Western Alliance Bancorporation (NYSE: WAL) (the "Company")
announced today its financial results for the second quarter
2016.
Second Quarter 2016 Highlights:
- Net income of $61.6 million, compared
to $61.3 million for the first quarter 2016, and $39.5 million for
the second quarter 2015
- Earnings per share of $0.60, inclusive
of $0.02 in acquisition / restructure expense, compared to $0.60
per share in the first quarter 2016, and $0.44 per share, inclusive
of $0.06 in acquisition / restructure expense, in the second
quarter 2015
- Total loans of $12.88 billion, up $1.64
billion from March 31, 2016 (includes increase of $1.26
billion at quarter end from the hotel franchise finance loan
portfolio purchase), and up $2.52 billion from June 30,
2015
- Total deposits of $14.20 billion, up
$1.12 billion from March 31, 2016, and up $2.79 billion from
June 30, 2015
- Net interest margin of 4.63%, compared
to 4.58% in the first quarter 2016, and 4.41% in the second quarter
2015
- Net operating revenue of $172.2 million
constituted quarter-over-quarter growth of $14.4 million, and
year-over-year growth of 50.7%, or $57.9 million. Operating
non-interest expense of $77.8 million resulted in
quarter-over-quarter growth of $2.0 million, and year-over-year
growth of 42.5%, or $23.2 million1
- Operating pre-provision net revenue of
$94.5 million, up 15.1% from $82.1 million in the first quarter
2016, and up 58.2% from $59.7 million in the second quarter
20151
- Efficiency ratio of 43.0%, compared to
45.6% in the first quarter 2016, and 44.7% in the second quarter
20151
- Nonperforming assets (nonaccrual loans
and repossessed assets) decreased to 0.54% of total assets, from
0.57% at March 31, 2016, and 0.88% at June 30, 2015
- Annualized net (recoveries) charge-offs
to average loans outstanding of (0.01)%, compared to 0.08% in the
first quarter 2016, and compared to (0.13)% in the second quarter
2015
- Qualifying debt of $382 million, an
increase of $172 million from March 31, 2016 due to issuance
of long-term subordinated debt
- Tangible common equity ratio of 9.1%,
compared to 9.1% at March 31, 2016, and 8.7% at June 30,
2015 1
- Stockholders' equity of $1.80 billion,
an increase of $136 million from March 31, 2016 and an
increase of $282 million from June 30, 2015 as a result of net
income and the at-the-market ("ATM") common stock issuances during
the quarter
- Tangible book value per share, net of
tax, of $14.25, an increase of 8.3% from $13.16 at March 31,
2016, and an increase of 26.7% from $11.25 at June 30, 2015
1
1 See Reconciliation of Non-GAAP Financial Measures.
Financial Performance
“Western Alliance delivered another quarter of exceptional
results,” commented Robert Sarver, Chairman and Chief Executive
Officer of Western Alliance Bancorporation. “For the second
quarter in a row, we generated over $1 billion in deposit growth,
more than half of which is non-interest bearing. This liquidity
funded strong organic loan growth during the period, as well as the
acquisition of the hotel franchise loan portfolio from GE. This
balance sheet momentum drove record revenue for the quarter and
improvement in our operating efficiency to 43%, which is among the
best in the industry. Further, our operating earnings per share was
up 24% to $0.62. Importantly, we maintained strong asset quality
during the quarter with NPAs falling to 0.54% of assets, while loan
recoveries exceeded loan losses."
“In pursuing our mission to continue to create shareholder
value, we augmented the capital generation from our earnings
performance by completing our at-the-market stock offering, which
pushed our tangible book value per share to $14.25, up 8% from last
quarter and up 27% from a year ago,” Sarver concluded.
Hotel Franchise Finance Asset Purchase
Results include the purchase of the GE domestic select-service
hotel franchise finance loan portfolio on April 20, 2016, which
increased total loans by $1.28 billion as of the acquisition date.
The Company also assumed certain related assets and liabilities as
part of the asset purchase. The results of operations from the
hotel franchise finance loan portfolio are included in the
Company's second quarter 2016 results beginning on April 20, 2016
and are reported in a newly created operating segment called Hotel
Franchise Finance ("HFF"). Pursuant to accounting guidance,
acquired assets and liabilities are recorded at estimated fair
value as of the acquisition date. The estimated fair values of the
purchased loans are preliminary and are subject to measurement
period adjustments.
Income Statement
Net interest income was $163.7 million in the second quarter
2016, an increase of $18.0 million from $145.7 million in the first
quarter 2016, and an increase of $55.0 million, or 50.6%, compared
to the second quarter 2015. The Company’s net interest margin
increased in the second quarter 2016 to 4.63%, compared to 4.58% in
the first quarter 2016, and increased from 4.41% in the second
quarter 2015. The increase in net interest margin for the current
quarter compared to the first quarter 2016 primarily relates to
additional income resulting from HFF. The increase in net interest
margin in the current quarter from the second quarter 2015 also
relates to additional income resulting from both the acquisition of
Bridge and HFF. Net interest income in the second quarter 2016
includes $8.2 million of total accretion income from acquired
loans, compared to $5.3 million in the first quarter 2016, and $3.3
million in the second quarter 2015.
Operating non-interest income was $8.6 million for the second
quarter 2016, compared to $12.1 million for the first quarter 2016,
and $5.6 million for the second quarter 2015.1 This decrease from
the first quarter 2016 is primarily the result of a non-recurring
gain on sale of loans recognized during the first quarter 2016.
Growth in the second quarter 2016 compared to the second quarter
2015 is attributable to Bridge operations of $3.5 million, which
generated deposit service charges, foreign currency income, and SBA
loan income.
Net operating revenue was $172.2 million for the second quarter
2016, an increase of $14.4 million, or 9.1%, compared to $157.8
million for the first quarter 2016, and an increase of $57.9
million, or 50.7%, compared to $114.3 million for the second
quarter 2015.1
Operating non-interest expense was $77.8 million for the second
quarter 2016, compared to $75.8 million for the first quarter 2016,
and $54.6 million for the second quarter 2015.1 The primary driver
of the increase in operating non-interest expense in the second
quarter 2016 compared to the first quarter 2016 is data processing
costs due to HFF loan servicing and other processing costs to
support the growing customer base. The increase year-over-year
relates to $14.0 million in new expenses from the acquired Bridge
operations as well as increased headcount and operating costs to
support the growth in the business. The Company’s operating
efficiency ratio1 on a tax equivalent basis was 43.0% for the
second quarter 2016, compared to 45.6% for the first quarter 2016,
and 44.7% for the second quarter 2015.
The Company views its operating pre-provision net revenue
("PPNR") 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 2016, the Company’s
operating PPNR was $94.5 million, up 15.1% from $82.1 million in
the first quarter 2016, and up 58.2% from $59.7 million in the
second quarter 2015.1 The non-operating items1 for the second
quarter 2016 consist primarily of acquisition / restructure
expenses of $3.7 million related to HFF and system termination
costs.
The Company had 1,515 full-time equivalent employees and 48
offices at June 30, 2016, compared to 1,411 employees and 48
offices at June 30, 2015.
1 See Reconciliation of Non-GAAP Financial Measures.
Balance Sheet
Gross loans totaled $12.88 billion at June 30, 2016, an
increase of $1.64 billion from $11.24 billion at March 31,
2016, and an increase of $2.52 billion from $10.36 billion at
June 30, 2015. The year-over-year increase is comprised of
$1.26 billion from HFF and $1.26 billion from organic loan growth.
Consistent with GAAP, the allowance for credit losses is not
carried over in an acquisition because acquired loans are recorded
at fair value, which discounts the loans based on expected future
cash flows. At June 30, 2016, the allowance for credit losses
was 0.95% of total loans, compared to 1.06% at March 31, 2016,
and 1.11% at June 30, 2015. The allowance for credit losses as
a percent of total loans, adjusted to include credit discounts on
acquired loans, was 1.42% at June 30, 2016, compared to 1.21%
at March 31, 2016, and 1.35% at June 30, 2015.
Deposits totaled $14.20 billion at June 30, 2016, an
increase of $1.12 billion from $13.08 billion at March 31,
2016, and an increase of $2.79 billion from $11.41 billion at
June 30, 2015. The increase from both the prior quarter and
from June 30, 2015 is the result of organic deposit growth.
Non-interest bearing deposits were $5.28 billion at June 30,
2016, compared to $4.64 billion at March 31, 2016, and $3.92
billion at June 30, 2015. Non-interest bearing deposits
comprised 37.1% of total deposits at June 30, 2016, compared
to 35.4% at March 31, 2016, and 34.4% at June 30, 2015.
The proportion of savings and money market balances to total
deposits decreased to 42.3% at June 30, 2016 from 43.2% at
March 31, 2016, and increased from 41.5% at June 30,
2015. Certificates of deposit as a percentage of total deposits
were 11.6% at June 30, 2016, compared to 13.1% at
March 31, 2016, and 15.3% at June 30, 2015. The Company’s
ratio of loans to deposits was 90.7% at June 30, 2016,
compared to 85.9% at March 31, 2016, and 90.8% at
June 30, 2015.
Borrowings decreased to zero at June 30, 2016 from $0.2
million at March 31, 2016 and from $70 million at
June 30, 2015. The decrease from the prior quarter relates to
a reduction in federal funds purchased. The decrease from the prior
year is due primarily to the payoff of the 10% Senior Notes of $58
million and a reduction in FHLB advances of $11 million. Qualifying
debt increased to $382 million at June 30, 2016 from $210
million at March 31, 2016, and from $208 million at
June 30, 2015. The quarter-over-quarter and year-over-year
increase is primarily due to the issuance of $175 million of
subordinated debt.
Stockholders’ equity at June 30, 2016 was $1.80 billion,
compared to $1.66 billion at March 31, 2016, and $1.51 billion
at June 30, 2015. The increase from the prior quarter relates
primarily to the ATM common stock issuances and net income for the
quarter. During the quarter ended June 30, 2016, we raised $55.9
million in net proceeds from the issuance of 1.5 million shares of
common stock under the ATM program, which is now completed.
At June 30, 2016, tangible common equity, net of tax, was
9.1% of tangible assets1 and total capital was 12.9% of
risk-weighted assets. The Company’s tangible book value per share1
was $14.25 at June 30, 2016, up 26.7% from June 30,
2015.
Total assets increased 9.7% to $16.73 billion at June 30,
2016 from $15.25 billion at March 31, 2016, and increased
24.2% from $13.47 billion at June 30, 2015. The increase in
total assets from June 30, 2015 relates to HFF, which
increased total loans by $1.26 billion, and organic loan growth
during the year of $1.26 billion.
Asset Quality
The provision for credit losses was $2.5 million for both the
second quarter 2016 and the first quarter 2016, and was zero for
the second quarter 2015. Net (recoveries) charge-offs in the second
quarter 2016 were $(0.4) million, or (0.01)%, of average loans
(annualized), compared to $2.3 million, or 0.08%, in the first
quarter 2016, and compared to $(3.0) million, or (0.13)%, for the
second quarter 2015.
Nonaccrual loans increased $5.9 million to $39.7 million during
the quarter and decreased $19.7 million from June 30, 2015.
Loans past due 90 days and still accruing interest totaled $7.0
million at June 30, 2016, compared to $4.5 million at
March 31, 2016, and $8.3 million at June 30, 2015. Loans
past due 30-89 days and still accruing interest totaled $3.5
million at quarter end, a decrease from $9.2 million at
March 31, 2016, and a decrease from $4.0 million at
June 30, 2015.
Repossessed assets totaled $49.8 million at quarter end, a
decrease of $3.0 million from $52.8 million at March 31, 2016,
and a decrease of $9.5 million from $59.3 million at June 30,
2015. Adversely graded loans totaled $363.6 million at quarter end,
an increase of $51.6 million from $312.0 million at March 31,
2016, and an increase of $11.4 million from $352.2 million at
June 30, 2015.
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 13.3% at June 30, 2016, from 15.1%
at December 31, 2015, and from 16.7% at June 30,
2015.1
1 See Reconciliation of Non-GAAP Financial Measures.
Segment Highlights
The Company's reportable segments are aggregated primarily based
on geographic location, services offered, and markets served. The
Company's regional segments, which include Arizona, Nevada,
Southern California, and Northern California, provide full service
banking and related services to their respective markets. The
operations from the regional segments correspond to the following
banking divisions: Alliance Bank of Arizona in Arizona, Bank of
Nevada and First Independent Bank in Nevada, Torrey Pines Bank in
Southern California, and Bridge Bank in Northern California.
The Company's National Business Lines ("NBL") segments provide
specialized banking services to niche markets. With the purchase of
the HFF loan portfolio, management has created a new HFF operating
segment, which is now included as one of the Company's NBL
reportable segments. The Company's other NBL reportable segments
include Homeowner Associations ("HOA") Services, Public &
Nonprofit Finance, Technology & Innovation, and Other NBLs.
These NBLs are managed centrally and are broader in geographic
scope than our other segments, though still predominately located
within our core market areas. The HOA Services NBL corresponds to
the Alliance Association Bank division. The newly created HFF NBL
includes the hotel franchise loan portfolio purchased from GE on
April 20, 2016. Public & Nonprofit Finance consists of the
operations of Public and Nonprofit Finance. The Technology &
Innovation NBL includes the operations of Equity Fund Resources,
the Life Sciences Group, the Renewable Resource Group, and
Technology Finance. The Other NBLs segment consists of the
operations of Corporate Finance, Mortgage Warehouse Lending, and
Resort Finance.
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 operating segments include loan and deposit growth, asset
quality, and pre-tax income.
The regional segments reported gross loan balances of $7.57
billion at June 30, 2016, an increase of $93 million during
the quarter, and an increase of $633 million during the last 12
months. Arizona had the largest growth in loans during the quarter,
$82 million, which was offset by decreases of $9 million in the
Northern California segment. The growth in loans during the last 12
months was driven by increases of $465 million in Arizona and $141
million in Southern California. Total deposits for the regional
segments were $11.34 billion, an increase of $867 million during
the quarter, and an increase of $2.16 billion during the last 12
months. Arizona and Southern California generated increased
deposits during the quarter of $618 million and $348 million,
respectively, which was partially offset by a decrease of $92
million in Northern California. With the exception of Northern
California, the regional segments each generated increased deposits
during the last 12 months, with Arizona contributing the largest
increase of $1.43 billion, followed by Southern California and
Nevada with increases of $457 million and $306 million,
respectively. Pre-tax income for the regional segments was $73.8
million for the three months ended June 30, 2016, an increase
of $7.7 million from the three months ended March 31, 2016,
and an increase of $20.2 million from the three months ended
June 30, 2015. Arizona, Nevada, and Southern California had
increases in pre-tax income of $4.9 million, $1.7 million, and $1.7
million, respectively, compared to the three months ended
March 31, 2016. This increase was offset by a decrease of $0.6
million in Northern California. All regional segments had increases
in pre-tax income from the three months ended June 30, 2015,
with Arizona and Northern California contributing the largest
increases of $8.2 million and $6.9 million, respectively. For the
six months ended June 30, 2016, the regional segments reported
total pre-tax income of $139.8 million, an increase of $39.3
million compared to the six months ended June 30, 2015. All
regional segments had increases in pre-tax income with Northern
California and Arizona contributing the largest increases of $15.0
million and $13.2 million, respectively.
The NBL segments reported gross loan balances of $5.28 billion
at June 30, 2016, an increase of $1.54 billion during the
quarter, and an increase of $1.90 billion during the last 12
months. The increase in loans for the NBL segments compared to the
prior quarter and to the same quarter in the prior year relates
primarily to the HFF segment, which increased loans by $1.26
billion at quarter end. The Other NBLs and Technology &
Innovation segments also generated growth in loans during the
quarter of $161 million and $98 million, respectively. During the
last 12 months, other increases were driven by the Technology &
Innovation, Public & Nonprofit, and Other NBL segments, which
increased loans by $332 million, $187 million, and $93 million,
respectively. Total deposits for the NBL segments were $2.67
billion, an increase of $343 million during the quarter, and an
increase of $729 million during the last 12 months. The HOA
Services and Technology & Innovation segments increased
deposits by $183 million and $159 million, respectively, during the
quarter. The increase of $729 million during the last 12 months is
the result of growth in the HOA Services and Technology &
Innovation segments of $548 million and $181 million, respectively.
Pre-tax income for the NBL segments was $35.0 million for the three
months ended June 30, 2016, an increase of $8.5 million from
the three months ended March 31, 2016, and an increase of
$21.1 million from the three months ended June 30, 2015. HFF
and HOA services had the largest increase in pre-tax income of $9.5
million and $1.1 million, respectively, compared to the three
months ended March 31, 2016, which was partially offset by
decreases of $1.3 million and $0.6 million in the Technology &
Innovation and Public & Nonprofit segments. The Technology
& Innovation and HFF segments had the largest increases in
pre-tax income of $10.9 million and $9.5 million, respectively,
from the three months ended June 30, 2015. Pre-tax income for
the NBLs for the six months ended June 30, 2016 totaled $61.5
million. The largest increases in pre-tax income compared to the
six months ended June 30, 2015 were in the HFF and Technology &
Innovation segments, which increased $23.1 million and $9.5
million, respectively, as a result of the HFF purchase and the
Bridge Bank acquisition.
Conference Call and Webcast
Western Alliance Bancorporation will host a conference call and
live webcast to discuss its second quarter 2016 financial results
at 12:00 p.m. ET on Friday, July 22, 2016. Participants may
access the call by dialing 1-888-317-6003 and using passcode
1639792 or via live audio webcast using the website link
http://services.choruscall.com/links/wal160722.
The webcast is also available via the Company’s website at
www.westernalliancebancorporation.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 22nd through 9:00 a.m. ET August
22nd by dialing 1-877-344-7529 passcode: 10089319.
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 them 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.
Early Adoption of Accounting Standards
During the first quarter 2016, the Company elected to early
adopt Accounting Standards Update ("ASU") 2016-09, Improvements to
Employee Share-Based Payment Accounting. The amendments in this ASU
require that all excess tax benefits and tax deficiencies be
recognized as income tax expense or benefit in the income statement
rather than as additional paid-in capital as required under
previous generally accepted accounting principles. Due to the early
adoption of ASU 2016-09, during the first quarter 2016, the Company
recognized a $3.9 million tax benefit as a reduction of income tax
expense (that previously would have been reflected as additional
paid-in capital).
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
expectations with regard to our business, financial and operating
results, and future economic performance, including our recent
domestic select-service hotel franchise finance loan portfolio
acquisition. 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,
2015 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; additional regulatory requirements
resulting from our continued growth; 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 $16 billion in assets, top-performing Western
Alliance Bancorporation (NYSE:WAL) is one of the fastest-growing
bank holding companies in the U.S. and recognized as #10 on the
Forbes 2016 “Best Banks in America” list. Its primary subsidiary,
Western Alliance Bank, is the go-to bank for business and succeeds
with local teams of experienced bankers who deliver superior
service and a full spectrum of deposit, lending, treasury
management, international banking and online banking products and
services. Western Alliance Bank operates full-service banking
divisions: Alliance Bank of Arizona, Bank of Nevada, Bridge Bank,
First Independent Bank and Torrey Pines Bank. The bank also serves
business customers through a robust national platform of
specialized financial services including Corporate Finance, Equity
Fund Resources, Hotel Franchise Finance, Life Sciences Group,
Mortgage Warehouse Lending, Public and Nonprofit Finance, Renewable
Resource Group, Resort Finance, Technology Finance and Alliance
Association Bank. For more information, visit
westernalliancebancorporation.com.
Western Alliance Bancorporation and Subsidiaries
Summary Consolidated Financial Data Unaudited
Selected Balance Sheet Data: June 30,
2016 2015 Change % (in millions) Total
assets $ 16,728.7 $ 13,470.1 24.2
%
Total loans, net of deferred fees 12,877.8 10,360.7 24.3 Securities
and money market investments 2,262.6 1,531.9 47.7 Total deposits
14,201.3 11,406.7 24.5 Borrowings — 69.5 (100.0 ) Qualifying debt
382.1 208.4 83.3 Stockholders' equity 1,796.2 1,514.7 18.6 Tangible
common equity, net of tax (1) 1,497.5 1,150.8 30.1
Selected Income Statement Data: For the Three Months
Ended June 30, For the Six Months Ended June 30,
2016 2015 Change % 2016
2015 Change % (in thousands, except per share
data) (in thousands, except per share data) Interest income $
174,089 $ 116,618 49.3
%
$ 328,345 $ 227,580 44.3
%
Interest expense 10,403 7,900 31.7 18,948
15,754 20.3 Net interest income 163,686 108,718 50.6 309,397
211,826 46.1 Provision for credit losses 2,500 — NM
5,000 700 NM Net interest income after provision for
credit losses 161,186 108,718 48.3 304,397 211,126 44.2
Non-interest income 8,559 5,545 54.4 21,692 11,787 84.0
Non-interest expense 81,804 61,209 33.6 157,297
115,242 36.5 Income before income taxes 87,941 53,054
65.8 168,792 107,671 56.8 Income tax expense 26,327 13,579
93.9 45,846 27,813 64.8 Net income $ 61,614
$ 39,475 56.1 $ 122,946 $ 79,858 54.0
Diluted earnings per share available to common stockholders $ 0.60
$ 0.44 36.4 $ 1.19 $ 0.90 32.2
(1) See Reconciliation of Non-GAAP Financial
Measures. NM: Changes +/- 100% are not meaningful.
Western Alliance Bancorporation and Subsidiaries Summary
Consolidated Financial Data Unaudited
Common Share Data:
At or for the Three Months Ended June 30, For the Six
Months Ended June 30, 2016 2015 Change
% 2016 2015 Change % Diluted
earnings per share available to common stockholders $ 0.60 $ 0.44
36.4 % $ 1.19 $ 0.90 32.2 % Book value per common share 17.09 14.12
21.0 Tangible book value per share, net of tax (1) 14.25 11.25 26.7
Average shares outstanding (in
thousands):
Basic 102,688 88,177 16.5 102,294 88,059 16.2 % Diluted 103,472
88,682 16.7 103,007 88,567 16.3 Common shares outstanding 105,084
102,291 2.7
Selected Performance Ratios:
Return on average assets (2) 1.55 % 1.41 % 9.9 % 1.62 % 1.46 % 11.0
% Return on average tangible common equity (1, 2) 17.36 16.03 8.3
17.88 16.64 7.5 Net interest margin (2) 4.63 4.41 5.0 4.60 4.38 5.0
Net interest spread 4.46 4.28 4.2 4.43 4.25 4.2
Efficiency ratio - tax equivalent basis
(1)
42.99 44.68 (3.8 ) 44.23 45.66 (3.1 ) Loan to deposit ratio 90.68
90.83 (0.2 )
Asset Quality Ratios: Net (recoveries)
charge-offs to average loans outstanding (2) (0.01 )% (0.13 )%
(92.3 )% 0.03 % (0.10 )% NM Nonaccrual loans to gross loans 0.31
0.58 (46.6 ) Nonaccrual loans and repossessed assets to total
assets 0.54 0.88 (38.6 ) Loans past due 90 days and still accruing
to total loans 0.05 0.08 (37.5 ) Allowance for credit losses to
gross loans 0.95 1.11 (14.4 ) Allowance for credit losses to
nonaccrual loans 307.68 193.62 58.9
Capital Ratios
(1): Jun 30, 2016 Dec 31, 2015 Jun 30,
2015 Tangible common equity 9.1 % 9.1 % 8.7 % Common
Equity Tier 1 (3) 9.6 9.7 9.1 Tier 1 Leverage ratio (3) 9.8 9.8
10.0 Tier 1 Capital (3) 10.0 10.2 10.2 Total Capital (3) 12.9 12.2
12.2 (1) See Reconciliation of Non-GAAP Financial
Measures. (2)
Annualized for the three and six months
ended June 30, 2016 and 2015 based on a 30 day month and a 360 day
year.
(3) Capital ratios for June 30, 2016 are preliminary until the Call
Report is filed. NM Changes +/- 100% are not meaningful.
Western
Alliance Bancorporation and Subsidiaries Condensed
Consolidated Income Statements Unaudited Three Months
Ended June 30, Six Months Ended June 30, 2016
2015 2016 2015 (dollars in thousands, except
per share data) Interest income: Loans $ 160,015 $ 105,468 $
299,801 $ 205,859 Investment securities 12,871 9,276 26,379 19,064
Other 1,203 1,874 2,165 2,657
Total
interest income 174,089 116,618 328,345
227,580 Interest expense: Deposits 7,678 5,362 13,921 10,509
Qualifying debt 2,514 480 4,698 920 Borrowings 211 2,058
329 4,325
Total interest expense 10,403
7,900 18,948 15,754
Net interest
income 163,686 108,718 309,397 211,826 Provision for credit
losses 2,500 — 5,000 700
Net
interest income after provision for credit losses 161,186
108,718 304,397 211,126 Non-interest
income: Service charges 4,506 3,128 8,972 6,017 Lending related
income and gains (losses) on sale of loans, net 253 118 4,194 319
Card income 1,078 899 2,091 1,712 Gains (losses) on sales of
investment securities, net — 55 1,001 644 Bank owned life insurance
1,029 772 1,959 1,749 Other 1,693 573 3,475
1,346
Total non-interest income 8,559 5,545
21,692 11,787 Non-interest expenses: Salaries
and employee benefits 44,711 32,406 89,566 64,947 Occupancy 7,246
4,949 13,503 9,762 Data processing 5,868 2,683 10,429 5,809 Legal,
professional and directors' fees 5,747 4,611 11,319 8,606 Insurance
2,963 2,274 6,286 4,364 Marketing 1,097 463 1,754 840 Loan and
repossessed asset expenses 832 1,284 1,734 2,374 Card expense 824
613 1,711 1,087 Intangible amortization 697 281 1,394 562 Net loss
(gain) on sales and valuations of repossessed and other assets 357
(1,218 ) 55 (1,569 ) Acquisition / restructure expense 3,662 7,842
3,662 8,001 Other 7,800 5,021 15,884 10,459
Total non-interest expense 81,804 61,209
157,297 115,242 Income before income taxes
87,941 53,054 168,792 107,671 Income tax expense 26,327
13,579 45,846 27,813
Net income $
61,614 $ 39,475 $ 122,946 $ 79,858
Preferred stock dividends — 247 — 423
Net income available to common stockholders $ 61,614
$ 39,228 $ 122,946 $ 79,435
Earnings
per share available to common stockholders: Diluted shares
103,472 88,682 103,007 88,567 Diluted earnings per share $ 0.60 $
0.44 $ 1.19 $ 0.90
Western Alliance Bancorporation and
Subsidiaries Five Quarter Condensed Consolidated Income
Statements Unaudited Three Months Ended Jun
30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30,
2015 Jun 30, 2015 (in thousands, except per share data)
Interest income: Loans $ 160,015 $ 139,786 $ 137,471 $ 133,087 $
105,468 Investment securities 12,871 13,508 12,454 12,039 9,276
Other 1,203 962 1,406 1,107 1,874
Total interest income 174,089 154,256
151,331 146,233 116,618 Interest expense:
Deposits 7,678 6,243 5,737 5,550 5,362 Qualifying debt 2,514 2,184
2,107 2,008 480 Borrowings 211 118 144 1,268
2,058
Total interest expense 10,403
8,545 7,988 8,826 7,900
Net interest
income 163,686 145,711 143,343 137,407 108,718 Provision for
credit losses 2,500 2,500 2,500 — —
Net interest income after provision for credit losses
161,186 143,211 140,843 137,407 108,718
Non-interest income: Service charges 4,506 4,466 4,295 4,327
3,128 Lending related income and gains (losses) on sale of loans,
net 253 3,941 1,097 532 118 Card income 1,078 1,013 1,013 954 899
Gains (losses) on sales of investment securities, net — 1,001 33
(62 ) 55 Bank owned life insurance 1,029 930 1,166 984 772 Other
1,693 1,782 1,875 1,767 573
Total non-interest income 8,559 13,133 9,479
8,502 5,545 Non-interest expenses: Salaries
and employee benefits 44,711 44,855 41,221 43,660 32,406 Occupancy
7,246 6,257 6,503 5,915 4,949 Data processing 5,868 4,561 4,629
4,338 2,683 Legal, professional, and directors' fees 5,747 5,572
5,890 4,052 4,611 Insurance 2,963 3,323 3,264 3,375 2,274 Marketing
1,097 657 1,298 747 463 Loan and repossessed asset expenses 832 902
904 1,099 1,284 Card expense 824 887 920 757 613 Intangible
amortization 697 697 704 704 281 Net loss (gain) on sales and
valuations of repossessed and other assets 357 (302 ) (397 ) (104 )
(1,218 ) Acquisition / restructure expense 3,662 — — 835 7,842
Other 7,800 8,084 7,512 7,538 5,021
Total non-interest expense 81,804 75,493
72,448 72,916 61,209 Income before
income taxes 87,941 80,851 77,874 72,993 53,054 Income tax expense
26,327 19,519 19,348 17,133 13,579
Net income $ 61,614 $ 61,332 $ 58,526
$ 55,860 $ 39,475 Preferred stock dividends —
— 151 176 247
Net income
available to common stockholders $ 61,614 $ 61,332
$ 58,375 $ 55,684 $ 39,228
Earnings per share available to common stockholders: Diluted
shares 103,472 102,538 102,006 101,520 88,682 Diluted earnings per
share $ 0.60 $ 0.60 $ 0.57 $ 0.55 $ 0.44
Western
Alliance Bancorporation and Subsidiaries Five Quarter
Condensed Consolidated Balance Sheets Unaudited Jun
30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30,
2015 Jun 30, 2015
(in millions)
Assets: Cash and due from banks $ 696.2 $ 1,031.0 $ 224.6 $
325.4 $ 700.2 Securities purchased under agreement to resell —
— — — 58.1
Cash and cash
equivalents 696.2 1,031.0 224.6 325.4 758.3 Securities and
money market investments 2,262.6 2,099.9 2,042.2 1,993.6 1,531.9
Loans held for sale 22.3 23.6 23.8 24.4 39.4 Loans held for
investment: Commercial 5,577.6 5,378.5 5,262.8 4,960.4 4,759.7
Commercial real estate - non-owner occupied 3,601.3 2,291.0 2,283.5
2,210.7 2,195.0 Commercial real estate - owner occupied 2,008.3
2,032.3 2,083.3 2,123.6 2,019.3 Construction and land development
1,333.5 1,179.9 1,133.4 1,121.9 1,002.7 Residential real estate
293.0 302.4 323.0 320.7 320.6 Consumer 41.8 33.7 26.9
26.6 24.0
Gross loans and deferred fees,
net 12,855.5 11,217.8 11,112.9 10,763.9 10,321.3 Allowance for
credit losses (122.1 ) (119.2 ) (119.1 ) (117.1 ) (115.1 )
Loans, net 12,733.4 11,098.6 10,993.8
10,646.8 10,206.2 Premises and equipment, net 120.5
119.8 118.5 121.7 116.0 Other assets acquired through foreclosure,
net 49.8 52.8 43.9 57.7 59.3 Bank owned life insurance 164.3 163.4
162.5 161.7 161.1 Goodwill and other intangibles, net 304.3 304.0
305.4 305.8 300.0 Other assets 375.3 354.9 360.4
318.4 297.9
Total assets $ 16,728.7
$ 15,248.0 $ 14,275.1 $ 13,955.5 $
13,470.1
Liabilities and Stockholders' Equity:
Liabilities: Deposits Non-interest bearing demand deposits $
5,275.1 $ 4,635.2 $ 4,094.0 $ 4,077.5 $ 3,924.4 Interest bearing:
Demand 1,278.1 1,088.2 1,028.1 1,024.5 1,001.3 Savings and money
market 6,005.8 5,650.9 5,296.9 4,672.6 4,733.9 Time certificates
1,642.3 1,707.4 1,611.6 1,835.8 1,747.1
Total deposits 14,201.3 13,081.7 12,030.6 11,610.4
11,406.7 Customer repurchase agreements 38.5 36.1
38.2 53.2 42.2
Total customer funds
14,239.8 13,117.8 12,068.8 11,663.6 11,448.9 Securities sold short
— — — — 57.6 Borrowings — 0.2 150.0 300.0 69.5 Qualifying debt
382.1 210.4 210.3 206.8 208.4 Accrued interest payable and other
liabilities 310.6 259.4 254.5 201.4
171.0
Total liabilities 14,932.5 13,587.8
12,683.6 12,371.8 11,955.4
Stockholders' Equity: Preferred stock — — — 70.5 70.5 Common stock
and additional paid-in capital 1,364.0 1,302.9 1,306.6 1,273.7
1,269.0 Retained earnings 385.6 324.0 262.6 204.2 148.5 Accumulated
other comprehensive income 46.6 33.3 22.3 35.3
26.7
Total stockholders' equity 1,796.2
1,660.2 1,591.5 1,583.7 1,514.7
Total liabilities and stockholders' equity $ 16,728.7
$ 15,248.0 $ 14,275.1 $ 13,955.5 $ 13,470.1
Western Alliance Bancorporation and
Subsidiaries Changes in the Allowance For Credit Losses
Unaudited Three Months Ended Jun 30, 2016
Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun
30, 2015 (in thousands) Balance, beginning of period $
119,227 $ 119,068 $ 117,072 $ 115,056 $ 112,098 Provision for
credit losses 2,500 2,500 2,500 — — Recoveries of loans previously
charged-off: Commercial and industrial 804 1,576 1,009 1,147 681
Commercial real estate - non-owner occupied 343 3,595 482 968 335
Commercial real estate - owner occupied 427 70 135 433 1,403
Construction and land development 58 95 13 329 1,373 Residential
real estate 153 257 232 232 1,184 Consumer 43 67 115
24 24 Total recoveries 1,828 5,660 1,986 3,133
5,000 Loans charged-off: Commercial and industrial 1,161 7,491
2,277 1,109 1,771 Commercial real estate - non-owner occupied — — —
— — Commercial real estate - owner occupied 244 410 — — —
Construction and land development — — — — — Residential real estate
— 26 194 8 218 Consumer 46 74 19 — 53
Total loans charged-off 1,451 8,001 2,490 1,117 2,042 Net
(recoveries) charge-offs (377 ) 2,341 504 (2,016 )
(2,958 ) Balance, end of period $ 122,104 $ 119,227 $
119,068 $ 117,072 $ 115,056 Net
(recoveries) charge-offs to average loans - annualized (0.01 )%
0.08 % 0.02 % (0.08 )% (0.13 )% Allowance for credit losses
to gross loans 0.95 % 1.06 % 1.07 % 1.09 % 1.11 % Allowance for
credit losses to gross loans, adjusted for acquisition accounting
(1) 1.42 1.21 1.25 1.32 1.35 Allowance for credit losses to
nonaccrual loans 307.68 352.72 246.10 245.48 193.62
Nonaccrual loans $ 39,685 $ 33,802 $ 48,381 $ 47,692 $ 59,425
Nonaccrual loans to gross loans 0.31 % 0.30 % 0.44 % 0.44 % 0.58 %
Repossessed assets $ 49,842 $ 52,776 $ 43,942 $ 57,719 $ 59,335
Nonaccrual loans and repossessed assets to total assets 0.54 % 0.57
% 0.65 % 0.76 % 0.88 % Loans past due 90 days, still
accruing $ 6,991 $ 4,488 $ 3,028 $ 5,550 $ 8,284 Loans past due 90
days and still accruing to gross loans 0.05 % 0.04 % 0.03 % 0.05 %
0.08 % Loans past due 30 to 89 days, still accruing $ 3,475 $ 9,207
$ 34,541 $ 19,630 $ 4,006 Loans past due 30 to 89 days, still
accruing to gross loans 0.03 % 0.08 % 0.31 % 0.18 % 0.04 %
Special mention loans $ 154,167 $ 133,036 $ 141,819 $ 153,431 $
132,313 Special mention loans to gross loans 1.20 % 1.19 % 1.28 %
1.43 % 1.28 % Classified loans on accrual $ 119,939 $ 92,435
$ 118,635 $ 108,341 $ 101,165 Classified loans on accrual to gross
loans 0.93 % 0.82 % 1.07 % 1.01 % 0.98 % Classified assets $
219,319 $ 187,929 $ 221,126 $ 224,148 $ 230,959 Classified assets
to total assets 1.31 % 1.23 % 1.55 % 1.61 % 1.71 % (1)
See Reconciliation of Non-GAAP Financial Measures.
Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields
and Rates
Unaudited Three Months Ended June 30,
2016 2015
AverageBalance
Interest
Average Yield /Cost
AverageBalance
Interest
Average Yield /Cost
($ in millions) ($ in thousands) ($ in millions) ($ in thousands)
Interest earning assets Loans: Commercial $ 5,365.0 $ 63,621
5.24 % $ 3,645.2 $ 35,552 4.59 % CRE - non-owner occupied 3,257.6
47,452 5.83 2,127.6 29,532 5.55 CRE - owner occupied 2,012.7 25,715
5.11 1,890.2 24,132 5.11 Construction and land development 1,293.7
19,094 5.90 854.4 12,575 5.89 Residential real estate 299.8 3,383
4.51 291.7 3,244 4.45 Consumer 35.7 428 4.80 26.1 408 6.25 Loans
held for sale 22.8 322 5.65 2.5 25
4.00
Total loans (1) 12,287.3 160,015 5.43
8,837.7 105,468 5.06 Securities: Securities - taxable 1,547.8 8,514
2.20 1,043.3 5,793 2.22 Securities - tax-exempt 469.7 4,357
5.44 380.3 3,483 5.36
Total
securities (1) 2,017.5 12,871 2.95 1,423.6 9,276 3.06 Other
597.5 1,203 0.81 309.4 1,874
2.42 Total interest earning assets 14,902.3 174,089 4.91
10,570.7 116,618 4.71
Non-interest earning assets Cash and
due from banks 134.2 118.6 Allowance for credit losses (120.4 )
(114.9 ) Bank owned life insurance 163.7 143.2 Other assets 832.7
459.1
Total assets $ 15,912.5 $
11,176.7
Interest-bearing liabilities
Interest-bearing deposits: Interest-bearing transaction accounts $
1,194.2 $ 504 0.17 % $ 971.6 $ 414 0.17 % Savings and money market
5,837.4 4,978 0.34 4,213.0 2,975 0.28 Time certificates of deposit
1,757.2 2,196 0.50 1,834.4 1,973
0.43
Total interest-bearing deposits 8,788.8 7,678
0.35 7,019.0 5,362 0.31 Short-term borrowings 153.1 211 0.55 177.8
1,774 3.99 Long-term debt — — — 107.7 284 1.05 Qualifying debt
227.5 2,514 4.42 44.1 480 4.35
Total interest-bearing liabilities 9,169.4 10,403
0.45 7,348.6 7,900 0.43
Non-interest-bearing liabilities
Non-interest-bearing demand deposits 4,772.6 2,593.5 Other
liabilities 246.7 148.4 Stockholders’ equity 1,723.8 1,086.2
Total liabilities and stockholders' equity $ 15,912.5
$ 11,176.7 Net interest income and margin $ 163,686
4.63 % $ 108,718 4.41 % Net interest spread 4.46 %
4.28 %
(1) Yields on loans and securities have been adjusted to a
tax equivalent basis. The taxable-equivalent adjustment was $8,703
and $7,878 for the three months ended June 30, 2016 and 2015,
respectively.
Western Alliance Bancorporation and
Subsidiaries Analysis of Average Balances, Yields and
Rates Unaudited Six Months Ended June 30,
2016 2015
AverageBalance
Interest
Average Yield /Cost
AverageBalance
Interest
Average Yield /Cost
($ in millions) ($ in thousands) ($ in millions) ($ in thousands)
Interest earning assets Loans: Commercial $ 5,262.8 $
124,546 5.24 % $ 3,616.7 $ 70,132 4.54 % CRE - non-owner occupied
2,765.0 78,405 5.67 2,087.3 57,363 5.50 CRE - owner occupied
2,037.0 51,901 5.10 1,845.1 46,699 5.06 Construction and land
development 1,229.9 36,589 5.95 821.7 24,013 5.84 Residential real
estate 305.7 6,891 4.51 293.7 6,788 4.62 Consumer 32.3 794 4.92
27.4 839 6.12 Loans held for sale 23.5 675 5.74
1.2 25 4.17
Total loans (1)
11,656.2 299,801 5.37 8,693.1 205,859 5.01 Securities: Securities -
taxable 1,558.1 17,851 2.29 1,069.2 12,085 2.26 Securities -
tax-exempt 462.2 8,528 5.33 382.1 6,979
5.35
Total Securities (1) 2,020.3 26,379 2.99
1,451.3 19,064 3.07 Other 507.5 2,165 0.85
223.3 2,657 2.38 Total interest earnings
assets 14,184.0 328,345 4.87 10,367.7 227,580 4.68
Non-interest
earning assets Cash and due from banks 137.5 118.3 Allowance
for credit losses (121.0 ) (113.0 ) Bank owned life insurance 163.2
142.8 Other assets 827.6 454.6
Total assets $
15,191.3 $ 10,970.4
Interest-bearing
liabilities Interest-bearing deposits: Interest bearing
transaction accounts $ 1,143.0 $ 959 0.17 % $ 945.9 $ 808 0.17 %
Savings and money market 5,585.7 9,012 0.32 4,062.1 5,751 0.28 Time
certificates of deposits 1,659.3 3,950 0.48
1,884.6 3,949 0.42
Total interest-bearing
deposits 8,388.0 13,921 0.33 6,892.6 10,508 0.30 Short-term
borrowings 102.9 329 0.64 177.6 3,525 3.97 Long-term debt — — —
154.5 801 1.04 Qualifying debt 213.5 4,698 4.40
42.3 920 4.35
Total interest-bearing
liabilities 8,704.4 18,948 0.44 7,267.0 15,754 0.43
Non-interest-bearing liabilities Non-interest-bearing demand
deposits 4,561.4 2,482.3 Other liabilities 245.6 162.7
Stockholders’ equity 1,679.9 1,058.4
Total
liabilities and stockholders' equity $ 15,191.3 $
10,970.4 Net interest income and margin $ 309,397
4.60 % $ 211,826 4.38 % Net interest spread 4.43 % 4.25 %
(1) Yields on loans and securities have been adjusted to a
tax equivalent basis. The taxable-equivalent adjustment was $17,138
and $15,267 for the six months ended June 30, 2016 and 2015,
respectively.
Western Alliance Bancorporation and Subsidiaries
Operating Segment Results Unaudited Balance
Sheet: Regional Segments
ConsolidatedCompany
Arizona Nevada
SouthernCalifornia
NorthernCalifornia
At June 30, 2016 (dollars in millions)
Assets: Cash,
cash equivalents, and investment securities $ 2,958.8 $ 2.4 $ 9.7 $
2.0 $ 1.9 Loans, net of deferred loan fees and costs 12,877.8
2,897.6 1,727.0 1,801.2 1,139.5 Less: allowance for credit losses
(122.1 ) (30.9 ) (19.9 ) (19.5 ) (8.4 ) Total loans 12,755.7
2,866.7 1,707.1 1,781.7 1,131.1 Other
assets acquired through foreclosure, net 49.8 7.3 21.0 — 0.3
Goodwill and other intangible assets, net 304.3 — 24.2 — 157.5
Other assets 660.1 47.7 63.9 18.9 11.7
Total assets $ 16,728.7 $ 2,924.1 $ 1,825.9
$ 1,802.6 $ 1,302.5
Liabilities:
Deposits $ 14,201.3 $ 3,801.4 $ 3,623.0 $ 2,404.0 $ 1,510.9
Borrowings and qualifying debt 382.1 — — — — Other liabilities
349.1 11.7 28.6 9.3 9.8 Total
liabilities 14,932.5 3,813.1 3,651.6 2,413.3
1,520.7
Allocated equity: 1,796.2 337.6
248.3 205.8 287.2
Total liabilities
and stockholders' equity $ 16,728.7 $ 4,150.7 $
3,899.9 $ 2,619.1 $ 1,807.9 Excess funds
provided (used) — 1,226.6 2,074.0 816.5 505.4 No. of offices
48 11 18 9 3 No. of full-time equivalent employees 1,515 169 229
166 165
Income Statement: Three Months
Ended June 30, 2016: (in thousands) Net interest income
(expense) $ 163,686 $ 41,204 $ 33,464 $ 25,803 $ 21,896 Provision
for (recovery of) credit losses 2,500 1,703 (1,704 )
220 926 Net interest income (expense) after provision
for credit losses 161,186 39,501 35,168 25,583 20,970 Non-interest
income 8,559 888 2,097 561 2,516 Non-interest expense (81,804 )
(14,550 ) (14,824 ) (10,635 ) (13,481 ) Income (loss) before income
taxes 87,941 25,839 22,441 15,509 10,005 Income tax expense
(benefit) 26,327 10,137 7,855 6,522
4,206
Net income $ 61,614 $ 15,702 $
14,586 $ 8,987 $ 5,799
Six
Months Ended June 30, 2016: (in thousands) Net interest income
(expense) $ 309,397 $ 79,660 $ 66,039 $ 50,231 $ 45,091 Provision
for (recovery of) credit losses 5,000 8,476 (2,517 )
250 1,968 Net interest income (expense) after
provision for credit losses 304,397 71,184 68,556 49,981 43,123
Non-interest income 21,692 4,569 4,156 1,221 4,942 Non-interest
expense (157,297 ) (29,006 ) (29,570 ) (21,869 ) (27,448 ) Income
(loss) before income taxes 168,792 46,747 43,142 29,333 20,617
Income tax expense (benefit) 45,846 18,339 15,100
12,335 8,669
Net income $ 122,946
$ 28,408 $ 28,042 $ 16,998 $ 11,948
Western Alliance Bancorporation and
Subsidiaries
Operating Segment Results
Unaudited Balance Sheet: National Business
Lines
HOAServices
HFF
Public
&NonprofitFinance
Technology &
Innovation
OtherNationalBusinessLines
Corporate& Other
At June 30, 2016 (dollars in millions)
Assets: Cash,
cash equivalents, and investment securities $ — $ — $ — $ — $ — $
2,942.8 Loans, net of deferred loan fees and costs 98.3 1,262.8
1,481.4 943.5 1,498.6 27.9 Less: allowance for credit losses (1.1 )
(0.1 ) (16.1 ) (9.6 ) (16.2 ) (0.3 ) Total loans 97.2
1,262.7 1,465.3 933.9 1,482.4 27.6
Other assets acquired through foreclosure, net — — — — —
21.2 Goodwill and other intangible assets, net — 0.2 — 122.4 — —
Other assets 0.4 8.1 16.2 4.4 13.4
475.4 Total assets $ 97.6 $ 1,271.0 $
1,481.5 $ 1,060.7 $ 1,495.8 $ 3,467.0
Liabilities: Deposits $ 1,711.3 $ — $ — $ 963.0 $ — $ 187.7
Borrowings and qualifying debt — — — — — 382.1 Other liabilities
1.3 15.0 105.5 — 36.4 131.5
Total liabilities 1,712.6 15.0 105.5
963.0 36.4 701.3
Allocated equity: 43.6
104.9 89.3 217.4 124.1 138.0
Total liabilities and stockholders' equity $ 1,756.2
$ 119.9 $ 194.8 $ 1,180.4 $ 160.5
$ 839.3 Excess funds provided (used) 1,658.6 (1,151.1
) (1,286.7 ) 119.7 (1,335.3 ) (2,627.7 ) No. of offices (1)
1 1 1 7 4 (7 ) No. of full-time equivalent employees 55 21 7 59 32
612
Income Statement: Three Months Ended
June 30, 2016: (in thousands) Net interest income (expense) $
9,909 $ 12,068 $ 5,026 $ 16,631 $ 12,523 $ (14,838 ) Provision for
(recovery of) credit losses 10 — 175 (614 )
1,699 85 Net interest income (expense) after
provision for credit losses 9,899 12,068 4,851 17,245 10,824
(14,923 ) Non-interest income 110 — 7 1,115 235 1,030 Non-interest
expense (5,820 ) (2,557 ) (1,929 ) (7,434 ) (3,598 ) (6,976 )
Income (loss) before income taxes 4,189 9,511 2,929 10,926 7,461
(20,869 ) Income tax expense (benefit) 1,571 3,567
1,098 4,097 2,798 (15,524 )
Net income
$ 2,618 $ 5,944 $ 1,831 $ 6,829 $ 4,663
$ (5,345 )
Six Months Ended June 30, 2016: (in
thousands) Net interest income (expense) $ 18,541 $ 12,068 $ 10,247
$ 32,940 $ 23,160 $ (28,580 ) Provision for (recovery of) credit
losses 88 — (194 ) (1,779 ) 1,937 (3,229 ) Net
interest income (expense) after provision for credit losses 18,453
12,068 10,441 34,719 21,223 (25,351 ) Non-interest income 215 — 3
2,752 870 2,964 Non-interest expense (11,361 ) (2,557 ) (3,953 )
(14,340 ) (7,035 ) (10,158 ) Income (loss) before income taxes
7,307 9,511 6,491 23,131 15,058 (32,545 ) Income tax expense
(benefit) 2,740 3,567 2,434 8,674 5,647
(31,659 )
Net income $ 4,567 $ 5,944 $
4,057 $ 14,457 $ 9,411 $ (886 )
(1)
Negative number in the Corporate & Other segment
represents elimination for shared offices among the segments.
Western
Alliance Bancorporation and Subsidiaries Operating Segment
Results Unaudited Balance Sheet:
Regional Segments
ConsolidatedCompany
Arizona Nevada
SouthernCalifornia
NorthernCalifornia
At December 31, 2015 (dollars in millions)
Assets:
Cash, cash equivalents, and investment securities $ 2,266.8 $ 2.3 $
9.5 $ 2.4 $ 2.4 Loans, net of deferred loan fees and costs 11,136.7
2,811.7 1,737.2 1,761.9 1,188.4 Less: allowance for credit losses
(119.1 ) (30.1 ) (18.6 ) (18.8 ) (12.7 ) Total loans 11,017.6
2,781.6 1,718.6 1,743.1 1,175.7
Other assets acquired through foreclosure, net 43.9 8.4 20.8 — 0.3
Goodwill and other intangible assets, net 305.4 — 24.8 — 158.2
Other assets 641.4 43.9 62.3 15.7 16.1
Total assets $ 14,275.1 $ 2,836.2 $ 1,836.0
$ 1,761.2 $ 1,352.7
Liabilities:
Deposits $ 12,030.6 $ 2,880.7 $ 3,382.8 $ 1,902.5 $ 1,541.1
Borrowings and qualifying debt 360.3 — — — — Other liabilities
292.7 12.2 29.0 7.8 11.2 Total
liabilities 12,683.6 2,892.9 3,411.8 1,910.3
1,552.3
Allocated equity: 1,591.5 309.2
244.4 191.3 293.2
Total liabilities
and stockholders' equity $ 14,275.1 $ 3,202.1 $
3,656.2 $ 2,101.6 $ 1,845.5 Excess funds
provided (used) — 365.9 1,820.2 340.4 492.8 No. of offices
47 11 18 9 2 No. of full-time equivalent employees 1,446 180 228
161 171
Income Statements: Three Months
Ended June 30, 2015: (in thousands) Net interest income
(expense) $ 108,718 $ 32,091 $ 29,946 $ 24,070 $ 5,216 Provision
for (recovery of) credit losses — 826 (3,148 ) 633
513 Net interest income (expense) after provision for
credit losses 108,718 31,265 33,094 23,437 4,703 Non-interest
income 5,545 1,008 2,370 850 271 Non-interest expense (61,209 )
(14,600 ) (15,032 ) (11,858 ) (1,913 ) Income (loss) before income
taxes 53,054 17,673 20,432 12,429 3,061 Income tax expense
(benefit) 13,579 6,934 7,151 5,227
1,287
Net income $ 39,475 $ 10,739 $
13,281 $ 7,202 $ 1,774
Six Months
Ended June 30, 2015: (in thousands) Net interest income
(expense) $ 211,826 $ 61,076 $ 59,155 $ 46,560 $ 9,669 Provision
for (recovery of) credit losses 700 158 (2,799 ) 266
486 Net interest income (expense) after provision for
credit losses 211,126 60,918 61,954 46,294 9,183 Non-interest
income 11,787 1,947 4,653 1,515 322 Non-interest expense (115,242 )
(29,361 ) (29,506 ) (23,479 ) (3,930 ) Income (loss) before income
taxes 107,671 33,504 37,101 24,330 5,575 Income tax expense
(benefit) 27,813 13,144 12,985 10,231
2,344
Net income $ 79,858 $ 20,360 $
24,116 $ 14,099 $ 3,231
Western Alliance
Bancorporation and Subsidiaries Operating Segment
Results Unaudited Balance Sheet:
National Business Lines HOA Services
Public
&NonprofitFinance
Technology
&Innovation
Other NationalBusiness
Lines
Corporate &Other
At December 31, 2015 (dollars in millions)
Assets:
Cash, cash equivalents, and investment securities $ — $ — $ — $ — $
2,250.2 Loans, net of deferred loan fees and costs 88.4 1,458.9
770.3 1,280.3 39.6 Less: allowance for credit losses (0.9 ) (15.6 )
(8.2 ) (13.8 ) (0.4 ) Total loans 87.5 1,443.3 762.1
1,266.5 39.2 Other assets acquired through
foreclosure, net — — — — 14.4 Goodwill and other intangible assets,
net — — 122.4 — — Other assets 0.2 14.0 2.7
11.5 475.0 Total assets $ 87.7 $ 1,457.3
$ 887.2 $ 1,278.0 $ 2,778.8
Liabilities: Deposits $ 1,291.9 $ — $ 842.5 $ — $ 189.1
Borrowings and qualifying debt — — — — 360.3 Other liabilities 0.5
63.8 — 40.8 127.4 Total
liabilities 1,292.4 63.8 842.5 40.8
676.8
Allocated equity: 34.2 87.8 200.9
105.7 124.8
Total liabilities and
stockholders' equity $ 1,326.6 $ 151.6 $ 1,043.4
$ 146.5 $ 801.6 Excess funds provided (used)
1,238.9 (1,305.7 ) 156.2 (1,131.5 ) (1,977.2 ) No. of
offices (1) 1 1 7 4 (6 ) No. of full-time equivalent employees 54 3
40 26 583
Income Statements: Three Months
Ended June 30, 2015: (in thousands) Net interest income
(expense) $ 6,436 $ 4,903 $ — $ 13,093 $ (7,037 ) Provision for
(recovery of) credit losses 71 1,469 — (288 )
(76 ) Net interest income (expense) after provision for credit
losses 6,365 3,434 — 13,381 (6,961 ) Non-interest income 80 433 —
(192 ) 725 Non-interest expense (4,100 ) (1,384 ) — (4,061 )
(8,261 ) Income (loss) before income taxes 2,345 2,483 — 9,128
(14,497 ) Income tax expense (benefit) 880 932 —
3,423 (12,255 )
Net income $ 1,465 $
1,551 $ — $ 5,705 $ (2,242 )
Six
Months Ended June 30, 2015: (in thousands) Net interest income
(expense) $ 12,204 $ 9,484 $ — $ 26,054 $ (12,376 ) Provision for
(recovery of) credit losses 141 2,106 — 413
(71 ) Net interest income (expense) after provision for
credit losses 12,063 7,378 — 25,641 (12,305 ) Non-interest income
153 639 — 245 2,313 Non-interest expense (8,470 ) (2,637 ) —
(7,716 ) (10,143 ) Income (loss) before income taxes 3,746 5,380 —
18,170 (20,135 ) Income tax expense (benefit) 1,405 2,018
— 6,814 (21,128 )
Net income $ 2,341
$ 3,362 $ — $ 11,356 $ 993
(1) Negative number in the Corporate & Other
segment represents elimination for shared offices among the
segments.
Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Unaudited Operating Pre-Provision Net Revenue by
Quarter: Three Months Ended Jun 30, 2016 Mar
31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30,
2015 (in thousands) Total non-interest income $ 8,559 $ 13,133
$ 9,479 $ 8,502 $ 5,545 Less: Gains (losses) on sales of investment
securities, net — 1,001 33 (62 ) 55 Unrealized (losses) gains on
assets and liabilities measured at fair value, net 6 (5 ) 10 47 (10
) (Loss) on extinguishment of debt — — — —
(81 )
Total operating non-interest income 8,553
12,137 9,436 8,517 5,581 Plus: net interest income 163,686
145,711 143,343 137,407 108,718
Net
operating revenue (1) $ 172,239 $ 157,848 $
152,779 $ 145,924 $ 114,299 Total
non-interest expense $ 81,804 $ 75,493 $ 72,448 $ 72,916 $ 61,209
Less: Net loss (gain) on sales and valuations of repossessed and
other assets 357 (302 ) (397 ) (104 ) (1,218 ) Acquisition /
restructure expense 3,662 — — 835 7,842
Total operating non-interest expense (1) $ 77,785
$ 75,795 $ 72,845 $ 72,185 $ 54,585
Operating
pre-provision net revenue (2) $ 94,454 $ 82,053 $
79,934 $ 73,739 $ 59,714 Plus:
Non-operating revenue adjustments 6 996 43 (15 ) (36 ) Less:
Provision for credit losses 2,500 2,500 2,500 — — Non-operating
expense adjustments 4,019 (302 ) (397 ) 731 6,624 Income tax
expense 26,327 19,519 19,348 17,133
13,579
Net income $ 61,614 $ 61,332 $
58,526 $ 55,860 $ 39,475
Tangible
Common Equity: Jun 30, 2016 Mar 31, 2016 Dec
31, 2015 Sep 30, 2015 Jun 30, 2015 (dollars and
shares in thousands) Total stockholders' equity $ 1,796,210 $
1,660,163 $ 1,591,502 $ 1,583,698 $ 1,514,744 Less: goodwill and
intangible assets 304,289 303,962 305,354
305,767 299,975
Total tangible stockholders'
equity 1,491,921 1,356,201 1,286,148 1,277,931 1,214,769 Less:
preferred stock — — — 70,500 70,500
Total tangible common equity 1,491,921 1,356,201 1,286,148
1,207,431 1,144,269 Plus: deferred tax - attributed to intangible
assets 5,594 5,828 6,093 6,290 6,515
Total tangible common equity, net of tax $ 1,497,515
$ 1,362,029 $ 1,292,241 $ 1,213,721 $
1,150,784 Total assets $ 16,728,767 $ 15,248,039 $
14,275,089 $ 13,955,570 $ 13,470,104 Less: goodwill and intangible
assets, net 304,289 303,962 305,354 305,767
299,975 Tangible assets 16,424,478 14,944,077
13,969,735 13,649,803 13,170,129 Plus: deferred tax - attributed to
intangible assets 5,594 5,828 6,093 6,290
6,515
Total tangible assets, net of tax $
16,430,072 $ 14,949,905 $ 13,975,828 $
13,656,093 $ 13,176,644 Tangible common equity ratio
(3) 9.1 % 9.1 % 9.2 % 8.9 % 8.7 % Common shares outstanding 105,084
103,513 103,087 102,305 102,291 Tangible book value per share, net
of tax (4) $ 14.25 $ 13.16 $ 12.54 $ 11.86 $ 11.25
Western
Alliance Bancorporation and Subsidiaries Reconciliation of
Non-GAAP Financial Measures Unaudited
Efficiency Ratio by Quarter: Three Months Ended
Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep
30, 2015 Jun 30, 2015 (in thousands) Total operating
non-interest expense $ 77,785 $ 75,795 $ 72,845 $ 72,185 $ 54,585
Divided by: Total net interest income 163,686 145,711 143,343
137,407 108,718 Plus: Tax equivalent interest adjustment 8,704
8,435 8,433 8,183 7,878 Operating non-interest income 8,553
12,137 9,436 8,517 5,581 $ 180,943
$ 166,283 $ 161,212 $ 154,107 $ 122,177
Efficiency ratio - tax equivalent basis (5) 43.0 %
45.6 % 45.2 % 46.8 % 44.7 %
Allowance for Credit Losses,
Adjusted for Acquisition Accounting: Jun 30, 2016
Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun
30, 2015 (in thousands) Allowance for credit losses $ 122,104 $
119,227 $ 119,068 $ 117,072 $ 115,056 Plus: remaining credit marks
Acquired performing loans 45,225 9,646 12,154 14,299 16,405
Purchased credit impaired loans 16,438 6,760 8,491
11,347 8,643 Adjusted allowance for credit
losses $ 183,767 $ 135,633 $ 139,713 $ 142,718
$ 140,104 Gross loans held for investment and
deferred fees, net $ 12,855,511 $ 11,217,860 $ 11,112,854 $
10,763,939 $ 10,321,221 Plus: remaining credit marks Acquired
performing loans 45,225 9,646 12,154 14,299 16,405 Purchased credit
impaired loans 16,438 6,760 8,491 11,347
8,643 Adjusted loans, net of deferred fees and costs
$ 12,917,174 $ 11,234,266 $ 11,133,499 $
10,789,585 $ 10,346,269 Allowance for credit
losses to gross loans 0.95 % 1.06 % 1.07 % 1.09 % 1.11 %
Allowance for credit losses to gross loans, adjusted for
acquisition accounting (6) 1.42 1.21 1.25
1.32 1.35
Western Alliance Bancorporation and
Subsidiaries
Reconciliation of Non-GAAP Financial
Measures
Unaudited
Regulatory Capital:
June 30, 2016
December 31, 2015 (in thousands)
Common Equity Tier
1: Common equity $ 1,796,210 $ 1,591,502 Less: Non-qualifying
goodwill and intangibles 295,204 293,487 Disallowed unrealized
losses on equity securities — — Disallowed deferred tax asset 4,131
5,001 AOCI related adjustments 33,259 10,228 Unrealized gain on
changes in fair value liabilities 10,203 6,309
Common equity Tier 1 (regulatory) (7) (10) $ 1,453,413
$ 1,276,477 Plus: Trust preferred securities
81,500 81,500 Preferred stock — — Less: Disallowed deferred tax
asset 2,754 7,502 Unrealized gain on changes in fair value
liabilities 6,802 9,464
Tier 1 capital (8)
(10) $ 1,525,357 $ 1,341,011
Divided
by: estimated risk-weighted assets (regulatory (8) (10) $
15,189,442 $ 13,193,563
Common equity Tier 1 ratio (8)
(10) 9.6 % 9.7 %
Total Capital: Tier 1 capital
(regulatory) (7) (10) $ 1,525,357 $ 1,341,011 Plus:
Subordinated debt 304,095 140,097 Qualifying allowance for credit
losses 122,104 119,068 Other 3,875 3,296 Less: Tier 2 qualifying
capital deductions — —
Tier 2 capital $
430,074 $ 262,461
Total capital
$ 1,955,431 $ 1,603,472
Total capital
ratio 12.9 % 12.2 %
Classified assets to Tier 1
capital plus allowance: Classified assets $ 219,319 $ 221,126
Divided by:
Tier 1 capital (8) (10) 1,525,357 1,341,011
Plus: Allowance for credit losses 122,104 119,068
Total Tier 1 capital plus allowance for credit losses $
1,647,461 $ 1,460,079
Classified assets to
Tier 1 capital plus allowance (9) (10) 13.3 % 15.1 % (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
measurement 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/20160721006430/en/
Western Alliance BancorporationDale Gibbons, 602-952-5476
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