Attached files
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| EX-99.2 - EXHIBIT 99.2 - WESTERN ALLIANCE BANCORPORATION | walq22017earningspresent.htm |
| 8-K - 8-K - WESTERN ALLIANCE BANCORPORATION | coverpage-pressrelease6302.htm |
Western Alliance Bancorporation |  | |
One East Washington Street | ||
Phoenix, AZ 85004 | ||
www.westernalliancebancorporation.com | ||
PHOENIX--(BUSINESS WIRE)--July 20, 2017
SECOND QUARTER 2017 FINANCIAL RESULTS
Net income | Earnings per share | Net interest margin | Efficiency ratio | Book value per common share | ||||
$80.0 million | $0.76 | 4.61% | 41.3% | $19.53 | ||||
41.2%, excluding non-operating adjustments1 | $16.71, excluding intangible assets1 | |||||||
CEO COMMENTARY: | ||||||||
Robert Sarver, Chairman and CEO, commented, “We delivered excellent results this quarter marked by robust revenue growth coupled with flat expenses, solid deposit and loan increases and continued healthy credit quality. Our net income of $80 million and $0.76 EPS for Q2 2017 set a compelling course for returns this year. Tangible book value per share1 for the company increased to $16.71 and return on assets rose to 1.71%. As expected, expenses leveled during the quarter while revenues increased bringing the operating efficiency ratio1 to 41.2%. We experienced solid growth as deposits grew $675 million to $16 billion and loans grew $327 million to nearly $14 billion. Our vigilant credit culture resulted in continued stable asset quality with non-performing assets to total assets of 0.32% and net recoveries of $1.2 million for the quarter.” | ||||||||
LINKED-QUARTER BASIS | YEAR-OVER-YEAR |
FINANCIAL HIGHLIGHTS: | |
▪ | Net income and earnings per share of $80.0 million and $0.76, compared to $73.4 million and $0.70, respectively |
▪ | Net operating revenue of $203.2 million, constituting growth of $14.0 million, and a decrease in operating non-interest expenses of $0.3 million 1 |
▪ | Operating pre-provision net revenue of $115.2 million, up $14.3 million from $100.9 million 1 |
▪ | Net income of $80.0 million and earnings per share of $0.76, compared to $61.6 million and $0.60, respectively |
▪ | Net operating revenue of $203.2 million, constituting year-over-year growth of 18.0%, or $31.0 million, and an increase in operating non-interest expenses of 13.2%, or $10.2 million1 |
▪ | Operating pre-provision net revenue of $115.2 million, up $20.7 million from $94.5 million 1 |
FINANCIAL POSITION RESULTS: |
▪ | Total loans of $13.99 billion, up $327 million |
▪ | Total deposits of $16.03 billion, up $675 million |
▪ | Stockholders' equity of $2.06 billion, up $90 million |
▪ | Increase in total loans of $1.11 billion |
▪ | Increase in total deposits of $1.83 billion |
▪ | Increase in stockholders' equity of $263 million |
LOANS AND ASSET QUALITY: |
▪ | Nonperforming assets (nonaccrual loans and repossessed assets) decreased to 0.32% of total assets, from 0.44% |
▪ | Annualized net loan (recoveries) charge-offs to average loans outstanding of (0.03)%, compared to 0.04% |
▪ | Nonperforming assets to total assets of 0.32%, compared to 0.54% |
▪ | Annualized net loan (recoveries) charge-offs to average loans outstanding of (0.03)%, compared to (0.01)% |
KEY PERFORMANCE METRICS: |
▪ | Net interest margin of 4.61%, compared to 4.63% |
▪ | Return on average assets and return on tangible common equity1 of 1.71% and 18.42%, compared to 1.69% and 17.85%, respectively |
▪ | Tangible common equity ratio of 9.5%, compared to 9.4% 1 |
▪ | Tangible book value per share, net of tax, of $16.71, an increase from $15.86 1 |
▪ | Operating efficiency ratio of 41.2%, compared to 44.4% 1 |
▪ | Net interest margin of 4.61%, compared to 4.63% |
▪ | Return on average assets and return on tangible common equity1 of 1.70%and 18.14%, compared to 1.62% and 17.88%, respectively |
▪ | Tangible common equity ratio of 9.5%, compared to 9.1% 1 |
▪ | Tangible book value per share, net of tax, of $16.71, an increase of 17.3% from $14.25 1 |
▪ | Operating efficiency ratio of 41.2%, compared to 43.0% 1 |
1 See reconciliation of Non-GAAP Financial Measures beginning on page 19.
1
Income Statement
Net interest income was $192.7 million in the second quarter 2017, an increase of $13.4 million from $179.3 million in the first quarter 2017 and an increase of $29.1 million, or 17.8%, compared to the second quarter 2016. Net interest income in the second quarter 2017 includes $7.1 million of total accretion income from acquired loans, compared to $6.4 million in the first quarter 2017, and $8.2 million in the second quarter 2016.
The Company’s net interest margin in the second quarter 2017 was 4.61%, a decrease from 4.63% in the first quarter 2017, and from 4.63% in the second quarter 2016. The decrease in net interest margin from the first quarter 2017 is attributable an increase in the average cash balance, higher costs on interest-bearing deposits, as well as a decrease in yield from investment securities, which offset the higher yields on loans as a result of rising interest rates. The decrease in net interest margin from the second quarter 2016 primarily relates to a increases in the cost of interest-bearing deposits and interest expense resulting from the issuance of long-term subordinated debt in June 2016, partially offset by higher yields on loans and securities.
Operating non-interest income was $10.5 million for the second quarter 2017, compared to $9.9 million for the first quarter 2017, and $8.6 million for the second quarter 2016.1
Net operating revenue was $203.2 million for the second quarter 2017, an increase of $14.0 million, compared to $189.2 million for the first quarter 2017, and an increase of $31.0 million, or 18.0%, compared to $172.2 million for the second quarter 2016.1
Operating non-interest expense was $88.0 million for the second quarter 2017, compared to $88.3 million for the first quarter 2017, and $77.8 million for the second quarter 2016.1 Operating non-interest expense held relatively flat from the prior quarter. The increase in operating non-interest expense from the second quarter 2016 relates primarily to higher compensation costs resulting from an increase in the number of employees to support growth, as well as higher incentive compensation related to achievement of performance targets. The Company’s operating efficiency ratio1 on a tax equivalent basis was 41.2% for the second quarter 2017, compared to 44.4% for the first quarter 2017, and 43.0% for the second quarter 2016.
Net income was $80.0 million for the second quarter 2017, an increase of $6.6 million from $73.4 million for the first quarter 2017, and an increase of $18.4 million, or 29.8%, from $61.6 million for the second quarter 2016. Earnings per share was $0.76 for the second quarter 2017, compared to $0.70 for the first quarter 2017, and $0.60 for the second quarter 2016.
The Company views its operating pre-provision net revenue ("PPNR") as a key metric for assessing the Company’s earnings power, which it defines as net operating revenue less operating non-interest expense. For the second quarter 2017, the Company’s operating PPNR was $115.2 million, up from $100.9 million in the first quarter 2017, and up 21.9% from $94.5 million in the second quarter 2016.1 The non-operating items1 for the second quarter 2017 consisted primarily of a net loss on sales / valuations of repossessed and other assets of $0.2 million.
The Company had 1,628 full-time equivalent employees and 46 offices at June 30, 2017, compared to 1,560 employees and 45 offices at March 31, 2017 and 1,514 employees and 48 offices at June 30, 2016.
2
Balance Sheet
Gross loans totaled $13.99 billion at June 30, 2017, an increase of $327 million from $13.66 billion at March 31, 2017, and an increase of $1.11 billion from $12.88 billion at June 30, 2016. The increase from both the prior quarter and from June 30, 2016 is due to organic loan growth. At June 30, 2017, the allowance for credit losses was 1.08% of total organic loans, compared to 1.08% at March 31, 2017, and 1.15% at June 30, 2016.
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 $37.8 million at June 30, 2017, compared to $45.1 million at March 31, 2017 and $61.7 million at June 30, 2016.
Deposits totaled $16.03 billion at June 30, 2017, an increase of $675 million from $15.36 billion at March 31, 2017, and an increase of $1.83 billion from $14.20 billion at June 30, 2016. The increase from both the prior quarter and from June 30, 2016 is the result of organic deposit growth. Non-interest bearing deposits were $6.86 billion at June 30, 2017, compared to $6.11 billion at March 31, 2017, and $5.28 billion at June 30, 2016. Non-interest bearing deposits comprised 42.8% of total deposits at June 30, 2017, compared to 39.8% at March 31, 2017, and 37.1% at June 30, 2016. The proportion of savings and money market balances to total deposits decreased to 38.1% from 40.7% at March 31, 2017, and from 42.3% at June 30, 2016. Certificates of deposit as a percentage of total deposits were 9.9% at June 30, 2017, compared to 10.0% at March 31, 2017, and 11.6% at June 30, 2016. The Company’s ratio of loans to deposits was 87.3% at June 30, 2017, compared to 89.0% at March 31, 2017, and 90.7% at June 30, 2016.
Qualifying debt totaled $375 million at June 30, 2017, compared to $367 million at March 31, 2017, and $382 million at June 30, 2016.
Stockholders’ equity at June 30, 2017 was $2.06 billion, compared to $1.97 billion at March 31, 2017, and $1.80 billion at June 30, 2016. The increase from the prior year relates primarily to net income for the respective period, which was partially offset by valuation declines on available-for-sale investment securities.
At June 30, 2017, tangible common equity, net of tax, was 9.5% of tangible assets1 and total capital was 13.3% of risk-weighted assets. The Company’s tangible book value per share1 was $16.71 at June 30, 2017, up 17.3% from June 30, 2016.
Total assets increased to $18.84 billion at June 30, 2017, from $18.12 billion at March 31, 2017, and increased 12.6% from $16.73 billion at June 30, 2016. The increase in total assets from the prior year relates primarily to organic loan growth and an increase in investment securities resulting from increased deposits.
Asset Quality
The provision for credit losses was $3.0 million for the second quarter 2017, compared to $4.3 million for the first quarter 2017, and $2.5 million for the second quarter 2016. Net loan (recoveries) charge-offs in the second quarter 2017 were $(1.2) million, or (0.03)% of average loans (annualized), compared to $1.3 million in net charge-offs, or 0.04%, in the first quarter 2017 and $(0.4) million in net recoveries, or (0.01)%, in the second quarter 2016.
Nonaccrual loans decreased $4.4 million to $30.1 million during the quarter. Loans past due 90 days and still accruing interest totaled $4.0 million at June 30, 2017, compared to $3.7 million at March 31, 2017, and $7.0 million at June 30, 2016. Loans past due 30-89 days and still accruing interest totaled $4.1 million at quarter end, a decrease from $10.8 million at March 31, 2017, and an increase from $3.5 million at June 30, 2016.
Repossessed assets totaled $31.0 million at quarter end, a decrease of $14.2 million from $45.2 million at March 31, 2017, and a decrease of $18.9 million from $49.8 million at June 30, 2016. Adversely graded loans and non-performing assets totaled $367.8 million at quarter end, a decrease of $20.4 million from $388.2 million at March 31, 2017, and an increase of $4.2 million from $363.6 million at June 30, 2016.
As the Company’s asset quality and capital remain strong, the ratio of classified assets to Tier I capital plus the allowance for credit losses, a common regulatory measure of asset quality, was 12.7% at June 30, 2017, compared to 12.6% at March 31, 2017, and 13.3% at June 30, 2016.1
1 See reconciliation of Non-GAAP Financial Measures beginning on page 19.
3
Segment Highlights
The Company's reportable segments are aggregated primarily based on geographic location, services offered, and markets served. The Company's regional segments, which include Arizona, Nevada, Southern California, and Northern California, provide full service banking and related services to their respective markets. The operations from the regional segments correspond to the following banking divisions: Alliance Bank of Arizona, Bank of Nevada and First Independent Bank, Torrey Pines Bank, and Bridge Bank.
The Company's National Business Lines ("NBL") segment provides specialized banking services to niche markets. The Company's NBL reportable segments include Homeowner Associations ("HOA") Services, Hotel Franchise Finance ("HFF"), Public & Nonprofit Finance, Technology & Innovation, and Other NBLs. These NBLs are managed centrally and are broader in geographic scope than our other segments, though still predominately located within our core market areas. The HOA Services NBL corresponds to the Alliance Association Bank division. The HFF NBL includes the hotel franchise loan portfolio purchased from GE Capital on April 20, 2016. The operations of Public and Nonprofit Finance are combined into one reportable segment. The Technology & Innovation NBL includes the operations of Equity Fund Resources, the Life Sciences Group, the Renewable Resource Group, and Technology Finance. The Other NBLs segment consists of the operations of Corporate Finance, Mortgage Warehouse Lending, and Resort Finance.
The Corporate & Other segment consists of corporate-related items, income and expense items not allocated to our other reportable segments, and inter-segment eliminations.
Key management metrics for evaluating the performance of the Company's Arizona, Nevada, Southern California, Northern California, and NBL segments include loan and deposit growth, asset quality, and pre-tax income.
The regional segments reported gross loan balances of $7.83 billion at June 30, 2017, an increase of $84 million during the quarter, and an increase of $265 million during the last twelve months. All regional segments, with the exception of Nevada, had loan growth during the quarter, with Arizona contributing the largest growth of $50 million, followed by Northern California and Southern California with growth of $42 million and $32 million, respectively. The growth in loans during the last twelve months was primarily driven by an increase of $192 million in Arizona. Total deposits for the regional segments were $12.50 billion, an increase of $494 million during the quarter, and an increase of $1.16 billion during the last twelve months. Arizona and Northern California generated increased deposits during the quarter of $524 million and $87 million, respectively, which was partially offset by a decrease of $146 million in Southern California. During the last twelve months, with the exception of Southern California, each regional segment generated increased deposits, with Arizona and Nevada contributing increases of $977 million and $302 million, respectively.
Pre-tax income for the regional segments was $84.7 million for the three months ended June 30, 2017, an increase of $12.3 million from the three months ended March 31, 2017, and an increase of $10.9 million from the three months ended June 30, 2016. All regional segments except Northern California, had an increase in pre-tax income from the prior quarter. Arizona and Nevada generated the largest increases in pre-tax income with increases of $5.8 million and $5.0 million, respectively, compared to the three months ended March 31, 2017. With the exception of Northern California, which had a decrease in pre-tax income of $1.2 million, each regional segment had increases in pre-tax income from the three months ended June 30, 2016, with Arizona and Nevada contributing the largest increases of $6.3 million and $4.3 million, respectively. For the six months ended June 30, 2017, the regional segments reported total pre-tax income of $157.1 million, an increase of $17.2 million compared to the six months ended June 30, 2016. All regional segments with the exception of Northern California had increases in pre-tax income with Arizona and Nevada contributing the largest increases of $11.8 million and $5.4 million, respectively.
The NBL segments reported gross loan balances of $6.15 billion at June 30, 2017, an increase of $245 million during the quarter, and an increase of $868 million during the last twelve months. The increase in loans for the NBL segments compared to the prior quarter relates primarily to the Other NBLs segment, which increased loans by $218 million. The increase in loans for the NBL segments over the last twelve months relates primarily to the Other NBLs and Technology & Innovation segments, which increased loans by $675 million, and $101 million, respectively. Total deposits for the NBL segments were $3.46 billion, an increase of $204 million during the quarter, and an increase of $785 million during the last twelve months. During the quarter, the Technology & Innovation and HOA Services segments increased deposits by $130 million and $74 million, respectively. The increase of $785 million during the last twelve months is the result of growth in the HOA Services and Technology & Innovation segments of $476 million and $309 million, respectively.
Pre-tax income for the NBL segments was $42.6 million for the three months ended June 30, 2017, an increase of $5.1 million from the three months ended March 31, 2017, and an increase of $7.6 million from the three months ended June 30, 2016. The increase in pre-tax income from the prior quarter relates primarily to the Other NBLs and Technology & Innovation segments as both segments had an increase in pre-tax income of $2.3 million. This increase was offset by a decrease in pre-tax income from the HFF segment of $2.0 million. The increase in pre-tax income compared to the three months ended June 30, 2016 was driven by an increase of $2.4 million in both the Public & Nonprofit Finance and Technology & Innovation segments as well as an increase in pre-tax income from the HOA Services segment of $2.3 million. These increases were partially offset by a decrease in pre-tax income for the HFF segment of $1.0 million. Pre-tax income for the NBL segments for the six months ended June 30, 2017 totaled $80.1 million, an increase of $18.6 million compared to the six months ended June 30, 2016. The largest increases in pre-tax income compared to the six months ended June 30, 2016 were in the HFF, HOA Services, and Public & Nonprofit Finance segments, which increased $9.6 million, $4.8 million, and $2.6 million, respectively.
4
Conference Call and Webcast
Western Alliance Bancorporation will host a conference call and live webcast to discuss its second quarter 2017 financial results at 12:00 p.m. ET on Friday, July 21, 2017. Participants may access the call by dialing 1-888-317-6003 and using passcode 2161427 or via live audio webcast using the website link http://services.choruscall.com/links/wal170721.html. The webcast is also available via the Company’s website at www.westernalliancebancorporation.com. Participants should log in at least 15 minutes early to receive instructions. The call will be recorded and made available for replay after 2:00 p.m. ET July 21st through 9:00 a.m. ET August 21st by dialing 1-877-344-7529 passcode: 10109628.
Reclassifications
Certain amounts in the Consolidated Income Statements for the prior periods have been reclassified to conform to the current presentation. The reclassifications have no effect on net income or stockholders’ equity as previously reported.
Use of Non-GAAP Financial Information
This press release contains both financial measures based on GAAP and non-GAAP based financial measures, which are used where management believes them to be helpful in understanding the Company’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Cautionary Note Regarding Forward-Looking Statements
This release contains forward-looking statements that relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Examples of forward-looking statements include, among others, statements we make regarding our expectations with regard to our business, financial and operating results, and future economic performance. The forward-looking statements contained herein reflect our current views about future events and financial performance and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from historical results and those expressed in any forward-looking statement. Some factors that could cause actual results to differ materially from historical or expected results include, among others: the risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 as filed with the Securities and Exchange Commission; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; inflation, interest rate, market and monetary fluctuations; increases in competitive pressures among financial institutions and businesses offering similar products and services; higher defaults on our loan portfolio than we expect; changes in management’s estimate of the adequacy of the allowance for credit losses; legislative or regulatory changes or changes in accounting principles, policies or guidelines; supervisory actions by regulatory agencies which may limit our ability to pursue certain growth opportunities, including expansion through acquisitions; additional regulatory requirements resulting from our continued growth; management’s estimates and projections of interest rates and interest rate policy; the execution of our business plan; and other factors affecting the financial services industry generally or the banking industry in particular.
Any forward-looking statement made by us in this release is based only on information currently available to us and speaks only as of the date on which it is made. We do not intend and disclaim any duty or obligation to update or revise any industry information or forward-looking statements, whether written or oral, that may be made from time to time, set forth in this press release to reflect new information, future events or otherwise.
About Western Alliance Bancorporation
With more than $18 billion in assets, Western Alliance Bancorporation (NYSE:WAL) is one of the country’s top-performing banking companies and is ranked #4 on the Forbes 2017 “Best Banks in America” list. Its primary subsidiary, Western Alliance Bank, is the go-to bank for business and succeeds with local teams of experienced bankers who deliver superior service and a full spectrum of deposit, lending, treasury management, international banking and online banking products and services. Western Alliance Bank operates full-service banking divisions: Alliance Bank of Arizona, Bank of Nevada and First Independent Bank, Torrey Pines Bank and Bridge Bank. The bank also serves business customers through a robust national platform of specialized financial services including Corporate Finance, Equity Fund Resources, Hotel Franchise Finance, Life Sciences Group, Mortgage Warehouse Lending, Public and Nonprofit Finance, Renewable Resource Group, Resort Finance, Technology Finance and Alliance Association Bank. For more information, visit westernalliancebancorporation.com.
5
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||||
Summary Consolidated Financial Data | ||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||
Selected Balance Sheet Data: | ||||||||||||||||||||||
As of June 30, | ||||||||||||||||||||||
2017 | 2016 | Change % | ||||||||||||||||||||
(in millions) | ||||||||||||||||||||||
Total assets | $ | 18,844.7 | $ | 16,728.7 | 12.6 | % | ||||||||||||||||
Total loans, net | 13,989.9 | 12,877.8 | 8.6 | |||||||||||||||||||
Securities and money market investments | 3,283.0 | 2,262.6 | 45.1 | |||||||||||||||||||
Total deposits | 16,031.1 | 14,201.3 | 12.9 | |||||||||||||||||||
Qualifying debt | 375.4 | 382.1 | (1.8 | ) | ||||||||||||||||||
Stockholders' equity | 2,058.7 | 1,796.2 | 14.6 | |||||||||||||||||||
Tangible common equity, net of tax (1) | 1,761.6 | 1,497.5 | 17.6 | |||||||||||||||||||
Selected Income Statement Data: | ||||||||||||||||||||||
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||||||||
2017 | 2016 | Change % | 2017 | 2016 | Change % | |||||||||||||||||
(in thousands, except per share data) | (in thousands, except per share data) | |||||||||||||||||||||
Interest income | $ | 206,953 | $ | 174,089 | 18.9 | % | $ | 399,218 | $ | 328,345 | 21.6 | % | ||||||||||
Interest expense | 14,210 | 10,403 | 36.6 | 27,166 | 18,948 | 43.4 | ||||||||||||||||
Net interest income | 192,743 | 163,686 | 17.8 | 372,052 | 309,397 | 20.3 | ||||||||||||||||
Provision for credit losses | 3,000 | 2,500 | 20.0 | 7,250 | 5,000 | 45.0 | ||||||||||||||||
Net interest income after provision for credit losses | 189,743 | 161,186 | 17.7 | 364,802 | 304,397 | 19.8 | ||||||||||||||||
Non-interest income | 10,449 | 8,559 | 22.1 | 20,993 | 21,692 | (3.2 | ) | |||||||||||||||
Non-interest expense | 88,257 | 81,804 | 7.9 | 176,014 | 157,297 | 11.9 | ||||||||||||||||
Income before income taxes | 111,935 | 87,941 | 27.3 | 209,781 | 168,792 | 24.3 | ||||||||||||||||
Income tax expense | 31,964 | 26,327 | 21.4 | 56,453 | 45,846 | 23.1 | ||||||||||||||||
Net income | $ | 79,971 | $ | 61,614 | 29.8 | $ | 153,328 | $ | 122,946 | 24.7 | ||||||||||||
Diluted earnings per share | $ | 0.76 | $ | 0.60 | 26.7 | $ | 1.46 | $ | 1.19 | 22.7 | ||||||||||||
(1) See Reconciliation of Non-GAAP Financial Measures. | ||||||||||||||||||||||
6
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||||
Summary Consolidated Financial Data | ||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||
Common Share Data: | ||||||||||||||||||||||
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||||||||
2017 | 2016 | Change % | 2017 | 2016 | Change % | |||||||||||||||||
Diluted earnings per share | $ | 0.76 | $ | 0.60 | 26.7 | % | $ | 1.46 | $ | 1.19 | 22.7 | % | ||||||||||
Book value per common share | 19.53 | 17.09 | 14.3 | |||||||||||||||||||
Tangible book value per share, net of tax (1) | 16.71 | 14.25 | 17.3 | |||||||||||||||||||
Average shares outstanding (in thousands): | ||||||||||||||||||||||
Basic | 104,161 | 102,688 | 1.4 | 104,075 | 102,294 | 1.7 | ||||||||||||||||
Diluted | 105,045 | 103,472 | 1.5 | 104,941 | 103,007 | 1.9 | ||||||||||||||||
Common shares outstanding | 105,429 | 105,084 | 0.3 | |||||||||||||||||||
Selected Performance Ratios: | ||||||||||||||||||
Return on average assets (2) | 1.71 | % | 1.55 | % | 10.3 | % | 1.70 | % | 1.62 | % | 4.9 | % | ||||||
Return on average tangible common equity (1, 2) | 18.42 | 17.36 | 6.1 | 18.14 | 17.88 | 1.5 | ||||||||||||
Net interest margin (2) | 4.61 | 4.63 | (0.4 | ) | 4.62 | 4.60 | 0.4 | |||||||||||
Net interest spread | 4.34 | 4.46 | (2.7 | ) | 4.37 | 4.43 | (1.4 | ) | ||||||||||
Operating efficiency ratio - tax equivalent basis (1) | 41.20 | 42.99 | (4.2 | ) | 40.66 | 44.23 | (8.1 | ) | ||||||||||
Loan to deposit ratio | 87.27 | 90.68 | (3.8 | ) | ||||||||||||||
Asset Quality Ratios: | ||||||||||||||||||
Net (recoveries) charge-offs to average loans outstanding (2) | (0.03 | )% | (0.01 | )% | NM | 0.00 | % | 0.03 | % | (100.0 | )% | |||||||
Nonaccrual loans to gross loans | 0.22 | 0.31 | (29.0 | ) | ||||||||||||||
Nonaccrual loans and repossessed assets to total assets | 0.32 | 0.54 | (40.7 | ) | ||||||||||||||
Loans past due 90 days and still accruing to gross loans | 0.03 | 0.05 | (40.0 | ) | ||||||||||||||
Allowance for credit losses to gross organic loans | 1.08 | 1.15 | (6.1 | ) | ||||||||||||||
Allowance for credit losses to nonaccrual loans | 438.33 | 307.68 | 42.5 | |||||||||||||||
Capital Ratios (1): | |||||||||
Jun 30, 2017 | Mar 31, 2017 | Jun 30, 2016 | |||||||
Tangible common equity (1) | 9.5 | % | 9.4 | % | 9.1 | % | |||
Common Equity Tier 1 (3) | 10.3 | 10.0 | 9.6 | ||||||
Tier 1 Leverage ratio (3) | 9.9 | 10.2 | 9.8 | ||||||
Tier 1 Capital (3) | 10.8 | 10.5 | 10.0 | ||||||
Total Capital (3) | 13.3 | 13.1 | 12.9 | ||||||
(1) | See Reconciliation of Non-GAAP Financial Measures. | ||||||
(2) | Annualized for the three month periods ended June 30, 2017 and 2016. | ||||||
(3) | Capital ratios for June 30, 2017 are preliminary until the Call Report is filed. | ||||||
NM | Changes +/- 100% are not meaningful. | ||||||
7
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||
Condensed Consolidated Income Statements | ||||||||||||||||
Unaudited | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||
Interest income: | ||||||||||||||||
Loans | $ | 183,657 | $ | 160,015 | $ | 356,210 | $ | 299,801 | ||||||||
Investment securities | 20,629 | 12,871 | 38,743 | 26,379 | ||||||||||||
Other | 2,667 | 1,203 | 4,265 | 2,165 | ||||||||||||
Total interest income | 206,953 | 174,089 | 399,218 | 328,345 | ||||||||||||
Interest expense: | ||||||||||||||||
Deposits | 9,645 | 7,678 | 18,057 | 13,921 | ||||||||||||
Qualifying debt | 4,493 | 2,514 | 8,831 | 4,698 | ||||||||||||
Borrowings | 72 | 211 | 278 | 329 | ||||||||||||
Total interest expense | 14,210 | 10,403 | 27,166 | 18,948 | ||||||||||||
Net interest income | 192,743 | 163,686 | 372,052 | 309,397 | ||||||||||||
Provision for credit losses | 3,000 | 2,500 | 7,250 | 5,000 | ||||||||||||
Net interest income after provision for credit losses | 189,743 | 161,186 | 364,802 | 304,397 | ||||||||||||
Non-interest income: | ||||||||||||||||
Service charges | 5,203 | 4,544 | 9,941 | 9,043 | ||||||||||||
Card income | 1,380 | 1,274 | 2,802 | 2,464 | ||||||||||||
Income from bank owned life insurance | 973 | 1,029 | 1,921 | 1,959 | ||||||||||||
Foreign currency income | 832 | 842 | 1,874 | 1,783 | ||||||||||||
Warrant income | 738 | 59 | 1,324 | 393 | ||||||||||||
Lending related income and gains (losses) on sale of loans, net | 227 | 194 | 649 | 3,801 | ||||||||||||
(Loss) gain on sales of investment securities, net | (47 | ) | — | 588 | 1,001 | |||||||||||
Other | 1,143 | 617 | 1,894 | 1,248 | ||||||||||||
Total non-interest income | 10,449 | 8,559 | 20,993 | 21,692 | ||||||||||||
Non-interest expenses: | ||||||||||||||||
Salaries and employee benefits | 52,246 | 44,711 | 103,866 | 89,566 | ||||||||||||
Legal, professional and directors' fees | 8,483 | 5,747 | 17,286 | 11,319 | ||||||||||||
Occupancy | 6,927 | 7,246 | 13,821 | 13,503 | ||||||||||||
Data processing | 4,396 | 5,114 | 9,667 | 9,175 | ||||||||||||
Insurance | 3,589 | 2,963 | 6,817 | 6,286 | ||||||||||||
Deposit costs | 2,133 | 986 | 3,874 | 1,758 | ||||||||||||
Marketing | 1,131 | 1,097 | 1,852 | 1,754 | ||||||||||||
Loan and repossessed asset expenses | 1,098 | 832 | 2,376 | 1,734 | ||||||||||||
Card expense | 704 | 824 | 1,358 | 1,711 | ||||||||||||
Intangible amortization | 488 | 697 | 1,177 | 1,394 | ||||||||||||
Net loss (gain) on sales and valuations of repossessed and other assets | 231 | 357 | (312 | ) | 55 | |||||||||||
Acquisition / restructure expense | — | 3,662 | — | 3,662 | ||||||||||||
Other | 6,831 | 7,568 | 14,232 | 15,380 | ||||||||||||
Total non-interest expense | 88,257 | 81,804 | 176,014 | 157,297 | ||||||||||||
Income before income taxes | 111,935 | 87,941 | 209,781 | 168,792 | ||||||||||||
Income tax expense | 31,964 | 26,327 | 56,453 | 45,846 | ||||||||||||
Net income | $ | 79,971 | $ | 61,614 | $ | 153,328 | $ | 122,946 | ||||||||
Earnings per share: | ||||||||||||||||
Diluted shares | 105,045 | 103,472 | 104,941 | 103,007 | ||||||||||||
Diluted earnings per share | $ | 0.76 | $ | 0.60 | $ | 1.46 | $ | 1.19 | ||||||||
8
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||
Five Quarter Condensed Consolidated Income Statements | ||||||||||||||||||||
Unaudited | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
Interest income: | ||||||||||||||||||||
Loans | $ | 183,657 | $ | 172,553 | $ | 168,881 | $ | 167,914 | $ | 160,015 | ||||||||||
Investment securities | 20,629 | 18,114 | 16,725 | 15,436 | 12,871 | |||||||||||||||
Other | 2,667 | 1,598 | 1,805 | 1,400 | 1,203 | |||||||||||||||
Total interest income | 206,953 | 192,265 | 187,411 | 184,750 | 174,089 | |||||||||||||||
Interest expense: | ||||||||||||||||||||
Deposits | 9,645 | 8,412 | 7,729 | 8,072 | 7,678 | |||||||||||||||
Qualifying debt | 4,493 | 4,338 | 4,252 | 4,048 | 2,514 | |||||||||||||||
Borrowings | 72 | 206 | 161 | 83 | 211 | |||||||||||||||
Total interest expense | 14,210 | 12,956 | 12,142 | 12,203 | 10,403 | |||||||||||||||
Net interest income | 192,743 | 179,309 | 175,269 | 172,547 | 163,686 | |||||||||||||||
Provision for credit losses | 3,000 | 4,250 | 1,000 | 2,000 | 2,500 | |||||||||||||||
Net interest income after provision for credit losses | 189,743 | 175,059 | 174,269 | 170,547 | 161,186 | |||||||||||||||
Non-interest income: | ||||||||||||||||||||
Service charges | 5,203 | 4,738 | 4,865 | 4,916 | 4,544 | |||||||||||||||
Card income | 1,380 | 1,422 | 1,381 | 1,381 | 1,274 | |||||||||||||||
Income from bank owned life insurance | 973 | 948 | 904 | 899 | 1,029 | |||||||||||||||
Foreign currency income | 832 | 1,042 | 747 | 888 | 842 | |||||||||||||||
Warrant income | 738 | 586 | 1,353 | 1,457 | 59 | |||||||||||||||
Lending related income and gains (losses) on sale of loans, net | 227 | 422 | 488 | 459 | 194 | |||||||||||||||
(Losses) gains on sales of investment securities, net | (47 | ) | 635 | 58 | — | — | ||||||||||||||
Other | 1,143 | 751 | 744 | 683 | 617 | |||||||||||||||
Total non-interest income | 10,449 | 10,544 | 10,540 | 10,683 | 8,559 | |||||||||||||||
Non-interest expenses: | ||||||||||||||||||||
Salaries and employee benefits | 52,246 | 51,620 | 49,702 | 49,542 | 44,711 | |||||||||||||||
Legal, professional, and directors' fees | 8,483 | 8,803 | 7,600 | 5,691 | 5,747 | |||||||||||||||
Occupancy | 6,927 | 6,894 | 6,944 | 6,856 | 7,246 | |||||||||||||||
Data processing | 4,396 | 5,271 | 4,504 | 4,982 | 5,114 | |||||||||||||||
Insurance | 3,589 | 3,228 | 3,468 | 3,144 | 2,963 | |||||||||||||||
Deposit costs | 2,133 | 1,741 | 1,862 | 1,363 | 986 | |||||||||||||||
Marketing | 1,131 | 721 | 1,164 | 678 | 1,097 | |||||||||||||||
Loan and repossessed asset expenses | 1,098 | 1,278 | 477 | 788 | 832 | |||||||||||||||
Card expense | 704 | 654 | 689 | 536 | 824 | |||||||||||||||
Intangible amortization | 488 | 689 | 697 | 697 | 697 | |||||||||||||||
Net loss (gain) on sales and valuations of repossessed and other assets | 231 | (543 | ) | (34 | ) | (146 | ) | 357 | ||||||||||||
Acquisition / restructure expense | — | — | 6,021 | 2,729 | 3,662 | |||||||||||||||
Other | 6,831 | 7,401 | 5,551 | 8,147 | 7,568 | |||||||||||||||
Total non-interest expense | 88,257 | 87,757 | 88,645 | 85,007 | 81,804 | |||||||||||||||
Income before income taxes | 111,935 | 97,846 | 96,164 | 96,223 | 87,941 | |||||||||||||||
Income tax expense | 31,964 | 24,489 | 26,364 | 29,171 | 26,327 | |||||||||||||||
Net income | $ | 79,971 | $ | 73,357 | $ | 69,800 | $ | 67,052 | $ | 61,614 | ||||||||||
Earnings per share: | ||||||||||||||||||||
Diluted shares | 105,045 | 104,836 | 104,765 | 104,564 | 103,472 | |||||||||||||||
Diluted earnings per share | $ | 0.76 | $ | 0.70 | $ | 0.67 | $ | 0.64 | $ | 0.60 | ||||||||||
9
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||
Five Quarter Condensed Consolidated Balance Sheets | ||||||||||||||||||||
Unaudited | ||||||||||||||||||||
Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | ||||||||||||||||
(in millions, except per share data) | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Cash and due from banks | $ | 606.7 | $ | 647.0 | $ | 284.5 | $ | 356.1 | $ | 696.2 | ||||||||||
Securities and money market investments | 3,283.0 | 2,869.1 | 2,767.8 | 2,778.1 | 2,262.6 | |||||||||||||||
Loans held for sale | 16.7 | 17.8 | 18.9 | 21.3 | 22.3 | |||||||||||||||
Loans held for investment: | ||||||||||||||||||||
Commercial | 6,318.5 | 6,039.1 | 5,855.8 | 5,715.0 | 5,577.6 | |||||||||||||||
Commercial real estate - non-owner occupied | 3,649.1 | 3,607.8 | 3,544.0 | 3,623.4 | 3,601.3 | |||||||||||||||
Commercial real estate - owner occupied | 2,021.2 | 2,043.4 | 2,013.3 | 1,984.0 | 2,008.3 | |||||||||||||||
Construction and land development | 1,601.7 | 1,601.7 | 1,478.1 | 1,379.7 | 1,333.5 | |||||||||||||||
Residential real estate | 334.8 | 309.9 | 259.4 | 271.8 | 293.0 | |||||||||||||||
Consumer | 47.9 | 43.0 | 39.0 | 38.4 | 41.8 | |||||||||||||||
Gross loans and deferred fees, net | 13,973.2 | 13,644.9 | 13,189.6 | 13,012.3 | 12,855.5 | |||||||||||||||
Allowance for credit losses | (131.8 | ) | (127.6 | ) | (124.7 | ) | (122.9 | ) | (122.1 | ) | ||||||||||
Loans, net | 13,841.4 | 13,517.3 | 13,064.9 | 12,889.4 | 12,733.4 | |||||||||||||||
Premises and equipment, net | 120.5 | 120.0 | 119.8 | 121.3 | 120.5 | |||||||||||||||
Other assets acquired through foreclosure, net | 31.0 | 45.2 | 47.8 | 49.6 | 49.8 | |||||||||||||||
Bank owned life insurance | 166.4 | 165.5 | 164.5 | 163.6 | 164.3 | |||||||||||||||
Goodwill and other intangibles, net | 301.6 | 302.1 | 302.9 | 303.6 | 304.3 | |||||||||||||||
Other assets | 477.4 | 438.5 | 429.7 | 359.6 | 375.3 | |||||||||||||||
Total assets | $ | 18,844.7 | $ | 18,122.5 | $ | 17,200.8 | $ | 17,042.6 | $ | 16,728.7 | ||||||||||
Liabilities and Stockholders' Equity: | ||||||||||||||||||||
Liabilities: | ||||||||||||||||||||
Deposits | ||||||||||||||||||||
Non-interest bearing demand deposits | $ | 6,859.4 | $ | 6,114.1 | $ | 5,632.9 | $ | 5,624.8 | $ | 5,275.1 | ||||||||||
Interest bearing: | ||||||||||||||||||||
Demand | 1,480.8 | 1,449.3 | 1,346.7 | 1,256.7 | 1,278.1 | |||||||||||||||
Savings and money market | 6,104.0 | 6,253.8 | 6,120.9 | 5,969.6 | 6,005.8 | |||||||||||||||
Time certificates | 1,586.9 | 1,538.8 | 1,449.3 | 1,592.1 | 1,642.3 | |||||||||||||||
Total deposits | 16,031.1 | 15,356.0 | 14,549.8 | 14,443.2 | 14,201.3 | |||||||||||||||
Customer repurchase agreements | 32.7 | 35.7 | 41.7 | 44.4 | 38.5 | |||||||||||||||
Total customer funds | 16,063.8 | 15,391.7 | 14,591.5 | 14,487.6 | 14,239.8 | |||||||||||||||
Borrowings | — | — | 80.0 | — | — | |||||||||||||||
Qualifying debt | 375.4 | 366.9 | 367.9 | 382.9 | 382.1 | |||||||||||||||
Accrued interest payable and other liabilities | 346.8 | 394.9 | 269.9 | 314.7 | 310.6 | |||||||||||||||
Total liabilities | 16,786.0 | 16,153.5 | 15,309.3 | 15,185.2 | 14,932.5 | |||||||||||||||
Stockholders' Equity: | ||||||||||||||||||||
Common stock and additional paid-in capital | 1,376.4 | 1,370.3 | 1,373.8 | 1,368.4 | 1,364.0 | |||||||||||||||
Retained earnings | 675.8 | 595.8 | 522.4 | 452.6 | 385.6 | |||||||||||||||
Accumulated other comprehensive income (loss) | 6.5 | 2.9 | (4.7 | ) | 36.4 | 46.6 | ||||||||||||||
Total stockholders' equity | 2,058.7 | 1,969.0 | 1,891.5 | 1,857.4 | 1,796.2 | |||||||||||||||
Total liabilities and stockholders' equity | $ | 18,844.7 | $ | 18,122.5 | $ | 17,200.8 | $ | 17,042.6 | $ | 16,728.7 | ||||||||||
10
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||
Changes in the Allowance For Credit Losses | ||||||||||||||||||||
Unaudited | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Balance, beginning of period | $ | 127,649 | $ | 124,704 | $ | 122,884 | $ | 122,104 | $ | 119,227 | ||||||||||
Provision for credit losses | 3,000 | 4,250 | 1,000 | 2,000 | 2,500 | |||||||||||||||
Recoveries of loans previously charged-off: | ||||||||||||||||||||
Commercial and industrial | 1,759 | 328 | 1,144 | 466 | 804 | |||||||||||||||
Commercial real estate - non-owner occupied | 360 | 355 | 691 | 230 | 343 | |||||||||||||||
Commercial real estate - owner occupied | 46 | 178 | 45 | 291 | 427 | |||||||||||||||
Construction and land development | 508 | 277 | 30 | 302 | 58 | |||||||||||||||
Residential real estate | 1,299 | 251 | 287 | 179 | 153 | |||||||||||||||
Consumer | — | 49 | 11 | 21 | 43 | |||||||||||||||
Total recoveries | 3,972 | 1,438 | 2,208 | 1,489 | 1,828 | |||||||||||||||
Loans charged-off: | ||||||||||||||||||||
Commercial and industrial | 651 | 2,595 | 1,267 | 2,558 | 1,161 | |||||||||||||||
Commercial real estate - non-owner occupied | 1,808 | — | 1 | — | — | |||||||||||||||
Commercial real estate - owner occupied | 11 | — | 1 | 72 | 244 | |||||||||||||||
Construction and land development | — | — | 18 | — | — | |||||||||||||||
Residential real estate | 332 | 115 | 60 | 79 | — | |||||||||||||||
Consumer | 8 | 33 | 41 | — | 46 | |||||||||||||||
Total loans charged-off | 2,810 | 2,743 | 1,388 | 2,709 | 1,451 | |||||||||||||||
Net loan (recoveries) charge-offs | (1,162 | ) | 1,305 | (820 | ) | 1,220 | (377 | ) | ||||||||||||
Balance, end of period | $ | 131,811 | $ | 127,649 | $ | 124,704 | $ | 122,884 | $ | 122,104 | ||||||||||
Net (recoveries) charge-offs to average loans- annualized | (0.03 | )% | 0.04 | % | (0.03 | )% | 0.04 | % | (0.01 | )% | ||||||||||
Allowance for credit losses to gross organic loans | 1.08 | % | 1.08 | % | 1.11 | % | 1.13 | % | 1.15 | % | ||||||||||
Allowance for credit losses to nonaccrual loans | 438.33 | 370.45 | 309.65 | 302.61 | 307.68 | |||||||||||||||
Nonaccrual loans | $ | 30,071 | $ | 34,458 | $ | 40,272 | $ | 40,608 | $ | 39,685 | ||||||||||
Nonaccrual loans to gross loans | 0.22 | % | 0.25 | % | 0.31 | % | 0.31 | % | 0.31 | % | ||||||||||
Repossessed assets | $ | 30,988 | $ | 45,200 | $ | 47,815 | $ | 49,619 | $ | 49,842 | ||||||||||
Nonaccrual loans and repossessed assets to total assets | 0.32 | % | 0.44 | % | 0.51 | % | 0.53 | % | 0.54 | % | ||||||||||
Loans past due 90 days, still accruing | $ | 4,021 | $ | 3,659 | $ | 1,067 | $ | 2,817 | $ | 6,991 | ||||||||||
Loans past due 90 days and still accruing to gross loans | 0.03 | % | 0.03 | % | 0.01 | % | 0.02 | % | 0.05 | % | ||||||||||
Loans past due 30 to 89 days, still accruing | $ | 4,071 | $ | 10,764 | $ | 6,294 | $ | 18,446 | $ | 3,475 | ||||||||||
Loans past due 30 to 89 days, still accruing to gross loans | 0.03 | % | 0.08 | % | 0.05 | % | 0.14 | % | 0.03 | % | ||||||||||
Special mention loans | $ | 141,036 | $ | 175,080 | $ | 148,144 | $ | 134,018 | $ | 154,167 | ||||||||||
Special mention loans to gross loans | 1.01 | % | 1.28 | % | 1.12 | % | 1.03 | % | 1.20 | % | ||||||||||
Classified loans on accrual | $ | 165,715 | $ | 133,483 | $ | 106,644 | $ | 110,650 | $ | 119,939 | ||||||||||
Classified loans on accrual to gross loans | 1.19 | % | 0.98 | % | 0.81 | % | 0.85 | % | 0.93 | % | ||||||||||
Classified assets | $ | 249,491 | $ | 236,786 | $ | 211,782 | $ | 212,286 | $ | 219,319 | ||||||||||
Classified assets to total assets | 1.32 | % | 1.31 | % | 1.23 | % | 1.25 | % | 1.31 | % | ||||||||||
11
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||||
Analysis of Average Balances, Yields and Rates | ||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||
June 30, 2017 | March 31, 2017 | |||||||||||||||||||||
Average Balance | Interest | Average Yield / Cost | Average Balance | Interest | Average Yield / Cost | |||||||||||||||||
($ in millions) | ($ in thousands) | ($ in millions) | ($ in thousands) | |||||||||||||||||||
Interest earning assets | ||||||||||||||||||||||
Loans: | ||||||||||||||||||||||
Commercial | $ | 6,054.3 | $ | 75,857 | 5.52 | % | $ | 5,753.7 | $ | 68,404 | 5.24 | % | ||||||||||
CRE - non-owner occupied | 3,606.8 | 52,416 | 5.81 | 3,534.8 | 53,506 | 6.05 | ||||||||||||||||
CRE - owner occupied | 2,019.5 | 25,931 | 5.14 | 1,998.0 | 24,726 | 4.95 | ||||||||||||||||
Construction and land development | 1,605.6 | 24,965 | 6.22 | 1,510.8 | 22,102 | 5.85 | ||||||||||||||||
Residential real estate | 322.2 | 3,950 | 4.90 | 271.9 | 3,023 | 4.45 | ||||||||||||||||
Consumer | 44.7 | 395 | 3.53 | 38.5 | 493 | 5.12 | ||||||||||||||||
Loans held for sale | 17.3 | 143 | 3.31 | 18.8 | 299 | 6.36 | ||||||||||||||||
Total loans (1), (2), (3) | 13,670.4 | 183,657 | 5.60 | 13,126.5 | 172,553 | 5.47 | ||||||||||||||||
Securities: | ||||||||||||||||||||||
Securities - taxable | 2,446.5 | 14,847 | 2.43 | 2,105.2 | 12,437 | 2.36 | ||||||||||||||||
Securities - tax-exempt | 628.0 | 5,782 | 5.48 | 604.3 | 5,677 | 5.57 | ||||||||||||||||
Total securities (1) | 3,074.5 | 20,629 | 3.05 | 2,709.5 | 18,114 | 3.08 | ||||||||||||||||
Cash and other | 903.3 | 2,667 | 1.18 | 482.0 | 1,598 | 1.33 | ||||||||||||||||
Total interest earning assets | 17,648.2 | 206,953 | 4.93 | 16,318.0 | 192,265 | 4.95 | ||||||||||||||||
Non-interest earning assets | ||||||||||||||||||||||
Cash and due from banks | 140.3 | 142.7 | ||||||||||||||||||||
Allowance for credit losses | (130.0 | ) | (125.7 | ) | ||||||||||||||||||
Bank owned life insurance | 165.8 | 164.8 | ||||||||||||||||||||
Other assets | 919.6 | 900.5 | ||||||||||||||||||||
Total assets | $ | 18,743.9 | $ | 17,400.3 | ||||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||
Interest-bearing transaction accounts | $ | 1,492.7 | $ | 986 | 0.26 | % | $ | 1,434.8 | $ | 805 | 0.22 | % | ||||||||||
Savings and money market | 6,155.8 | 5,831 | 0.38 | 6,069.0 | 5,312 | 0.35 | ||||||||||||||||
Time certificates of deposit | 1,576.0 | 2,828 | 0.72 | 1,484.9 | 2,295 | 0.62 | ||||||||||||||||
Total interest-bearing deposits | 9,224.5 | 9,645 | 0.42 | 8,988.7 | 8,412 | 0.37 | ||||||||||||||||
Short-term borrowings | 34.6 | 72 | 0.83 | 110.9 | 206 | 0.74 | ||||||||||||||||
Qualifying debt | 359.3 | 4,493 | 5.00 | 354.1 | 4,338 | 4.90 | ||||||||||||||||
Total interest-bearing liabilities | 9,618.4 | 14,210 | 0.59 | 9,453.7 | 12,956 | 0.55 | ||||||||||||||||
Non-interest-bearing liabilities | ||||||||||||||||||||||
Non-interest-bearing demand deposits | 6,735.3 | 5,719.2 | ||||||||||||||||||||
Other liabilities | 351.7 | 280.6 | ||||||||||||||||||||
Stockholders’ equity | 2,038.5 | 1,946.8 | ||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 18,743.9 | $ | 17,400.3 | ||||||||||||||||||
Net interest income and margin (4) | $ | 192,743 | 4.61 | % | $ | 179,309 | 4.63 | % | ||||||||||||||
(1) Yields on loans and securities have been adjusted to a tax-equivalent basis. The taxable-equivalent adjustment was $10.4 million and $9.7 million for the three months ended June 30, 2017 and March 31, 2017, respectively. | ||||||||||||||||||||||
(2) Included in the yield computation are net loan fees of $10.0 million and accretion on acquired loans of $7.1 million for the three months ended June 30, 2017, compared to $6.6 million and $6.4 million for the three months ended March 31, 2017, respectively. | ||||||||||||||||||||||
(3) Includes non-accrual loans. | ||||||||||||||||||||||
(4) Net interest margin is computed by dividing net interest income by total average earning assets. | ||||||||||||||||||||||
12
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||||
Analysis of Average Balances, Yields and Rates | ||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||
Three Months Ended June 30, | ||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||
Average Balance | Interest | Average Yield / Cost | Average Balance | Interest | Average Yield / Cost | |||||||||||||||||
($ in millions) | ($ in thousands) | ($ in millions) | ($ in thousands) | |||||||||||||||||||
Interest earning assets | ||||||||||||||||||||||
Loans: | ||||||||||||||||||||||
Commercial | $ | 6,054.3 | $ | 75,857 | 5.52 | % | $ | 5,365.0 | $ | 63,621 | 5.24 | % | ||||||||||
CRE - non-owner occupied | 3,606.8 | 52,416 | 5.81 | 3,257.6 | 47,452 | 5.83 | ||||||||||||||||
CRE - owner occupied | 2,019.5 | 25,931 | 5.14 | 2,012.7 | 25,715 | 5.11 | ||||||||||||||||
Construction and land development | 1,605.6 | 24,965 | 6.22 | 1,293.7 | 19,094 | 5.90 | ||||||||||||||||
Residential real estate | 322.2 | 3,950 | 4.90 | 299.8 | 3,383 | 4.51 | ||||||||||||||||
Consumer | 44.7 | 395 | 3.53 | 35.7 | 428 | 4.80 | ||||||||||||||||
Loans held for sale | 17.3 | 143 | 3.31 | 22.8 | 322 | 5.66 | ||||||||||||||||
Total loans (1), (2), (3) | 13,670.4 | 183,657 | 5.60 | 12,287.3 | 160,015 | 5.43 | ||||||||||||||||
Securities: | ||||||||||||||||||||||
Securities - taxable | 2,446.5 | 14,847 | 2.43 | 1,547.8 | 8,514 | 2.20 | ||||||||||||||||
Securities - tax-exempt | 628.0 | 5,782 | 5.48 | 469.7 | 4,357 | 5.44 | ||||||||||||||||
Total securities (1) | 3,074.5 | 20,629 | 3.05 | 2,017.5 | 12,871 | 2.95 | ||||||||||||||||
Cash and other | 903.3 | 2,667 | 1.18 | 597.5 | 1,203 | 0.81 | ||||||||||||||||
Total interest earning assets | 17,648.2 | 206,953 | 4.93 | 14,902.3 | 174,089 | 4.91 | ||||||||||||||||
Non-interest earning assets | ||||||||||||||||||||||
Cash and due from banks | 140.3 | 134.2 | ||||||||||||||||||||
Allowance for credit losses | (130.0 | ) | (120.4 | ) | ||||||||||||||||||
Bank owned life insurance | 165.8 | 163.7 | ||||||||||||||||||||
Other assets | 919.6 | 832.7 | ||||||||||||||||||||
Total assets | $ | 18,743.9 | $ | 15,912.5 | ||||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||
Interest-bearing transaction accounts | $ | 1,492.7 | $ | 986 | 0.26 | % | $ | 1,194.2 | $ | 504 | 0.17 | % | ||||||||||
Savings and money market | 6,155.8 | 5,831 | 0.38 | 5,837.4 | 4,978 | 0.34 | ||||||||||||||||
Time certificates of deposit | 1,576.0 | 2,828 | 0.72 | 1,757.2 | 2,196 | 0.50 | ||||||||||||||||
Total interest-bearing deposits | 9,224.5 | 9,645 | 0.42 | 8,788.8 | 7,678 | 0.35 | ||||||||||||||||
Short-term borrowings | 34.6 | 72 | 0.83 | 153.1 | 211 | 0.55 | ||||||||||||||||
Qualifying debt | 359.3 | 4,493 | 5.00 | 227.5 | 2,514 | 4.42 | ||||||||||||||||
Total interest-bearing liabilities | 9,618.4 | 14,210 | 0.59 | 9,169.4 | 10,403 | 0.45 | ||||||||||||||||
Non-interest-bearing liabilities | ||||||||||||||||||||||
Non-interest-bearing demand deposits | 6,735.3 | 4,772.6 | ||||||||||||||||||||
Other liabilities | 351.7 | 246.7 | ||||||||||||||||||||
Stockholders’ equity | 2,038.5 | 1,723.8 | ||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 18,743.9 | $ | 15,912.5 | ||||||||||||||||||
Net interest income and margin (4) | $ | 192,743 | 4.61 | % | $ | 163,686 | 4.63 | % | ||||||||||||||
(1) Yields on loans and securities have been adjusted to a tax-equivalent basis. The taxable-equivalent adjustment was $10.4 million and $8.7 million for the three months ended June 30, 2017 and 2016, respectively. | ||||||||||||||||||||||
(2) Included in the yield computation are net loan fees of $10.0 million and accretion on acquired loans of $7.1 million for the three months ended June 30, 2017, compared to $6.5 million and $8.2 million for the three months ended June 30, 2016, respectively. | ||||||||||||||||||||||
(3) Includes non-accrual loans. | ||||||||||||||||||||||
(4) Net interest margin is computed by dividing net interest income by total average earning assets. | ||||||||||||||||||||||
13
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||||
Analysis of Average Balances, Yields and Rates | ||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||
Six Months Ended June 30, | ||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||
Average Balance | Interest | Average Yield / Cost | Average Balance | Interest | Average Yield / Cost | |||||||||||||||||
($ in millions) | ($ in thousands) | ($ in millions) | ($ in thousands) | |||||||||||||||||||
Interest earning assets | ||||||||||||||||||||||
Loans: | ||||||||||||||||||||||
Commercial | $ | 5,904.9 | $ | 144,260 | 5.38 | % | $ | 5,262.8 | $ | 121,507 | 5.12 | % | ||||||||||
CRE - non-owner occupied | 3,571.0 | 105,921 | 5.93 | 2,765.0 | 78,405 | 5.67 | ||||||||||||||||
CRE - owner occupied | 2,008.8 | 50,658 | 5.04 | 2,037.0 | 51,901 | 5.10 | ||||||||||||||||
Construction and land development | 1,558.5 | 47,067 | 6.04 | 1,229.9 | 39,680 | 6.45 | ||||||||||||||||
Residential real estate | 297.2 | 6,974 | 4.69 | 305.7 | 6,891 | 4.51 | ||||||||||||||||
Consumer | 41.6 | 888 | 4.27 | 32.3 | 742 | 4.59 | ||||||||||||||||
Loans held for sale | 18.0 | 442 | 4.91 | 23.5 | 675 | 5.74 | ||||||||||||||||
Total loans (1) | 13,400.0 | 356,210 | 5.53 | 11,656.2 | 299,801 | 5.37 | ||||||||||||||||
Securities: | ||||||||||||||||||||||
Securities - taxable (1) | 2,276.8 | 27,285 | 2.40 | 1,558.1 | 17,851 | 2.29 | ||||||||||||||||
Securities - tax-exempt | 616.2 | 11,458 | 5.52 | 462.2 | 8,528 | 5.33 | ||||||||||||||||
Total securities | 2,893.0 | 38,743 | 3.06 | 2,020.3 | 26,379 | 2.99 | ||||||||||||||||
Cash and other | 693.8 | 4,265 | 1.23 | 507.5 | 2,165 | 0.85 | ||||||||||||||||
Total interest earning assets | 16,986.8 | 399,218 | 4.94 | 14,184.0 | 328,345 | 4.87 | ||||||||||||||||
Non-interest earning assets | ||||||||||||||||||||||
Cash and due from banks | 141.5 | 137.5 | ||||||||||||||||||||
Allowance for credit losses | (127.9 | ) | (121.0 | ) | ||||||||||||||||||
Bank owned life insurance | 165.3 | 163.2 | ||||||||||||||||||||
Other assets | 910.1 | 827.6 | ||||||||||||||||||||
Total assets | $ | 18,075.8 | $ | 15,191.3 | ||||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||
Interest-bearing transaction accounts | $ | 1,463.9 | $ | 1,792 | 0.24 | % | $ | 1,143.0 | $ | 959 | 0.17 | % | ||||||||||
Savings and money market accounts | 6,112.7 | 11,142 | 0.36 | 5,585.7 | 9,012 | 0.32 | ||||||||||||||||
Time certificates of deposit | 1,530.7 | 5,123 | 0.67 | 1,659.3 | 3,950 | 0.48 | ||||||||||||||||
Total interest-bearing deposits | 9,107.3 | 18,057 | 0.40 | 8,388.0 | 13,921 | 0.33 | ||||||||||||||||
Short-term borrowings | 72.5 | 278 | 0.77 | 102.9 | 329 | 0.64 | ||||||||||||||||
Qualifying debt | 356.6 | 8,831 | 4.95 | 213.5 | 4,698 | 4.40 | ||||||||||||||||
Total interest-bearing liabilities | 9,536.4 | 27,166 | 0.57 | 8,704.4 | 18,948 | 0.44 | ||||||||||||||||
Non-interest-bearing liabilities | ||||||||||||||||||||||
Non-interest-bearing demand deposits | 6,230.1 | 4,561.4 | ||||||||||||||||||||
Other liabilities | 316.4 | 245.6 | ||||||||||||||||||||
Stockholders’ equity | 1,992.9 | 1,679.9 | ||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 18,075.8 | $ | 15,191.3 | ||||||||||||||||||
Net interest income and margin (4) | $ | 372,052 | 4.62 | % | $ | 309,397 | 4.60 | % | ||||||||||||||
(1) Yields on loans and securities have been adjusted to a tax-equivalent basis. The taxable-equivalent adjustment was $20.1 million and $17.1 million for the six months ended June 30, 2017 and 2016, respectively. | ||||||||||||||||||||||
(2) Included in the yield computation are net loan fees of $16.6 million and accretion on acquired loans of $13.5 million for the six months ended June 30, 2017, compared to $13.0 million and $13.5 million for the six months ended June 30, 2016, respectively. | ||||||||||||||||||||||
(3) Includes non-accrual loans. | ||||||||||||||||||||||
(4) Net interest margin is computed by dividing net interest income by total average earning assets. | ||||||||||||||||||||||
14
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||
Operating Segment Results | ||||||||||||||||||||
Unaudited | ||||||||||||||||||||
Balance Sheet: | Regional Segments | |||||||||||||||||||
Consolidated Company | Arizona | Nevada | Southern California | Northern California | ||||||||||||||||
At June 30, 2017 | (dollars in millions) | |||||||||||||||||||
Assets: | ||||||||||||||||||||
Cash, cash equivalents, and investment securities | $ | 3,889.7 | $ | 1.8 | $ | 7.4 | $ | 2.2 | $ | 1.9 | ||||||||||
Loans, net of deferred loan fees and costs | 13,989.9 | 3,089.9 | 1,729.3 | 1,838.4 | 1,172.5 | |||||||||||||||
Less: allowance for credit losses | (131.8 | ) | (30.7 | ) | (18.3 | ) | (20.6 | ) | (10.1 | ) | ||||||||||
Total loans | 13,858.1 | 3,059.2 | 1,711.0 | 1,817.8 | 1,162.4 | |||||||||||||||
Other assets acquired through foreclosure, net | 31.0 | 2.3 | 15.7 | — | 0.2 | |||||||||||||||
Goodwill and other intangible assets, net | 301.6 | — | 23.3 | — | 157.0 | |||||||||||||||
Other assets | 764.3 | 41.7 | 59.3 | 13.8 | 13.8 | |||||||||||||||
Total assets | $ | 18,844.7 | $ | 3,105.0 | $ | 1,816.7 | $ | 1,833.8 | $ | 1,335.3 | ||||||||||
Liabilities: | ||||||||||||||||||||
Deposits | $ | 16,031.1 | $ | 4,778.5 | $ | 3,925.3 | $ | 2,251.6 | $ | 1,547.8 | ||||||||||
Borrowings and qualifying debt | 375.4 | — | — | — | — | |||||||||||||||
Other liabilities | 379.5 | 8.6 | 27.9 | 5.9 | 11.0 | |||||||||||||||
Total liabilities | 16,786.0 | 4,787.1 | 3,953.2 | 2,257.5 | 1,558.8 | |||||||||||||||
Allocated equity: | 2,058.7 | 373.9 | 253.3 | 205.8 | 291.0 | |||||||||||||||
Total liabilities and stockholders' equity | $ | 18,844.7 | $ | 5,161.0 | $ | 4,206.5 | $ | 2,463.3 | $ | 1,849.8 | ||||||||||
Excess funds provided (used) | — | 2,056.0 | 2,389.8 | 629.5 | 514.5 | |||||||||||||||
No. of offices | 46 | 9 | 16 | 9 | 3 | |||||||||||||||
No. of full-time equivalent employees | 1,628 | 168 | 220 | 176 | 166 | |||||||||||||||
Income Statement: | ||||||||||||||||||||
Three Months Ended June 30, 2017: | (in thousands) | |||||||||||||||||||
Net interest income (expense) | $ | 192,743 | $ | 49,295 | $ | 36,422 | $ | 29,058 | $ | 19,719 | ||||||||||
Provision for credit losses | 3,000 | 384 | (3,123 | ) | (53 | ) | 698 | |||||||||||||
Net interest income (expense) after provision for credit losses | 189,743 | 48,911 | 39,545 | 29,111 | 19,021 | |||||||||||||||
Non-interest income | 10,449 | 1,189 | 2,313 | 888 | 1,930 | |||||||||||||||
Non-interest expense | (88,257 | ) | (17,922 | ) | (15,115 | ) | (13,020 | ) | (12,162 | ) | ||||||||||
Income (loss) before income taxes | 111,935 | 32,178 | 26,743 | 16,979 | 8,789 | |||||||||||||||
Income tax expense (benefit) | 31,964 | 12,624 | 9,360 | 7,140 | 3,696 | |||||||||||||||
Net income (loss) | $ | 79,971 | $ | 19,554 | $ | 17,383 | $ | 9,839 | $ | 5,093 | ||||||||||
Six Months Ended June 30, 2017: | (in thousands) | |||||||||||||||||||
Net interest income (expense) | $ | 372,052 | $ | 93,202 | $ | 71,718 | $ | 54,276 | $ | 41,754 | ||||||||||
Provision for (recovery of) credit losses | 7,250 | 398 | (3,334 | ) | 38 | 1,094 | ||||||||||||||
Net interest income (expense) after provision for credit losses | 364,802 | 92,804 | 75,052 | 54,238 | 40,660 | |||||||||||||||
Non-interest income | 20,993 | 2,302 | 4,446 | 1,631 | 4,043 | |||||||||||||||
Non-interest expense | (176,014 | ) | (36,544 | ) | (30,985 | ) | (25,723 | ) | (24,871 | ) | ||||||||||
Income (loss) before income taxes | 209,781 | 58,562 | 48,513 | 30,146 | 19,832 | |||||||||||||||
Income tax expense (benefit) | 56,453 | 22,974 | 16,980 | 12,677 | 8,339 | |||||||||||||||
Net income (loss) | $ | 153,328 | $ | 35,588 | $ | 31,533 | $ | 17,469 | $ | 11,493 | ||||||||||
15
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||||||
Operating Segment Results | ||||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||||
Balance Sheet: | National Business Lines | |||||||||||||||||||||||
HOA Services | Public & Nonprofit Finance | Technology & Innovation | Hotel Franchise Finance | Other NBLs | Corporate & Other | |||||||||||||||||||
At June 30, 2017 | (dollars in millions) | |||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Cash, cash equivalents, and investment securities | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 3,876.4 | ||||||||||||
Loans, net of deferred loan fees and costs | 150.3 | 1,545.7 | 1,044.4 | 1,238.5 | 2,173.2 | 7.7 | ||||||||||||||||||
Less: allowance for credit losses | (1.6 | ) | (16.1 | ) | (10.1 | ) | (1.2 | ) | (22.6 | ) | (0.5 | ) | ||||||||||||
Total loans | 148.7 | 1,529.6 | 1,034.3 | 1,237.3 | 2,150.6 | 7.2 | ||||||||||||||||||
Other assets acquired through foreclosure, net | — | — | — | — | — | 12.8 | ||||||||||||||||||
Goodwill and other intangible assets, net | — | — | 121.2 | 0.1 | — | — | ||||||||||||||||||
Other assets | 0.4 | 16.4 | 5.5 | 5.3 | 8.5 | 599.6 | ||||||||||||||||||
Total assets | $ | 149.1 | $ | 1,546.0 | $ | 1,161.0 | $ | 1,242.7 | $ | 2,159.1 | $ | 4,496.0 | ||||||||||||
Liabilities: | ||||||||||||||||||||||||
Deposits | $ | 2,186.9 | $ | — | $ | 1,272.4 | $ | — | $ | — | $ | 68.6 | ||||||||||||
Borrowings and qualifying debt | — | — | — | — | — | 375.4 | ||||||||||||||||||
Other liabilities | 0.6 | 50.7 | 0.7 | 0.3 | 49.6 | 224.2 | ||||||||||||||||||
Total liabilities | 2,187.5 | 50.7 | 1,273.1 | 0.3 | 49.6 | 668.2 | ||||||||||||||||||
Allocated equity: | 57.1 | 126.4 | 229.5 | 100.9 | 175.5 | 245.3 | ||||||||||||||||||
Total liabilities and stockholders' equity | $ | 2,244.6 | $ | 177.1 | $ | 1,502.6 | $ | 101.2 | $ | 225.1 | $ | 913.5 | ||||||||||||
Excess funds provided (used) | 2,095.5 | (1,368.9 | ) | 341.6 | (1,141.5 | ) | (1,934.0 | ) | (3,582.5 | ) | ||||||||||||||
No. of offices | 1 | 1 | 9 | 1 | 4 | (7 | ) | |||||||||||||||||
No. of full-time equivalent employees | 62 | 8 | 62 | 17 | 35 | 714 | ||||||||||||||||||
Income Statement: | ||||||||||||||||||||||||
Three Months Ended June 30, 2017: | (in thousands) | |||||||||||||||||||||||
Net interest income (expense) | $ | 13,781 | $ | 7,488 | $ | 21,029 | $ | 13,410 | $ | 15,304 | $ | (12,763 | ) | |||||||||||
Provision for credit losses | 165 | 196 | 603 | 1,808 | 2,322 | — | ||||||||||||||||||
Net interest income (expense) after provision for credit losses | 13,616 | 7,292 | 20,426 | 11,602 | 12,982 | (12,763 | ) | |||||||||||||||||
Non-interest income | 140 | 10 | 1,961 | — | 532 | 1,486 | ||||||||||||||||||
Non-interest expense | (7,258 | ) | (1,983 | ) | (9,082 | ) | (3,056 | ) | (4,566 | ) | (4,093 | ) | ||||||||||||
Income (loss) before income taxes | 6,498 | 5,319 | 13,305 | 8,546 | 8,948 | (15,370 | ) | |||||||||||||||||
Income tax expense (benefit) | 2,436 | 1,994 | 4,989 | 3,205 | 3,356 | (16,836 | ) | |||||||||||||||||
Net income (loss) | $ | 4,062 | $ | 3,325 | $ | 8,316 | $ | 5,341 | $ | 5,592 | $ | 1,466 | ||||||||||||
Six Months Ended June 30, 2017: | (in thousands) | |||||||||||||||||||||||
Net interest income (expense) | $ | 26,529 | $ | 13,973 | $ | 39,195 | $ | 26,991 | $ | 29,447 | $ | (25,033 | ) | |||||||||||
Provision for (recovery of) credit losses | 292 | 705 | 899 | 1,808 | 5,849 | (499 | ) | |||||||||||||||||
Net interest income (expense) after provision for credit losses | 26,237 | 13,268 | 38,296 | 25,183 | 23,598 | (24,534 | ) | |||||||||||||||||
Non-interest income | 281 | 25 | 3,834 | — | 1,253 | 3,178 | ||||||||||||||||||
Non-interest expense | (14,405 | ) | (4,236 | ) | (17,861 | ) | (6,044 | ) | (9,287 | ) | (6,058 | ) | ||||||||||||
Income (loss) before income taxes | 12,113 | 9,057 | 24,269 | 19,139 | 15,564 | (27,414 | ) | |||||||||||||||||
Income tax expense (benefit) | 4,542 | 3,396 | 9,100 | 7,177 | 5,837 | (34,569 | ) | |||||||||||||||||
Net income (loss) | $ | 7,571 | $ | 5,661 | $ | 15,169 | $ | 11,962 | $ | 9,727 | $ | 7,155 | ||||||||||||
16
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||
Operating Segment Results | ||||||||||||||||||||
Unaudited | ||||||||||||||||||||
Balance Sheet: | Regional Segments | |||||||||||||||||||
Consolidated Company | Arizona | Nevada | Southern California | Northern California | ||||||||||||||||
At December 31, 2016 | (dollars in millions) | |||||||||||||||||||
Assets: | ||||||||||||||||||||
Cash, cash equivalents, and investment securities | $ | 3,052.3 | $ | 1.9 | $ | 10.1 | $ | 2.1 | $ | 1.9 | ||||||||||
Loans, net of deferred loan fees and costs | 13,208.5 | 2,955.9 | 1,725.5 | 1,766.8 | 1,095.4 | |||||||||||||||
Less: allowance for credit losses | (124.7 | ) | (30.1 | ) | (18.5 | ) | (19.4 | ) | (8.8 | ) | ||||||||||
Total loans | 13,083.8 | 2,925.8 | 1,707.0 | 1,747.4 | 1,086.6 | |||||||||||||||
Other assets acquired through foreclosure, net | 47.8 | 6.2 | 18.0 | — | 0.3 | |||||||||||||||
Goodwill and other intangible assets, net | 302.9 | — | 23.7 | — | 157.5 | |||||||||||||||
Other assets | 714.0 | 42.9 | 58.8 | 14.5 | 14.3 | |||||||||||||||
Total assets | $ | 17,200.8 | $ | 2,976.8 | $ | 1,817.6 | $ | 1,764.0 | $ | 1,260.6 | ||||||||||
Liabilities: | ||||||||||||||||||||
Deposits | $ | 14,549.8 | $ | 3,843.4 | $ | 3,731.5 | $ | 2,382.6 | $ | 1,543.6 | ||||||||||
Borrowings and qualifying debt | 447.9 | — | — | — | — | |||||||||||||||
Other liabilities | 311.6 | 12.8 | 28.3 | 12.9 | 12.4 | |||||||||||||||
Total liabilities | 15,309.3 | 3,856.2 | 3,759.8 | 2,395.5 | 1,556.0 | |||||||||||||||
Allocated equity: | 1,891.5 | 346.6 | 250.7 | 201.6 | 283.7 | |||||||||||||||
Total liabilities and stockholders' equity | $ | 17,200.8 | $ | 4,202.8 | $ | 4,010.5 | $ | 2,597.1 | $ | 1,839.7 | ||||||||||
Excess funds provided (used) | — | 1,226.0 | 2,192.9 | 833.1 | 579.1 | |||||||||||||||
No. of offices | 48 | 10 | 18 | 9 | 3 | |||||||||||||||
No. of full-time equivalent employees | 1,514 | 169 | 228 | 57 | 275 | |||||||||||||||
Income Statements: | ||||||||||||||||||||
Three Months Ended June 30, 2016: | (in thousands) | |||||||||||||||||||
Net interest income (expense) | $ | 163,686 | $ | 41,204 | $ | 33,464 | $ | 25,803 | $ | 21,896 | ||||||||||
Provision for (recovery of) credit losses | 2,499 | 1,703 | (1,704 | ) | 220 | 926 | ||||||||||||||
Net interest income (expense) after provision for credit losses | 161,187 | 39,501 | 35,168 | 25,583 | 20,970 | |||||||||||||||
Non-interest income | 8,558 | 888 | 2,097 | 561 | 2,516 | |||||||||||||||
Non-interest expense | (81,804 | ) | (14,550 | ) | (14,824 | ) | (10,635 | ) | (13,481 | ) | ||||||||||
Income (loss) before income taxes | 87,941 | 25,839 | 22,441 | 15,509 | 10,005 | |||||||||||||||
Income tax expense (benefit) | 26,327 | 10,137 | 7,855 | 6,522 | 4,206 | |||||||||||||||
Net income (loss) | $ | 61,614 | $ | 15,702 | $ | 14,586 | $ | 8,987 | $ | 5,799 | ||||||||||
Six Months Ended June 30, 2016: | (in thousands) | |||||||||||||||||||
Net interest income (expense) | $ | 309,397 | $ | 79,660 | $ | 66,039 | $ | 50,231 | $ | 45,091 | ||||||||||
Provision for (recovery of) credit losses | 4,999 | 8,476 | (2,517 | ) | 250 | 1,968 | ||||||||||||||
Net interest income (expense) after provision for credit losses | 304,398 | 71,184 | 68,556 | 49,981 | 43,123 | |||||||||||||||
Non-interest income | 21,691 | 4,569 | 4,156 | 1,221 | 4,942 | |||||||||||||||
Non-interest expense | (157,297 | ) | (29,006 | ) | (29,570 | ) | (21,869 | ) | (27,448 | ) | ||||||||||
Income (loss) before income taxes | 168,792 | 46,747 | 43,142 | 29,333 | 20,617 | |||||||||||||||
Income tax expense (benefit) | 45,846 | 18,339 | 15,100 | 12,335 | 8,669 | |||||||||||||||
Net income (loss) | $ | 122,946 | $ | 28,408 | $ | 28,042 | $ | 16,998 | $ | 11,948 | ||||||||||
17
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||||||
Operating Segment Results | ||||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||||
Balance Sheet: | National Business Lines | |||||||||||||||||||||||
HOA Services | Public & Nonprofit Finance | Technology & Innovation | Hotel Franchise Finance | Other NBLs | Corporate & Other | |||||||||||||||||||
At December 31, 2016 | (dollars in millions) | |||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Cash, cash equivalents, and investment securities | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 3,036.3 | ||||||||||||
Loans, net of deferred loan fees and costs | 116.8 | 1,454.3 | 1,011.4 | 1,292.1 | 1,776.9 | 13.4 | ||||||||||||||||||
Less: allowance for credit losses | (1.3 | ) | (15.6 | ) | (10.6 | ) | (0.8 | ) | (19.0 | ) | (0.6 | ) | ||||||||||||
Total loans | 115.5 | 1,438.7 | 1,000.8 | 1,291.3 | 1,757.9 | 12.8 | ||||||||||||||||||
Other assets acquired through foreclosure, net | — | — | — | — | — | 23.3 | ||||||||||||||||||
Goodwill and other intangible assets, net | — | — | 121.5 | 0.2 | — | — | ||||||||||||||||||
Other assets | 0.3 | 15.6 | 7.2 | 5.3 | 11.1 | 544.0 | ||||||||||||||||||
Total assets | $ | 115.8 | $ | 1,454.3 | $ | 1,129.5 | $ | 1,296.8 | $ | 1,769.0 | $ | 3,616.4 | ||||||||||||
Liabilities: | ||||||||||||||||||||||||
Deposits | $ | 1,890.3 | $ | — | $ | 1,038.2 | $ | — | $ | — | $ | 120.2 | ||||||||||||
Borrowings and qualifying debt | — | — | — | — | — | 447.9 | ||||||||||||||||||
Other liabilities | 0.7 | 50.5 | 2.0 | 1.4 | 17.5 | 173.1 | ||||||||||||||||||
Total liabilities | 1,891.0 | 50.5 | 1,040.2 | 1.4 | 17.5 | 741.2 | ||||||||||||||||||
Allocated equity: | 65.6 | 117.1 | 224.1 | 107.1 | 145.5 | 149.5 | ||||||||||||||||||
Total liabilities and stockholders' equity | $ | 1,956.6 | $ | 167.6 | $ | 1,264.3 | $ | 108.5 | $ | 163.0 | $ | 890.7 | ||||||||||||
Excess funds provided (used) | 1,840.8 | (1,286.7 | ) | 134.8 | (1,188.3 | ) | (1,606.0 | ) | (2,725.7 | ) | ||||||||||||||
No. of offices | 1 | 1 | 8 | 1 | 4 | (7 | ) | |||||||||||||||||
No. of full-time equivalent employees | 55 | 7 | 59 | 21 | 32 | 611 | ||||||||||||||||||
Income Statement: | ||||||||||||||||||||||||
Three Months Ended June 30, 2016: | (in thousands) | |||||||||||||||||||||||
Net interest income (expense) | $ | 9,909 | $ | 5,026 | $ | 16,631 | $ | 12,068 | $ | 12,523 | $ | (14,838 | ) | |||||||||||
Provision for (recovery of) credit losses | 10 | 175 | (614 | ) | — | 1,699 | 84 | |||||||||||||||||
Net interest income (expense) after provision for credit losses | 9,899 | 4,851 | 17,245 | 12,068 | 10,824 | (14,922 | ) | |||||||||||||||||
Non-interest income | 110 | 7 | 1,115 | — | 235 | 1,029 | ||||||||||||||||||
Non-interest expense | (5,820 | ) | (1,929 | ) | (7,434 | ) | (2,557 | ) | (3,598 | ) | (6,976 | ) | ||||||||||||
Income (loss) before income taxes | 4,189 | 2,929 | 10,926 | 9,511 | 7,461 | (20,869 | ) | |||||||||||||||||
Income tax expense (benefit) | 1,571 | 1,098 | 4,097 | 3,567 | 2,798 | (15,524 | ) | |||||||||||||||||
Net income (loss) | $ | 2,618 | $ | 1,831 | $ | 6,829 | $ | 5,944 | $ | 4,663 | $ | (5,345 | ) | |||||||||||
Six Months Ended June 30, 2016: | (in thousands) | |||||||||||||||||||||||
Net interest income (expense) | $ | 18,541 | $ | 10,247 | $ | 32,940 | $ | 12,068 | $ | 23,160 | $ | (28,580 | ) | |||||||||||
Provision for (recovery of) credit losses | 88 | (194 | ) | (1,779 | ) | — | 1,937 | (3,230 | ) | |||||||||||||||
Net interest income (expense) after provision for credit losses | 18,453 | 10,441 | 34,719 | 12,068 | 21,223 | (25,350 | ) | |||||||||||||||||
Non-interest income | 215 | 3 | 2,752 | — | 870 | 2,963 | ||||||||||||||||||
Non-interest expense | (11,361 | ) | (3,953 | ) | (14,340 | ) | (2,557 | ) | (7,035 | ) | (10,158 | ) | ||||||||||||
Income (loss) before income taxes | 7,307 | 6,491 | 23,131 | 9,511 | 15,058 | (32,545 | ) | |||||||||||||||||
Income tax expense (benefit) | 2,740 | 2,434 | 8,674 | 3,567 | 5,647 | (31,659 | ) | |||||||||||||||||
Net income (loss) | $ | 4,567 | $ | 4,057 | $ | 14,457 | $ | 5,944 | $ | 9,411 | $ | (886 | ) | |||||||||||
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Western Alliance Bancorporation and Subsidiaries | |||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||||
Unaudited | |||||||||||||||||||
Operating Pre-Provision Net Revenue by Quarter: | |||||||||||||||||||
Three Months Ended | |||||||||||||||||||
Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | |||||||||||||||
(in thousands) | |||||||||||||||||||
Total non-interest income | $ | 10,449 | $ | 10,544 | $ | 10,540 | $ | 10,683 | $ | 8,559 | |||||||||
Less: | |||||||||||||||||||
(Losses) gains on sales of investment securities, net | (47 | ) | 635 | 58 | — | — | |||||||||||||
Unrealized gains (losses) on assets and liabilities measured at fair value, net | 11 | 14 | 37 | 7 | 6 | ||||||||||||||
Total operating non-interest income | 10,485 | 9,895 | 10,445 | 10,676 | 8,553 | ||||||||||||||
Plus: net interest income | 192,743 | 179,309 | 175,269 | 172,547 | 163,686 | ||||||||||||||
Net operating revenue (1) | $ | 203,228 | $ | 189,204 | $ | 185,714 | $ | 183,223 | $ | 172,239 | |||||||||
Total non-interest expense | $ | 88,257 | $ | 87,757 | $ | 88,645 | $ | 85,007 | $ | 81,804 | |||||||||
Less: | |||||||||||||||||||
Net loss (gain) on sales and valuations of repossessed and other assets | 231 | (543 | ) | (34 | ) | (146 | ) | 357 | |||||||||||
Acquisition / restructure expense | — | — | 6,021 | 2,729 | 3,662 | ||||||||||||||
Total operating non-interest expense (1) | $ | 88,026 | $ | 88,300 | $ | 82,658 | $ | 82,424 | $ | 77,785 | |||||||||
Operating pre-provision net revenue (2) | $ | 115,202 | $ | 100,904 | $ | 103,056 | $ | 100,799 | $ | 94,454 | |||||||||
Plus: | |||||||||||||||||||
Non-operating revenue adjustments | (36 | ) | 649 | 95 | 7 | 6 | |||||||||||||
Less: | |||||||||||||||||||
Provision for credit losses | 3,000 | 4,250 | 1,000 | 2,000 | 2,500 | ||||||||||||||
Non-operating expense adjustments | 231 | (543 | ) | 5,987 | 2,583 | 4,019 | |||||||||||||
Income tax expense | 31,964 | 24,489 | 26,364 | 29,171 | 26,327 | ||||||||||||||
Net income | $ | 79,971 | $ | 73,357 | $ | 69,800 | $ | 67,052 | $ | 61,614 | |||||||||
(1), (2) See Non-GAAP Financial Measures footnotes on page 22.
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Western Alliance Bancorporation and Subsidiaries | |||||||||
Reconciliation of Non-GAAP Financial Measures | |||||||||
Unaudited | |||||||||
Tangible Common Equity: | |||||||||||||||||||
Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | |||||||||||||||
(dollars and shares in thousands) | |||||||||||||||||||
Total stockholders' equity | $ | 2,058,674 | $ | 1,968,992 | $ | 1,891,529 | $ | 1,857,354 | $ | 1,796,210 | |||||||||
Less: goodwill and intangible assets | 301,645 | 302,133 | 302,894 | 303,592 | 304,289 | ||||||||||||||
Total tangible common equity | 1,757,029 | 1,666,859 | 1,588,635 | 1,553,762 | 1,491,921 | ||||||||||||||
Plus: deferred tax - attributed to intangible assets | 4,550 | 4,759 | 4,949 | 5,304 | 5,594 | ||||||||||||||
Total tangible common equity, net of tax | $ | 1,761,579 | $ | 1,671,618 | $ | 1,593,584 | $ | 1,559,066 | $ | 1,497,515 | |||||||||
Total assets | $ | 18,844,745 | $ | 18,122,506 | $ | 17,200,842 | $ | 17,042,602 | $ | 16,728,767 | |||||||||
Less: goodwill and intangible assets, net | 301,645 | 302,133 | 302,894 | 303,592 | 304,289 | ||||||||||||||
Tangible assets | 18,543,100 | 17,820,373 | 16,897,948 | 16,739,010 | 16,424,478 | ||||||||||||||
Plus: deferred tax - attributed to intangible assets | 4,550 | 4,759 | 4,949 | 5,304 | 5,594 | ||||||||||||||
Total tangible assets, net of tax | $ | 18,547,650 | $ | 17,825,132 | $ | 16,902,897 | $ | 16,744,314 | $ | 16,430,072 | |||||||||
Tangible common equity ratio (3) | 9.5 | % | 9.4 | % | 9.4 | % | 9.3 | % | 9.1 | % | |||||||||
Common shares outstanding | 105,429 | 105,428 | 105,071 | 105,071 | 105,084 | ||||||||||||||
Tangible book value per share, net of tax (4) | $ | 16.71 | $ | 15.86 | $ | 15.17 | $ | 14.84 | $ | 14.25 | |||||||||
Operating Efficiency Ratio by Quarter: | |||||||||||||||||||
Three Months Ended | |||||||||||||||||||
Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | |||||||||||||||
(in thousands) | |||||||||||||||||||
Total operating non-interest expense | $ | 88,026 | $ | 88,300 | $ | 82,658 | $ | 82,424 | $ | 77,785 | |||||||||
Divided by: | |||||||||||||||||||
Total net interest income | 192,743 | 179,309 | 175,269 | 172,547 | 163,686 | ||||||||||||||
Plus: | |||||||||||||||||||
Tax equivalent interest adjustment | 10,453 | 9,676 | 9,165 | 8,599 | 8,704 | ||||||||||||||
Operating non-interest income | 10,485 | 9,895 | 10,445 | 10,676 | 8,553 | ||||||||||||||
$ | 213,681 | $ | 198,880 | $ | 194,879 | $ | 191,822 | $ | 180,943 | ||||||||||
Operating efficiency ratio - tax equivalent basis (5) | 41.2 | % | 44.4 | % | 42.4 | % | 43.0 | % | 43.0 | % | |||||||||
(3), (4), (5) See Non-GAAP Financial Measures footnotes on page 22.
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Western Alliance Bancorporation and Subsidiaries |
Reconciliation of Non-GAAP Financial Measures |
Unaudited |
Regulatory Capital:
Jun 30, 2017 | Dec 31, 2016 | ||||||
(in thousands) | |||||||
Common Equity Tier 1: | |||||||
Common equity | $ | 2,058,674 | $ | 1,891,529 | |||
Less: | |||||||
Non-qualifying goodwill and intangibles | 295,655 | 294,754 | |||||
Disallowed deferred tax asset | 1,059 | 1,400 | |||||
AOCI related adjustments | (147 | ) | (13,460 | ) | |||
Unrealized gain on changes in fair value liabilities | 8,092 | 8,118 | |||||
Common equity Tier 1 (regulatory) (6) (9) | $ | 1,754,015 | $ | 1,600,717 | |||
Divided by: estimated risk-weighted assets (regulatory) (7) (9) | $ | 17,001,053 | $ | 15,980,092 | |||
Common equity Tier 1 ratio (7) (9) | 10.3 | % | 10.0 | % | |||
Common equity Tier 1 (regulatory) (6) (9) | 1,754,015 | 1,600,717 | |||||
Plus: | |||||||
Trust preferred securities | 81,500 | 81,500 | |||||
Less: | |||||||
Disallowed deferred tax asset | 265 | 934 | |||||
Unrealized gain on changes in fair value of liabilities | 2,023 | 5,412 | |||||
Tier 1 capital (7) (9) | $ | 1,833,227 | $ | 1,675,871 | |||
Divided by: Tangible average assets | $ | 18,436,956 | $ | 16,868,674 | |||
Tier 1 leverage ratio | 9.9 | % | 9.9 | % | |||
Total Capital: | |||||||
Tier 1 capital (regulatory) (6) (9) | $ | 1,833,227 | $ | 1,675,871 | |||
Plus: | |||||||
Subordinated debt | 298,722 | 299,927 | |||||
Qualifying allowance for credit losses | 131,811 | 124,704 | |||||
Other | 5,851 | 6,978 | |||||
Less: Tier 2 qualifying capital deductions | — | — | |||||
Tier 2 capital | $ | 436,384 | $ | 431,609 | |||
Total capital | $ | 2,269,611 | $ | 2,107,480 | |||
Total capital ratio | 13.3 | % | 13.2 | % | |||
Classified assets to Tier 1 capital plus allowance: | |||||||
Classified assets | $ | 249,491 | $ | 211,782 | |||
Divided by: | |||||||
Tier 1 capital (7) (9) | 1,833,227 | 1,675,871 | |||||
Plus: Allowance for credit losses | 131,811 | 124,704 | |||||
Total Tier 1 capital plus allowance for credit losses | $ | 1,965,038 | $ | 1,800,575 | |||
Classified assets to Tier 1 capital plus allowance (8) (9) | 12.7 | % | 11.8 | % | |||
(6), (7), (8), (9) See Non-GAAP Financial Measures footnotes on page 22.
21
(1) | We believe these non-GAAP measurements provide a useful indication of the cash generating capacity of the Company. | |||||||
(2) | We believe this non-GAAP measurement is a key indicator of the earnings power of the Company. | |||||||
(3) | We believe this non-GAAP ratio provides an important metric with which to analyze and evaluate financial condition and capital strength. | |||||||
(4) | We believe this non-GAAP measurement improves the comparability to other institutions that have not engaged in acquisitions that resulted in recorded goodwill and other intangibles. | |||||||
(5) | We believe this non-GAAP ratio provides a useful metric to measure the operating efficiency of the Company. | |||||||
(6) | Under the current guidelines of the Federal Reserve and the Federal Deposit Insurance Corporation, common equity Tier 1 capital consists of common stock, retained earnings, and minority interests in certain subsidiaries, less most other intangible assets. | |||||||
(7) | Common equity Tier 1 is often expressed as a percentage of risk-weighted assets. Under the risk-based capital framework, a bank's balance sheet assets and credit equivalent amounts of off-balance sheet items are assigned to one of the risk categories defined under new capital guidelines. The aggregated dollar amount in each category is then multiplied by the risk weighting assigned to that category. The resulting weighted values from each category are added together and this sum is the risk-weighted assets total that, as adjusted, comprises the denominator (risk-weighted assets) to determine the common equity Tier 1 ratio. Common equity Tier 1 is divided by the risk-weighted assets to determine the common equity Tier 1 ratio. We believe this non-GAAP ratio provides an important metric with which to analyze and evaluate financial condition and capital strength. | |||||||
(8) | We believe this non-GAAP ratio provides an important regulatory metric to analyze asset quality. | |||||||
(9) | Current quarter is preliminary until Call Report is filed. | |||||||
CONTACT:
Western Alliance Bancorporation
Dale Gibbons, 602-952-5476
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