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Western Alliance Bancorporation$44.90$.34.76%

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 Western Alliance Bancorporation Reports First Quarter 2019 Financial Results
   Monday, April 22, 2019 5:28:00 PM ET

PHOENIX--(BUSINESS WIRE)-- Western Alliance Bancorporation (NYSE:WAL):

Net income         Earnings per share         Net interest margin2         Efficiency ratio         Book value per
common share
$120.8 million $1.16 4.71% 42.0% $26.04
 


CEO COMMENTARY:

"Western Alliance is off to a solid start to the year continuing its momentum from 2018, with $120.8 million in net income and $1.16 EPS, representing an increase of 19.7% and 20.8%, respectively, over the first quarter 2018,” commented Kenneth Vecchione, Chief Executive Officer. “Deposit growth for the quarter of $1 billion brought deposits to over $20 billion and outpaced loan growth of $406 million to $18 billion at quarter-end, while net interest margin2 expanded three basis points to 4.71%. Asset quality remains stable with a net charge-off rate2 of 0.03% and non-performing assets to total assets ratio of 0.26%. Our return on average assets2 and tangible common equity1,2 again surpassed industry averages at 2.12% and 20.49% and, with this quarter’s strong balance sheet growth, Western Alliance is well-positioned for another great year.”

         
LINKED-QUARTER BASIS      

YEAR-OVER-YEAR

     

FINANCIAL HIGHLIGHTS:

 
  • Net income and earnings per share of $120.8 million and $1.16 compared to $119.1 million and $1.13, respectively
  • Net income of $120.8 million and earnings per share of $1.16, up 19.7% and 20.8%, respectively

 

  • Net operating revenue1 of $259.9 million, an increase of 0.7%, or $1.7 million, compared to an increase in operating non-interest expenses1 of 2.9%, or $3.2 million
  • Net operating revenue1 of $259.9 million, an increase of 14.5%, or $33.0 million, compared to an increase in operating non-interest expenses1 of 13.5%, or $13.4 million
  • Operating pre-provision net revenue1 of $147.1 million, down $1.4 million from $148.5 million

 

  • Operating pre-provision net revenue1 of $147.1 million, up $19.5 million from $127.6 million

 

  • Effective tax rate of 17.45%, compared to 14.94%
  • Effective tax rate of 17.45%, compared to 17.10%
 

FINANCIAL POSITION RESULTS:

 
  • Total loans of $18.12 billion, up $406 million
  • Increase in total loans of $2.56 billion, or 16.4%
  • Total deposits of $20.21 billion, up $1.03 billion
  • Increase in total deposits of $2.85 billion, or 16.4%

 

  • Stockholders' equity of $2.72 billion, up $107 million
  • Increase in stockholders' equity of $427 million
 

LOANS AND ASSET QUALITY:

 
  • Nonperforming assets (nonaccrual loans and repossessed assets) to total assets of 0.26%, compared to 0.20%
  • Nonperforming assets to total assets of 0.26%, compared to 0.33%

 

  • Annualized net loan charge-offs2 to average loans outstanding of 0.03% compared to 0.08%

 

  • Annualized net loan charge-offs2 to average loans outstanding of 0.03%, compared to 0.04%
 

KEY PERFORMANCE METRICS:

 
  • Net interest margin2 of 4.71% compared to 4.68%

 

  • Tangible book value per share1, net of tax, of $23.20, an increase from $22.07

 

  • Return on average assets2 and on tangible common equity1,2 of 2.12% and 20.49%, compared to 2.13% and 21.10%, respectively
  • Operating efficiency ratio1 of 42.4% compared to 41.5%1
  • Tangible common equity ratio1 of 10.3%, compared to 10.2%

 

  • Net interest margin2 of 4.71%, compared to 4.66%

 

  • Return on average assets2 and on tangible common equity1,2 of 2.12% and 20.49%, compared to 2.02% and 20.74%, respectively

 

  • Tangible book value per share1, net of tax, of $23.20, an increase of 23.0% from $18.86
  • Tangible common equity ratio1 of 10.3%, compared to 9.8%

 

  • Operating efficiency ratio1 of 42.4%, compared to 42.7%1

 

 

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 $247.3 million in the first quarter 2019, an increase of $3.8 million from $243.5 million in the fourth quarter 2018, and an increase of $33.1 million, or 15.5%, compared to the first quarter 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 first quarter 2019 includes $2.8 million of total accretion income from acquired loans, compared to $4.5 million in the fourth quarter 2018, and $5.7 million in the first quarter 2018.

The Company’s net interest margin in the first quarter 2019 was 4.71%, an increase from 4.68% in the fourth quarter 2018, and from 4.66% in the first quarter 2018.

Operating non-interest income was $12.6 million for the first quarter 2019, compared to $14.7 million for the fourth quarter 2018, and $12.7 million for the first quarter 2018.1 The decrease in operating non-interest income from the fourth quarter 2018 primarily relates to a decrease in income from warrants.

Net operating revenue was $259.9 million for the first quarter 2019, an increase of $1.7 million, compared to $258.2 million for the fourth quarter 2018, and an increase of $33.0 million, or 14.5%, compared to $226.9 million for the first quarter 2018.1

Operating non-interest expense was $112.8 million for the first quarter 2019, compared to $109.6 million for the fourth quarter 2018, and $99.4 million for the first quarter 2018.1 The Company’s operating efficiency ratio1 was 42.4% for the first quarter 2019, an increase from 41.5% in the fourth quarter 2018, and a decrease from 42.7% for the first quarter 2018.

Income tax expense was $25.5 million for the first quarter 2019, compared to $20.9 million for the fourth quarter 2018, and $20.8 million for the first quarter 2018.

Net income was $120.8 million for the first quarter 2019, an increase of $1.7 million from $119.1 million for the fourth quarter 2018, and an increase of $19.9 million, or 19.7%, from $100.9 million for the first quarter 2018. Earnings per share was $1.16 for the first quarter 2019, compared to $1.13 for the fourth quarter 2018, and $0.96 for the first quarter 2018.

The Company views its operating pre-provision net revenue ("PPNR") as a key metric for assessing the Company’s earnings power, which it defines as net operating revenue less operating non-interest expense. For the first quarter 2019, the Company’s operating PPNR was $147.1 million, down $1.4 million from $148.5 million in the fourth quarter 2018, and up 15.3% from $127.6 million in the first quarter 2018.1 The non-operating income item1 for the first quarter 2019 consisted of net unrealized gains on assets measured at fair value of $2.8 million. The non-operating expense item1 for the first quarter 2019 consisted of a net loss on sales and valuations of repossessed and other assets of $0.1 million.

The Company had 1,773 full-time equivalent employees and 47 offices at March 31, 2019, compared to 1,787 employees and 47 offices at December 31, 2018, and 1,713 employees and 47 offices at March 31, 2018.

1 See reconciliation of Non-GAAP Financial Measures.

Balance Sheet

Gross loans totaled $18.12 billion at March 31, 2019, an increase of $406 million from $17.71 billion at December 31, 2018, and an increase of $2.56 billion from $15.56 billion at March 31, 2018. The increase from the prior quarter was driven by an increase of $257 million in residential real estate loans, $149 million in construction and land development loans, and $91 million in CRE, non-owner occupied loans. These increases were partially offset by a decrease of $40 million in CRE, owner occupied and a decrease of $39 million in commercial and industrial loans. From March 31, 2018, loans increased across all loan types, with the largest increases in residential real estate loans of $1.04 billion, commercial and industrial loans of $779 million, CRE, non-owner occupied loans of $379 million, and construction and land development loans of $326 million. At March 31, 2019 and December 31, 2018, the allowance for credit losses to gross loans held for investment was 0.86%, compared to 0.93% at March 31, 2018. At March 31, 2019, the allowance for credit losses to total organic loans was 0.90%, compared to 0.92% at December 31, 2018, and 1.02% at March 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.

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 $13.1 million at March 31, 2019, compared to $14.6 million at December 31, 2018, and $23.1 million at March 31, 2018.

Deposits totaled $20.21 billion at March 31, 2019, an increase of $1.03 billion from $19.18 billion at December 31, 2018, and an increase of $2.85 billion from $17.35 billion at March 31, 2018. The increase from the prior quarter was driven by an increase of $468 million from savings and money market accounts, $396 million from time certificates, and $223 million in non-interest bearing demand deposits. From March 31, 2018, deposits increased across all deposit types, with the largest increases in savings and money market accounts of $1.48 billion, interest-bearing demand deposits of $724 million, certificates of deposit of $470 million, and non-interest bearing demand deposits of $177 million. Non-interest bearing deposits were $7.68 billion at March 31, 2019, compared to $7.46 billion at December 31, 2018, and $7.50 billion at March 31, 2018. Non-interest bearing deposits comprised 38.0% of total deposits at March 31, 2019, compared to 38.9% at December 31, 2018, and 43.2% at March 31, 2018. The proportion of savings and money market balances to total deposits was 38.6%, compared to 38.2% at December 31, 2018, and 36.4% at March 31, 2018. Interest-bearing demand deposits as a percentage of total deposits were 12.4% at March 31, 2019, compared to 13.3% at December 31, 2018, and 10.2% at March 31, 2018. Certificates of deposit as a percentage of total deposits were 11.0% at March 31, 2019, compared to 9.6% at December 31, 2018, and 10.1% at March 31, 2018. The Company’s ratio of loans to deposits was 89.6% at March 31, 2019, compared to 92.4% at December 31, 2018, and 89.7% at March 31, 2018.

Borrowings were zero at March 31, 2019, compared to $491 million at December 31, 2018, and $300 million at March 31, 2018. The decrease in borrowings from December 31, 2018 to March 31, 2019 is due to a reduction in overnight borrowings.

Qualifying debt totaled $374 million at March 31, 2019, compared to $361 million at December 31, 2018, and $364 million at March 31, 2018.

Stockholders’ equity at March 31, 2019 was $2.72 billion, compared to $2.61 billion at December 31, 2018, and $2.29 billion at March 31, 2018. The increase in stockholders' equity from December 31, 2018 and March 31, 2018 is primarily a function of net income, partially offset by share repurchases. Under the Company's common stock repurchase program, the Company is authorized to repurchase up to $250 million of its shares of common stock. During the first quarter 2019, the Company repurchased 940,915 shares of its common stock, representing approximately 1% of the Company's outstanding shares. Shares were repurchased at a weighted average price of $40.30, for a total payment of $37.9 million.

At March 31, 2019, tangible common equity, net of tax, was 10.3% of tangible assets1 and total capital was 13.2% of risk-weighted assets. The Company’s tangible book value per share1 was $23.20 at March 31, 2019, up 23.0% from March 31, 2018.

Total assets increased 3.0% to $23.79 billion at March 31, 2019, from $23.11 billion at December 31, 2018, and increased 14.6% from $20.76 billion at March 31, 2018. The increase in total assets from the prior year relates primarily to organic loan growth.

Asset Quality

The provision for credit losses was $3.5 million for the first quarter 2019, compared to $6.0 million for both the first and fourth quarter 2018. Net loan charge-offs2 in the first quarter 2019 were $1.2 million, or 0.03% of average loans (annualized), compared to $3.3 million, or 0.08%, in the fourth quarter 2018, and $1.4 million, or 0.04%, in the first quarter 2018.

Nonaccrual loans increased $16.1 million to $43.9 million during the quarter and increased $6.6 million from March 31, 2018. Loans past due 90 days and still accruing were zero at March 31, 2019, compared to $0.6 million at December 31, 2018, and less than $0.1 million at March 31, 2018. Loans past due 30-89 days and still accruing interest totaled $20.5 million at March 31, 2019, an increase from $16.6 million at December 31, 2018, and an increase from $6.5 million at March 31, 2018.

Repossessed assets totaled $17.7 million at March 31, 2019, a decrease of $0.2 million from $17.9 million at December 31, 2018, and a decrease of $12.5 million from $30.2 million at March 31, 2018. Adversely graded loans and non-performing assets totaled $357.6 million at March 31, 2019, an increase of $41.9 million from $315.6 million at December 31, 2018, and a decrease of $21.2 million from $378.7 million at March 31, 2018.

The ratio of classified assets to Tier 1 capital plus the allowance for credit losses, a common regulatory measure of asset quality, was 8.9% at March 31, 2019, compared to 9.4% at December 31, 2018, and 9.4% at March 31, 2018.1

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 $9.17 billion at March 31, 2019, an increase of $58 million during the quarter, and an increase of $593 million during the last twelve months. The growth in loans during the quarter was driven by increases in the Southern California and Nevada segments, with loan growth of $89 million and $66 million, respectively. These increases were partially offset by a decrease of $103 million in the Northern California segment. All regional segments contributed to the growth in loans during the last twelve months. The largest increases were in the Nevada, Southern California, and Arizona segments, with loan growth of $250 million, $236 million, and $181 million, respectively. Total deposits for the regional segments were $14.13 billion, an increase of $856 million during the quarter, and an increase of $1.22 billion during the last twelve months. The increase in deposits during the quarter was driven by the Southern California, Arizona, and Northern California segments, with deposit growth of $446 million, $230 million, and $170 million, respectively. During the last twelve months, the Southern California, Nevada, Arizona, and Northern California segments had increases in deposits of $370 million, $359 million, $299 million, and $194 million, respectively

Pre-tax income for the regional segments was $88.3 million for the three months ended March 31, 2019, an increase of $1.6 million from the three months ended December 31, 2018, and an increase of $2.5 million from the three months ended March 31, 2018. The Arizona and Southern California segments had increases in pre-tax income of $1.6 million and $0.4 million, respectively, partially offset by decrease of $0.5 million in the Northern California segment, compared to the three months ended December 31, 2018. The Southern California, Northern California, and Arizona segments had the largest increases in pre-tax income from the three months ended March 31, 2018 of $1.7 million, $1.7 million, and $1.3 million, respectively, partially offset by a decrease of $2.3 million in the Nevada segment.

The NBL segments reported gross loan balances of $8.94 billion at March 31, 2019, an increase of $349 million during the quarter, and an increase of $1.96 billion during the last twelve months. The increase in loans from the prior quarter was driven by the Other NBLs and HFF segments, which had loan growth of $394 million and $85 million, respectively, partially offset by a decrease of $144 million in the Technology & Innovation segment. During the last twelve months, the largest drivers of loan growth were the Other NBLs and HFF segments, with increases of $1.82 billion, $186 million, respectively, partially offset by a decrease of $112 million in the Technology & Innovation segment. Total deposits for the NBL segments were $5.37 billion, an increase of $207 million during the quarter, and an increase of $1.16 billion during the last twelve months. The increase in deposits from the prior quarter is primarily attributable to the HOA Services segment, which increased deposits by $356 million, partially offset by a decrease of $154 million in the Technology & Innovation segment. The increase of $1.16 billion during the last twelve months is a result of growth in both the Technology & Innovation and HOA Services segments of $671 million and $488 million, respectively.

Pre-tax income for the NBL segments was $59.4 million for the three months ended March 31, 2019, an increase of $3.8 million from the three months ended December 31, 2018, and an increase of $12.8 million from the three months ended March 31, 2018. The increase in pre-tax income from the prior quarter relates to the Other NBLs and HOA Services segments, which increased by $4.0 million and $2.7 million, respectively. These increases were partially offset by decreases in pre-tax income from the Technology & Innovation, Public & Nonprofit Finance, and HFF segments, which had decreases of $1.4 million, $1.0 million, and $0.5 million, respectively. The drivers of the increase in pre-tax income from the same period in the prior year were the Technology & Innovation, HOA Services, and Other NBLs segments, which had increases of $7.4 million, $4.6 million, and $1.9 million, respectively. These increases were partially offset by decreases in pre-tax income for the HFF and Public & Nonprofit Finance segments, which decreased by $1.0 million and $0.2 million, respectively.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live webcast to discuss its first quarter 2019 financial results at 12:00 p.m. ET on Tuesday, April 23, 2019. Participants may access the call by dialing 1-888-317-6003 and using passcode 1255245 or via live audio webcast using the website link . The webcast is also available via the Company’s website at . Participants should log in at least 15 minutes early to receive instructions. The call will be recorded and made available for replay after 2:00 p.m. ET April 23rd through 9:00 a.m. ET May 23rd by dialing 1-877-344-7529 passcode: 10130331.

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, 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, 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; 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 has ranked 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 March 31,
2019 2018

Change %

(in millions)
Total assets $ 23,792.8 $ 20,760.7 14.6 %
Gross loans, net of deferred fees 18,116.7 15,560.4 16.4
Securities and money market investments 3,739.4 3,734.3 0.1
Total deposits 20,208.7 17,354.5 16.4
Qualifying debt 374.0 363.9 2.8
Stockholders' equity 2,720.6 2,293.7 18.6
Tangible common equity, net of tax (1) 2,424.0 1,996.2 21.4
 
 
Selected Income Statement Data:
For the Three Months Ended March 31,
2019 2018

Change %

(in thousands, except per share data)
Interest income $ 291,168 $ 234,697 24.1 %
Interest expense 43,832   20,477   114.1
Net interest income 247,336 214,220 15.5
Provision for credit losses 3,500   6,000   (41.7 )
Net interest income after provision for credit losses 243,836 208,220 17.1
Non-interest income 15,410 11,643 32.4
Non-interest expense 112,914   98,149   15.0
Income before income taxes 146,332 121,714 20.2
Income tax expense 25,536   20,814   22.7
Net income $ 120,796   $ 100,900   19.7
Diluted earnings per share $ 1.16   $ 0.96   20.8

(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 March 31,
2019 2018

Change %

Diluted earnings per share $ 1.16 $ 0.96 20.8 %
Book value per common share 26.04 21.67 20.2
Tangible book value per share, net of tax (1) 23.20 18.86 23.0
Average shares outstanding
(in thousands):
Basic 104,033 104,530 (0.5 )
Diluted 104,475 105,324 (0.8 )
Common shares outstanding 104,483 105,861 (1.3 )
 
Selected Performance Ratios:
Return on average assets (2) 2.12 % 2.02 % 5.0 %
Return on average tangible common equity (1, 2) 20.49 20.74 (1.2 )
Net interest margin (2) 4.71 4.66 1.1
Operating efficiency ratio - tax equivalent basis (1) 42.4 42.7 (0.7 )
Loan to deposit ratio 89.65 89.66 0.0
 
Asset Quality Ratios:
Net charge-offs to average loans outstanding (2) 0.03 % 0.04 % (25.0

)%

Nonaccrual loans to gross loans 0.24 0.24
Nonaccrual loans and repossessed assets to total assets 0.26 0.33 (21.2 )
Allowance for credit losses to gross loans 0.86 0.93 (7.5 )
Allowance for credit losses to nonaccrual loans 353.15 387.86 (8.9 )
 

Capital Ratios (1):

Mar 31, 2019 Dec 31, 2018 Mar 31, 2018
Tangible common equity (1) 10.3 % 10.2 % 9.8 %
Common Equity Tier 1 (1), (3) 10.7 10.7 10.5
Tier 1 Leverage ratio (1), (3) 11.0 10.9 10.5
Tier 1 Capital (1), (3) 11.1 11.1 10.9
Total Capital (1), (3) 13.2 13.2 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 March 31, 2019 are preliminary until the Call Report is filed.
   
Western Alliance Bancorporation and Subsidiaries
Condensed Consolidated Income Statements
Unaudited
Three Months Ended March 31,
2019 2018
(dollars in thousands, except per share data)
Interest income:
Loans $ 258,818 $ 205,959
Investment securities 29,134 26,621
Other 3,216   2,117  
Total interest income 291,168   234,697  
Interest expense:
Deposits 35,788 14,173
Qualifying debt 6,105 4,969
Borrowings 1,939   1,335  
Total interest expense 43,832   20,477  
Net interest income 247,336 214,220
Provision for credit losses 3,500   6,000  
Net interest income after provision for credit losses 243,836   208,220  
Non-interest income:
Service charges and fees 5,412 5,745
Income from equity investments 2,009 1,460
Card income 1,841 1,972
Foreign currency income 1,095 1,202
Income from bank owned life insurance 981 928
Lending related income and gains (losses) on sale of loans, net 251 978
Unrealized gains (losses) on assets measured at fair value, net 2,834 (1,074 )
Other 987   432  
Total non-interest income 15,410   11,643  
Non-interest expenses:
Salaries and employee benefits 68,556 62,133
Occupancy 8,227 6,864
Legal, professional, and directors' fees 7,532 6,003
Data processing 6,332 5,207
Deposit costs 5,724 2,926
Insurance 2,809 3,869
Business development 2,085 1,728
Loan and repossessed asset expenses 2,006 583
Marketing 741 596
Card expense 634 942
Intangible amortization 387 398
Net loss (gain) on sales and valuations of repossessed and other assets 97 (1,228 )
Other 7,784   8,128  
Total non-interest expense 112,914   98,149  
Income before income taxes 146,332 121,714
Income tax expense 25,536   20,814  
Net income $ 120,796   $ 100,900  
 
Earnings per share:
Diluted shares 104,475 105,324
Diluted earnings per share $ 1.16 $ 0.96
 
Western Alliance Bancorporation and Subsidiaries        
Five Quarter Condensed Consolidated Income Statements
Unaudited  
Three Months Ended
Mar 31, 2019 Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018
(in thousands, except per share data)
Interest income:
Loans $ 258,818 $ 247,874 $ 234,709 $ 222,035 $ 205,959
Investment securities 29,134 30,367 27,239 27,445 26,621
Other 3,216   3,727   3,268   2,122   2,117  
Total interest income 291,168   281,968   265,216   251,602   234,697  
Interest expense:
Deposits 35,788 31,176 25,266 19,849 14,173
Qualifying debt 6,105 5,829 5,794 5,695 4,969
Borrowings 1,939   1,450   118   1,950   1,335  
Total interest expense 43,832   38,455   31,178   27,494   20,477  
Net interest income 247,336 243,513 234,038 224,108 214,220
Provision for credit losses 3,500   6,000   6,000   5,000   6,000  
Net interest income after provision for credit losses 243,836   237,513   228,038   219,108   208,220  
Non-interest income:
Service charges and fees 5,412 5,611 5,267 5,672 5,745
Income from equity investments 2,009 3,178 1,440 2,517 1,460
Card income 1,841 1,866 2,138 2,033 1,972
Foreign currency income 1,095 1,285 1,092 1,181 1,202
Income from bank owned life insurance 981 983 868 1,167 928
Lending related income and gains (losses) on sale of loans, net 251 893 1,422 1,047 978
(Loss) gain on sales of investment securities, net (424 ) (7,232 )
Unrealized gains (losses) on assets measured at fair value, net 2,834 (640 ) (1,212 ) (685 ) (1,074 )
Other 987   859   635   512   432  
Total non-interest income 15,410   13,611   4,418   13,444   11,643  
Non-interest expenses:
Salaries and employee benefits 68,556 64,558 64,762 61,785 62,133
Occupancy 8,227 7,733 7,406 7,401 6,864
Legal, professional, and directors' fees 7,532 6,866 7,907 7,946 6,003
Data processing 6,332 6,028 5,895 5,586 5,207
Deposit costs 5,724 7,012 4,848 4,114 2,926
Insurance 2,809 2,539 3,712 3,885 3,869
Business development 2,085 1,437 1,381 1,414 1,728
Loan and repossessed asset expenses 2,006 1,748 1,230 1,017 583
Marketing 741 1,341 687 1,146 596
Card expense 634 996 1,282 1,081 942
Intangible amortization 387 399 398 399 398
Net loss (gain) on sales and valuations of repossessed and other assets 97 1,483 (67 ) (179 ) (1,228 )
Other 7,784   8,989   14,400   6,953   8,128  
Total non-interest expense 112,914   111,129   113,841   102,548   98,149  
Income before income taxes 146,332 139,995 118,615 130,004 121,714
Income tax expense 25,536   20,909   7,492   25,325   20,814  
Net income $ 120,796   $ 119,086   $ 111,123   $ 104,679   $ 100,900  
 
Earnings per share:
Diluted shares 104,475 105,286 105,448 105,420 105,324
Diluted earnings per share $ 1.16 $ 1.13 $ 1.05 $ 0.99 $ 0.96
 
Western Alliance Bancorporation and Subsidiaries          
Five Quarter Condensed Consolidated Balance Sheets
Unaudited
Mar 31, 2019 Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018
(in millions)
Assets:
Cash and due from banks $ 785.6 $ 498.6 $ 700.5 $ 506.8 $ 439.4
Securities and money market investments 3,739.4 3,761.1 3,633.7 3,688.7 3,734.3
Loans held for investment:
Commercial and industrial 7,723.7 7,762.6 7,487.7 7,278.4 6,944.4
Commercial real estate - non-owner occupied 4,304.3 4,213.4 3,953.0 4,010.6 3,925.3
Commercial real estate - owner occupied 2,285.3 2,325.4 2,288.2 2,270.5 2,264.6
Construction and land development 2,283.5 2,134.7 2,107.6 1,978.3 1,957.5
Residential real estate 1,461.5 1,204.4 827.1 545.3 418.1
Consumer 58.4   70.1   69.2   55.2   50.5  
Gross loans, net of deferred fees 18,116.7 17,710.6 16,732.8 16,138.3 15,560.4
Allowance for credit losses (155.0 ) (152.7 ) (150.0 ) (147.1 ) (144.7 )
Loans, net 17,961.7   17,557.9   16,582.8   15,991.2   15,415.7  
Premises and equipment, net 119.8 119.5 119.2 115.4 116.7
Operating lease right-of-use asset (1) 72.8
Other assets acquired through foreclosure, net 17.7 17.9 20.0 27.5 30.2
Bank owned life insurance 171.1 170.1 169.2 168.7 168.6
Goodwill and other intangibles, net 298.8 299.2 299.5 300.0 300.4
Other assets 625.9   685.2   651.2   569.2   555.4  
Total assets $ 23,792.8   $ 23,109.5   $ 22,176.1   $ 21,367.5   $ 20,760.7  
Liabilities and Stockholders' Equity:
Liabilities:
Deposits
Non-interest bearing demand deposits $ 7,679.3 $ 7,456.1 $ 8,014.7 $ 7,947.9 $ 7,502.0
Interest bearing:
Demand 2,499.8 2,555.6 1,978.4 1,864.6 1,776.3
Savings and money market 7,798.3 7,330.7 7,059.1 6,468.8 6,314.9
Time certificates 2,231.3   1,835.0   1,856.4   1,806.2   1,761.3  
Total deposits 20,208.7 19,177.4 18,908.6 18,087.5 17,354.5
Customer repurchase agreements 15.1   22.4   20.9   18.0   21.7  
Total customer funds 20,223.8 19,199.8 18,929.5 18,105.5 17,376.2
Borrowings 491.0 75.0 300.0
Qualifying debt 374.0 360.5 359.1 361.1 363.9
Operating lease liability (1) 77.8
Accrued interest payable and other liabilities 396.6   444.5   399.1   434.2   426.9  
Total liabilities 21,072.2   20,495.8   19,687.7   18,975.8   18,467.0  
Stockholders' Equity:
Common stock and additional paid-in capital 1,329.6 1,364.6 1,392.6 1,387.9 1,385.0
Retained earnings 1,399.2 1,282.7 1,166.2 1,055.1 950.4
Accumulated other comprehensive (loss) income (8.2 ) (33.6 ) (70.4 ) (51.3 ) (41.7 )
Total stockholders' equity 2,720.6   2,613.7   2,488.4   2,391.7   2,293.7  
Total liabilities and stockholders' equity $ 23,792.8   $ 23,109.5   $ 22,176.1   $ 21,367.5   $ 20,760.7  

(1) Refer to Adoption of Accounting Standards for further discussion.

         
Western Alliance Bancorporation and Subsidiaries
Changes in the Allowance For Credit Losses
Unaudited
Three Months Ended
Mar 31, 2019 Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018
(in thousands)
Balance, beginning of period $ 152,717 $ 150,011 $ 147,083 $ 144,659 $ 140,050
Provision for credit losses 3,500 6,000 6,000 5,000 6,000
Recoveries of loans previously charged-off:
Commercial and industrial 477 690 362 916 459
Commercial real estate - non-owner occupied 804 15 105
Commercial real estate - owner occupied 453 9 52 231 21
Construction and land development 55 13 24 8 1,388
Residential real estate 93 116 440 141 250
Consumer 5   8   11   14   10  
Total recoveries 1,083 836 1,693 1,325 2,233
Loans charged-off:
Commercial and industrial 2,124 4,130 4,610 2,777 3,517
Commercial real estate - non-owner occupied 233
Commercial real estate - owner occupied
Construction and land development 1
Residential real estate 188 46 885 107
Consumer 1     109   5    
Total loans charged-off 2,313 4,130 4,765 3,901 3,624
Net loan charge-offs 1,230   3,294   3,072   2,576   1,391  
Balance, end of period $ 154,987   $ 152,717   $ 150,011   $ 147,083   $ 144,659  
 
Net charge-offs to average loans - annualized 0.03 % 0.08 % 0.08 % 0.07 % 0.04 %
 
Allowance for credit losses to gross loans 0.86 % 0.86 % 0.90 % 0.91 % 0.93 %
Allowance for credit losses to gross organic loans 0.90 0.92 0.97 0.99 1.02
Allowance for credit losses to nonaccrual loans 353.15 550.41 406.89 432.38 387.86
 
Nonaccrual loans $ 43,887 $ 27,746 $ 36,868 $ 34,017 $ 37,297
Nonaccrual loans to gross loans 0.24 % 0.16 % 0.22 % 0.21 % 0.24 %
Repossessed assets $ 17,707 $ 17,924 $ 20,028 $ 27,541 $ 30,194
Nonaccrual loans and repossessed assets to total assets 0.26 % 0.20 % 0.26 % 0.29 % 0.33 %
 
Loans past due 90 days, still accruing $ $ 594 $ $ $ 37
Loans past due 90 days and still accruing to gross loans % 0.00 % % % 0.00 %
Loans past due 30 to 89 days, still accruing $ 20,480 $ 16,557 $ 9,360 $ 1,545 $ 6,479
Loans past due 30 to 89 days, still accruing to gross loans 0.11 % 0.09 % 0.06 % 0.01 % 0.04 %
 
Special mention loans $ 134,348 $ 88,856 $ 124,689 $ 150,278 $ 184,702
Special mention loans to gross loans 0.74 % 0.50 % 0.75 % 0.93 % 1.19 %
 
Classified loans on accrual $ 161,620 $ 181,105 $ 176,727 $ 156,659 $ 126,538
Classified loans on accrual to gross loans 0.89 % 1.02 % 1.06 % 0.97 % 0.81 %
Classified assets $ 238,241 $ 242,101 $ 252,770 $ 240,063 $ 213,482
Classified assets to total assets 1.00 % 1.05 % 1.14 % 1.12 % 1.03 %
 
Western Alliance Bancorporation and Subsidiaries          
Analysis of Average Balances, Yields and Rates
Unaudited  
Three Months Ended
March 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 $ 7,538.7 $ 109,089 6.03 % $ 7,490.4 $ 107,321 5.84 %
CRE - non-owner occupied 4,211.1 62,441 6.03 3,921.3 59,711 6.05
CRE - owner occupied 2,327.5 30,084 5.35 2,308.3 30,695 5.38
Construction and land development 2,178.3 39,704 7.41 2,133.5 38,082 7.09
Residential real estate 1,391.1 16,567 4.83 943.3 11,187 4.71
Consumer 62.4   933   6.07   58.5   878   5.95  
Total loans (1), (2), (3) 17,709.1 258,818 6.02 16,855.3 247,874 5.92
Securities:
Securities - taxable 2,762.6 20,336 2.99 2,798.1 20,930 2.97
Securities - tax-exempt 895.6   8,798   4.98   957.4   9,437   4.89  
Total securities (1) 3,658.2 29,134 3.47 3,755.5 30,367 3.46
Cash and other 450.8   3,216   2.89   562.3   3,727   2.63  
Total interest earning assets 21,818.1 291,168 5.53 21,173.1 281,968 5.40
Non-interest earning assets
Cash and due from banks 162.2 149.6
Allowance for credit losses (154.2 ) (150.2 )
Bank owned life insurance 170.5 169.5
Other assets 1,112.9   1,052.0  
Total assets $ 23,109.5   $ 22,394.0  
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts $ 2,495.9 $ 5,583 0.91 % $ 2,141.1 $ 4,588 0.85 %
Savings and money market 7,446.6 22,007 1.20 7,061.7 18,832 1.06
Time certificates of deposit 1,817.8   8,198   1.83   1,832.2   7,756   1.68  
Total interest-bearing deposits 11,760.3 35,788 1.23 11,035.0 31,176 1.12
Short-term borrowings 315.8 1,939 2.49 253.0 1,450 2.27
Qualifying debt 363.0   6,105   6.82   359.0   5,829   6.44  
Total interest-bearing liabilities 12,439.1 43,832 1.43 11,647.0 38,455 1.31
Interest cost of funding earning assets 0.82 0.72
Non-interest-bearing liabilities
Non-interest-bearing demand deposits 7,555.6 7,812.8
Other liabilities 425.0 376.9
Stockholders’ equity 2,689.8   2,557.3  
Total liabilities and stockholders' equity $ 23,109.5   $ 22,394.0  
Net interest income and margin (4) $ 247,336   4.71 % $ 243,513   4.68 %
(1)   Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $6.1 million for each of the three months ended March 31, 2019 and December 31, 2018.
(2) Included in the yield computation are net loan fees of $12.3 million and accretion on acquired loans of $2.8 million for the three months ended March 31, 2019, compared to $11.3 million and $4.5 million for the three months ended December 31, 2018.
(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
March 31, 2019 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 and industrial $ 7,538.7 $ 109,089 6.03 % $ 6,580.9 $ 85,547 5.46 %
CRE - non-owner occupied 4,211.1 62,441 6.03 3,920.8 56,285 5.84
CRE - owner occupied 2,327.5 30,084 5.35 2,241.8 28,551 5.28
Construction and land development 2,178.3 39,704 7.41 1,789.4 29,619 6.72
Residential real estate 1,391.1 16,567 4.83 425.3 5,280 5.03
Consumer 62.4   933   6.07   47.9   677   5.73  
Total loans (1), (2), (3) 17,709.1 258,818 6.02 15,006.1 205,959 5.67
Securities:
Securities - taxable 2,762.6 20,336 2.99 2,875.3 19,149 2.70
Securities - tax-exempt 895.6   8,798   4.98   836.9   7,472   4.53  
Total securities (1) 3,658.2 29,134 3.47 3,712.2 26,621 3.11
Cash and other 450.8   3,216   2.89   425.7   2,117   2.02  
Total interest earning assets 21,818.1 291,168 5.53 19,144.0 234,697 5.09
Non-interest earning assets
Cash and due from banks 162.2 142.3
Allowance for credit losses (154.2 ) (141.0 )
Bank owned life insurance 170.5 168.1
Other assets 1,112.9   990.8  
Total assets $ 23,109.5   $ 20,304.2  
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts $ 2,495.9 $ 5,583 0.91 % $ 1,654.7 $ 1,380 0.34 %
Savings and money market 7,446.6 22,007 1.20 6,226.7 8,915 0.58
Time certificates of deposit 1,817.8   8,198   1.83   1,579.9   3,878   1.00  
Total interest-bearing deposits 11,760.3 35,788 1.23 9,461.3 14,173 0.61
Short-term borrowings 315.8 1,939 2.49 351.6 1,335 1.54
Qualifying debt 363.0   6,105   6.82   368.8   4,969   5.46  
Total interest-bearing liabilities 12,439.1 43,832 1.43 10,181.7 20,477 0.82
Interest cost of funding earning assets 0.82 0.43
Non-interest-bearing liabilities
Non-interest-bearing demand deposits 7,555.6 7,510.6
Other liabilities 425.0 338.5
Stockholders’ equity 2,689.8   2,273.4  
Total liabilities and stockholders' equity $ 23,109.5   $ 20,304.2  
Net interest income and margin (4) $ 247,336   4.71 % $ 214,220   4.66 %
(1)   Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $6.1 million and $5.7 million for the three months ended March 31, 2019 and 2018, respectively.
(2) Included in the yield computation are net loan fees of $12.3 million and accretion on acquired loans of $2.8 million for the three months ended March 31, 2019, compared to $10.0 million and $5.7 million for the three months ended March 31, 2018.
(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
Operating Segment Results
Unaudited  
 
Balance Sheet: Regional Segments

Consolidated
Company

Arizona Nevada

Southern
California

Northern
California

At March 31, 2019: (dollars in millions)
Assets:
Cash, cash equivalents, and investment securities $ 4,525.0 $ 2.3 $ 9.1 $ 2.0 $ 1.9
Loans, net of deferred loan fees and costs 18,116.7 3,653.9 2,069.4 2,249.8 1,197.2
Less: allowance for credit losses (155.0 ) (31.9 ) (18.3 ) (20.1 ) (9.4 )
Total loans 17,961.7   3,622.0   2,051.1   2,229.7   1,187.8  
Other assets acquired through foreclosure, net 17.7 0.7 13.9
Goodwill and other intangible assets, net 298.8 23.2 155.3
Other assets 989.6   47.6   58.4   15.2   24.3  
Total assets $ 23,792.8   $ 3,672.6   $ 2,155.7   $ 2,246.9   $ 1,369.3  
Liabilities:
Deposits $ 20,208.7 $ 5,319.9 $ 4,006.8 $ 2,793.8 $ 2,008.7
Borrowings and qualifying debt 374.0
Other liabilities 489.5   11.6   12.0   0.5   13.4  
Total liabilities 21,072.2   5,331.5   4,018.8   2,794.3   2,022.1  
Allocated equity: 2,720.6   447.7   283.1   260.5   298.9  
Total liabilities and stockholders' equity $ 23,792.8   $ 5,779.2   $ 4,301.9   $ 3,054.8   $ 2,321.0  
Excess funds provided (used) 2,106.6 2,146.2 807.9 951.7
 
No. of offices 47 10 16 9 3
No. of full-time equivalent employees 1,773 113 90 119 121
 
Income Statement:
 
Three Months Ended March 31, 2019: (in thousands)
Net interest income $ 247,336 $ 55,226 $ 39,097 $ 30,477 $ 23,033
Provision for (recovery of) credit losses 3,500   161   533   733   (719 )
Net interest income after provision for credit losses 243,836 55,065 38,564 29,744 23,752
Non-interest income 15,410 1,521 2,573 1,001 2,220
Non-interest expense (112,914 ) (22,248 ) (15,781 ) (14,583 ) (13,490 )
Income (loss) before income taxes 146,332 34,338 25,356 16,162 12,482
Income tax expense (benefit) 25,536   8,585   5,325   4,525   3,495  
Net income $ 120,796   $ 25,753   $ 20,031   $ 11,637   $ 8,987  
 
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 March 31, 2019: (dollars in millions)
Assets:
Cash, cash equivalents, and investment securities $ $ $ $ $ $ 4,509.7
Loans, net of deferred loan fees and costs 209.4 1,561.6 1,057.3 1,565.0 4,549.0 4.1
Less: allowance for credit losses (1.9 ) (14.8 ) (8.4 ) (9.5 ) (40.7 )  
Total loans 207.5   1,546.8   1,048.9   1,555.5   4,508.3   4.1  
Other assets acquired through foreclosure, net 3.1
Goodwill and other intangible assets, net 120.2 0.1
Other assets 0.9   12.5   6.4   7.7   58.8   757.8  
Total assets $ 208.4   $ 1,559.3   $ 1,175.5   $ 1,563.3   $ 4,567.1   $ 5,274.7  
Liabilities:
Deposits $ 2,963.0 $ $ 2,404.7 $ $ 5.3 $ 706.5
Borrowings and qualifying debt 374.0
Other liabilities 2.0   34.0     (0.3 ) 60.9   355.4  
Total liabilities 2,965.0   34.0   2,404.7   (0.3 ) 66.2   1,435.9  
Allocated equity: 77.7   126.0   253.3   130.3   374.3   468.8  
Total liabilities and stockholders' equity $ 3,042.7   $ 160.0   $ 2,658.0   $ 130.0   $ 440.5   $ 1,904.7  
Excess funds provided (used) 2,834.3 (1,399.3 ) 1,482.5 (1,433.3 ) (4,126.6 ) (3,370.0 )
 
No. of offices 1 1 9 1 4 (7 )
No. of full-time equivalent employees 69 10 67 16 58 1,110
 
Income Statement:
 
Three Months Ended March 31, 2019: (in thousands)
Net interest income $ 20,641 $ 3,422 $ 29,403 $ 12,944 $ 25,691 $ 7,402
Provision for (recovery of) credit losses (27 ) (40 ) (918 ) 799   2,978    
Net interest income after provision for credit losses 20,668 3,462 30,321 12,145 22,713 7,402
Non-interest income 96 3,362 657 3,980
Non-interest expense (8,460 ) (1,906 ) (11,889 ) (2,399 ) (9,336 ) (12,822 )
Income (loss) before income taxes 12,304 1,556 21,794 9,746 14,034 (1,440 )
Income tax expense (benefit) 2,830   356   5,013   2,242   3,228   (10,063 )
Net income $ 9,474   $ 1,200   $ 16,781   $ 7,504   $ 10,806   $ 8,623  
 
Western Alliance Bancorporation and Subsidiaries        
Operating Segment Results  
Unaudited
 
Balance Sheet: Regional Segments

Consolidated
Company

Arizona Nevada

Southern
California

Northern
California

At December 31, 2018: (dollars in millions)
Assets:
Cash, cash equivalents, and investment securities $ 4,259.7 $ 2.5 $ 10.9 $ 2.5 $ 3.0
Loans, net of deferred loan fees and costs 17,710.6 3,647.9 2,003.5 2,161.1 1,300.2
Less: allowance for credit losses (152.7 ) (30.7 ) (18.7 ) (19.8 ) (10.7 )
Total loans 17,557.9   3,617.2   1,984.8   2,141.3   1,289.5  
Other assets acquired through foreclosure, net 17.9 0.8 13.9
Goodwill and other intangible assets, net 299.2 23.2 155.5
Other assets 974.8   46.9   57.8   14.2   23.9  
Total assets $ 23,109.5   $ 3,667.4   $ 2,090.6   $ 2,158.0   $ 1,471.9  
Liabilities:
Deposits $ 19,177.4 $ 5,090.2 $ 3,996.4 $ 2,347.5 $ 1,839.1
Borrowings and qualifying debt 851.5
Other liabilities 466.9   10.4   14.5   4.5   12.2  
Total liabilities 20,495.8   5,100.6   4,010.9   2,352.0   1,851.3  
Allocated equity: 2,613.7   441.0   277.4   242.9   304.1  
Total liabilities and stockholders' equity $ 23,109.5   $ 5,541.6   $ 4,288.3   $ 2,594.9   $ 2,155.4  
Excess funds provided (used) 1,874.2 2,197.7 436.9 683.5
 
No. of offices 47 10 16 9 3
No. of full-time equivalent employees 1,713 108 96 105 122
 
Income Statements:
 
Three Months Ended March 31, 2018: (in thousands)
Net interest income (expense) $ 214,220 $ 54,555 $ 36,690 $ 27,802 $ 22,255
Provision for (recovery of) credit losses 6,000   1,434   (1,723 ) 729   1,548  
Net interest income (expense) after provision for credit losses 208,220 53,121 38,413 27,073 20,707
Non-interest income 11,643 1,416 3,333 1,001 2,547
Non-interest expense (98,149 ) (21,504 ) (14,084 ) (13,646 ) (12,503 )
Income (loss) before income taxes 121,714 33,033 27,662 14,428 10,751
Income tax expense (benefit) 20,814   8,321   5,903   4,135   3,098  
Net income $ 100,900   $ 24,712   $ 21,759   $ 10,293   $ 7,653  
 
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, 2018: (dollars in millions)
Assets:
Cash, cash equivalents, and investment securities $ $ $ $ $ $ 4,240.8
Loans, net of deferred loan fees and costs 210.0 1,547.5 1,200.9 1,479.9 4,154.9 4.7
Less: allowance for credit losses (1.9 ) (14.2 ) (10.0 ) (8.5 ) (38.2 )  
Total loans 208.1   1,533.3   1,190.9   1,471.4   4,116.7   4.7  
Other assets acquired through foreclosure, net 3.2
Goodwill and other intangible assets, net 120.4 0.1
Other assets 0.9   20.1   6.3   7.2   37.1   760.4  
Total assets $ 209.0   $ 1,553.4   $ 1,317.6   $ 1,478.7   $ 4,153.8   $ 5,009.1  
Liabilities:
Deposits $ 2,607.2 $ $ 2,559.0 $ $ $ 738.0
Borrowings and qualifying debt 851.5
Other liabilities 2.1   25.2   0.1   0.4   49.6   347.9  
Total liabilities 2,609.3   25.2   2,559.1   0.4   49.6   1,937.4  
Allocated equity: 70.7   123.9   268.7   122.3   340.0   422.7  
Total liabilities and stockholders' equity $ 2,680.0   $ 149.1   $ 2,827.8   $ 122.7   $ 389.6   $ 2,360.1  
Excess funds provided (used) 2,471.0 (1,404.3 ) 1,510.2 (1,356.0 ) (3,764.2 ) (2,649.0 )
 
No. of offices 1 1 9 1 4 (7 )
No. of full-time equivalent employees 67 11 54 16 41 1,093
 
Income Statement:
 
Three Months Ended March 31, 2018: (in thousands)
Net interest income (expense) $ 15,359 $ 3,746 $ 22,821 $ 14,185 $ 18,811 $ (2,004 )
Provision for (recovery of) credit losses 47   (207 ) 1,651   1,236   1,285    
Net interest income (expense) after provision for credit losses 15,312 3,953 21,170 12,949 17,526 (2,004 )
Non-interest income 150 3,051 13 224 (92 )
Non-interest expense (7,803 ) (2,174 ) (9,833 ) (2,206 ) (5,662 ) (8,734 )
Income (loss) before income taxes 7,659 1,779 14,388 10,756 12,088 (10,830 )
Income tax expense (benefit) 1,761   409   3,309   2,474   2,780   (11,376 )
Net income $ 5,898   $ 1,370   $ 11,079   $ 8,282   $ 9,308   $ 546  
 
Western Alliance Bancorporation and Subsidiaries          
Reconciliation of Non-GAAP Financial Measures
Unaudited
 
Operating Pre-Provision Net Revenue by Quarter:
Three Months Ended
Mar 31, 2019 Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018
(in thousands)
Total non-interest income $ 15,410 $ 13,611 $ 4,418 $ 13,444 $ 11,643
Less:
(Loss) gain on sales of investment securities, net (424 ) (7,232 )
Unrealized gains (losses) on assets measured at fair value, net 2,834   (640 ) (1,212 ) (685 ) (1,074 )
Total operating non-interest income (1) 12,576 14,675 12,862 14,129 12,717
Plus: net interest income 247,336   243,513   234,038   224,108   214,220  
Net operating revenue (1) $ 259,912   $ 258,188   $ 246,900   $ 238,237   $ 226,937  
 
Total non-interest expense $ 112,914 $ 111,129 $ 113,841 $ 102,548 $ 98,149
Less:
Advance funding to charitable foundation 7,645
401(k) plan change and other miscellaneous items 1,218
Net loss (gain) on sales and valuations of repossessed and other assets 97   1,483   (67 ) (179 ) (1,228 )
Total operating non-interest expense (1) $ 112,817   $ 109,646   $ 105,045   $ 102,727   $ 99,377  
         
Operating pre-provision net revenue (2) $ 147,095   $ 148,542   $ 141,855   $ 135,510   $ 127,560  
 
Plus:
Non-operating revenue adjustments 2,834 (1,064 ) (8,444 ) (685 ) (1,074 )
Less:
Provision for credit losses 3,500 6,000 6,000 5,000 6,000
Non-operating expense adjustments 97 1,483 8,796 (179 ) (1,228 )
Income tax expense 25,536   20,909   7,492   25,325   20,814  
Net income $ 120,796   $ 119,086   $ 111,123   $ 104,679   $ 100,900  

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

 
Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Unaudited
 
Operating Efficiency Ratio by Quarter:          

 

Three Months Ended
Mar 31, 2019 Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018
(in thousands)
Total operating non-interest expense $ 112,817 $ 109,646 $ 105,045 $ 102,727 $ 99,377
Divided by:
Total net interest income 247,336 243,513 234,038 224,108 214,220
Plus:
Tax equivalent interest adjustment 6,094 6,140 6,003 5,939 5,727
Operating non-interest income 12,576   14,675   12,862   14,129   12,717  
$ 266,006   $ 264,328   $ 252,903   $ 244,176   $ 232,664  
Operating efficiency ratio - tax equivalent basis (3) 42.4 % 41.5 % 41.5 % 42.1 % 42.7 %
 
Tangible Common Equity:
Mar 31, 2019 Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018
(dollars and shares in thousands)
Total stockholders' equity $ 2,720,620 $ 2,613,734 $ 2,488,393 $ 2,391,684 $ 2,293,763
Less: goodwill and intangible assets 298,768   299,155   299,553   299,951   300,350  
Total tangible common equity 2,421,852 2,314,579 2,188,840 2,091,733 1,993,413
Plus: deferred tax - attributed to intangible assets 2,183   1,885   2,462   2,555   2,773  
Total tangible common equity, net of tax $ 2,424,035   $ 2,316,464   $ 2,191,302   $ 2,094,288   $ 1,996,186  
Total assets $ 23,792,846 $ 23,109,486 $ 22,176,147 $ 21,367,452 $ 20,760,731
Less: goodwill and intangible assets, net 298,768   299,155   299,553   299,951   300,350  
Tangible assets 23,494,078 22,810,331 21,876,594 21,067,501 20,460,381
Plus: deferred tax - attributed to intangible assets 2,183   1,885   2,462   2,555   2,773  
Total tangible assets, net of tax $ 23,496,261   $ 22,812,216   $ 21,879,056   $ 21,070,056   $ 20,463,154  
Tangible common equity ratio (4) 10.3 % 10.2 % 10.0 % 9.9 % 9.8 %
Common shares outstanding 104,483 104,949 105,861 105,876 105,861
Tangible book value per share, net of tax (5) $ 23.20 $ 22.07 $ 20.70 $ 19.78 $ 18.86
 

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

 
Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Unaudited
 
Regulatory Capital:    
Mar 31, 2019   Dec 31, 2018
(in thousands)
Common Equity Tier 1:
Common equity $ 2,720,620 $ 2,613,734
Less:
Non-qualifying goodwill and intangibles 296,496 296,769
Disallowed deferred tax asset 2,134 768
AOCI related adjustments (15,695 ) (47,055 )
Unrealized gain on changes in fair value liabilities 7,490   13,432  
Common equity Tier 1 (6) (9) $ 2,430,195   $ 2,349,820  
Divided by: estimated risk-weighted assets (7) (9) $ 22,610,881 $ 21,983,976
Common equity Tier 1 ratio (7) (9) 10.7 % 10.7 %
 
Common equity Tier 1 (6)(9) 2,430,195 2,349,820
Plus:
Trust preferred securities 81,500 81,500
Less:
Disallowed deferred tax asset
Unrealized gain on changes in fair value of liabilities    
Tier 1 capital (6) (9) $ 2,511,695   $ 2,431,320  
Divided by: Tangible average assets $ 22,867,068 $ 22,204,799
Tier 1 leverage ratio 11.0 % 10.9 %
 
Total Capital:
Tier 1 capital (6) (9) $ 2,511,695 $ 2,431,320
Plus:
Subordinated debt 304,903 305,131
Qualifying allowance for credit losses 154,987 152,717
Other 9,224 8,188
Less: Tier 2 qualifying capital deductions    
Tier 2 capital $ 469,114   $ 466,036  
   
Total capital $ 2,980,809   $ 2,897,356  
 
Total capital ratio 13.2 % 13.2 %
 
Classified assets to Tier 1 capital plus allowance for credit losses:
Classified assets $ 238,241 $ 242,101
Divided by:
Tier 1 capital (6) (9) 2,511,695 2,431,320
Plus: Allowance for credit losses 154,987   152,717  
Total Tier 1 capital plus allowance for credit losses $ 2,666,682   $ 2,584,037  
 
Classified assets to Tier 1 capital plus allowance (8) (9) 8.9 % 9.4 %
 

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

Non-GAAP Financial Measures Footnotes
 
(1) We believe these non-GAAP measurements provide a useful indication of the cash generating capacity of the Company.
(2) We believe this non-GAAP measurement is a key indicator of the earnings power of the Company.
(3) We believe this non-GAAP ratio provides a useful metric to measure the operating efficiency of the Company.
(4) We believe this non-GAAP ratio provides an important metric with which to analyze and evaluate financial condition and capital strength.
(5) We believe this non-GAAP measurement improves the comparability to other institutions that have not engaged in acquisitions that resulted in recorded goodwill and other intangibles.
(6) Under the current guidelines of the Federal Reserve and the Federal Deposit Insurance Corporation, common equity Tier 1 capital consists of common stock, retained earnings, and minority interests in certain subsidiaries, less most other intangible assets.
(7) Common equity Tier 1 is often expressed as a percentage of risk-weighted assets. Under the risk-based capital framework, a bank's balance sheet assets and credit equivalent amounts of off-balance sheet items are assigned to one of the risk categories defined under new capital guidelines. The aggregated dollar amount in each category is then multiplied by the risk weighting assigned to that category. The resulting weighted values from each category are added together and this sum is the risk-weighted assets total that, as adjusted, comprises the denominator (risk-weighted assets) of the common equity Tier 1 ratio. Common equity Tier 1 is divided by the risk-weighted assets to determine the common equity Tier 1 ratio. We believe this non-GAAP ratio provides an important metric with which to analyze and evaluate financial condition and capital strength.
(8) We believe this non-GAAP ratio provides an important regulatory metric to analyze asset quality.
(9) Current quarter is preliminary until Call Report is filed.

Western Alliance Bancorporation
Dale Gibbons, 602-952-5476

Source: Western Alliance Bancorporation



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