WESTERN ALLIANCE BANCORPORATION - FORM 8-K - EX-99.1 - PRESS RELEASE

Attached files

file	filename
8-K - PRESS RELEASE COVER PAGE - WESTERN ALLIANCE BANCORPORATION	a8-kcoverpagex9302014.htm
EX-99.2 - EARNINGS PRESENTATION - WESTERN ALLIANCE BANCORPORATION	walq32014earningspresent.htm

Western Alliance Reports Third Quarter 2014 Net Income of $40.9 million, or $0.46 Per Share

PHOENIX--(BUSINESS WIRE)--October 16, 2014--Western Alliance Bancorporation (NYSE:WAL) announced today its financial results for the third quarter 2014.

Third Quarter 2014 Highlights:


•	Net income of $40.9 million, compared to $35.5 million for the second quarter 2014 and $28.6 million for the third quarter 2013


•	Earnings per share of $0.46, compared to $0.40 per share in the second quarter 2014 and $0.33 per share in the third quarter 2013


•	Pre-tax, pre-provision operating earnings of $51.8 million, up from $47.4 million in the second quarter 2014and up $42.1 million from the third quarter 2013¹


•	Net interest margin of 4.43%, compared to 4.39% in the second quarter 2014 and 4.41% in the third quarter 2013


•	Total loans of $7.93 billion, up $385 million from June 30, 2014 and up $1.41 billion from September 30, 2013


•	Total deposits of $8.70 billion, up $228 million from June 30, 2014 and up $1.42 billion from September 30, 2013


•	Nonperforming assets (nonaccrual loans and repossessed assets) remained flat at 1.23% of total assets compared to the second quarter 2014 and decreased from 1.72% in the third quarter 2013


•	Net loan recoveries (annualized) to average loans outstanding of 0.15%, compared to 0.09% in the second quarter 2014 and 0.10% in the third quarter 2013


•	Tier I Leverage Capital of 10.1% and Total Risk-Based Capital ratio of 12.2%, compared to 10.0% and 12.5% at June 30, 2014 and September 30, 2013, respectively


•	Total equity of $1.00 billion, up $45 million from June 30, 2014 and up $177 million from September 30, 2013


•	Tangible book value per share, net of tax, of $9.53, up from $9.02 at June 30, 2014 and up from $7.57 at September 30, 2013¹

Financial Performance

"Through the hard work and dedication of our team, we again delivered very strong financial performance, with record revenue, efficiency, net income, and earnings per share," said Robert Sarver, Chairman and Chief Executive Officer of Western Alliance Bancorporation. "Our balance sheet momentum continued with double digit growth rates in loans and deposits, while maintaining a tight focus on expense control as operating costs were flat from the second quarter."

Sarver added, "Asset quality remains strong as we have experienced net recoveries in four of the last five quarters. And, despite our strong asset growth, tangible common equity climbed to 8.2% of tangible assets from 7.9% last quarter."

Income Statement

Net interest income was $98.1 million in the third quarter 2014, an increase of $4.2 million, or 4.4%, from $93.9 million in the second quarter of 2014 and an increase of $13.5 million, or 16.0%, compared to the third quarter 2013. The Company’s net interest margin increased in the third quarter 2014 to 4.43%, compared to 4.39% in the second quarter 2014 and 4.41% in the third quarter 2013. Interest income on the disposition of purchased credit impaired loans was $2.5 million in the third quarter of 2014, compared to $3.1 million for the second quarter 2014 and $1.3 million for the third quarter 2013.

Operating non-interest income was $5.7 million for the third quarter 2014, compared to $5.7 million in the second quarter of 2014 and $5.8 million for the third quarter of 2013.¹

Net operating revenue was $103.7 million for the third quarter 2014, an increase of 4.1% compared to $99.6 million for the second quarter of 2014 and an increase of 14.8% compared to $90.4 million for the third quarter 2013.¹

Operating non-interest expense was $52.0 million for the third quarter 2014, compared to $52.2 million for the second quarter of 2014 and $48.3 million for the third quarter of 2013.¹ The Company’s operating efficiency ratio¹ on a tax equivalent basis was 47.2% for the third quarter 2014, compared to 49.4% for the second quarter 2014 and 51.6% for the third quarter 2013.

Non-operating items for the third quarter 2014 consisted of a net gain on sales and valuations of repossessed and other assets of $2.0 million, unrealized gains on assets and liabilities measured at fair value of $0.9 million, and loss on extinguishment of debt of $0.5 million due to the Company's repurchase of $6.5 million in outstanding 10% senior note principal, due in 2015, whose carrying value is included in borrowings. Prior to the repurchase, the outstanding senior note principal balance was $64.9 million.

The Company had 1,120 full-time equivalent employees and 39 offices at September 30, 2014, compared to 1,023 full-time equivalent employees and 41 offices at September 30, 2013.

The Company views its pre-tax, pre-provision operating earnings as a key metric for assessing the Company’s earning power, which it defines as net operating revenue less operating non-interest expense. For the third quarter 2014, the Company’s pre-tax, pre-provision operating earnings were $51.8 million, up from $47.4 million in the second quarter 2014 and up from $42.1 million in the third quarter 2013.¹

Balance Sheet

Gross loans totaled $7.93 billion at September 30, 2014, an increase of $385 million from June 30, 2014 and an increase of $1.41 billion from September 30, 2013. At September 30, 2014, the allowance for credit losses was 1.38% of total loans, compared to 1.40% at June 30, 2014 and 1.50% at September 30, 2013, reflecting an improvement in the Company’s asset quality profile and historical losses.

Deposits totaled $8.70 billion at September 30, 2014, an increase of $228 million from $8.47 billion at June 30, 2014 and an increase of $1.42 billion from $7.28 billion at September 30, 2013. Non-interest bearing deposits were $2.25 billion at September 30, 2014, compared to $2.28 billion at June 30, 2014 and $1.97 billion at September 30, 2013. Non-interest bearing deposits comprised 25.8% of total deposits at September 30, 2014, compared to 26.9% at June 30, 2014 and 27.1% at September 30, 2013. The proportion of savings and money market accounts decreased to 42.4% from 42.9% at June 30, 2014 and increased from 41.9% at September 30, 2013. Certificates of deposit as a percent of total deposits increased to 22.5% from 20.8% at June 30, 2014 and from 21.7% at September 30, 2013. The Company’s ratio of loans to deposits was 91.2% at September 30, 2014, compared to 89.1% at June 30, 2014 and 89.6% at September 30, 2013.

Stockholders’ equity at September 30, 2014 increased to $1.00 billion from $958 million at June 30, 2014 and increased $177 million from $827 million at September 30, 2013. In the second quarter 2014, the Company began issuing common stock under a $100 million at-the-market (ATM) public offering. However, no shares were sold in the third quarter 2014, compared to $2.6 million in net proceeds from the issuance of 115,866 shares of common stock in the second quarter 2014.

At September 30, 2014, tangible common equity, net of tax, was 8.2% of tangible assets¹ and total risk-based capital was 12.2% of risk-weighted assets. The Company’s tangible book value per share¹ was $9.53 at September 30, 2014, up 25.9% from September 30, 2013.

Total assets increased 2.6% to $10.29 billion at September 30, 2014 from $10.02 billion at June 30, 2014 and increased 15.3% from $8.92 billion at September 30, 2013.

Asset Quality

The provision for credit losses was $0.4 million for the third quarter 2014, compared to $0.5 million for the second quarter 2014 and zero for the third quarter 2013. Net loan recoveries in the third quarter 2014 were $2.8 million, or 0.15% of average loans (annualized), compared to$1.5 million, or 0.09% for the second quarter 2014. Net loan recoveries for the third quarter 2013 were $1.5 million, or 0.10% of average loans (annualized).

Nonaccrual loans increased $10.7 million to $75.1 million during the third quarter 2014, compared to the second quarter 2014. Loans past due 90 days and still accruing interest totaled $3.6 million at September 30, 2014, up from $3.0 million at June 30, 2014 and down from $5.5 million at September 30, 2013. Loans past due 30-89 days, still accruing interest totaled $16.5 million at quarter end, up from $5.1 million at June 30, 2014 and $8.7 million at September 30, 2013. Other assets acquired through foreclosure decreased to $51.8 million for the third quarter 2014, compared to $59.3 million for the second quarter 2014 and $76.5 million for the third quarter 2013.

As the Company’s capital increased, the ratio of classified assets to Tier I capital plus the allowance for credit losses, a common regulatory measure of asset quality, improved to 21% at September 30, 2014 from 31% at September 30, 2013.¹

Segment Highlights

On December 31, 2013, the Company consolidated its three bank subsidiaries under one charter, Western Alliance Bank. As a result, the Company has redefined its operating segments to reflect the new organizational and internal reporting structure. Prior year segment information has not been recast to conform to the new segmentation methodology due to the impracticability of restating segments because of the change in legal structure at December 31, 2013. The new operating segments are as follows: Arizona, Nevada, California, Central Business Lines, and Corporate & Other.

The Company's reportable segments are aggregated primarily based on geographic location, services offered, and markets served. The Arizona, Nevada, and California segments provide full service banking and related services to their respective regions. The Company's Central Business Lines (CBL) segment provides banking services to niche markets. These CBLs are managed centrally and are broader in geographic scope, though still predominately within our core market areas. Corporate & Other 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, California and Central Business Lines segments include loan and deposit growth, asset quality, and pre-tax income.

Arizona reported a gross loan balance of $2.20 billion at September 30, 2014, an increase of $74 million during the quarter, and an increase of $180 million during the nine months ended September 30, 2014. Deposits were $2.08 billion at September 30, 2014, a decrease of $38 million during the quarter, and an increase of $77 million during the nine months ended September 30, 2014. Pre-tax income was $14.8 million and $44.7 million for the three and nine months ended September 30, 2014, respectively.

Nevada reported a gross loan balance of $1.68 billion at September 30, 2014, a decrease of $3 million during the quarter, and a decrease of $74 million during the nine months ended September 30, 2014. Deposits were $3.19 billion at September 30, 2014, an increase of $6 million during the quarter, and an increase of $271 million during the nine months ended September 30, 2014. Pre-tax income was $21.2 million and $55.4 million for the three and nine months ended September 30, 2014, respectively.

California reported a gross loan balance of $1.73 billion at September 30, 2014, an increase of $31 million during the quarter, and an increase of $110 million during the nine months ended September 30, 2014. Deposits were $2.35 billion at September 30, 2014, an increase of $289 million during the quarter, and an increase of $405 million during the nine months ended September 30, 2014. Pre-tax income was $13.4 million and $37.8 million for the three and nine months ended September 30, 2014, respectively.

Central Business Lines reported a gross loan balance of $2.26 billion at September 30, 2014, an increase of $313 million during the quarter, and an increase of $914 million during the nine months ended September 30, 2014. Deposits were $906 million at September 30, 2014, an increase of $20 million during the quarter, and an increase of $138 million during the nine months ended September 30, 2014. Pre-tax income was $9.6 million and $21.7 million for the three and nine months ended September 30, 2014, respectively.

Attached to this press release is summarized financial information for the quarter ended September 30, 2014.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live webcast to discuss its third quarter 2014 financial results at 12:00 p.m. ET on Friday, October 17, 2014. Participants may access the call by dialing 1-888-317-6003 and using passcode: 2466045 or via live audio webcast using the website link: http://services.choruscall.com/links/wal141017.html. The webcast is also available via the Company’s website at www.westernalliancebancorp.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 October 17th through November 18th at 9:00 a.m. ET by dialing 1-877-344-7529 passcode: 10052772.

Use of Non-GAAP Financial Information

This press release contains both financial measures based on accounting principles generally accepted in the United States (“GAAP”) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding Western Alliance Bancorporation’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.

Early Adoption of Accounting Standards

Effective as of the first quarter 2014, the Company elected early adoption of Accounting Standards Codification 323-740, an amended Financial Accounting Standards Board standard related to accounting for low income housing tax credit investments. Under this amended standard, the amortization of the investment may now be calculated under the proportional amortization method and is included in income tax expense rather than as a separate line item in non-interest income. Prior period amounts have been adjusted to reflect the adoption of this new accounting guidance, which has resulted in an increase in non-interest income and income tax expense. See the supplemental schedule at the end of the Q1 2014 press release for additional detail on the impact that adoption of this standard has had on prior period financial information.

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 guidance, outlook or expectations relating 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, 2013 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; 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

Western Alliance Bancorporation (NYSE:WAL) is a leading bank holding company providing comprehensive business banking and related financial services through its wholly-owned banking subsidiary, Western Alliance Bank (the "Bank"). With local teams of experienced bankers, the Bank provides a superior level of capabilities, products and services, to assist the growth of local businesses and the quality of life in the markets it serves. In addition to a centrally managed platform of specialized financial service units, the Bank operates full service banking divisions in its local markets as Alliance Bank of Arizona, Bank of Nevada, First Independent Bank and Torrey Pines Bank. Western Alliance Bancorporation is publicly traded on the New York Stock Exchange. Additional investor information can be accessed on the Investor Relations page of the Company's website, www.westernalliancebancorp.com.

¹ See Reconciliation of Non-GAAP Financial Measures beginning on page 15.



Western Alliance Bancorporation and Subsidiaries
Summary Consolidated Financial Data
Unaudited

	At or for the Three Months Ended September 30,							At or for the Nine Months Ended September 30,
	2014		2013			Change %		2014			2013			Change %

Selected Balance Sheet Data:
(dollars in millions)
Total assets	$	10,288.8	$	8,920.5		15.3	%
Loans, net of deferred fees	7,929.5		6,516.3			21.7
Securities and money market investments	1,597.3		1,370.8			16.5
Securities purchased under agreement to resell	—		128.1			(100.0	)
Total deposits	8,697.6		7,275.3			19.5
Borrowings	330.8		394.1			(16.1	)
Junior subordinated debt	41.8		39.4			6.1
Stockholders' equity	1,003.1		826.5			21.4

Selected Income Statement Data:
(dollars in thousands)
Interest income	$	105,554	$	92,680		13.9	%	$	306,228		$	265,073		15.5	%
Interest expense	7,481		8,121			(7.9	)	23,480			22,159			6.0
Net interest income	98,073		84,559			16.0		282,748			242,914			16.4
Provision for loan losses	419		—			100.0		4,426			8,920			(50.4	)
Net interest income after provision for credit losses	97,654		84,559			15.5		278,322			233,994			18.9
Non-interest income	6,226		4,129			50.8		16,834			20,690			(18.6	)
Non-interest expense	50,012		49,675			0.7		152,177			145,135			4.9
Income from continuing operations before income taxes	53,868		39,013			38.1		142,979			109,549			30.5
Income tax expense	12,949		10,390			24.6		34,279			25,838			32.7
Income from continuing operations	40,919		28,623			43.0		108,700			83,711			29.9
Loss from discontinued operations, net of tax	—		(29		)	(100.0	)	(1,158		)	(160		)	623.8
Net income	$	40,919	$	28,594		43.1	%	$	107,542		$	83,551		28.7	%
Diluted net income per common share from continuing operations	$	0.46	$	0.33		39.4	%	$	1.23		$	0.96		28.1	%
Diluted net loss per common share from discontinued operations, net of tax	$	—	$	—				$	(0.01	)	$	(0.01	)
Diluted net income per common share	$	0.46	$	0.33		39.4	%	$	1.22		$	0.95		28.4	%

Common Share Data:
Diluted net income per common share	$	0.46	$	0.33		39.4	%	$	1.22		$	0.95		28.4	%
Book value per common share	$	9.81	$	7.87		24.7	%
Tangible book value per share, net of tax (1)	$	9.53	$	7.57		25.9	%
Average shares outstanding (in thousands):
Basic	86,723		85,799			1.1		86,495			85,596			1.1
Diluted	87,572		86,769			0.9		87,345			86,428			1.1
Common shares outstanding	87,849		87,099			0.9		87,849			87,099			0.9

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



Western Alliance Bancorporation and Subsidiaries
Summary Consolidated Financial Data (continued)
Unaudited

	At or for the Three Months Ended September 30,						At or for the Nine Months Ended September 30,
	2014		2013		Change %		2014		2013		Change %

Selected Performance Ratios:
Return on average assets (1)	1.63	%	1.33	%	22.6	%	1.47	%	1.34	%	9.7	%
Return on average tangible common equity (2)	19.91		17.50		13.8		18.66		17.61		6.0
Net interest margin (1)	4.43		4.41		0.5		4.41		4.38		0.7
Net interest spread	4.30		4.25		1.2		4.27		4.22		1.2
Efficiency ratio - tax equivalent basis (2)	47.20		51.56		(8.5	)	49.16		52.73		(6.8	)
Loan to deposit ratio	91.17		89.57		1.8

Capital Ratios:
Tangible equity (2)	9.5	%	9.0	%	5.6	%
Tangible common equity (2)	8.2		7.4		10.8
Tier 1 common equity (2)	9.0		8.8		2.3
Tier 1 Leverage ratio (3)	10.1		10.0		1.0
Tier 1 Risk Based Capital (3)	11.0		11.2		(1.8	)
Total Risk Based Capital (3)	12.2		12.5		(2.4	)

Asset Quality Ratios:
Net (recoveries) charge-offs to average loans outstanding (1)	(0.15	)%	(0.10	)%	50.0	%	(0.09	)%	0.14	%	(164.3	)%
Nonaccrual loans to gross loans	0.95		1.18		(19.5	)
Nonaccrual loans and repossessed assets to total assets	1.23		1.72		(28.5	)
Loans past due 90 days and still accruing to total loans	0.04		0.08		(50.0	)
Allowance for credit losses to gross loans	1.38		1.50		(8.0	)
Allowance for credit losses to nonaccrual loans	145.37		127.67		13.9

(1) Annualized for the three- and nine-month periods ended September 30, 2014 and 2013.
(2) See Reconciliation of Non-GAAP Financial Measures.
(3) Capital ratios are preliminary until the Call Reports are filed.



Western Alliance Bancorporation and Subsidiaries
Condensed Consolidated Income Statements
Unaudited
	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Interest income:	(dollars in thousands)
Loans	$	94,436		$	83,994		$	271,823		$	239,812
Investment securities	10,535			8,286			32,754			24,266
Federal funds sold and other	583			400			1,651			995
Total interest income	105,554			92,680			306,228			265,073
Interest expense:
Deposits	5,172			4,232			14,767			11,893
Borrowings	1,866			3,429			7,406			8,885
Junior subordinated debt	443			460			1,307			1,381
Total interest expense	7,481			8,121			23,480			22,159
Net interest income	98,073			84,559			282,748			242,914
Provision for credit losses	419			—			4,426			8,920
Net interest income after provision for credit losses	97,654			84,559			278,322			233,994
Non-interest income:
Service charges	2,434			2,425			7,701			7,408
Bank owned life insurance	1,136			1,832			3,044			3,904
Gains (losses) on sales of investment securities, net	181			(1,679		)	384			(1,537		)
Unrealized gains (losses) on assets and liabilities measured at fair value, net	896			(7		)	(145		)	(3,865		)
Loss on extinguishment of debt	(502		)	—			(502		)	—
Bargain purchase gain from acquisition	—			—			—			10,044
Other	2,081			1,558			6,352			4,736
Total non-interest income	6,226			4,129			16,834			20,690
Non-interest expenses:
Salaries and employee benefits	32,230			28,689			93,536			83,363
Occupancy	4,500			4,901			13,510			14,500
Legal, professional and directors' fees	3,022			3,438			10,853			9,010
Data processing	2,109			1,872			7,184			5,912
Insurance	1,996			1,884			6,476			6,350
Loan and repossessed asset expenses	1,007			1,136			3,168			3,453
Customer service	888			677			2,216			2,037
Marketing	378			585			1,443			1,962
Intangible amortization	281			597			1,180			1,791
Net (gain) loss on sales and valuations of repossessed and other assets	(1,956		)	371			(4,319		)	(234		)
Merger / restructure expense	15			1,018			198			3,833
Other	5,542			4,507			16,732			13,158
Total non-interest expense	50,012			49,675			152,177			145,135
Income from continuing operations before income taxes	53,868			39,013			142,979			109,549
Income tax expense	12,949			10,390			34,279			25,838
Income from continuing operations	$	40,919		$	28,623		$	108,700		$	83,711
Loss from discontinued operations, net of tax	—			(29		)	(1,158		)	(160		)
Net income	$	40,919		$	28,594		$	107,542		$	83,551
Preferred stock dividends	353			352			1,058			1,058
Net income available to common stockholders	$	40,566		$	28,242		$	106,484		$	82,493
Diluted net income per share	$	0.46		$	0.33		$	1.22		$	0.95



Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Income Statements
Unaudited
	Three Months Ended
	Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013
	(in thousands, except per share data)
Interest income:
Loans	$	94,436		$	90,583		$	86,804		$	86,902		$	83,994
Investment securities	10,535			10,894			11,325			10,137			8,286
Federal funds sold and other	583			496			572			543			400
Total interest income	105,554			101,973			98,701			97,582			92,680
Interest expense:
Deposits	5,172			4,930			4,665			4,442			4,232
Borrowings	1,866			2,702			2,838			2,717			3,429
Junior subordinated debt	443			443			421			442			460
Total interest expense	7,481			8,075			7,924			7,601			8,121
Net interest income	98,073			93,898			90,777			89,981			84,559
Provision for credit losses	419			507			3,500			4,300			—
Net interest income after provision for credit losses	97,654			93,391			87,277			85,681			84,559
Non-interest income:
Service charges	2,434			2,737			2,530			2,512			2,425
Bank owned life insurance	1,136			959			949			905			1,832
Gains (losses) on sales of investment securities, net	181			(163		)	366			342			(1,679		)
Unrealized gains (losses) on assets and liabilities measured at fair value, net	896			235			(1,276		)	(2,618		)	(7		)
Loss on extinguishment of debt	(502		)	—			—			(1,387		)	—
Other	2,081			2,005			2,266			1,803			1,558
Total non-interest income	6,226			5,773			4,835			1,557			4,129
Non-interest expenses:
Salaries and employee benefits	32,230			31,751			29,555			30,071			28,689
Occupancy	4,500			4,328			4,682			4,626			4,901
Legal, professional and directors' fees	3,022			4,192			3,639			4,623			3,438
Data processing	2,109			2,401			2,674			2,040			1,872
Insurance	1,996			2,087			2,393			1,744			1,884
Loan and repossessed asset expenses	1,007			927			1,234			793			1,136
Customer service	888			708			620			860			677
Marketing	378			506			559			619			585
Intangible amortization	281			302			597			597			597
Net (gain) loss on sales and valuations of repossessed and other assets	(1,956		)	184			(2,547		)	(2,153		)	371
Merger / restructure expense	15			26			157			1,919			1,018
Other	5,542			5,004			6,186			5,392			4,507
Total non-interest expense	50,012			52,416			49,749			51,131			49,675
Income from continuing operations before income taxes	53,868			46,748			42,363			36,107			39,013
Income tax expense	12,949			10,706			10,624			3,992			10,390
Income from continuing operations	$	40,919		$	36,042		$	31,739		$	32,115		$	28,623
Loss from discontinued operations, net of tax	—			(504		)	(654		)	(701		)	(29		)
Net income	$	40,919		$	35,538		$	31,085		$	31,414		$	28,594
Preferred stock dividends	353			352			353			352			352
Net income available to common stockholders	$	40,566		$	35,186		$	30,732		$	31,062		$	28,242

Diluted net income per share	$	0.46		$	0.40		$	0.35		$	0.36		$	0.33



Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Balance Sheets
Unaudited
	Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013
	(in millions)
Assets:
Cash and due from banks	$	258.8		$	379.3		$	354.8		$	305.5		$	380.9
Securities purchased under agreement to resell	—			—			111.1			—			128.1
Cash and cash equivalents	258.8			379.3			465.9			305.5			509.0

Securities and money market investments	1,597.3			1,606.7			1,671.2			1,689.6			1,370.8
Loans held for sale	—			—			—			—			25.4
Loans held for investment:
Commercial	3,292.2			3,027.7			2,723.4			2,478.2			2,234.9
Commercial real estate - non-owner occupied	1,998.9			1,940.0			1,849.2			1,841.1			1,864.3
Commercial real estate - owner occupied	1,621.9			1,605.0			1,606.2			1,561.9			1,551.2
Construction and land development	677.1			612.4			553.7			535.7			459.8
Residential real estate	316.9			328.1			344.9			350.3			359.0
Consumer	33.0			40.9			38.3			43.1			29.8
Deferred fees, net	(10.5		)	(9.6		)	(7.1		)	(8.9		)	(8.1		)
Gross loans and deferred fees, net	7,929.5			7,544.5			7,108.6			6,801.4			6,490.9
Allowance for credit losses	(109.2		)	(105.9		)	(103.9		)	(100.1		)	(97.9		)
Loans, net	7,820.3			7,438.6			7,004.7			6,701.3			6,393.0

Premises and equipment, net	112.1			109.6			106.6			105.6			105.9
Other assets acquired through foreclosure, net	51.8			59.3			56.5			66.7			76.5
Bank owned life insurance	143.2			142.5			141.5			140.6			139.7
Goodwill and other intangibles, net	26.2			26.5			26.8			27.4			28.0
Other assets	279.1			261.1			273.4			270.7			272.2
Total assets	$	10,288.8		$	10,023.6		$	9,746.6		$	9,307.4		$	8,920.5
Liabilities and Stockholders' Equity:
Liabilities:
Deposits:
Non-interest bearing demand deposits	$	2,246.7		$	2,278.8		$	2,093.6		$	2,200.0		$	1,972.5
Interest bearing:
Demand	809.4			794.8			750.4			709.8			673.7
Savings and money market	3,685.0			3,637.4			3,672.3			3,310.4			3,050.0
Time certificates	1,956.5			1,758.5			1,632.7			1,618.0			1,579.1
Total deposits	8,697.6			8,469.5			8,149.0			7,838.2			7,275.3
Customer repurchase agreements	53.0			53.7			57.4			71.2			55.5
Total customer funds	8,750.6			8,523.2			8,206.4			7,909.4			7,330.8
Securities sold short	—			—			109.8			—			126.6
Borrowings	330.8			337.5			342.8			341.1			394.1
Junior subordinated debt	41.8			42.7			42.8			41.9			39.4
Accrued interest payable and other liabilities	162.5			162.5			150.0			159.5			203.1
Total liabilities	9,285.7			9,065.9			8,851.8			8,451.9			8,094.0
Stockholders' Equity
Common stock and additional paid-in capital	807.2			803.4			795.3			797.2			792.2
Preferred stock	141.0			141.0			141.0			141.0			141.0
Retained earnings (accumulated deficit)	45.4			4.8			(30.4		)	(61.2		)	(92.2		)
Accumulated other comprehensive income (loss)	9.5			8.5			(11.1		)	(21.5		)	(14.5		)
Total stockholders' equity	1,003.1			957.7			894.8			855.5			826.5
Total liabilities and stockholders' equity	$	10,288.8		$	10,023.6		$	9,746.6		$	9,307.4		$	8,920.5



Western Alliance Bancorporation and Subsidiaries
Changes in the Allowance For Credit Losses
Unaudited
	Three Months Ended
	Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013
	(in thousands)
Balance, beginning of period	$	105,937		$	103,899		$	100,050		$	97,851		$	96,323
Provision for credit losses	419			507			3,500			4,300			—
Recoveries of loans previously charged-off:
Commercial and industrial	1,053			1,254			922			666			2,242
Commercial real estate - non-owner occupied	1,226			1,052			83			395			273
Commercial real estate - owner occupied	553			196			477			297			149
Construction and land development	182			498			211			273			966
Residential real estate	768			314			553			549			430
Consumer	34			191			170			179			726
Total recoveries	3,816			3,505			2,416			2,359			4,786
Loans charged-off:
Commercial and industrial	110			1,039			1,478			621			544
Commercial real estate - non-owner occupied	158			99			160			2,268			466
Commercial real estate - owner occupied	35			230			11			238			398
Construction and land development	—			78			—			686			—
Residential real estate	423			523			406			281			1,138
Consumer	285			5			12			366			712
Total loans charged-off	1,011			1,974			2,067			4,460			3,258
Net loan (recoveries) charge-offs	(2,805		)	(1,531		)	(349		)	2,101			(1,528		)
Balance, end of period	$	109,161		$	105,937		$	103,899		$	100,050		$	97,851

Net (recoveries) charge-offs to average loans outstanding - annualized	(0.15		)%	(0.09		)%	(0.02		)%	0.13		%	(0.10		)%
Allowance for credit losses to gross loans	1.38			1.40			1.46			1.47			1.50
Nonaccrual loans	$	75,092		$	64,345		$	70,401		$	75,681		$	76,641
Repossessed assets	51,787			59,292			56,450			66,719			76,475
Loans past due 90 days, still accruing	3,558			3,001			167			1,534			5,456
Loans past due 30 to 89 days, still accruing	16,500			5,123			11,087			13,425			8,689
Classified loans on accrual	107,776			133,220			125,903			128,586			144,041
Special mention loans	98,265			90,534			117,540			129,965			137,247



Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields and Rates
Unaudited
	Three Months Ended September 30,
	2014							2013
	Average Balance			Interest		Average Yield / Cost		Average Balance			Interest		Average Yield / Cost
	($ in millions)			($ in thousands)				($ in millions)			($ in thousands)
Interest earning assets
Loans (1)	$	7,644.9		$	94,436	5.18	%	$	6,306.4		$	83,994	5.44	%
Securities (1)	1,575.7			10,535		3.11		1,303.4			8,286		3.01
Federal funds sold and other	203.1			583		1.15		364.6			400		0.44
Total interest earning assets	9,423.7			105,554		4.75		7,974.4			92,680		4.81
Non-interest earning assets
Cash and due from banks	137.6							119.2
Allowance for credit losses	(107.0		)					(96.7		)
Bank owned life insurance	142.7							139.7
Other assets	458.3							492.0
Total assets	$	10,055.3						$	8,628.6
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts	$	810.3		$	400	0.20	%	$	641.7		$	376	0.23	%
Savings and money market	3,659.9			2,809		0.31		2,828.1			2,172		0.31
Time certificates of deposit	1,763.8			1,963		0.45		1,675.5			1,684		0.40
Total interest-bearing deposits	6,234.0			5,172		0.33		5,145.3			4,232		0.33
Short-term borrowings	119.9			219		0.73		182.7			2,420		5.30
Long-term debt	272.0			1,647		2.42		392.1			1,009		1.03
Junior subordinated debt	42.7			443		4.15		39.9			460		4.61
Total interest-bearing liabilities	6,668.6			7,481		0.45		5,760.0			8,121		0.56
Non-interest-bearing liabilities
Non-interest-bearing demand deposits	2,241.4							1,931.1
Other liabilities	155.8							114.7
Stockholders’ equity	989.5							822.8
Total liabilities and stockholders' equity	$	10,055.3						$	8,628.6
Net interest income and margin				$	98,073	4.43	%				$	84,559	4.41	%
Net interest spread						4.30	%						4.25	%

(1) Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $6,348 and $3,272 for the three months ended September 30, 2014 and 2013, respectively.



Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields and Rates
Unaudited

	Nine Months Ended September 30,
	2014							2013
	Average Balance			Interest		Average Yield / Cost		Average Balance			Interest		Average Yield / Cost
	($ in millions)			($ in thousands)				($ in millions)			($ in thousands)
Interest earning assets
Loans (1)	$	7,241.6		$	271,823	5.24	%	$	6,008.4		$	239,812	5.42	%
Securities (1)	1,618.8			32,754		3.11		1,294.3			24,266		3.05
Federal funds sold & other	235.2			1,651		0.94		392.2			995		0.34
Total interest earnings assets	9,095.6			306,228		4.75		7,694.9			265,073		4.76
Non-interest earning assets
Cash and due from banks	138.9							130.3
Allowance for credit losses	(104.4		)					(97.2		)
Bank owned life insurance	141.8							139.7
Other assets	450.3							440.6
Total assets	$	9,722.2						$	8,308.3
Interest-bearing liabilities
Interest-bearing deposits:
Interest bearing transaction accounts	$	789.1		$	1,169	0.20	%	$	625.8		$	1,047	0.22	%
Savings and money market	3,566.0			8,063		0.30		2,740.0			6,090		0.30
Time certificates of deposits	1,695.1			5,535		0.44		1,570.5			4,756		0.40
Total interest-bearing deposits	6,050.2			14,767		0.33		4,936.3			11,893		0.32
Short-term borrowings	174.2			565		0.43		182.3			2,848		2.08
Long-term debt	284.6			6,841		3.20		343.8			6,037		2.34
Junior subordinated debt	42.5			1,307		4.10		37.6			1,381		4.90
Total interest-bearing liabilities	6,551.5			23,480		0.48		5,500.0			22,159		0.54
Non-interest-bearing liabilities
Non-interest-bearing demand deposits	2,114.4							1,895.1
Other liabilities	120.3							110.7
Stockholders’ equity	936.0							802.5
Total liabilities and stockholders' equity	$	9,722.2						$	8,308.3
Net interest income and margin				$	282,748	4.41	%				$	242,914	4.38	%
Net interest spread						4.27	%						4.22	%

(1) Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $18,081 and $9,583 for the nine months ended September 30, 2014 and 2013, respectively.



Western Alliance Bancorporation and Subsidiaries
Operating Segment Results
Unaudited
	Arizona			Nevada			California			Central Business Lines			Corporate & Other			Consolidated Company
	(dollars in millions)
As of September 30, 2014:
Assets:
Cash, cash equivalents and investment securities	$	2.1		$	5.3		$	2.3		$	—		$	1,846.4		$	1,856.1
Gross loans and deferred fees, net	2,204.9			1,680.1			1,725.7			2,264.9			53.9			7,929.5
Less: allowance for credit losses	(30.4		)	(23.1		)	(23.8		)	(31.2		)	(0.7		)	(109.2		)
Loans, net	2,174.5			1,657.0			1,701.9			2,233.7			53.2			7,820.3
Other assets acquired through foreclosure, net	13.5			19.2			—			—			19.1			51.8
Goodwill and other intangibles, net	—			26.2			—			—			—			26.2
Other assets	44.6			69.2			41.0			20.5			359.1			534.4
Total assets	$	2,234.7		$	1,776.9		$	1,745.2		$	2,254.2		$	2,277.8		$	10,288.8
Liabilities:
Deposits (1)	$	2,077.4		$	3,193.8		$	2,349.9		$	906.0		$	170.5		$	8,697.6
Borrowings	—			—			—			—			330.8			330.8
Other liabilities	21.2			41.7			10.8			42.1			141.5			257.3
Total liabilities	2,098.6			3,235.5			2,360.7			948.1			642.8			9,285.7
Allocated equity	236.9			209.0			197.0			203.9			156.3			1,003.1
Liabilities and stockholders' equity	$	2,335.5		$	3,444.5		$	2,557.7		$	1,152.0		$	799.1		$	10,288.8
Excess funds provided (used)	100.8			1,667.6			812.5			(1,102.2		)	(1,478.7		)	—

No. of branches	10			18			11			—			—			39
No. of full-time equivalent employees	216			301			223			93			287			1,120

	(in thousands)
Three Months Ended September 30, 2014:
Net interest income (expense)	$	28,417		$	29,880		$	25,830		$	18,861		$	(4,915	)	$	98,073
Provision for (recovery of) credit losses	330			(3,040		)	96			3,294			(261		)	419
Net interest income (expense) after provision for credit losses	28,087			32,920			25,734			15,567			(4,654		)	97,654
Non-interest income	840			2,239			957			513			1,677			6,226
Non-interest expense	(14,174		)	(13,986		)	(13,254		)	(6,477		)	(2,121		)	(50,012		)
Income (loss) from continuing operations before income taxes	14,753			21,173			13,437			9,603			(5,098		)	53,868
Income tax expense (benefit)	5,787			7,411			5,649			3,601			(9,499		)	12,949
Net income	$	8,966		$	13,762		$	7,788		$	6,002		$	4,401		$	40,919

	(in thousands)
Nine Months Ended September 30, 2014:
Net interest income (expense)	$	84,236		$	87,834		$	73,324		$	49,051		$	(11,697	)	$	282,748
Provision for (recovery of) credit losses	1,891			(5,935		)	(921		)	8,931			460			4,426
Net interest income (expense) after provision for credit losses	82,345			93,769			74,245			40,120			(12,157		)	278,322
Non-interest income	2,594			6,880			3,177			1,238			2,945			16,834
Non-interest expense	(40,271		)	(45,248		)	(39,639		)	(19,625		)	(7,394		)	(152,177		)
Income (loss) from continuing operations before income taxes	44,668			55,401			37,783			21,733			(16,606		)	142,979
Income tax expense (benefit)	17,521			19,392			15,886			8,150			(26,670		)	34,279
Income from continuing operations	27,147			36,009			21,897			13,583			10,064			108,700
Loss from discontinued operations, net of tax	—			—			—			—			(1,158		)	(1,158		)
Net income	$	27,147		$	36,009		$	21,897		$	13,583		$	8,906		$	107,542

(1) Certain centrally-managed deposits from prior periods were re-allocated to specific regions to conform to current presentation.



Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures (Unaudited)

Pre-Tax, Pre-Provision Operating Earnings by Quarter
	Three Months Ended
	Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013
	(in thousands)
Total non-interest income	$	6,226		$	5,773		$	4,835		$	1,557		$	4,129
Less:
Gains (losses) on sales of investment securities, net	181			(163		)	366			342			(1,679		)
Unrealized gains (losses) on assets and liabilities measured at fair value, net	896			235			(1,276		)	(2,618		)	(7		)
Loss on extinguishment of debt	(502		)	—			—			(1,387		)	—
Total operating non-interest income	5,651			5,701			5,745			5,220			5,815
Add: net interest income	98,073			93,898			90,777			89,981			84,559
Net operating revenue (1)	$	103,724		$	99,599		$	96,522		$	95,201		$	90,374

Total non-interest expense	$	50,012		$	52,416		$	49,749		$	51,131		$	49,675
Less:
Net (gain) loss on sales and valuations of repossessed and other assets	(1,956		)	184			(2,547		)	(2,153		)	371
Merger / restructure expense	15			26			157			1,919			1,018
Total operating non-interest expense (1)	$	51,953		$	52,206		$	52,139		$	51,365		$	48,286

Pre-tax, pre-provision operating earnings (2)	$	51,771		$	47,393		$	44,383		$	43,836		$	42,088



Tangible Common Equity
	Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013
	(dollars and shares in thousands)
Total stockholders' equity	$	1,003,122		$	957,664		$	894,804		$	855,498		$	826,472
Less:
Goodwill and intangible assets, net	26,194			26,475			26,777			27,374			27,970
Total tangible stockholders' equity	976,928			931,189			868,027			828,124			798,502
Less:
Preferred stock	141,000			141,000			141,000			141,000			141,000
Total tangible common equity	835,928			790,189			727,027			687,124			657,502
Add:
Deferred tax - attributed to intangible assets	1,138			1,138			1,243			1,452			1,661
Total tangible common equity, net of tax	$	837,066		$	791,327		$	728,270		$	688,576		$	659,163
Total assets	$	10,288,824		$	10,023,587		$	9,746,623		$	9,307,342		$	8,920,449
Less:
Goodwill and intangible assets, net	26,194			26,475			26,777			27,374			27,970
Tangible assets	10,262,630			9,997,112			9,719,846			9,279,968			8,892,479
Add:
Deferred tax - attributed to intangible assets	1,138			1,138			1,243			1,452			1,661
Total tangible assets, net of tax	$	10,263,768		$	9,998,250		$	9,721,089		$	9,281,420		$	8,894,140
Tangible equity ratio (3)	9.5		%	9.3		%	8.9		%	8.9		%	9.0		%
Tangible common equity ratio (3)	8.2		%	7.9		%	7.5		%	7.4		%	7.4		%
Common shares outstanding	87,849			87,774			87,554			87,186			87,099
Tangible book value per share, net of tax (4)	$	9.53		$	9.02		$	8.32		$	7.90		$	7.57



Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures (Unaudited)

Efficiency Ratio
	Three Months Ended
	Sep 30, 2014			Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Sep 30, 2013
	(in thousands)
Total operating non-interest expense	$	51,953		$	52,206		$	52,139		$	51,365		$	48,286
Divided by:
Total net interest income	$	98,073		$	93,898		$	90,777		$	89,981		$	84,559
Add:
Tax equivalent adjustment	6,348			6,029			5,705			3,728			3,272
Operating non-interest income	5,651			5,701			5,745			5,220			5,815
	$	110,072		$	105,628		$	102,227		$	98,929		$	93,646
Efficiency ratio - tax equivalent basis (5)	47.2		%	49.4		%	51.0		%	51.9		%	51.6		%



Tier 1 Common Equity
	September 30,
	2014			2013
	(in thousands)
Stockholders' equity	$	1,003,122		$	826,472
Less:
Accumulated other comprehensive income (loss)	9,483			(14,504		)
Non-qualifying goodwill and intangibles	25,056			26,373
Other non-qualifying assets	—			—
Disallowed unrealized losses on equity securities	1,011			5,112
Add:
Qualifying trust preferred securities	48,442			46,918
Tier 1 capital (regulatory) (6) (9)	1,016,014			856,409
Less:
Qualifying trust preferred securities	48,442			46,918
Preferred stock	141,000			141,000
Estimated Tier 1 common equity (7) (9)	$	826,572		$	668,491
Divided by:
Estimated risk-weighted assets (regulatory) (7) (9)	$	9,216,875		$	7,630,125
Tier 1 common equity ratio (7) (9)	9.0		%	8.8		%

Tier 1 Capital
	September 30,
	2014			2013
	(in thousands)
Classified assets	$	241,790		$	296,580
Divide:
Tier 1 capital (regulatory) (6) (9)	1,016,014			856,409
Plus: Allowance for credit losses	109,161			97,851
Total Tier 1 capital plus allowance for credit losses	$	1,125,175		$	954,260
Classified assets to Tier 1 capital plus allowance (8) (9)	21		%	31		%



(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 the non-GAAP ratios provide an important metric with which to analyze and evaluate financial condition and capital strength.
(4) We believe this non-GAAP ratio 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, Tier 1 capital consists of common stock, retained earnings, non-cumulative perpetual preferred stock, trust preferred securities up to a certain limit, and minority interests in certain subsidiaries, less most other intangible assets.
(7) Tier 1 common equity 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 four broad risk categories. The aggregated dollar amount in each category is then multiplied by the risk weighting assigned to that category. The resulting weighted values from each of the four categories are added together and this sum is the risk-weighted assets total that, as adjusted, comprises the denominator (risk-weighted assets) to determine the Tier 1 capital ratio. Adjustments are made to Tier 1 capital to arrive at Tier 1 common equity. Tier 1 common equity is divided by the risk-weighted assets to determine the Tier 1 common equity 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 Reports are filed.

CONTACT:

Western Alliance Bancorporation

Dale Gibbons, 602-952-5476

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WESTERN ALLIANCE BANCORPORATION Reports