Market Overview

Western Alliance Bancorporation Reports Fourth Quarter and Full Year 2019 Financial Results

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Western Alliance Bancorporation (NYSE:WAL):

FOURTH QUARTER AND FULL YEAR 2019 FINANCIAL RESULTS

Net income

 

Earnings per share

 

Net interest margin2

 

Efficiency ratio

 

Book value per

common share

$128.1 million

 

$1.25

 

4.39%

 

44.1%

 

$29.42

 

 

 

43.8%1,

excluding non-operating items

 

$26.541,

excluding goodwill and intangibles

CEO COMMENTARY:

"Western Alliance produced strong results in the fourth quarter of 2019 leading to record revenues and earnings for the quarter and full year," said Kenneth Vecchione, President and Chief Executive Officer. "Our distinctive business model delivered strong quarterly results, achieving a record $128.1 million in net income and earnings per share of $1.25, an increase of 10.6% over prior year. Quarterly loan and deposit growth of $970 million and $356 million, respectively, lifted total assets to $26.8 billion. Quarterly net interest margin of 4.39% declined only 2 basis points from prior quarter due to timely deposit repricing and tangible book value 1 rose 3.7% to $26.54.

"Reflecting on full year results, our growth in loans of $3.4 billion and deposits of $3.6 billion generated the highest total revenues in company history, surpassing $1.0 billion, against the backdrop of lower rates. Asset quality remained steady, with net charge-offs for the year of $3.4 million, or only 2 basis points of average loans. Net income climbed 14.5% over the prior year to $499.2 million and earnings per share increased 16.9% to $4.84 over the same period. As we enter into 2020, we remain committed to providing continued shareholder value with disciplined growth, while maintaining strong asset quality and industry leading revenue to expense metrics."

LINKED-QUARTER BASIS

FULL YEAR

 

 

FINANCIAL HIGHLIGHTS:

 

  • Net income and earnings per share of $128.1 million and $1.25 compared to $127.4 million and $1.24, respectively
  • Net income of $499.2 million and earnings per share of $4.84, up 14.5% and 16.9%, from $435.8 million and $4.14, respectively
  • Net operating revenue1 of $287.5 million, an increase of 1.8%, or $5.0 million, compared to an increase in operating non-interest expenses1 of 5.0%, or $6.2 million
  • Net operating revenue1 of $1.1 billion, an increase of 13.1%, or $127.0 million, compared to an increase in operating non-interest expenses1 of 14.9%, or $62.2 million
  • Operating pre-provision net revenue1 of $158.8 million, down $1.1 million from $159.9 million
  • Operating pre-provision net revenue1 of $618.3 million, up $64.8 million from $553.5 million
  • Effective tax rate of 17.00%, compared to 18.30%
  • Effective tax rate of 17.39%, compared to 14.61%
 

FINANCIAL POSITION RESULTS:

 

  • Total loans of $21.1 billion, up $970 million, or 19.3% annualized
  • Increase in total loans of $3.4 billion, or 19.3%
  • Total deposits of $22.8 billion, up $356 million, or 6.3% annualized
  • Increase in total deposits of $3.6 billion, or 18.9%
  • Stockholders' equity of $3.0 billion, up $94 million
  • Increase in stockholders' equity of $403 million
 

LOANS AND ASSET QUALITY:

 

  • Nonperforming assets (nonaccrual loans and repossessed assets) to total assets of 0.26%, compared to 0.25%
  • Nonperforming assets to total assets of 0.26%, compared to 0.20%
  • Annualized net loan charge-offs (recoveries)2 to average loans outstanding of 0.02% compared to (0.01)%
  • Net loan charge-offs to average loans outstanding of 0.02%, compared to 0.06%
 

KEY PERFORMANCE METRICS:

 

  • Net interest margin2 of 4.39%, compared to 4.41%
  • Net interest margin of 4.52%, compared to 4.68%
  • Return on average assets2 and on tangible common equity1,2 of 1.92% and 18.89%, compared to 1.94% and 19.41%, respectively
  •  Return on average assets and on tangible common equity1 of 2.00% and 19.60%, compared to 2.05% and 20.64%, respectively
  • Tangible common equity ratio1 of 10.3%, compared to 10.1%
  • Tangible common equity ratio 1 of 10.3%, compared to 10.2%
  • Tangible book value per share1, net of tax, of $26.54, an increase of 3.7% from $25.60
  • Tangible book value per share 1, net of tax, of $26.54, an increase of 20.3% from $22.07
  • Operating efficiency ratio1 of 43.8%, compared to 42.4%
  • Operating efficiency ratio 1 of 42.7%, compared to 41.9%

1

See reconciliation of Non-GAAP Financial Measures.

2

Beginning in Q1 2019, annualized performance metrics are calculated on an actual/actual basis, from a previous 30/360 basis. Prior period amounts have been restated to conform to the current presentation.

Income Statement

Net interest income was $272.0 million in the fourth quarter 2019, an increase of $5.6 million from $266.4 million in the third quarter 2019, and an increase of $28.5 million, or 11.7%, compared to the fourth quarter 2018. For 2019, net interest income was $1.0 billion, an increase of $124.5 million, or 13.6%, compared to $915.9 million in 2018. 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 over the life of the loans and may be accelerated upon prepayment of acquired loans. Net interest income in the fourth quarter 2019 includes $2.5 million of total accretion income from acquired loans, compared to $2.7 million in the third quarter 2019, and $4.5 million in the fourth quarter 2018. Net interest income in 2019 includes $12.7 million of total accretion income from acquired loans, compared to $18.6 million in 2018.

The Company's net interest margin in the fourth quarter 2019 was 4.39%, a decrease from 4.41% in the third quarter 2019 and 4.68% in the fourth quarter 2018. The decrease in net interest margin of 29 basis points from the fourth quarter 2018 is primarily the result of the federal rate cuts in 2019, totaling 75 basis points.

Operating non-interest income1 was $15.5 million for the fourth quarter 2019, compared to $16.1 million for the third quarter 2019, and $14.7 million for the fourth quarter 2018. For 2019, operating non-interest income1 was $56.8 million, an increase of $2.4 million, or 4.5%, compared to $54.4 million in 2018. The increase in operating non-interest income from 2018 primarily relates to an increase in rental income from equipment leases.

Net operating revenue1 was $287.5 million for the fourth quarter 2019, an increase of $5.0 million, compared to $282.5 million for the third quarter 2019, and an increase of $29.3 million, or 11.4%, compared to $258.2 million for the fourth quarter 2018. For 2019, net operating revenue1 was $1.1 billion, an increase of $127.0 million, or 13.1%, compared to $970.3 million in 2018.

Operating non-interest expense1 was $128.7 million for the fourth quarter 2019, compared to $122.6 million for the third quarter 2019, and $109.6 million for the fourth quarter 2018. The Company's operating efficiency ratio1 was 43.8% for the fourth quarter 2019, compared to 42.4% in the third quarter 2019, and 41.5% for the fourth quarter 2018. For 2019, operating non-interest expense1 was $479.0 million, an increase of $62.2 million, or 14.9%, compared to $416.8 million in 2018. The increase in operating non-interest expense from 2018 primarily relates to an increase in compensation related costs and technology initiatives to support the Company's continued growth. Deposit costs in 2019 have also increased commensurate with growth in average deposit balances and increased rates compared to 2018.

Income tax expense was $26.2 million for the fourth quarter 2019, compared to $28.5 million for the third quarter 2019, and $20.9 million for the fourth quarter 2018. Income tax expense for 2019 was $105.1 million, an increase of $30.5 million, or 40.9%, compared to $74.5 million in 2018.

Net income was $128.1 million for the fourth quarter 2019, an increase of $0.7 million from $127.4 million for the third quarter 2019, and an increase of $9.0 million, or 7.5%, from $119.1 million for the fourth quarter 2018. Earnings per share was $1.25 for the fourth quarter 2019, compared to $1.24 for the third quarter 2019, and $1.13 for the fourth quarter 2018. For 2019, net income was $499.2 million, an increase of $63.4 million, or 14.5%, compared to $435.8 million in 2018. Earnings per share for 2019 was $4.84, an increase of 16.9%, compared to $4.14 in 2018.

The Company views its operating pre-provision net revenue1 ("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 fourth quarter 2019, the Company's operating PPNR1 was $158.8 million, down $1.1 million from $159.9 million in the third quarter 2019, and up $10.2 million from $148.5 million in the fourth quarter 2018. Non-operating income1 for the fourth quarter 2019 consisted of net unrealized gains on assets measured at fair value of $0.5 million. Non-operating expense1 for the fourth quarter 2019 consisted of a net loss on sales and valuations of repossessed and other assets of $1.0 million. For 2019, operating PPNR1 was $618.3 million, an increase of $64.8 million, or 11.7%, from $553.5 million in 2018. The non-operating income items1 for 2019 consisted of a net gain on sales of investment securities of $3.2 million and net unrealized gains on assets measured at fair value of $5.1 million. Non-operating expense1 for 2019 consisted of a net loss on sales and valuations of repossessed and other assets of $3.8 million.

The Company had 1,835 full-time equivalent employees and 47 offices at December 31, 2019, compared to 1,814 employees and 47 offices at September 30, 2019, and 1,787 employees and 47 offices at December 31, 2018.

1

See reconciliation of Non-GAAP Financial Measures.

Balance Sheet

Gross loans totaled $21.1 billion at December 31, 2019, an increase of $970 million from $20.2 billion at September 30, 2019, and an increase of $3.4 billion from $17.7 billion at December 31, 2018. The increase from the prior quarter was driven by an increase of $674 million in commercial and industrial loans, $285 million in residential real estate loans, and $214 million in CRE, non-owner occupied loans. These increases were partially offset by a decrease of $203 million in construction and land development loans. From December 31, 2018, the largest increases in the loan balance were driven by commercial and industrial loans of $1.6 billion, CRE, non-owner occupied loans of $1.0 billion, and residential real estate loans of $943 million. At December 31, 2019, the allowance for credit losses to gross loans held for investment was 0.80%, compared to 0.82% at September 30, 2019, and 0.86% at December 31, 2018. At December 31, 2019, the allowance for credit losses to total organic loans was 0.82%, compared to 0.85% at September 30, 2019, and 0.92% at December 31, 2018. The Company defines its organic loans as those loans that have not been acquired in a transaction accounted for as a business combination.

Deposits totaled $22.8 billion at December 31, 2019, an increase of $356 million from $22.4 billion at September 30, 2019, and an increase of $3.6 billion from $19.2 billion at December 31, 2018. The increase from the prior quarter was driven by an increase of $260 million in certificates of deposits, $252 million in interest bearing demand deposits, and $62.3 million from savings and money market accounts. These increases were offset by a decrease of $218 million from non-interest bearing demand deposits. From December 31, 2018, deposits increased across all deposit types, with increases in savings and money market accounts of $1.8 billion, non-interest bearing demand deposits of $1.1 billion, certificates of deposit of $542 million, and interest-bearing demand deposits of $205 million. Non-interest bearing deposits were $8.5 billion at December 31, 2019, compared to $8.8 billion at September 30, 2019, and $7.5 billion at December 31, 2018. Non-interest bearing deposits comprised 37.5% of total deposits at December 31, 2019, compared to 39.0% at September 30, 2019, and 38.9% at December 31, 2018. The proportion of savings and money market balances to total deposits was 40.0%, compared to 40.4% at September 30, 2019, and 38.2% at December 31, 2018. Interest-bearing demand deposits as a percentage of total deposits were 12.1% at December 31, 2019, compared to 11.2% at September 30, 2019, and 13.3% at December 31, 2018. Certificates of deposit as a percentage of total deposits were 10.4% at December 31, 2019, compared to 9.4% at September 30, 2019, and 9.6% at December 31, 2018. The Company's ratio of loans to deposits was 92.7% at December 31, 2019, compared to 89.8% at September 30, 2019, and 92.4% at December 31, 2018.

Borrowings were zero at December 31, 2019 and September 30, 2019, compared to $491 million at December 31, 2018. The decrease in borrowings from December 31, 2018 is due to a decrease in overnight advances.

Qualifying debt totaled $394 million at December 31, 2019, compared to $389 million at September 30, 2019, and $361 million at December 31, 2018.

Stockholders' equity was $3.0 billion at December 31, 2019, compared to $2.9 billion at September 30, 2019, and $2.6 billion at December 31, 2018. The increase in stockholders' equity from December 31, 2018 is primarily a function of net income, partially offset by share repurchases and dividends to shareholders. Under the Company's common stock repurchase program, the Company was authorized to repurchase up to $250 million of its shares of common stock through December 31, 2019. During the fourth quarter 2019, the Company repurchased 88,799 shares of its common stock at a weighted average price of $51.33, for a total of $4.6 million. During the year ended December 31, 2019, the Company repurchased a total of 2.8 million shares of its common stock, representing approximately 3% of the Company's outstanding shares. Shares were repurchased at a weighted average price of $42.53, for a total of $120.0 million. During the fourth quarter 2019, the Company's Board of Directors approved a cash dividend of $0.25 per share. The dividend payment to shareholders totaled $25.6 million, and was paid on November 29, 2019.

At December 31, 2019, tangible common equity, net of tax, was 10.3% of tangible assets1 and total capital was 12.8% of risk-weighted assets. The Company's tangible book value per share1 was $26.54 at December 31, 2019, up 20.3% from December 31, 2018.

Total assets increased 1.9% to $26.8 billion at December 31, 2019, from $26.3 billion at September 30, 2019, and increased 16.1% from $23.1 billion at December 31, 2018. The increase in total assets from the prior year relates primarily to organic loan growth.

Asset Quality

The provision for credit losses remained flat at $4.0 million for the fourth quarter 2019 compared to the third quarter 2019, and decreased from $6.0 million for the fourth quarter 2018. Net loan charge-offs2 in the fourth quarter 2019 were $1.2 million, or 0.02% of average loans (annualized), compared to net (recoveries) of $(0.6) million, or (0.01)%, in the third quarter 2019, and net charge-offs of $3.3 million, or 0.08%, in the fourth quarter 2018.

Nonaccrual loans increased $5.6 million to $56.0 million during the quarter and increased $28.2 million from December 31, 2018. Loans past due 90 days and still accruing were zero at December 31, 2019 and September 30, 2019, and $0.6 million at December 31, 2018. Loans past due 30-89 days and still accruing interest totaled $14.5 million at December 31, 2019, a decrease from $29.5 million at September 30, 2019, and a decrease from $16.6 million at December 31, 2018.

Repossessed assets totaled $13.8 million at December 31, 2019, compared to $15.5 million at September 30, 2019, and a decrease of $4.1 million from $17.9 million at December 31, 2018. Adversely graded loans and non-performing assets totaled $341.6 million at December 31, 2019, a decrease of $97.6 million from $439.2 million at September 30, 2019, and an increase of $26.0 million from $315.6 million at December 31, 2018.

The ratio of classified assets to Tier 1 capital plus the allowance for credit losses1, a common regulatory measure of asset quality, was 5.8% at December 31, 2019, compared to 7.8% at September 30, 2019, and 9.4% at December 31, 2018.

1

See reconciliation of Non-GAAP Financial Measures.

2

Beginning in Q1 2019, annualized performance metrics are calculated on an actual/actual basis, from a previous 30/360 basis. Prior period amounts have been restated to conform to the current presentation.

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 the Company's investment portfolio, Corporate borrowings and other 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 $9.7 billion at December 31, 2019, a decrease of $15 million during the quarter, and an increase of $553 million during the last year. The decline in loans during the quarter was driven by the Arizona and Southern California segments with loan decreases of $120 million and $53 million, respectively. These decreases were partially offset by increases of $86 million and $73 million in the Northern California and Nevada segments, respectively. The growth in loans during the last year was spread across all regional segments with increases in the Nevada, Arizona, Southern California, and Northern California segments of $249 million, $200 million, $93 million, and $11 million, respectively. Total deposits for the regional segments were $14.7 billion, a decrease of $570 million during the quarter, and an increase of $1.4 billion during the last year. The decrease in deposits during the quarter was driven by the Arizona and Southern California segments, with deposit decreases of $586 million and $168 million, respectively. These decreases were partially offset by increases of $103 million and $81 million, respectively, in the Northern California and Nevada segments. The growth in deposits over the last year was spread across all regional segments with increases in the Northern California, Nevada, Arizona, and Southern California segments of $535 million, $354 million, $295 million, and $238 million, respectively.

Pre-tax income for the regional segments was $105.1 million for the three months ended December 31, 2019, an increase of $1.1 million from the three months ended September 30, 2019, and an increase of $18.3 million from the three months ended December 31, 2018. The growth in pre-tax income during the quarter was driven by increases in the Northern California and Nevada segments, with pre-tax income growth of $1.2 million and $1.1 million, respectively. These increases were partially offset by a decrease of $1.7 million in the Arizona segment. The Arizona, Southern California, Nevada, and Northern California segments had increases in pre-tax income from the three months ended December 31, 2018 of $8.8 million, $4.6 million, $3.8 million, and $1.1 million, respectively. For the year ended December 31, 2019, the regional segments reported total pre-tax income of $394.2 million, an increase of $48.4 million compared to the year ended December 31, 2018 with increases across all regional segments. Arizona, Southern California, Nevada, and Northern California had increases in pre-tax income of $17.4 million, $14.3 million, $11.7 million, and $4.9 million, respectively.

The NBL segments reported gross loan balances of $11.5 billion at December 31, 2019, an increase of $986 million during the quarter, and an increase of $2.9 billion during the last year. The increase in loans from the prior quarter was driven by the Other NBLs, Technology & Innovation, Public & Nonprofit Finance, and HFF segments, which had loan growth of $714 million, $175 million, $53 million, and $35 million, respectively. During the last year, the largest drivers of loan growth were the Other NBLs, HFF, Technology & Innovation, and Public & Nonprofit Finance segments, with increases of $1.9 billion, $451 million, $351 million, and $88 million, respectively. Total deposits for the NBL segments were $7.0 billion, an increase of $646 million during the quarter, and an increase of $1.9 billion during the last year. The increase in deposits from the prior quarter is primarily attributable to the Technology & Innovation and HOA Services segments, which increased deposits by $482 million and $158 million, respectively. The increase of $1.9 billion during the last year is a result of growth in the Technology & Innovation and HOA Services segments of $1.2 billion and $603 million, respectively.

Pre-tax income for the NBL segments was $77.4 million for the three months ended December 31, 2019, an increase of $6.2 million from the three months ended September 30, 2019, and an increase of $21.7 million from the three months ended December 31, 2018. The increase in pre-tax income from the prior quarter primarily relates to the Other NBLs, HFF, Technology & Innovation and HOA Services segments, which increased by $2.9 million, $2.3 million, $1.1 million and $0.6 million, respectively. These increases were partially offset by a decrease in pre-tax income from the Public & Nonprofit segment of $0.8 million. The drivers of the increase in pre-tax income from the same period in the prior year were the Other NBLs, Technology & Innovation, HOA Services, and HFF segments, which had increases of $15.0 million, $4.3 million, $3.2 million, and $0.7 million, respectively. These increases were partially offset by a decrease in pre-tax income for the Public & Nonprofit Finance segment, which decreased by $1.6 million. Pre-tax income for the NBL segments for the year ended December 31, 2019 totaled $268.1 million, an increase of $65.6 million compared to the year ended December 31, 2018. The largest increases in pre-tax income compared to the year ended December 31, 2018 were in the Other NBLs, Technology & Innovation, and HOA Services segments. These segments had increases of $34.6 million, $21.4 million, and $14.7 million, respectively. These increases were partially offset by decreases of $2.6 million and $2.5 million in the Public & Nonprofit and HFF segments, respectively.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live webcast to discuss its fourth quarter 2019 financial results at 12:00 p.m. ET on Friday, January 24, 2020. Participants may access the call by dialing 1-888-317-6003 and using passcode 7572681 or via live audio webcast using the website link https://services.choruscall.com/links/wal200124.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 January 24th through 9:00 a.m. ET February 24th by dialing 1-877-344-7529 passcode: 10138010.

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 2019, the Company adopted the Accounting Standards Updates ("ASU") related to leases, which include ASU 2016-02, Leases, ASU 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases (Topic 842) Targeted Improvements.

The amendments in ASU 2016-02 require lessees to recognize the lease assets and lease liabilities arising from operating leases in the statement of financial position, resulting in a gross up of assets and liabilities on the balance sheet. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The Company elected to apply the package of practical expedients, which permitted the Company to forgo reassessment of 1) expired or existing contracts that may contain leases; 2) lease classification of expired or existing leases; and 3) initial direct costs for any existing leases. Upon adoption of this standard on January 1, 2019, the Company recorded a right-of-use asset and corresponding lease liability of $42.5 million and $46.1 million, respectively. No cumulative effect adjustment to retained earnings was recorded as of January 1, 2019. The new standard does not have a material impact on the Company's results of operations or cash flow.

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, future economic performance and dividends, and the expected impact to the Company's allowance and provision for credit losses and capital levels upon the adoption of the new current expected credit loss (CECL) accounting standard. 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, 2018 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 (including changes related to the impact of CECL); 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 $25 billion in assets, Western Alliance Bancorporation (NYSE:WAL) is one of the country's top-performing banking companies. Western Alliance is ranked #1 regional bank by S&P Global Market Intelligence for 2018 and in the top 10 on the Forbes "Best Banks in America" list for four consecutive years, 2016-2019. Its primary subsidiary, Western Alliance Bank, Member FDIC, helps business clients realize their growth ambitions 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 and has 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 December 31,

 

 

 

 

 

 

 

 

2019

 

2018

 

Change %

 

 

 

 

 

 

 

 

(in millions)

 

 

Total assets

 

 

 

 

 

 

 

$

26,821.9

 

 

$

23,109.5

 

 

16.1

%

Gross loans, net of deferred fees

 

 

 

 

 

 

 

21,123.3

 

 

17,710.6

 

 

19.3

 

Securities and money market investments

 

 

 

 

 

4,036.6

 

 

3,761.1

 

 

7.3

 

Total deposits

 

 

 

 

 

 

 

22,796.5

 

 

19,177.4

 

 

18.9

 

Qualifying debt

 

 

 

 

 

 

 

393.6

 

 

360.5

 

 

9.2

 

Stockholders' equity

 

 

 

 

 

 

 

3,016.7

 

 

2,613.7

 

 

15.4

 

Tangible common equity, net of tax (1)

 

 

 

 

 

 

 

2,721.1

 

 

2,316.5

 

 

17.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Income Statement Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended December 31,

 

For the Year Ended December 31,

 

 

2019

 

2018

 

Change %

 

2019

 

2018

 

Change %

 

 

(in thousands, except per share data)

 

 

 

(in thousands, except per share data)

 

 

Interest income

 

$

315,420

 

 

$

281,968

 

 

11.9

%

 

$

1,225,045

 

 

$

1,033,483

 

 

18.5

%

Interest expense

 

43,447

 

 

38,455

 

 

13.0

 

 

184,633

 

 

117,604

 

 

57.0

 

Net interest income

 

271,973

 

 

243,513

 

 

11.7

 

 

1,040,412

 

 

915,879

 

 

13.6

 

Provision for credit losses

 

4,000

 

 

6,000

 

 

(33.3

)

 

18,500

 

 

23,000

 

 

(19.6

)

Net interest income after provision for credit losses

 

267,973

 

 

237,513

 

 

12.8

 

 

1,021,912

 

 

892,879

 

 

14.5

 

Non-interest income

 

16,027

 

 

13,611

 

 

17.8

 

 

65,095

 

 

43,116

 

 

51.0

 

Non-interest expense

 

129,699

 

 

111,129

 

 

16.7

 

 

482,781

 

 

425,667

 

 

13.4

 

Income before income taxes

 

154,301

 

 

139,995

 

 

10.2

 

 

604,226

 

 

510,328

 

 

18.4

 

Income tax expense

 

26,236

 

 

20,909

 

 

25.5

 

 

105,055

 

 

74,540

 

 

40.9

 

Net income

 

$

128,065

 

 

$

119,086

 

 

7.5

 

 

$

499,171

 

 

$

435,788

 

 

14.5

 

Diluted earnings per share

 

$

1.25

 

 

$

1.13

 

 

10.6

 

 

$

4.84

 

 

$

4.14

 

 

16.9

 

(1)

See Reconciliation of Non-GAAP Financial Measures.

Western Alliance Bancorporation and Subsidiaries

 

 

 

 

 

 

 

 

 

 

Summary Consolidated Financial Data

 

 

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At or For the Three Months Ended December 31,

 

For the Year Ended December 31,

 

 

2019

 

2018

 

Change %

 

2019

 

2018

 

Change %

Diluted earnings per share

 

$

1.25

 

 

$

1.13

 

 

10.6

%

 

$

4.84

 

 

$

4.14

 

 

16.9

%

Book value per common share

 

29.42

 

 

24.90

 

 

18.2

 

 

 

 

 

 

 

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

 

26.54

 

 

22.07

 

 

20.3

 

 

 

 

 

 

 

Average shares outstanding

(in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

101,609

 

 

104,684

 

 

(2.9

)

 

102,667

 

 

104,669

 

 

(1.9

)

Diluted

 

102,138

 

 

105,286

 

 

(3.0

)

 

103,133

 

 

105,370

 

 

(2.1

)

Common shares outstanding

 

102,524

 

 

104,949

 

 

(2.3

)

 

 

 

 

 

 

 

Selected Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (2)

 

1.92

%

 

2.11

%

 

(9.0

)%

 

2.00

%

 

2.05

%

 

(2.4

)%

Return on average tangible common equity (1, 2)

 

18.89

 

 

20.92

 

 

(9.7

)

 

19.60

 

 

20.64

 

 

(5.0

)

Net interest margin (2)

 

4.39

 

 

4.68

 

 

(6.2

)

 

4.52

 

 

4.68

 

 

(3.4

)

Operating efficiency ratio - tax equivalent basis (1)

 

43.8

 

 

41.5

 

 

5.6

 

 

42.7

 

 

41.9

 

 

1.8

 

Loan to deposit ratio

 

92.66

 

 

92.35

 

 

0.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Quality Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

0.02

%

 

0.08

%

 

(75.0

)%

 

0.02

%

 

0.06

%

 

(66.7

)%

Nonaccrual loans to gross loans

 

0.27

 

 

0.16

 

 

68.8

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans and repossessed assets to total assets

 

0.26

 

 

0.20

 

 

30.0

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses to gross loans

 

0.80

 

 

0.86

 

 

(7.0

)

 

 

 

 

 

 

 

 

 

Allowance for credit losses to nonaccrual loans

 

299.81

 

 

550.41

 

 

(45.5

)

 

 

 

 

 

 

 

 

 

 

Capital Ratios (1):

 

 

 

 

 

 

 

 

Dec 31, 2019

 

Sep 30, 2019

 

Dec 31, 2018

Tangible common equity (1)

 

10.3

%

 

10.1

%

 

10.2

%

Common Equity Tier 1 (1), (3)

 

10.6

 

 

10.3

 

 

10.7

 

Tier 1 Leverage ratio (1), (3)

 

10.6

 

 

10.4

 

 

10.9

 

Tier 1 Capital (1), (3)

 

10.9

 

 

10.6

 

 

11.1

 

Total Capital (1), (3)

 

12.8

 

 

12.6

 

 

13.2

 

(1)

See Reconciliation of Non-GAAP Financial Measures.

(2)

Annualized on an actual/actual basis for periods less than 12 months.

(3)

Capital ratios for December 31, 2019 are preliminary.

Western Alliance Bancorporation and Subsidiaries

 

 

 

 

 

 

 

 

Condensed Consolidated Income Statements

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

2019

 

2018

 

2019

 

2018

 

 

(dollars in thousands, except per share data)

Interest income:

 

 

 

 

 

 

 

 

Loans

 

$

284,971

 

 

$

247,874

 

 

$

1,093,070

 

 

$

910,577

 

Investment securities

 

28,194

 

 

30,367

 

 

115,889

 

 

111,672

 

Other

 

2,255

 

 

3,727

 

 

16,086

 

 

11,234

 

Total interest income

 

315,420

 

 

281,968

 

 

1,225,045

 

 

1,033,483

 

Interest expense:

 

 

 

 

 

 

 

 

Deposits

 

37,374

 

 

31,176

 

 

158,405

 

 

90,464

 

Qualifying debt

 

5,492

 

 

5,829

 

 

23,390

 

 

22,287

 

Borrowings

 

581

 

 

1,450

 

 

2,838

 

 

4,853

 

Total interest expense

 

43,447

 

 

38,455

 

 

184,633

 

 

117,604

 

Net interest income

 

271,973

 

 

243,513

 

 

1,040,412

 

 

915,879

 

Provision for credit losses

 

4,000

 

 

6,000

 

 

18,500

 

 

23,000

 

Net interest income after provision for credit losses

 

267,973

 

 

237,513

 

 

1,021,912

 

 

892,879

 

Non-interest income:

 

 

 

 

 

 

 

 

Service charges and fees

 

6,233

 

 

5,611

 

 

23,353

 

 

22,295

 

Lending related income and gains (losses) on sale of loans, net

 

1,815

 

 

893

 

 

3,158

 

 

4,340

 

Card income

 

1,784

 

 

1,866

 

 

6,979

 

 

8,009

 

Income from equity investments

 

1,671

 

 

3,178

 

 

8,290

 

 

8,595

 

Foreign currency income

 

1,423

 

 

1,285

 

 

4,987

 

 

4,760

 

Income from bank owned life insurance

 

963

 

 

983

 

 

3,901

 

 

3,946

 

Gain (loss) on sales of investment securities

 

 

 

(424

)

 

3,152

 

 

(7,656

)

Unrealized gains (losses) on assets measured at fair value, net

 

491

 

 

(640

)

 

5,119

 

 

(3,611

)

Other

 

1,647

 

 

859

 

 

6,156

 

 

2,438

 

Total non-interest income

 

16,027

 

 

13,611

 

 

65,095

 

 

43,116

 

Non-interest expenses:

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

73,946

 

 

64,558

 

 

279,274

 

 

253,238

 

Legal, professional, and directors' fees

 

10,124

 

 

6,866

 

 

37,009

 

 

28,722

 

Data processing

 

10,014

 

 

6,028

 

 

30,577

 

 

22,716

 

Occupancy

 

8,256

 

 

7,733

 

 

32,507

 

 

29,404

 

Deposit costs

 

6,789

 

 

7,012

 

 

31,719

 

 

18,900

 

Insurance

 

3,233

 

 

2,539

 

 

11,924

 

 

14,005

 

Loan and repossessed asset expenses

 

2,152

 

 

1,748

 

 

7,571

 

 

4,578

 

Business development

 

2,071

 

 

1,437

 

 

7,043

 

 

5,960

 

Marketing

 

1,559

 

 

1,341

 

 

4,199

 

 

3,770

 

Card expense

 

454

 

 

996

 

 

2,346

 

 

4,301

 

Intangible amortization

 

386

 

 

399

 

 

1,547

 

 

1,594

 

Net loss (gain) on sales and valuations of repossessed and other assets

 

962

 

 

1,483

 

 

3,818

 

 

9

 

Other

 

9,753

 

 

8,989

 

 

33,247

 

 

38,470

 

Total non-interest expense

 

129,699

 

 

111,129

 

 

482,781

 

 

425,667

 

Income before income taxes

 

154,301

 

 

139,995

 

 

604,226

 

 

510,328

 

Income tax expense

 

26,236

 

 

20,909

 

 

105,055

 

 

74,540

 

Net income

 

$

128,065

 

 

$

119,086

 

 

$

499,171

 

 

$

435,788

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

Diluted shares

 

102,138

 

 

105,286

 

 

103,133

 

 

105,370

 

Diluted earnings per share

 

$

1.25

 

 

$

1.13

 

 

$

4.84

 

 

$

4.14

 

Western Alliance Bancorporation and Subsidiaries

 

 

 

 

 

 

 

 

Five Quarter Condensed Consolidated Income Statements

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Dec 31, 2019

 

Sep 30, 2019

 

Jun 30, 2019

 

Mar 31, 2019

 

Dec 31, 2018

 

 

(in thousands, except per share data)

Interest income:

 

 

 

 

 

 

 

 

 

 

Loans

 

$

284,971

 

 

$

278,932

 

 

$

270,349

 

 

$

258,818

 

 

$

247,874

 

Investment securities

 

28,194

 

 

29,660

 

 

28,900

 

 

29,134

 

 

30,367

 

Other

 

2,255

 

 

7,016

 

 

3,599

 

 

3,216

 

 

3,727

 

Total interest income

 

315,420

 

 

315,608

 

 

302,848

 

 

291,168

 

 

281,968

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

Deposits

 

37,374

 

 

43,354

 

 

41,888

 

 

35,788

 

 

31,176

 

Qualifying debt

 

5,492

 

 

5,785

 

 

6,008

 

 

6,105

 

 

5,829

 

Borrowings

 

581

 

 

47

 

 

271

 

 

1,939

 

 

1,450

 

Total interest expense

 

43,447

 

 

49,186

 

 

48,167

 

 

43,832

 

 

38,455

 

Net interest income

 

271,973

 

 

266,422

 

 

254,681

 

 

247,336

 

 

243,513

 

Provision for credit losses

 

4,000

 

 

4,000

 

 

7,000

 

 

3,500

 

 

6,000

 

Net interest income after provision for credit losses

 

267,973

 

 

262,422

 

 

247,681

 

 

243,836

 

 

237,513

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

Service charges and fees

 

6,233

 

 

5,888

 

 

5,821

 

 

5,412

 

 

5,611

 

Lending related income and gains (losses) on sale of loans, net

 

1,815

 

 

539

 

 

553

 

 

251

 

 

893

 

Card income

 

1,784

 

 

1,729

 

 

1,625

 

 

1,841

 

 

1,866

 

Income from equity investments

 

1,671

 

 

3,742

 

 

868

 

 

2,009

 

 

3,178

 

Foreign currency income

 

1,423

 

 

1,321

 

 

1,148

 

 

1,095

 

 

1,285

 

Income from bank owned life insurance

 

963

 

 

979

 

 

978

 

 

981

 

 

983

 

Gain (loss) on sales of investment securities

 

 

 

3,152

 

 

 

 

 

 

(424

)

Unrealized gains (losses) on assets measured at fair value, net

 

491

 

 

222

 

 

1,572

 

 

2,834

 

 

(640

)

Other

 

1,647

 

 

1,869

 

 

1,653

 

 

987

 

 

859

 

Total non-interest income

 

16,027

 

 

19,441

 

 

14,218

 

 

15,410

 

 

13,611

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

73,946

 

 

70,978

 

 

65,794

 

 

68,556

 

 

64,558

 

Legal, professional, and directors' fees

 

10,124

 

 

8,248

 

 

11,105

 

 

7,532

 

 

6,866

 

Data processing

 

10,014

 

 

7,095

 

 

6,793

 

 

6,675

 

 

6,028

 

Occupancy

 

8,256

 

 

8,263

 

 

7,761

 

 

8,227

 

 

7,733

 

Deposit costs

 

6,789

 

 

11,537

 

 

7,669

 

 

5,724

 

 

7,012

 

Insurance

 

3,233

 

 

3,071

 

 

2,811

 

 

2,809

 

 

2,539

 

Loan and repossessed asset expenses

 

2,152

 

 

1,953

 

 

1,460

 

 

2,006

 

 

1,748

 

Business development

 

2,071

 

 

1,443

 

 

1,444

 

 

2,085

 

 

1,437

 

Marketing

 

1,559

 

 

842

 

 

1,057

 

 

741

 

 

1,341

 

Card expense

 

454

 

 

548

 

 

710

 

 

634

 

 

996

 

Intangible amortization

 

386

 

 

387

 

 

387

 

 

387

 

 

399

 

Net loss (gain) on sales and valuations of repossessed and other assets

 

962

 

 

3,379

 

 

(620

)

 

97

 

 

1,483

 

Other

 

9,753

 

 

8,211

 

 

7,842

 

 

7,441

 

 

8,989

 

Total non-interest expense

 

129,699

 

 

125,955

 

 

114,213

 

 

112,914

 

 

111,129

 

Income before income taxes

 

154,301

 

 

155,908

 

 

147,686

 

 

146,332

 

 

139,995

 

Income tax expense

 

26,236

 

 

28,533

 

 

24,750

 

 

25,536

 

 

20,909

 

Net income

 

$

128,065

 

 

$

127,375

 

 

$

122,936

 

 

$

120,796

 

 

$

119,086

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

Diluted shares

 

102,138

 

 

102,451

 

 

103,501

 

 

104,475

 

 

105,286

 

Diluted earnings per share

 

$

1.25

 

 

$

1.24

 

 

$

1.19

 

 

$

1.16

 

 

$

1.13

 

Western Alliance Bancorporation and Subsidiaries

 

 

 

 

 

 

 

 

 

 

Five Quarter Condensed Consolidated Balance Sheets

 

 

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

Dec 31, 2019

 

Sep 30, 2019

 

Jun 30, 2019

 

Mar 31, 2019

 

Dec 31, 2018

 

 

(in millions)

Assets:

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

434.6

 

 

$

872.1

 

 

$

1,067.7

 

 

$

785.6

 

 

$

498.6

 

Securities and money market investments

 

4,036.6

 

 

4,148.1

 

 

3,870.1

 

 

3,739.4

 

 

3,761.1

 

Loans held for sale

 

21.8

 

 

21.8

 

 

 

 

 

 

 

Loans held for investment:

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

9,382.0

 

 

8,707.8

 

 

8,454.2

 

 

7,723.7

 

 

7,762.6

 

Commercial real estate - non-owner occupied

 

5,245.6

 

 

5,031.3

 

 

4,685.5

 

 

4,304.3

 

 

4,213.4

 

Commercial real estate - owner occupied

 

2,316.9

 

 

2,299.8

 

 

2,254.1

 

 

2,285.3

 

 

2,325.4

 

Construction and land development

 

1,952.2

 

 

2,155.6

 

 

2,210.4

 

 

2,283.5

 

 

2,134.7

 

Residential real estate

 

2,147.7

 

 

1,862.5

 

 

1,580.1

 

 

1,461.5

 

 

1,204.4

 

Consumer

 

57.1

 

 

74.0

 

 

66.0

 

 

58.4

 

 

70.1

 

Gross loans, net of deferred fees

 

21,101.5

 

 

20,131.0

 

 

19,250.3

 

 

18,116.7

 

 

17,710.6

 

Allowance for credit losses

 

(167.8

)

 

(165.0

)

 

(160.4

)

 

(155.0

)

 

(152.7

)

Loans, net

 

20,933.7

 

 

19,966.0

 

 

19,089.9

 

 

17,961.7

 

 

17,557.9

 

Premises and equipment, net

 

125.8

 

 

125.0

 

 

123.1

 

 

119.8

 

 

119.5

 

Operating lease right-of-use asset

 

72.6

 

 

74.5

 

 

71.1

 

 

72.8

 

 

 

Other assets acquired through foreclosure, net

 

13.9

 

 

15.5

 

 

17.7

 

 

17.7

 

 

17.9

 

Bank owned life insurance

 

174.0

 

 

173.1

 

 

172.1

 

 

171.1

 

 

170.1

 

Goodwill and other intangibles, net

 

297.6

 

 

298.0

 

 

298.4

 

 

298.8

 

 

299.2

 

Other assets

 

711.3

 

 

630.1

 

 

604.7

 

 

625.9

 

 

685.2

 

Total assets

 

$

26,821.9

 

 

$

26,324.2

 

 

$

25,314.8

 

 

$

23,792.8

 

 

$

23,109.5

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

Non-interest bearing demand deposits

 

$

8,537.9

 

 

$

8,755.7

 

 

$

8,677.3

 

 

$

7,679.3

 

 

$

7,456.1

 

Interest bearing:

 

 

 

 

 

 

 

 

 

 

Demand

 

2,760.9

 

 

2,509.4

 

 

2,525.6

 

 

2,499.8

 

 

2,555.6

 

Savings and money market

 

9,120.7

 

 

9,058.4

 

 

7,898.3

 

 

7,798.3

 

 

7,330.7

 

Certificates of deposit

 

2,377.0

 

 

2,117.3

 

 

2,338.7

 

 

2,231.3

 

 

1,835.0

 

Total deposits

 

22,796.5

 

 

22,440.8

 

 

21,439.9

 

 

20,208.7

 

 

19,177.4

 

Customer repurchase agreements

 

16.7

 

 

15.0

 

 

13.9

 

 

15.1

 

 

22.4

 

Total customer funds

 

22,813.2

 

 

22,455.8

 

 

21,453.8

 

 

20,223.8

 

 

19,199.8

 

Borrowings

 

 

 

 

 

 

 

 

 

491.0

 

Qualifying debt

 

393.6

 

 

388.9

 

 

387.2

 

 

374.0

 

 

360.5

 

Operating lease liability

 

78.1

 

 

79.8

 

 

76.2

 

 

77.8

 

 

 

Accrued interest payable and other liabilities

 

520.3

 

 

476.7

 

 

546.3

 

 

396.6

 

 

444.5

 

Total liabilities

 

23,805.2

 

 

23,401.2

 

 

22,463.5

 

 

21,072.2

 

 

20,495.8

 

Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

Common stock and additional paid-in capital

 

1,311.4

 

 

1,305.5

 

 

1,310.9

 

 

1,329.6

 

 

1,364.6

 

Retained earnings

 

1,680.3

 

 

1,581.9

 

 

1,514.0

 

 

1,399.2

 

 

1,282.7

 

Accumulated other comprehensive income (loss)

 

25.0

 

 

35.6

 

 

26.4

 

 

(8.2

)

 

(33.6

)

Total stockholders' equity

 

3,016.7

 

 

2,923.0

 

 

2,851.3

 

 

2,720.6

 

 

2,613.7

 

Total liabilities and stockholders' equity

 

$

26,821.9

 

 

$

26,324.2

 

 

$

25,314.8

 

 

$

23,792.8

 

 

$

23,109.5

 

Western Alliance Bancorporation and Subsidiaries

 

 

 

 

 

 

 

 

 

 

Changes in the Allowance For Credit Losses

 

 

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Dec 31, 2019

 

Sep 30, 2019

 

Jun 30, 2019

 

Mar 31, 2019

 

Dec 31, 2018

 

 

(in thousands)

Allowance for loan losses

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

165,021

 

 

$

160,409

 

 

$

154,987

 

 

$

152,717

 

 

$

150,011

 

Provision for credit losses

 

4,000

 

 

4,000

 

 

7,000

 

 

3,500

 

 

6,000

 

Recoveries of loans previously charged-off:

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

744

 

 

2,549

 

 

495

 

 

477

 

 

690

 

Commercial real estate - non-owner occupied

 

4

 

 

 

 

53

 

 

 

 

 

Commercial real estate - owner occupied

 

5

 

 

8

 

 

386

 

 

453

 

 

9

 

Construction and land development

 

10

 

 

17

 

 

9

 

 

55

 

 

13

 

Residential real estate

 

161

 

 

131

 

 

27

 

 

93

 

 

116

 

Consumer

 

6

 

 

6

 

 

8

 

 

5

 

 

8

 

Total recoveries

 

930

 

 

2,711

 

 

978

 

 

1,083

 

 

836

 

Loans charged-off:

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

2,028

 

 

1,950

 

 

2,018

 

 

2,124

 

 

4,130

 

Commercial real estate - non-owner occupied

 

 

 

 

 

 

 

 

 

 

Commercial real estate - owner occupied

 

 

 

139

 

 

 

 

 

 

 

Construction and land development

 

 

 

 

 

141

 

 

 

 

 

Residential real estate

 

 

 

9

 

 

397

 

 

188

 

 

 

Consumer

 

126

 

 

1

 

 

 

 

1

 

 

 

Total loans charged-off

 

2,154

 

 

2,099

 

 

2,556

 

 

2,313

 

 

4,130

 

Net loan charge-offs (recoveries)

 

1,224

 

 

(612

)

 

1,578

 

 

1,230

 

 

3,294

 

Balance, end of period

 

$

167,797

 

 

$

165,021

 

 

$

160,409

 

 

$

154,987

 

 

$

152,717

 

 

 

 

 

 

 

 

 

 

 

 

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

 

0.02

%

 

(0.01

)%

 

0.03

%

 

0.03

%

 

0.08

%

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses to gross loans

 

0.80

%

 

0.82

%

 

0.83

%

 

0.86

%

 

0.86

%

Allowance for credit losses to gross organic loans

 

0.82

 

 

0.85

 

 

0.87

 

 

0.90

 

 

0.92

 

Allowance for credit losses to nonaccrual loans

 

299.81

 

 

327.83

 

 

309.52

 

 

353.15

 

 

550.41

 

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans

 

$

55,968

 

 

$

50,338

 

 

$

51,825

 

 

$

43,887

 

 

$

27,746

 

Nonaccrual loans to gross loans

 

0.27

%

 

0.25

%

 

0.27

%

 

0.24

%

 

0.16

%

Repossessed assets

 

$

13,850

 

 

$

15,483

 

 

$

17,707

 

 

$

17,707

 

 

$

17,924

 

Nonaccrual loans and repossessed assets to total assets

 

0.26

%

 

0.25

%

 

0.27

%

 

0.26

%

 

0.20

%

 

 

 

 

 

 

 

 

 

 

 

Loans past due 90 days, still accruing

 

$

 

 

$

 

 

$

 

 

$

 

 

$

594

 

Loans past due 90 days and still accruing to gross loans

 

%

 

%

 

%

 

%

 

0.00

%

Loans past due 30 to 89 days, still accruing

 

$

14,479

 

 

$

29,502

 

 

$

9,681

 

 

$

20,480

 

 

$

16,557

 

Loans past due 30 to 89 days, still accruing to gross loans

 

0.07

%

 

0.15

%

 

0.05

%

 

0.11

%

 

0.09

%

 

 

 

 

 

 

 

 

 

 

 

Special mention loans

 

$

180,479

 

 

$

233,835

 

 

$

197,996

 

 

$

134,348

 

 

$

88,856

 

Special mention loans to gross loans

 

0.86

%

 

1.16

%

 

1.03

%

 

0.74

%

 

0.50

%

 

 

 

 

 

 

 

 

 

 

 

Classified loans on accrual

 

$

91,286

 

 

$

139,576

 

 

$

131,442

 

 

$

161,620

 

 

$

181,105

 

Classified loans on accrual to gross loans

 

0.43

%

 

0.69

%

 

0.68

%

 

0.89

%

 

1.02

%

Classified assets

 

$

171,246

 

 

$

220,423

 

 

$

216,000

 

 

$

238,241

 

 

$

242,101

 

Classified assets to total assets

 

0.64

%

 

0.84

%

 

0.85

%

 

1.00

%

 

1.05

%

Western Alliance Bancorporation and Subsidiaries

 

 

 

 

 

 

 

 

 

 

Analysis of Average Balances, Yields and Rates

 

 

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

December 31, 2019

 

September 30, 2019

 

 

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 and industrial

 

$

8,927.4

 

 

$

121,110

 

 

5.52

%

 

8,423.0

 

 

$

118,332

 

 

5.72

%

CRE - non-owner occupied

 

5,107.9

 

 

70,982

 

 

5.53

 

 

4,722.2

 

 

69,421

 

 

5.85

 

CRE - owner occupied

 

2,299.2

 

 

30,494

 

 

5.36

 

 

2,259.6

 

 

30,099

 

 

5.38

 

Construction and land development

 

2,076.9

 

 

36,772

 

 

7.05

 

 

2,226.3

 

 

39,177

 

 

7.00

 

Residential real estate

 

2,042.1

 

 

24,394

 

 

4.74

 

 

1,701.6

 

 

20,913

 

 

4.88

 

Consumer

 

63.7

 

 

867

 

 

5.40

 

 

69.5

 

 

990

 

 

5.65

 

Loans held for sale

 

21.8

 

 

352

 

 

6.41

 

 

0.2

 

 

 

 

 

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

 

20,539.0

 

 

284,971

 

 

5.58

 

 

19,402.4

 

 

278,932

 

 

5.79

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

Securities - taxable

 

3,020.2

 

 

18,483

 

 

2.43

 

 

3,073.1

 

 

20,575

 

 

2.66

 

Securities - tax-exempt

 

1,094.6

 

 

9,711

 

 

4.43

 

 

1,062.1

 

 

9,085

 

 

4.30

 

Total securities (1)

 

4,114.8

 

 

28,194

 

 

2.96

 

 

4,135.2

 

 

29,660

 

 

3.08

 

Cash and other

 

493.4

 

 

2,255

 

 

1.81

 

 

1,009.9

 

 

7,016

 

 

2.76

 

Total interest earning assets

 

25,147.2

 

 

315,420

 

 

5.08

 

 

24,547.5

 

 

315,608

 

 

5.20

 

Non-interest earning assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

180.5

 

 

 

 

 

 

346.8

 

 

 

 

 

Allowance for credit losses

 

(166.1

)

 

 

 

 

 

(162.6

)

 

 

 

 

Bank owned life insurance

 

173.4

 

 

 

 

 

 

172.5

 

 

 

 

 

Other assets

 

1,108.6

 

 

 

 

 

 

1,094.2

 

 

 

 

 

Total assets

 

$

26,443.6

 

 

 

 

 

 

$

25,998.4

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing transaction accounts

 

$

2,646.5

 

 

$

4,793

 

 

0.72

%

 

$

2,488.6

 

 

$

5,061

 

 

0.81

%

Savings and money market

 

8,929.8

 

 

22,250

 

 

0.99

 

 

8,456.5

 

 

26,608

 

 

1.25

 

Certificates of deposit

 

2,124.6

 

 

10,331

 

 

1.93

 

 

2,250.4

 

 

11,685

 

 

2.06

 

Total interest-bearing deposits

 

13,700.9

 

 

37,374

 

 

1.08

 

 

13,195.5

 

 

43,354

 

 

1.30

 

Short-term borrowings

 

150.2

 

 

581

 

 

1.53

 

 

17.5

 

 

47

 

 

1.07

 

Qualifying debt

 

390.1

 

 

5,492

 

 

5.59

 

 

387.8

 

 

5,785

 

 

5.92

 

Total interest-bearing liabilities

 

14,241.2

 

 

43,447

 

 

1.21

 

 

13,600.8

 

 

49,186

 

 

1.43

 

Interest cost of funding earning assets

 

 

 

 

 

0.69

 

 

 

 

 

 

0.79

 

Non-interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing demand deposits

 

8,624.5

 

 

 

 

 

 

8,916.6

 

 

 

 

 

Other liabilities

 

590.0

 

 

 

 

 

 

579.6

 

 

 

 

 

Stockholders' equity

 

2,987.9

 

 

 

 

 

 

2,901.4

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

26,443.6

 

 

 

 

 

 

$

25,998.4

 

 

 

 

 

Net interest income and margin (4)

 

 

 

$

271,973

 

 

4.39

%

 

 

 

$

266,422

 

 

4.41

%

(1)

Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $6.4 million for the three months ended December 31, 2019 and September 30, 2019.

(2)

Included in the yield computation are net loan fees of $18.3 million and accretion on acquired loans of $2.5 million for the three months ended December 31, 2019, compared to $13.4 million and $2.7 million for the three months ended September 30, 2019.

(3)

Includes non-accrual loans.

(4)

Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis.

Western Alliance Bancorporation and Subsidiaries

 

 

 

 

 

 

 

 

Analysis of Average Balances, Yields and Rates

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

December 31, 2019

 

December 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 and industrial

 

$

8,927.4

 

 

$

121,110

 

 

5.52

%

 

$

7,490.4

 

 

$

107,321

 

 

5.84

%

CRE - non-owner occupied

 

5,107.9

 

 

70,982

 

 

5.53

 

 

3,921.3

 

 

59,711

 

 

6.05

 

CRE - owner occupied

 

2,299.2

 

 

30,494

 

 

5.36

 

 

2,308.3

 

 

30,695

 

 

5.38

 

Construction and land development

 

2,076.9

 

 

36,772

 

 

7.05

 

 

2,133.5

 

 

38,082

 

 

7.09

 

Residential real estate

 

2,042.1

 

 

24,394

 

 

4.74

 

 

943.3

 

 

11,187

 

 

4.71

 

Consumer

 

63.7

 

 

867

 

 

5.40

 

 

58.5

 

 

878

 

 

5.96

 

Loans held for sale

 

21.8

 

 

352

 

 

6.41

 

 

 

 

 

 

 

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

 

20,539.0

 

 

284,971

 

 

5.58

 

 

16,855.3

 

 

247,874

 

 

5.92

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

Securities - taxable

 

3,020.2

 

 

18,483

 

 

2.43

 

 

2,798.1

 

 

20,930

 

 

2.97

 

Securities - tax-exempt

 

1,094.6

 

 

9,711

 

 

4.43

 

 

957.4

 

 

9,437

 

 

4.89

 

Total securities (1)

 

4,114.8

 

 

28,194

 

 

2.96

 

 

3,755.5

 

 

30,367

 

 

3.46

 

Cash and other

 

493.4

 

 

2,255

 

 

1.81

 

 

562.3

 

 

3,727

 

 

2.63

 

Total interest earning assets

 

25,147.2

 

 

315,420

 

 

5.08

 

 

21,173.1

 

 

281,968

 

 

5.40

 

Non-interest earning assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

180.5

 

 

 

 

 

 

149.6

 

 

 

 

 

Allowance for credit losses

 

(166.1

)

 

 

 

 

 

(150.2

)

 

 

 

 

Bank owned life insurance

 

173.4

 

 

 

 

 

 

169.5

 

 

 

 

 

Other assets

 

1,108.6

 

 

 

 

 

 

1,052.0

 

 

 

 

 

Total assets

 

$

26,443.6

 

 

 

 

 

 

$

22,394.0

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing transaction accounts

 

$

2,646.5

 

 

$

4,793

 

 

0.72

%

 

$