Attached files
| file | filename |
|---|---|
| 8-K - 8-K - WESTERN ALLIANCE BANCORPORATION | coverpage-pressrelease1231.htm |
| EX-99.1 - EXHIBIT 99.1 - WESTERN ALLIANCE BANCORPORATION | pressrelease-12312016.htm |
Earnings Call
4th Quarter 2016
January 27, 2017
2
Financial Highlights
▪ Net income of $69.8 million and earnings per share of $0.67 (inclusive of $0.03 in acquisition / restructure expense), compared to
$67.1 million and $0.64 per share for Q3 2016 (inclusive of $0.02 in acquisition / restructure expense), and $58.5 million and $0.57
per share for Q4 2015
▪ Net interest margin of 4.57%, compared to 4.55% in Q3 2016, and 4.67% in Q4 2015
▪ Efficiency ratio of 42.4%, compared to 43.0% in Q3 2016, and 45.2% in Q4 2015
▪ Total loans of $13.21 billion, up $175 million from prior quarter and total deposits of $14.55 billion, up $107 million from prior quarter
▪ Nonperforming assets (nonaccrual loans and repossessed assets) decreased to 0.51% of total assets, from 0.53% at September 30,
2016
▪ Net loan (recoveries) charge-offs to average loans outstanding of (0.03%), compared to 0.04% in Q3 2016 and 0.02% in Q4 2015
▪ Tangible common equity ratio of 9.4% and tangible book value per share, net of tax, of $15.17, compared to 9.3% and $14.84,
respectively, at September 30, 2016
▪ Net income of $259.8 million and earnings per share of $2.50, compared to $194.2 million and $2.03 per share for 2015
▪ Return on average assets and return on average tangible common equity ratio of 1.61% and 17.71%, compared to 1.56% and
17.83% in 2015
▪ Net interest margin of 4.58%, compared to 4.51% in 2015
▪ Total loan and deposit increase of $2.07 billion and $2.52 billion, respectively, from December 31, 2015
▪ Net loan charge-offs (recoveries) to average loans outstanding of 0.02%, compared to (0.06)% in 2015 and nonperforming assets
(nonaccrual loans and repossessed assets) to total assets of 0.51%, compared to and 0.65% in 2015
▪ Tangible common equity ratio of 9.4% and tangible book value per share, net of tax, of $15.17, compared to 9.2% and $12.54,
respectively, at December 31, 2015
Note: Prior period financial results for 2015 have been adjusted to reflect the adoption of the accounting guidance in ASU 2016-01, Recognition and Measurement of
Financial Assets and Financial Liabilities. See the supplemental schedule at the end of the press release for the impact that adoption had on prior period financial results.
Q4 2016
HIGHLIGHTS
FULL YEAR
2016
HIGHLIGHTS
2
3
Quarterly Consolidated Financial Results
$ in millions, except EPS
Q4 2016 HIGHLIGHTS
▪ Net Interest Income increased
$2.8 million as a result of loan growth
and an increase in investment
securities
▪ Operating Non-Interest Expense
increased $0.3 million
▪ Acquisition / Restructure Expense
includes costs related to the Hotel
Franchise Finance acquisition and
core system conversion costs
▪ Income Tax decreased
$2.8 million resulting from a reduction
in the effective tax rate
Q4-16 Q3-16 Q4-15
Net Interest Income $ 175.3 $ 172.5 $ 143.3
Operating Non-Interest Income 10.5 10.7 9.4
Net Operating Revenue $ 185.8 $ 183.2 $ 152.8
Operating Non-Interest Expense (82.7) (82.4) (72.8)
Operating Pre-Provision Net Revenue $ 103.1 $ 100.8 $ 79.9
Provision for Credit Losses (1.0) (2.0) (2.5)
Gains on OREO and Other Assets — 0.1 0.4
Acquisition / Restructure Expense (6.0) (2.7) —
Other 0.1 — 0.1
Pre-tax Income $ 96.2 $ 96.2 $ 77.9
Income Tax (26.4) (29.2) (19.3)
Net Income $ 69.8 $ 67.1 $ 58.5
Preferred Dividend — — (0.2)
Net Income Available to Common $ 69.8 $ 67.1 $ 58.4
Average Diluted Shares Outstanding 104.8 104.6 102.0
Earnings Per Share $ 0.67 $ 0.64 $ 0.57
3
4
Annual Consolidated Financial Results
$ in millions, except EPS
2016 HIGHLIGHTS
▪ Net Interest Income increased
$164.6 million (33.4%) commensurate
to growth in loans of 18.6% and in
deposits of 20.9%
▪ Growth in Net Operating Revenue of
34.0% outpaced growth in Operating
Non-Interest Expense of 25.6%
▪ Provision for Credit Losses increased
$4.8 million resulting from loan growth
and an increase in net charge-offs
▪ Income Tax increased $37.1 million
due to an increase in pre-tax income
2016 2015
Net Interest Income $ 657.2 $ 492.6
Operating Non-Interest Income 41.8 29.2
Net Operating Revenue $ 699.1 $ 521.8
Operating Non-Interest Expense (318.7) (253.8)
Operating Pre-Provision Net Revenue $ 380.4 $ 267.9
Provision for Credit Losses (8.0) (3.2)
Gains on OREO and Other Assets 0.1 2.1
Acquisition / Restructure Expense (12.4) (8.8)
Other 1.1 0.5
Pre-tax Income $ 361.2 $ 258.5
Income Tax (101.4) (64.3)
Net Income $ 259.8 $ 194.2
Preferred Dividend — (0.8)
Net Income Available to Common $ 259.8 $ 193.5
Average Diluted Shares Outstanding 103.8 95.2
Earnings Per Share $ 2.50 $ 2.03
4
5
Net Interest Drivers
$ in billions, unless otherwise indicated
Interest Bearing Deposits and Cost of Funds
Loans and Yield
Borrowings and Cost of Borrowings
Q4 2016 HIGHLIGHTS
▪ Loan yield decreased due to lower
yields on CRE loans
▪ Cost of funds decreased one basis
point for interest-bearing deposits due
to lower rates on savings and money
market accounts
▪ Cost of funds for total deposits,
including non-interest bearing
deposits, also decreased one basis
point to 0.21%
Total Investments and Yield
Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
2.98% 3.02% 2.95% 2.90%
2.81%
$2.0 $2.1 $2.3
$2.8 $2.8
Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
5.35% 5.31%
5.43% 5.44% 5.41%
$11.1 $11.2 $12.9 $13.0 $13.2
Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
0.30% 0.31%
0.35% 0.36% 0.35%
$7.9 $8.4 $8.9 $8.8 $8.9
Investments
Investments and Other
Loans
Interest Bearing Deposits
5
Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
2.94%
3.65%
2.84%
4.05% 4.02%
$360.3
$210.6
$382.1 $382.9 $447.9
6
Net Interest Income and Accretion
$ in millions
Q4 2016 HIGHLIGHTS
▪ NIM increased 2 basis points to 4.57% quarter-over-
quarter
▪ Adjusted NIM for acquired loan accretion was 4.40% for
the quarter, compared to reported NIM of 4.57%
Net Interest Income and NIM
Acquired Loan Accretion and Adjusted NIM
Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
4.67%
4.58% 4.63% 4.55% 4.57%
$143.3 $145.7
$163.7 $172.5 $175.3
Non-PCI Accretion
PCI Accretion
Adjusted Net Interest Margin, excluding accretion
Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
$3.6 $2.8 $4.1 $4.6
$4.9
$1.4 $2.5
$4.1 $4.2 $2.1
4.52% 4.42% 4.41% 4.33% 4.40%
Scheduled Acquisition Loan Accretion *
Non-PCI Rate and Credit Accretion
PCI Rate Accretion
Q1-17 Q2-17 Q3-17 Q4-17
$3.3 $3.4 $3.2 $3.2
$1.1 $1.2 $1.2 $1.2
* Amounts do not include early loan payoffsEnding rate and credit marks on all acquired loans at 12/31/2016 is $70 million
PCI Accretion
Non-PCI Accretion
PCI Rate Accretion
Non-PCI Rate and Credit Accretion
Adjusted NIM
6
7
Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
$41.2 $44.9 $44.7 $49.5 $49.7
$9.8 $9.6 $10.2
$10.0 $10.4$10.0 $9.6 $10.9
$10.7 $12.1$11.8 $11.7
$12.0 $12.2 $10.5
Operating Expenses and Efficiency
$ in millions
Q4 2016 HIGHLIGHTS
▪ The operating efficiency ratio decreased from 43.0% in
Q3 2016 to 42.4%
▪ Operating expenses remained relatively consistent with
the prior quarter
Operating Expenses and Efficiency Ratio
Breakdown of Operating Expenses
Other
Professional Fees + Data Processing
Occupancy + Insurance
Compensation
Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
45.2% 45.6%
43.0% 43.0% 42.4%
$72.8 $75.8 $77.8
$82.4
7
$82.7
8
Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
$58.5
$61.3 $61.6
$67.1
$69.8
1.67%
1.70%
1.58%
1.63%
Operating Pre-Provision Net Revenue, Net Income, and ROA
$ in millions
▪ ROA increased from the prior quarter due to an increase in net interest income resulting from the deployment of excess cash into the
purchases of securities and loan growth
Operating Pre-Provision Net Revenue and ROA Net Income and ROA
Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
$79.9 $82.1
$94.5 $100.8
$103.1
2.28% 2.27%
2.37% 2.38% 2.40%
8
1.55%
9
Consolidated Balance Sheet
$ in millions
▪ Loans increased $175 million over
prior quarter and $2.07 billion (18.6%)
over prior year
▪ Deposits increased $107 million
(7.4%) over prior quarter and $2.52
billion (20.9%) over prior year
▪ Shareholders' Equity increased
$35 million as a function of Net
Income, offset by a decrease in
cumulative unrealized gains on
investment securities
▪ Tangible Book Value/Share increased
$0.33 over prior quarter and $2.63
(21.0%) over prior year
Q4 2016 HIGHLIGHTSQ4-16 Q3-16 Q4-15
Investments & Cash $ 3,052 $ 3,134 $ 2,267
Loans 13,209 13,034 11,137
Allowance for Credit Losses (125) (123) (119)
Other Assets 1,065 998 990
Total Assets $ 17,201 $ 17,043 $ 14,275
Deposits $ 14,550 $ 14,443 $ 12,031
Borrowings 489 427 399
Other Liabilities 270 316 254
Total Liabilities $ 15,309 $ 15,186 $ 12,684
Shareholders' Equity 1,892 1,857 1,592
Total Liabilities and Equity $ 17,201 $ 17,043 $ 14,275
Tangible Book Value Per Share $ 15.17 $ 14.84 $ 12.54
9
10
Loan Growth and Portfolio Composition
$ in millions
Q4 2016 HIGHLIGHTS
▪ Quarter-over-quarter loan
growth driven by:
◦ C&I $141 million
◦ Construction & Land
$98 million
▪ Year-over-year loan growth
driven by:
◦ CRE, Non-OO $1.26 billion
◦ C&I $593 million
$2.07 BILLION YEAR OVER YEAR GROWTH
Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
$5,267 $5,382 $5,581 $5,719 $5,860
$2,103 $2,052 $2,027
$2,002 $2,029
$2,283 $2,291
$3,601 $3,623 $3,544
$1,133 $1,180
$1,334 $1,380 $1,478
$350 $336
$335 $310 $298
3.1%
18.9%
20.5%
47.3%
10.2%
2.3%
15.4%
26.8%
44.4%
11.2%
Growth
* Increase in loans includes $1.28 billion from the acquisition of GE's hotel
franchise finance loan portfolio on April 20, 2016.
Residential and
Consumer
Construction &
Land
CRE, Non-Owner
Occupied
CRE, Owner
Occupied
Commercial &
Industrial
$11,136
+348
$11,241
+105
$12,878
+1,637 *
$13,034
+156
$13,209
+175
10
11
Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
$4,094 $4,635
$5,275 $5,625 $5,633
$1,028
$1,088
$1,278 $1,257 $1,347
$5,297
$5,651
$6,006 $5,969
$6,121
$1,611
$1,708
$1,642 $1,592
$1,449
Deposit Growth and Composition
$ in millions
Q4 2016 HIGHLIGHTS
▪ Quarter-over-quarter deposit
growth driven by:
◦ Savings and MMDA of
$152 million
◦ Interest Bearing DDA of
$90 million
◦ Offset by CDs decrease of
$143 million
▪ Year-over-year deposit growth
driven by:
◦ Non-interest bearing DDA
growth of $1.54 billion
◦ Savings and MMDA growth
of $824 million
◦ Offset by CDs decrease of
$162 million
8.5%
13.4%
34.0%
44.0%
9.3%
10.0%
38.7%
42.0%
$2.52 BILLION YEAR OVER YEAR GROWTH
CDs
Savings and
MMDA
Interest Bearing
DDA
Non-Interest
Bearing DDA
Growth
$14,201
+1,119 $13,082
+1,052
$12,030
+420
$14,443
+242
$14,550
+107
11
12
Adversely Graded Assets to Total Assets
NPAs to Total Assets
Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
2.54%
2.11% 2.24% 2.03% 2.07%
0.65% 0.57% 0.54% 0.53% 0.51%
OREO Non-Performing Loans
Classified Accruing Loans Special Mention Loans
Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
$44 $53 $50 $50 $48
$48 $34 $40 $41 $40
$119
$92 $120 $110 $107
$142
$133
$154
$134 $148
Adversely Graded Loans and Non-Performing Assets *
$ in millions
NPAs
Adversely
Graded
Loans
$335
Accruing TDRs total $54 million as of 12/31/2016
$353
$312
$364 $343
* Amounts are net of total PCI credit and interest rate discounts of $28 million as of 12/31/2016
12
Special Mention Loans
OREO
13
Gross Charge-Offs Recoveries
Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
Charge-Offs, Recoveries, ALLL, and Provision
$ in millions
Gross Charge-Offs and Recoveries
Net Recoveries / Charge-Offs and Rate
ALLL+CD/Total Loans Provision for Credit Losses
ALLL/Total Loans
Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
1.25%
1.42% 1.37% 1.30%
$2.5 $2.5 $2.5 $2.0 $1.0
1.07% 0.95% 0.94% 0.95%
Net Charge-Offs (Recoveries)
Net Charge-Off (Recovery) Rate
Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
$0.5
$2.3
$(0.4)
$1.2
$(0.8)
0.02% (0.01)% 0.04% (0.03)%
ALLL and Credit Discounts
ALLL Credit Discounts
Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
$119 $119 $122 $123 $125
$21 $16
$62 $56 $47
Provision for Credit Losses and ALL Ratios
13
Credit Discounts ALLL
1.21%
$2.5
$8.0
$2.7 $1.4
$(5.7)
$(1.5) $(2.0) $(1.8)
$1.4
$(2.2)
$140 $135
$179$184 $172
1.06%
0.08%
14
ROTCE TBV/Share
Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
18.6% 18.4%
17.4% 17.5% 17.6%
$12.54
$13.16
$14.25
$14.84 $15.17
Capital
Total Capital Common Equity Tier 1
Tier 1 Leverage Tangible Common Equity
Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
12.2% 12.3%
12.9%
13.1% 13.2%
9.7%
9.9%
9.6%
9.8%
10.0%
9.8% 9.9% 9.8%
9.6% 9.9%
9.2% 9.1% 9.1%
9.3% 9.4%
Capital Ratios ROTCE and TBV/Share
14
15
Outlook 1st Quarter 2017
▪ Loan and Deposit Growth
▪ Interest Margin
▪ Operating Efficiency
▪ Asset Quality
15
16
Forward-Looking Statements
16
This presentation contains forward-looking statements that relate to expectations, beliefs, projections, future plans and strategies,
anticipated events or trends, and similar expressions concerning matters that are not historical facts. Examples of forward-looking
statements include, among others, statements we make regarding our expectations with regard to our business, financial and operating
results, and future economic performance, including our recent domestic select-service hotel franchise finance loan portfolio acquisition.
The forward-looking statements contained herein reflect our current views about future events and financial performance and are
subject to risks, uncertainties, assumptions, and changes in circumstances that may cause our actual results to differ significantly from
historical results and those expressed in any forward-looking statement. Some factors that could cause actual results to differ materially
from historical or expected results include, among others: the risk factors discussed in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2015 as filed with the Securities and Exchange Commission; changes in general economic conditions,
either nationally or locally in the areas in which we conduct or will conduct our business; inflation, interest rate, market and monetary
fluctuations; increases in competitive pressures among financial institutions and businesses offering similar products and services;
higher defaults on our loan portfolio than we expect; changes in management’s estimate of the adequacy of the allowance for credit
losses; legislative or regulatory changes or changes in accounting principles, policies, or guidelines; supervisory actions by regulatory
agencies which may limit our ability to pursue certain growth opportunities, including expansion through acquisitions; additional
regulatory requirements resulting from our continued growth; management’s estimates and projections of interest rates and interest
rate policy; the execution of our business plan; and other factors affecting the financial services industry generally or the banking
industry in particular.
Any forward-looking statement made by us in this presentation is based only on information currently available to us and speaks
only as of the date on which it is made. We do not intend to have and disclaim any duty or obligation to update or revise any industry
information or forward-looking statements, whether written or oral, that may be made from time to time, set forth in this presentation
to reflect new information, future events or otherwise.