Market Overview

Western Alliance Reports Second Quarter 2018 Financial Performance

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Western Alliance Bancorporation (NYSE:WAL):

SECOND QUARTER 2018 FINANCIAL RESULTS

               
Net income Earnings per share Net interest margin Efficiency ratio Book value per
common share
$104.7 million $0.99 4.70% 42.1% $22.59

CEO COMMENTARY:

"The success of our constructive partnership with customers – helping
them succeed helps us succeed – led Western Alliance to another solid
quarter of performance," said Chief Executive Officer, Kenneth Vecchione.

"Deposit growth of $733 million paired with loan growth of $578 million,
together drove net interest income to a new high and boosted the
interest margin 10 basis points to 4.70 percent. Operating leverage
improved as the $11.3 million increase in net operating revenue1
from the first quarter was more than triple the $3.3 million increase in
operating expense1. Asset quality remained strong with net
loan losses of only 0.07 percent of total loans during the quarter and
non-performing assets of 0.29 percent of total assets. Net income of
$104.7 million and earnings per share of $0.99 were each 30 percent
higher than the year ago period. Return on assets exceeded 2 percent for
the first time in company history and return on tangible equity1
was again above 20 percent. Tangible book value per share1
now stands at $19.78."

       
LINKED-QUARTER BASIS     YEAR-OVER-YEAR
   
FINANCIAL HIGHLIGHTS:
 
  • Net income and earnings per share of $104.7 million and $0.99
    compared to $100.9 million and $0.96, respectively
  • Net income of $104.7 million and earnings per share of $0.99,
    compared to $80.0 million and $0.76, respectively

 

  • Net operating revenue of $238.2 million constituting growth of
    5.0%, or $11.3 million, compared to an increase in operating
    non-interest expenses of 3.4%, or $3.4 million1

 

  • Net operating revenue of $238.2 million constituting
    year-over-year growth of 17.1%, or $34.8 million, compared to an
    increase in operating non-interest expenses of 16.5%, or $14.5
    million1
  • Operating pre-provision net revenue of $135.5 million, up $7.9
    million from $127.6 million1
  • Operating pre-provision net revenue of $135.5 million, up $20.3
    million from $115.2 million 1

 

  • Effective tax rate of 19.48%, compared to 17.10%, due the
    cyclical excess tax benefits on share-based payment awards in Q1
  • Effective tax rate of 19.48%, compared to 28.56%, due to the
    effect of the Tax Cuts and Jobs Act.
 

FINANCIAL POSITION RESULTS:

 
  • Total loans of $16.14 billion, up $578 million, or 14.3%
    annualized
  • Increase in total loans of $2.15 billion, or 15.4%
  • Total deposits of $18.09 billion, up $733 million, or 16.9%
    annualized

 

  • Increase in total deposits of $2.06 billion, or 12.8%

 

  • Stockholders' equity of $2.39 billion, up $98 million
  • Increase in stockholders' equity of $333 million
 

LOANS AND ASSET QUALITY:

 
  • Nonperforming assets (nonaccrual loans and repossessed assets)
    to total assets of 0.29%, compared to 0.33%
  • Nonperforming assets to total assets of 0.29%, compared to 0.32%
  • Annualized net loan charge-offs to average loans outstanding of
    0.07%, compared to 0.04%

 

  • Annualized net loan charge-offs (recoveries) to average loans
    outstanding of 0.07%, compared to (0.03)%
 

KEY PERFORMANCE METRICS:

 
  • Net interest margin of 4.70%, compared to 4.60%
  • Return on average assets and return on tangible common equity1
    of 2.02% and 20.41%, compared to 1.99% and 20.46%, respectively

 

  • Tangible common equity ratio of 9.9%, compared to 9.8% 1
  • Net interest margin of 4.70%, compared to 4.61%

 

  • Tangible book value per share, net of tax, of $19.78, an
    increase from $18.86 1

 

  • Return on average assets and return on tangible common equity1
    of 2.02% and 20.41%, compared to 1.71% and 18.42%, respectively
  • Operating efficiency ratio of 42.1%, compared to 42.7% 1
  • Tangible common equity ratio of 9.9%, compared to 9.5% 1

 

  • Tangible book value per share, net of tax, of $19.78, an
    increase of 18.4% from $16.71 1
  • Operating efficiency ratio of 42.1%, compared to 41.2% 1

 

 

1 See reconciliation of Non-GAAP Financial Measures.

Income Statement

Net interest income was $224.1 million in the second quarter 2018, an
increase of $9.9 million from $214.2 million in the first quarter 2018,
and an increase of $31.4 million, or 16.3%, compared to the second
quarter 2017. As acquired loans are recorded at fair value in an
acquisition, purchase discounts on these acquired loans are recorded and
accreted into interest income based on expected future cash flows or
over the life of the loans and may be accelerated upon prepayment of
acquired loans. Net interest income in the second quarter 2018 includes
$5.1 million of total accretion income from acquired loans, compared to
$5.7 million in the first quarter 2018, and $7.1 million in the second
quarter 2017.

The Company's net interest margin in the second quarter 2018 was 4.70%,
an increase from 4.60% in the first quarter 2018, and from 4.61% in the
second quarter 2017. Adjusting net interest margin to include the
effects of the Tax Cuts and Jobs Act ("TCJA"), which reduced the tax
equivalent adjustment from tax-exempt securities and loans, results in
adjusted net interest margin1 of 4.49% for the second quarter
2017.

Operating non-interest income was $14.1 million for the second quarter
2018, compared to $12.7 million for the first quarter 2018, and $10.6
million for the second quarter 2017.1 The increase in
operating non-interest income for the second quarter 2018 compared to
the same quarter in the prior year is due primarily to increases in
income from equity securities of $1.2 million, lending related income of
$0.8 million, and card income of $0.5 million.

Net operating revenue was $238.2 million for the second quarter 2018, an
increase of $11.3 million, compared to $226.9 million for the first
quarter 2018, and an increase of $34.8 million, or 17.1%, compared to
$203.4 million for the second quarter 2017.1

Operating non-interest expense was $102.7 million for the second quarter
2018, compared to $99.4 million for the first quarter 2018, and $88.2
million for the second quarter 2017.1 The Company's operating
efficiency ratio1 on a tax equivalent basis was 42.1% for the
second quarter 2018, compared to 42.7% for the first quarter 2018, and
41.2% for the second quarter 2017. Adjusting the operating efficiency
ratio1 to include the effects of the lower statutory
corporate federal tax rate would result in an operating efficiency ratio
of 42.3% for the second quarter 2017.

Income tax expense was $25.3 million for the second quarter 2018,
compared to $20.8 million for the first quarter 2018, and $32.0 million
for the second quarter 2017. Income tax expense for the first and second
quarters of 2018 includes the effect of the TCJA, which lowered the
statutory corporate tax rate from 35% to 21%.

Net income was $104.7 million for the second quarter 2018, an increase
of $3.8 million from $100.9 million for the first quarter 2018, and an
increase of $24.7 million, or 30.9%, from $80.0 million for the second
quarter 2017. Earnings per share was $0.99 for the second quarter 2018,
compared to $0.96 for the first quarter 2018, and $0.76 for the second
quarter 2017.

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 2018, the Company's operating PPNR was $135.5 million, up
from $127.6 million in the first quarter 2018, and up 17.6% from $115.2
million in the second quarter 2017.1 The non-operating items1
for the second quarter 2018 consisted of a net gain on sales and
valuations of repossessed and other assets of $0.2 million, offset by
net unrealized losses on assets measured at fair value of $0.7 million.

The Company had 1,773 full-time equivalent employees and 47 offices at
June 30, 2018, compared to 1,713 employees and 47 offices at March 31,
2018, and 1,628 employees and 46 offices at June 30, 2017.

1 See reconciliation of Non-GAAP Financial Measures.

Balance Sheet

Gross loans totaled $16.14 billion at June 30, 2018, an increase of $578
million from $15.56 billion at March 31, 2018, and an increase of $2.15
billion from $13.99 billion at June 30, 2017. The increase from the
prior quarter was driven by an increase of $334 million in commercial
and industrial loans and $127 million in residential real estate loans.
From June 30, 2017, loans increased across all loan types, with the
largest increase in commercial and industrial loans of $957 million. At
June 30, 2018, the allowance for credit losses to gross loans held for
investment was 0.91%, compared to 0.93% at March 31, 2018, and 0.94% at
June 30, 2017. At June 30, 2018, the allowance for credit losses to
total organic loans was 0.99%, compared to 1.02% at March 31, 2018, and
1.08% at June 30, 2017. 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 $19.7 million at June 30, 2018, compared to
$23.1 million at March 31, 2018, and $37.8 million at June 30, 2017.

Deposits totaled $18.09 billion at June 30, 2018, an increase of $733
million from $17.35 billion at March 31, 2018, and an increase of $2.06
billion from $16.03 billion at June 30, 2017. The increase from the
prior quarter was driven by an increase of $446 million in non-interest
bearing demand deposits and $154 million from savings and money market
accounts. From June 30, 2017, deposits increased across all deposit
types, with the largest increase in non-interest bearing demand deposits
of $1.09 billion. Non-interest bearing deposits were $7.95 billion at
June 30, 2018, compared to $7.50 billion at March 31, 2018, and $6.86
billion at June 30, 2017. Non-interest bearing deposits comprised 43.9%
of total deposits at June 30, 2018, compared to 43.2% at March 31, 2018,
and 42.8% at June 30, 2017. The proportion of savings and money market
balances to total deposits was 35.8%, compared to 36.4% at March 31,
2018, and 38.1% at June 30, 2017. Certificates of deposit as a
percentage of total deposits were 10.0% at June 30, 2018, compared to
10.1% at March 31, 2018, and 9.9% at June 30, 2017. The Company's ratio
of loans to deposits was 89.2% at June 30, 2018, compared to 89.7% at
March 31, 2018, and 87.3% at June 30, 2017.

Borrowings totaled $75 million at June 30, 2018, a decrease of $225
million from $300 million at March 31, 2018, and an increase of $75
million from zero at June 30, 2017. The change in borrowings from both
the prior quarter and the prior year is due to fluctuations in FHLB
overnight advances.

Qualifying debt totaled $361 million at June 30, 2018, compared to $364
million at March 31, 2018, and $375 million at June 30, 2017.

Stockholders' equity at June 30, 2018 was $2.39 billion, compared to
$2.29 billion at March 31, 2018, and $2.06 billion at June 30, 2017.

At June 30, 2018, tangible common equity, net of tax, was 9.9% of
tangible assets1 and total capital was 13.4% of risk-weighted
assets. The Company's tangible book value per share1 was
$19.78 at June 30, 2018, up 18.4% from June 30, 2017.

Total assets increased 2.9% to $21.37 billion at June 30, 2018, from
$20.76 billion at March 31, 2018, and increased 13.4% from $18.84
billion at June 30, 2017. The increase in total assets from the prior
year relates primarily to organic loan growth and an increase in
investment securities resulting from utilized cash from increased
deposits.

Asset Quality

The provision for credit losses was $5.0 million for the second quarter
2018, compared to $6.0 million for the first quarter 2018, and compared
to $3.0 million for the second quarter 2017. Net loan charge-offs
(recoveries) in the second quarter 2018 were $2.6 million, or 0.07% of
average loans (annualized), compared to $1.4 million, or 0.04%, in the
first quarter 2018, and $(1.2) million, or (0.03)%, in the second
quarter 2017.

Nonaccrual loans decreased $3.3 million to $34.0 million during the
quarter and increased $3.9 million during past twelve months. Loans past
due 90 days and still accruing interest totaled zero at June 30, 2018,
compared to $37 thousand at March 31, 2018, and $4.0 million at June 30,
2017. Loans past due 30-89 days and still accruing interest totaled $1.5
million at quarter end, a decrease from $6.5 million at March 31, 2018,
and a decrease from $4.1 million at June 30, 2017.

Repossessed assets totaled $27.5 million at June 30, 2018, a decrease of
$2.7 million from $30.2 million at March 31, 2018, and a decrease of
$3.5 million from $31.0 million at June 30, 2017. Adversely graded loans
and non-performing assets totaled $368.5 million at June 30, 2018, a
decrease of $10.2 million from $378.7 million at March 31, 2018, and an
increase of $0.7 million from $367.8 million at June 30, 2017.

As the Company's capital increased, the ratio of classified assets to
Tier I capital plus the allowance for credit losses, a common regulatory
measure of asset quality, was 10.1% at June 30, 2018, compared to 9.4%
at March 31, 2018, and 12.7% at June 30, 2017.1

1 See reconciliation of Non-GAAP Financial Measures beginning
on page 20.

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 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 $8.72 billion at
June 30, 2018, an increase of $144 million during the quarter, and an
increase of $891 million during the last twelve months. The growth in
loans during the quarter was driven primarily by increases of $85
million in Arizona and $31 million in Nevada. The growth in loans during
the last twelve months was driven by increases in all regional segments.
The largest increases were $468 million in Arizona and $189 million in
Southern California, followed by Nevada and Northern California with
increases of $121 million and $113 million, respectively. Total deposits
for the regional segments were $13.12 billion, an increase of $212
million during the quarter, and an increase of $616 million during the
last twelve months. During the quarter, Arizona and Nevada had increases
in deposits of $249 million and $114 million, respectively. These
increases were partially offset by decreases of $121 million and $30
million in Southern California and Northern California, respectively.
During the last twelve months, Arizona, Northern California, and
Southern California had increased deposits of $491 million, $237
million, and $52 million, respectively. These increases were partially
offset by a decrease in deposits of $163 million in Nevada.

Pre-tax income for the regional segments was $86.0 million for the three
months ended June 30, 2018, an increase of $0.1 million from the three
months ended March 31, 2018, and an increase of $1.3 million from the
three months ended June 30, 2017. Arizona and Northern California had
increases in pre-tax income of $4.3 million and $1.2 million,
respectively, compared to the three months ended March 31, 2018. These
increases were partially offset by a decrease of $5.4 million in Nevada.
Arizona and Northern California had increases in pre-tax income from the
three months ended June 30, 2017 of $5.1 million and $3.2 million,
respectively. These increases were partially offset by decreases of $4.5
million and $2.6 million in Nevada and Southern California,
respectively. For the six months ended June 30, 2018, the regional
segments reported total pre-tax income of $171.8 million, an increase of
$14.8 million compared to the six months ended June 30, 2017. Arizona,
Northern California, and Nevada each had increases of $11.8 million,
$2.9 million, and $1.4 million, respectively. These increases were
partially offset by a decrease of $1.3 million in Southern California.

The NBL segments reported gross loan balances of $7.41 billion at
June 30, 2018, an increase of $432 million during the quarter, and an
increase of $1.26 billion during the last twelve months. There were
increases in loans across all of the NBL segments compared to the prior
quarter. The largest increases relate to the Other NBLs, HFF, and
Technology & Innovation segments, which increased by $297 million, $53
million, and $37 million, respectively. During the last twelve months,
each of the NBL segments have had increases in loans. The largest
drivers of the increase were Other NBLs, HFF, and Technology &
Innovation segments with increases of $849 million, $193 million, and
$161 million, respectively. Total deposits for the NBL segments were
$4.51 billion, an increase of $300 million during the quarter, and an
increase of $1.05 billion during the last twelve months. The Technology
& Innovation and HOA services segments each had increases of $260
million and $40 million, respectively. The increase of $1.05 billion
during the last twelve months is the result of growth in the Technology
& Innovation and HOA Services of $721 million and $328 million,
respectively.

Pre-tax income for the NBL segments was $48.7 million for the three
months ended June 30, 2018, an increase of $2.0 million from the three
months ended March 31, 2018, and an increase of $6.1 million from the
three months ended June 30, 2017. The increase in pre-tax income from
the prior quarter relates primarily to the Technology & Innovation, HOA
Services, and HFF segments, which increased by $1.6 million, $0.4
million, and $0.4 million, respectively. These increases were partially
offset by a decrease in pre-tax income from the Other NBLs segment which
had a decrease of $0.3 million. The primary drivers of the increase in
pre-tax income from the same period in the prior year were the Other
NBLs, Technology & Innovation, HFF, and HOA Services segments. These
segments had increases of $2.8 million, $2.7 million, $2.6 million, and
$1.6 million, respectively. These increases were partially offset by a
decrease of $3.6 million in pre-tax income in the Public & Nonprofit
segment. Pre-tax income for the NBL segments for the six months ended
June 30, 2018 totaled $95.4 million, an increase of $15.3 million
compared to the six months ended June 30, 2017. The largest increases in
pre-tax income compared to the six months ended June 30, 2017 were in
the Other NBLs, Technology & Innovation, HOA Services, and HFF segments.
These segments had increases of $8.3 million, $6.2 million, $3.6
million, and $2.7 million, respectively. These increases were partially
offset by a decrease of $5.5 million in the Public & Nonprofit segment.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live
webcast to discuss its second quarter 2018 financial results at 12:00
p.m. ET on Friday, July 20, 2018. Participants may access the call by
dialing 1-888-317-6003 and using passcode 5174586 or via live audio
webcast using the website link https://services.choruscall.com/links/wal180720.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 20th through 9:00 a.m. ET August 20th by dialing
1-877-344-7529 passcode: 10121936.

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.

Adoption of Accounting Standards

During the first quarter 2018, the Company adopted Accounting Standards
Update ("ASU") 2014-09, Revenue from Contracts with
Customers
, ASU 2016-01, Recognition and Measurement of Financial
Assets and Financial Liabilitie
s and ASU 2018-02, Reclassification
of Certain Tax Effects from Accumulated Other Comprehensive Income
.

The amendments in ASU 2014-09 create a common revenue standard and
clarify the principles for recognizing revenue that can be applied
consistently across various transactions, industries, and capital
markets. Although this new accounting guidance brings considerable
changes to how many companies account for revenue and disclose
revenue-related information, the effect on the Company has not been
significant as substantially all of the Company's revenue is generated
from interest income related to loans and investment securities, which
are not within the scope of this guidance. For the Company's revenue
streams that are within the scope of this guidance, the guidance was
adopted on January 1, 2018 using the modified retrospective method. Upon
adoption, the Company's accounting policies did not change materially as
the principles of revenue recognition in the ASU are largely consistent
with current practices applied by the Company.

The amendments in ASU 2016-01 require that equity investments be
measured at fair value with changes in fair value recognized in net
income, rather than accumulated other comprehensive income. Upon
adoption of the new accounting guidance, on January 1, 2018, the Company
recorded a cumulative-effect adjustment of $0.4 million to decrease
accumulated other comprehensive income with a corresponding increase to
opening retained earnings. During the six months ended June 30, 2018,
the Company recognized a loss of $1.8 million related to fair value
changes in equity securities.

The amendments in ASU 2018-02 allow a reclassification from accumulated
other comprehensive income to retained earnings from tax effects
resulting from the TCJA so that tax effects of items within other
comprehensive income reflect the current tax rate. Previously, the
effect of a change in tax laws or rates on deferred tax liabilities and
assets were included in income from continuing operations even in
situations in which the related income tax effects of items in
accumulated other comprehensive income were originally recognized in
comprehensive income. Upon adoption of the new accounting guidance, on
January 1, 2018, the Company recorded a cumulative-effect adjustment of
$0.6 million to decrease accumulated other comprehensive income with a
corresponding increase to opening retained earnings.

Cautionary Note Regarding Forward-Looking Statements

This release contains forward-looking statements that relate to
expectations, beliefs, projections, future plans and strategies,
anticipated events or trends and similar expressions concerning matters
that are not historical facts. Examples of forward-looking statements
include, among others, statements we make regarding our expectations
with regard to our business, financial and operating results, and future
economic performance, including our recent domestic select-service hotel
franchise finance loan portfolio acquisition. The forward-looking
statements contained herein reflect our current views about future
events and financial performance and are subject to risks,
uncertainties, assumptions and changes in circumstances that may cause
our actual results to differ significantly from historical results and
those expressed in any forward-looking statement. Some factors that
could cause actual results to differ materially from historical or
expected results include, among others: the risk factors discussed in
the Company's Annual Report on Form 10-K for the year ended December 31,
2017 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 $20 billion in assets, Western Alliance Bancorporation
(NYSE:WAL) is one of the country's top-performing banking companies and
is ranked #2 on the Forbes 2018 "Best Banks in America" list. Its
primary subsidiary, Western Alliance Bank, Member FDIC, is the go-to
bank for business and succeeds with local teams of experienced bankers
who deliver superior service and a full spectrum of customized loan,
deposit and treasury management capabilities. Business clients also
benefit from a powerful array of specialized financial services that
provide strong expertise and tailored solutions for a wide variety of
industries and sectors. A national presence with a regional footprint,
Western Alliance Bank operates individually branded, full-service
banking divisions with offices in key markets nationwide. For more
information, visit westernalliancebank.com.

Western Alliance Bancorporation and Subsidiaries            
Summary Consolidated Financial Data
Unaudited  
 
 
Selected Balance Sheet Data:
As of June 30,  
2018 2017 Change %
(in millions)
Total assets $ 21,367.5 $ 18,844.7 13.4 %
Gross loans, net of deferred fees 16,138.3 13,989.9 15.4
Securities and money market investments 3,688.7 3,283.0 12.4
Total deposits 18,087.5 16,031.1 12.8
Borrowings 75.0

NM

Qualifying debt 361.1 375.4 (3.8 )
Stockholders' equity 2,391.7 2,058.7 16.2
Tangible common equity, net of tax (1)

2,094.3

1,761.6 18.9
 
Selected Income Statement Data:

For the Three Months Ended June 30,

For the Six Months Ended June 30,  
2018 2017 Change % 2018 2017 Change %
(in thousands, except per share data) (in thousands, except per share data)
Interest income $ 251,602 $ 206,953 21.6 % $ 486,299 $ 399,218 21.8 %
Interest expense 27,494   14,210   93.5 47,971   27,166   76.6
Net interest income 224,108 192,743 16.3 438,328 372,052 17.8
Provision for credit losses 5,000   3,000   66.7 11,000   7,250   51.7
Net interest income after provision for credit losses 219,108 189,743 15.5 427,328 364,802 17.1
Non-interest income 13,444 10,601 26.8 25,087 21,200 18.3
Non-interest expense 102,548   88,420   16.0 200,697   176,247   13.9
Income before income taxes 130,004 111,924 16.2 251,718 209,755 20.0
Income tax expense 25,325   31,964   (20.8 ) 46,139   56,453   (18.3 )
Net income $ 104,679   $ 79,960   30.9 $ 205,579   $ 153,302   34.1
Diluted earnings per share $ 0.99   $ 0.76   30.3 $ 1.95   $ 1.46   33.6
 

(1) See Reconciliation of Non-GAAP Financial Measures.

NM Changes +/- 100% are not meaningful.

 
 

Western Alliance Bancorporation and Subsidiaries

       
Summary Consolidated Financial Data  
Unaudited
     
 
Common Share Data:
At or For the Three Months Ended June 30, For the Six Months Ended June 30,
2018

2017

Change %

2018

 

2017

Change %

Diluted earnings per share

$

0.99

$

0.76

30.3

%

$

1.95

$

1.46

33.6

%

Book value per common share 22.59

19.53

15.7

Tangible book value per share, net of tax (1) 19.78

16.71

18.4

Average shares outstanding
(in thousands):
Basic 104,691

104,162

0.5

104,611

104,075

0.5

Diluted 105,420

105,045

0.4

105,372

104,941

0.4

Common shares outstanding 105,876

105,429

0.4

 
Selected Performance Ratios:
Return on average assets (2)

2.02

%

1.71

%

18.1

%

 

2.00

%

1.70

%

17.6

%

Return on average tangible common equity (1, 2) 20.41

18.42

10.8

 

20.43

18.14 12.6
Net interest margin (2)

4.70

4.61

2.0

 

4.65

4.62 0.6
Operating efficiency ratio - tax equivalent basis (1) 42.1

41.2

2.0

 

42.4

42.8

(0.9

)

Loan to deposit ratio 89.22

87.27

2.2

 

 
Asset Quality Ratios:
Net charge-offs (recoveries) to average loans outstanding (2)

0.07

%

(0.03

)%

NM

 

0.05

%

0.00

%

NM
Nonaccrual loans to gross loans 0.21

0.22

(4.5

)

 

Nonaccrual loans and repossessed assets to total assets 0.29

0.32

(9.4

)

 

Loans past due 90 days and still accruing to gross loans

0.03

NM

 

Allowance for credit losses to gross loans 0.91

0.94

(3.2

)

 

Allowance for credit losses to nonaccrual loans 432.38

438.33

(1.4

)

 

 
Capital Ratios (1):  

 

 

Jun 30, 2018

Mar 31, 2018

Jun 30, 2017

Tangible common equity (1)

 

 

 

9.9

%

9.8

%

9.5

%

Common Equity Tier 1 (1), (3)

 

 

10.7

10.5

10.3

Tier 1 Leverage ratio (1), (3)

 

 

10.8

10.5

9.9

Tier 1 Capital (1), (3)

 

 

11.1

10.9

10.8

Total Capital (1), (3)

 

 

13.4

13.2

13.4

 

(1) See Reconciliation of Non-GAAP Financial Measures.

(2) Annualized for the three and six months ended June 30, 2018
and 2017.

(3) Capital ratios for June 30, 2018 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,
2018 2017 2018 2017
(dollars in thousands, except per share data)
Interest income:
Loans $ 222,035 $ 183,657 $ 427,994 $ 356,210
Investment securities 27,445 20,629 54,066 38,743
Other 2,122   2,667   4,239   4,265  
Total interest income 251,602   206,953   486,299   399,218  
Interest expense:
Deposits 19,849 9,645 34,022 18,057
Qualifying debt 5,695 4,493 10,664 8,831
Borrowings 1,950   72   3,285   278  
Total interest expense 27,494   14,210   47,971   27,166  
Net interest income 224,108 192,743 438,328 372,052
Provision for credit losses 5,000   3,000   11,000   7,250  
Net interest income after provision for credit losses 219,108   189,743   427,328   364,802  
Non-interest income:
Service charges and fees 5,672 5,203 11,417 9,941
Income from equity investments 2,517 1,318 3,977 2,010
Card income 2,033 1,516 4,005 3,008
Income from bank owned life insurance 1,167 973 2,095 1,921
Foreign currency income 1,181 832 2,383 1,874
Lending related income and gains (losses) on sale of loans, net 1,047 227 2,025 649
Gain (loss) on sales of investment securities, net (47 ) 588
Unrealized (losses) gains on assets measured at fair value, net (685 ) (1,759 ) (1 )
Other 512   579   944   1,210  
Total non-interest income 13,444   10,601   25,087   21,200  
Non-interest expenses:
Salaries and employee benefits 61,785 52,273 123,918 103,893
Legal, professional, and directors' fees 7,946 8,483 13,949 17,286
Occupancy 7,401 6,927 14,265 13,821
Data processing 5,586 4,375 10,793 9,639
Deposit costs 4,114 2,133 7,040 3,874
Insurance 3,885 3,589 7,754 6,817
Business development 1,414 1,447 3,142 3,510
Marketing 1,146 1,131 1,742 1,852
Card expense 1,081 861 2,023 1,592
Loan and repossessed asset expenses 1,017 1,098 1,600 2,376
Intangible amortization 399 488 797 1,177
Net (gain) loss on sales and valuations of repossessed and other
assets
(179 ) 231 (1,407 ) (312 )
Other 6,953   5,384   15,081   10,722  
Total non-interest expense 102,548   88,420   200,697   176,247  
Income before income taxes 130,004 111,924 251,718 209,755
Income tax expense 25,325   31,964   46,139   56,453  
Net income $ 104,679   $ 79,960   $ 205,579   $ 153,302  
 
Earnings per share:
Diluted shares 105,420 105,045 105,372 104,941
Diluted earnings per share $ 0.99 $ 0.76 $ 1.95 $ 1.46
 
 
 
Western Alliance Bancorporation and Subsidiaries        
Five Quarter Condensed Consolidated Income Statements
Unaudited    
Three Months Ended
Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017
(in thousands, except per share data)
Interest income:
Loans $ 222,035 $ 205,959 $ 200,204 $ 191,096 $ 183,657
Investment securities 27,445 26,621 26,312 23,584 20,629
Other 2,122   2,117   1,943   3,156   2,667  
Total interest income 251,602   234,697   228,459   217,836   206,953  
Interest expense:
Deposits 19,849 14,173 12,459 11,449 9,645
Qualifying debt 5,695 4,969 4,734 4,708 4,493
Borrowings 1,950   1,335   237   96   72  
Total interest expense 27,494   20,477   17,430   16,253   14,210  
Net interest income 224,108 214,220 211,029 201,583 192,743
Provision for credit losses 5,000   6,000   5,000   5,000   3,000  
Net interest income after provision for credit losses 219,108   208,220   206,029   196,583   189,743  
Non-interest income:
Service charges and fees 5,672 5,745 5,157 5,248 5,203
Income from equity investments 2,517 1,460 1,519 967 1,318
Card income 2,033 1,972 1,796 1,509 1,516
Income from bank owned life insurance 1,167 928 965 975 973
Foreign currency income 1,181 1,202 906 756 832
Lending related income and gains (losses) on sale of loans, net 1,047 978 1,466 97 227
Gain (loss) on sales of investment securities, net 1,436 319 (47 )
Unrealized (losses) gains on assets measured at fair value, net (685 ) (1,074 )
Other 512   432   443   585   579  
Total non-interest income 13,444   11,643   13,688   10,456   10,601  
Non-interest expenses:
Salaries and employee benefits 61,785 62,133 57,704 52,747 52,273
Legal, professional, and directors' fees 7,946 6,003 6,490 6,038 8,483
Occupancy 7,401 6,864 6,532 7,507 6,927
Data processing 5,586 5,207 5,062 4,524 4,375
Deposit costs 4,114 2,926 2,953 2,904 2,133
Insurance 3,885 3,869 3,687 3,538 3,589
Business development 1,414 1,728 1,179 1,439 1,447
Marketing 1,146 596 1,176 776 1,131
Card expense 1,081 942 855 966 861
Loan and repossessed asset expenses 1,017 583 978 1,263 1,098
Intangible amortization 399 398 408 489 488
Net (gain) loss on sales and valuations of repossessed and other
assets
(179 ) (1,228 ) (34 ) 266 231
Other 6,953   8,128   8,408   6,839   5,384  
Total non-interest expense 102,548   98,149   95,398   89,296   88,420  
Income before income taxes 130,004 121,714 124,319 117,743 111,924
Income tax expense 25,325   20,814   34,973   34,899   31,964  
Net income $ 104,679   $ 100,900   $ 89,346   $ 82,844   $ 79,960  
 
Earnings per share:
Diluted shares 105,420 105,324 105,164 104,942 105,045
Diluted earnings per share $ 0.99 $ 0.96 $ 0.85 $ 0.79 $ 0.76
 
 
 
Western Alliance Bancorporation and Subsidiaries        
Five Quarter Condensed Consolidated Balance Sheets
Unaudited
    Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017
(in millions, except per share data)
Assets:
Cash and due from banks $ 506.8 $ 439.4 $ 416.8 $ 650.4 $ 606.7
Securities and money market investments 3,688.7 3,734.3 3,820.4 3,773.6 3,283.0
Loans held for sale 16.3 16.7
Loans held for investment:
Commercial 7,278.4 6,944.4 6,841.4 6,735.9 6,318.5
Commercial real estate - non-owner occupied 4,010.6 3,925.3 3,904.0 3,628.4 3,649.1
Commercial real estate - owner occupied 2,270.5 2,264.6 2,241.6 2,047.5 2,021.2
Construction and land development 1,978.3 1,957.5 1,632.2 1,666.4 1,601.7
Residential real estate 545.3 418.1 425.9 376.7 334.8
Consumer 55.2   50.5   48.8   50.7   47.9  
Gross loans, net of deferred fees 16,138.3 15,560.4 15,093.9 14,505.6 13,973.2
Allowance for credit losses (147.1 ) (144.7 ) (140.0 ) (136.4 ) (131.8 )
Loans, net 15,991.2   15,415.7   14,953.9   14,369.2   13,841.4  
Premises and equipment, net 115.4 116.7 118.7 120.1 120.5
Other assets acquired through foreclosure, net 27.5 30.2 28.5 29.0 31.0
Bank owned life insurance 168.7 168.6 167.8 166.8 166.4
Goodwill and other intangibles, net 300.0 300.4 300.7 301.2 301.6
Other assets 569.2   555.4   522.3   495.6   477.4  
Total assets $ 21,367.5   $ 20,760.7   $ 20,329.1   $ 19,922.2   $ 18,844.7  
Liabilities and Stockholders' Equity:
Liabilities:
Deposits
Non-interest bearing demand deposits $ 7,947.9 $ 7,502.0 $ 7,434.0 $ 7,608.7 $ 6,859.4
Interest bearing:
Demand 1,864.6 1,776.3 1,586.2 1,406.4 1,480.8
Savings and money market 6,468.8 6,314.9 6,330.9 6,300.2 6,104.0
Time certificates 1,806.2   1,761.3   1,621.4   1,589.5   1,586.9  
Total deposits 18,087.5 17,354.5 16,972.5 16,904.8 16,031.1
Customer repurchase agreements 18.0   21.7   26.0   26.1   32.7  
Total customer funds 18,105.5 17,376.2 16,998.5 16,930.9 16,063.8
Borrowings 75.0 300.0 390.0
Qualifying debt 361.1 363.9 376.9 372.9 375.4
Accrued interest payable and other liabilities 434.2   426.9   333.9   472.8   346.8  
Total liabilities 18,975.8   18,467.0   18,099.3   17,776.6   16,786.0  
Stockholders' Equity:
Common stock and additional paid-in capital 1,387.9 1,385.0 1,384.4 1,378.8 1,376.4
Retained earnings 1,055.1 950.4 848.5 758.6 675.8
Accumulated other comprehensive (loss) income (51.3 ) (41.7 ) (3.1 ) 8.2   6.5  
Total stockholders' equity 2,391.7   2,293.7   2,229.8   2,145.6   2,058.7  
Total liabilities and stockholders' equity $ 21,367.5   $ 20,760.7   $ 20,329.1   $ 19,922.2   $ 18,844.7  
 
 
 
Western Alliance Bancorporation and Subsidiaries        
Changes in the Allowance For Credit Losses
Unaudited
    Three Months Ended
Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017
(in thousands)
Balance, beginning of period $ 144,659 $ 140,050 $ 136,421 $ 131,811 $ 127,649
Provision for credit losses 5,000 6,000 5,000 5,000 3,000
Recoveries of loans previously charged-off:
Commercial and industrial 916 459 406 619 1,759
Commercial real estate - non-owner occupied 15 105 58 1,168 360
Commercial real estate - owner occupied 231 21 119 613 46
Construction and land development 8 1,388 218 226 508
Residential real estate 141 250 120 108 1,299
Consumer 14   10   3   33    
Total recoveries 1,325 2,233 924 2,767 3,972
Loans charged-off:
Commercial and industrial 2,778 3,517 2,019 2,921 651
Commercial real estate - non-owner occupied 232 275 175 1,808
Commercial real estate - owner occupied 11
Construction and land development 1
Residential real estate 885 107 332
Consumer 5     1   61   8  
Total loans charged-off 3,901 3,624 2,295 3,157 2,810
Net loan charge-offs (recoveries) 2,576   1,391   1,371   390   (1,162 )
Balance, end of period $ 147,083   $ 144,659   $ 140,050   $ 136,421   $ 131,811  
 

Net charge-offs (recoveries) to average loans-annualized

0.07 % 0.04 % 0.04 % 0.01 % (0.03 )%
 
Allowance for credit losses to gross loans 0.91 % 0.93 % 0.93 % 0.94 % 0.94 %
Allowance for credit losses to gross organic loans 0.99 1.02 1.03 1.06 1.08
Allowance for credit losses to nonaccrual loans 432.38 387.86 318.84 248.07 438.33
 
Nonaccrual loans $ 34,017 $ 37,297 $ 43,925 $ 54,994 $ 30,071
Nonaccrual loans to gross loans 0.21 % 0.24 % 0.29 % 0.38 % 0.22 %
Repossessed assets $ 27,541 $ 30,194 $ 28,540 $ 28,973 $ 30,988
Nonaccrual loans and repossessed assets to total assets 0.29 % 0.33 % 0.36 % 0.42 % 0.32 %
 
Loans past due 90 days, still accruing $ $ 37 $ 43 $ 44 $ 4,021
Loans past due 90 days and still accruing to gross loans % 0.00 % 0.00 % 0.00 % 0.03 %
Loans past due 30 to 89 days, still accruing $ 1,545 $ 6,479 $ 10,142 $ 5,179 $ 4,071
Loans past due 30 to 89 days, still accruing to gross loans 0.01 % 0.04 % 0.07 % 0.04 % 0.03 %
 
Special mention loans $ 150,278 $ 184,702 $ 155,032 $ 199,965 $ 141,036
Special mention loans to gross loans 0.93 % 1.19 % 1.03 % 1.38 % 1.01 %
 
Classified loans on accrual $ 156,659 $ 126,538 $ 127,681 $ 122,264 $ 165,715
Classified loans on accrual to gross loans 0.97 % 0.81 % 0.85 % 0.84 % 1.19 %
Classified assets $ 240,063 $ 213,482 $ 222,004 $ 221,803 $ 249,491
Classified assets to total assets 1.12 % 1.03 % 1.09 % 1.11 % 1.32 %
 
 
Western Alliance Bancorporation and Subsidiaries            
Analysis of Average Balances, Yields and Rates
Unaudited    
Three Months Ended
June 30, 2018 March 31, 2018
Average
Balance
Interest Average Yield /
Cost
Average
Balance
Interest

Average Yield /
Cost

($ in millions) ($ in thousands) ($ in millions) ($ in thousands)
Interest earning assets
Loans:
Commercial $ 6,902.5 $ 94,243 5.64 % $ 6,580.9 $ 85,547 5.38 %
CRE - non-owner occupied 3,964.2 59,373 6.01 3,920.8 56,285 5.76
CRE - owner occupied 2,242.6 28,698 5.23 2,241.8 28,551 5.21
Construction and land development 1,952.0 33,567 6.89 1,789.4 29,619 6.63
Residential real estate 433.4 5,414 5.00 425.3 5,280 4.97
Consumer 52.4   740   5.65   47.9   677   5.65  
Total loans (1), (2), (3) 15,547.1 222,035 5.81 15,006.1 205,959 5.59
Securities:
Securities - taxable 2,802.9 19,274 2.75 2,875.3 19,149 2.66
Securities - tax-exempt 848.7   8,171   4.81   836.9   7,472   4.47  
Total securities (1) 3,651.6 27,445 3.23 3,712.2 26,621 3.07
Cash and other 382.5   2,122   2.22   425.7   2,117   1.99  
Total interest earning assets 19,581.2 251,602 5.26 19,144.0 234,697 5.02
Non-interest earning assets
Cash and due from banks 145.0 142.3
Allowance for credit losses (145.6 ) (141.0 )
Bank owned life insurance 168.3 168.1
Other assets 1,010.7   990.8  
Total assets $ 20,759.6   $ 20,304.2  
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts $ 1,824.7 $ 2,360 0.52 % $ 1,654.7 $ 1,380 0.33 %
Savings and money market 6,126.3 12,324 0.80 6,226.7 8,915 0.57
Time certificates of deposit 1,714.8   5,165   1.20   1,579.9   3,878   0.98  
Total interest-bearing deposits 9,665.8 19,849 0.82 9,461.3 14,173 0.60
Short-term borrowings 413.2 1,950 1.89 351.6 1,335 1.52
Qualifying debt 362.8   5,695   6.28   368.8   4,969   5.39  
Total interest-bearing liabilities 10,441.8 27,494 1.05 10,181.7 20,477 0.80
Non-interest-bearing liabilities
Non-interest-bearing demand deposits 7,612.0 7,510.6
Other liabilities 354.0 338.5
Stockholders' equity 2,351.8   2,273.4  
Total liabilities and stockholders' equity $ 20,759.6   $ 20,304.2  
Net interest income and margin (4) $ 224,108   4.70 % $ 214,220   4.60 %
(1)   Yields on loans and securities have been adjusted to a tax
equivalent basis. The tax equivalent adjustment was $5.9 million and
$5.7 million for the three months ended June 30, 2018 and March 31,
2018, respectively.
(2) Included in the yield computation are net loan fees of $11.0 million
and accretion on acquired loans of $5.1 million for the three months
ended June 30, 2018, compared to $10.0 million and $5.7 million for
the three months ended March 31, 2018, 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,
2018 2017

Average
Balance

Interest

Average Yield /
Cost

Average
Balance
Interest Average Yield /
Cost
($ in millions) ($ in thousands) ($ in millions) ($ in thousands)
Interest earning assets
Loans:
Commercial $ 6,902.5 $ 94,243 5.64 % $ 6,071.6 $ 76,000 5.39

%

CRE - non-owner occupied 3,964.2 59,373 6.01 3,606.8 52,416 5.84
CRE - owner occupied 2,242.6 28,698 5.23 2,019.5 25,931 5.43
Construction and land development 1,952.0 33,567 6.89 1,605.6 24,965 6.24
Residential real estate 433.4 5,414 5.00 322.2 3,950 4.90
Consumer 52.4   740   5.65   44.7   395   3.53  
Total loans (1), (2), (3) 15,547.1 222,035 5.81 13,670.4 183,657 5.60
Securities:
Securities - taxable 2,802.9 19,274 2.75 2,446.5 14,847 2.43
Securities - tax-exempt 848.7   8,171   4.81   628.0   5,782   5.48  
Total securities (1) 3,651.6 27,445 3.23 3,074.5 20,629 3.05
Cash and other 382.6   2,122   2.22   903.3   2,667   1.18  
Total interest earning assets 19,581.3 251,602 5.26 17,648.2 206,953 4.93
Non-interest earning assets
Cash and due from banks 145.0 140.3
Allowance for credit losses (145.6 ) (130.0 )
Bank owned life insurance 168.3 165.8
Other assets 1,010.6   919.6  
Total assets $ 20,759.6   $ 18,743.9  
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts $ 1,824.7 $ 2,360 0.52 % $ 1,492.7 $ 986 0.26 %
Savings and money market 6,126.3 12,324 0.80 6,155.8 5,831 0.38
Time certificates of deposit 1,714.8   5,165   1.20   1,576.0   2,828   0.72  
Total interest-bearing deposits 9,665.8 19,849 0.82 9,224.5 9,645 0.42
Short-term borrowings 413.2 1,950 1.89 34.6 72 0.83
Qualifying debt 362.8   5,695   6.28   359.3   4,493   5.00  
Total interest-bearing liabilities 10,441.8 27,494 1.05 9,618.4 14,210 0.59
Non-interest-bearing liabilities
Non-interest-bearing demand deposits 7,612.0 6,735.3
Other liabilities 354.0 351.7
Stockholders' equity 2,351.8   2,038.5  
Total liabilities and stockholders' equity $ 20,759.6   $ 18,743.9  
Net interest income and margin (4) $ 224,108   4.70 % $ 192,743   4.61 %
Net interest margin, adjusted (5) 4.49 %
(1)   Yields on loans and securities have been adjusted to a tax
equivalent basis. The tax equivalent adjustment was $5.9 million and
$10.4 million for the three months ended June 30, 2018 and 2017,
respectively.
(2) Included in the yield computation are net loan fees of $11.0 million
and accretion on acquired loans of $5.1 million for the three months
ended June 30, 2018, 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.
(5) Prior period net interest margin is adjusted to include the effects
from the TCJA of the lower statutory corporate federal tax rate on
the calculation of the tax equivalent adjustment in order to be
comparable to the current period.
 
 
Western Alliance Bancorporation and Subsidiaries            
Analysis of Average Balances, Yields and Rates
Unaudited    
Six Months Ended June 30,
2018 2017
Average
Balance
Interest Average Yield /
Cost
Average
Balance
Interest Average Yield /
Cost
($ in millions) ($ in thousands) ($ in millions) ($ in thousands)
Interest earning assets
Loans:
Commercial $ 6,742.6 $ 179,789 5.51 % $ 5,908.0 $ 144,346 5.28 %
CRE - non-owner occupied 3,942.6 115,659 5.88 3,585.9 106,277 5.95
CRE - owner occupied 2,242.2 57,249 5.22 2,008.8 50,658 5.28
Construction and land development 1,871.1 63,186 6.76 1,558.5 47,067 6.05
Residential real estate 429.4 10,694 4.98 297.2 6,974 4.69
Consumer 50.2   1,417   5.65   41.6   888   4.27  
Total loans (1), (2), (3) 15,278.1 427,994 5.70 13,400.0 356,210 5.53
Securities:
Securities - taxable 2,838.9 38,423 2.71 2,276.8 27,285 2.40
Securities - tax-exempt 842.8   15,643   4.64   616.2   11,458   5.52  
Total securities (1) 3,681.7 54,066 3.15 2,893.0 38,743 3.06
Cash and other 404.0   4,239   2.10   693.8   4,265   1.23  
Total interest earning assets 19,363.8 486,299 5.14 16,986.8 399,218 4.94
Non-interest earning assets
Cash and due from banks 143.7 141.5
Allowance for credit losses (143.3 ) (127.9 )
Bank owned life insurance 168.2 165.3
Other assets 1,000.8   910.1  
Total assets $ 20,533.2   $ 18,075.8  
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts $ 1,740.2 $ 3,741 0.43 % $ 1,463.9 $ 1,791 0.24 %
Savings and money market 6,176.2 21,238 0.69 6,112.7 11,143 0.36
Time certificates of deposit 1,647.7   9,043   1.10   1,530.7   5,123   0.67  
Total interest-bearing deposits 9,564.1 34,022 0.71 9,107.3 18,057 0.40
Short-term borrowings 382.6 3,285 1.72 72.5 278 0.77
Qualifying debt 365.8   10,664   5.83   356.6   8,831   4.95  
Total interest-bearing liabilities 10,312.5 47,971 0.93 9,536.4 27,166 0.57
Non-interest-bearing liabilities
Non-interest-bearing demand deposits 7,561.6 6,230.1
Other liabilities 346.3 316.4
Stockholders' equity 2,312.8   1,992.9  
Total liabilities and stockholders' equity $ 20,533.2   $ 18,075.8  
Net interest income and margin (4) $ 438,328   4.65 % $ 372,052   4.62 %
Net interest margin, adjusted (5) 4.50 %
(1)   Yields on loans and securities have been adjusted to a tax
equivalent basis. The tax equivalent adjustment was $11.7 million
and $20.1 million for the six months ended June 30, 2018 and 2017,
respectively.
(2) Included in the yield computation are net loan fees of $20.9 million
and accretion on acquired loans of $10.8 million for the six months
ended June 30, 2018, compared to $16.6 million and $13.5 million for
the six 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.
(5) Prior period net interest margin is adjusted to include the effects
from the TCJA of the lower statutory corporate federal tax rate on
the calculation of the tax equivalent adjustment in order to be
comparable to the current period.
 
 
Western Alliance Bancorporation and Subsidiaries        
Operating Segment Results
Unaudited    
 
Balance Sheet: Regional Segments
Consolidated Company Arizona Nevada Southern California Northern California
At June 30, 2018: (dollars in millions)
Assets:
Cash, cash equivalents, and investment securities $ 4,195.5 $ 1.8 $ 8.3 $ 2.2 $ 2.0
Loans, net of deferred loan fees and costs 16,138.3 3,557.6 1,850.7 2,027.8 1,285.4
Less: allowance for credit losses (147.1 ) (33.4 ) (17.8 ) (20.4 ) (10.9 )
Total loans 15,991.2   3,524.2   1,832.9   2,007.4   1,274.5  
Other assets acquired through foreclosure, net 27.5 2.3 14.1
Goodwill and other intangible assets, net 300.0 23.2 156.1
Other assets 853.3   45.8   58.0   14.5   18.2  
Total assets $ 21,367.5   $ 3,574.1   $ 1,936.5   $ 2,024.1   $ 1,450.8  
Liabilities:
Deposits $ 18,087.5 $ 5,269.3 $ 3,762.3 $ 2,303.2 $ 1,784.3
Borrowings and qualifying debt 436.1
Other liabilities 452.2   9.0   14.8   1.7   11.6  
Total liabilities 18,975.8   5,278.3   3,777.1   2,304.9   1,795.9  
Allocated equity: 2,391.7   434.7   261.3   228.8   301.7  
Total liabilities and stockholders' equity $ 21,367.5   $ 5,713.0   $ 4,038.4   $ 2,533.7   $ 2,097.6  
Excess funds provided (used) 2,138.9 2,101.9 509.6 646.8
 
No. of offices 47 10 16 9 3
No. of full-time equivalent employees 1,773 124 98 116 130
 
Income Statement:
 
Three Months Ended June 30, 2018: (in thousands)
Net interest income $ 224,108 $ 57,977 $ 35,276 $ 27,664 $ 23,001
Provision for (recovery) credit losses 5,000   518   (243 ) (276 ) 13  
Net interest income after provision for credit losses 219,108 57,459 35,519 27,940 22,988
Non-interest income 13,444 2,256 2,679 966 2,421
Non-interest expense (102,548 ) (22,419 ) (15,931 ) (14,491 ) (13,429 )
Income (loss) before income taxes 130,004 37,296 22,267 14,415 11,980
Income tax expense (benefit) 25,325   9,324   4,676   4,036   3,355  
Net income $ 104,679   $ 27,972   $ 17,591   $ 10,379   $ 8,625  
 
 
Six Months Ended June 30, 2018: (in thousands)
Net interest income $ 438,328 $ 112,532 $ 71,966 $ 55,466 $ 45,256
Provision for (recovery of) credit losses 11,000   1,952   (1,967 ) 454   1,561  
Net interest income after provision for credit losses 427,328 110,580 73,933 55,012 43,695
Non-interest income 25,087 3,672 6,012 1,967 4,969
Non-interest expense (200,697 ) (43,923 ) (30,015 ) (28,137 ) (25,932 )
Income (loss) before income taxes 251,718 70,329 49,930 28,842 22,732
Income tax expense (benefit) 46,139   17,645   10,579   8,171   6,452  
Net income $ 205,579   $ 52,684   $ 39,351   $ 20,671   $ 16,280  
 
 
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 June 30, 2018: (dollars in millions)
Assets:
Cash, cash equivalents, and investment securities $ $ $ $ $ $ 4,181.2
Loans, net of deferred loan fees and costs 186.5 1,566.1 1,205.4 1,431.9 3,022.1 4.8
Less: allowance for credit losses (1.8 ) (15.2 ) (11.2 ) (7.1 ) (29.2 ) (0.1 )
Total loans 184.7   1,550.9   1,194.2   1,424.8   2,992.9   4.7  
Other assets acquired through foreclosure, net 11.1
Goodwill and other intangible assets, net 120.6 0.1
Other assets 0.9   21.0   5.3   6.5   13.8   669.3  
Total assets $ 185.6   $ 1,571.9   $ 1,320.1   $ 1,431.4   $ 3,006.7   $ 4,866.3  
Liabilities:
Deposits $ 2,514.9 $ $ 1,993.5 $ $ $ 460.0
Borrowings and qualifying debt 436.1
Other liabilities 2.1   17.7   0.1   (0.4 ) 103.0   292.6  
Total liabilities 2,517.0   17.7   1,993.6   (0.4 ) 103.0   1,188.7  
Allocated equity: 67.1   125.3   257.8   117.8   248.0   349.2  
Total liabilities and stockholders' equity $ 2,584.1   $ 143.0   $ 2,251.4   $ 117.4   $ 351.0   $ 1,537.9  
Excess funds provided (used) 2,398.5 (1,428.9 ) 931.3 (1,314.0 ) (2,655.7 ) (3,328.4 )
 
No. of offices 1 1 9 1 4 (7 )
No. of full-time equivalent employees 65 11 56 17 42 1,114
 
Income Statement:
 
Three Months Ended June 30, 2018: (in thousands)
Net interest income $ 16,046 $ 3,794 $ 24,562 $ 13,874 $ 19,672 $ 2,242
Provision for (recovery) credit losses 135   (27 ) 2,256   548   2,074   2  
Net interest income after provision for credit losses 15,911 3,821 22,306 13,326 17,598 2,240
Non-interest income 179 3,630 409 904
Non-interest expense (8,033 ) (2,080 ) (9,899 ) (2,200 ) (6,250 ) (7,816 )
Income (loss) before income taxes 8,057 1,741 16,037 11,126 11,757 (4,672 )
Income tax expense (benefit) 1,853   401   3,688   2,559   2,704   (7,271 )
Net income $ 6,204   $ 1,340   $ 12,349   $ 8,567   $ 9,053   $ 2,599  
 
 
Six Months Ended June 30, 2018: (in thousands)
Net interest income $ 31,405 $ 7,539 $ 47,383 $ 28,060 $ 38,484 $ 237
Provision for (recovery of) credit losses 182   (233 ) 3,907   1,783   3,359   2  
Net interest income after provision for credit losses 31,223 7,772 43,476 26,277 35,125 235
Non-interest income 328 6,681 13 633 812
Non-interest expense (15,836 ) (4,254 ) (19,733 ) (4,405 ) (11,912 ) (16,550 )
Income (loss) before income taxes 15,715 3,518 30,424 21,885 23,846 (15,503 )
Income tax expense (benefit) 3,615   809   6,998   5,033   5,484   (18,647 )
Net income $ 12,100   $ 2,709   $ 23,426   $ 16,852   $ 18,362   $ 3,144  
 
 
Western Alliance Bancorporation and Subsidiaries      
Operating Segment Results    
Unaudited
 
Balance Sheet:

Regional Segments

Consolidated
Company

Arizona

Nevada

Southern
California

Northern
California

At December 31, 2017:

(dollars in millions)

Assets:
Cash, cash equivalents, and investment securities $ 4,237.1 $ 2.1 $ 8.2 $ 2.1 $ 1.7
Loans, net of deferred loan fees and costs 15,093.9 3,323.7 1,844.8 1,934.7

 

1,275.5
Less: allowance for credit losses (140.0 ) (31.5

)

 

(18.1 ) (19.5 )

 

(13.2 )
Total loans 14,953.9   3,292.2   1,826.7   1,915.2  

 

1,262.3  
Other assets acquired through foreclosure, net 28.5 2.3 13.3

 

0.2
Goodwill and other intangible assets, net 300.7 23.2

 

156.5
Other assets 808.9   46.3   58.8   14.4  

 

15.1  
Total assets $ 20,329.1   $ 3,342.9   $ 1,930.2   $ 1,931.7   $ 1,435.8  
Liabilities:
Deposits $ 16,972.5 $ 4,841.3 $ 3,951.4 $ 2,461.1 $ 1,681.7
Borrowings and qualifying debt 766.9

 

Other liabilities 360.0   11.6   20.9   3.2  

 

11.9  
Total liabilities 18,099.4   4,852.9   3,972.3   2,464.3  

 

1,693.6  
Allocated equity: 2,229.7   396.5   263.7   221.8  

 

303.1  
Total liabilities and stockholders' equity $ 20,329.1   $ 5,249.4   $ 4,236.0   $ 2,686.1   $ 1,996.7  
Excess funds provided (used)

1,906.5

2,305.8 754.4

 

560.9
 
No. of offices 47 10 16 9

 

3
No. of full-time equivalent employees 1,725 110 91 111

 

123
 
Income Statements:
 
Three Months Ended June 30, 2017: (in thousands)
Net interest income (expense) $ 192,743 $ 49,295 $ 36,422 $ 29,058 $ 19,719
Provision for (recovery of) 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 10,601 1,189 2,313 888

 

1,930
Non-interest expense (88,420 ) (17,922

)

 

(15,115 ) (13,020 )

 

(12,162 )
Income (loss) before income taxes 111,924 32,178 26,743 16,979

 

8,789
Income tax expense (benefit) 31,964   12,624   9,360   7,140  

 

3,696  
Net income $ 79,960   $ 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 21,200 2,302 4,446 1,631

 

4,043
Non-interest expense (176,247 ) (36,544

)

 

(30,985 ) (25,723 )

 

(24,871 )
Income (loss) before income taxes 209,755 58,562 48,513 30,146

 

19,832
Income tax expense (benefit) 56,453   22,974   16,980   12,677  

 

8,339  
Net income $ 153,302   $ 35,588   $ 31,533   $ 17,469   $ 11,493  
 
 
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, 2017: (dollars in millions)
Assets:
Cash, cash equivalents, and investment securities $ $ $ $

$

$ 4,223.0
Loans, net of deferred loan fees and costs 162.1 1,580.4 1,097.9 1,327.7 2,543.0 4.1
Less: allowance for credit losses (1.6 ) (15.6 ) (11.4 ) (4.0 ) (25.0 ) (0.1 )
Total loans 160.5   1,564.8   1,086.5   1,323.7   2,518.0   4.0  
Other assets acquired through foreclosure, net 12.7
Goodwill and other intangible assets, net 120.9 0.1
Other assets 0.9   17.9   6.0   5.9   15.5   628.1  
Total assets $ 161.4   $ 1,582.7   $ 1,213.4   $ 1,329.7   $ 2,533.5   $ 4,867.8  
Liabilities:
Deposits $ 2,230.4 $ $ 1,737.6 $ $ $ 69.0
Borrowings and qualifying debt 766.9
Other liabilities 1.2   42.4   0.8   0.4   5.5   262.1  
Total liabilities 2,231.6   42.4   1,738.4   0.4   5.5   1,098.0  
Allocated equity: 59.4   126.5   244.1   108.3   206.0   300.3  
Total liabilities and stockholders' equity $ 2,291.0   $ 168.9   $ 1,982.5   $ 108.7   $ 211.5   $ 1,398.3  
Excess funds provided (used) 2,129.6 (1,413.8 ) 769.1 (1,221.0 ) (2,322.0 ) (3,469.5 )
 
No. of offices 1 1 9 1 4 (7 )
No. of full-time equivalent employees 65 10 62 12 38 1,103
 
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 (recovery of) 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 140 162 1,961 532 1,486
Non-interest expense (7,258 ) (2,146 ) (9,082 ) (3,056 ) (4,566 ) (4,093 )
Income (loss) before income taxes 6,498 5,308 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 $ 4,062   $ 3,314   $ 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 281 232 3,834 1,253 3,178
Non-interest expense (14,405 ) (4,469 ) (17,861 ) (6,044 ) (9,287 ) (6,058 )
Income (loss) before income taxes 12,113 9,031 24,269 19,139 15,564 (27,414 )
Income tax expense (benefit) 4,542   3,396   9,100   7,177