared to 1.27% at
March 31, 2015, and 1.40% at June 30, 2014, reflecting an
improvement in the Company’s asset quality profile and historical
losses. Consistent with GAAP, the allowance for credit losses on
acquired loans is not carried over in an acquisition as acquired
loans are recorded at fair value, which discounts the loans based
on expected future cash flows. The allowance for credit losses as a
percent of total loans, adjusted to include credit discounts on
acquired loans, was 1.35% at June 30, 2015, compared to 1.45%
at December 31, 2014.1
The acquisition of Bridge added $260 million of goodwill and $15
million of core deposit intangible assets, which are preliminary
amounts that are subject to measurement period adjustments over the
next year. Goodwill was allocated to the Northern California and
Central Business Lines segments based on the balances of loans and
deposits as of June 30, 2015 and core deposit intangible assets
were allocated to these segments based on core deposit balances.
Total goodwill and core deposit intangible assets allocated to the
Northern California and Central Business Lines segments were $155
million and $119 million, respectively, as of June 30, 2015.
Deposits totaled $11.41 billion at June 30, 2015, including
$1.74 billion acquired from Bridge, and organic deposit growth of
$734 million from December 31, 2014. Non-interest bearing
deposits were $3.92 billion at June 30, 2015, compared to
$2.66 billion at March 31, 2015, and $2.28 billion at
June 30, 2014. Non-interest bearing deposits comprised 34.4%
of total deposits at June 30, 2015, compared to 27.5% at
March 31, 2015, and 26.9% at June 30, 2014. The increase
in the proportion of the Company's non-interest bearing deposits
was due to the Bridge acquisition as 68.3% of Bridge's deposits
were non-interest bearing. The proportion of savings and money
market accounts decreased to 41.5% from 42.6% at March 31,
2015, and from 42.9% at June 30, 2014. Certificates of deposit
as a percentage of total deposits were 15.3% at June 30, 2015,
compared to 20.2% at March 31, 2015, and 20.8% at
June 30, 2014. The Company’s ratio of loans to deposits was
90.8% at June 30, 2015, compared to 91.3% at March 31,
2015, and 89.1% at June 30, 2014.
Borrowings totaled $70 million at June 30, 2015, a decrease
of $206 million from $275 million at March 31, 2015, and a
decrease of $268 million from $338 million at June 30, 2014.
The decrease from the prior quarter is due to the payoff of FHLB
advances, resulting in a loss on extinguishment of debt of $0.1
million. Qualifying debt increased to $208 million at June 30,
2015, from $41 million at March 31, 2015, primarily due to the
issuance of $150 million of subordinated debt and $11 million in
junior subordinated debt assumed from Bridge.
Stockholders’ equity at June 30, 2015 was $1.51 billion,
compared to $1.05 billion at March 31, 2015, and $958 million
at June 30, 2014. The merger with Bridge increased
stockholders' equity by $431 million, primarily due to the issuance
of 12.5 million shares of the Company's common stock.
At June 30, 2015, tangible common equity, net of tax, was
8.7% of tangible assets1 and total capital under Basel III federal
regulatory standards was 12.2% of risk-weighted assets. The
Company’s tangible book value per share1 was $11.25 at
June 30, 2015, up 24.7% from June 30, 2014.
Total assets increased 19.7% to $13.47 billion at June 30,
2015, from $11.25 billion at March 31, 2015, and increased
34.4% from $10.02 billion at June 30, 2014. The increase in
total assets was primarily related to the merger with Bridge, which
increased total assets by $2.20 billion.
Asset Quality
There was no provision for credit losses for the second quarter
2015, compared to $0.7 million in the first quarter 2015, and $0.5
million for the second quarter 2014. Net loan recoveries in the
second quarter 2015 were $3.0 million, or 0.13% of average loans
(annualized), compared to $1.2 million, or 0.06%, in the first
quarter 2015, respectively, and $1.5 million, or 0.09%, for the
second quarter 2014, respectively.
Nonaccrual loans decreased $1.3 million to $59.4 million during
the quarter, including Bridge. Loans past due 90 days and still
accruing interest totaled $8.3 million at June 30, 2015,
compared to $3.7 million at March 31, 2015, and $3.0 million
at June 30, 2014. Loans past due 30-89 days and still accruing
interest totaled $4.0 million at quarter end, a decrease from $14.1
million at March 31, 2015, and a decrease from $5.1 million at
June 30, 2014.
As the Company’s asset quality improved and its 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 18.5% at June 30, 2015, from 20.3%
at March 31, 2015, and from 24.5% at June 30, 2014.1
Segment Highlights
The Company's reportable segments are aggregated primarily based
on geographic location, services offered, and markets served. As a
result of the acquisition of Bridge on June 30, 2015, former Bridge
activities were allocated between the newly formed Northern
California segment and the Central Business Lines ("CBL") segment.
As a substantial portion of Bridge's balance sheet is generated
from nationally-focused business lines, the Technology and Energy
Infrastructure lines of Bridge's business are included in the CBL
segment. Substantially all of the remaining assets and liabilities
are included in the Northern California segment. The Southern
California segment represents legacy Western Alliance operations in
California, excluding two branches located in northern California,
which are now included in the Northern California segment.
The Arizona, Nevada, Southern California, and Northern
California segments provide full service banking and related
services to their respective markets. The Company's CBL segment
provides specialized banking services to niche markets and, as of
June 30, 2015, includes the Technology and Energy Infrastructure
operations of Bridge. These CBLs are managed centrally and are
broader in geographic scope compared to our other segments, though
still predominately located within our core market areas. The
Corporate & Other segment 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, Southern California, Northern
California, and CBL segments include loan and deposit growth, asset
quality, and pre-tax income.
Arizona reported a gross loan balance of $2.43 billion at
June 30, 2015, an increase of $91 million during the last six
months, and an increase of $302 million during the last 12 months.
Deposits were $2.37 billion at June 30, 2015, an increase of
$192 million during the last six months, and an increase of $255
million during the last 12 months. Pre-tax income was $17.8 million
and $17.3 million for the three months ended June 30, 2015 and
2014, respectively, and $33.6 million and $29.9 million for the six
months ended June 30, 2015 and 2014, respectively.
Nevada reported a gross loan balance of $1.76 billion at
June 30, 2015, an increase of $93 million during the last six
months, and an increase of $79 million during the last 12 months.
Deposits were $3.32 billion at June 30, 2015, an increase of
$86 million during the last six months, and an increase of $129
million during the last 12 months. Pre-tax income was $20.5 million
and $17.7 million for the three months ended June 30, 2015 and
2014, respectively, and $37.2 million and $34.2 million for the six
months ended June 30, 2015 and 2014, respectively.
Southern California reported a gross loan balance of $1.66
billion at June 30, 2015, an increase of $107 million during
the last six months, and an increase of $145 million during the
last 12 months. Deposits were $1.95 billion at June 30, 2015,
an increase of $202 million during the last six months, and an
increase of $281 million during the last 12 months. Pre-tax income
was $12.5 million and $12.6 million for the three months ended
June 30, 2015 and 2014, respectively, and $24.4 million and
$21.9 million for the six months ended June 30, 2015 and 2014,
respectively.
Northern California reported a gross loan balance of $1.08
billion at June 30, 2015, an increase of $879 million during
the last six months, and an increase of $898 million during the
last 12 months. Deposits were $1.55 billion at June 30, 2015,
an increase of $966 million during the last six months, and an
increase of $1.16 billion during the last 12 months. Results of
operations for Northern California includes the Company's two
previously existing northern California branch operations and does
not include the results of operations of Bridge. Pre-tax income was
$2.8 million and $1.4 million for the three months ended
June 30, 2015 and 2014, respectively, and $5.3 million and
$2.5 million for the six months ended June 30, 2015 and 2014,
respectively.
CBL, which includes the Technology and Energy Infrastructure
operations of Bridge, reported a gross loan balance of $3.39
billion at June 30, 2015, an increase of $798 million during
the last six months, and an increase of $1.44 billion during the
last 12 months. Deposits were $1.95 billion at June 30, 2015,
an increase of $999 million during the last six months, and an
increase of $1.06 billion during the last 12 months. Pre-tax income
was $14.0 million and $6.8 million for the three months ended
June 30, 2015 and 2014, respectively, and $27.3 million and
$12.1 million for the six months ended June 30, 2015 and 2014,
respectively.
Attached to this press release is summarized financial
information for the quarter ended June 30, 2015.
Conference Call and Webcast
Western Alliance Bancorporation will host a conference call and
live webcast to discuss its second quarter 2015 financial results
at 12:00 p.m. ET on Monday, July 27, 2015. Participants may
access the call by dialing 1-888-317-6003 and using passcode
7737999 or via live audio webcast using the website link
http://services.choruscall.com/links/wal150724.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 July 27th through 9:00 a.m. ET August
27th by dialing 1-877-344-7529 passcode: 10068074.
Reclassifications
Certain amounts in the Consolidated Income Statements for the
prior periods have been reclassified to conform to the current
presentation. The reclassifications have no effect on net income or
stockholders’ equity as previously reported.
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 the
Company’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.
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 our
acquisition of Bridge Capital Holdings, the performance of the
combined company, and any 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, 2014 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, including expansion through acquisitions;
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
With more than $10 billion in assets, top-performing Western
Alliance Bancorporation (NYSE:WAL) is one of the fastest growing
bank holding companies in the U.S. Its primary subsidiary,
Western Alliance Bank, is the go-to bank for business and succeeds
with local teams of experienced bankers who deliver superior,
personalized services and a full spectrum of deposit, lending,
treasury management and online banking products and services.
Western Alliance Bank operates five full-service banking divisions:
Alliance Bank of Arizona, Bank of Nevada, Bridge Bank, First
Independent Bank and Torrey Pines Bank. The Company also serves
business customers through a robust national platform of
specialized financial services including Corporate Finance,
Equipment Finance, Public Finance, Resort Finance, Technology
Finance, Energy Infrastructure Group, Mortgage Warehouse Lending
and Alliance Association Bank. For more information visit
westernalliancebancorp.com.
1 See Reconciliation of Non-GAAP Financial Measures beginning on
page 18.
Western Alliance Bancorporation and Subsidiaries
Summary Consolidated Financial Data Unaudited
Selected Balance Sheet Data:
June 30, June 30, 2015 2014
Change %
(in millions)
Total assets $ 13,470.1 $ 10,023.6 34.4 % Total loans, net of
deferred fees 10,360.7 7,544.5 37.3 Securities and money market
investments 1,531.9 1,606.7 (4.7 ) Total deposits 11,406.7 8,469.5
34.7 Borrowings 69.5 337.5 (79.4 ) Qualifying debt 208.4 42.7 388.1
Stockholders' equity 1,514.7 957.7 58.2 Tangible common equity, net
of tax (1) 1,150.8 791.3 45.4
Selected Income Statement
Data: For the Three Months Ended June 30, For the Six
Months Ended June 30, 2015 2014
Change %
2015 2014
Change %
(in thousands) (in thousands) Interest income $ 116,618 $ 101,973
14.4 % $ 227,580 $ 200,674 13.4 % Interest expense 7,900
8,075 (2.2 ) 15,754 15,999 (1.5 ) Net interest
income 108,718 93,898 15.8 211,826 184,675 14.7 Provision for
credit losses — 507 (100.0 ) 700 4,007
(82.5 ) Net interest income after provision for credit losses
108,718 93,391 16.4 211,126 180,668 16.9 Non-interest income (2,191
) 5,598 (139.1 ) 3,742 10,171 (63.2 ) Non-interest expense 61,209
52,241 17.2 115,242 101,728 13.3 Income
from continuing operations before income taxes 45,318 46,748 (3.1 )
99,626 89,111 11.8 Income tax expense 10,599 10,706
(1.0 ) 24,717 21,330 15.9 Income from continuing
operations 34,719 36,042 (3.7 ) 74,909 67,781 10.5 Loss on
discontinued operations, net of tax — (504 ) (100.0 ) —
(1,158 ) (100.0 ) Net income $ 34,719 $ 35,538
(2.3 ) $ 74,909 $ 66,623 12.4 Diluted earnings per
share from continuing operations $ 0.39 $ 0.41 (4.9 )
$ 0.84 $ 0.77 9.1 Diluted loss per share from
discontinued operations — (0.01 ) — (0.01 ) Diluted
earnings per share available to common stockholders $ 0.39 $
0.40 (2.5 ) $ 0.84 $ 0.76 10.5
Common Share Data: At or for the Three Months Ended June
30, At or for the Six Months Ended June 30, 2015
2014
Change %
2015 2014
Change %
Diluted earnings per share available to common stockholders $ 0.39
$ 0.40 (2.5 )% $ 0.84 $ 0.76 10.5 % Book value per common share
14.12 9.30 51.8 Tangible book value per share, net of tax (1) 11.25
9.02 24.7 Average shares outstanding (in thousands): Basic 88,177
86,501 1.9 88,059 86,379 1.9 % Diluted 88,682 87,333 1.5 88,567
87,229 1.5 Common shares outstanding 102,291 87,774 16.5 (1)
See Reconciliation of Non-GAAP Financial Measures.
Western Alliance Bancorporation and Subsidiaries Summary
Consolidated Financial Data Unaudited
At or for the Three Months Ended June 30,
At or for the Six Months Ended June 30, 2015
2014 Change % 2015 2014 Change %
Selected Performance Ratios: Return on average assets (1)
1.24 % 1.46 % (15.1 )% 1.37 % 1.39 % (1.4 )% Return on average
tangible common equity (2) 14.10 18.62 (24.3 ) 15.61 17.98 (13.2 )
Net interest margin (1) 4.41 4.39 0.5 4.38 4.40 (0.5 ) Net interest
spread 4.28 4.26 0.5 4.25 4.27 (0.5 ) Efficiency ratio - tax
equivalent basis (2) 44.63 49.34 (9.5 ) 45.63 50.10 (8.9 ) Loan to
deposit ratio 90.83 89.08 2.0
Asset Quality Ratios:
Net (recoveries) charge-offs to average loans outstanding (1) (0.13
)% (0.09 )% 44.4 % (0.10 )% (0.05 )% 100.0 % Nonaccrual loans to
gross loans 0.58 0.85 (31.8 ) Nonaccrual loans and repossessed
assets to total assets 0.88 1.23 (28.5 ) Loans past due 90 days and
still accruing to total loans 0.08 0.04 100.0 Allowance for credit
losses to gross loans 1.11 1.40 (20.7 ) Allowance for credit losses
to nonaccrual loans 193.62 164.64 17.6
Capital Ratios
(2): Basel
III Basel I June 30, 2015 March 31, 2015
June 30, 2014 Tangible common equity 8.7 % 8.5 % 7.9 %
Common Equity Tier 1 (3) 9.1 9.0 9.0 Tier 1 Leverage ratio (3) 10.0
9.8 10.0 Tier 1 Capital (3) 10.2 10.2 11.2 Total Capital (3) 12.2
11.3 12.5 (1) Annualized for the three and six
month periods ended June 30, 2015 and 2014. (2) See Reconciliation
of Non-GAAP Financial Measures. (3) Basel III capital ratios are
preliminary until the Call Report is filed.
Western
Alliance Bancorporation and Subsidiaries Condensed
Consolidated Income Statements Unaudited
Three Months Ended June 30, Six Months Ended June 30,
2015 2014 2015 2014
(dollars in thousands)
Interest income: Loans $ 105,468 $ 90,583 $ 205,859 $ 177,387
Investment securities 9,276 10,894 19,064 22,219 Other 1,874
496 2,657 1,068
Total interest income
116,618 101,973 227,580 200,674
Interest expense: Deposits 5,362 4,930 10,508 9,595 Borrowings
2,087 2,702 4,354 5,540 Junior subordinated debt 451 443
892 864
Total interest expense 7,900
8,075 15,754 15,999
Net interest
income 108,718 93,898 211,826 184,675 Provision for credit
losses — 507 700 4,007
Net interest
income after provision for credit losses 108,718 93,391
211,126 180,668 Non-interest income: Service
charges 3,128 2,758 6,017 5,319 Bank owned life insurance 772 959
1,749 1,908 Gains (losses) on sales of investment securities, net
55 (163 ) 644 203 Unrealized (losses) gains on assets and
liabilities measured at fair value, net (7,885 ) 235 (8,194 )
(1,041 ) Loss on extinguishment of debt (81 ) — (81 ) — Other 1,820
1,809 3,607 3,782
Total non-interest
income (2,191 ) 5,598 3,742 10,171
Non-interest expenses: Salaries and employee benefits 32,406 31,751
64,947 61,306 Occupancy 4,949 4,293 9,762 8,979 Legal, professional
and directors' fees 4,611 4,192 8,606 7,831 Data Processing 2,683
2,580 5,809 5,309 Insurance 2,274 2,087 4,364 4,480 Loan and
repossessed asset expenses 1,284 889 2,374 2,036 Card expense 613
530 1,087 1,130 Marketing 463 506 840 1,065 Intangible amortization
281 302 562 899 Net (gain) loss on sales and valuations of
repossessed and other assets (1,218 ) 184 (1,569 ) (2,363 ) Merger
/ restructure expense 7,842 26 8,001 183 Other 5,021 4,901
10,459 10,873
Total non-interest
expense 61,209 52,241 115,242 101,728
Income from continuing operations before income taxes 45,318
46,748 99,626 89,111 Income tax expense 10,599 10,706
24,717 21,330
Income from continuing
operations $ 34,719 $ 36,042 $ 74,909 $ 67,781 Loss from
discontinued operations, net of tax — (504 ) — (1,158
)
Net income $ 34,719 $ 35,538 $ 74,909
$ 66,623 Preferred stock dividends 247 352 423
705
Net income available to common
stockholders $ 34,472 $ 35,186 $ 74,486 $
65,918 Diluted net income per share $ 0.39 $ 0.40
$ 0.84 $ 0.76
Western
Alliance Bancorporation and Subsidiaries Five Quarter
Condensed Consolidated Income Statements Unaudited
Three Months Ended
Jun 30, 2015
Mar 31, 2015 Dec 31, 2014 Sep 30, 2014 Jun
30, 2014
(in thousands, except per share data)
Interest income: Loans $ 105,468 $ 100,391 $ 99,099 $ 94,436 $
90,583 Investment securities 9,276 9,788 10,455 10,535 10,894 Other
1,874 783 597 583 496
Total
interest income 116,618 110,962 110,151
105,554 101,973 Interest expense: Deposits 5,362
5,146 5,245 5,172 4,930 Borrowings 2,087 2,267 2,314 1,866 2,702
Junior subordinated debt 451 441 447 443
443
Total interest expense 7,900 7,854
8,006 7,481 8,075
Net interest
income 108,718 103,108 102,145 98,073 93,898 Provision for
credit losses — 700 300 419 507
Net interest income after provision for credit losses
108,718 102,408 101,845 97,654 93,391
Non-interest income: Service charges 3,128 2,889 2,791 2,457
2,758 Bank owned life insurance 772 977 1,464 1,136 959 Gains
(losses) on sales of investment securities, net 55 589 373 181 (163
) Unrealized (losses) gains on assets and liabilities measured at
fair value, net (7,885 ) (309 ) 1,357 896 235 Loss on
extinguishment of debt (81 ) — — (502 ) — Other 1,820 1,787
2,432 1,824 1,809
Total non-interest
income (2,191 ) 5,933 8,417 5,992 5,598
Non-interest expenses: Salaries and employee benefits 32,406
32,541 33,094 32,230 31,751 Occupancy 4,949 4,813 4,698 4,479 4,293
Legal, professional, and directors' fees 4,611 3,995 3,425 3,022
4,192 Data Processing 2,683 3,126 2,345 2,404 2,580 Insurance 2,274
2,090 2,386 1,996 2,087 Loan and repossessed asset expenses 1,284
1,090 1,486 901 889 Card expense 613 474 678 609 530 Marketing 463
377 857 378 506 Intangible amortization 281 281 281 281 302 Net
(gain) loss on sales and valuations of repossessed and other assets
(1,218 ) (351 ) (1,102 ) (1,956 ) 184 Merger / restructure expense
7,842 159 — 15 26 Other 5,021 5,438 7,594
5,419 4,901
Total non-interest expense 61,209
54,033 55,742 49,778 52,241
Income from continuing operations before income taxes 45,318 54,308
54,520 53,868 46,748 Income tax expense 10,599 14,118
14,111 12,949 10,706
Income from continuing
operations $ 34,719 $ 40,190 $ 40,409 $ 40,919 $ 36,042 Loss
from discontinued operations, net of tax — — —
— (504 )
Net income $ 34,719 $ 40,190 $
40,409 $ 40,919 $ 35,538 Preferred stock
dividends 247 176 329 353 352
Net Income available to common stockholders $ 34,472
$ 40,014 $ 40,080 $ 40,566 $ 35,186
Diluted net income per share $ 0.39 $ 0.45 $ 0.46
$ 0.46 $ 0.40
Western
Alliance Bancorporation and Subsidiaries Five Quarter
Condensed Consolidated Balance Sheets Unaudited
Jun 30, 2015 Mar 31, 2015 Dec 31, 2014
Sep 30, 2014 Jun 30, 2014 (in millions)
Assets: Cash and due from banks $ 700.2 $ 492.4 $ 164.4 $
258.8 $ 379.3 Securities purchased under agreement to resell 58.1
— — — —
Cash and cash
equivalents 758.3 492.4 164.4 258.8 379.3 Securities and money
market investments 1,531.9 1,453.7 1,547.8 1,597.3 1,606.7 Loans
held for sale 39.4 — — — — Loans held for investment: Commercial
4,759.7 3,725.2 3,532.3 3,293.2 3,028.0 Commercial real estate -
non-owner occupied 2,195.0 2,113.8 2,052.6 1,993.3 1,934.0
Commercial real estate - owner occupied 2,019.3 1,818.0 1,732.9
1,620.3 1,603.4 Construction and land development 1,002.7 842.9
748.1 671.8 609.1 Residential real estate 320.6 292.2 299.4 317.5
328.6 Consumer 24.0 26.5 33.0 33.4 41.4
Gross loans and deferred fees, net 10,321.3 8,818.6
8,398.3 7,929.5 7,544.5 Allowance for credit losses (115.1 ) (112.1
) (110.2 ) (109.2 ) (105.9 )
Loans, net 10,206.2
8,706.5 8,288.1 7,820.3 7,438.6
Premises and equipment, net 116.0 114.3 113.8 112.1 109.6 Other
assets acquired through foreclosure, net 59.3 63.8 57.1 51.8 59.3
Bank owned life insurance 161.1 142.9 142.0 143.2 142.5 Goodwill
and other intangibles, net 300.0 25.6 25.9 26.2 26.5 Other assets
297.9 252.7 261.4 279.1 261.1
Total assets $ 13,470.1 $ 11,251.9 $ 10,600.5
$ 10,288.8 $ 10,023.6
Liabilities and
Stockholders' Equity: Liabilities: Deposits Non-interest
bearing demand deposits $ 3,924.4 $ 2,657.4 $ 2,288.0 $ 2,246.7 $
2,278.8 Interest bearing: Demand 1,001.3 936.5 854.9 809.4 794.8
Savings and money market 4,733.9 4,121.0 3,869.7 3,685.0 3,637.4
Time certificates 1,747.1 1,947.4 1,918.4
1,956.5 1,758.5
Total deposits 11,406.7
9,662.3 8,931.0 8,697.6 8,469.5 Customer repurchase agreements 42.2
47.2 54.9 53.0 53.7
Total
customer funds 11,448.9 9,709.5 8,985.9 8,750.6 8,523.2
Securities sold short 57.6 — — — — Borrowings 69.5 275.2 390.3
330.8 337.5 Qualifying debt 208.4 40.7 40.4 41.8 42.7 Accrued
interest payable and other liabilities 171.0 175.2
183.0 162.5 162.5
Total liabilities
11,955.4 10,200.6 9,599.6 9,285.7
9,065.9 Stockholders' Equity: Preferred stock 70.5 70.5 70.5
141.0 141.0 Common stock and additional paid-in capital 1,269.0
831.9 828.3 807.2 803.4 Retained earnings 159.9 125.5 85.5 45.4 4.8
Accumulated other comprehensive income 15.3 23.4 16.6
9.5 8.5
Total stockholders' equity
1,514.7 1,051.3 1,000.9 1,003.1 957.7
Total liabilities and stockholders' equity $ 13,470.1
$ 11,251.9 $ 10,600.5 $ 10,288.8 $
10,023.6
Western Alliance
Bancorporation and Subsidiaries Changes in the Allowance For
Credit Losses Unaudited Three Months
Ended Jun 30, 2015 Mar 31, 2015 Dec 31,
2014 Sep 30, 2014 Jun 30, 2014 (in thousands)
Balance, beginning of period $ 112,098 $ 110,216 $ 109,161 $
105,937 $ 103,899 Provision for credit losses — 700 300 419 507
Recoveries of loans previously charged-off: Commercial and
industrial 681 916 1,499 1,053 1,254 Commercial real estate -
non-owner occupied 335 277 229 1,226 1,052 Commercial real estate -
owner occupied 1,403 106 43 553 196 Construction and land
development 1,373 157 1,268 182 498 Residential real estate 1,184
533 261 768 314 Consumer 24 40 64 34
191 Total recoveries 5,000 2,029 3,364 3,816 3,505 Loans
charged-off: Commercial and industrial 1,771 393 1,743 110 1,039
Commercial real estate - non-owner occupied — — — 158 99 Commercial
real estate - owner occupied — — 270 35 230 Construction and land
development — — 8 — 78 Residential real estate 218 400 377 423 523
Consumer 53 54 211 285 5 Total
loans charged-off 2,042 847 2,609 1,011 1,974 Net loan recoveries
(2,958 ) (1,182 ) (755 ) (2,805 ) (1,531 ) Balance, end of period $
115,056 $ 112,098 $ 110,216 $ 109,161 $
105,937 Net recoveries to average loans outstanding -
annualized (0.13 )% (0.06 )% (0.04 )% (0.15 )% (0.09 )% Allowance
for credit losses to gross loans 1.11 1.27 1.31 1.38 1.40
Nonaccrual loans $ 59,425 $ 60,742 $ 67,659 $ 75,092 $ 64,345
Repossessed assets 59,335 63,759 57,150 51,787 59,292 Loans past
due 90 days, still accruing 8,284 3,730 5,132 3,558 3,001 Loans
past due 30 to 89 days, still accruing 4,006 14,137 9,804 16,500
5,123 Classified loans on accrual 101,165 76,090 90,393 107,776
133,220 Special mention loans 132,313 100,345 97,504 98,265 90,534
Western Alliance Bancorporation and
Subsidiaries Analysis of Average Balances, Yields and
Rates Unaudited Three
Months Ended June 30, 2015 2014
Average
Average Yield /
Average Average Yield / Balance
Interest Cost Balance Interest
Cost ($ in millions) ($ in thousands) ($ in millions) ($ in
thousands)
Interest earning assets Loans (1) $ 8,837.7 $
105,468 5.06 % $ 7,178.3 $ 90,583 5.29 % Securities (1) 1,423.6
9,276 3.06 1,629.9 10,894 3.08 Other 309.4 1,874 2.42
292.4 496 0.68 Total interest earning
assets 10,570.7 116,618 4.71 9,100.6 101,973 4.75
Non-interest
earning assets Cash and due from banks 118.6 138.7 Allowance
for credit losses (114.9 ) (105.0 ) Bank owned life insurance 143.2
141.8 Other assets 459.1 462.0
Total assets $
11,176.7 $ 9,738.1
Interest-bearing
liabilities Interest-bearing deposits: Interest-bearing
transaction accounts $ 971.6 $ 414 0.17 % $ 791.5 $ 385 0.19 %
Savings and money market 4,213.0 2,975 0.28 3,583.5 2,691 0.30 Time
certificates of deposit 1,834.4 1,973 0.43
1,700.4 1,854 0.44
Total interest-bearing
deposits 7,019.0 5,362 0.31 6,075.4 4,930 0.32 Short-term
borrowings 177.8 1,774 3.99 236.2 216 0.37 Long-term debt 111.0 313
1.13 280.4 2,486 3.55 Junior subordinated debt 40.8 451
4.42 42.8 443 4.14
Total
interest-bearing liabilities 7,348.6 7,900 0.43 6,634.8 8,075
0.49
Non-interest-bearing liabilities Non-interest-bearing
demand deposits 2,593.5 2,045.5 Other liabilities 148.4 126.7
Stockholders’ equity 1,086.2 931.1
Total
liabilities and stockholders' equity $ 11,176.7 $
9,738.1 Net interest income and margin $ 108,718 4.41
% $ 93,898 4.39 % Net interest spread 4.28 % 4.26 %
(1) Yields on loans and securities have been adjusted to a tax
equivalent basis. The taxable-equivalent adjustment was $7,878 and
$6,029 for the three months ended June 30, 2015 and 2014,
respectively.
Western Alliance Bancorporation and
Subsidiaries Analysis of Average Balances, Yields and
Rates Unaudited Six
Months Ended June 30, 2015 2014 Average
Average Yield / Average Average Yield /
Balance Interest Cost Balance
Interest Cost ($ in millions) ($ in thousands) ($ in
millions) ($ in thousands)
Interest earning assets Loans (1)
$ 8,693.1 $ 205,859 5.01 % $ 7,036.5 $ 177,387 5.28 % Securities
(1) 1,451.3 19,064 3.07 1,640.7 22,219 3.11 Other 223.3
2,657 2.38 251.6 1,068 0.85
Total interest earnings assets 10,367.7 227,580 4.68 8,928.8
200,674 4.76
Non-interest earning assets Cash and due from
banks 118.3 138.1 Allowance for credit losses (113.0 ) (103.1 )
Bank owned life insurance 142.8 141.4 Other assets 454.6
447.6
Total assets $ 10,970.4 $ 9,552.8
Interest-bearing liabilities Interest-bearing deposits:
Interest bearing transaction accounts $ 945.9 $ 808 0.17 % $ 778.3
$ 768 0.20 % Savings and money market 4,062.1 5,751 0.28 3,518.3
5,254 0.30 Time certificates of deposits 1,884.6 3,949
0.42 1,660.2 3,573 0.43
Total
interest-bearing deposits 6,892.6 10,508 0.30 5,956.8 9,595
0.32 Short-term borrowings 177.6 3,525 3.97 201.8 345 0.34
Long-term debt 156.2 829 1.06 291.0 5,195 3.57 Junior subordinated
debt 40.6 892 4.39 42.4 864 4.08
Total interest-bearing liabilities 7,267.0 15,754
0.43 6,492.0 15,999 0.49
Non-interest-bearing liabilities
Non-interest-bearing demand deposits 2,482.3 2,049.8 Other
liabilities 162.7 102.2 Stockholders’ equity 1,058.4 908.8
Total liabilities and stockholders' equity $ 10,970.4
$ 9,552.8 Net interest income and margin $ 211,826
4.38 % $ 184,675 4.40 % Net interest spread 4.25 %
4.27 % (1) Yields on loans and securities have been adjusted
to a tax equivalent basis. The taxable-equivalent adjustment was
$15,267 and $11,734 for the six months ended June 30, 2015 and
2014, respectively.
Western Alliance
Bancorporation and Subsidiaries Operating Segment
Results Unaudited
Balance Sheets: Central Southern
Northern Business Corporate
Consolidated Arizona Nevada California
California Lines & Other Company
At June 30, 2015 (dollars in millions)
Assets: Cash,
cash equivalents, and investment securities $ 2.3 $ 10.2 $ 2.6 $
2.1 $ — $ 2,273.0 $ 2,290.2 Loans, net of deferred loan fees and
costs 2,432.8 1,761.9 1,659.9 1,077.5 3,388.0 40.6 10,360.7 Less:
allowance for credit losses (31.7 ) (23.0 ) (21.7 ) (3.2 ) (34.9 )
(0.6 ) (115.1 ) Total loans 2,401.1 1,738.9 1,638.2
1,074.3 3,353.1 40.0 10,245.6
Other assets acquired through foreclosure, net 18.6 23.4 — 1.6 —
15.7 59.3 Goodwill and other intangible assets, net — 25.4 — 155.2
119.4 — 300.0 Other assets 43.7 63.0 13.8 15.7
27.9 410.9 575.0 Total assets $ 2,465.7
$ 1,860.9 $ 1,654.6 $ 1,248.9 $ 3,500.4
$ 2,739.6 $ 13,470.1
Liabilities:
Deposits $ 2,369.9 $ 3,316.9 $ 1,946.8 $ 1,550.2 $ 1,945.1 $ 277.8
$ 11,406.7 Borrowings and qualifying debt — — — — — 277.9 277.9
Other liabilities 20.3 29.2 3.5 8.4
77.6 131.8 270.8 Total liabilities 2,390.2
3,346.1 1,950.3 1,558.6 2,022.7
687.5 11,955.4
Allocated equity: 268.2
221.7 182.1 180.7 339.5 322.5
1,514.7
Total liabilities and stockholders' equity $
2,658.4 $ 3,567.8 $ 2,132.4 $ 1,739.3 $
2,362.2 $ 1,010.0 $ 13,470.1 Excess funds
provided (used) (192.7 ) (1,706.9 ) (477.8 ) (490.4 ) 1,138.2
1,729.6 — No. of offices 11 18 9 3 7 — 48 No. of full-time
equivalent employees 219 280 196 199 138 379 1,411
At
December 31, 2014 Assets: Cash, cash equivalents, and
investment securities $ 2.3 $ 5.0 $ 2.2 $ 0.3 $ — $ 1,702.4 $
1,712.2 Loans, net of deferred loan fees and costs 2,341.9 1,668.7
1,553.1 198.6 2,590.0 46.0 8,398.3 Less: allowance for credit
losses (30.7 ) (21.9 ) (17.9 ) (5.1 ) (34.0 ) (0.6 ) (110.2 ) Total
loans 2,311.2 1,646.8 1,535.2 193.5
2,556.0 45.4 8,288.1 Other assets acquired
through foreclosure, net 15.5 21.0 — — — 20.6 57.1 Goodwill and
other intangible assets, net — 25.9 — — — — 25.9 Other assets 34.8
64.2 6.2 15.3 22.9 373.8
517.2 Total assets $ 2,363.8 $ 1,762.9 $
1,543.6 $ 209.1 $ 2,578.9 $ 2,142.2 $
10,600.5
Liabilities: Deposits $ 2,178.0 $ 3,230.6 $
1,744.5 $ 584.0 $ 946.6 $ 247.3 $ 8,931.0 Other borrowings — — — —
— 390.3 390.3 Other liabilities 17.4 40.8 8.9
0.2 72.4 138.6 278.3 Total liabilities
2,195.4 3,271.4 1,753.4 584.2 1,019.0
776.2 9,599.6
Allocated equity: 250.8
209.0 70.9 126.8 232.9 110.5
1,000.9
Total liabilities and stockholders'
equity $ 2,446.2 $ 3,480.4 $ 1,824.3 $
711.0 $ 1,251.9 $ 886.7 $ 10,600.5
Excess funds provided (used) 82.4 1,717.5 280.7 501.9 (1,327.0 )
(1,255.5 ) — No. of offices 11 18 9 2 — — 40 No. of
full-time equivalent employees 215 295 198 29 99 295 1,131
Western Alliance Bancorporation and Subsidiaries
Operating Segment Results Unaudited
Central Southern Northern Business
Corporate Consolidated Arizona Nevada
California California Lines & Other
Company (dollars in millions)
At June 30, 2014
Assets: Cash, cash equivalents, and investment securities $
3.0 $ 7.0 $ 2.2 $ 0.2 $ — $ 1,973.6 $ 1,986.0 Loans, net of
deferred loan fees and costs 2,131.0 1,682.6 1,515.3 179.5 1,951.5
84.6 7,544.5 Less: allowance for credit losses (29.9 ) (23.6 )
(18.7 ) (5.1 ) (27.4 ) (1.2 ) (105.9 ) Total loans 2,101.1
1,659.0 1,496.6 174.4 1,924.1 83.4
7,438.6 Other assets acquired through foreclosure,
net 13.1 24.1 — — — 22.1 59.3 Goodwill and other intangible assets,
net — 26.5 — — — — 26.5 Other assets 42.2 62.7 10.8
15.4 21.1 361.0 513.2 Total
assets $ 2,159.4 $ 1,779.3 $ 1,509.6 $ 190.0
$ 1,945.2 $ 2,440.1 $ 10,023.6
Liabilities: Deposits $ 2,115.4 $ 3,187.8 $ 1,666.2 $ 394.9
$ 886.3 $ 218.9 $ 8,469.5 Other borrowings — — — — — 337.5 337.5
Other liabilities 20.9 46.8 4.7 0.1
24.7 161.7 258.9 Total liabilities 2,136.3
3,234.6 1,670.9 395.0 911.0
718.1 9,065.9
Allocated equity: 233.7
212.5 83.1 105.6 152.3 170.5
957.7
Total liabilities and stockholders' equity $
2,370.0 $ 3,447.1 $ 1,754.0 $ 500.6 $
1,063.3 $ 888.6 $ 10,023.6 Excess funds
provided (used) 210.6 1,667.8 244.4 310.6 (881.9 ) (1,551.5 ) —
No. of offices 10 18 9 2 — — 39 No. of full-time equivalent
employees 212 305 197 21 92 285 1,112
Western Alliance Bancorporation and Subsidiaries
Operating Segment Results Unaudited
Income Statements: Central Southern
Northern Business Corporate
Consolidated Arizona Nevada California
California Lines & Other Company
(in thousands)
Three Months Ended June 30, 2015: Net
interest income (expense) $ 32,091 $ 29,946 $ 24,070 $ 5,216 $
24,432 $ (7,037 ) $ 108,718 Provision for credit losses 826
(3,148 ) 634 513 1,251 (76 ) — Net
interest income (expense) after provision for credit losses 31,265
33,094 23,436 4,703 23,181 (6,961 ) 108,718 Non-interest income
1,008 2,370 850 271 321 (7,011 ) (2,191 ) Non-interest expense
(14,507 ) (14,918 ) (11,777 ) (2,142 ) (9,548 ) (8,317 ) (61,209 )
Income (loss) from continuing operations before income taxes 17,766
20,546 12,509 2,832 13,954 (22,289 ) 45,318 Income tax expense
(benefit) 6,970 7,191 5,261 1,191 5,233
(15,247 ) 10,599
Net income $ 10,796 $
13,355 $ 7,248 $ 1,641 $ 8,721 $ (7,042
) $ 34,719
Six Months Ended June 30, 2015: Net
interest income (expense) $ 61,076 $ 59,155 $ 46,560 $ 9,669 $
47,742 $ (12,376 ) $ 211,826 Provision for (recovery of) credit
losses 158 (2,799 ) 266 486 2,660 (71 )
700 Net interest income (expense) after provision for credit
losses 60,918 61,954 46,294 9,183 45,082 (12,305 ) 211,126
Non-interest income 1,947 4,653 1,515 322 1,037 (5,732 ) 3,742
Non-interest expense (29,268 ) (29,392 ) (23,398 ) (4,159 ) (18,826
) (10,199 ) (115,242 ) Income (loss) from continuing operations
before income taxes 33,597 37,215 24,411 5,346 27,293 (28,236 )
99,626 Income tax expense (benefit) 13,180 13,025
10,265 2,248 10,235 (24,236 ) 24,717
Net income $ 20,417 $ 24,190 $ 14,146 $
3,098 $ 17,058 $ (4,000 ) $ 74,909
Western Alliance Bancorporation and Subsidiaries
Operating Segment Results Unaudited
Income Statements:
Central Southern Northern Business
Corporate Consolidated Arizona Nevada
California California Lines & Other
Company (in thousands)
Three Months Ended June 30,
2014: Net interest income (expense) $ 29,211 $ 29,359 $ 22,502
$ 2,200 $ 16,226 $ (5,600 ) $ 93,898 Provision for credit losses 3
(2,011 ) (1,672 ) — 3,467 720 507
Net interest income (expense) after provision for credit
losses 29,208 31,370 24,174 2,200 12,759 (6,320 ) 93,391
Non-interest income 934 2,248 865 34 643 874 5,598 Non-interest
expense (12,793 ) (15,922 ) (12,410 ) (861 ) (6,640 ) (3,615 )
(52,241 ) Income (loss) from continuing operations before income
taxes 17,349 17,696 12,629 1,373 6,762 (9,061 ) 46,748 Income tax
expense (benefit) 6,805 6,194 5,310 577
2,536 (10,716 ) 10,706 Income from continuing
operations 10,544 11,502 7,319 796 4,226 1,655 36,042 Loss from
discontinued operations, net — — — — —
(504 ) (504 )
Net income $ 10,544 $ 11,502
$ 7,319 $ 796 $ 4,226 $ 1,151 $
35,538
Six Months Ended June 30, 2014: Net
interest income (expense) $ 55,819 $ 57,954 $ 43,181 $ 4,313 $
30,190 $ (6,782 ) $ 184,675 Provision for credit losses 1,561
(2,895 ) (1,017 ) — 5,637 721 4,007
Net interest income (expense) after provision for credit
losses 54,258 60,849 44,198 4,313 24,553 (7,503 ) 180,668
Non-interest income 1,710 4,384 2,015 65 725 1,268 10,167
Non-interest expense (26,053 ) (31,005 ) (24,358 ) (1,887 ) (13,148
) (5,273 ) (101,724 ) Income (loss) from continuing operations
before income taxes 29,915 34,228 21,855 2,491 12,130 (11,508 )
89,111 Income tax expense (benefit) 11,734 11,981
9,190 1,047 4,549 (17,171 ) 21,330
Income from continuing operations 18,181 22,247 12,665 1,444 7,581
5,663 67,781 Loss from discontinued operations, net — —
— — — (1,158 ) (1,158 )
Net
income $ 18,181 $ 22,247 $ 12,665 $ 1,444
$ 7,581 $ 4,505 $ 66,623
Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Unaudited
Pre-Tax, Pre-Provision Operating Earnings
by Quarter: Three Months Ended Jun 30, 2015
Mar 31, 2015 Dec 31, 2014 Sep 30, 2014 Jun
30, 2014 (in thousands) Total non-interest income $ (2,191 ) $
5,933 $ 8,417 $ 5,992 $ 5,598 Less: Gains (losses) on sales of
investment securities, net 55 589 373 181 (163 ) Unrealized
(losses) gains on assets and liabilities measured at fair value,
net (7,885 ) (309 ) 1,357 896 235 Loss on extinguishment of debt
(81 ) — — (502 ) —
Total operating
non-interest income 5,720 5,653 6,687 5,417 5,526 Plus: net
interest income 108,718 103,108 102,145 98,073
93,898
Net operating revenue (1) $ 114,438
$ 108,761 $ 108,832 $ 103,490 $ 99,424
Total non-interest expense $ 61,209 $ 54,033 $ 55,742
$ 49,778 $ 52,241 Less: Net (gain) loss on sales and valuations of
repossessed and other assets (1,218 ) (351 ) (1,102 ) (1,956 ) 184
Merger / restructure expense 7,842 159 — 15
26
Total operating non-interest expense (1) $
54,585 $ 54,225 $ 56,844 $ 51,719 $
52,031
Pre-tax,
pre-provision operating earnings (2) $ 59,853 $ 54,536
$ 51,988 $ 51,771 $ 47,393
Tangible Common Equity: Jun 30, 2015 Mar 31,
2015 Dec 31, 2014 Sep 30, 2014 Jun 30,
2014 (dollars and shares in thousands) Total stockholders'
equity $ 1,514,744 $ 1,051,330 $ 1,000,928 $ 1,003,122 $ 957,664
Less: goodwill and intangible assets 299,975 25,632
25,913 26,194 26,475
Total tangible
stockholders' equity 1,214,769 1,025,698 975,015 976,928
931,189 Less: preferred stock 70,500 70,500 70,500
141,000 141,000 Total tangible common equity
1,144,269 955,198 904,515 835,928 790,189 Plus: deferred tax -
attributed to intangible assets 6,515 903 1,006
1,138 1,138
Total tangible common equity,
net of tax $ 1,150,784 $ 956,101 $ 905,521
$ 837,066 $ 791,327 Total assets $ 13,470,103 $
11,251,943 $ 10,600,498 $ 10,288,824 $ 10,023,587 Less: goodwill
and intangible assets, net 299,975 25,632 25,913
26,194 26,475 Tangible assets 13,170,128
11,226,311 10,574,585 10,262,630 9,997,112 Plus: deferred tax -
attributed to intangible assets 6,515 903 1,006
1,138 1,138
Total tangible assets, net of
tax $ 13,176,643 $ 11,227,214 $ 10,575,591
$ 10,263,768 $ 9,998,250 Tangible common equity ratio
(3) 8.7 % 8.5 % 8.6 % 8.2 % 7.9 % Common shares outstanding 102,291
89,180 88,691 87,849 87,774 Tangible book value per share, net of
tax (4) $ 11.25 $ 10.72 $ 10.21 $ 9.53 $ 9.02
Western Alliance
Bancorporation and Subsidiaries Reconciliation of Non-GAAP
Financial Measures Unaudited Efficiency
Ratio by Quarter: Three Months Ended Jun 30, 2015
Mar 31, 2015 Dec 31, 2014 Sep 30, 2014 Jun
30, 2014 (in thousands) Total operating non-interest expense $
54,585 $ 54,225 $ 56,844 $ 51,719 $ 52,031 Divided by: Total net
interest income 108,718 103,108 102,145 98,073 93,898 Plus: Tax
equivalent interest adjustment 7,878 7,389 6,489 6,348 6,029
Operating non-interest income 5,720 5,653 6,687
5,417 5,526 $ 122,316 $ 116,150
$ 115,321 $ 109,838 $ 105,453
Efficiency
ratio - tax equivalent basis (5) 44.6 % 46.7 % 49.3 % 47.1 %
49.3 %
Allowance for Credit Losses, Adjusted for
Acquisition Accounting: Jun 30,
2015 Dec 31, 2014 Allowance for credit losses $
115,056 $ 110,216 Plus: remaining credit marks Acquired performing
loans 16,197 2,041 Purchased credit impaired loans 8,643
9,279 Adjusted allowance for credit losses 139,896 121,536
Gross loans held for investment and deferred fees, net
10,321,221 8,398,265 Plus: remaining credit marks Acquired
performing loans 16,197 2,041 Purchased credit impaired loans 8,643
9,279 Adjusted loans, net of deferred fees and costs
10,346,061 8,409,585 Allowance for credit losses to gross
loans 1.11 % 1.31 %
Allowance for credit losses to gross loans,
adjusted for acquisition accounting (6) 1.35 1.45
Western Alliance Bancorporation and
Subsidiaries Reconciliation of Non-GAAP Financial
Measures Unaudited Regulatory
Capital: Basel III June 30, 2015
(in thousands)
Common Equity Tier 1: Common equity $
1,444,244 Less: Accumulated other comprehensive income 15,348
Non-qualifying goodwill and intangibles 289,217 Disallowed deferred
tax asset 3,093 Unrealized gain on trust preferred securities 5,965
Common equity Tier 1 (regulatory) (7) (10) 1,130,621
Plus: Trust preferred securities 81,500 Preferred stock 70,500
Less: Disallowed deferred tax asset 4,640 Unrealized gain on trust
preferred securities 8,948
Tier 1 capital (8) (10) $
1,269,033
Divided by: estimated risk-weighted assets (regulatory
(8) (10) $ 12,439,928
Common equity Tier 1 ratio (8)
(10) 9.1 %
Total Capital: Tier 1 capital
(regulatory) (7) (10) $ 1,269,033 Plus: Subordinated debt
136,778 Qualifying allowance for credit losses 115,056 Other 2,124
Less: Tier 2 qualifying capital deductions —
Tier 2
capital $ 253,958
Total capital 1,522,991
Tier 1 Capital: Classified assets $ 230,959 Divided by:
Common equity Tier 1 (regulatory) (7) (10) 1,130,621 Plus:
Allowance for credit losses 115,056 Total Common equity Tier
1 plus allowance for credit losses $ 1,245,677
Classified
assets to common equity Tier 1 plus allowance (9) (10) 19 %
(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
these 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) We believe this non-GAAP ratio is a
useful metric in understanding the Company's total allowance for
credit losses, adjusted for acquisition accounting, as under U.S.
GAAP, a company's allowance for credit losses is not carried over
in an acquisition, rather these loans are shown as being purchased
at a discount that factors in expected future credit losses. (7)
Under the current guidelines of the Federal Reserve and the Federal
Deposit Insurance Corporation, common equity Tier 1 capital
consists of common stock, retained earnings, and minority interests
in certain subsidiaries, less most other intangible assets. (8)
Common equity Tier 1 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 the risk categories
defined under new capital guidelines. The aggregated dollar amount
in each category is then multiplied by the risk weighting assigned
to that category. The resulting weighted values from each category
are added together and this sum is the risk-weighted assets total
that, as adjusted, comprises the denominator (risk-weighted assets)
to determine the common equity Tier 1 ratio. Common equity Tier 1
is divided by the risk-weighted assets to determine the common
equity Tier 1 ratio. We believe this non-GAAP ratio provides an
important metric with which to analyze and evaluate financial
condition and capital strength. (9) We believe this non-GAAP ratio
provides an important regulatory metric to analyze asset quality.
(10) Current quarter is preliminary until Call Reports are filed.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150727005430/en/
Western Alliance BancorporationDale Gibbons, 602-952-5476
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