Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - WESTERN ALLIANCE BANCORPORATION | pressrelease-3312017.htm |
| 8-K - 8-K - WESTERN ALLIANCE BANCORPORATION | coverpage-pressrelease3312.htm |
Earnings Call
1st Quarter 2017
April 21, 2017
2
Financial Highlights
▪ Net income of $73.4 million and earnings per share of $0.70, compared to $69.8 million and
$0.67 per share for Q4 2016, and $61.3 million and $0.60 per share for Q1 2016
▪ Net interest margin of 4.63%, compared to 4.57% in Q4 2016, and 4.58% in Q1 2016
▪ Operating efficiency ratio of 44.4%, compared to 42.4% in Q4 2016, and 45.6% in Q1 2016
▪ Total loans of $13.66 billion, up $454 million from prior quarter and total deposits of $15.36
billion, up $806 million from prior quarter
▪ Nonperforming assets (nonaccrual loans and repossessed assets) decreased to 0.44% of
total assets, from 0.51% at December 31, 2016
▪ Net loan charge-offs (recoveries) to average loans outstanding of 0.04%, compared to
(0.03)% in Q4 2016 and 0.08% in Q1 2016
▪ Tangible common equity ratio of 9.4% and tangible book value per share, net of tax, of
$15.86, compared to 9.4% and $15.17, respectively, at December 31, 2016
Q1 2017
Highlights
2
3
Quarterly Consolidated Financial Results
$ in millions, except EPS
Q1 2017 Highlights
▪ Net Interest Income increased
primarily as a result of higher yields on
loans and securities from rising
interest rates
▪ Operating Non-Interest Expense
increased due to higher professional
fees and compensation costs to
support continued growth and also
reflects seasonal compensation costs
▪ Provision for Credit Losses increased
as a result of significant loan growth
▪ Income Tax decreased primarily as a
result of cyclical excess tax benefits on
share-based payment awards
Q1-17 Q4-16 Q1-16
Net Interest Income $ 179.3 $ 175.3 $ 145.7
Operating Non-Interest Income 9.9 10.5 12.1
Net Operating Revenue $ 189.2 $ 185.8 $ 157.8
Operating Non-Interest Expense (88.3) (82.7) (75.8)
Operating Pre-Provision Net Revenue $ 100.9 $ 103.1 $ 82.1
Provision for Credit Losses (4.3) (1.0) (2.5)
Gains on OREO and Other Assets 0.5 — 0.3
Acquisition / Restructure Expense — (6.0) —
Other 0.7 0.1 1.0
Pre-tax Income $ 97.8 $ 96.2 $ 80.9
Income Tax (24.5) (26.4) (19.5)
Net Income Available to Common $ 73.4 $ 69.8 $ 61.3
Average Diluted Shares Outstanding 104.8 104.8 102.5
Earnings Per Share $ 0.70 $ 0.67 $ 0.60
3
4
Net Interest Drivers
$ in billions, unless otherwise indicated
Interest Bearing Deposits and Cost of Funds
Loans and Yield
Borrowings and Cost of Borrowings
Q1 2017 Highlights
▪ Loan yield increased due to higher
yields on C&I and CRE loans,
reflecting an increase in accretion on
acquired loans and rising interest rates
▪ Cost of funds increased two basis
points due to volume and rate mix
across all interest-bearing deposit
categories
▪ Cost of funds for total deposits,
including non-interest bearing
deposits, increased two basis points to
0.23%
Total Investments and Yield
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
3.02% 2.95% 2.90% 2.81%
3.08%
$2.1 $2.3
$2.8 $2.8 $2.9
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
5.31%
5.43% 5.44% 5.41% 5.47%
$11.2
$12.9 $13.0 $13.2 $13.7
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
0.31%
0.35% 0.36% 0.35% 0.37%
$8.4 $8.9 $8.8 $8.9
$9.2
Investments
Loans
Interest Bearing Deposits
Borrowings
4
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
3.65%
2.84%
4.05% 4.02% 3.91%
$210.6
$382.1 $382.9 $447.9 $366.9
5
Net Interest Income and Accretion
$ in millions
Q1 2017 Highlights
▪ NIM increased 6 basis points to 4.63% quarter-over-
quarter as a result of rising interest rates and non-
interest bearing DDA growth
▪ Adjusted NIM for acquired loan accretion was 4.48% for
the quarter, an increase of 8 basis points from the prior
quarter and is in line with the increase in NIM explained
above
Net Interest Income and NIM
Acquired Loan Accretion and Adjusted NIM
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
4.58% 4.63% 4.55% 4.57% 4.63%
$145.7
$163.7 $172.5
$175.3 $179.3
Non-PCI Accretion
PCI Accretion
Adjusted Net Interest Margin, excluding accretion
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
$2.8 $4.1 $4.6
$4.9 $4.1
$2.5
$4.1 $4.2 $2.1 $2.3
4.42% 4.41% 4.33% 4.40% 4.48%
Scheduled Acquisition Loan Accretion *
Non-PCI Rate and Credit Accretion
PCI Rate Accretion
Q2-17 Q3-17 Q4-17 Q1-18
$3.2 $3.2 $3.1 $2.8
$0.9 $0.9 $0.8 $0.8
* Amounts do not include early loan payoffsEnding rate and credit marks on all acquired loans at 3/31/2017 is $65 million
PCI Accretion
Non-PCI Accretion
PCI Rate Accretion
Non-PCI Rate and Credit Accretion
Adjusted NIM
5
6
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
$44.9 $44.7 $49.5 $49.7 $51.6
$9.6 $10.2 $10.0 $10.4
$10.1$9.6 $10.9
$10.7 $12.1 $14.1$11.7
$12.0 $12.2 $10.5
Operating Expenses and Efficiency
$ in millions
Q1 2017 Highlights
▪ The operating efficiency ratio increased from 42.4% in
Q4 2016 to 44.4% due to higher professional and
compensation costs to support continued growth and
also reflects seasonal compensation costs in Q1 2017
▪ The operating efficiency ratio decreased from 45.6% in
Q1 2016 to 44.4% as revenue growth outpaced
expense growth
Operating Expenses and Efficiency Ratio
Breakdown of Operating Expenses
Other
Professional Fees + Data Processing
Occupancy + Insurance
Compensation
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
45.6%
43.0% 43.0% 42.4%
44.4%
$75.8 $77.8
$82.4 $82.7
6
$88.3
$12.5
7
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
$61.3 $61.6
$67.1 $69.8
$73.4
1.70%
1.55% 1.58% 1.63%
1.69%
Operating Pre-Provision Net Revenue, Net Income, and ROA
$ in millions
Operating Pre-Provision Net Revenue and Operating PPNR ROA Net Income and ROA
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
$82.1
$94.5 $100.8
$103.1 $100.9
2.27%
2.37% 2.38% 2.40% 2.32%
7
8
Consolidated Balance Sheet
$ in millions
▪ Loans increased 3.4% over prior
quarter and 21.6% over prior year
▪ Deposits increased 5.5% over prior
quarter and 17.4% over prior year
▪ Loan to Deposit Ratio of 89.0%,
compared to 90.8% in prior quarter
and 85.9% in prior year
▪ Shareholders' Equity increased
primarily as a function of Net Income
▪ Tangible Book Value/Share increased
4.5% over prior quarter and 20.5%
over prior year
Q1 2017 HighlightsQ1-17 Q4-16 Q1-16
Investments & Cash $ 3,516 $ 3,052 $ 3,131
Loans 13,663 13,209 11,241
Allowance for Credit Losses (128) (125) (119)
Other Assets 1,072 1,065 995
Total Assets $ 18,123 $ 17,201 $ 15,248
Deposits $ 15,356 $ 14,550 $ 13,082
Borrowings 403 489 247
Other Liabilities 395 270 259
Total Liabilities $ 16,154 $ 15,309 $ 13,588
Shareholders' Equity 1,969 1,892 1,660
Total Liabilities and Equity $ 18,123 $ 17,201 $ 15,248
Tangible Book Value Per Share $ 15.86 $ 15.17 $ 13.16
8
9
Loan Growth and Portfolio Composition
$ in millions
Q1 2017 Highlights
▪ Quarter-over-quarter loan growth
driven by:
◦ C&I $198 million
◦ Construction & Land
$124 million
◦ Residential $55 million
▪ Year-over-year loan growth
driven by:
◦ CRE, Non-OO $1.32 billion*
◦ C&I $676 million
$2.42 Billion Year Over Year Growth
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
$5,382 $5,581 $5,719 $5,860 $6,058
$2,052 $2,027 $2,002
$2,029 $2,043
$2,291
$3,601 $3,623 $3,544
$3,608
$1,180
$1,334 $1,380 $1,478
$1,602
$336
$335 $310
$298
$353
3.0%
18.3%
20.4%
47.9%
10.5%
2.6%
15.0%
26.4%
44.3%
11.7%
* Increase in loans includes $1.28 billion from the acquisition of GE's hotel
franchise finance loan portfolio on April 20, 2016.
Residential and
Consumer
Construction &
Land
CRE, Non-Owner
Occupied
CRE, Owner
Occupied
Commercial &
Industrial
$11,241
+105
$12,878
+1,637*
$13,034
+156
$13,209
+175
$13,663
+454
9
10
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
$4,635 $5,275
$5,625 $5,633 $6,114
$1,088
$1,278 $1,257 $1,347
$1,449
$5,651
$6,006 $5,969
$6,121
$6,254
$1,708
$1,642 $1,592
$1,449
$1,539
Deposit Growth and Composition
$ in millions
Q1 2017 Highlights
▪ Quarter-over-quarter deposit
growth across all deposit types:
◦ Non-interest bearing DDA
of $481 million
◦ Savings and MMDA of
$133 million
◦ Interest Bearing DDA of
$102 million
◦ CDs of $90 million
▪ Year-over-year deposit growth
driven by:
◦ Non-interest bearing DDA
growth of $1.48 billion
◦ Savings and MMDA growth
of $603 million
◦ Offset by CDs decrease of
$169 million
8.3%
13.1%
35.4%
43.2%
9.4%
10.0%
39.8%
40.8%
$2.27 Billion Year Over Year Growth
CDs
Savings and
MMDA
Interest Bearing
DDA
Non-Interest
Bearing DDA
$14,443
+242
$14,201
+1,119
$13,082
+1,052
$14,550
+107
$15,356
+806
10
11
Adversely Graded Assets to Total Assets
NPAs to Total Assets
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
2.11% 2.24% 2.03% 2.07%
2.25%
0.57% 0.54% 0.53% 0.51% 0.44%
OREO Non-Performing Loans
Classified Accruing Loans Special Mention Loans
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
$53 $50 $50 $48 $45
$34 $40 $41 $40 $34
$92 $120 $110 $107 $133
$133
$154
$134 $148
$175
Adversely Graded Loans and Non-Performing Assets *
$ in millions
NPAs
Adversely
Graded
Loans
$343
Accruing TDRs total $49 million as of 3/31/2017
$312
$364
$335
$387
* Amounts are net of total PCI credit and interest rate discounts of $26 million as of 3/31/2017
11
Special Mention Loans
OREO
12
Gross Charge-Offs Recoveries
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
Charge-Offs, Recoveries, ALLL, and Provision
$ in millions
Gross Charge-Offs and Recoveries
Net Recoveries / Charge-Offs and Rate
ALLL+CD/Total Loans Provision for Credit Losses
ALLL/Total Loans
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
1.21%
1.42% 1.37% 1.30% 1.26%
$2.5 $2.5 $2.0 $1.0
$4.3
1.06% 0.95% 0.94% 0.95%
Net Charge-Offs (Recoveries)
Net Charge-Off (Recovery) Rate
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
$2.3
$1.2
$(0.8)
$1.3
ALLL and Credit Discounts
ALLL Credit Discounts
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
$119 $122 $123 $125 $128
$16
$62 $56 $47 $45
Provision for Credit Losses and ALL Ratios
12
Credit Discounts ALLL
$8.0
$1.5 $1.4 $2.7
$(1.8) $(2.2)
$(5.7)
$(1.5)
$2.7
$(1.4)
$135
$173 $179 $184 $172
(0.01)%
0.08%
0.94%
$(0.4)
0.04% 0.04%
(0.03)%
13
ROTCE TBV/Share
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
18.4%
17.5% 17.6%
17.8%
$13.16
$14.25 $14.84
$15.17 $15.86
Capital
Total Capital Common Equity Tier 1
Tier 1 Leverage Tangible Common Equity
Q1-16 Q2-16 Q3-16 Q4-16 Q1-17
12.3%
12.9% 13.1%
13.2% 13.2%
9.9%
9.6%
9.8% 10.0%
10.1%9.9% 9.8%
9.9%
10.2%
9.1% 9.1% 9.3%
9.4% 9.4%
Capital Ratios ROTCE and TBV/Share
13
9.6%
17.4%
14
Outlook 2nd Quarter 2017
▪ Loan and Deposit Growth
▪ Interest Margin
▪ Operating Efficiency
▪ Asset Quality
14
15
Forward-Looking Statements
15
This presentation 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, 2016 as filed with the Securities and Exchange Commission; changes in general economic conditions,
either nationally or locally in the areas in which we conduct or will conduct our business; inflation, interest rate, market and monetary
fluctuations; increases in competitive pressures among financial institutions and businesses offering similar products and services;
higher defaults on our loan portfolio than we expect; changes in management’s estimate of the adequacy of the allowance for credit
losses; legislative or regulatory changes or changes in accounting principles, policies, or guidelines; supervisory actions by regulatory
agencies which may limit our ability to pursue certain growth opportunities, including expansion through acquisitions; additional
regulatory requirements resulting from our continued growth; management’s estimates and projections of interest rates and interest
rate policy; the execution of our business plan; and other factors affecting the financial services industry generally or the banking
industry in particular.
Any forward-looking statement made by us in this presentation 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 to have 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 presentation
to reflect new information, future events or otherwise.