Western Alliance Reports First Quarter 2017 Financial Results

Western Alliance Bancorporation (NYSE:WAL):

                 

FIRST QUARTER 2017 FINANCIAL RESULTS

                 
Net income Earnings per share Net interest margin Efficiency ratio Book value per
common share

$73.4 million

$0.70

4.63% 44.0% $18.68

4.48%, excluding acquired loan accretion

44.4%, excluding non-operating adjustments

$15.86, excluding intangible assets

 

CEO COMMENTARY:

“Western Alliance is off to a strong start to the year with $73.4
million in net income and $0.70 EPS in Q1 2017,” commented Robert
Sarver, Chairman and Chief Executive Officer of Western Alliance
Bancorporation. “We are particularly pleased with our loan growth of
$454 million to $13.66 billion, up 3.4% over the prior quarter, and our
very strong deposit growth of $806 million to $15.36 billion, up 5.5%
over the prior quarter. Asset quality remains strong with a net
charge-off rate of 0.04% and non-performing assets to total assets of
0.44%. Our return on average assets and tangible common equity1
rose for the quarter to 1.69% and 17.85%, among the highest in the
industry. With the quarter’s increase in tangible book value per share
to $15.86,1 Western Alliance continues to deliver to its
shareholders superior income, asset, and capital growth and has set a
firm foundation for a strong 2017.”

       

LINKED-QUARTER BASIS

YEAR-OVER-YEAR

       

FINANCIAL HIGHLIGHTS:

• Net income and earnings per share of $73.4 million and $0.70,
compared to $69.8 million and $0.67, respectively

• Net income of $73.4 million and earnings per share of $0.70,
compared to $61.3 million and $0.60, respectively

• Net operating revenue of $189.2 million, constituting growth of
$3.4 million, and an increase in operating non-interest expenses
of $5.6 million1

• Net operating revenue of $189.2 million, constituting
year-over-year growth of 19.9%, or $31.4 million, and an increase
in operating non-interest expenses of 16.5%, or $12.5 million1

• Operating pre-provision net revenue of $100.9 million, down $2.2
million from $103.1 million 1

• Operating pre-provision net revenue of $100.9 million, up $18.9
million from $82.1 million 1

       

FINANCIAL POSITION RESULTS:

• Total loans of $13.66 billion, up $454 million

• Increase in total loans of $2.42 billion

• Total deposits of $15.36 billion, up $806 million

• Total deposits increase of $2.27 billion

• Stockholders’ equity of $1.97 billion, up $77 million

• Increase in stockholders’ equity of $309 million

       

LOANS AND ASSET QUALITY:

• Nonperforming assets (nonaccrual loans and repossessed assets)
decreased to 0.44% of total assets, from 0.51%

• Nonperforming assets to total assets of 0.44%, compared to 0.57%

• Annualized net loan charge-offs (recoveries) to average loans
outstanding of 0.04%, compared to (0.03)%

• Annualized net loan charge-offs to average loans outstanding of
0.04%, compared to 0.08%

       

KEY PERFORMANCE METRICS:

• Net interest margin of 4.63%, compared to 4.57%

• Net interest margin of 4.63%, compared to 4.58%

• Return on average assets and return on tangible common equity1
of 1.69% and 17.85%, compared to 1.63% and 17.59%, respectively

• Return on average assets and return on tangible common equity1
of 1.69% and 17.85%, compared to 1.70% and 18.43%, respectively

• Tangible common equity ratio of 9.4%, compared to 9.4%1

• Tangible common equity ratio of 9.4%, compared to 9.1%1

• Tangible book value per share, net of tax, of $15.86, an
increase from $15.171

• Tangible book value per share, net of tax, of $15.86, an
increase of 20.5% from $13.161

• Operating efficiency ratio of 44.4%, compared to 42.4%1

• Operating efficiency ratio of 44.4%, compared to 45.6%1

 

1 See reconciliation of Non-GAAP Financial Measures.

Income Statement

Net interest income was $179.3 million in the first quarter 2017, an
increase of $4.0 million from $175.3 million in the fourth quarter 2016,
and an increase of $33.6 million, or 23.1%, compared to the first
quarter 2016. Net interest income in the first quarter 2017 includes
$6.4 million of total accretion income from acquired loans, compared to
$7.0 million in the fourth quarter 2016, and $5.3 million in the first
quarter 2016.

The Company’s net interest margin in the first quarter 2017 was 4.63%,
an increase from 4.57% in the fourth quarter 2016, and from 4.58% in the
first quarter 2016. The increase in net interest margin from the fourth
quarter 2016 is attributable to higher yields on loans and securities as
a result of rising interest rates. The increase in net interest margin
from the first quarter 2016 primarily relates to an increase in acquired
loan accretion, partially offset by an increase in interest expense
resulting from the issuance of long-term subordinated debt in June 2016,
as well as an increase in the cost of interest-bearing deposits.

Operating non-interest income was $9.9 million for the first quarter
2017, compared to $10.5 million for the fourth quarter 2016, and $12.1
million for the first quarter 2016.1

Net operating revenue was $189.2 million for the first quarter 2017, an
increase of $3.4 million, compared to $185.8 million for the fourth
quarter 2016, and an increase of $31.4 million, or 19.9%, compared to
$157.8 million for the first quarter 2016.1

Operating non-interest expense was $88.3 million for the first quarter
2017, compared to $82.7 million for the fourth quarter 2016, and $75.8
million for the first quarter 2016.1 The increase in
operating non-interest expense from the prior quarter relates to higher
professional fees and compensation costs as the Company continues to
build out its infrastructure to support growth and also reflects
seasonal compensation costs. The Company’s operating efficiency ratio1
on a tax equivalent basis was 44.4% for the first quarter 2017, compared
to 42.4% for the fourth quarter 2016, and 45.6% for the first quarter
2016.

Net income was $73.4 million for the first quarter 2017, an increase of
$3.6 million from $69.8 million for the fourth quarter 2016, and an
increase of $12.1 million, or 19.6%, from $61.3 million for the first
quarter 2016. Earnings per share was $0.70 for the first quarter 2017,
compared to $0.67 for the fourth quarter 2016, and $0.60 for the first
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
first quarter 2017, the Company’s operating PPNR was $100.9 million,
down from $103.1 million in the fourth quarter 2016, and up 23.0% from
$82.1 million in the first quarter 2016.1 The non-operating
items1 for the first quarter 2017 consisted primarily of net
gains on sales of investment securities of $0.6 million and a net gain
on sales / valuations of repossessed and other assets of $0.5 million.

The Company had 1,564 full-time equivalent employees and 45 offices at
March 31, 2017, compared to 1,557 employees and 48 offices at December
31, 2016 and 1,464 employees and 47 offices at March 31, 2016.

Balance Sheet

Gross loans totaled $13.66 billion at March 31, 2017, an increase of
$454 million from $13.21 billion at December 31, 2016, and an increase
of $2.42 billion from $11.24 billion at March 31, 2016. The
year-over-year increase is comprised of $1.28 billion from Hotel
Franchise Finance (“HFF”) acquisition as of April 20, 2016 and the
remainder from organic loan growth. 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. At March 31, 2017, the
allowance for credit losses was 0.94% of total loans, compared to 0.95%
at December 31, 2016, and 1.06% at March 31, 2016. The allowance for
credit losses as a percent of total loans, adjusted to include credit
discounts on acquired loans1, was 1.26% at March 31, 2017,
compared to 1.30% at December 31, 2016, and 1.21% at March 31, 2016.

Deposits totaled $15.36 billion at March 31, 2017, an increase of $806
million from $14.55 billion at December 31, 2016, and an increase of
$2.27 billion from $13.08 billion at March 31, 2016. The increase from
both the prior quarter and from March 31, 2016 is the result of organic
deposit growth. Non-interest bearing deposits were $6.11 billion at
March 31, 2017, compared to $5.63 billion at December 31, 2016, and
$4.64 billion at March 31, 2016. Non-interest bearing deposits comprised
39.8% of total deposits at March 31, 2017, compared to 38.7% at
December 31, 2016, and 35.4% at March 31, 2016. The proportion of
savings and money market balances to total deposits decreased to 40.7%
from 42.1% at December 31, 2016, and from 43.2% at March 31, 2016.
Certificates of deposit as a percentage of total deposits were 10.0% at
March 31, 2017, compared to 10.0% at December 31, 2016, and 13.1% at
March 31, 2016. The Company’s ratio of loans to deposits was 89.0% at
March 31, 2017, compared to 90.8% at December 31, 2016, and 85.9% at
March 31, 2016.

Borrowings decreased to zero at March 31, 2017, from $80.0 million at
December 31, 2016, and $0.2 million at March 31, 2016. The decrease from
the prior quarter is due to payoff of FHLB overnight advances. The
decrease from the prior year is due to the payoff of short-term federal
funds purchased.

Qualifying debt totaled $367 million at March 31, 2017, a decrease from
$368 million at December 31, 2016, and an increase of $157 million from
$210 million at March 31, 2016. The increase from the prior year is
primarily related to the issuance of $175 million in subordinated debt
in June 2016.

Stockholders’ equity at March 31, 2017 was $1.97 billion, compared to
$1.89 billion at December 31, 2016, and $1.66 billion at March 31, 2016.
The increase from the prior year relates primarily to at-the-market
stock issuances and net income for the respective period, which was
partially offset by valuation declines on available-for-sale investment
securities.

At March 31, 2017, tangible common equity, net of tax, was 9.4% of
tangible assets1 and total capital was 13.2% of risk-weighted
assets. The Company’s tangible book value per share1 was
$15.86 at March 31, 2017, up 20.5% from March 31, 2016.

Total assets increased to $18.12 billion at March 31, 2017, from $17.20
billion at December 31, 2016, and increased 18.9% from $15.25 billion at
March 31, 2016. The increase in total assets from the prior year relates
primarily to the HFF acquisition, organic loan growth, and an increase
in investment securities resulting from increased deposits.

Asset Quality

The provision for credit losses was $4.3 million for the first quarter
2017, compared to $1.0 million for the fourth quarter 2016, and $2.5
million for the first quarter 2016. Net loan charge-offs (recoveries) in
the first quarter 2017 were $1.3 million, or 0.04% of average loans
(annualized), compared to $(0.8) million in net recoveries, or (0.03)%,
in the fourth quarter 2016 and $2.3 million in net charge-offs, or
0.08%, in the first quarter 2016.

Nonaccrual loans decreased $5.8 million to $34.5 million during the
quarter. Loans past due 90 days and still accruing interest totaled $3.7
million at March 31, 2017, compared to $1.1 million at December 31,
2016, and $4.5 million at March 31, 2016. Loans past due 30-89 days and
still accruing interest totaled $10.8 million at quarter end, an
increase from $6.3 million at December 31, 2016, and an increase from
$9.2 million at March 31, 2016.

Repossessed assets totaled $45.2 million at quarter end, a decrease of
$2.6 million from $47.8 million at December 31, 2016, and a decrease of
$7.6 million from $52.8 million at March 31, 2016. Adversely graded
loans and non-performing assets totaled $388.3 million at quarter end,
an increase of $45.5 million from $342.9 million at December 31, 2016,
and an increase of $76.3 million from $312.1 million at March 31, 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 12.6% at
March 31, 2017, compared to 11.8% at December 31, 2016, and 13.0% at
March 31, 2016.1

1 See reconciliation of Non-GAAP Financial Measures.

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,
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 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 $7.75 billion at
March 31, 2017, an increase of $202 million during the quarter, and an
increase of $273 million during the last twelve months. All regional
segments had loan growth during the quarter with Arizona contributing
the largest growth of $84 million, followed by Nevada, Southern
California, and Northern California with growth of $44 million, $40
million, and $35 million, respectively. The growth in loans during the
last twelve months was primarily driven by increases of $225 million in
Arizona and $60 million in Nevada, which were partially offset by a
decrease of $19 million in Northern California. Total deposits for the
regional segments were $12.01 billion, an increase of $509 million
during the quarter, and an increase of $1.54 billion during the last
twelve months. Arizona and Nevada generated increased deposits during
the quarter of $412 million and $165 million, respectively, which was
partially offset by a decrease of $82.3 million in Northern California.
With the exception of Northern California, each of the regional segments
generated increased deposits during the last twelve months, with Arizona
contributing the largest increase of $1.07 billion, followed by Southern
California and Nevada with increases of $341 million and $267 million,
respectively.

Pre-tax income for the regional segments was $72.4 million for the three
months ended March 31, 2017, a decrease of $4.1 million from the three
months ended December 31, 2016, and an increase of $6.3 million from the
three months ended March 31, 2016. Arizona and Southern California each
had a decrease in pre-tax income of $2.7 million. These decreases were
partially offset by increases in pre-tax income for Nevada and Northern
California of $0.5 million and $1.0 million, respectively, compared to
the three months ended December 31, 2016. With the exception of Southern
California, which had a decrease in pre-tax income of $0.7 million, each
regional segment had increases in pre-tax income from the three months
ended March 31, 2016, with Arizona and Nevada contributing the largest
increases of $5.5 million and $1.1 million, respectively.

The NBL segments reported gross loan balances of $5.91 billion at
March 31, 2017, an increase of $256 million during the quarter, and an
increase of $2.17 billion during the last twelve months. The increase in
loans for the NBL segments compared to the prior quarter relates
primarily to the Other NBLs and Public & Nonprofit Finance segments,
which increased loans by $178 million and $74 million, respectively. The
increases in loans during the last twelve months were driven by HFF (as
a result of the $1.28 billion purchase), Other NBLs, and Technology &
Innovation segments, which increased loans by $1.28 billion, $617
million, and $166 million, respectively. Total deposits for the NBL
segments were $3.26 billion, an increase of $327 million during the
quarter, and an increase of $923 million during the last twelve months.
The HOA Services and Technology & Innovation segments increased deposits
by $223 million and $104 million, respectively, during the quarter. The
increase of $923 million during the last twelve months is the result of
growth in the HOA Services and Technology & Innovation segments of $585
million and $339 million, respectively.

Pre-tax income for the NBL segments was $37.5 million for the three
months ended March 31, 2017, a decrease of $3.0 million from the three
months ended December 31, 2016, and an increase of $11.0 million from
the three months ended March 31, 2016. The decrease in pre-tax income
from the prior quarter relates primarily to the Other NBLs segment,
which decreased $3.7 million. This decrease was offset by increases in
pre-tax income from the Public & Nonprofit and HOA Services segments of
$0.4 million and $0.5 million, respectively. The HFF and HOA Services
segments had the largest increases in pre-tax income of $10.6 million
and $2.5 million, respectively, from the three months ended March 31,
2016, which were offset by decreases in pre-tax income of $1.2 million
and $1.0 million from the Technology & Innovation and Other NBLs
segments, respectively.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live
webcast to discuss its first quarter 2017 financial results at 12:00
p.m. ET on Friday, April 21, 2017. Participants may access the call by
dialing 1-888-317-6003 and using passcode 3879324 or via live audio
webcast using the website link http://services.choruscall.com/links/wal170421.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 April 21st through 9:00 a.m. ET May 21st by dialing
1-877-344-7529 passcode: 10103883.

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, including our recent domestic select-service hotel
franchise finance loan portfolio acquisition. The forward-looking
statements contained herein reflect our current views about future
events and financial performance and are subject to risks,
uncertainties, assumptions and changes in circumstances that may cause
our actual results to differ significantly from historical results and
those expressed in any forward-looking statement. Some factors that
could cause actual results to differ materially from historical or
expected results include, among others: the risk factors discussed in
the Company’s Annual Report on Form 10-K for the year ended December 31,
2016 as filed with the Securities and Exchange Commission; changes in
general economic conditions, either nationally or locally in the areas
in which we conduct or will conduct our business; inflation, interest
rate, market and monetary fluctuations; increases in competitive
pressures among financial institutions and businesses offering similar
products and services; higher defaults on our loan portfolio than we
expect; changes in management’s estimate of the adequacy of the
allowance for credit losses; legislative or regulatory changes or
changes in accounting principles, policies or guidelines; supervisory
actions by regulatory agencies which may limit our ability to pursue
certain growth opportunities, including expansion through acquisitions;
additional regulatory requirements resulting from our continued growth;
management’s estimates and projections of interest rates and interest
rate policy; the execution of our business plan; and other factors
affecting the financial services industry generally or the banking
industry in particular.

Any forward-looking statement made by us in this 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.

 

Western Alliance Bancorporation and Subsidiaries

Summary Consolidated Financial Data
Unaudited
       
 

Selected Balance Sheet Data:

As of March 31,
2017 2016 Change %

(in millions)

Total assets $ 18,122.5 $ 15,248.0 18.9 %
Total loans, net of deferred fees 13,662.7 11,241.4 21.5
Securities and money market investments 2,869.1 2,099.9 36.6
Total deposits 15,356.0 13,081.7 17.4
Borrowings 0.2 (100.0 )
Qualifying debt 366.9 210.4 74.4
Stockholders’ equity 1,969.0 1,660.2 18.6
Tangible common equity, net of tax (1) 1,671.6 1,362.0 22.7
 
Selected Income Statement Data:
For the Three Months Ended March 31,
2017 2016 Change %
(in thousands, except per share data)
Interest income $ 192,265 $ 154,256 24.6 %
Interest expense 12,956   8,545   51.6
Net interest income 179,309 145,711 23.1
Provision for credit losses 4,250   2,500   70.0
Net interest income after provision for credit losses 175,059 143,211 22.2
Non-interest income 10,544 13,133 (19.7 )
Non-interest expense 87,757   75,493   16.2
Income before income taxes 97,846 80,851 21.0
Income tax expense 24,489   19,519   25.5
Net income $ 73,357   $ 61,332   19.6
Diluted earnings per share available to common stockholders $ 0.70   $ 0.60   16.7
 
 
(1) See Reconciliation of Non-GAAP Financial Measures.
 

Western Alliance Bancorporation and Subsidiaries

Summary Consolidated Financial Data
Unaudited
   
 
Common Share Data:
As of or for the Three Months Ended March 31,
2017   2016   Change %
Diluted earnings per share available to common stockholders $ 0.70 $ 0.60 16.7 %
Book value per common share 18.68 16.04 16.5
Tangible book value per share, net of tax (1) 15.86 13.16 20.5
Average shares outstanding
(in thousands):
Basic

103,987

101,895 2.1
Diluted

104,836

102,538 2.2
Common shares outstanding 105,428 103,514 1.8
 
Selected Performance Ratios:
Return on average assets (2) 1.69 % 1.70 % (0.6 )%
Return on average tangible common equity (1, 2) 17.85 18.43 (3.1 )
Net interest margin (2) 4.63 4.58 1.1
Net interest spread 4.40 4.42 (0.5 )
Operating efficiency ratio – tax equivalent basis (1) 44.40 45.58 (2.6 )
Loan to deposit ratio 88.97 85.93 3.5
 
Asset Quality Ratios:
Net charge-offs (recoveries) to average loans outstanding (2) 0.04 % 0.08 % (50.0 )%
Nonaccrual loans to gross loans 0.25 0.30 (16.7 )
Nonaccrual loans and repossessed assets to total assets 0.44 0.57 (22.8 )
Loans past due 90 days and still accruing to gross loans 0.03 0.04 (25.0 )
Allowance for credit losses to gross loans 0.94 1.06 (11.3 )
Allowance for credit losses to nonaccrual loans 370.45 352.72 5.0
 
Capital Ratios (1):
Mar 31, 2017   Dec 31, 2016     Mar 31, 2016

Tangible common equity (1)

9.4 % 9.4 % 9.1 %
Common Equity Tier 1 (3) 10.1 10.0 9.9
Tier 1 Leverage ratio (3) 10.2 9.9 9.9
Tier 1 Capital (3) 10.5 10.5 10.4
Total Capital (3) 13.2 13.2 12.3
 
 

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

(2) Annualized for the three month periods ended March 31, 2017
and 2016.

(3) Capital ratios for March 31, 2017 are preliminary until the
Call Report is filed.

 
 
Western Alliance Bancorporation and Subsidiaries
Condensed Consolidated Income Statements
Unaudited
 
    Three Months Ended March 31,
2017   2016
(dollars in thousands, except per share data)
Interest income:
Loans $ 172,553 $ 139,786
Investment securities 18,114 13,508
Other 1,598   962  
Total interest income 192,265   154,256  
Interest expense:
Deposits 8,412 6,243
Qualifying debt 4,338 2,184
Borrowings 206   118  
Total interest expense 12,956   8,545  
Net interest income 179,309 145,711
Provision for credit losses 4,250   2,500  
Net interest income after provision for credit losses 175,059   143,211  
Non-interest income:
Service charges 4,738 4,499
Card income 1,218 1,013
Income from bank owned life insurance 948 930
Gain (loss) on sales of investment securities, net 635 1,001
SBA/warrant income 516 1,006
Lending related income and gains (losses) on sale of loans, net 492 2,935
Other 1,997   1,749  
Total non-interest income 10,544   13,133  
Non-interest expenses:
Salaries and employee benefits 51,620 44,855
Legal, professional and directors’ fees 8,803 5,572
Occupancy 6,894 6,257
Data processing 5,271 4,060
Insurance 3,228 3,323
Marketing 721 657
Intangible amortization 689 697
Card expense 654 887
Loan and repossessed asset expenses 1,278 902
Net (gain) loss on sales and valuations of repossessed and other
assets
(543 ) (302 )
Other 9,142   8,585  
Total non-interest expense 87,757   75,493  
Income before income taxes 97,846 80,851
Income tax expense 24,489   19,519  
Net income available to common stockholders $ 73,357   $ 61,332  
 
Earnings per share available to common stockholders:
Diluted shares

104,836

102,538
Diluted earnings per share $ 0.70 $ 0.60
 
 
Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Income Statements
Unaudited
    Three Months Ended
Mar 31, 2017     Dec 31, 2016     Sep 30, 2016     Jun 30, 2016     Mar 31, 2016
(in thousands, except per share data)
Interest income:
Loans $ 172,553 $ 168,881 $ 167,914 $ 160,015 $ 139,786
Investment securities 18,114 16,725 15,436 12,871 13,508
Other 1,598   1,805   1,400   1,203   962  
Total interest income 192,265   187,411   184,750   174,089   154,256  
Interest expense:
Deposits 8,412 7,729 8,072 7,678 6,243
Qualifying debt 4,338 4,252 4,048 2,514 2,184
Borrowings 206   161   83   211   118  
Total interest expense 12,956   12,142   12,203   10,403   8,545  
Net interest income 179,309 175,269 172,547 163,686 145,711
Provision for credit losses 4,250   1,000   2,000   2,500   2,500  
Net interest income after provision for credit losses 175,059   174,269   170,547   161,186   143,211  
Non-interest income:
Service charges 4,738 4,865 4,916 4,544 4,499
Card income 1,218 1,170 1,177 1,078 1,013
Income from bank owned life insurance 948 904 899 1,029 930
Gains (losses) on sales of investment securities, net 635 58 1,001
SBA/ warrant income 516 1,353 1,457 365 1,006
Lending related income and gains (losses) on sale of loans, net 492 488 459 (112 ) 2,935
Other 1,997   1,702   1,775   1,655   1,749  
Total non-interest income 10,544   10,540   10,683   8,559   13,133  
Non-interest expenses:
Salaries and employee benefits 51,620 49,702 49,542 44,711 44,855
Legal, professional, and directors’ fees 8,803 7,600 5,691 5,747 5,572
Occupancy 6,894 6,944 6,856 7,246 6,257
Data processing 5,271 4,504 4,982 5,114 4,060
Insurance 3,228 3,468 3,144 2,963 3,323
Marketing 721 1,164 678 1,097 657
Intangible amortization 689 697 697 697 697
Card expense 654 689 536 824 887
Loan and repossessed asset expenses 1,278 477 788 832 902
Net (gain) loss on sales and valuations of repossessed and other
assets
(543 ) (34 ) (146 ) 357 (302 )
Acquisition / restructure expense 6,021 2,729 3,662
Other 9,142   7,413   9,510   8,554   8,585  
Total non-interest expense 87,757   88,645   85,007   81,804   75,493  
Income before income taxes 97,846 96,164 96,223 87,941 80,851
Income tax expense 24,489   26,364   29,171   26,327   19,519  
Net income available to common stockholders $ 73,357   $ 69,800   $ 67,052   $ 61,614   $ 61,332  
 
 
Earnings per share available to common stockholders:
Diluted shares

104,836

104,765 104,564 103,472 102,538
Diluted earnings per share $ 0.70 $ 0.67 $ 0.64 $ 0.60 $ 0.60
 
 
Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Balance Sheets
Unaudited
    Mar 31, 2017     Dec 31, 2016     Sep 30, 2016     Jun 30, 2016     Mar 31, 2016
(in millions, except per share data)
Assets:
Cash and due from banks $ 647.0 $ 284.5 $ 356.1 $ 696.2 $ 1,031.0
Securities and money market investments 2,869.1 2,767.8 2,778.1 2,262.6 2,099.9
Loans held for sale 17.8 18.9 21.3 22.3 23.6
Loans held for investment:
Commercial 6,039.1 5,855.8 5,715.0 5,577.6 5,378.5
Commercial real estate – non-owner occupied 3,607.8 3,544.0 3,623.4 3,601.3 2,291.0
Commercial real estate – owner occupied 2,043.4 2,013.3 1,984.0 2,008.3 2,032.3
Construction and land development 1,601.7 1,478.1 1,379.7 1,333.5 1,179.9
Residential real estate 309.9 259.4 271.8 293.0 302.4
Consumer 43.0   39.0   38.4   41.8   33.7  
Gross loans and deferred fees, net 13,644.9 13,189.6 13,012.3 12,855.5 11,217.8
Allowance for credit losses (127.6 ) (124.7 ) (122.9 ) (122.1 ) (119.2 )
Loans, net 13,517.3   13,064.9   12,889.4   12,733.4   11,098.6  
Premises and equipment, net 120.0 119.8 121.3 120.5 119.8
Other assets acquired through foreclosure, net 45.2 47.8 49.6 49.8 52.8
Bank owned life insurance 165.5 164.5 163.6 164.3 163.4
Goodwill and other intangibles, net 302.1 302.9 303.6 304.3 304.0
Other assets 438.5   429.7   359.6   375.3   354.9  
Total assets $ 18,122.5   $ 17,200.8   $ 17,042.6   $ 16,728.7   $ 15,248.0  
Liabilities and Stockholders’ Equity:
Liabilities:
Deposits
Non-interest bearing demand deposits $ 6,114.1 $ 5,632.9 $ 5,624.8 $ 5,275.1 $ 4,635.2
Interest bearing:
Demand 1,449.3 1,346.7 1,256.7 1,278.1 1,088.2
Savings and money market 6,253.8 6,120.9 5,969.6 6,005.8 5,650.9
Time certificates 1,538.8   1,449.3   1,592.1   1,642.3   1,707.4  
Total deposits 15,356.0 14,549.8 14,443.2 14,201.3 13,081.7
Customer repurchase agreements 35.7   41.7   44.4   38.5   36.1  
Total customer funds 15,391.7 14,591.5 14,487.6 14,239.8 13,117.8
Borrowings 80.0 0.2
Qualifying debt 366.9 367.9 382.9 382.1 210.4
Accrued interest payable and other liabilities 394.9   269.9   314.7   310.6   259.4  
Total liabilities 16,153.5   15,309.3   15,185.2   14,932.5   13,587.8  
Stockholders’ Equity:
Common stock and additional paid-in capital 1,370.3 1,373.8 1,368.4 1,364.0 1,302.9
Retained earnings 595.8 522.4 452.6 385.6 324.0
Accumulated other comprehensive income (loss) 2.9   (4.7 ) 36.4   46.6   33.3  
Total stockholders’ equity 1,969.0   1,891.5   1,857.4   1,796.2   1,660.2  
Total liabilities and stockholders’ equity $ 18,122.5   $ 17,200.8   $ 17,042.6   $ 16,728.7   $ 15,248.0  
 
 
Western Alliance Bancorporation and Subsidiaries
Changes in the Allowance For Credit Losses
Unaudited
    Three Months Ended
Mar 31, 2017     Dec 31, 2016     Sep 30, 2016     Jun 30, 2016     Mar 31, 2016
(in thousands)
Balance, beginning of period $ 124,704 $ 122,884 $ 122,104 $ 119,227 $ 119,068
Provision for credit losses 4,250 1,000 2,000 2,500 2,500
Recoveries of loans previously charged-off:
Commercial and industrial 328 1,144 466 804 1,576
Commercial real estate – non-owner occupied 355 691 230 343 3,595
Commercial real estate – owner occupied 178 45 291 427 70
Construction and land development 277 30 302 58 95
Residential real estate 251 287 179 153 257
Consumer 49   11   21   43   67  
Total recoveries 1,438 2,208 1,489 1,828 5,660
Loans charged-off:
Commercial and industrial 2,595 1,267 2,558 1,161 7,491
Commercial real estate – non-owner occupied 1
Commercial real estate – owner occupied 1 72 244 410
Construction and land development 18
Residential real estate 115 60 79 26
Consumer 33   41     46   74  
Total loans charged-off 2,743 1,388 2,709 1,451 8,001
Net loan charge-offs (recoveries) 1,305   (820 ) 1,220   (377 ) 2,341  
Balance, end of period $ 127,649   $ 124,704   $ 122,884   $ 122,104   $ 119,227  
 
Net charge-offs (recoveries) to average loans- annualized 0.04 % (0.03 )% 0.04 % (0.01 )% 0.08 %
 
Allowance for credit losses to gross loans 0.94 % 0.95 % 0.94 % 0.95 % 1.06 %
Allowance for credit losses to gross loans, adjusted for acquisition
accounting (1)
1.26 1.30 1.37 1.42 1.21
Allowance for credit losses to nonaccrual loans 370.45 309.65 302.61 307.68 352.72
 
Nonaccrual loans $ 34,458 $ 40,272 $ 40,608 $ 39,685 $ 33,802
Nonaccrual loans to gross loans 0.25 % 0.31 % 0.31 % 0.31 % 0.30 %
Repossessed assets $ 45,200 $ 47,815 $ 49,619 $ 49,842 $ 52,776
Nonaccrual loans and repossessed assets to total assets 0.44 % 0.51 % 0.53 % 0.54 % 0.57 %
 
Loans past due 90 days, still accruing $ 3,659 $ 1,067 $ 2,817 $ 6,991 $ 4,488
Loans past due 90 days and still accruing to gross loans 0.03 % 0.01 % 0.02 % 0.05 % 0.04 %
Loans past due 30 to 89 days, still accruing $ 10,764 $ 6,294 $ 18,446 $ 3,475 $ 9,207
Loans past due 30 to 89 days, still accruing to gross loans 0.08 % 0.05 % 0.14 % 0.03 % 0.08 %
 
Special mention loans $ 175,184 $ 148,144 $ 134,018 $ 154,167 $ 133,036
Special mention loans to gross loans 1.28 % 1.12 % 1.03 % 1.20 % 1.19 %
 
Classified loans on accrual $ 133,483 $ 106,644 $ 110,650 $ 119,939 $ 92,435
Classified loans on accrual to gross loans 0.98 % 0.81 % 0.85 % 0.93 % 0.82 %
Classified assets $ 236,786 $ 211,782 $ 212,286 $ 219,319 $ 187,929
Classified assets to total assets 1.31 % 1.23 % 1.25 % 1.31 % 1.23 %
 
(1) See Reconciliation of Non-GAAP Financial Measures.
 
 
Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields and Rates
Unaudited
    Three Months Ended
March 31, 2017     December 31, 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 $ 5,753.7 $ 68,404 5.24 % $ 5,656.4 $ 66,674 5.19 %
CRE – non-owner occupied 3,534.8 53,506 6.05 3,581.1 51,565 5.76
CRE – owner occupied 1,998.0 24,726 4.95 1,993.3 24,897 5.00
Construction and land development 1,510.8 22,102 5.85 1,431.9 22,094 6.17
Residential real estate 271.9 3,023 4.45 264.3 2,926 4.43
Consumer 38.5 493 5.12 38.7 468 4.84
Loans held for sale 18.8   299   6.36   20.2   257   5.09  
Total loans (1), (2), (3) 13,126.5 172,553 5.47 12,985.9 168,881 5.41
Securities:
Securities – taxable 2,105.2 12,437 2.36 2,142.6 11,482 2.14
Securities – tax-exempt 604.3   5,677   5.57   591.2   5,243   5.25  
Total securities (1) 2,709.5 18,114 3.08 2,733.8 16,725 2.81
Other 482.0   1,598   1.33   430.0   1,805   1.68  
Total interest earning assets 16,318.0 192,265 4.95 16,149.7 187,411 4.87
Non-interest earning assets
Cash and due from banks 142.7 146.0
Allowance for credit losses (125.7 ) (122.7 )
Bank owned life insurance 164.8 163.9
Other assets 900.5   844.0  
Total assets $ 17,400.3   $ 17,180.9  
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts $ 1,434.8 $ 805 0.22 % $ 1,295.6 $ 660 0.20 %
Savings and money market 6,069.0 5,312 0.35 6,004.4 5,043 0.34
Time certificates of deposit 1,484.9   2,295   0.62   1,507.0   2,026   0.54  
Total interest-bearing deposits 8,988.7 8,412 0.37 8,807.0 7,729 0.35
Short-term borrowings 110.9 206 0.74 73.5 161 0.88
Qualifying debt 354.1   4,338   4.90   365.4   4,252   4.65  
Total interest-bearing liabilities 9,453.7 12,956 0.55 9,245.9 12,142 0.53
Non-interest-bearing liabilities
Non-interest-bearing demand deposits 5,719.2 5,752.0
Other liabilities 280.6 292.5
Stockholders’ equity 1,946.8   1,890.5  
Total liabilities and stockholders’ equity $ 17,400.3   $ 17,180.9  
Net interest income and margin (4) $ 179,309   4.63 % $ 175,269   4.57 %
Net interest spread (5) 4.40 % 4.34 %
 
(1) Yields on loans and securities have been adjusted to a
tax-equivalent basis. The taxable-equivalent adjustment was $9.7
million and $8.6 million for the three months ended March 31, 2017
and December 31, 2016, respectively.
(2) Included in the yield computation are net loan fees of $6.6
million and accretion on acquired loans of $6.4 million for the
three months ended March 31, 2017, compared to $8.3 million and $7.0
million for the three months ended December 31 2016, respectively.
(3) Includes non-accrual loans.
(4) Net interest margin is computed by dividing net interest income
by total average earning assets.
(5) Net interest spread represents average yield earned on
interest-earning assets less the average rate paid on
interest-bearing liabilities.
 
 
Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields and Rates
Unaudited
    Three Months Ended March 31,
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 $ 5,753.7 $ 68,404 5.24 % $ 5,160.6 $ 60,925 5.24 %
CRE – non-owner occupied 3,534.8 53,506 6.05 2,272.4 30,953 5.45
CRE – owner occupied 1,998.0 24,726 4.95 2,061.4 26,186 5.08
Construction and land development 1,510.8 22,102 5.85 1,166.1 17,496 6.00
Residential real estate 271.9 3,023 4.45 311.5 3,509 4.51
Consumer 38.5 493 5.12 28.8 366 5.08
Loans held for sale 18.8   299   6.36   24.1   351   5.82  
Total loans (1), (2), (3) 13,126.5 172,553 5.47 11,024.9 139,786 5.31
Securities:
Securities – taxable 2,105.2 12,437 2.36 1,568.4 9,337 2.38
Securities – tax-exempt 604.3   5,677   5.57   454.7   4,171   5.23  
Total securities (1) 2,709.5 18,114 3.08 2,023.1 13,508 3.02
Other 482.0   1,598   1.33   417.5   962   0.92  
Total interest earning assets 16,318.0 192,265 4.95 13,465.5 154,256 4.83
Non-interest earning assets
Cash and due from banks 142.7 140.8
Allowance for credit losses (125.7 ) (121.5 )
Bank owned life insurance 164.8 162.8
Other assets 900.5   822.5  
Total assets $ 17,400.3   $ 14,470.1  
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts $ 1,434.8 $ 805 0.22 % $ 1,091.9 $ 455 0.17 %
Savings and money market 6,069.0 5,312 0.35 5,333.9 4,034 0.30
Time certificates of deposit 1,484.9   2,295   0.62   1,561.5   1,754   0.45  
Total interest-bearing deposits 8,988.7 8,412 0.37 7,987.3 6,243 0.31
Short-term borrowings 110.9 206 0.74 52.8 118 0.89
Qualifying debt 354.1   4,338   4.90   199.4   2,184   4.38  
Total interest-bearing liabilities 9,453.7 12,956 0.55 8,239.5 8,545 0.41
Non-interest-bearing liabilities
Non-interest-bearing demand deposits 5,719.2 4,350.1
Other liabilities 280.6 244.5
Stockholders’ equity 1,946.8   1,636.0  
Total liabilities and stockholders’ equity $ 17,400.3   $ 14,470.1  
Net interest income and margin (4) $ 179,309   4.63 % $ 145,711   4.58 %
Net interest spread (5) 4.40 % 4.42 %
 
(1) Yields on loans and securities have been adjusted to a
tax-equivalent basis. The taxable-equivalent adjustment was $9.7
million and $8.4 million for the three months ended March 31, 2017
and 2016, respectively.
(2) Included in the yield computation are net loan fees of $6.6
million and accretion on acquired loans of $6.4 million for the
three months ended March 31, 2017, compared to $6.5 million and $5.3
million for the three months ended March 31, 2016, respectively.
(3) Includes non-accrual loans.
(4) Net interest margin is computed by dividing net interest income
by total average earning assets.
(5) Net interest spread represents average yield earned on
interest-earning assets less the average rate paid on interest
bearing-liabilities.
 
 
Western Alliance Bancorporation and Subsidiaries
Operating Segment Results
Unaudited
                   
Balance Sheet: Regional Segments

Consolidated
Company

Arizona Nevada

Southern
California

Northern
California

At March 31, 2017 (dollars in millions)
Assets:
Cash, cash equivalents, and investment securities $ 3,516.1 $ 1.8 $ 8.9 $ 1.9 $ 1.7
Loans, net of deferred loan fees and costs 13,662.7 3,039.7 1,769.3 1,806.7 1,130.1
Less: allowance for credit losses (127.6 ) (30.3 ) (18.7 ) (20.1 ) (9.4 )
Total loans 13,535.1   3,009.4   1,750.6   1,786.6   1,120.7  
Other assets acquired through foreclosure, net 45.2 5.0 17.1 0.2
Goodwill and other intangible assets, net 302.1 23.4 157.2
Other assets 724.0   42.3   58.9   13.9   13.5  
Total assets $ 18,122.5   $ 3,058.5   $ 1,858.9   $ 1,802.4   $ 1,293.3  
Liabilities:
Deposits $ 15,356.0 $ 4,255.0 $ 3,896.1 $ 2,397.2 $ 1,461.3
Borrowings and qualifying debt 366.9
Other liabilities 430.6   13.4   27.4   4.5   13.6  
Total liabilities 16,153.5   4,268.4   3,923.5   2,401.7   1,474.9  
Allocated equity: 1,969.0   365.7   259.0   205.2   284.6  
Total liabilities and stockholders’ equity $ 18,122.5   $ 4,634.1   $ 4,182.5   $ 2,606.9   $ 1,759.5  
Excess funds provided (used) 1,575.6 2,323.6 804.5 466.2
 
No. of offices 45 9 16 9 3
No. of full-time equivalent employees 1,564 169 227 176 162
 
Income Statement:
 
Three Months Ended March 31, 2017: (in thousands)
Net interest income (expense) $ 179,309 $ 43,907 $ 35,296 $ 25,218 $ 22,035
Provision for credit losses 4,250   14   (211 ) 91   396  
Net interest income (expense) after provision for credit losses 175,059 43,893 35,507 25,127 21,639
Non-interest income 10,544 1,113 2,133 743 2,113
Non-interest expense (87,757 ) (18,622 ) (15,870 ) (12,703 ) (12,709 )
Income (loss) before income taxes 97,846 26,384 21,770 13,167 11,043
Income tax expense (benefit) 24,489   10,350   7,620   5,537   4,643  
Net income $ 73,357   $ 16,034   $ 14,150   $ 7,630   $ 6,400  
 
 
Western Alliance Bancorporation and Subsidiaries
Operating Segment Results
Unaudited
                       
Balance Sheet: National Business Lines
HOA
Services

Public &
Nonprofit
Finance

Technology &
Innovation

Hotel
Franchise
Finance

Other NBLs

Corporate &
Other

At March 31, 2017 (dollars in millions)
Assets:
Cash, cash equivalents, and investment securities $ $ $ $ $ $ 3,501.8
Loans, net of deferred loan fees and costs 132.7 1,528.7 1,011.2 1,279.6 1,955.1 9.6
Less: allowance for credit losses (1.4 ) (16.0 ) (9.7 ) (1.3 ) (20.0 ) (0.7 )
Total loans 131.3   1,512.7   1,001.5   1,278.3   1,935.1   8.9  
Other assets acquired through foreclosure, net 22.9
Goodwill and other intangible assets, net 121.4 0.1
Other assets 0.4   11.9   5.7   5.4   2.8   569.2  
Total assets $ 131.7   $ 1,524.6   $ 1,128.6   $ 1,283.8   $ 1,937.9   $ 4,102.8  
Liabilities:
Deposits $ 2,112.8 $ $ 1,142.2 $ $ $ 91.4
Borrowings and qualifying debt 366.9
Other liabilities 1.8   43.1   0.8   0.6   132.6   192.8  
Total liabilities 2,114.6   43.1   1,143.0   0.6   132.6   651.1  
Allocated equity: 72.9   122.3   225.5   105.5   162.2   166.1  
Total liabilities and stockholders’ equity $ 2,187.5   $ 165.4   $ 1,368.5   $ 106.1   $ 294.8   $ 817.2  
Excess funds provided (used) 2,055.8 (1,359.2 ) 239.9 (1,177.7 ) (1,643.1 ) (3,285.6 )
 
No. of offices 1 1 8 1 4 (7 )
No. of full-time equivalent employees 62 6 57 20 31 654
 
Income Statement:
 
Three Months Ended March 31, 2017: (in thousands)
Net interest income (expense) $ 12,748 $ 6,485 $ 18,166 $ 13,581 $ 14,143 $ (12,270 )
Provision for credit losses 127   509   296     3,527   (499 )
Net interest income (expense) after provision for credit losses 12,621 5,976 17,870 13,581 10,616 (11,771 )
Non-interest income 141 15 1,873 721 1,692
Non-interest expense (7,147 ) (2,253 ) (8,779 ) (2,988 ) (4,721 ) (1,965 )
Income (loss) before income taxes 5,615 3,738 10,964 10,593 6,616 (12,044 )
Income tax expense (benefit) 2,106   1,402   4,111   3,972   2,481   (17,733 )
Net income $ 3,509   $ 2,336   $ 6,853   $ 6,621   $ 4,135   $ 5,689  
 
 
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

1,557

168

225

175

167

 
Income Statements:
 
Three Months Ended March 31, 2016: (in thousands)
Net interest income (expense) $ 145,711 $ 38,456 $ 32,575 $ 24,428 $ 23,195
Provision for (recovery of) credit losses 2,500   6,773   (813 ) 30   1,042  
Net interest income (expense) after provision for credit losses 143,211 31,683 33,388 24,398 22,153
Non-interest income 13,133 3,681 2,059 660 2,426
Non-interest expense (75,493 ) (14,456 ) (14,746 ) (11,234 ) (13,967 )
Income (loss) before income taxes 80,851 20,908 20,701 13,824 10,612
Income tax expense (benefit) 19,519   8,202   7,245   5,813   4,463  
Net income (loss) $ 61,332   $ 12,706   $ 13,456   $ 8,011   $ 6,149  
 
Three Months Ended December 31, 2016: (in thousands)
Net interest income (expense) $ 175,269 $ 45,322 $ 35,491 $ 26,823 $ 20,890
Provision for (recovery of) credit losses 1,000   (963 ) 189   (724 ) 475  
Net interest income (expense) after provision for credit losses 174,269 46,285 35,302 27,547 20,415
Non-interest income 10,540 1,139 2,203 643 2,564
Non-interest expense (88,645 ) (18,316 ) (16,199 ) (12,242 ) (12,919 )
Income (loss) before income taxes 96,164 29,108 21,306 15,948 10,060
Income tax expense (benefit) 26,364   11,419   7,457   6,707   4,230  
Net income (loss) $ 69,800   $ 17,689   $ 13,849   $ 9,241   $ 5,830  
 
 
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

64

6

57

20

34

641

 
Income Statement:
 
Three Months Ended March 31, 2016: (in thousands)
Net interest income (expense) $ 8,632 $ 5,221 $ 16,309 $ $ 10,637 $ (13,742 )
Provision for (recovery of) credit losses 78   (369 ) (1,165 )   238   (3,314 )
Net interest income (expense) after provision for credit losses 8,554 5,590 17,474 10,399 (10,428 )
Non-interest income 105 (4 ) 1,637 635 1,934
Non-interest expense (5,541 ) (2,024 ) (6,906 )   (3,437 ) (3,182 )
Income (loss) before income taxes 3,118 3,562 12,205 7,597 (11,676 )
Income tax expense (benefit) 1,169   1,336   4,577     2,849   (16,135 )
Net income (loss) $ 1,949   $ 2,226   $ 7,628   $   $ 4,748   $ 4,459  
 
Three Months Ended December 31, 2016: (in thousands)
Net interest income (expense) $ 11,686 $ 5,641 $ 18,060 $ 13,145 $ 14,673 $ (16,462 )
Provision for (recovery of) credit losses 96   326   710     891    
Net interest income (expense) after provision for credit losses 11,590 5,315 17,350 13,145 13,782 (16,462 )
Non-interest income 119 37 2,105 717 1,013
Non-interest expense (6,596 ) (2,010 ) (8,094 ) (2,780 ) (4,197 ) (5,292 )
Income (loss) before income taxes 5,113 3,342 11,361 10,365 10,302 (20,741 )
Income tax expense (benefit) 1,918   1,253   4,261   3,887   3,864   (18,632 )
Net income (loss) $ 3,195   $ 2,089   $ 7,100   $ 6,478   $ 6,438   $ (2,109 )
 
   
Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Unaudited
               
Operating Pre-Provision Net Revenue by Quarter:
Three Months Ended
Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 Jun 30, 2016 Mar 31, 2016
(in thousands)
Total non-interest income $ 10,544 $ 10,540 $ 10,683 $ 8,559 $ 13,133
Less:
Gains (losses) on sales of investment securities, net 635 58 1,001
Unrealized gains (losses) on assets and liabilities measured at fair
value, net
    7   6   (5 )
Total operating non-interest income 9,909 10,482 10,676 8,553 12,137
Plus: net interest income 179,309   175,269   172,547   163,686   145,711  
Net operating revenue (1) $ 189,218   $ 185,751   $ 183,223   $ 172,239   $ 157,848  
 
Total non-interest expense $ 87,757 $ 88,645 $ 85,007 $ 81,804 $ 75,493
Less:
Net (gain) loss on sales and valuations of repossessed and other
assets
(543 ) (34 ) (146 ) 357 (302 )
Acquisition / restructure expense   6,021   2,729   3,662    
Total operating non-interest expense (1) $ 88,300   $ 82,658   $ 82,424   $ 77,785   $ 75,795  
         
Operating pre-provision net revenue (2) $ 100,918   $ 103,093   $ 100,799   $ 94,454   $ 82,053  
 
Plus:
Non-operating revenue adjustments 635 58 7 6 996
Less:
Provision for credit losses 4,250 1,000 2,000 2,500 2,500
Non-operating expense adjustments (543 ) 5,987 2,583 4,019 (302 )
Income tax expense 24,489   26,364   29,171   26,327   19,519  
Net income $ 73,357   $ 69,800   $ 67,052   $ 61,614   $ 61,332  
 

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

Unaudited

                   
 
Tangible Common Equity:
Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 Jun 30, 2016 Mar 31, 2016
(dollars and shares in thousands)
Total stockholders’ equity $ 1,968,992 $ 1,891,529 $ 1,857,354 $ 1,796,210 $ 1,660,163
Less: goodwill and intangible assets 302,133   302,894   303,592   304,289   303,962  
Total tangible common equity 1,666,859 1,588,635 1,553,762 1,491,921 1,356,201
Plus: deferred tax – attributed to intangible assets 4,759   4,949   5,304   5,594   5,828  
Total tangible common equity, net of tax $ 1,671,618   $ 1,593,584   $ 1,559,066   $ 1,497,515   $ 1,362,029  
Total assets $ 18,122,506 $ 17,200,842 $ 17,042,602 $ 16,728,767 $ 15,248,039
Less: goodwill and intangible assets, net 302,133   302,894   303,592   304,289   303,962  
Tangible assets 17,820,373 16,897,948 16,739,010 16,424,478 14,944,077
Plus: deferred tax – attributed to intangible assets 4,759   4,949   5,304   5,594   5,828  
Total tangible assets, net of tax $ 17,825,132   $ 16,902,897   $ 16,744,314   $ 16,430,072   $ 14,949,905  
Tangible common equity ratio (3) 9.4 % 9.4 % 9.3 % 9.1 % 9.1 %
Common shares outstanding 105,428 105,071 105,071 105,084 103,513
Tangible book value per share, net of tax (4) $ 15.86 $ 15.17 $ 14.84 $ 14.25 $ 13.16
 
   
Operating Efficiency Ratio by Quarter:
Three Months Ended
Mar 31, 2017     Dec 31, 2016     Sep 30, 2016     Jun 30, 2016     Mar 31, 2016
(in thousands)
Total operating non-interest expense $ 88,300 $ 82,658 $ 82,424 $ 77,785 $ 75,795
Divided by:
Total net interest income 179,309 175,269 172,547 163,686 145,711
Plus:
Tax equivalent interest adjustment 9,676 9,165 8,599 8,704 8,435
Operating non-interest income 9,909   10,482   10,676   8,553   12,137  
$ 198,894   $ 194,916   $ 191,822   $ 180,943   $ 166,283  
Operating efficiency ratio – tax equivalent basis (5) 44.4 % 42.4 % 43.0 % 43.0 % 45.6 %
 
             

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

Unaudited

 
 
Allowance for Credit Losses, Adjusted for Acquisition Accounting:
     
Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 Jun 30, 2016 Mar 31, 2016
(in thousands)
Allowance for credit losses $ 127,649 $ 124,704 $ 122,884 $ 122,104 $ 119,227
Plus: remaining credit marks
Acquired performing loans 32,781 34,392 41,020 45,225 9,646
Purchased credit impaired loans 12,335   12,872   15,093   16,438   6,760  
Adjusted allowance for credit losses $ 172,765   $ 171,968   $ 178,997   $ 183,767   $ 135,633  
 
Gross loans held for investment and deferred fees, net $ 13,644,883 $ 13,189,527 $ 13,012,262 $ 12,855,511 $ 11,217,860
Plus: remaining credit marks
Acquired performing loans 32,781 34,392 41,020 45,225 9,646
Purchased credit impaired loans 12,335   12,872   15,093   16,438   6,760  
Adjusted loans, net of deferred fees and costs $ 13,689,999   $ 13,236,791   $ 13,068,375   $ 12,917,174   $ 11,234,266  
 
Allowance for credit losses to gross loans 0.94 % 0.95 % 0.94 % 0.95 % 1.06 %
Allowance for credit losses to gross loans, adjusted for
acquisition accounting (6)
1.26 1.30 1.37 1.42 1.21
 
               
Net Interest Margin, Adjusted for Acquisition Accounting:
   
Mar 31, 2017 Dec 31, 2016 Sep 30, 2016 Jun 30, 2016 Mar 31, 2016
(in thousands)
Average interest earning assets $ 16,318,000 $ 16,149,700 $ 15,931,600 $ 14,902,300 $ 13,465,500
Taxable-equivalent adjustment 9,676 9,165 8,599 8,703 8,435
 
Net interest income $ 179,309 $ 175,269 $ 172,547 $ 163,686 $ 145,711
Less: accretion
Acquired performing loans 4,064 4,911 4,604 4,122 2,847
Purchased credit impaired loans 2,329   2,075   4,189   4,048   2,468  
Adjusted net interest income $ 172,916   $ 168,283   $ 163,754   $ 155,516   $ 140,396  
 
Net interest margin 4.63 % 4.57 % 4.55 % 4.63 % 4.58 %

Net interest margin, adjusted for accretion(7)

4.48 4.40 4.33 4.41 4.42
 
       

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

Unaudited

 
 

Regulatory Capital:

Mar 31, 2017 Dec 31, 2016
(in thousands)
Common Equity Tier 1:
Common equity $ 1,968,992 $ 1,891,529
Less:
Non-qualifying goodwill and intangibles 295,878 294,754
Disallowed deferred tax asset 2,011 1,400
AOCI related adjustments (5,875 ) (13,460 )
Unrealized gain on changes in fair value liabilities 9,802   8,118  

Common equity Tier 1 (regulatory) (8) (11)

$ 1,667,176   $ 1,600,717  

Divided by: estimated risk-weighted assets (regulatory (9) (11)

$ 16,565,677 $ 15,980,092

Common equity Tier 1 ratio (9) (11)

10.1 % 10.0 %
 

Common equity Tier 1 (regulatory) (8) (11)

1,667,176 1,600,717
Plus:
Trust preferred securities 81,500 81,500
Less:
Disallowed deferred tax asset 503 934
Unrealized gain on changes in fair value of liabilities 2,450   5,412  

Tier 1 capital (9) (11)

$ 1,745,723   $ 1,675,871  
Divided by: Tangible average assets $ 17,121,149 $ 16,868,674
Tier 1 leverage ratio 10.2 % 9.9 %
 
Total Capital:

Tier 1 capital (regulatory) (8) (11)

$ 1,745,723 $ 1,675,871
Plus:
Subordinated debt 300,759 299,927
Qualifying allowance for credit losses 127,649 124,704
Other 6,367 6,978
Less: Tier 2 qualifying capital deductions    
Tier 2 capital $ 434,775   $ 431,609  
   
Total capital $ 2,180,498   $ 2,107,480  
 
Total capital ratio 13.2 % 13.2 %
 
Classified assets to Tier 1 capital plus allowance:
Classified assets $ 236,786 $ 211,782
Divided by:

Tier 1 capital (9) (11)

1,745,723 1,675,871
Plus: Allowance for credit losses 127,649   124,704  
Total Tier 1 capital plus allowance for credit losses $ 1,873,372   $ 1,800,575  
 

Classified assets to Tier 1 capital plus allowance (10) (11)

12.6 % 11.8 %
 
 
(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) We believe this non-GAAP ratio is a useful metric in understanding
the Company’s total allowance for credit losses, adjusted for
acquisition accounting, because under GAAP, a company’s allowance
for credit losses is not carried over in an acquisition, but rather
these loans are shown as being purchased at a discount that factors
in expected future credit losses.
(7)

We believe this non-GAAP ratio is a useful metric in understanding
the Company’s net interest margin, adjusted for acquisition
accounting, because under GAAP, interest rate and credit marks on
acquired loans are accreted and recognized as part of interest
income. By excluding the accretion on acquired loans, management
believes this is more indicative of the yield from the Company’s
loan portfolio and improves comparability to other institutions
that have not engaged in acquisitions that resulted in recognition
of interest rate and credit marks on acquired loans.

(8)

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.

(9)

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.

(10)

We believe this non-GAAP ratio provides an important regulatory
metric to analyze asset quality.

(11)

Current quarter is preliminary until Call Report is filed.

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