Western Alliance Bancorporation (NYSE:WAL):
FIRST QUARTER 2017 FINANCIAL
RESULTS
Net income Earnings per share Net interest
margin Efficiency ratio Book value percommon
share
$73.4 million
$0.70
4.63% 44.0% $18.68
4.48%, excluding acquired loan
accretion
44.4%, excluding non-operating adjustments
$15.86, excluding intangible assets
CEO COMMENTARY:
"Western Alliance is off to a strong start to the year with
$73.4 million in net income and $0.70 EPS in Q1 2017,” commented
Robert Sarver, Chairman and Chief Executive Officer of Western
Alliance Bancorporation. “We are particularly pleased with our loan
growth of $454 million to $13.66 billion, up 3.4% over the prior
quarter, and our very strong deposit growth of $806 million to
$15.36 billion, up 5.5% over the prior quarter. Asset quality
remains strong with a net charge-off rate of 0.04% and
non-performing assets to total assets of 0.44%. Our return on
average assets and tangible common equity1 rose for the quarter to
1.69% and 17.85%, among the highest in the industry. With the
quarter’s increase in tangible book value per share to $15.86,1
Western Alliance continues to deliver to its shareholders superior
income, asset, and capital growth and has set a firm foundation for
a strong 2017."
LINKED-QUARTER BASIS
YEAR-OVER-YEAR
FINANCIAL HIGHLIGHTS:
• Net income and earnings per share of
$73.4 million and $0.70, compared to $69.8 million and $0.67,
respectively
• Net income of $73.4 million and earnings
per share of $0.70, compared to $61.3 million and $0.60,
respectively
• Net operating revenue of $189.2 million,
constituting growth of $3.4 million, and an increase in operating
non-interest expenses of $5.6 million1
• Net operating revenue of $189.2 million,
constituting year-over-year growth of 19.9%, or $31.4 million, and
an increase in operating non-interest expenses of 16.5%, or $12.5
million1
• Operating pre-provision net revenue of
$100.9 million, down $2.2 million from $103.1 million 1
• Operating pre-provision net revenue of
$100.9 million, up $18.9 million from $82.1 million 1
FINANCIAL POSITION RESULTS:
• Total loans of $13.66 billion, up $454
million
• Increase in total loans of $2.42
billion
• Total deposits of $15.36 billion, up
$806 million
• Total deposits increase of $2.27
billion
• Stockholders' equity of $1.97 billion,
up $77 million
• Increase in stockholders' equity of $309
million
LOANS AND ASSET QUALITY:
• Nonperforming assets (nonaccrual loans
and repossessed assets) decreased to 0.44% of total assets, from
0.51%
• Nonperforming assets to total assets of
0.44%, compared to 0.57%
• Annualized net loan charge-offs
(recoveries) to average loans outstanding of 0.04%, compared to
(0.03)%
• Annualized net loan charge-offs to
average loans outstanding of 0.04%, compared to 0.08%
KEY PERFORMANCE METRICS:
• Net interest margin of 4.63%, compared
to 4.57%
• Net interest margin of 4.63%, compared
to 4.58%
• Return on average assets and return on
tangible common equity1 of 1.69% and 17.85%, compared to 1.63% and
17.59%, respectively
• Return on average assets and return on
tangible common equity1 of 1.69% and 17.85%, compared to 1.70% and
18.43%, respectively
• Tangible common equity ratio of 9.4%,
compared to 9.4%1
• Tangible common equity ratio of 9.4%,
compared to 9.1%1
• Tangible book value per share, net of
tax, of $15.86, an increase from $15.171
• Tangible book value per share, net of
tax, of $15.86, an increase of 20.5% from $13.161
• Operating efficiency ratio of 44.4%,
compared to 42.4%1
• Operating efficiency ratio of 44.4%,
compared to 45.6%1
1 See reconciliation of Non-GAAP Financial Measures.
Income Statement
Net interest income was $179.3 million in the first quarter
2017, an increase of $4.0 million from $175.3 million in the fourth
quarter 2016, and an increase of $33.6 million, or 23.1%, compared
to the first quarter 2016. Net interest income in the first quarter
2017 includes $6.4 million of total accretion income from acquired
loans, compared to $7.0 million in the fourth quarter 2016, and
$5.3 million in the first quarter 2016.
The Company’s net interest margin in the first quarter 2017 was
4.63%, an increase from 4.57% in the fourth quarter 2016, and from
4.58% in the first quarter 2016. The increase in net interest
margin from the fourth quarter 2016 is attributable to higher
yields on loans and securities as a result of rising interest
rates. The increase in net interest margin from the first quarter
2016 primarily relates to an increase in acquired loan accretion,
partially offset by an increase in interest expense resulting from
the issuance of long-term subordinated debt in June 2016, as well
as an increase in the cost of interest-bearing deposits.
Operating non-interest income was $9.9 million for the first
quarter 2017, compared to $10.5 million for the fourth quarter
2016, and $12.1 million for the first quarter 2016.1
Net operating revenue was $189.2 million for the first quarter
2017, an increase of $3.4 million, compared to $185.8 million for
the fourth quarter 2016, and an increase of $31.4 million, or
19.9%, compared to $157.8 million for the first quarter 2016.1
Operating non-interest expense was $88.3 million for the first
quarter 2017, compared to $82.7 million for the fourth quarter
2016, and $75.8 million for the first quarter 2016.1 The increase
in operating non-interest expense from the prior quarter relates to
higher professional fees and compensation costs as the Company
continues to build out its infrastructure to support growth and
also reflects seasonal compensation costs. The Company’s operating
efficiency ratio1 on a tax equivalent basis was 44.4% for the first
quarter 2017, compared to 42.4% for the fourth quarter 2016, and
45.6% for the first quarter 2016.
Net income was $73.4 million for the first quarter 2017, an
increase of $3.6 million from $69.8 million for the fourth quarter
2016, and an increase of $12.1 million, or 19.6%, from $61.3
million for the first quarter 2016. Earnings per share was $0.70
for the first quarter 2017, compared to $0.67 for the fourth
quarter 2016, and $0.60 for the first quarter 2016.
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 first quarter 2017, the Company’s
operating PPNR was $100.9 million, down from $103.1 million in the
fourth quarter 2016, and up 23.0% from $82.1 million in the first
quarter 2016.1 The non-operating items1 for the first quarter 2017
consisted primarily of net gains on sales of investment securities
of $0.6 million and a net gain on sales / valuations of repossessed
and other assets of $0.5 million.
The Company had 1,564 full-time equivalent employees and 45
offices at March 31, 2017, compared to 1,557 employees and 48
offices at December 31, 2016 and 1,464 employees and 47 offices at
March 31, 2016.
Balance Sheet
Gross loans totaled $13.66 billion at March 31, 2017, an
increase of $454 million from $13.21 billion at December 31,
2016, and an increase of $2.42 billion from $11.24 billion at
March 31, 2016. The year-over-year increase is comprised of
$1.28 billion from Hotel Franchise Finance ("HFF") acquisition as
of April 20, 2016 and the remainder from organic loan growth.
Consistent with accounting principles generally accepted in the
United States ("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 March 31, 2017, the allowance for credit losses
was 0.94% of total loans, compared to 0.95% at December 31,
2016, and 1.06% at March 31, 2016. The allowance for credit
losses as a percent of total loans, adjusted to include credit
discounts on acquired loans1, was 1.26% at March 31, 2017,
compared to 1.30% at December 31, 2016, and 1.21% at
March 31, 2016.
Deposits totaled $15.36 billion at March 31, 2017, an
increase of $806 million from $14.55 billion at December 31,
2016, and an increase of $2.27 billion from $13.08 billion at
March 31, 2016. The increase from both the prior quarter and
from March 31, 2016 is the result of organic deposit growth.
Non-interest bearing deposits were $6.11 billion at March 31,
2017, compared to $5.63 billion at December 31, 2016, and
$4.64 billion at March 31, 2016. Non-interest bearing deposits
comprised 39.8% of total deposits at March 31, 2017, compared
to 38.7% at December 31, 2016, and 35.4% at March 31,
2016. The proportion of savings and money market balances to total
deposits decreased to 40.7% from 42.1% at December 31, 2016,
and from 43.2% at March 31, 2016. Certificates of deposit as a
percentage of total deposits were 10.0% at March 31, 2017,
compared to 10.0% at December 31, 2016, and 13.1% at
March 31, 2016. The Company’s ratio of loans to deposits was
89.0% at March 31, 2017, compared to 90.8% at
December 31, 2016, and 85.9% at March 31, 2016.
Borrowings decreased to zero at March 31, 2017, from $80.0
million at December 31, 2016, and $0.2 million at
March 31, 2016. The decrease from the prior quarter is due to
payoff of FHLB overnight advances. The decrease from the prior year
is due to the payoff of short-term federal funds purchased.
Qualifying debt totaled $367 million at March 31, 2017, a
decrease from $368 million at December 31, 2016, and an
increase of $157 million from $210 million at March 31, 2016.
The increase from the prior year is primarily related to the
issuance of $175 million in subordinated debt in June 2016.
Stockholders’ equity at March 31, 2017 was $1.97 billion,
compared to $1.89 billion at December 31, 2016, and $1.66
billion at March 31, 2016. The increase from the prior year
relates primarily to at-the-market stock issuances and net income
for the respective period, which was partially offset by valuation
declines on available-for-sale investment securities.
At March 31, 2017, tangible common equity, net of tax, was
9.4% of tangible assets1 and total capital was 13.2% of
risk-weighted assets. The Company’s tangible book value per share1
was $15.86 at March 31, 2017, up 20.5% from March 31,
2016.
Total assets increased to $18.12 billion at March 31, 2017,
from $17.20 billion at December 31, 2016, and increased 18.9%
from $15.25 billion at March 31, 2016. The increase in total
assets from the prior year relates primarily to the HFF
acquisition, organic loan growth, and an increase in investment
securities resulting from increased deposits.
Asset Quality
The provision for credit losses was $4.3 million for the first
quarter 2017, compared to $1.0 million for the fourth quarter 2016,
and $2.5 million for the first quarter 2016. Net loan charge-offs
(recoveries) in the first quarter 2017 were $1.3 million, or 0.04%
of average loans (annualized), compared to $(0.8) million in net
recoveries, or (0.03)%, in the fourth quarter 2016 and $2.3 million
in net charge-offs, or 0.08%, in the first quarter 2016.
Nonaccrual loans decreased $5.8 million to $34.5 million during
the quarter. Loans past due 90 days and still accruing interest
totaled $3.7 million at March 31, 2017, compared to $1.1
million at December 31, 2016, and $4.5 million at
March 31, 2016. Loans past due 30-89 days and still accruing
interest totaled $10.8 million at quarter end, an increase from
$6.3 million at December 31, 2016, and an increase from $9.2
million at March 31, 2016.
Repossessed assets totaled $45.2 million at quarter end, a
decrease of $2.6 million from $47.8 million at December 31, 2016,
and a decrease of $7.6 million from $52.8 million at March 31,
2016. Adversely graded loans and non-performing assets totaled
$388.3 million at quarter end, an increase of $45.5 million from
$342.9 million at December 31, 2016, and an increase of $76.3
million from $312.1 million at March 31, 2016.
As the Company’s asset quality and capital remain strong, the
ratio of classified assets to Tier I capital plus the allowance for
credit losses, a common regulatory measure of asset quality, was
12.6% at March 31, 2017, compared to 11.8% at
December 31, 2016, and 13.0% at March 31, 2016.1
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, Bank of Nevada and
First Independent Bank, Torrey Pines Bank, and Bridge Bank.
The Company's National Business Lines ("NBL") segment provides
specialized banking services to niche markets. The Company's NBL
reportable segments include Homeowner Associations ("HOA")
Services, HFF, 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 HFF NBL includes the hotel franchise loan portfolio purchased
from GE on April 20, 2016. The operations of Public and Nonprofit
Finance are combined into one reportable segment. 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 Arizona, Nevada, Southern California, Northern
California, and NBL segments include loan and deposit growth, asset
quality, and pre-tax income.
The regional segments reported gross loan balances of $7.75
billion at March 31, 2017, an increase of $202 million during
the quarter, and an increase of $273 million during the last twelve
months. All regional segments had loan growth during the quarter
with Arizona contributing the largest growth of $84 million,
followed by Nevada, Southern California, and Northern California
with growth of $44 million, $40 million, and $35 million,
respectively. The growth in loans during the last twelve months was
primarily driven by increases of $225 million in Arizona and $60
million in Nevada, which were partially offset by a decrease of $19
million in Northern California. Total deposits for the regional
segments were $12.01 billion, an increase of $509 million during
the quarter, and an increase of $1.54 billion during the last
twelve months. Arizona and Nevada generated increased deposits
during the quarter of $412 million and $165 million, respectively,
which was partially offset by a decrease of $82.3 million in
Northern California. With the exception of Northern California,
each of the regional segments generated increased deposits during
the last twelve months, with Arizona contributing the largest
increase of $1.07 billion, followed by Southern California and
Nevada with increases of $341 million and $267 million,
respectively.
Pre-tax income for the regional segments was $72.4 million for
the three months ended March 31, 2017, a decrease of $4.1
million from the three months ended December 31, 2016, and an
increase of $6.3 million from the three months ended March 31,
2016. Arizona and Southern California each had a decrease in
pre-tax income of $2.7 million. These decreases were partially
offset by increases in pre-tax income for Nevada and Northern
California of $0.5 million and $1.0 million, respectively, compared
to the three months ended December 31, 2016. With the
exception of Southern California, which had a decrease in pre-tax
income of $0.7 million, each regional segment had increases in
pre-tax income from the three months ended March 31, 2016,
with Arizona and Nevada contributing the largest increases of $5.5
million and $1.1 million, respectively.
The NBL segments reported gross loan balances of $5.91 billion
at March 31, 2017, an increase of $256 million during the
quarter, and an increase of $2.17 billion during the last twelve
months. The increase in loans for the NBL segments compared to the
prior quarter relates primarily to the Other NBLs and Public &
Nonprofit Finance segments, which increased loans by $178 million
and $74 million, respectively. The increases in loans during the
last twelve months were driven by HFF (as a result of the $1.28
billion purchase), Other NBLs, and Technology & Innovation
segments, which increased loans by $1.28 billion, $617 million, and
$166 million, respectively. Total deposits for the NBL segments
were $3.26 billion, an increase of $327 million during the quarter,
and an increase of $923 million during the last twelve months. The
HOA Services and Technology & Innovation segments increased
deposits by $223 million and $104 million, respectively, during the
quarter. The increase of $923 million during the last twelve months
is the result of growth in the HOA Services and Technology &
Innovation segments of $585 million and $339 million,
respectively.
Pre-tax income for the NBL segments was $37.5 million for the
three months ended March 31, 2017, a decrease of $3.0 million
from the three months ended December 31, 2016, and an increase
of $11.0 million from the three months ended March 31, 2016.
The decrease in pre-tax income from the prior quarter relates
primarily to the Other NBLs segment, which decreased $3.7 million.
This decrease was offset by increases in pre-tax income from the
Public & Nonprofit and HOA Services segments of $0.4 million
and $0.5 million, respectively. The HFF and HOA Services segments
had the largest increases in pre-tax income of $10.6 million and
$2.5 million, respectively, from the three months ended
March 31, 2016, which were offset by decreases in pre-tax
income of $1.2 million and $1.0 million from the Technology &
Innovation and Other NBLs segments, respectively.
Conference Call and Webcast
Western Alliance Bancorporation will host a conference call and
live webcast to discuss its first quarter 2017 financial results at
12:00 p.m. ET on Friday, April 21, 2017. Participants may
access the call by dialing 1-888-317-6003 and using passcode
3879324 or via live audio webcast using the website link
http://services.choruscall.com/links/wal170421.html.
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 April 21st through 9:00 a.m. ET May 21st
by dialing 1-877-344-7529 passcode: 10103883.
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
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.
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,
2016 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 $18 billion in assets, Western Alliance
Bancorporation (NYSE:WAL) is one of the country’s top-performing
banking companies and is ranked #4 on the Forbes 2017 “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 and First Independent Bank, Torrey Pines
Bank and Bridge 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:
As of March 31, 2017 2016 Change
%
(in millions)
Total assets $ 18,122.5 $ 15,248.0 18.9 % Total loans, net of
deferred fees 13,662.7 11,241.4 21.5 Securities and money market
investments 2,869.1 2,099.9 36.6 Total deposits 15,356.0 13,081.7
17.4 Borrowings — 0.2 (100.0 ) Qualifying debt 366.9 210.4 74.4
Stockholders' equity 1,969.0 1,660.2 18.6 Tangible common equity,
net of tax (1) 1,671.6 1,362.0 22.7
Selected Income
Statement Data: For the Three Months Ended March 31,
2017 2016 Change % (in thousands,
except per share data) Interest income $ 192,265 $ 154,256 24.6 %
Interest expense 12,956 8,545 51.6 Net interest
income 179,309 145,711 23.1 Provision for credit losses 4,250
2,500 70.0 Net interest income after provision for
credit losses 175,059 143,211 22.2 Non-interest income 10,544
13,133 (19.7 ) Non-interest expense 87,757 75,493
16.2 Income before income taxes 97,846 80,851 21.0 Income tax
expense 24,489 19,519 25.5 Net income $ 73,357
$ 61,332 19.6 Diluted earnings per share available to common
stockholders $ 0.70 $ 0.60 16.7 (1) See
Reconciliation of Non-GAAP Financial Measures.
Western Alliance Bancorporation and
Subsidiaries
Summary Consolidated Financial Data Unaudited
Common Share Data: As of or for the Three
Months Ended March 31, 2017 2016
Change % Diluted earnings per share available to
common stockholders $ 0.70 $ 0.60 16.7 % Book value per common
share 18.68 16.04 16.5 Tangible book value per share, net of tax
(1) 15.86 13.16 20.5 Average shares outstanding(in thousands):
Basic
103,987
101,895 2.1 Diluted
104,836
102,538 2.2 Common shares outstanding 105,428 103,514 1.8
Selected Performance Ratios: Return on average assets (2)
1.69 % 1.70 % (0.6 )% Return on average tangible common equity (1,
2) 17.85 18.43 (3.1 ) Net interest margin (2) 4.63 4.58 1.1 Net
interest spread 4.40 4.42 (0.5 ) Operating efficiency ratio - tax
equivalent basis (1) 44.40 45.58 (2.6 ) Loan to deposit ratio 88.97
85.93 3.5
Asset Quality Ratios: Net charge-offs
(recoveries) to average loans outstanding (2) 0.04 % 0.08 % (50.0
)% Nonaccrual loans to gross loans 0.25 0.30 (16.7 ) Nonaccrual
loans and repossessed assets to total assets 0.44 0.57 (22.8 )
Loans past due 90 days and still accruing to gross loans 0.03 0.04
(25.0 ) Allowance for credit losses to gross loans 0.94 1.06 (11.3
) Allowance for credit losses to nonaccrual loans 370.45 352.72 5.0
Capital Ratios (1): Mar 31, 2017 Dec
31, 2016 Mar 31, 2016
Tangible common equity (1)
9.4 % 9.4 % 9.1 % Common Equity Tier 1 (3) 10.1 10.0 9.9 Tier 1
Leverage ratio (3) 10.2 9.9 9.9 Tier 1 Capital (3) 10.5 10.5 10.4
Total Capital (3) 13.2 13.2 12.3
(1) See Reconciliation of Non-GAAP
Financial Measures.
(2) Annualized for the three month periods
ended March 31, 2017 and 2016.
(3) Capital ratios for March 31, 2017 are
preliminary until the Call Report is filed.
Western Alliance Bancorporation and
Subsidiaries Condensed Consolidated Income Statements
Unaudited Three Months Ended March
31, 2017 2016 (dollars in thousands,
except per share data) Interest income: Loans $ 172,553 $ 139,786
Investment securities 18,114 13,508 Other 1,598 962
Total interest income 192,265 154,256 Interest
expense: Deposits 8,412 6,243 Qualifying debt 4,338 2,184
Borrowings 206 118
Total interest expense
12,956 8,545
Net interest income 179,309
145,711 Provision for credit losses 4,250 2,500
Net interest income after provision for credit losses
175,059 143,211 Non-interest income: Service charges
4,738 4,499 Card income 1,218 1,013 Income from bank owned life
insurance 948 930 Gain (loss) on sales of investment securities,
net 635 1,001 SBA/warrant income 516 1,006 Lending related income
and gains (losses) on sale of loans, net 492 2,935 Other 1,997
1,749
Total non-interest income 10,544
13,133 Non-interest expenses: Salaries and employee benefits
51,620 44,855 Legal, professional and directors' fees 8,803 5,572
Occupancy 6,894 6,257 Data processing 5,271 4,060 Insurance 3,228
3,323 Marketing 721 657 Intangible amortization 689 697 Card
expense 654 887 Loan and repossessed asset expenses 1,278 902 Net
(gain) loss on sales and valuations of repossessed and other assets
(543 ) (302 ) Other 9,142 8,585
Total non-interest
expense 87,757 75,493 Income before income taxes
97,846 80,851 Income tax expense 24,489 19,519
Net
income available to common stockholders $ 73,357 $
61,332
Earnings per share available to common
stockholders: Diluted shares
104,836
102,538 Diluted earnings per share $ 0.70 $ 0.60
Western Alliance Bancorporation and Subsidiaries Five
Quarter Condensed Consolidated Income Statements
Unaudited Three Months Ended Mar 31,
2017 Dec 31, 2016 Sep 30,
2016 Jun 30, 2016 Mar 31,
2016 (in thousands, except per share data) Interest income:
Loans $ 172,553 $ 168,881 $ 167,914 $ 160,015 $ 139,786 Investment
securities 18,114 16,725 15,436 12,871 13,508 Other 1,598
1,805 1,400 1,203 962
Total interest
income 192,265 187,411 184,750 174,089
154,256 Interest expense: Deposits 8,412 7,729 8,072
7,678 6,243 Qualifying debt 4,338 4,252 4,048 2,514 2,184
Borrowings 206 161 83 211 118
Total interest expense 12,956 12,142 12,203
10,403 8,545
Net interest income
179,309 175,269 172,547 163,686 145,711 Provision for credit losses
4,250 1,000 2,000 2,500 2,500
Net interest income after provision for credit losses
175,059 174,269 170,547 161,186 143,211
Non-interest income: Service charges 4,738 4,865 4,916 4,544
4,499 Card income 1,218 1,170 1,177 1,078 1,013 Income from bank
owned life insurance 948 904 899 1,029 930 Gains (losses) on sales
of investment securities, net 635 58 — — 1,001 SBA/ warrant income
516 1,353 1,457 365 1,006 Lending related income and gains (losses)
on sale of loans, net 492 488 459 (112 ) 2,935 Other 1,997
1,702 1,775 1,655 1,749
Total
non-interest income 10,544 10,540 10,683
8,559 13,133 Non-interest expenses: Salaries and
employee benefits 51,620 49,702 49,542 44,711 44,855 Legal,
professional, and directors' fees 8,803 7,600 5,691 5,747 5,572
Occupancy 6,894 6,944 6,856 7,246 6,257 Data processing 5,271 4,504
4,982 5,114 4,060 Insurance 3,228 3,468 3,144 2,963 3,323 Marketing
721 1,164 678 1,097 657 Intangible amortization 689 697 697 697 697
Card expense 654 689 536 824 887 Loan and repossessed asset
expenses 1,278 477 788 832 902 Net (gain) loss on sales and
valuations of repossessed and other assets (543 ) (34 ) (146 ) 357
(302 ) Acquisition / restructure expense — 6,021 2,729 3,662 —
Other 9,142 7,413 9,510 8,554 8,585
Total non-interest expense 87,757 88,645
85,007 81,804 75,493 Income before
income taxes 97,846 96,164 96,223 87,941 80,851 Income tax expense
24,489 26,364 29,171 26,327 19,519
Net income available to common stockholders $ 73,357
$ 69,800 $ 67,052 $ 61,614 $ 61,332
Earnings per share available to common
stockholders: Diluted shares
104,836
104,765 104,564 103,472 102,538 Diluted earnings per share $ 0.70 $
0.67 $ 0.64 $ 0.60 $ 0.60
Western Alliance
Bancorporation and Subsidiaries Five Quarter Condensed
Consolidated Balance Sheets Unaudited
Mar 31, 2017 Dec 31, 2016
Sep 30, 2016 Jun 30, 2016
Mar 31, 2016 (in millions, except per share data)
Assets: Cash and due from banks $ 647.0 $ 284.5 $ 356.1 $
696.2 $ 1,031.0 Securities and money market investments 2,869.1
2,767.8 2,778.1 2,262.6 2,099.9 Loans held for sale 17.8 18.9 21.3
22.3 23.6 Loans held for investment: Commercial 6,039.1 5,855.8
5,715.0 5,577.6 5,378.5 Commercial real estate - non-owner occupied
3,607.8 3,544.0 3,623.4 3,601.3 2,291.0 Commercial real estate -
owner occupied 2,043.4 2,013.3 1,984.0 2,008.3 2,032.3 Construction
and land development 1,601.7 1,478.1 1,379.7 1,333.5 1,179.9
Residential real estate 309.9 259.4 271.8 293.0 302.4 Consumer 43.0
39.0 38.4 41.8 33.7
Gross
loans and deferred fees, net 13,644.9 13,189.6 13,012.3
12,855.5 11,217.8 Allowance for credit losses (127.6 ) (124.7 )
(122.9 ) (122.1 ) (119.2 )
Loans, net 13,517.3
13,064.9 12,889.4 12,733.4 11,098.6
Premises and equipment, net 120.0 119.8 121.3 120.5 119.8 Other
assets acquired through foreclosure, net 45.2 47.8 49.6 49.8 52.8
Bank owned life insurance 165.5 164.5 163.6 164.3 163.4 Goodwill
and other intangibles, net 302.1 302.9 303.6 304.3 304.0 Other
assets 438.5 429.7 359.6 375.3 354.9
Total assets $ 18,122.5 $ 17,200.8 $
17,042.6 $ 16,728.7 $ 15,248.0
Liabilities
and Stockholders' Equity: Liabilities: Deposits Non-interest
bearing demand deposits $ 6,114.1 $ 5,632.9 $ 5,624.8 $ 5,275.1 $
4,635.2 Interest bearing: Demand 1,449.3 1,346.7 1,256.7 1,278.1
1,088.2 Savings and money market 6,253.8 6,120.9 5,969.6 6,005.8
5,650.9 Time certificates 1,538.8 1,449.3 1,592.1
1,642.3 1,707.4
Total deposits 15,356.0
14,549.8 14,443.2 14,201.3 13,081.7 Customer repurchase agreements
35.7 41.7 44.4 38.5 36.1
Total customer funds 15,391.7 14,591.5 14,487.6 14,239.8
13,117.8 Borrowings — 80.0 — — 0.2 Qualifying debt 366.9 367.9
382.9 382.1 210.4 Accrued interest payable and other liabilities
394.9 269.9 314.7 310.6 259.4
Total liabilities 16,153.5 15,309.3 15,185.2
14,932.5 13,587.8 Stockholders' Equity: Common
stock and additional paid-in capital 1,370.3 1,373.8 1,368.4
1,364.0 1,302.9 Retained earnings 595.8 522.4 452.6 385.6 324.0
Accumulated other comprehensive income (loss) 2.9 (4.7 )
36.4 46.6 33.3
Total stockholders'
equity 1,969.0 1,891.5 1,857.4 1,796.2
1,660.2
Total liabilities and stockholders'
equity $ 18,122.5 $ 17,200.8 $ 17,042.6 $
16,728.7 $ 15,248.0
Western Alliance
Bancorporation and Subsidiaries Changes in the Allowance For
Credit Losses Unaudited Three Months
Ended Mar 31, 2017 Dec 31, 2016
Sep 30, 2016 Jun 30, 2016
Mar 31, 2016 (in thousands) Balance, beginning
of period $ 124,704 $ 122,884 $ 122,104 $ 119,227 $ 119,068
Provision for credit losses 4,250 1,000 2,000 2,500 2,500
Recoveries of loans previously charged-off: Commercial and
industrial 328 1,144 466 804 1,576 Commercial real estate -
non-owner occupied 355 691 230 343 3,595 Commercial real estate -
owner occupied 178 45 291 427 70 Construction and land development
277 30 302 58 95 Residential real estate 251 287 179 153 257
Consumer 49 11 21 43 67 Total
recoveries 1,438 2,208 1,489 1,828 5,660 Loans charged-off:
Commercial and industrial 2,595 1,267 2,558 1,161 7,491 Commercial
real estate - non-owner occupied — 1 — — — Commercial real estate -
owner occupied — 1 72 244 410 Construction and land development —
18 — — — Residential real estate 115 60 79 — 26 Consumer 33
41 — 46 74 Total loans charged-off
2,743 1,388 2,709 1,451 8,001 Net loan charge-offs (recoveries)
1,305 (820 ) 1,220 (377 ) 2,341 Balance, end
of period $ 127,649 $ 124,704 $ 122,884 $
122,104 $ 119,227 Net charge-offs (recoveries)
to average loans- annualized 0.04 % (0.03 )% 0.04 % (0.01 )% 0.08 %
Allowance for credit losses to gross loans 0.94 % 0.95 %
0.94 % 0.95 % 1.06 % Allowance for credit losses to gross loans,
adjusted for acquisition accounting (1) 1.26 1.30 1.37 1.42 1.21
Allowance for credit losses to nonaccrual loans 370.45 309.65
302.61 307.68 352.72 Nonaccrual loans $ 34,458 $ 40,272 $
40,608 $ 39,685 $ 33,802 Nonaccrual loans to gross loans 0.25 %
0.31 % 0.31 % 0.31 % 0.30 % Repossessed assets $ 45,200 $ 47,815 $
49,619 $ 49,842 $ 52,776 Nonaccrual loans and repossessed assets to
total assets 0.44 % 0.51 % 0.53 % 0.54 % 0.57 % Loans past
due 90 days, still accruing $ 3,659 $ 1,067 $ 2,817 $ 6,991 $ 4,488
Loans past due 90 days and still accruing to gross loans 0.03 %
0.01 % 0.02 % 0.05 % 0.04 % Loans past due 30 to 89 days, still
accruing $ 10,764 $ 6,294 $ 18,446 $ 3,475 $ 9,207 Loans past due
30 to 89 days, still accruing to gross loans 0.08 % 0.05 % 0.14 %
0.03 % 0.08 % Special mention loans $ 175,184 $ 148,144 $
134,018 $ 154,167 $ 133,036 Special mention loans to gross loans
1.28 % 1.12 % 1.03 % 1.20 % 1.19 % Classified loans on
accrual $ 133,483 $ 106,644 $ 110,650 $ 119,939 $ 92,435 Classified
loans on accrual to gross loans 0.98 % 0.81 % 0.85 % 0.93 % 0.82 %
Classified assets $ 236,786 $ 211,782 $ 212,286 $ 219,319 $ 187,929
Classified assets to total assets 1.31 % 1.23 % 1.25 % 1.31 % 1.23
% (1) See Reconciliation of Non-GAAP Financial Measures.
Western Alliance Bancorporation and
Subsidiaries Analysis of Average Balances, Yields and
Rates Unaudited Three Months Ended
March 31, 2017 December 31, 2016
AverageBalance
Interest
Average Yield /Cost
AverageBalance Interest
Average Yield /Cost ($ in millions) ($ in
thousands) ($ in millions) ($ in thousands)
Interest earning
assets Loans: Commercial $ 5,753.7 $ 68,404 5.24 % $ 5,656.4 $
66,674 5.19 % CRE - non-owner occupied 3,534.8 53,506 6.05 3,581.1
51,565 5.76 CRE - owner occupied 1,998.0 24,726 4.95 1,993.3 24,897
5.00 Construction and land development 1,510.8 22,102 5.85 1,431.9
22,094 6.17 Residential real estate 271.9 3,023 4.45 264.3 2,926
4.43 Consumer 38.5 493 5.12 38.7 468 4.84 Loans held for sale 18.8
299 6.36 20.2 257 5.09
Total loans (1), (2), (3) 13,126.5 172,553 5.47 12,985.9
168,881 5.41 Securities: Securities - taxable 2,105.2 12,437 2.36
2,142.6 11,482 2.14 Securities - tax-exempt 604.3 5,677
5.57 591.2 5,243 5.25
Total
securities (1) 2,709.5 18,114 3.08 2,733.8 16,725 2.81 Other
482.0 1,598 1.33 430.0 1,805
1.68
Total interest earning assets 16,318.0 192,265
4.95 16,149.7 187,411 4.87
Non-interest earning assets Cash
and due from banks 142.7 146.0 Allowance for credit losses (125.7 )
(122.7 ) Bank owned life insurance 164.8 163.9 Other assets 900.5
844.0
Total assets $ 17,400.3 $
17,180.9
Interest-bearing liabilities
Interest-bearing deposits: Interest-bearing transaction accounts $
1,434.8 $ 805 0.22 % $ 1,295.6 $ 660 0.20 % Savings and money
market 6,069.0 5,312 0.35 6,004.4 5,043 0.34 Time certificates of
deposit 1,484.9 2,295 0.62 1,507.0
2,026 0.54
Total interest-bearing deposits
8,988.7 8,412 0.37 8,807.0 7,729 0.35 Short-term borrowings 110.9
206 0.74 73.5 161 0.88 Qualifying debt 354.1 4,338
4.90 365.4 4,252 4.65
Total
interest-bearing liabilities 9,453.7 12,956 0.55 9,245.9 12,142
0.53
Non-interest-bearing liabilities Non-interest-bearing
demand deposits 5,719.2 5,752.0 Other liabilities 280.6 292.5
Stockholders’ equity 1,946.8 1,890.5
Total
liabilities and stockholders' equity $ 17,400.3 $
17,180.9 Net interest income and margin (4) $ 179,309
4.63 % $ 175,269 4.57 % Net interest spread (5) 4.40 % 4.34
% (1) Yields on loans and securities have been adjusted to a
tax-equivalent basis. The taxable-equivalent adjustment was $9.7
million and $8.6 million for the three months ended March 31, 2017
and December 31, 2016, respectively. (2) Included in the yield
computation are net loan fees of $6.6 million and accretion on
acquired loans of $6.4 million for the three months ended March 31,
2017, compared to $8.3 million and $7.0 million for the three
months ended December 31 2016, respectively. (3) Includes
non-accrual loans. (4) Net interest margin is computed by dividing
net interest income by total average earning assets. (5) Net
interest spread represents average yield earned on interest-earning
assets less the average rate paid on interest-bearing liabilities.
Western Alliance Bancorporation and
Subsidiaries Analysis of Average Balances, Yields and
Rates Unaudited Three Months Ended
March 31, 2017 2016
AverageBalance Interest
Average Yield /Cost
AverageBalance Interest
Average Yield /Cost
($ in millions) ($ in thousands) ($ in millions) ($ in thousands)
Interest earning assets Loans: Commercial $ 5,753.7 $ 68,404
5.24 % $ 5,160.6 $ 60,925 5.24 % CRE - non-owner occupied 3,534.8
53,506 6.05 2,272.4 30,953 5.45 CRE - owner occupied 1,998.0 24,726
4.95 2,061.4 26,186 5.08 Construction and land development 1,510.8
22,102 5.85 1,166.1 17,496 6.00 Residential real estate 271.9 3,023
4.45 311.5 3,509 4.51 Consumer 38.5 493 5.12 28.8 366 5.08 Loans
held for sale 18.8 299 6.36 24.1 351
5.82
Total loans (1), (2), (3) 13,126.5
172,553 5.47 11,024.9 139,786 5.31 Securities: Securities - taxable
2,105.2 12,437 2.36 1,568.4 9,337 2.38 Securities - tax-exempt
604.3 5,677 5.57 454.7 4,171
5.23
Total securities (1) 2,709.5 18,114 3.08 2,023.1
13,508 3.02 Other 482.0 1,598 1.33 417.5
962 0.92
Total interest earning assets
16,318.0 192,265 4.95 13,465.5 154,256 4.83
Non-interest earning
assets Cash and due from banks 142.7 140.8
Allowance for
credit losses (125.7 ) (121.5 ) Bank owned life insurance 164.8
162.8 Other assets 900.5 822.5
Total assets $
17,400.3 $ 14,470.1
Interest-bearing
liabilities Interest-bearing deposits: Interest-bearing
transaction accounts $ 1,434.8 $ 805 0.22 % $ 1,091.9 $ 455 0.17 %
Savings and money market 6,069.0 5,312 0.35 5,333.9 4,034 0.30 Time
certificates of deposit 1,484.9 2,295 0.62
1,561.5 1,754 0.45
Total interest-bearing
deposits 8,988.7 8,412 0.37 7,987.3 6,243 0.31 Short-term
borrowings 110.9 206 0.74 52.8 118 0.89 Qualifying debt 354.1
4,338 4.90 199.4 2,184 4.38
Total interest-bearing liabilities 9,453.7 12,956
0.55 8,239.5 8,545 0.41
Non-interest-bearing liabilities
Non-interest-bearing demand deposits 5,719.2 4,350.1 Other
liabilities 280.6 244.5 Stockholders’ equity 1,946.8 1,636.0
Total liabilities and stockholders' equity $ 17,400.3
$ 14,470.1 Net interest income and margin (4) $
179,309 4.63 % $ 145,711 4.58 % Net interest spread
(5) 4.40 % 4.42 % (1) Yields on loans and securities have
been adjusted to a tax-equivalent basis. The taxable-equivalent
adjustment was $9.7 million and $8.4 million for the three months
ended March 31, 2017 and 2016, respectively. (2) Included in the
yield computation are net loan fees of $6.6 million and accretion
on acquired loans of $6.4 million for the three months ended March
31, 2017, compared to $6.5 million and $5.3 million for the three
months ended March 31, 2016, respectively. (3) Includes non-accrual
loans. (4) Net interest margin is computed by dividing net interest
income by total average earning assets. (5) Net interest spread
represents average yield earned on interest-earning assets less the
average rate paid on interest bearing-liabilities.
Western Alliance Bancorporation and Subsidiaries
Operating Segment Results Unaudited
Balance
Sheet: Regional Segments
ConsolidatedCompany
Arizona Nevada
SouthernCalifornia
NorthernCalifornia
At March 31, 2017 (dollars in millions)
Assets: Cash,
cash equivalents, and investment securities $ 3,516.1 $ 1.8 $ 8.9 $
1.9 $ 1.7 Loans, net of deferred loan fees and costs 13,662.7
3,039.7 1,769.3 1,806.7 1,130.1 Less: allowance for credit losses
(127.6 ) (30.3 ) (18.7 ) (20.1 ) (9.4 ) Total loans 13,535.1
3,009.4 1,750.6 1,786.6 1,120.7 Other
assets acquired through foreclosure, net 45.2 5.0 17.1 — 0.2
Goodwill and other intangible assets, net 302.1 — 23.4 — 157.2
Other assets 724.0 42.3 58.9 13.9 13.5
Total assets $ 18,122.5 $ 3,058.5 $ 1,858.9
$ 1,802.4 $ 1,293.3
Liabilities:
Deposits $ 15,356.0 $ 4,255.0 $ 3,896.1 $ 2,397.2 $ 1,461.3
Borrowings and qualifying debt 366.9 — — — — Other liabilities
430.6 13.4 27.4 4.5 13.6 Total
liabilities 16,153.5 4,268.4 3,923.5 2,401.7
1,474.9
Allocated equity: 1,969.0 365.7
259.0 205.2 284.6
Total liabilities
and stockholders' equity $ 18,122.5 $ 4,634.1 $
4,182.5 $ 2,606.9 $ 1,759.5 Excess funds
provided (used) — 1,575.6 2,323.6 804.5 466.2 No. of offices
45 9 16 9 3 No. of full-time equivalent employees 1,564 169 227 176
162
Income Statement: Three Months Ended
March 31, 2017: (in thousands) Net interest income (expense) $
179,309 $ 43,907 $ 35,296 $ 25,218 $ 22,035 Provision for credit
losses 4,250 14 (211 ) 91 396 Net
interest income (expense) after provision for credit losses 175,059
43,893 35,507 25,127 21,639 Non-interest income 10,544 1,113 2,133
743 2,113 Non-interest expense (87,757 ) (18,622 ) (15,870 )
(12,703 ) (12,709 ) Income (loss) before income taxes 97,846 26,384
21,770 13,167 11,043 Income tax expense (benefit) 24,489
10,350 7,620 5,537 4,643
Net
income $ 73,357 $ 16,034 $ 14,150 $ 7,630
$ 6,400
Western Alliance
Bancorporation and Subsidiaries Operating Segment
Results Unaudited
Balance
Sheet: National Business Lines HOAServices
Public
&NonprofitFinance
Technology
&Innovation
HotelFranchiseFinance
Other NBLs
Corporate &Other
At March 31, 2017 (dollars in millions)
Assets: Cash,
cash equivalents, and investment securities $ — $ — $ — $ — $ — $
3,501.8 Loans, net of deferred loan fees and costs 132.7 1,528.7
1,011.2 1,279.6 1,955.1 9.6 Less: allowance for credit losses (1.4
) (16.0 ) (9.7 ) (1.3 ) (20.0 ) (0.7 ) Total loans 131.3
1,512.7 1,001.5 1,278.3 1,935.1 8.9
Other assets acquired through foreclosure, net — — — — —
22.9 Goodwill and other intangible assets, net — — 121.4 0.1 — —
Other assets 0.4 11.9 5.7 5.4 2.8
569.2 Total assets $ 131.7 $ 1,524.6 $
1,128.6 $ 1,283.8 $ 1,937.9 $ 4,102.8
Liabilities: Deposits $ 2,112.8 $ — $ 1,142.2 $ — $ — $ 91.4
Borrowings and qualifying debt — — — — — 366.9 Other liabilities
1.8 43.1 0.8 0.6 132.6 192.8
Total liabilities 2,114.6 43.1 1,143.0
0.6 132.6 651.1
Allocated equity: 72.9
122.3 225.5 105.5 162.2 166.1
Total liabilities and stockholders' equity $ 2,187.5
$ 165.4 $ 1,368.5 $ 106.1 $ 294.8
$ 817.2 Excess funds provided (used) 2,055.8 (1,359.2
) 239.9 (1,177.7 ) (1,643.1 ) (3,285.6 ) No. of offices 1 1
8 1 4 (7 ) No. of full-time equivalent employees 62 6 57 20 31 654
Income Statement: Three Months Ended March
31, 2017: (in thousands) Net interest income (expense) $ 12,748
$ 6,485 $ 18,166 $ 13,581 $ 14,143 $ (12,270 ) Provision for credit
losses 127 509 296 — 3,527 (499
) Net interest income (expense) after provision for credit losses
12,621 5,976 17,870 13,581 10,616 (11,771 ) Non-interest income 141
15 1,873 — 721 1,692 Non-interest expense (7,147 ) (2,253 ) (8,779
) (2,988 ) (4,721 ) (1,965 ) Income (loss) before income taxes
5,615 3,738 10,964 10,593 6,616 (12,044 ) Income tax expense
(benefit) 2,106 1,402 4,111 3,972 2,481
(17,733 )
Net income $ 3,509 $ 2,336 $
6,853 $ 6,621 $ 4,135 $ 5,689
Western Alliance Bancorporation and Subsidiaries
Operating Segment Results Unaudited
Balance
Sheet: Regional Segments
ConsolidatedCompany
Arizona Nevada
SouthernCalifornia
NorthernCalifornia
At December 31, 2016 (dollars in millions)
Assets:
Cash, cash equivalents, and investment securities $ 3,052.3 $ 1.9 $
10.1 $ 2.1 $ 1.9 Loans, net of deferred loan fees and costs
13,208.5 2,955.9 1,725.5 1,766.8 1,095.4 Less: allowance for credit
losses (124.7 ) (30.1 ) (18.5 ) (19.4 ) (8.8 ) Total loans 13,083.8
2,925.8 1,707.0 1,747.4 1,086.6
Other assets acquired through foreclosure, net 47.8 6.2 18.0 — 0.3
Goodwill and other intangible assets, net 302.9 — 23.7 — 157.5
Other assets 714.0 42.9 58.8 14.5 14.3
Total assets $ 17,200.8 $ 2,976.8 $ 1,817.6
$ 1,764.0 $ 1,260.6
Liabilities:
Deposits $ 14,549.8 $ 3,843.4 $ 3,731.5 $ 2,382.6 $ 1,543.6
Borrowings and qualifying debt 447.9 — — — — Other liabilities
311.6 12.8 28.3 12.9 12.4 Total
liabilities 15,309.3 3,856.2 3,759.8 2,395.5
1,556.0
Allocated equity: 1,891.5 346.6
250.7 201.6 283.7
Total liabilities
and stockholders' equity $ 17,200.8 $ 4,202.8 $
4,010.5 $ 2,597.1 $ 1,839.7 Excess funds
provided (used) — 1,226.0 2,192.9 833.1 579.1 No. of offices
48
10
18 9
3
No. of full-time equivalent employees
1,557
168
225
175
167
Income Statements: Three Months Ended March
31, 2016: (in thousands) Net interest income (expense) $
145,711 $ 38,456 $ 32,575 $ 24,428 $ 23,195 Provision for (recovery
of) credit losses 2,500 6,773 (813 ) 30 1,042
Net interest income (expense) after provision for credit
losses 143,211 31,683 33,388 24,398 22,153 Non-interest income
13,133 3,681 2,059 660 2,426 Non-interest expense (75,493 ) (14,456
) (14,746 ) (11,234 ) (13,967 ) Income (loss) before income taxes
80,851 20,908 20,701 13,824 10,612 Income tax expense (benefit)
19,519 8,202 7,245 5,813 4,463
Net income (loss) $ 61,332 $ 12,706 $ 13,456
$ 8,011 $ 6,149
Three Months Ended
December 31, 2016: (in thousands) Net interest income (expense)
$ 175,269 $ 45,322 $ 35,491 $ 26,823 $ 20,890 Provision for
(recovery of) credit losses 1,000 (963 ) 189 (724 )
475 Net interest income (expense) after provision for credit
losses 174,269 46,285 35,302 27,547 20,415 Non-interest income
10,540 1,139 2,203 643 2,564 Non-interest expense (88,645 ) (18,316
) (16,199 ) (12,242 ) (12,919 ) Income (loss) before income taxes
96,164 29,108 21,306 15,948 10,060 Income tax expense (benefit)
26,364 11,419 7,457 6,707 4,230
Net income (loss) $ 69,800 $ 17,689 $ 13,849
$ 9,241 $ 5,830
Western
Alliance Bancorporation and Subsidiaries Operating Segment
Results Unaudited
Balance Sheet:
National Business Lines
HOAServices
Public
&NonprofitFinance
Technology
&Innovation
HotelFranchiseFinance
Other NBLs
Corporate &Other
At December 31, 2016 (dollars in millions)
Assets:
Cash, cash equivalents, and investment securities $ — $ — $ — $ — $
— $ 3,036.3 Loans, net of deferred loan fees and costs 116.8
1,454.3 1,011.4 1,292.1 1,776.9 13.4 Less: allowance for credit
losses (1.3 ) (15.6 ) (10.6 ) (0.8 ) (19.0 ) (0.6 ) Total loans
115.5 1,438.7 1,000.8 1,291.3 1,757.9
12.8 Other assets acquired through foreclosure, net —
— — — — 23.3 Goodwill and other intangible assets, net — — 121.5
0.2 — — Other assets 0.3 15.6 7.2 5.3
11.1 544.0 Total assets $ 115.8 $ 1,454.3
$ 1,129.5 $ 1,296.8 $ 1,769.0 $ 3,616.4
Liabilities: Deposits $ 1,890.3 $ — $ 1,038.2 $ — $ —
$ 120.2 Borrowings and qualifying debt — — — — — 447.9 Other
liabilities 0.7 50.5 2.0 1.4 17.5
173.1 Total liabilities 1,891.0 50.5
1,040.2 1.4 17.5 741.2
Allocated
equity: 65.6 117.1 224.1 107.1
145.5 149.5
Total liabilities and stockholders'
equity $ 1,956.6 $ 167.6 $ 1,264.3 $ 108.5
$ 163.0 $ 890.7 Excess funds provided (used)
1,840.8 (1,286.7 ) 134.8 (1,188.3 ) (1,606.0 ) (2,725.7 )
No. of offices 1 1
8
1
4
(7
) No. of full-time equivalent employees
64
6
57
20
34
641
Income Statement: Three Months Ended March
31, 2016: (in thousands) Net interest income (expense) $ 8,632
$ 5,221 $ 16,309 $ — $ 10,637 $ (13,742 ) Provision for (recovery
of) credit losses 78 (369 ) (1,165 ) — 238
(3,314 ) Net interest income (expense) after provision for credit
losses 8,554 5,590 17,474 — 10,399 (10,428 ) Non-interest income
105 (4 ) 1,637 — 635 1,934 Non-interest expense (5,541 ) (2,024 )
(6,906 ) — (3,437 ) (3,182 ) Income (loss) before income
taxes 3,118 3,562 12,205 — 7,597 (11,676 ) Income tax expense
(benefit) 1,169 1,336 4,577 — 2,849
(16,135 )
Net income (loss) $ 1,949 $ 2,226
$ 7,628 $ — $ 4,748 $ 4,459
Three Months Ended December 31, 2016: (in thousands)
Net interest income (expense) $ 11,686 $ 5,641 $ 18,060 $ 13,145 $
14,673 $ (16,462 ) Provision for (recovery of) credit losses 96
326 710 — 891 — Net
interest income (expense) after provision for credit losses 11,590
5,315 17,350 13,145 13,782 (16,462 ) Non-interest income 119 37
2,105 — 717 1,013 Non-interest expense (6,596 ) (2,010 ) (8,094 )
(2,780 ) (4,197 ) (5,292 ) Income (loss) before income taxes 5,113
3,342 11,361 10,365 10,302 (20,741 ) Income tax expense (benefit)
1,918 1,253 4,261 3,887 3,864
(18,632 )
Net income (loss) $ 3,195 $ 2,089 $
7,100 $ 6,478 $ 6,438 $ (2,109 )
Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Unaudited
Operating Pre-Provision Net Revenue by Quarter:
Three Months Ended Mar 31, 2017 Dec 31, 2016
Sep 30, 2016 Jun 30, 2016 Mar 31, 2016 (in
thousands) Total non-interest income $ 10,544 $ 10,540 $ 10,683 $
8,559 $ 13,133 Less: Gains (losses) on sales of investment
securities, net 635 58 — — 1,001 Unrealized gains (losses) on
assets and liabilities measured at fair value, net — —
7 6 (5 )
Total operating non-interest
income 9,909 10,482 10,676 8,553 12,137 Plus: net interest
income 179,309 175,269 172,547 163,686
145,711
Net operating revenue (1) $ 189,218 $
185,751 $ 183,223 $ 172,239 $ 157,848
Total non-interest expense $ 87,757 $ 88,645 $ 85,007 $
81,804 $ 75,493 Less: Net (gain) loss on sales and valuations of
repossessed and other assets (543 ) (34 ) (146 ) 357 (302 )
Acquisition / restructure expense — 6,021 2,729
3,662 —
Total operating non-interest
expense (1) $ 88,300 $ 82,658 $ 82,424 $
77,785 $ 75,795
Operating pre-provision net revenue (2) $ 100,918 $
103,093 $ 100,799 $ 94,454 $ 82,053
Plus: Non-operating revenue adjustments 635 58 7 6 996 Less:
Provision for credit losses 4,250 1,000 2,000 2,500 2,500
Non-operating expense adjustments (543 ) 5,987 2,583 4,019 (302 )
Income tax expense 24,489 26,364 29,171 26,327
19,519 Net income $ 73,357 $ 69,800 $
67,052 $ 61,614 $ 61,332
Western Alliance Bancorporation and
SubsidiariesReconciliation of Non-GAAP Financial
MeasuresUnaudited
Tangible Common Equity: Mar 31, 2017
Dec 31, 2016 Sep 30, 2016 Jun 30, 2016 Mar
31, 2016 (dollars and shares in thousands) Total stockholders'
equity $ 1,968,992 $ 1,891,529 $ 1,857,354 $ 1,796,210 $ 1,660,163
Less: goodwill and intangible assets 302,133 302,894
303,592 304,289 303,962
Total tangible
common equity 1,666,859 1,588,635 1,553,762 1,491,921 1,356,201
Plus: deferred tax - attributed to intangible assets 4,759
4,949 5,304 5,594 5,828
Total
tangible common equity, net of tax $ 1,671,618 $
1,593,584 $ 1,559,066 $ 1,497,515 $ 1,362,029
Total assets $ 18,122,506 $ 17,200,842 $ 17,042,602 $
16,728,767 $ 15,248,039 Less: goodwill and intangible assets, net
302,133 302,894 303,592 304,289 303,962
Tangible assets 17,820,373 16,897,948 16,739,010 16,424,478
14,944,077 Plus: deferred tax - attributed to intangible assets
4,759 4,949 5,304 5,594 5,828
Total tangible assets, net of tax $ 17,825,132 $
16,902,897 $ 16,744,314 $ 16,430,072 $
14,949,905 Tangible common equity ratio (3) 9.4 % 9.4 % 9.3
% 9.1 % 9.1 % Common shares outstanding 105,428 105,071 105,071
105,084 103,513 Tangible book value per share, net of tax (4) $
15.86 $ 15.17 $ 14.84 $ 14.25 $ 13.16
Operating Efficiency Ratio by Quarter: Three Months
Ended Mar 31, 2017 Dec 31, 2016
Sep 30, 2016 Jun 30, 2016
Mar 31, 2016 (in thousands) Total operating
non-interest expense $ 88,300 $ 82,658 $ 82,424 $ 77,785 $ 75,795
Divided by: Total net interest income 179,309 175,269 172,547
163,686 145,711 Plus: Tax equivalent interest adjustment 9,676
9,165 8,599 8,704 8,435 Operating non-interest income 9,909
10,482 10,676 8,553 12,137 $ 198,894
$ 194,916 $ 191,822 $ 180,943 $ 166,283
Operating efficiency ratio - tax equivalent basis (5)
44.4 % 42.4 % 43.0 % 43.0 % 45.6 %
Western Alliance Bancorporation and
SubsidiariesReconciliation of Non-GAAP Financial
MeasuresUnaudited
Allowance for Credit Losses, Adjusted for
Acquisition Accounting: Mar 31,
2017 Dec 31, 2016 Sep 30, 2016 Jun 30,
2016 Mar 31, 2016 (in thousands) Allowance for credit
losses $ 127,649 $ 124,704 $ 122,884 $ 122,104 $ 119,227 Plus:
remaining credit marks Acquired performing loans 32,781 34,392
41,020 45,225 9,646 Purchased credit impaired loans 12,335
12,872 15,093 16,438 6,760 Adjusted
allowance for credit losses $ 172,765 $ 171,968 $
178,997 $ 183,767 $ 135,633 Gross loans
held for investment and deferred fees, net $ 13,644,883 $
13,189,527 $ 13,012,262 $ 12,855,511 $ 11,217,860 Plus: remaining
credit marks Acquired performing loans 32,781 34,392 41,020 45,225
9,646 Purchased credit impaired loans 12,335 12,872
15,093 16,438 6,760 Adjusted loans, net of
deferred fees and costs $ 13,689,999 $ 13,236,791 $
13,068,375 $ 12,917,174 $ 11,234,266
Allowance for credit losses to gross loans 0.94 % 0.95 % 0.94 %
0.95 % 1.06 %
Allowance for credit losses to gross loans,
adjusted for acquisition accounting (6) 1.26 1.30
1.37 1.42 1.21
Net Interest Margin, Adjusted
for Acquisition Accounting: Mar 31, 2017
Dec 31, 2016 Sep 30, 2016 Jun 30, 2016 Mar
31, 2016 (in thousands) Average interest earning assets $
16,318,000 $ 16,149,700 $ 15,931,600 $ 14,902,300 $ 13,465,500
Taxable-equivalent adjustment 9,676 9,165 8,599 8,703 8,435
Net interest income $ 179,309 $ 175,269 $ 172,547 $ 163,686 $
145,711 Less: accretion Acquired performing loans 4,064 4,911 4,604
4,122 2,847 Purchased credit impaired loans 2,329 2,075
4,189 4,048 2,468 Adjusted net interest
income $ 172,916 $ 168,283 $ 163,754 $ 155,516
$ 140,396 Net interest margin 4.63 % 4.57 %
4.55 % 4.63 % 4.58 %
Net interest margin, adjusted for
accretion(7)
4.48 4.40 4.33 4.41 4.42
Western Alliance Bancorporation and
SubsidiariesReconciliation of Non-GAAP Financial
MeasuresUnaudited
Regulatory Capital:
Mar 31, 2017 Dec 31, 2016 (in thousands)
Common
Equity Tier 1: Common equity $ 1,968,992 $ 1,891,529 Less:
Non-qualifying goodwill and intangibles 295,878 294,754 Disallowed
deferred tax asset 2,011 1,400 AOCI related adjustments (5,875 )
(13,460 ) Unrealized gain on changes in fair value liabilities
9,802 8,118
Common equity Tier 1 (regulatory) (8)
(11)
$ 1,667,176 $ 1,600,717
Divided by: estimated risk-weighted
assets (regulatory (9) (11)
$ 16,565,677 $ 15,980,092
Common equity Tier 1 ratio (9)
(11)
10.1 % 10.0 %
Common equity Tier 1 (regulatory) (8)
(11)
1,667,176 1,600,717 Plus: Trust preferred securities 81,500 81,500
Less: Disallowed deferred tax asset 503 934 Unrealized gain on
changes in fair value of liabilities 2,450 5,412
Tier 1 capital (9) (11)
$ 1,745,723 $ 1,675,871
Divided by: Tangible
average assets $ 17,121,149 $ 16,868,674
Tier 1 leverage
ratio 10.2 % 9.9 %
Total Capital:
Tier 1 capital (regulatory) (8) (11)
$ 1,745,723 $ 1,675,871 Plus: Subordinated debt 300,759 299,927
Qualifying allowance for credit losses 127,649 124,704 Other 6,367
6,978 Less: Tier 2 qualifying capital deductions — —
Tier 2 capital $ 434,775 $ 431,609
Total capital $ 2,180,498 $ 2,107,480
Total capital ratio 13.2 % 13.2 %
Classified assets to Tier 1 capital plus allowance:
Classified assets $ 236,786 $ 211,782 Divided by:
Tier 1 capital (9) (11)
1,745,723 1,675,871 Plus: Allowance for credit losses 127,649
124,704
Total Tier 1 capital plus allowance for
credit losses $ 1,873,372 $ 1,800,575
Classified assets to Tier 1 capital
plus allowance (10) (11)
12.6 % 11.8 % (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 this non-GAAP ratio provides 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,
because under GAAP, a company's allowance for credit losses is not
carried over in an acquisition, but rather these loans are shown as
being purchased at a discount that factors in expected future
credit losses. (7)
We believe this non-GAAP ratio is a useful
metric in understanding the Company's net interest margin, adjusted
for acquisition accounting, because under GAAP, interest rate and
credit marks on acquired loans are accreted and recognized as part
of interest income. By excluding the accretion on acquired loans,
management believes this is more indicative of the yield from the
Company's loan portfolio and improves comparability to other
institutions that have not engaged in acquisitions that resulted in
recognition of interest rate and credit marks on acquired
loans.
(8)
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.
(9)
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.
(10)
We believe this non-GAAP ratio provides an
important regulatory metric to analyze asset quality.
(11)
Current quarter is preliminary until Call
Report is filed.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170420006629/en/
Western Alliance BancorporationDale Gibbons, 602-952-5476
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