WAL Western Alliance Bancorporation

Western Alliance Bancorporation (NYSE:WAL):

 

SECOND QUARTER 2017 FINANCIAL RESULTS

Net income

   

Earnings per share

   

Net interest margin

   

Efficiency ratio

   

Book value per

common share

$80.0 million

$0.76

4.61%

41.3%

$19.53

41.2%, excluding non-operating adjustments1

$16.71, excluding intangible  

assets1

CEO COMMENTARY:

Robert Sarver, Chairman and CEO, commented, “We delivered excellent results this quarter marked by robust revenue growth coupled with flat expenses, solid deposit and loan increases and continued healthy credit quality. Our net income of $80 million and $0.76 EPS for Q2 2017 set a compelling course for returns this year. Tangible book value per share1 for the company increased to $16.71 and return on assets rose to 1.71%. As expected, expenses leveled during the quarter while revenues increased bringing the operating efficiency ratio1 to 41.2%. We experienced solid growth as deposits grew $675 million to $16 billion and loans grew $327 million to nearly $14 billion. Our vigilant credit culture resulted in continued stable asset quality with non-performing assets to total assets of 0.32% and net recoveries of $1.2 million for the quarter.”

LINKED-QUARTER BASIS       YEAR-OVER-YEAR          

FINANCIAL HIGHLIGHTS:

• Net income and earnings per share of $80.0 million and $0.76, compared to $73.4 million and $0.70, respectively

• Net income of $80.0 million and earnings per share of $0.76, compared to $61.6 million and $0.60, respectively

• Net operating revenue of $203.2 million, constituting growth of $14.0 million, and a decrease in operating non-interest expenses of $0.3 million 1

• Net operating revenue of $203.2 million, constituting year-over-year growth of 18.0%, or $31.0 million, and an increase in operating non-interest expenses of 13.2%, or $10.2 million 1

• Operating pre-provision net revenue of $115.2 million, up $14.3 million from $100.9 million 1

• Operating pre-provision net revenue of $115.2 million, up $20.7 million from $94.5 million 1

 

FINANCIAL POSITION RESULTS:

• Total loans of $13.99 billion, up $327 million

• Increase in total loans of $1.11 billion

• Total deposits of $16.03 billion, up $675 million

• Increase in total deposits of $1.83 billion

• Stockholders' equity of $2.06 billion, up $90 million

• Increase in stockholders' equity of $263 million

 

LOANS AND ASSET QUALITY:

• Nonperforming assets (nonaccrual loans and repossessed assets) decreased to 0.32% of total assets, from 0.44%

• Nonperforming assets to total assets of 0.32%, compared to 0.54%

• Annualized net loan (recoveries) charge-offs to average loans outstanding of (0.03)%, compared to 0.04%

•Annualized net loan (recoveries) charge-offs to average loans outstanding of (0.03)%, compared to (0.01)%

 

KEY PERFORMANCE METRICS:

• Net interest margin of 4.61%, compared to 4.63%

• Net interest margin of 4.61%, compared to 4.63%

• Return on average assets and return on tangible common equity 1 of 1.71% and 18.42%, compared to 1.69% and 17.85%, respectively

• Return on average assets and return on tangible common equity 1 of 1.70%and 18.14%, compared to 1.62% and 17.88%, respectively

• Tangible common equity ratio of 9.5%, compared to 9.4% 1

• Tangible common equity ratio of 9.5%, compared to 9.1% 1

• Tangible book value per share, net of tax, of $16.71, an increase from $15.86 1

• Tangible book value per share, net of tax, of $16.71, an increase of 17.3% from $14.25 1

• Operating efficiency ratio of 41.2%, compared to 44.4% 1

• Operating efficiency ratio of 41.2%, compared to 43.0% 1

 

1 See reconciliation of Non-GAAP Financial Measures.

Income Statement

Net interest income was $192.7 million in the second quarter 2017, an increase of $13.4 million from $179.3 million in the first quarter 2017 and an increase of $29.1 million, or 17.8%, compared to the second quarter 2016. Net interest income in the second quarter 2017 includes $7.1 million of total accretion income from acquired loans, compared to $6.4 million in the first quarter 2017, and $8.2 million in the second quarter 2016.

The Company’s net interest margin in the second quarter 2017 was 4.61%, a decrease from 4.63% in the first quarter 2017, and from 4.63% in the second quarter 2016. The decrease in net interest margin from the first quarter 2017 is attributable to an increase in the average cash balance, higher costs on interest-bearing deposits, as well as a decrease in yield from investment securities, which offset the higher yields on loans as a result of rising interest rates. The decrease in net interest margin from the second quarter 2016 primarily relates to a increases in the cost of interest-bearing deposits and interest expense resulting from the issuance of long-term subordinated debt in June 2016, partially offset by higher yields on loans and securities.

Operating non-interest income was $10.5 million for the second quarter 2017, compared to $9.9 million for the first quarter 2017, and $8.6 million for the second quarter 2016.1

Net operating revenue was $203.2 million for the second quarter 2017, an increase of $14.0 million, compared to $189.2 million for the first quarter 2017, and an increase of $31.0 million, or 18.0%, compared to $172.2 million for the second quarter 2016.1

Operating non-interest expense was $88.0 million for the second quarter 2017, compared to $88.3 million for the first quarter 2017, and $77.8 million for the second quarter 2016.1 Operating non-interest expense held relatively flat from the prior quarter. The increase in operating non-interest expense from the second quarter 2016 relates primarily to higher compensation costs resulting from an increase in the number of employees to support growth, as well as higher incentive compensation related to achievement of performance targets. The Company’s operating efficiency ratio1 on a tax equivalent basis was 41.2% for the second quarter 2017, compared to 44.4% for the first quarter 2017, and 43.0% for the second quarter 2016.

Net income was $80.0 million for the second quarter 2017, an increase of $6.6 million from $73.4 million for the first quarter 2017, and an increase of $18.4 million, or 29.8%, from $61.6 million for the second quarter 2016. Earnings per share was $0.76 for the second quarter 2017, compared to $0.70 for the first quarter 2017, and $0.60 for the second 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 second quarter 2017, the Company’s operating PPNR was $115.2 million, up from $100.9 million in the first quarter 2017, and up 21.9% from $94.5 million in the second quarter 2016.1 The non-operating items1 for the second quarter 2017 consisted primarily of a net loss on sales / valuations of repossessed and other assets of $0.2 million.

The Company had 1,628 full-time equivalent employees and 46 offices at June 30, 2017, compared to 1,560 employees and 45 offices at March 31, 2017 and 1,514 employees and 48 offices at June 30, 2016.

Balance Sheet

Gross loans totaled $13.99 billion at June 30, 2017, an increase of $327 million from $13.66 billion at March 31, 2017, and an increase of $1.11 billion from $12.88 billion at June 30, 2016. The increase from both the prior quarter and from June 30, 2016 is due to organic loan growth. At June 30, 2017, the allowance for credit losses was 1.08% of total organic loans, compared to 1.08% at March 31, 2017, and 1.15% at June 30, 2016.

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. Credit discounts on acquired loans are included as a reduction to gross loans. These discounts totaled $37.8 million at June 30, 2017, compared to $45.1 million at March 31, 2017 and $61.7 million at June 30, 2016.

Deposits totaled $16.03 billion at June 30, 2017, an increase of $675 million from $15.36 billion at March 31, 2017, and an increase of $1.83 billion from $14.20 billion at June 30, 2016. The increase from both the prior quarter and from June 30, 2016 is the result of organic deposit growth. Non-interest bearing deposits were $6.86 billion at June 30, 2017, compared to $6.11 billion at March 31, 2017, and $5.28 billion at June 30, 2016. Non-interest bearing deposits comprised 42.8% of total deposits at June 30, 2017, compared to 39.8% at March 31, 2017, and 37.1% at June 30, 2016. The proportion of savings and money market balances to total deposits decreased to 38.1% from 40.7% at March 31, 2017, and from 42.3% at June 30, 2016. Certificates of deposit as a percentage of total deposits were 9.9% at June 30, 2017, compared to 10.0% at March 31, 2017, and 11.6% at June 30, 2016. The Company’s ratio of loans to deposits was 87.3% at June 30, 2017, compared to 89.0% at March 31, 2017, and 90.7% at June 30, 2016.

Qualifying debt totaled $375 million at June 30, 2017, compared to $367 million at March 31, 2017, and $382 million at June 30, 2016.

Stockholders’ equity at June 30, 2017 was $2.06 billion, compared to $1.97 billion at March 31, 2017, and $1.80 billion at June 30, 2016. The increase from the prior year relates primarily to net income for the respective period, which was partially offset by valuation declines on available-for-sale investment securities.

At June 30, 2017, tangible common equity, net of tax, was 9.5% of tangible assets1 and total capital was 13.3% of risk-weighted assets. The Company’s tangible book value per share1 was $16.71 at June 30, 2017, up 17.3% from June 30, 2016.

Total assets increased to $18.84 billion at June 30, 2017, from $18.12 billion at March 31, 2017, and increased 12.6% from $16.73 billion at June 30, 2016. The increase in total assets from the prior year relates primarily to organic loan growth and an increase in investment securities resulting from increased deposits.

Asset Quality

The provision for credit losses was $3.0 million for the second quarter 2017, compared to $4.3 million for the first quarter 2017, and $2.5 million for the second quarter 2016. Net loan (recoveries) charge-offs in the second quarter 2017 were $(1.2) million, or (0.03)% of average loans (annualized), compared to $1.3 million in net charge-offs, or 0.04%, in the first quarter 2017 and $(0.4) million in net recoveries, or (0.01)%, in the second quarter 2016.

Nonaccrual loans decreased $4.4 million to $30.1 million during the quarter. Loans past due 90 days and still accruing interest totaled $4.0 million at June 30, 2017, compared to $3.7 million at March 31, 2017, and $7.0 million at June 30, 2016. Loans past due 30-89 days and still accruing interest totaled $4.1 million at quarter end, a decrease from $10.8 million at March 31, 2017, and an increase from $3.5 million at June 30, 2016.

Repossessed assets totaled $31.0 million at quarter end, a decrease of $14.2 million from $45.2 million at March 31, 2017, and a decrease of $18.9 million from $49.8 million at June 30, 2016. Adversely graded loans and non-performing assets totaled $367.8 million at quarter end, a decrease of $20.4 million from $388.2 million at March 31, 2017, and an increase of $4.2 million from $363.6 million at June 30, 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 12.7% at June 30, 2017, compared to 12.6% at March 31, 2017, and 13.3% at June 30, 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, Hotel Franchise Finance ("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 Capital 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 $7.83 billion at June 30, 2017, an increase of $84 million during the quarter, and an increase of $265 million during the last twelve months. All regional segments, with the exception of Nevada, had loan growth during the quarter, with Arizona contributing the largest growth of $50 million, followed by Northern California and Southern California with growth of $42 million and $32 million, respectively. The growth in loans during the last twelve months was primarily driven by an increase of $192 million in Arizona. Total deposits for the regional segments were $12.50 billion, an increase of $494 million during the quarter, and an increase of $1.16 billion during the last twelve months. Arizona and Northern California generated increased deposits during the quarter of $524 million and $87 million, respectively, which was partially offset by a decrease of $146 million in Southern California. During the last twelve months, with the exception of Southern California, each regional segment generated increased deposits, with Arizona and Nevada contributing increases of $977 million and $302 million, respectively.

Pre-tax income for the regional segments was $84.7 million for the three months ended June 30, 2017, an increase of $12.3 million from the three months ended March 31, 2017, and an increase of $10.9 million from the three months ended June 30, 2016. All regional segments except Northern California, had an increase in pre-tax income from the prior quarter. Arizona and Nevada generated the largest increases in pre-tax income with increases of $5.8 million and $5.0 million, respectively, compared to the three months ended March 31, 2017. With the exception of Northern California, which had a decrease in pre-tax income of $1.2 million, each regional segment had increases in pre-tax income from the three months ended June 30, 2016, with Arizona and Nevada contributing the largest increases of $6.3 million and $4.3 million, respectively. For the six months ended June 30, 2017, the regional segments reported total pre-tax income of $157.1 million, an increase of $17.2 million compared to the six months ended June 30, 2016. All regional segments with the exception of Northern California had increases in pre-tax income with Arizona and Nevada contributing the largest increases of $11.8 million and $5.4 million, respectively.

The NBL segments reported gross loan balances of $6.15 billion at June 30, 2017, an increase of $245 million during the quarter, and an increase of $868 million during the last twelve months. The increase in loans for the NBL segments compared to the prior quarter relates primarily to the Other NBLs segment, which increased loans by $218 million. The increase in loans for the NBL segments over the last twelve months relates primarily to the Other NBLs and Technology & Innovation segments, which increased loans by $675 million, and $101 million, respectively. Total deposits for the NBL segments were $3.46 billion, an increase of $204 million during the quarter, and an increase of $785 million during the last twelve months. During the quarter, the Technology & Innovation and HOA Services segments increased deposits by $130 million and $74 million, respectively. The increase of $785 million during the last twelve months is the result of growth in the HOA Services and Technology & Innovation segments of $476 million and $309 million, respectively.

Pre-tax income for the NBL segments was $42.6 million for the three months ended June 30, 2017, an increase of $5.1 million from the three months ended March 31, 2017, and an increase of $7.6 million from the three months ended June 30, 2016. The increase in pre-tax income from the prior quarter relates primarily to the Other NBLs and Technology & Innovation segments as both segments had an increase in pre-tax income of $2.3 million. This increase was offset by a decrease in pre-tax income from the HFF segment of $2.0 million. The increase in pre-tax income compared to the three months ended June 30, 2016 was driven by an increase of $2.4 million in both the Public & Nonprofit Finance and Technology & Innovation segments as well as an increase in pre-tax income from the HOA Services segment of $2.3 million. These increases were partially offset by a decrease in pre-tax income for the HFF segment of $1.0 million. Pre-tax income for the NBL segments for the six months ended June 30, 2017 totaled $80.1 million, an increase of $18.6 million compared to the six months ended June 30, 2016. The largest increases in pre-tax income compared to the six months ended June 30, 2016 were in the HFF, HOA Services, and Public & Nonprofit Finance segments, which increased $9.6 million, $4.8 million, and $2.6 million, respectively.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live webcast to discuss its second quarter 2017 financial results at 12:00 p.m. ET on Friday, July 21, 2017. Participants may access the call by dialing 1-888-317-6003 and using passcode 2161427 or via live audio webcast using the website link http://services.choruscall.com/links/wal170721.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 July 21st through 9:00 a.m. ET August 21st by dialing 1-877-344-7529 passcode: 10109628.

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. 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 June 30,       2017   2016   Change % (in millions) Total assets $ 18,844.7 $ 16,728.7 12.6 % Total loans, net 13,989.9 12,877.8 8.6 Securities and money market investments 3,283.0 2,262.6 45.1 Total deposits 16,031.1 14,201.3 12.9 Qualifying debt 375.4 382.1 (1.8 ) Stockholders' equity 2,058.7 1,796.2 14.6 Tangible common equity, net of tax (1) 1,761.6 1,497.5 17.6   Selected Income Statement Data: For the Three Months Ended June 30, For the Six Months Ended June 30, 2017 2016 Change % 2017 2016 Change % (in thousands, except per share data) (in thousands, except per share data) Interest income $ 206,953 $ 174,089 18.9 % $ 399,218 $ 328,345 21.6 % Interest expense 14,210   10,403   36.6 27,166   18,948   43.4 Net interest income 192,743 163,686 17.8 372,052 309,397 20.3 Provision for credit losses 3,000   2,500   20.0 7,250   5,000   45.0 Net interest income after provision for credit losses 189,743 161,186 17.7 364,802 304,397 19.8 Non-interest income 10,449 8,559 22.1 20,993 21,692 (3.2 ) Non-interest expense 88,257   81,804   7.9 176,014   157,297   11.9 Income before income taxes 111,935 87,941 27.3 209,781 168,792 24.3 Income tax expense 31,964   26,327   21.4 56,453   45,846   23.1 Net income $ 79,971   $ 61,614   29.8 $ 153,328   $ 122,946   24.7 Diluted earnings per share $ 0.76   $ 0.60   26.7 $ 1.46   $ 1.19   22.7   (1) See Reconciliation of Non-GAAP Financial Measures.   Western Alliance Bancorporation and Subsidiaries Summary Consolidated Financial Data Unaudited   Common Share Data:       For the Three Months Ended June 30,   For the Six Months Ended June 30, 2017   2016   Change% 2017   2016   Change% Diluted earnings per share $ 0.76 $ 0.60 26.7 % $ 1.46 $ 1.19 22.7 % Book value per common share 19.53 17.09 14.3 Tangible book value per share, net of tax (1) 16.71 14.25 17.3 Average shares outstanding(in thousands): Basic 104,161 102,688 1.4 104,075 102,294 1.7 Diluted 105,045 103,472 1.5 104,941 103,007 1.9 Common shares outstanding 105,429 105,084 0.3  

Selected Performance Ratios:

Return on average assets (2) 1.71 % 1.55 % 10.3 % 1.70 % 1.62 % 4.9 % Return on average tangible common equity (1, 2) 18.42 17.36 6.1 18.14 17.88 1.5 Net interest margin (2) 4.61 4.63 (0.4 ) 4.62 4.60 0.4 Net interest spread 4.34 4.46 (2.7 ) 4.37 4.43 (1.4 ) Operating efficiency ratio - tax equivalent basis (1) 41.20 42.99 (4.2 ) 40.66 44.23 (8.1 ) Loan to deposit ratio 87.27 90.68 (3.8 )  

Asset Quality Ratios:

Net (recoveries) charge-offs to average loans outstanding (2)

(0.03)

%

(0.01)

%

NM

0.00 % 0.03 % (100.0

)%

Nonaccrual loans to gross loans 0.22 0.31 (29.0 ) Nonaccrual loans and repossessed assets to total assets 0.32 0.54 (40.7 ) Loans past due 90 days and still accruing to gross loans 0.03 0.05 (40.0 ) Allowance for credit losses to gross organic loans 1.08 1.15 (6.1 ) Allowance for credit losses to nonaccrual loans 438.33 307.68 42.5  

Capital Ratios (1):

  Jun 30, 2017 Mar 31, 2017 Jun 30, 2016 Tangible common equity (1) 9.5 % 9.4 % 9.1 % Common Equity Tier 1 (3) 10.3 10.0 9.6 Tier 1 Leverage ratio (3) 9.9 10.2 9.8 Tier 1 Capital (3) 10.8 10.5 10.0 Total Capital (3) 13.3 13.1 12.9   (1) See Reconciliation of Non-GAAP Financial Measures. (2) Annualized for the three month periods ended June 30, 2017 and 2016. (3) Capital ratios for June 30, 2017 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, 2017   2016 2017   2016 (dollars in thousands, except per share data) Interest income: Loans $ 183,657 $ 160,015 $ 356,210 $ 299,801 Investment securities 20,629 12,871 38,743 26,379 Other 2,667   1,203   4,265   2,165

Total interest income

206,953   174,089   399,218   328,345 Interest expense: Deposits 9,645 7,678 18,057 13,921 Qualifying debt 4,493 2,514 8,831 4,698 Borrowings 72   211   278   329

Total interest expense

14,210   10,403   27,166   18,948 Net interest income 192,743 163,686 372,052 309,397 Provision for credit losses 3,000   2,500   7,250   5,000 Net interest income after provision for credit losses 189,743   161,186   364,802   304,397 Non-interest income: Service charges 5,203 4,544 9,941 9,043 Card income 1,380 1,274 2,802 2,464 Income from bank owned life insurance 973 1,029 1,921 1,959 Foreign currency income 832 842 1,874 1,783 Warrant income 738 59 1,324 393 Lending related income and gains (losses) on sale of loans, net 227 194 649 3,801 (Loss) gain on sales of investment securities, net (47 ) — 588 1,001 Other 1,143   617   1,894   1,248

Total non-interest income

10,449   8,559   20,993   21,692 Non-interest expenses: Salaries and employee benefits 52,246 44,711 103,866 89,566 Legal, professional and directors' fees 8,483 5,747 17,286 11,319 Occupancy 6,927 7,246 13,821 13,503 Data processing 4,396 5,114 9,667 9,175 Insurance 3,589 2,963 6,817 6,286 Deposit costs 2,133 986 3,874 1,758 Marketing 1,131 1,097 1,852 1,754 Loan and repossessed asset expenses 1,098 832 2,376 1,734 Card expense 704 824 1,358 1,711 Intangible amortization 488 697 1,177 1,394 Net loss (gain) on sales and valuations of repossessed and other assets 231 357 (312 ) 55 Acquisition / restructure expense — 3,662 — 3,662 Other 6,831   7,568   14,232   15,380

Total non-interest expense

88,257   81,804   176,014   157,297 Income before income taxes 111,935 87,941 209,781 168,792 Income tax expense 31,964   26,327   56,453   45,846 Net income $ 79,971   $ 61,614   $ 153,328   $ 122,946   Earnings per share: Diluted shares 105,045 103,472 104,941 103,007 Diluted earnings per share $ 0.76 $ 0.60 $ 1.46 $ 1.19   Western Alliance Bancorporation and Subsidiaries Five Quarter Condensed Consolidated Income Statements Unaudited         Three Months Ended Jun 30, 2017   Mar 31, 2017   Dec 31, 2016   Sep 30, 2016   Jun 30, 2016 (in thousands, except per share data) Interest income: Loans $ 183,657 $ 172,553 $ 168,881 $ 167,914 $ 160,015 Investment securities 20,629 18,114 16,725 15,436 12,871 Other 2,667   1,598   1,805   1,400   1,203

Total interest income

206,953   192,265   187,411   184,750   174,089 Interest expense: Deposits 9,645 8,412 7,729 8,072 7,678 Qualifying debt 4,493 4,338 4,252 4,048 2,514 Borrowings 72   206   161   83   211 Total interest expense 14,210   12,956   12,142   12,203   10,403 Net interest income 192,743 179,309 175,269 172,547 163,686 Provision for credit losses 3,000   4,250   1,000   2,000   2,500 Net interest income after provision for credit losses 189,743   175,059   174,269   170,547   161,186 Non-interest income: Service charges 5,203 4,738 4,865 4,916 4,544 Card income 1,380 1,422 1,381 1,381 1,274 Income from bank owned life insurance 973 948 904 899 1,029 Foreign currency income 832 1,042 747 888 842 Warrant income 738 586 1,353 1,457 59 Lending related income and gains (losses) on sale of loans, net 227 422 488 459 194 (Losses) gains on sales of investment securities, net (47 ) 635 58 — — Other 1,143   751   744   683   617 Total non-interest income 10,449   10,544   10,540   10,683   8,559 Non-interest expenses: Salaries and employee benefits 52,246 51,620 49,702 49,542 44,711 Legal, professional, and directors' fees 8,483 8,803 7,600 5,691 5,747 Occupancy 6,927 6,894 6,944 6,856 7,246 Data processing 4,396 5,271 4,504 4,982 5,114 Insurance 3,589 3,228 3,468 3,144 2,963 Deposit costs 2,133 1,741 1,862 1,363 986 Marketing 1,131 721 1,164 678 1,097 Loan and repossessed asset expenses 1,098 1,278 477 788 832 Card expense 704 654 689 536 824 Intangible amortization 488 689 697 697 697 Net loss (gain) on sales and valuations of repossessed and other assets 231 (543 ) (34 ) (146 ) 357 Acquisition / restructure expense — — 6,021 2,729 3,662 Other 6,831   7,401   5,551   8,147   7,568 Total non-interest expense 88,257   87,757   88,645   85,007   81,804 Income before income taxes 111,935 97,846 96,164 96,223 87,941 Income tax expense 31,964   24,489   26,364   29,171   26,327 Net income $ 79,971   $ 73,357   $ 69,800   $ 67,052   $ 61,614     Earnings per share: Diluted shares 105,045 104,836 104,765 104,564 103,472 Diluted earnings per share $ 0.76 $ 0.70 $ 0.67 $ 0.64 $ 0.60   Western Alliance Bancorporation and Subsidiaries Five Quarter Condensed Consolidated Balance Sheets Unaudited         Jun 30, 2017   Mar 31, 2017   Dec 31, 2016   Sep 30, 2016   Jun 30, 2016 (in millions, except per share data) Assets: Cash and due from banks $ 606.7 $ 647.0 $ 284.5 $ 356.1 $ 696.2 Securities and money market investments 3,283.0 2,869.1 2,767.8 2,778.1 2,262.6 Loans held for sale 16.7 17.8 18.9 21.3 22.3 Loans held for investment: Commercial 6,318.5 6,039.1 5,855.8 5,715.0 5,577.6 Commercial real estate - non-owner occupied 3,649.1 3,607.8 3,544.0 3,623.4 3,601.3 Commercial real estate - owner occupied 2,021.2 2,043.4 2,013.3 1,984.0 2,008.3 Construction and land development 1,601.7 1,601.7 1,478.1 1,379.7 1,333.5 Residential real estate 334.8 309.9 259.4 271.8 293.0 Consumer 47.9   43.0   39.0   38.4   41.8   Gross loans and deferred fees, net 13,973.2 13,644.9 13,189.6 13,012.3 12,855.5 Allowance for credit losses (131.8 ) (127.6 ) (124.7 ) (122.9 ) (122.1 ) Loans, net 13,841.4   13,517.3   13,064.9   12,889.4   12,733.4   Premises and equipment, net 120.5 120.0 119.8 121.3 120.5 Other assets acquired through foreclosure, net 31.0 45.2 47.8 49.6 49.8 Bank owned life insurance 166.4 165.5 164.5 163.6 164.3 Goodwill and other intangibles, net 301.6 302.1 302.9 303.6 304.3 Other assets 477.4   438.5   429.7   359.6   375.3   Total assets $ 18,844.7   $ 18,122.5   $ 17,200.8   $ 17,042.6   $ 16,728.7   Liabilities and Stockholders' Equity: Liabilities: Deposits Non-interest bearing demand deposits $ 6,859.4 $ 6,114.1 $ 5,632.9 $ 5,624.8 $ 5,275.1 Interest bearing: Demand 1,480.8 1,449.3 1,346.7 1,256.7 1,278.1 Savings and money market 6,104.0 6,253.8 6,120.9 5,969.6 6,005.8 Time certificates 1,586.9   1,538.8   1,449.3   1,592.1   1,642.3   Total deposits 16,031.1 15,356.0 14,549.8 14,443.2 14,201.3 Customer repurchase agreements 32.7   35.7   41.7   44.4   38.5   Total customer funds 16,063.8 15,391.7 14,591.5 14,487.6 14,239.8 Borrowings — — 80.0 — — Qualifying debt 375.4 366.9 367.9 382.9 382.1 Accrued interest payable and other liabilities 346.8   394.9   269.9   314.7   310.6   Total liabilities 16,786.0   16,153.5   15,309.3   15,185.2   14,932.5   Stockholders' Equity: Common stock and additional paid-in capital 1,376.4 1,370.3 1,373.8 1,368.4 1,364.0 Retained earnings 675.8 595.8 522.4 452.6 385.6 Accumulated other comprehensive income (loss) 6.5   2.9   (4.7 ) 36.4   46.6   Total stockholders' equity 2,058.7   1,969.0   1,891.5   1,857.4   1,796.2   Total liabilities and stockholders' equity $ 18,844.7   $ 18,122.5   $ 17,200.8   $ 17,042.6   $ 16,728.7     Western Alliance Bancorporation and Subsidiaries Changes in the Allowance For Credit Losses Unaudited         Three Months Ended Jun 30, 2017   Mar 31, 2017   Dec 31, 2016   Sep 30, 2016   Jun 30, 2016 (in thousands) Balance, beginning of period $ 127,649 $ 124,704 $ 122,884 $ 122,104 $ 119,227 Provision for credit losses 3,000 4,250 1,000 2,000 2,500 Recoveries of loans previously charged-off: Commercial and industrial 1,759 328 1,144 466 804 Commercial real estate - non-owner occupied 360 355 691 230 343 Commercial real estate - owner occupied 46 178 45 291 427 Construction and land development 508 277 30 302 58 Residential real estate 1,299 251 287 179 153 Consumer —   49   11   21   43   Total recoveries 3,972 1,438 2,208 1,489 1,828 Loans charged-off: Commercial and industrial 651 2,595 1,267 2,558 1,161 Commercial real estate - non-owner occupied 1,808 — 1 — — Commercial real estate - owner occupied 11 — 1 72 244 Construction and land development — — 18 — — Residential real estate 332 115 60 79 — Consumer 8   33   41   —   46   Total loans charged-off 2,810 2,743 1,388 2,709 1,451 Net loan (recoveries) charge-offs (1,162 ) 1,305   (820 ) 1,220   (377 ) Balance, end of period $ 131,811   $ 127,649   $ 124,704   $ 122,884   $ 122,104     Net (recoveries) charge-offs to average loans- annualized (0.03 )% 0.04 % (0.03 )% 0.04 % (0.01 )%   Allowance for credit losses to gross organic loans 1.08 % 1.08 % 1.11 % 1.13 % 1.15 % Allowance for credit losses to nonaccrual loans 438.33 370.45 309.65 302.61 307.68   Nonaccrual loans $ 30,071 $ 34,458 $ 40,272 $ 40,608 $ 39,685 Nonaccrual loans to gross loans 0.22 % 0.25 % 0.31 % 0.31 % 0.31 % Repossessed assets $ 30,988 $ 45,200 $ 47,815 $ 49,619 $ 49,842 Nonaccrual loans and repossessed assets to total assets 0.32 % 0.44 % 0.51 % 0.53 % 0.54 %   Loans past due 90 days, still accruing $ 4,021 $ 3,659 $ 1,067 $ 2,817 $ 6,991 Loans past due 90 days and still accruing to gross loans 0.03 % 0.03 % 0.01 % 0.02 % 0.05 % Loans past due 30 to 89 days, still accruing $ 4,071 $ 10,764 $ 6,294 $ 18,446 $ 3,475 Loans past due 30 to 89 days, still accruing to gross loans 0.03 % 0.08 % 0.05 % 0.14 % 0.03 %   Special mention loans $

141,036

$ 175,080 $ 148,144 $ 134,018 $ 154,167 Special mention loans to gross loans 1.01 % 1.28 % 1.12 % 1.03 % 1.20 %   Classified loans on accrual $ 165,715 $ 133,483 $ 106,644 $ 110,650 $ 119,939 Classified loans on accrual to gross loans 1.19 % 0.98 % 0.81 % 0.85 % 0.93 % Classified assets $ 249,491 $ 236,786 $ 211,782 $ 212,286 $ 219,319 Classified assets to total assets 1.32 % 1.31 % 1.23 % 1.25 % 1.31 %   Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited         Three Months Ended June 30, 2017   March 31, 2017 AverageBalance   Interest  

Average Yield /Cost

AverageBalance   Interest   Average Yield /Cost ($ in millions) ($ in thousands) ($ in millions) ($ in thousands) Interest earning assets Loans: Commercial $ 6,054.3 $ 75,857 5.52 % $ 5,753.7 $ 68,404 5.24 % CRE - non-owner occupied 3,606.8 52,416 5.81 3,534.8 53,506 6.05 CRE - owner occupied 2,019.5 25,931 5.14 1,998.0 24,726 4.95 Construction and land development 1,605.6 24,965 6.22 1,510.8 22,102 5.85 Residential real estate 322.2 3,950 4.90 271.9 3,023 4.45 Consumer 44.7 395 3.53 38.5 493 5.12 Loans held for sale 17.3   143   3.31   18.8   299   6.36  

Total loans (1), (2), (3)

13,670.4 183,657 5.60 13,126.5 172,553 5.47 Securities: Securities - taxable 2,446.5 14,847 2.43 2,105.2 12,437 2.36 Securities - tax-exempt 628.0   5,782   5.48   604.3   5,677   5.57   Total securities (1) 3,074.5 20,629 3.05 2,709.5 18,114 3.08 Cash and other 903.3   2,667   1.18   482.0   1,598   1.33   Total interest earning assets 17,648.2 206,953 4.93 16,318.0 192,265 4.95 Non-interest earning assets Cash and due from banks 140.3 142.7 Allowance for credit losses (130.0 ) (125.7 ) Bank owned life insurance 165.8 164.8 Other assets 919.6   900.5   Total assets $ 18,743.9   $ 17,400.3   Interest-bearing liabilities

Interest-bearing deposits:

Interest-bearing transaction accounts $ 1,492.7 $ 986 0.26 % $ 1,434.8 $ 805 0.22 % Savings and money market 6,155.8 5,831 0.38 6,069.0 5,312 0.35 Time certificates of deposit 1,576.0   2,828   0.72   1,484.9   2,295   0.62   Total interest-bearing deposits 9,224.5 9,645 0.42 8,988.7 8,412 0.37 Short-term borrowings 34.6 72 0.83 110.9 206 0.74 Qualifying debt 359.3   4,493   5.00   354.1   4,338   4.90   Total interest-bearing liabilities 9,618.4 14,210 0.59 9,453.7 12,956 0.55 Non-interest-bearing liabilities Non-interest-bearing demand deposits 6,735.3 5,719.2 Other liabilities 351.7 280.6 Stockholders’ equity 2,038.5   1,946.8   Total liabilities and stockholders' equity $ 18,743.9   $ 17,400.3   Net interest income and margin (4) $ 192,743 4.61 % $ 179,309 4.63 %   (1) Yields on loans and securities have been adjusted to a tax-equivalent basis. The taxable-equivalent adjustment was $10.4 million and $9.7 million for the three months ended June 30, 2017 and March 31, 2017, respectively. (2) Included in the yield computation are net loan fees of $10.0 million and accretion on acquired loans of $7.1 million for the three months ended June 30, 2017, compared to $6.6 million and $6.4 million for the three months ended March 31, 2017, respectively. (3) Includes non-accrual loans. (4) Net interest margin is computed by dividing net interest income by total average earning assets.   Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited         Three Months Ended June 30, 2017   2016 AverageBalance   Interest   Average Yield /Cost AverageBalance   Interest   Average Yield /Cost ($ in millions) ($ in thousands) ($ in millions) ($ in thousands) Interest earning assets Loans: Commercial $ 6,054.3 $ 75,857 5.52 % $ 5,365.0 $ 63,621 5.24 % CRE - non-owner occupied 3,606.8 52,416 5.81 3,257.6 47,452 5.83 CRE - owner occupied 2,019.5 25,931 5.14 2,012.7 25,715 5.11 Construction and land development 1,605.6 24,965 6.22 1,293.7 19,094 5.90 Residential real estate 322.2 3,950 4.90 299.8 3,383 4.51 Consumer 44.7 395 3.53 35.7 428 4.80 Loans held for sale 17.3   143   3.31   22.8   322   5.66   Total loans (1), (2), (3) 13,670.4 183,657 5.60 12,287.3 160,015 5.43 Securities: Securities - taxable 2,446.5 14,847 2.43 1,547.8 8,514 2.20 Securities - tax-exempt 628.0   5,782   5.48   469.7   4,357   5.44   Total securities (1) 3,074.5 20,629 3.05 2,017.5 12,871 2.95 Cash and other 903.3   2,667   1.18   597.5   1,203   0.81   Total interest earning assets 17,648.2 206,953 4.93 14,902.3 174,089 4.91 Non-interest earning assets Cash and due from banks 140.3 134.2 Allowance for credit losses (130.0 ) (120.4 ) Bank owned life insurance 165.8 163.7 Other assets 919.6   832.7   Total assets $ 18,743.9   $ 15,912.5   Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 1,492.7 $ 986 0.26 % $ 1,194.2 $ 504 0.17 % Savings and money market 6,155.8 5,831 0.38 5,837.4 4,978 0.34 Time certificates of deposit 1,576.0   2,828   0.72   1,757.2   2,196   0.50   Total interest-bearing deposits 9,224.5 9,645 0.42 8,788.8 7,678 0.35 Short-term borrowings 34.6 72 0.83 153.1 211 0.55 Qualifying debt 359.3   4,493   5.00   227.5   2,514   4.42   Total interest-bearing liabilities 9,618.4 14,210 0.59 9,169.4 10,403 0.45 Non-interest-bearing liabilities Non-interest-bearing demand deposits 6,735.3 4,772.6 Other liabilities 351.7 246.7 Stockholders’ equity 2,038.5   1,723.8   Total liabilities and stockholders' equity $ 18,743.9   $ 15,912.5   Net interest income and margin (4) $ 192,743   4.61 % $ 163,686   4.63 %   (1) Yields on loans and securities have been adjusted to a tax-equivalent basis. The taxable-equivalent adjustment was $10.4 million and $8.7 million for the three months ended June 30, 2017 and 2016, respectively. (2) Included in the yield computation are net loan fees of $10.0 million and accretion on acquired loans of $7.1 million for the three months ended June 30, 2017, compared to $6.5 million and $8.2 million for the three months ended June 30, 2016, respectively. (3) Includes non-accrual loans. (4) Net interest margin is computed by dividing net interest income by total average earning assets.   Western Alliance Bancorporation and Subsidiaries Analysis of Average Balances, Yields and Rates Unaudited         Six Months Ended June 30, 2017   2016 AverageBalance   Interest   Average Yield /Cost AverageBalance   Interest   Average Yield /Cost ($ in millions) ($ in thousands) ($ in millions) ($ in thousands) Interest earning assets Loans: Commercial $ 5,904.9 $ 144,260 5.38 % $ 5,262.8 $ 121,507 5.12 % CRE - non-owner occupied 3,571.0 105,921 5.93 2,765.0 78,405 5.67 CRE - owner occupied 2,008.8 50,658 5.04 2,037.0 51,901 5.10 Construction and land development 1,558.5 47,067 6.04 1,229.9 39,680 6.45 Residential real estate 297.2 6,974 4.69 305.7 6,891 4.51 Consumer 41.6 888 4.27 32.3 742 4.59 Loans held for sale 18.0   442   4.91   23.5   675   5.74   Total loans (1) 13,400.0 356,210 5.53 11,656.2 299,801 5.37 Securities: Securities - taxable (1) 2,276.8 27,285 2.40 1,558.1 17,851 2.29 Securities - tax-exempt 616.2   11,458   5.52   462.2   8,528   5.33   Total securities 2,893.0 38,743 3.06 2,020.3 26,379 2.99 Cash and other 693.8   4,265   1.23   507.5   2,165   0.85   Total interest earning assets 16,986.8 399,218 4.94 14,184.0 328,345 4.87 Non-interest earning assets Cash and due from banks 141.5 137.5 Allowance for credit losses (127.9 ) (121.0 ) Bank owned life insurance 165.3 163.2 Other assets 910.1   827.6   Total assets $ 18,075.8   $ 15,191.3   Interest-bearing liabilities Interest-bearing deposits: Interest-bearing transaction accounts $ 1,463.9 $ 1,792 0.24 % $ 1,143.0 $ 959 0.17 % Savings and money market accounts 6,112.7 11,142 0.36 5,585.7 9,012 0.32 Time certificates of deposit 1,530.7   5,123   0.67   1,659.3   3,950   0.48   Total interest-bearing deposits 9,107.3 18,057 0.40 8,388.0 13,921 0.33 Short-term borrowings 72.5 278 0.77 102.9 329 0.64 Qualifying debt 356.6   8,831   4.95   213.5   4,698   4.40   Total interest-bearing liabilities 9,536.4 27,166 0.57 8,704.4 18,948 0.44 Non-interest-bearing liabilities Non-interest-bearing demand deposits 6,230.1 4,561.4 Other liabilities 316.4 245.6 Stockholders’ equity 1,992.9   1,679.9   Total liabilities and stockholders' equity $ 18,075.8   $ 15,191.3   Net interest income and margin (4) $ 372,052   4.62 % $ 309,397   4.60 %   (1) Yields on loans and securities have been adjusted to a tax-equivalent basis. The taxable-equivalent adjustment was $20.1 million and $17.1 million for the six months ended June 30, 2017 and 2016, respectively. (2) Included in the yield computation are net loan fees of $16.6 million and accretion on acquired loans of $13.5 million for the six months ended June 30, 2017, compared to $13.0 million and $13.5 million for the six months ended June 30, 2016, respectively. (3) Includes non-accrual loans. (4) Net interest margin is computed by dividing net interest income by total average earning assets.   Western Alliance Bancorporation and Subsidiaries Operating Segment Results Unaudited   Balance Sheet:         Regional Segments

ConsolidatedCompany

Arizona   Nevada  

SouthernCalifornia

 

NorthernCalifornia

At June 30, 2017 (dollars in millions) Assets: Cash, cash equivalents, and investment securities $ 3,889.7 $ 1.8 $ 7.4 $ 2.2 $ 1.9 Loans, net of deferred loan fees and costs 13,989.9 3,089.9 1,729.3 1,838.4 1,172.5 Less: allowance for credit losses (131.8 ) (30.7 ) (18.3 ) (20.6 ) (10.1 ) Total loans 13,858.1   3,059.2   1,711.0   1,817.8   1,162.4   Other assets acquired through foreclosure, net 31.0 2.3 15.7 — 0.2 Goodwill and other intangible assets, net 301.6 — 23.3 — 157.0 Other assets 764.3   41.7   59.3   13.8   13.8   Total assets $ 18,844.7   $ 3,105.0   $ 1,816.7   $ 1,833.8   $ 1,335.3   Liabilities: Deposits $ 16,031.1 $ 4,778.5 $ 3,925.3 $ 2,251.6 $ 1,547.8 Borrowings and qualifying debt 375.4 — — — — Other liabilities 379.5   8.6   27.9   5.9   11.0   Total liabilities 16,786.0   4,787.1   3,953.2   2,257.5   1,558.8   Allocated equity: 2,058.7   373.9   253.3   205.8   291.0   Total liabilities and stockholders' equity $ 18,844.7   $ 5,161.0   $ 4,206.5   $ 2,463.3   $ 1,849.8   Excess funds provided (used) — 2,056.0 2,389.8 629.5 514.5   No. of offices 46 9 16 9 3 No. of full-time equivalent employees 1,628 168 220 176 166   Income Statement:   Three Months Ended June 30, 2017: (in thousands) Net interest income (expense) $ 192,743 $ 49,295 $ 36,422 $ 29,058 $ 19,719 Provision for credit losses 3,000   384   (3,123 ) (53 ) 698   Net interest income (expense) after provision for credit losses 189,743 48,911 39,545 29,111 19,021 Non-interest income 10,449 1,189 2,313 888 1,930 Non-interest expense (88,257 ) (17,922 ) (15,115 ) (13,020 ) (12,162 ) Income (loss) before income taxes 111,935 32,178 26,743 16,979 8,789 Income tax expense (benefit) 31,964   12,624   9,360   7,140   3,696   Net income (loss) $ 79,971   $ 19,554   $ 17,383   $ 9,839   $ 5,093       Six Months Ended June 30, 2017: (in thousands) Net interest income (expense) $ 372,052 $ 93,202 $ 71,718 $ 54,276 $ 41,754 Provision for (recovery of) credit losses 7,250   398   (3,334 ) 38   1,094   Net interest income (expense) after provision for credit losses 364,802 92,804 75,052 54,238 40,660 Non-interest income 20,993 2,302 4,446 1,631 4,043 Non-interest expense (176,014 ) (36,544 ) (30,985 ) (25,723 ) (24,871 ) Income (loss) before income taxes 209,781 58,562 48,513 30,146 19,832 Income tax expense (benefit) 56,453   22,974   16,980   12,677   8,339   Net income (loss) $ 153,328   $ 35,588   $ 31,533   $ 17,469   $ 11,493     Western Alliance Bancorporation and Subsidiaries Operating Segment Results Unaudited   Balance Sheet:       National Business Lines   HOAServices  

Public &Nonprofit Finance

 

Technology &Innovation

 

HotelFranchiseFinance

 

Other NBLs

Corporate &Other

At June 30, 2017 (dollars in millions) Assets: Cash, cash equivalents, and investment securities $ — $ — $ — $ — $ — $ 3,876.4 Loans, net of deferred loan fees and costs 150.3 1,545.7 1,044.4 1,238.5 2,173.2 7.7 Less: allowance for credit losses (1.6 ) (16.1 ) (10.1 ) (1.2 ) (22.6 ) (0.5 ) Total loans 148.7   1,529.6   1,034.3   1,237.3   2,150.6   7.2   Other assets acquired through foreclosure, net — — — — — 12.8 Goodwill and other intangible assets, net — — 121.2 0.1 — — Other assets 0.4   16.4   5.5   5.3   8.5   599.6   Total assets $ 149.1   $ 1,546.0   $ 1,161.0   $ 1,242.7   $ 2,159.1   $ 4,496.0   Liabilities: Deposits $ 2,186.9 $ — $ 1,272.4 $ — $ — $ 68.6 Borrowings and qualifying debt — — — — — 375.4 Other liabilities 0.6   50.7   0.7   0.3   49.6   224.2   Total liabilities 2,187.5   50.7   1,273.1   0.3   49.6   668.2   Allocated equity: 57.1   126.4   229.5   100.9   175.5   245.3   Total liabilities and stockholders' equity $ 2,244.6   $ 177.1   $ 1,502.6   $ 101.2   $ 225.1   $ 913.5   Excess funds provided (used) 2,095.5 (1,368.9 ) 341.6 (1,141.5 ) (1,934.0 ) (3,582.5 )   No. of offices 1 1 9 1 4 (7 ) No. of full-time equivalent employees 62 8 62 17 35 714   Income Statement:   Three Months Ended June 30, 2017: (in thousands) Net interest income (expense) $ 13,781 $ 7,488 $ 21,029 $ 13,410 $ 15,304 $ (12,763 ) Provision for credit losses 165   196   603   1,808   2,322   —   Net interest income (expense) after provision for credit losses 13,616 7,292 20,426 11,602 12,982 (12,763 ) Non-interest income 140 10 1,961 — 532 1,486 Non-interest expense (7,258 ) (1,983 ) (9,082 ) (3,056 ) (4,566 ) (4,093 ) Income (loss) before income taxes 6,498 5,319 13,305 8,546 8,948 (15,370 ) Income tax expense (benefit) 2,436   1,994   4,989   3,205   3,356   (16,836 ) Net income (loss) $ 4,062   $ 3,325   $ 8,316   $ 5,341   $ 5,592   $ 1,466     Six Months Ended June 30, 2017: (in thousands) Net interest income (expense) $ 26,529 $ 13,973 $ 39,195 $ 26,991 $ 29,447 $ (25,033 ) Provision for (recovery of) credit losses 292   705   899   1,808   5,849   (499 ) Net interest income (expense) after provision for credit losses 26,237 13,268 38,296 25,183 23,598 (24,534 ) Non-interest income 281 25 3,834 — 1,253 3,178 Non-interest expense (14,405 ) (4,236 ) (17,861 ) (6,044 ) (9,287 ) (6,058 ) Income (loss) before income taxes 12,113 9,057 24,269 19,139 15,564 (27,414 ) Income tax expense (benefit) 4,542   3,396   9,100   7,177   5,837   (34,569 ) Net income (loss) $ 7,571   $ 5,661   $ 15,169   $ 11,962   $ 9,727   $ 7,155     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 1,514 169 228 57 275   Income Statements:   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 2,499   1,703   (1,704 ) 220   926   Net interest income (expense) after provision for credit losses 161,187 39,501 35,168 25,583 20,970 Non-interest income 8,558 888 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 (loss) $ 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 4,999   8,476   (2,517 ) 250   1,968   Net interest income (expense) after provision for credit losses 304,398 71,184 68,556 49,981 43,123 Non-interest income 21,691 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 (loss) $ 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

 

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 55 7 59 21 32 611   Income Statement:   Three Months Ended June 30, 2016: (in thousands) Net interest income (expense) $ 9,909 $ 5,026 $ 16,631 $ 12,068 $ 12,523 $ (14,838 ) Provision for (recovery of) credit losses 10   175   (614 ) —   1,699   84   Net interest income (expense) after provision for credit losses 9,899 4,851 17,245 12,068 10,824 (14,922 ) Non-interest income 110 7 1,115 — 235 1,029 Non-interest expense (5,820 ) (1,929 ) (7,434 ) (2,557 ) (3,598 ) (6,976 ) Income (loss) before income taxes 4,189 2,929 10,926 9,511 7,461 (20,869 ) Income tax expense (benefit) 1,571   1,098   4,097   3,567   2,798   (15,524 ) Net income (loss) $ 2,618   $ 1,831   $ 6,829   $ 5,944   $ 4,663   $ (5,345 )   Six Months Ended June 30, 2016: (in thousands) Net interest income (expense) $ 18,541 $ 10,247 $ 32,940 $ 12,068 $ 23,160 $ (28,580 ) Provision for (recovery of) credit losses 88   (194 ) (1,779 ) —   1,937   (3,230 ) Net interest income (expense) after provision for credit losses 18,453 10,441 34,719 12,068 21,223 (25,350 ) Non-interest income 215 3 2,752 — 870 2,963 Non-interest expense (11,361 ) (3,953 ) (14,340 ) (2,557 ) (7,035 ) (10,158 ) Income (loss) before income taxes 7,307 6,491 23,131 9,511 15,058 (32,545 ) Income tax expense (benefit) 2,740   2,434   8,674   3,567   5,647   (31,659 ) Net income (loss) $ 4,567   $ 4,057   $ 14,457   $ 5,944   $ 9,411   $ (886 )   Western Alliance Bancorporation and Subsidiaries Reconciliation of Non-GAAP Financial Measures Unaudited   Operating Pre-Provision Net Revenue by Quarter:       Three Months Ended Jun 30, 2017   Mar 31, 2017   Dec 31, 2016   Sep 30, 2016   Jun 30, 2016 (in thousands) Total non-interest income $ 10,449 $ 10,544 $ 10,540 $ 10,683 $ 8,559 Less: (Losses) gains on sales of investment securities, net (47 ) 635 58 — — Unrealized gains (losses) on assets and liabilities measured at fair value, net 11   14   37   7   6 Total operating non-interest income 10,485 9,895 10,445 10,676 8,553 Plus: net interest income 192,743   179,309   175,269   172,547   163,686 Net operating revenue (1) $ 203,228   $ 189,204   $ 185,714   $ 183,223   $ 172,239   Total non-interest expense $ 88,257 $ 87,757 $ 88,645 $ 85,007 $ 81,804 Less: Net loss (gain) on sales and valuations of repossessed and other assets 231 (543 ) (34 ) (146 ) 357 Acquisition / restructure expense —   —   6,021   2,729   3,662 Total operating non-interest expense (1) $ 88,026   $ 88,300   $ 82,658   $ 82,424   $ 77,785           Operating pre-provision net revenue (2) $ 115,202   $ 100,904   $ 103,056   $ 100,799   $ 94,454   Plus: Non-operating revenue adjustments (36 ) 649 95 7 6 Less: Provision for credit losses 3,000 4,250 1,000 2,000 2,500 Non-operating expense adjustments 231 (543 ) 5,987 2,583 4,019 Income tax expense 31,964   24,489   26,364   29,171   26,327 Net income $ 79,971   $ 73,357   $ 69,800   $ 67,052   $ 61,614  

(1), (2) See Non-GAAP Financial Measures footnotes.

Western Alliance Bancorporation and Subsidiaries

Reconciliation of Non-GAAP Financial Measures

Unaudited

  Tangible Common Equity:         Jun 30, 2017   Mar 31, 2017   Dec 31, 2016   Sep 30, 2016   Jun 30, 2016 (dollars and shares in thousands) Total stockholders' equity $ 2,058,674 $ 1,968,992 $ 1,891,529 $ 1,857,354 $ 1,796,210 Less: goodwill and intangible assets 301,645   302,133   302,894   303,592   304,289   Total tangible common equity 1,757,029 1,666,859 1,588,635 1,553,762 1,491,921 Plus: deferred tax - attributed to intangible assets 4,550   4,759   4,949   5,304   5,594   Total tangible common equity, net of tax $ 1,761,579   $ 1,671,618   $ 1,593,584   $ 1,559,066   $ 1,497,515   Total assets $ 18,844,745 $ 18,122,506 $ 17,200,842 $ 17,042,602 $ 16,728,767 Less: goodwill and intangible assets, net 301,645   302,133   302,894   303,592   304,289   Tangible assets 18,543,100 17,820,373 16,897,948 16,739,010 16,424,478 Plus: deferred tax - attributed to intangible assets 4,550   4,759   4,949   5,304   5,594   Total tangible assets, net of tax $ 18,547,650   $ 17,825,132   $ 16,902,897   $ 16,744,314   $ 16,430,072   Tangible common equity ratio (3) 9.5 % 9.4 % 9.4 % 9.3 % 9.1 % Common shares outstanding 105,429 105,428 105,071 105,071 105,084 Tangible book value per share, net of tax (4) $ 16.71 $ 15.86 $ 15.17 $ 14.84 $ 14.25   Operating Efficiency Ratio by Quarter:         Three Months Ended Jun 30, 2017   Mar 31, 2017   Dec 31, 2016   Sep 30, 2016   Jun 30, 2016 (in thousands) Total operating non-interest expense $ 88,026 $ 88,300 $ 82,658 $ 82,424 $ 77,785 Divided by: Total net interest income 192,743 179,309 175,269 172,547 163,686 Plus: Tax equivalent interest adjustment 10,453 9,676 9,165 8,599 8,704 Operating non-interest income 10,485   9,895   10,445   10,676   8,553   $ 213,681   $ 198,880   $ 194,879   $ 191,822   $ 180,943  

Operating efficiency ratio - tax equivalent basis (5)

41.2 % 44.4 % 42.4 % 43.0 % 43.0 %  

(3), (4), (5) See Non-GAAP Financial Measures footnotes.

Western Alliance Bancorporation and Subsidiaries

Reconciliation of Non-GAAP Financial Measures

Unaudited

 

Regulatory Capital:

        Jun 30, 2017   Dec 31, 2016 (in thousands) Common Equity Tier 1: Common equity $ 2,058,674 $ 1,891,529 Less: Non-qualifying goodwill and intangibles 295,655 294,754 Disallowed deferred tax asset 1,059 1,400 AOCI related adjustments (147 ) (13,460 ) Unrealized gain on changes in fair value liabilities 8,092   8,118   Common equity Tier 1 (regulatory) (6) (9) $ 1,754,015   $ 1,600,717   Divided by: estimated risk-weighted assets (regulatory) (7) (9) $ 17,001,053 $ 15,980,092 Common equity Tier 1 ratio (7) (9) 10.3 % 10.0 %   Common equity Tier 1 (regulatory) (6) (9) 1,754,015 1,600,717 Plus: Trust preferred securities 81,500 81,500 Less: Disallowed deferred tax asset 265 934 Unrealized gain on changes in fair value of liabilities 2,023   5,412   Tier 1 capital (7) (9) $ 1,833,227   $ 1,675,871   Divided by: Tangible average assets $ 18,436,956 $ 16,868,674 Tier 1 leverage ratio 9.9 % 9.9 %   Total Capital: Tier 1 capital (regulatory) (6) (9) $ 1,833,227 $ 1,675,871 Plus: Subordinated debt 298,722 299,927 Qualifying allowance for credit losses 131,811 124,704 Other 5,851 6,978 Less: Tier 2 qualifying capital deductions —   —   Tier 2 capital $ 436,384   $ 431,609       Total capital $ 2,269,611   $ 2,107,480     Total capital ratio 13.3 % 13.2 %   Classified assets to Tier 1 capital plus allowance: Classified assets $ 249,491 $ 211,782 Divided by: Tier 1 capital (7) (9) 1,833,227 1,675,871 Plus: Allowance for credit losses 131,811   124,704   Total Tier 1 capital plus allowance for credit losses $ 1,965,038   $ 1,800,575     Classified assets to Tier 1 capital plus allowance (8) (9) 12.7 % 11.8 %  

(6), (7), (8), (9) See Non-GAAP Financial Measures footnotes.

(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) 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. (7) 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. (8) We believe this non-GAAP ratio provides an important regulatory metric to analyze asset quality. (9) Current quarter is preliminary until Call Report is filed.

View source version on businesswire.com: http://www.businesswire.com/news/home/20170720006376/en/

Western Alliance BancorporationDale Gibbons, 602-952-5476