Western Alliance Bancorporation (NYSE:WAL):
THIRD QUARTER 2017 FINANCIAL
RESULTS
Net income
Earnings per share
Net interest margin
Efficiency ratio
Book value per
common share
$82.9 million $0.79 4.65% 40.0%
$20.34
40.0%, excluding non-
operating adjustments1
$17.53, excluding
intangible assets1
CEO COMMENTARY:
Robert Sarver, Chairman and CEO, commented, “The economy
continues to steadily expand and our clients are growing their
businesses. Our highly experienced bankers have deep local roots
and are among the best and brightest in our markets. This quarter
was marked by continued momentum in key financial metrics and
reaffirms our outstanding 2017 results for shareholders. Tangible
book value per share increased 5% to $17.531 from the prior
quarter. Robust loan growth of $532 million and deposit growth of
$874 million during the quarter has us well-positioned for future
success. Our quarterly operating results, with net income of $82.9
million, EPS of $0.79 and an operating efficiency ratio of 40%1
reflect our strong fundamentals.”
LINKED-QUARTER
BASIS
YEAR-OVER-YEAR
FINANCIAL HIGHLIGHTS
▪
Net income and earnings per share of $82.9 million
and $0.79, compared to $80.0 million and $0.76, respectively
▪
Net income of $82.9 million and earnings per share of $0.79,
compared to $67.1 million and $0.64, respectively
▪
Net operating revenue of $211.5 million,
an increase of 4.1%, or $8.3 million, and an increase in operating
non-interest expenses of $0.8 million 1
▪
Net operating revenue of $211.5 million, an increase of 15.4%, or
$28.3 million, and an increase in operating non-interest expenses
of 7.8%, or $6.4 million1
▪
Operating pre-provision net revenue of $122.7 million, up $7.5
million from $115.2 million 1
▪
Operating pre-provision net revenue of $122.7 million, up $21.9
million from $100.8 million 1
FINANCIAL POSITION RESULTS
▪
Total loans of $14.52 billion, up $532 million
▪
Increase in total loans of $1.49 billion
▪
Total deposits of $16.90 billion, up $874 million
▪
Increase in total deposits of $2.46 billion
▪
Stockholders' equity of $2.15 billion, up $87 million
▪
Increase in stockholders' equity of $288 million
LOANS AND ASSET QUALITY
▪
Nonperforming assets (nonaccrual loans and
repossessed assets) to total assets of 0.42% 2, compared to
0.32%
▪
Nonperforming assets to total assets of
0.42% 2, compared to 0.53%
▪
Annualized net charge-offs (recoveries) to average loans
outstanding of 0.01%, compared to (0.03)%
▪
Annualized net charge-offs (recoveries) to average loans
outstanding of 0.01%, compared to 0.04%
KEY PERFORMANCE METRICS
▪
Net interest margin of 4.65%, compared to 4.61%
▪
Net interest margin of 4.65%, compared to 4.55%
▪
Return on average assets and return on tangible common equity1 of
1.71% and 18.18%, compared to 1.71% and 18.42%, respectively
▪
Return on average assets and return on tangible common equity1 of
1.70% and 18.15%, compared to 1.61% and 17.74%, respectively
▪
Tangible common equity ratio of 9.4%, compared to 9.5% 1
▪
Tangible common equity ratio of 9.4%, compared to 9.3% 1
▪
Tangible book value per share, net of tax, of $17.53, an increase
of 4.9% from $16.71 1
▪
Tangible book value per share, net of tax, of $17.53, an increase
of 18.1% from $14.84 1
▪
Operating efficiency ratio of 40.0%, compared to 41.2% 1
▪
Operating efficiency ratio of 40.0%, compared to 43.0% 1 1
See reconciliation of Non-GAAP Financial
Measures.
2 Includes one loan with a net balance of $23 million, which the
Company sold subsequent to quarter-end.
Income Statement
Net interest income was $201.6 million in the third quarter
2017, an increase of $8.8 million from $192.7 million in the second
quarter 2017 and an increase of $29.0 million, or 16.8%, compared
to the third quarter 2016. Net interest income in the third quarter
2017 includes $7.5 million of accretion income from acquired loans,
compared to $7.1 million in the second quarter 2017, and $8.8
million in the third quarter 2016.
The Company’s net interest margin in the third quarter 2017 was
4.65%, an increase from 4.61% in the second quarter 2017, and from
4.55% in the third quarter 2016. The increase in net interest
margin from the second quarter 2017 and the third quarter 2016 is
attributable to higher yields on loans as a result of rising
interest rates, as well as an increase in yields from investment
securities.
Operating non-interest income was $9.9 million for the third
quarter 2017, compared to $10.5 million for the second quarter
2017, and $10.7 million for the third quarter 2016.1 The decrease
in operating non-interest income from the prior quarter primarily
relates to a decrease in income from equity investments. The
decrease in operating non-interest income from the third quarter
2016 is due primarily to a decrease in lending related income,
resulting from decreased SBA income.
Net operating revenue was $211.5 million for the third quarter
2017, an increase of $8.3 million, or 4.1%, compared to $203.2
million for the second quarter 2017, and an increase of $28.3
million, or 15.4%, compared to $183.2 million for the third quarter
2016.1
Operating non-interest expense was $88.8 million for the third
quarter 2017, compared to $88.0 million for the second quarter
2017, and $82.4 million for the third quarter 2016.1 Operating
non-interest expense held relatively flat from the prior quarter as
the decrease in legal, professional and directors' fees resulting
from vesting of director restricted stock awards at the end of the
second quarter 2017 was offset by increases in deposit costs and
charitable contributions during the quarter. The increase in
operating non-interest expense from the third 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 40.0% for the third quarter 2017, compared to
41.2% for the second quarter 2017, and 43.0% for the third quarter
2016.
Net income was $82.9 million for the third quarter 2017, an
increase of $2.9 million, or 3.6%, from $80.0 million for the
second quarter 2017, and an increase of $15.8 million, or 23.6%,
from $67.1 million for the third quarter 2016. Earnings per share
was $0.79 for the third quarter 2017, compared to $0.76 for the
second quarter 2017, and $0.64 for the third 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 third quarter 2017, the Company’s
operating PPNR was $122.7 million, up 6.5% from $115.2 million in
the second quarter 2017, and up 21.7% from $100.8 million in the
third quarter 2016.1 The non-operating items1 for the third quarter
2017 consisted primarily of a net gain on sales of investment
securities of $0.3 million, offset by a net loss on sales /
valuations of repossessed and other assets of $0.3 million. The
non-operating items1 for the third quarter 2016 consisted primarily
of acquisition / restructure expenses of $2.7 million related to
the HFF and system conversion costs.
The Company had 1,673 full-time equivalent employees and 47
offices at September 30, 2017, compared to 1,628 employees and
46 offices at June 30, 2017 and 1,520 employees and 48 offices
at September 30, 2016.
Balance Sheet
Gross loans totaled $14.52 billion at September 30, 2017,
an increase of $532 million from $13.99 billion at June 30,
2017, and an increase of $1.49 billion from $13.03 billion at
September 30, 2016. The increase from both the prior quarter
and from September 30, 2016 is due to organic loan growth. At
September 30, 2017, the allowance for credit losses to gross
loans held for investment was 0.94%, compared to 0.94% at
June 30, 2017, and 0.94% at September 30, 2016. At
September 30, 2017, the allowance for credit losses to total
organic loans was 1.06%, compared to 1.08% at June 30, 2017,
and 1.13% at September 30, 2016. The Company defines its
organic loans as those loans that have not been acquired in a
transaction accounted for as a business combination.
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 $32.7 million at
September 30, 2017, compared to $37.8 million at June 30,
2017, and $56.1 million at September 30, 2016.
Deposits totaled $16.90 billion at September 30, 2017, an
increase of $874 million from $16.03 billion at June 30, 2017,
and an increase of $2.46 billion from $14.44 billion at
September 30, 2016. The increase from both the prior quarter
and from September 30, 2016 is the result of organic deposit
growth. Non-interest bearing deposits were $7.61 billion at
September 30, 2017, compared to $6.86 billion at June 30,
2017, and $5.62 billion at September 30, 2016. Non-interest
bearing deposits comprised 45.0% of total deposits at
September 30, 2017, compared to 42.8% at June 30, 2017,
and 38.9% at September 30, 2016. The proportion of savings and
money market balances to total deposits decreased to 37.3% from
38.1% at June 30, 2017, and from 41.3% at September 30,
2016. Certificates of deposit as a percentage of total deposits
were 9.4% at September 30, 2017, compared to 9.9% at
June 30, 2017, and 11.0% at September 30, 2016. The
Company’s ratio of loans to deposits was 85.9% at
September 30, 2017, compared to 87.3% at June 30, 2017,
and 90.2% at September 30, 2016.
Qualifying debt totaled $373 million at September 30, 2017,
compared to $375 million at June 30, 2017, and $383 million at
September 30, 2016.
Stockholders’ equity at September 30, 2017 was $2.15
billion, compared to $2.06 billion at June 30, 2017, and $1.86
billion at September 30, 2016. The increase from the prior
quarter and prior year relates primarily to net income for the
respective period.
At September 30, 2017, tangible common equity, net of tax,
was 9.4% of tangible assets1 and total capital was 13.3% of
risk-weighted assets. The Company’s tangible book value per share1
was $17.53 at September 30, 2017, up 18.1% from
September 30, 2016.
Total assets increased 5.7% to $19.92 billion at
September 30, 2017, from $18.84 billion at June 30, 2017,
and increased 16.9% from $17.04 billion at September 30, 2016.
The increase in total assets from the prior quarter and prior year
relates primarily to loan growth of $532 million and $1.49 billion,
respectively.
Asset Quality
The provision for credit losses was $5.0 million for the third
quarter 2017, compared to $3.0 million for the second quarter 2017,
and $2.0 million for the third quarter 2016. Net charge-offs
(recoveries) in the third quarter 2017 were $0.4 million, or 0.01%
of average loans (annualized), compared to $(1.2) million in net
recoveries, or (0.03)%, in the second quarter 2017 and $1.2 million
in net charge-offs, or 0.04%, in the third quarter 2016.
Nonaccrual loans increased $24.9 million to $55.0 million during
the quarter, which primarily relates to one loan with a net balance
of $23 million, which the Company sold subsequent to quarter end.
The Company incurred a loss of $1.4 million on the sale of the
loan, which was recognized as a charge-off during the quarter.
Loans past due 90 days and still accruing interest totaled less
than $0.1 million at September 30, 2017, compared to $4.0
million at June 30, 2017, and $2.8 million at
September 30, 2016. Loans past due 30-89 days and still
accruing interest totaled $5.2 million at quarter end, an increase
from $4.1 million at June 30, 2017, and a decrease from $18.4
million at September 30, 2016.
Repossessed assets totaled $29.0 million at quarter end, a
decrease of $2.0 million from $31.0 million at June 30, 2017,
and a decrease of $20.6 million from $49.6 million at
September 30, 2016. Adversely graded loans and non-performing
assets totaled $406.2 million at quarter end, an increase of $38.4
million from $367.8 million at June 30, 2017, and an increase
of $71.3 million from $334.9 million at September 30, 2016.
The increase in non-performing assets during the quarter primarily
relates to the $23 million loan discussed above.
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
10.7% at September 30, 2017, compared to 12.7% at
June 30, 2017, and 12.3% at September 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 $7.95
billion at September 30, 2017, an increase of $121 million
during the quarter, and an increase of $410 million during the last
twelve months. All regional segments, with the exception of Nevada,
had loan growth during the quarter, with Northern California
contributing the largest growth of $88 million, followed by Arizona
and Southern California with growth of $41 million and $35 million,
respectively. The growth in loans during the last twelve months was
primarily driven by increases of $193 million in Arizona, $189
million in Northern California, and $40 million in Southern
California. Total deposits for the regional segments were $13.20
billion, an increase of $693 million during the quarter, and an
increase of $1.79 billion during the last twelve months. Arizona
and Southern California generated increased deposits during the
quarter of $420 million and $261 million, respectively, which was
partially offset by a decrease of $12 million in Northern
California. During the last twelve months, each regional segment
generated increased deposits, with Arizona, Southern California,
and Nevada contributing increases of $1.27 billion, $257 million,
and $239 million, respectively.
Pre-tax income for the regional segments was $86.1 million for
the three months ended September 30, 2017, an increase of $1.4
million from the three months ended June 30, 2017, and an
increase of $5.4 million from the three months ended
September 30, 2016. Arizona generated the largest increase in
pre-tax income of $3.2 million, compared to the three months ended
June 30, 2017, which was partially offset by a decrease in
Southern California of $1.5 million. Arizona and Nevada had
increases in pre-tax income from the three months ended
September 30, 2016 of $7.1 million and $1.5 million,
respectively, which were offset by decreases in Northern California
and Southern California of $3.0 million and $0.2 million,
respectively. For the nine months ended September 30, 2017,
the regional segments reported total pre-tax income of $243.1
million, an increase of $22.6 million compared to the nine months
ended September 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 $18.9
million and $6.9 million, respectively.
The NBL segments reported gross loan balances of $6.57 billion
at September 30, 2017, an increase of $414 million during the
quarter, and an increase of $1.09 billion during the last twelve
months. All NBL segments had loan growth during the quarter, with
the Other NBLs segment contributing the largest growth of $340
million, followed by increases in HFF and Public & Nonprofit
Finance of $34 million and $29 million, respectively. The increase
in loans for the NBL segments over the last twelve months relates
primarily to the Other NBLs, Public & Nonprofit Finance, and
Technology & Innovation segments, which increased loans by $839
million, $127 million, and $115 million, respectively. Total
deposits for the NBL segments were $3.61 billion, an increase of
$154 million during the quarter, and an increase of $732 million
during the last twelve months. During the quarter, the Technology
& Innovation segment increased deposits by $187 million, which
was partially offset by a decrease of $34 million in HOA Services.
The increase of $732 million during the last twelve months is the
result of growth in the Technology & Innovation and HOA
Services segments of $393 million and $339 million,
respectively.
Pre-tax income for the NBL segments was $45.6 million for the
three months ended September 30, 2017, an increase of $3.0
million from the three months ended June 30, 2017, and an
increase of $7.6 million from the three months ended
September 30, 2016. The increase in pre-tax income from the
prior quarter relates primarily to the HFF segment as it had an
increase in pre-tax income of $3.8 million. This increase was
offset by a decrease in pre-tax income from the Other NBLs segment
of $1.3 million. The increase in pre-tax income compared to the
three months ended September 30, 2016 was driven by increases
across all NBL segments. The largest increases were generated by
HFF, Public & Nonprofit Finance, and Technology &
Innovation with increases of $2.2 million, $2.0 million, and $1.8
million, respectively. Pre-tax income for the NBL segments for the
nine months ended September 30, 2017 totaled $125.8 million,
an increase of $26.2 million compared to the nine months ended
September 30, 2016. The largest increases in pre-tax income
compared to the nine months ended September 30, 2016 were in
the HFF, HOA Services, and Public & Nonprofit Finance segments,
which increased $11.8 million, $6.3 million, and $4.5 million,
respectively.
Conference Call and Webcast
Western Alliance Bancorporation will host a conference call and
live webcast to discuss its third quarter 2017 financial results at
12:00 p.m. ET on Friday, October 20, 2017. Participants may
access the call by dialing 1-888-317-6003 and using passcode
0722330 or via live audio webcast using the website link
https://services.choruscall.com/links/wal171020.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 October 20th through 9:00 a.m. ET
November 20th by dialing 1-877-344-7529, passcode: 10112871.
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 $19 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
September 30, 2017 2016 Change % (in
millions) Total assets $ 19,922.2 $ 17,042.6 16.9 % Total loans,
net 14,521.9 13,033.6 11.4 Securities and money market investments
3,773.6 2,778.1 35.8 Total deposits 16,904.8 14,443.2 17.0
Qualifying debt 372.9 382.9 (2.6 ) Stockholders' equity 2,145.6
1,857.4 15.5 Tangible common equity, net of tax (1) 1,848.8 1,559.1
18.6
Selected Income Statement Data: For the Three
Months Ended September 30, For the Nine Months Ended
September 30, 2017 2016 Change %
2017 2016 Change % (in thousands, except per
share data) (in thousands, except per share data) Interest income $
217,836 $ 184,750 17.9 % $ 617,054 $ 513,095 20.3 % Interest
expense 16,253 12,203 33.2 43,419 31,151
39.4 Net interest income 201,583 172,547 16.8 573,635
481,944 19.0 Provision for credit losses 5,000 2,000
NM 12,250 7,000 75.0 Net interest income after
provision for credit losses 196,583 170,547 15.3 561,385 474,944
18.2 Non-interest income 10,288 10,683 (3.7 ) 31,281 32,375 (3.4 )
Non-interest expense 89,114 85,007 4.8 265,128
242,304 9.4 Income before income taxes 117,757 96,223 22.4
327,538 265,015 23.6 Income tax expense 34,899 29,171
19.6 91,352 75,017 21.8 Net income $ 82,858 $
67,052 23.6 $ 236,186 $ 189,998 24.3 Diluted
earnings per share $ 0.79 $ 0.64 23.4 $ 2.25 $
1.84 22.3 (1) See Reconciliation of Non-GAAP
Financial Measures. NM: Changes +/- 100% are not meaningful.
Western Alliance Bancorporation and
Subsidiaries Summary Consolidated Financial Data
Unaudited Common Share Data:
For the Three Months Ended September 30, For the Nine
Months Ended September 30, 2017 2016 Change
% 2017 2016 Change % Diluted earnings per
share $ 0.79 $ 0.64 23.4 % $ 2.25 $ 1.84 22.3 % Book value per
common share 20.34 17.68 15.0 Tangible book value per share, net of
tax (1) 17.53 14.84 18.1
Average shares outstanding (in
thousands):
Basic 104,221 103,768 0.4 104,124 102,791 1.3 Diluted 104,942
104,564 0.4 104,941 103,532 1.4 Common shares outstanding 105,493
105,071 0.4
Selected Performance Ratios: Return on
average assets (2) 1.71 % 1.58 % 8.2 % 1.70 % 1.61 % 5.6 % Return
on average tangible common equity (1, 2) 18.18 17.50 3.9 18.15
17.74 2.3 Net interest margin (2) 4.65 4.55 2.2 4.63 4.58 1.1
Operating efficiency ratio - tax equivalent basis (1) 39.95 42.97
(7.0 ) 41.76 43.78 (4.6 ) Loan to deposit ratio 85.90 90.24 (4.8 )
Asset Quality Ratios: Net charge-offs (recoveries) to
average loans outstanding (2) 0.01 % 0.04 % (75.0 )% 0.01 % 0.04 %
(75.0 )% Nonaccrual loans to gross loans 0.38 0.31 22.6 Nonaccrual
loans and repossessed assets to total assets 0.42 0.53 (20.8 )
Loans past due 90 days and still accruing to gross loans — 0.02
(100.0 ) Allowance for credit losses to gross organic loans 1.06
1.13 (6.2 ) Allowance for credit losses to nonaccrual loans 248.07
302.61 (18.0 )
Capital Ratios:
Sep 30, 2017 Jun 30, 2017 Sep 30, 2016
Tangible common equity (1) 9.4 % 9.5 % 9.3 % Common Equity Tier 1
(1), (3) 10.4 10.3 9.8 Tier 1 Leverage ratio (1), (3) 10.1 9.9 9.6
Tier 1 Capital (1), (3) 10.8 10.8 10.3 Total Capital (1), (3) 13.3
13.4 13.1 (1) See Reconciliation of Non-GAAP
Financial Measures. (2) Annualized for the three month periods
ended September 30, 2017 and 2016. (3) Capital ratios for September
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 September 30,
Nine Months Ended September 30, 2017
2016 2017
2016 (dollars in thousands, except per share data) Interest
income: Loans $ 191,096 $ 167,914 $ 547,306 $ 467,715 Investment
securities 23,584 15,436 62,327 41,815 Other 3,156 1,400
7,421 3,565
Total interest income
217,836 184,750 617,054 513,095
Interest expense: Deposits 11,449 8,072 29,506 21,993 Qualifying
debt 4,708 4,048 13,539 8,746 Borrowings 96 83 374
412
Total interest expense 16,253
12,203 43,419 31,151
Net interest
income 201,583 172,547 573,635 481,944 Provision for credit
losses 5,000 2,000 12,250 7,000
Net
interest income after provision for credit losses 196,583
170,547 561,385 474,944 Non-interest
income: Service charges 5,248 4,916 15,189 13,958 Card income 1,344
1,381 4,146 3,844 Income from equity investments 950 1,208 2,933
1,610 Income from bank owned life insurance 975 899 2,896 2,858
Foreign currency income 756 888 2,630 2,672 Lending related income
and gains (losses) on sale of loans, net 97 708 746 4,509 Gain
(loss) on sales of investment securities, net 319 — 907 1,001 Other
income 599 683 1,834 1,923
Total
non-interest income 10,288 10,683 31,281
32,375 Non-interest expenses: Salaries and employee benefits
52,730 49,542 156,596 139,108 Legal, professional and directors'
fees 6,038 5,691 23,324 17,010 Occupancy 7,507 6,856 21,328 20,359
Data processing 4,524 5,266 14,163 15,028 Insurance 3,538 3,144
10,355 9,430 Deposit costs 2,904 1,363 6,778 3,121 Marketing 776
678 2,628 2,432 Loan and repossessed asset expenses 1,263 788 3,639
2,522 Card expense 801 252 2,187 1,376 Intangible amortization 489
697 1,666 2,091 Net loss (gain) on sales and valuations of
repossessed and other assets 266 (146 ) (46 ) (91 ) Acquisition /
restructure expense — 2,729 — 6,391 Other 8,278 8,147
22,510 23,527
Total non-interest expense
89,114 85,007 265,128 242,304 Income
before income taxes 117,757 96,223 327,538 265,015 Income tax
expense 34,899 29,171 91,352 75,017
Net income $ 82,858 $ 67,052 $ 236,186
$ 189,998
Earnings per share: Diluted shares
104,942 104,564 104,941 103,532 Diluted earnings per share $ 0.79 $
0.64 $ 2.25 $ 1.84
Western Alliance Bancorporation and
Subsidiaries Five Quarter Condensed Consolidated Income
Statements Unaudited Three
Months Ended Sep 30, 2017 Jun 30, 2017 Mar 31,
2017 Dec 31, 2016 Sep 30, 2016 (in thousands,
except per share data) Interest income: Loans $ 191,096 $ 183,657 $
172,553 $ 168,881 $ 167,914 Investment securities 23,584 20,629
18,114 16,725 15,436 Other 3,156 2,667 1,598
1,805 1,400
Total interest income 217,836
206,953 192,265 187,411 184,750
Interest expense: Deposits 11,449 9,645 8,412 7,729 8,072
Qualifying debt 4,708 4,493 4,338 4,252 4,048 Borrowings 96
72 206 161 83
Total interest
expense 16,253 14,210 12,956 12,142
12,203
Net interest income 201,583 192,743 179,309
175,269 172,547 Provision for credit losses 5,000 3,000
4,250 1,000 2,000
Net interest
income after provision for credit losses 196,583 189,743
175,059 174,269 170,547 Non-interest
income: Service charges and fees 5,248 5,203 4,738 4,865 4,916 Card
income 1,344 1,380 1,422 1,381 1,381 Income from equity investments
950 1,291 692 1,054 1,208 Income from bank owned life insurance 975
973 948 904 899 Foreign currency income 756 832 1,042 747 888
Lending related income and gains (losses) on sale of loans, net 97
227 422 488 708 Gain (loss) on sales of investment securities, net
319 (47 ) 635 58 — Other income 599 590 645
1,043 683
Total non-interest income 10,288
10,449 10,544 10,540 10,683
Non-interest expenses: Salaries and employee benefits 52,730 52,246
51,620 49,702 49,542 Legal, professional, and directors' fees 6,038
8,483 8,803 7,600 5,691 Occupancy 7,507 6,927 6,894 6,944 6,856
Data processing 4,524 4,375 5,264 4,504 5,266 Insurance 3,538 3,589
3,228 3,468 3,144 Deposit costs 2,904 2,133 1,741 1,862 1,363
Marketing 776 1,131 721 1,164 678 Loan and repossessed asset
expenses 1,263 1,098 1,278 477 788 Card expense 801 725 661 689 252
Intangible amortization 489 488 689 697 697 Net loss (gain) on
sales and valuations of repossessed and other assets 266 231 (543 )
(34 ) (146 ) Acquisition / restructure expense — — — 6,021 2,729
Other 8,278 6,831 7,401 5,551 8,147
Total non-interest expense 89,114 88,257
87,757 88,645 85,007 Income before
income taxes 117,757 111,935 97,846 96,164 96,223 Income tax
expense 34,899 31,964 24,489 26,364
29,171
Net income $ 82,858 $ 79,971 $
73,357 $ 69,800 $ 67,052
Earnings
per share: Diluted shares 104,942 105,045 104,836 104,765
104,564 Diluted earnings per share $ 0.79 $ 0.76 $ 0.70 $ 0.67 $
0.64
Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Balance Sheets
Unaudited Sep 30, 2017
Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Sep
30, 2016 (in millions, except per share data)
Assets:
Cash and due from banks $ 650.4 $ 606.7 $ 647.0 $ 284.5 $ 356.1
Securities and money market investments 3,773.6 3,283.0 2,869.1
2,767.8 2,778.1 Loans held for sale 16.3 16.7 17.8 18.9 21.3 Loans
held for investment: Commercial 6,735.9 6,318.5 6,039.1 5,855.8
5,715.0 Commercial real estate - non-owner occupied 3,628.4 3,649.1
3,607.8 3,544.0 3,623.4 Commercial real estate - owner occupied
2,047.5 2,021.2 2,043.4 2,013.3 1,984.0 Construction and land
development 1,666.4 1,601.7 1,601.7 1,478.1 1,379.7 Residential
real estate 376.7 334.8 309.9 259.4 271.8 Consumer 50.7 47.9
43.0 39.0 38.4
Gross loans and
deferred fees, net 14,505.6 13,973.2 13,644.9 13,189.6 13,012.3
Allowance for credit losses (136.4 ) (131.8 ) (127.6 ) (124.7 )
(122.9 )
Loans, net 14,369.2 13,841.4 13,517.3
13,064.9 12,889.4 Premises and equipment, net
120.1 120.5 120.0 119.8 121.3 Other assets acquired through
foreclosure, net 29.0 31.0 45.2 47.8 49.6 Bank owned life insurance
166.8 166.4 165.5 164.5 163.6 Goodwill and other intangibles, net
301.2 301.6 302.1 302.9 303.6 Other assets 495.6 477.4
438.5 429.7 359.6
Total assets $
19,922.2 $ 18,844.7 $ 18,122.5 $ 17,200.8
$ 17,042.6
Liabilities and Stockholders'
Equity: Liabilities: Deposits Non-interest bearing demand
deposits $ 7,608.7 $ 6,859.4 $ 6,114.1 $ 5,632.9 $ 5,624.8 Interest
bearing: Demand 1,406.4 1,480.8 1,449.3 1,346.7 1,256.7 Savings and
money market 6,300.2 6,104.0 6,253.8 6,120.9 5,969.6 Time
certificates 1,589.5 1,586.9 1,538.8 1,449.3
1,592.1
Total deposits 16,904.8 16,031.1
15,356.0 14,549.8 14,443.2 Customer repurchase agreements 26.1
32.7 35.7 41.7 44.4
Total
customer funds 16,930.9 16,063.8 15,391.7 14,591.5 14,487.6
Borrowings — — — 80.0 — Qualifying debt 372.9 375.4 366.9 367.9
382.9 Accrued interest payable and other liabilities 472.8
346.8 394.9 269.9 314.7
Total
liabilities 17,776.6 16,786.0 16,153.5
15,309.3 15,185.2 Stockholders' Equity: Common stock
and additional paid-in capital 1,378.8 1,376.4 1,370.3 1,373.8
1,368.4 Retained earnings 758.6 675.8 595.8 522.4 452.6 Accumulated
other comprehensive income (loss) 8.2 6.5 2.9
(4.7 ) 36.4
Total stockholders' equity 2,145.6
2,058.7 1,969.0 1,891.5 1,857.4
Total liabilities and stockholders' equity $ 19,922.2
$ 18,844.7 $ 18,122.5 $ 17,200.8 $ 17,042.6
Western Alliance Bancorporation and
Subsidiaries Changes in the Allowance For Credit Losses
Unaudited Three Months
Ended Sep 30, 2017 Jun 30, 2017 Mar 31,
2017 Dec 31, 2016 Sep 30, 2016 (in thousands)
Balance, beginning of period $ 131,811 $ 127,649 $ 124,704 $
122,884 $ 122,104 Provision for credit losses 5,000 3,000 4,250
1,000 2,000 Recoveries of loans previously charged-off: Commercial
and industrial 619 1,759 328 1,144 466 Commercial real estate -
non-owner occupied 1,168 360 355 691 230 Commercial real estate -
owner occupied 613 46 178 45 291 Construction and land development
226 508 277 30 302 Residential real estate 108 1,299 251 287 179
Consumer 33 — 49 11 21 Total
recoveries 2,767 3,972 1,438 2,208 1,489 Loans charged-off:
Commercial and industrial 2,921 651 2,595 1,267 2,558 Commercial
real estate - non-owner occupied 175 1,808 — 1 — Commercial real
estate - owner occupied — 11 — 1 72 Construction and land
development — — — 18 — Residential real estate — 332 115 60 79
Consumer 61 8 33 41 — Total
loans charged-off 3,157 2,810 2,743 1,388 2,709 Net charge-offs
(recoveries) 390 (1,162 ) 1,305 (820 ) 1,220
Balance, end of period $ 136,421 $ 131,811 $ 127,649
$ 124,704 $ 122,884 Net charge-offs
(recoveries) to average loans- annualized 0.01 % (0.03 )% 0.04 %
(0.03 )% 0.04 % Allowance for credit losses to gross loans
0.94 % 0.94 % 0.94 % 0.95 % 0.94 % Allowance for credit losses to
gross organic loans 1.06 1.08 1.08 1.11 1.13 Allowance for credit
losses to nonaccrual loans 248.07 438.33 370.45 309.65 302.61
Nonaccrual loans1 $ 54,994 $ 30,071 $ 34,458 $ 40,272 $
40,608 Nonaccrual loans to gross loans 0.38 % 0.22 % 0.25 % 0.31 %
0.31 % Repossessed assets $ 28,992 $ 30,988 $ 45,200 $ 47,815 $
49,619 Nonaccrual loans and repossessed assets to total assets 0.42
% 0.32 % 0.44 % 0.51 % 0.53 % Loans past due 90 days, still
accruing $ 44 $ 4,021 $ 3,659 $ 1,067 $ 2,817 Loans past due 90
days and still accruing to gross loans — % 0.03 % 0.03 % 0.01 %
0.02 % Loans past due 30 to 89 days, still accruing $ 5,179 $ 4,071
$ 10,764 $ 6,294 $ 18,446 Loans past due 30 to 89 days, still
accruing to gross loans 0.04 % 0.03 % 0.08 % 0.05 % 0.14 %
Special mention loans $ 199,965 $ 141,036 $ 175,080 $ 148,144 $
134,018 Special mention loans to gross loans 1.38 % 1.01 % 1.28 %
1.12 % 1.03 % Classified loans on accrual $
122,264
$ 165,715 $ 133,483 $ 106,644 $ 110,650 Classified loans on accrual
to gross loans
0.84
% 1.19 % 0.98 % 0.81 % 0.85 % Classified assets $ 221,803 $ 249,491
$ 236,786 $ 211,782 $ 212,286 Classified assets to total assets
1.11 % 1.32 % 1.31 % 1.23 % 1.25 % 1 Includes
one loan with a net balance of $23 million, which the Company sold
subsequent to quarter-end.
Western
Alliance Bancorporation and Subsidiaries Analysis of Average
Balances, Yields and Rates Unaudited
Three Months Ended September 30, 2017
June 30, 2017 AverageBalance Interest
Average Yield /Cost AverageBalance
Interest Average Yield /Cost ($ in millions)
($ in thousands) ($ in millions) ($ in thousands)
Interest
earning assets Loans: Commercial $ 6,328.5 $ 80,617 5.59 % $
6,054.3 $ 75,857 5.52 % CRE - non-owner occupied 3,595.3 54,250
6.04 3,606.8 52,416 5.81 CRE - owner occupied 2,032.7 25,238 4.97
2,019.5 25,931 5.14 Construction and land development 1,633.4
25,897 6.34 1,605.6 24,965 6.22 Residential real estate 351.5 4,151
4.72 322.2 3,950 4.90 Consumer 52.2 729 5.59 44.7 395 3.53 Loans
held for sale 16.5 214 5.19 17.3 143
3.31
Total loans (1), (2), (3) 14,010.1
191,096 5.68 13,670.4 183,657 5.60 Securities: Securities - taxable
2,778.4 17,399 2.50 2,446.5 14,847 2.43 Securities - tax-exempt
657.1 6,185 5.61 628.0 5,782
5.48
Total securities (1) 3,435.5 23,584 3.10 3,074.5
20,629 3.05 Cash and other 845.8 3,156 1.49
903.3 2,667 1.18
Total interest earning assets
18,291.4 217,836 5.00 17,648.2 206,953 4.93
Non-interest earning
assets Cash and due from banks 132.3 140.3 Allowance for credit
losses (133.6 ) (130.0 ) Bank owned life insurance 166.4 165.8
Other assets 930.7 919.6
Total assets $
19,387.2 $ 18,743.9
Interest-bearing
liabilities Interest-bearing deposits: Interest-bearing
transaction accounts $ 1,476.5 $ 1,066 0.29 % $ 1,492.7 $ 986 0.26
% Savings and money market 6,282.4 7,135 0.45 6,155.8 5,831 0.38
Time certificates of deposit 1,585.7 3,248 0.82
1,576.0 2,828 0.72
Total
interest-bearing deposits 9,344.6 11,449 0.49 9,224.5 9,645
0.42 Short-term borrowings 31.7 96 1.21 34.6 72 0.83 Qualifying
debt 375.3 4,708 5.02 359.3 4,493
5.00
Total interest-bearing liabilities
9,751.6 16,253 0.67 9,618.4 14,210 0.59
Non-interest-bearing
liabilities Non-interest-bearing demand deposits 7,174.5
6,735.3 Other liabilities 336.9 351.7 Stockholders’ equity 2,124.2
2,038.5
Total liabilities and stockholders'
equity $ 19,387.2 $ 18,743.9 Net interest income
and margin (4) $ 201,583 4.65 % $ 192,743 4.61 %
(1)
Yields on loans and securities have been
adjusted to a tax-equivalent basis. The taxable-equivalent
adjustment was $10.8 million and $10.4 million for the three months
ended September 30, 2017 and June 30, 2017, respectively.
(2)
Included in the yield computation are net
loan fees of $9.4 million and accretion on acquired loans of $7.5
million for the three months ended September 30, 2017, compared to
$10.0 million and $7.1 million for the three months ended June 30,
2017, respectively.
(3)
Includes non-accrual loans.
(4)
Net interest margin is computed by
dividing net interest income by total average earning assets.
Western Alliance Bancorporation and
Subsidiaries Analysis of Average Balances, Yields and
Rates Unaudited Three Months
Ended September 30, 2017 2016
AverageBalance Interest Average Yield
/Cost AverageBalance Interest
Average Yield /Cost ($ in millions) ($ in thousands)
($ in millions) ($ in thousands)
Interest earning assets
Loans: Commercial $ 6,328.5 $ 80,617 5.59 % $ 5,503.0 $ 65,447 5.24
% CRE - non-owner occupied 3,595.3 54,250 6.04 3,655.6 51,708 5.66
CRE - owner occupied 2,032.7 25,238 4.97 1,999.5 26,620 5.33
Construction and land development 1,633.4 25,897 6.34 1,338.2
19,793 5.92 Residential real estate 351.5 4,151 4.72 281.4 3,557
5.06 Consumer 52.2 729 5.59 40.0 475 4.75 Loans held for sale 16.5
214 5.19 21.9 314 5.74
Total loans (1), (2), (3) 14,010.1 191,096 5.68 12,839.6
167,914 5.44 Securities: Securities - taxable 2,778.4 17,399 2.50
1,895.5 10,438 2.20 Securities - tax-exempt 657.1 6,185
5.61 511.8 4,998 5.46
Total
securities (1) 3,435.5 23,584 3.10 2,407.3 15,436 2.90 Cash and
other 845.8 3,156 1.49 684.7 1,400
0.82
Total interest earning assets 18,291.4
217,836 5.00 15,931.6 184,750 4.85
Non-interest earning
assets Cash and due from banks 132.3 146.1
Allowance for
credit losses (133.6 ) (123.6 ) Bank owned life insurance 166.4
164.0 Other assets 930.7 834.9
Total assets $
19,387.2 $ 16,953.0
Interest-bearing
liabilities Interest-bearing deposits: Interest-bearing
transaction accounts $ 1,476.5 $ 1,066 0.29 % $ 1,286.1 $ 612 0.19
% Savings and money market 6,282.4 7,135 0.45 6,129.2 5,314 0.35
Time certificates of deposit 1,585.7 3,248 0.82
1,637.3 2,146 0.52
Total
interest-bearing deposits 9,344.6 11,449 0.49 9,052.6 8,072
0.36 Short-term borrowings 31.7 96 1.21 39.1 83 0.85 Qualifying
debt 375.3 4,708 5.02 369.1 4,048
4.39
Total interest-bearing liabilities
9,751.6 16,253 0.67 9,460.8 12,203 0.52
Non-interest-bearing
liabilities Non-interest-bearing demand deposits 7,174.5
5,363.7 Other liabilities 336.9 292.2 Stockholders’ equity 2,124.2
1,836.3
Total liabilities and stockholders'
equity $ 19,387.2 $ 16,953.0 Net interest income
and margin (4) $ 201,583 4.65 % $ 172,547 4.55 %
(1)
Yields on loans and securities have been
adjusted to a tax-equivalent basis. The taxable-equivalent
adjustment was $10.8 million and $8.6 million for the three months
ended September 30, 2017 and 2016, respectively.
(2)
Included in the yield computation are net
loan fees of $9.4 million and accretion on acquired loans of $7.5
million for the three months ended September 30, 2017, compared to
$7.2 million and $8.8 million for the three months ended September
30, 2016, respectively.
(3)
Includes non-accrual loans.
(4)
Net interest margin is computed by
dividing net interest income by total average earning assets.
Western Alliance Bancorporation and
Subsidiaries Analysis of Average Balances, Yields and
Rates Unaudited Nine Months
Ended September 30, 2017 2016
AverageBalance Interest Average Yield
/Cost AverageBalance Interest
Average Yield /Cost ($ in millions) ($ in thousands)
($ in millions) ($ in thousands)
Interest earning assets
Loans: Commercial $ 6,047.6 $ 224,876 5.45 % $ 5,343.5 $ 189,994
5.24 % CRE - non-owner occupied 3,579.2 160,172 5.97 3,064.1
130,113 5.66 CRE - owner occupied 2,016.8 75,895 5.02 2,024.4
78,521 5.17 Construction and land development 1,583.7 72,965 6.14
1,266.3 56,382 5.94 Residential real estate 315.5 11,125 4.70 297.5
10,449 4.68 Consumer 45.2 1,617 4.77 34.8 1,268 4.86 Loans held for
sale 17.5 656 5.00 22.9 988 5.75
Total loans (1) 13,605.5 547,306 5.58 12,053.5
467,715 5.39 Securities: Securities - taxable (1) 2,445.8 44,684
2.44 1,671.4 28,290 2.26 Securities - tax-exempt 630.0
17,643 5.55 478.8 13,525 5.38
Total securities 3,075.8 62,327 3.07 2,150.2 41,815 2.95
Cash and other 745.0 7,421 1.33 567.0
3,565 0.84
Total interest earning assets
17,426.3 617,054 4.96 14,770.7 513,095 4.86
Non-interest earning
assets Cash and due from banks 138.4 140.4
Allowance for
credit losses (129.8 ) (121.8 ) Bank owned life insurance 165.7
163.5 Other assets 917.1 830.0
Total assets $
18,517.7 $ 15,782.8
Interest-bearing
liabilities Interest-bearing deposits: Interest-bearing
transaction accounts $ 1,468.2 $ 2,858 0.26 % $ 1,191.1 $ 1,571
0.18 % Savings and money market accounts 6,169.9 18,277 0.39
5,768.2 14,326 0.33 Time certificates of deposit 1,549.2
8,371 0.72 1,651.9 6,096 0.49
Total interest-bearing deposits 9,187.3 29,506 0.43 8,611.2
21,993 0.34 Short-term borrowings 58.7 374 0.85 81.5 412 0.67
Qualifying debt 370.8 13,539 4.87 265.7
8,746 4.39
Total interest-bearing liabilities
9,616.8 43,419 0.60 8,958.4 31,151 0.46
Non-interest-bearing
liabilities Non-interest-bearing demand deposits 6,548.4
4,830.7 Other liabilities 315.3 261.3 Stockholders’ equity 2,037.2
1,732.4
Total liabilities and stockholders'
equity $ 18,517.7 $ 15,782.8 Net interest income
and margin (4) $ 573,635 4.63 % $ 481,944 4.58 %
(1)
Yields on loans and securities have been
adjusted to a tax-equivalent basis. The taxable-equivalent
adjustment was $31.0 million and $25.7 million for the nine months
ended September 30, 2017 and 2016, respectively.
(2)
Included in the yield computation are net
loan fees of $26.0 million and accretion on acquired loans of $21.0
million for the nine months ended September 30, 2017, compared to
$20.3 million and $22.3 million for the nine months ended September
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
Consolidated
Company
Arizona Nevada
Southern
California
Northern
California
At September 30, 2017 (dollars in millions)
Assets:
Cash, cash equivalents, and investment securities $ 4,424.0 $ 1.9 $
7.7 $ 1.9 $ 1.7 Loans, net of deferred loan fees and costs 14,521.9
3,131.2 1,685.6 1,873.5 1,260.7 Less: allowance for credit losses
(136.4 ) (30.7 ) (16.8 ) (20.4 ) (12.6 ) Total loans 14,385.5
3,100.5 1,668.8 1,853.1 1,248.1
Other assets acquired through foreclosure, net 29.0 2.3 13.7 — 0.2
Goodwill and other intangible assets, net 301.2 — 23.2 — 156.8
Other assets 782.5 45.8 58.4 13.9 17.4
Total assets $ 19,922.2 $ 3,150.5 $ 1,771.8
$ 1,868.9 $ 1,424.2
Liabilities:
Deposits $ 16,904.8 $ 5,198.1 $ 3,950.5 $ 2,512.2 $ 1,535.6
Borrowings and qualifying debt 372.9 — — — — Other liabilities
498.9 13.4 23.3 3.6 11.1 Total
liabilities 17,776.6 5,211.5 3,973.8 2,515.8
1,546.7
Allocated equity: 2,145.6 390.4
251.5 216.6 299.2
Total liabilities
and stockholders' equity $ 19,922.2 $ 5,601.9 $
4,225.3 $ 2,732.4 $ 1,845.9 Excess funds
provided (used) — 2,451.4 2,453.5 863.5 421.7 No. of offices
47 10 16 9 3 No. of full-time equivalent employees 1,673 167 218
180 167
Income Statement: Three
Months Ended September 30, 2017: (in thousands) Net interest
income (expense) $ 201,583 $ 52,637 $ 36,310 $ 26,811 $ 21,932
Provision for credit losses 5,000 (289 ) (2,044 ) (58 )
3,144 Net interest income (expense) after provision for
credit losses 196,583 52,926 38,354 26,869 18,788 Non-interest
income 10,288 1,265 2,354 971 1,796 Non-interest expense (89,114 )
(18,844 ) (14,748 ) (12,340 ) (11,317 ) Income (loss) before income
taxes 117,757 35,347 25,960 15,500 9,267 Income tax expense
(benefit) 34,899 13,857 9,086 6,517
3,897
Net income (loss) $ 82,858 $ 21,490
$ 16,874 $ 8,983 $ 5,370
Nine Months Ended September 30, 2017: (in thousands) Net
interest income (expense) $ 573,635 $ 145,839 $ 108,028 $ 81,087 $
63,686 Provision for (recovery of) credit losses 12,250 109
(5,378 ) (20 ) 4,238 Net interest income (expense)
after provision for credit losses 561,385 145,730 113,406 81,107
59,448 Non-interest income 31,281 3,567 6,800 2,602 5,839
Non-interest expense (265,128 ) (55,388 ) (45,733 ) (38,063 )
(36,188 ) Income (loss) before income taxes 327,538 93,909 74,473
45,646 29,099 Income tax expense (benefit) 91,352 36,831
26,066 19,194 12,236
Net income
(loss) $ 236,186 $ 57,078 $ 48,407 $
26,452 $ 16,863
Western
Alliance Bancorporation and Subsidiaries Operating Segment
Results Unaudited Balance
Sheet: National Business Lines
HOA
Services
Public &
Nonprofit
Finance
Technology &
Innovation
Hotel
Franchise
Finance
Other NBLs
Corporate &
Other
At September 30, 2017 (dollars in millions)
Assets:
Cash, cash equivalents, and investment securities $ — $ — $ — $ — $
— $ 4,410.8 Loans, net of deferred loan fees and costs 157.3
1,574.5 1,049.2 1,272.5 2,513.0 4.4 Less: allowance for credit
losses (1.6 ) (16.1 ) (9.9 ) (2.7 ) (25.5 ) (0.1 ) Total loans
155.7 1,558.4 1,039.3 1,269.8 2,487.5
4.3 Other assets acquired through foreclosure, net —
— — — — 12.8 Goodwill and other intangible assets, net — — 121.1
0.1 — — Other assets 0.4 12.2 5.3 5.2
10.1 613.8 Total assets $ 156.1 $ 1,570.6
$ 1,165.7 $ 1,275.1 $ 2,497.6 $ 5,041.7
Liabilities: Deposits $ 2,153.3 $ — $ 1,459.5 $ — $ —
$ 95.6 Borrowings and qualifying debt — — — — — 372.9 Other
liabilities 1.1 46.4 0.7 0.4 136.1
262.8 Total liabilities 2,154.4 46.4
1,460.2 0.4 136.1 731.3
Allocated
equity: 57.4 126.0 234.6 104.3
207.2 258.4
Total liabilities and stockholders'
equity $ 2,211.8 $ 172.4 $ 1,694.8 $ 104.7
$ 343.3 $ 989.7 Excess funds provided (used)
2,055.7 (1,398.2 ) 529.1 (1,170.4 ) (2,154.3 ) (4,052.0 )
No. of offices 1 1 9 1 4 (7 ) No. of full-time equivalent employees
64 10 61 9 38 759
Income Statement:
Three Months Ended September 30, 2017: (in thousands) Net
interest income (expense) $ 13,746 $ 7,269 $ 20,415 $ 15,346 $
16,933 $ (9,816 ) Provision for credit losses 40 91
(83 ) 1,116 4,416 (1,333 ) Net interest income
(expense) after provision for credit losses 13,706 7,178 20,498
14,230 12,517 (8,483 ) Non-interest income 136 15 1,855 — 379 1,517
Non-interest expense (7,011 ) (1,871 ) (8,824 ) (1,905 ) (5,286 )
(6,968 ) Income (loss) before income taxes 6,831 5,322 13,529
12,325 7,610 (13,934 ) Income tax expense (benefit) 2,562
1,028 5,075 4,622 2,853 (14,598 )
Net income (loss) $ 4,269 $ 4,294 $ 8,454
$ 7,703 $ 4,757 $ 664
Nine Months Ended September 30, 2017: (in thousands) Net
interest income (expense) $ 40,275 $ 21,242 $ 59,610 $ 42,337 $
46,380 $ (34,849 ) Provision for (recovery of) credit losses 332
796 816 2,924 10,265
(1,832 ) Net interest income (expense) after provision for credit
losses 39,943 20,446 58,794 39,413 36,115 (33,017 ) Non-interest
income 417 40 5,689 — 1,632 4,695 Non-interest expense (21,416 )
(6,107 ) (26,685 ) (7,949 ) (14,573 ) (13,026 ) Income
(loss) before income taxes 18,944 14,379 37,798 31,464 23,174
(41,348 ) Income tax expense (benefit) 7,104 4,424
14,175 11,799 8,690 (49,167 )
Net income
(loss) $ 11,840 $ 9,955 $ 23,623 $ 19,665
$ 14,484 $ 7,819
Western Alliance
Bancorporation and Subsidiaries Operating Segment
Results Unaudited Balance
Sheet: Regional Segments
Consolidated
Company
Arizona Nevada
Southern
California
Northern
California
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 September 30, 2016: (in thousands) Net interest income
(expense) $ 172,547 $ 45,531 $ 35,977 $ 26,488 $ 22,181 Provision
for (recovery of) credit losses 2,000 2,399 (1,009 )
(105 ) 144 Net interest income (expense) after provision for
credit losses 170,547 43,132 36,986 26,593 22,037 Non-interest
income 10,683 1,180 2,264 686 2,916 Non-interest expense (85,007 )
(16,084 ) (14,801 ) (11,532 ) (12,706 ) Income (loss) before income
taxes 96,223 28,228 24,449 15,747 12,247 Income tax expense
(benefit) 29,171 11,074 8,557 6,621
5,150
Net income (loss) $ 67,052 $ 17,154
$ 15,892 $ 9,126 $ 7,097
Nine Months Ended September 30, 2016: (in thousands) Net
interest income (expense) $ 481,944 $ 125,191 $ 102,016 $ 76,719 $
67,272 Provision for (recovery of) credit losses 7,000
10,875 (3,526 ) 145 2,112 Net interest income
(expense) after provision for credit losses 474,944 114,316 105,542
76,574 65,160 Non-interest income 32,375 5,749 6,420 1,907 7,858
Non-interest expense (242,304 ) (45,090 ) (44,371 ) (33,401 )
(40,154 ) Income (loss) before income taxes 265,015 74,975 67,591
45,080 32,864 Income tax expense (benefit) 75,017 29,413
23,657 18,956 13,819
Net income
(loss) $ 189,998 $ 45,562 $ 43,934 $
26,124 $ 19,045
Western
Alliance Bancorporation and Subsidiaries Operating Segment
Results Unaudited Balance
Sheet: National Business Lines
HOA
Services
Public &
Nonprofit
Finance
Technology &
Innovation
Hotel
Franchise
Finance
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 September 30, 2016: (in thousands) Net
interest income (expense) $ 11,312 $ 5,012 $ 18,143 $ 13,370 $
12,060 $ (17,527 ) Provision for (recovery of) credit losses 72
(315 ) (557 ) — 1,372 (1 ) Net interest income
(expense) after provision for credit losses 11,240 5,327 18,700
13,370 10,688 (17,526 ) Non-interest income 125 19 1,871 — 728 894
Non-interest expense (6,062 ) (1,974 ) (8,837 ) (3,207 ) (3,972 )
(5,832 ) Income (loss) before income taxes 5,303 3,372 11,734
10,163 7,444 (22,464 ) Income tax expense (benefit) 1,989
1,265 4,400 3,811 2,791 (16,487 )
Net income (loss) $ 3,314 $ 2,107 $ 7,334
$ 6,352 $ 4,653 $ (5,977 )
Nine Months Ended September 30, 2016: (in thousands) Net
interest income (expense) $ 29,853 $ 15,259 $ 51,083 $ 25,438 $
35,220 $ (46,107 ) Provision for (recovery of) credit losses 160
(509 ) (2,336 ) — 3,309 (3,230 ) Net interest
income (expense) after provision for credit losses 29,693 15,768
53,419 25,438 31,911 (42,877 ) Non-interest income 340 22 4,623 —
1,598 3,858 Non-interest expense (17,423 ) (5,927 ) (23,177 )
(5,764 ) (11,007 ) (15,990 ) Income (loss) before income taxes
12,610 9,863 34,865 19,674 22,502 (55,009 ) Income tax expense
(benefit) 4,729 3,699 13,074 7,378
8,438 (48,146 )
Net income (loss) $ 7,881 $
6,164 $ 21,791 $ 12,296 $ 14,064 $
(6,863 )
Western Alliance Bancorporation and
Subsidiaries Reconciliation of Non-GAAP Financial
Measures Unaudited Operating
Pre-Provision Net Revenue by Quarter: Three Months Ended
Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec
31, 2016 Sep 30, 2016 (in thousands) Total non-interest
income $ 10,288 $ 10,449 $ 10,544 $ 10,540 $ 10,683 Less: Gains
(losses) on sales of investment securities, net 319 (47 ) 635 58 —
Unrealized gains (losses) on assets and liabilities measured at
fair value, net 14 11 14 37 7
Total operating non-interest income 9,955 10,485 9,895
10,445 10,676 Plus: net interest income 201,583 192,743
179,309 175,269 172,547
Net
operating revenue (1) $ 211,538 $ 203,228
$ 189,204 $ 185,714 $ 183,223 Total
non-interest expense $ 89,114 $ 88,257 $ 87,757 $ 88,645 $ 85,007
Less: Net loss (gain) on sales and valuations of repossessed and
other assets 266 231 (543 ) (34 ) (146 ) Acquisition / restructure
expense — — — 6,021 2,729
Total operating non-interest expense (1) $ 88,848
$ 88,026 $ 88,300 $ 82,658 $ 82,424
Operating
pre-provision net revenue (2) $ 122,690 $ 115,202
$ 100,904 $ 103,056 $ 100,799
Plus: Non-operating revenue adjustments 333 (36 ) 649 95 7 Less:
Provision for credit losses 5,000 3,000 4,250 1,000 2,000
Non-operating expense adjustments 266 231 (543 ) 5,987 2,583 Income
tax expense 34,899 31,964 24,489 26,364
29,171 Net income $ 82,858 $ 79,971 $ 73,357
$ 69,800 $ 67,052 (1), (2)
See Non-GAAP Financial Measures
footnotes.
Western Alliance Bancorporation and
Subsidiaries Reconciliation of Non-GAAP Financial
Measures Unaudited Tangible Common Equity:
Sep 30, 2017 Jun 30, 2017 Mar 31,
2017 Dec 31, 2016 Sep 30, 2016 (dollars and
shares in thousands) Total stockholders' equity $ 2,145,627 $
2,058,674 $ 1,968,992 $ 1,891,529 $ 1,857,354 Less: goodwill and
intangible assets 301,157 301,645 302,133
302,894 303,592
Total tangible common equity
1,844,470 1,757,029 1,666,859 1,588,635 1,553,762 Plus: deferred
tax - attributed to intangible assets 4,341 4,550
4,759 4,949 5,304
Total tangible common
equity, net of tax $ 1,848,811 $ 1,761,579 $
1,671,618 $ 1,593,584 $ 1,559,066 Total assets
$ 19,922,221 $ 18,844,745 $ 18,122,506 $ 17,200,842 $ 17,042,602
Less: goodwill and intangible assets, net 301,157 301,645
302,133 302,894 303,592 Tangible assets
19,621,064 18,543,100 17,820,373 16,897,948 16,739,010 Plus:
deferred tax - attributed to intangible assets 4,341 4,550
4,759 4,949 5,304
Total tangible
assets, net of tax $ 19,625,405 $ 18,547,650 $
17,825,132 $ 16,902,897 $ 16,744,314 Tangible
common equity ratio (3) 9.4 % 9.5 % 9.4 % 9.4 % 9.3 % Common shares
outstanding 105,493 105,429 105,428 105,071 105,071 Tangible book
value per share, net of tax (4) $ 17.53 $ 16.71 $ 15.86 $ 15.17 $
14.84
Operating Efficiency Ratio by Quarter:
Three Months Ended Sep 30, 2017 Jun 30, 2017
Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 (in
thousands) Total operating non-interest expense $ 88,848 $ 88,026 $
88,300 $ 82,658 $ 82,424 Divided by: Total net interest income
201,583 192,743 179,309 175,269 172,547 Plus: Tax equivalent
interest adjustment 10,837 10,453 9,676 9,165 8,599 Operating
non-interest income 9,955 10,485 9,895 10,445
10,676 $ 222,375 $ 213,681 $ 198,880
$ 194,879 $ 191,822
Operating efficiency ratio - tax
equivalent basis (5)
40.0 % 41.2 % 44.4 % 42.4 % 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:
Sep 30,
2017 Dec 31, 2016 (in
thousands)
Common Equity Tier 1: Common equity $ 2,145,627 $
1,891,529 Less: Non-qualifying goodwill and intangibles 295,432
294,754 Disallowed deferred tax asset 2 1,400 AOCI related
adjustments 886 (13,460 ) Unrealized gain on changes in fair value
liabilities 8,566 8,118
Common equity Tier 1
(regulatory) (6) (9) $ 1,840,741 $ 1,600,717
Divided by: estimated risk-weighted assets
(regulatory) (7) (9) $ 17,759,899 $ 15,980,092
Common
equity Tier 1 ratio (7) (9) 10.4 % 10.0 % Common
equity Tier 1 (regulatory) (6) (9) 1,840,741 1,600,717 Plus: Trust
preferred securities 81,500 81,500 Less: Disallowed deferred tax
asset — 934 Unrealized gain on changes in fair value of liabilities
2,142 5,412
Tier 1 capital (7) (9) $
1,920,099 $ 1,675,871
Divided by: Tangible average
assets $ 19,082,108 $ 16,868,674
Tier 1 leverage ratio
10.1 % 9.9 %
Total Capital: Tier 1 capital
(regulatory) (6) (9) $ 1,920,099 $ 1,675,871 Plus:
Subordinated debt 299,316 299,927 Qualifying allowance for credit
losses 136,421 124,704 Other 5,595 6,978 Less: Tier 2 qualifying
capital deductions — —
Tier 2 capital $
441,332 $ 431,609
Total capital
$ 2,361,431 $ 2,107,480
Total capital
ratio 13.3 % 13.2 %
Classified assets to Tier 1
capital plus allowance: Classified assets $ 220,567 $ 211,782
Divided by:
Tier 1 capital (7) (9) 1,920,099
1,675,871 Plus: Allowance for credit losses 136,421 124,704
Total Tier 1 capital plus allowance for credit losses
$ 2,056,520 $ 1,800,575
Classified assets
to Tier 1 capital plus allowance (8) (9) 10.7 % 11.8 %
(6), (7), (8), (9)
See Non-GAAP Financial Measures
footnotes.
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.
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version on businesswire.com: http://www.businesswire.com/news/home/20171019006565/en/
Western Alliance BancorporationDale Gibbons, 602-952-5476
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