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Western Alliance Bancorporation Reports Second Quarter 2019 Financial Results

PHOENIX--(BUSINESS WIRE)--

Western Alliance Bancorporation (WAL):

SECOND QUARTER 2019 FINANCIAL RESULTS

Net income

 

Earnings per share

 

Net interest margin2

 

Efficiency ratio

 

Book value per
common share

$122.9 million

 

$1.19

 

4.59%

 

41.5%

 

$27.51

CEO COMMENTARY:

Kenneth Vecchione, Chief Executive Officer, commented: “During the second quarter Western Alliance generated a record $122.9 million in net income and earnings per share of $1.19. We reached a new milestone of $25 billion in total assets as both loan and deposit growth exceeded $1 billion, representing 25% annualized growth. As our loan growth trajectory continues, asset quality remains strong and stable with net loan losses of just 0.03% for the quarter and non-performing assets to total assets ratio of 0.27%. We generated 12% annualized growth in net interest income, absorbing the 12 basis point margin impact from lower rates, from our strong balance sheet growth. We remain among the most profitable banks in our industry, with return on assets of 2.05% and return on average tangible common equity1 of 19.72%. Further, we continued our shareholder-oriented approach to capital allocation with share repurchases of $33.9 million during the quarter while our board also approved a cash dividend of $0.25 per share to be initiated during the third quarter of 2019. Our superior capital growth, evidenced by industry-leading capital levels and tangible book value per share, continues to optimally position our company for growth and value creation.”

LINKED-QUARTER BASIS

YEAR-OVER-YEAR

FINANCIAL HIGHLIGHTS:

 

  • Net income and earnings per share of $122.9 million and $1.19 compared to $120.8 million and $1.16, respectively
  • Net income of $122.9 million and earnings per share of $1.19, up 17.4% and 20.2%, respectively
  • Net operating revenue1 of $267.3 million, an increase of 2.9%, or $7.4 million, compared to an increase in operating non-interest expenses1 of 1.8%, or $2.0 million
  • Net operating revenue1 of $267.3 million, an increase of 12.2%, or $29.1 million, compared to an increase in operating non-interest expenses1 of 11.8%, or $12.1 million
  • Operating pre-provision net revenue1 of $152.5 million, up $5.4 million from $147.1 million
  • Operating pre-provision net revenue1 of $152.5 million, up $17.0 million from $135.5 million
  • Effective tax rate of 16.76%, compared to 17.45%
  • Effective tax rate of 16.76%, compared to 19.48%

FINANCIAL POSITION RESULTS:

 

  • Total loans of $19.3 billion, up $1.1 billion, or 25.0% annualized
  • Increase in total loans of $3.1 billion, or 19.3%
  • Total deposits of $21.4 billion, up $1.2 billion, or 24.4% annualized
  • Increase in total deposits of $3.4 billion, or 18.5%
  • Stockholders' equity of $2.9 billion, up $131 million
  • Increase in stockholders' equity of $460 million

LOANS AND ASSET QUALITY:

 

  • Nonperforming assets (nonaccrual loans and repossessed assets) to total assets of 0.27%, compared to 0.26%
  • Nonperforming assets to total assets of 0.27%, compared to 0.29%
  • Annualized net loan charge-offs to average loans outstanding of 0.03% compared to 0.03%
  • Annualized net loan charge-offs2 to average loans outstanding of 0.03%, compared to 0.07%

KEY PERFORMANCE METRICS:

 

  • Net interest margin of 4.59% compared to 4.71%
  • Net interest margin2 of 4.59%, compared to 4.71%
  • Return on average assets and on tangible common equity1 of 2.05% and 19.72%, compared to 2.12% and 20.49%, respectively
  • Return on average assets2 and on tangible common equity1,2 of 2.05% and 19.72%, compared to 2.02% and 20.47%, respectively
  • Tangible common equity ratio1 of 10.2%, compared to 10.3%
  • Tangible common equity ratio1 of 10.2%, compared to 9.9%
  • Tangible book value per share1, net of tax, of $24.65, an increase from $23.20
  • Tangible book value per share1, net of tax, of $24.65, an increase of 24.6% from $19.78
  • Operating efficiency ratio1 of 42.0%, compared to 42.4%
  • Operating efficiency ratio1 of 42.0%, compared to 42.1%

1

See reconciliation of Non-GAAP Financial Measures.

2

Beginning in Q1 2019, annualized performance metrics are calculated on an actual/actual basis, from a previous 30/360 basis. Prior period amounts have been restated to conform to the current presentation.

Income Statement

Net interest income was $254.7 million in the second quarter 2019, an increase of $7.3 million from $247.3 million in the first quarter 2019, and an increase of $30.6 million, or 13.6%, compared to the second quarter 2018. As acquired loans are recorded at fair value in an acquisition, purchase discounts on these acquired loans are recorded and accreted into interest income based on expected future cash flows over the life of the loans and may be accelerated upon prepayment of acquired loans. Net interest income in the second quarter 2019 includes $4.6 million of total accretion income from acquired loans, compared to $2.8 million in the first quarter 2019, and $5.1 million in the second quarter 2018.

The Company’s net interest margin in the second quarter 2019 was 4.59%, a decrease from 4.71% in both the first quarter 2019 and second quarter 2018.

Operating non-interest income was $12.6 million for the second and first quarter 2019, compared to $14.1 million for the second quarter 2018.1 The decrease in operating non-interest income from the second quarter 2018 primarily relates to a decrease in income from warrants.

Net operating revenue was $267.3 million for the second quarter 2019, an increase of $7.4 million, compared to $259.9 million for the first quarter 2019, and an increase of $29.1 million, or 12.2%, compared to $238.2 million for the second quarter 2018.1

Operating non-interest expense was $114.8 million for the second quarter 2019, compared to $112.8 million for the first quarter 2019, and $102.7 million for the second quarter 2018.1 The Company’s operating efficiency ratio1 was 42.0% for the second quarter 2019, an improvement from 42.4% in the first quarter 2019, and from 42.1% for the second quarter 2018.

Income tax expense was $24.8 million for the second quarter 2019, compared to $25.5 million for the first quarter 2019, and $25.3 million for the second quarter 2018.

Net income was $122.9 million for the second quarter 2019, an increase of $2.1 million from $120.8 million for the first quarter 2019, and an increase of $18.3 million, or 17.4%, from $104.7 million for the second quarter 2018. Earnings per share was $1.19 for the second quarter 2019, compared to $1.16 for the first quarter 2019, and $0.99 for the second quarter 2018.

The Company views its operating pre-provision net revenue ("PPNR") as a key metric for assessing the Company’s earnings power, which it defines as net operating revenue less operating non-interest expense. For the second quarter 2019, the Company’s operating PPNR was $152.5 million, up $5.4 million from $147.1 million in the first quarter 2019, and up $17.0 million from $135.5 million in the second quarter 2018.1 Non-operating income1 for the second quarter 2019 consisted of net unrealized gains on assets measured at fair value of $1.6 million. Non-operating expense1 for the second quarter 2019 consisted of a net gain on sales and valuations of repossessed and other assets of $0.6 million.

The Company had 1,806 full-time equivalent employees and 47 offices at June 30, 2019, compared to 1,773 employees and 47 offices at March 31, 2019 and June 30, 2018.

1

See reconciliation of Non-GAAP Financial Measures.

Balance Sheet

Gross loans totaled $19.3 billion at June 30, 2019, an increase of $1.1 billion from $18.1 billion at March 31, 2019, and an increase of $3.1 billion from $16.1 billion at June 30, 2018. The increase from the prior quarter was driven by an increase of $730 million in commercial and industrial loans, $381 million in CRE, non-owner occupied loans, and $119 million in residential real estate loans. These increases were partially offset by a decrease of $73 million in construction and land development loans, and $31 million in CRE, owner occupied. From June 30, 2018, loans increased across most loan types, with the largest increases in commercial and industrial loans of $1.2 billion, residential real estate loans of $1.0 billion, CRE, non-owner occupied loans of $675 million, and construction and land development loans of $232 million. These increases were partially offset by a decrease of $16 million in CRE, owner occupied loans. At June 30, 2019, the allowance for credit losses to gross loans held for investment was 0.83%, compared to 0.86% at March 31, 2019, and 0.91% at June 30, 2018. At June 30, 2019, the allowance for credit losses to total organic loans was 0.87%, compared to 0.90% at March 31, 2019, and 0.99% at June 30, 2018. The Company defines its organic loans as those loans that have not been acquired in a transaction accounted for as a business combination.

Consistent with accounting principles generally accepted in the United States ("GAAP"), the allowance for credit losses is not carried over in an acquisition because acquired loans are recorded at fair value, which discounts the loans based on expected future cash flows. Credit discounts on acquired loans are included as a reduction to gross loans. These discounts totaled $10.6 million at June 30, 2019, compared to $13.1 million at March 31, 2019, and $19.7 million at June 30, 2018.

Deposits totaled $21.4 billion at June 30, 2019, an increase of $1.2 billion from $20.2 billion at March 31, 2019, and an increase of $3.4 billion from $18.1 billion at June 30, 2018. The increase from the prior quarter was driven by an increase of $998 million in non-interest bearing demand deposits, $107 million from certificates of deposit, and $100 million from savings and money market accounts. From June 30, 2018, deposits increased across all deposit types, with the largest increases in savings and money market accounts of $1.4 billion, non-interest bearing demand deposits of $729 million, interest-bearing demand deposits of $661 million, and certificates of deposit of $533 million. Non-interest bearing deposits were $8.7 billion at June 30, 2019, compared to $7.7 billion at March 31, 2019, and $7.9 billion at June 30, 2018. Non-interest bearing deposits comprised 40.5% of total deposits at June 30, 2019, compared to 38.0% at March 31, 2019, and 43.9% at June 30, 2018. The proportion of savings and money market balances to total deposits was 36.8%, compared to 38.6% at March 31, 2019, and 35.8% at June 30, 2018. Interest-bearing demand deposits as a percentage of total deposits were 11.8% at June 30, 2019, compared to 12.4% at March 31, 2019, and 10.3% at June 30, 2018. Certificates of deposit as a percentage of total deposits were 10.9% at June 30, 2019, compared to 11.0% at March 31, 2019, and 10.0% at June 30, 2018. The Company’s ratio of loans to deposits was 89.8% at June 30, 2019, compared to 89.6% at March 31, 2019, and 89.2% at June 30, 2018.

Borrowings were zero at June 30, 2019 and March 31, 2019, compared to $75 million at June 30, 2018. The decrease in borrowings from June 30, 2018 is due to a reduction in overnight borrowings.

Qualifying debt totaled $387 million at June 30, 2019, compared to $374 million at March 31, 2019, and $361 million at June 30, 2018.

Stockholders’ equity at June 30, 2019 was $2.9 billion, compared to $2.7 billion at March 31, 2019, and $2.4 billion at June 30, 2018. The increase in stockholders' equity from March 31, 2019 and June 30, 2018 is primarily a function of net income, partially offset by share repurchases. Under the Company's common stock repurchase program, the Company is authorized to repurchase up to $250 million of its shares of common stock. During the second quarter 2019, the Company repurchased 792,688 shares of its common stock at a weighted average price of $42.82, for a total of $33.9 million. During the six months ended June 30, 2019, the Company repurchased a total of 1,733,603 shares of its common stock, representing approximately 2% of the Company's outstanding shares. Shares were repurchased at a weighted average price of $41.45, for a total of $71.9 million.

At June 30, 2019, tangible common equity, net of tax, was 10.2% of tangible assets1 and total capital was 12.9% of risk-weighted assets. The Company’s tangible book value per share1 was $24.65 at June 30, 2019, up 24.6% from June 30, 2018.

Total assets increased 6.4% to $25.3 billion at June 30, 2019, from $23.8 billion at March 31, 2019, and increased 18.5% from $21.4 billion at June 30, 2018. The increase in total assets from the prior year relates primarily to organic loan growth.

Asset Quality

The provision for credit losses was $7.0 million for the second quarter 2019, compared to $3.5 million for the first quarter 2019, and compared to $5.0 million for the second quarter 2018. Net loan charge-offs2 in the second quarter 2019 were $1.6 million, or 0.03% of average loans (annualized), compared to $1.2 million, or 0.03%, in the first quarter 2019, and $2.6 million, or 0.07%, in the second quarter 2018.

Nonaccrual loans increased $7.9 million to $51.8 million during the quarter and increased $17.8 million from June 30, 2018. Loans past due 90 days and still accruing were zero at June 30, 2019, March 31, 2019, and June 30, 2018. Loans past due 30-89 days and still accruing interest totaled $9.7 million at June 30, 2019, a decrease from $20.5 million at March 31, 2019, and an increase from $1.5 million at June 30, 2018.

Repossessed assets totaled $17.7 million at June 30, 2019 and March 31, 2019, a decrease of $9.8 million from $27.5 million at June 30, 2018. Adversely graded loans and non-performing assets totaled $399.0 million at June 30, 2019, an increase of $41.4 million from $357.6 million at March 31, 2019, and an increase of $30.5 million from $368.5 million at June 30, 2018.

The ratio of classified assets to Tier 1 capital plus the allowance for credit losses, a common regulatory measure of asset quality, was 7.8% at June 30, 2019, compared to 8.9% at March 31, 2019, and 10.1% at June 30, 2018.1

1

See reconciliation of Non-GAAP Financial Measures.

2

Beginning in Q1 2019, annualized performance metrics are calculated on an actual/actual basis, from a previous 30/360 basis. Prior period amounts have been restated to conform to the current presentation.

Segment Highlights

The Company's reportable segments are aggregated primarily based on geographic location, services offered, and markets served. The Company's regional segments, which include Arizona, Nevada, Southern California, and Northern California, provide full service banking and related services to their respective markets. The operations from the regional segments correspond to the following banking divisions: Alliance Bank of Arizona, Bank of Nevada and First Independent Bank, Torrey Pines Bank, and Bridge Bank.

The Company's National Business Lines ("NBL") segment provides specialized banking services to niche markets. The Company's NBL reportable segments include Homeowner Associations ("HOA") Services, Hotel Franchise Finance ("HFF"), Public & Nonprofit Finance, Technology & Innovation, and Other NBLs. These NBLs are managed centrally and are broader in geographic scope than our other segments, though still predominately located within our core market areas.

The Corporate & Other segment consists of the Company's investment portfolio, Corporate borrowings and other 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 $9.5 billion at June 30, 2019, an increase of $314 million during the quarter, and an increase of $763 million during the last twelve months. The growth in loans during the quarter was driven by increases in the Arizona, Nevada, and Southern California segments, with loan growth of $283 million, $26 million, and $7 million, respectively. These increases were partially offset by a decrease of $2 million in the Northern California segment. The growth in loans during the last twelve months was also driven by increases in the Arizona, Nevada, and Southern California segments, with loan growth of $379 million, $245 million, and $229 million, respectively. These increases were partially offset by a decrease of $90 million in the Northern California segment. Total deposits for the regional segments were $14.8 billion, an increase of $711 million during the quarter, and an increase of $1.7 billion during the last twelve months. The increase in deposits during the quarter was driven by the Arizona and Nevada segments, with deposit growth of $787 million and $182 million, respectively. These increases were partially offset by a decrease of $258 million in the Southern California segment. During the last twelve months, each of the regional segments had growth in deposits. Deposit growth over the last twelve months in the Arizona, Nevada, Southern California, and Northern California segments totaled $838 million, $426 million, $233 million, and $225 million, respectively.

Pre-tax income for the regional segments was $96.9 million for the three months ended June 30, 2019, an increase of $8.5 million from the three months ended March 31, 2019, and an increase of $10.9 million from the three months ended June 30, 2018. All regional segments had increases in pre-tax income compared to the three months ended March 31, 2019. The Arizona and Nevada segments each had increases in pre-tax income of $3.0 million and the Southern and Northern California segments each had increases in pre-tax income of $1.3 million. The Nevada, Southern California, and Northern California segments had increases in pre-tax income from the three months ended June 30, 2018 of $6.1 million, $3.0 million, and $1.8 million, respectively. For the six months ended June 30, 2019, the regional segments reported total pre-tax income of $185.2 million, an increase of $13.4 million compared to the six months ended June 30, 2018. Southern California, Nevada, Northern California and Arizona each had increases of $4.7 million, $3.8 million, $3.5 million, and $1.3 million, respectively.

The NBL segments reported gross loan balances of $9.8 billion at June 30, 2019, an increase of $817 million during the quarter, and an increase of $2.3 billion during the last twelve months. The increase in loans from the prior quarter was driven by the Other NBLs, Technology & Innovation, HFF, and Public & Nonprofit Finance segments, which had loan growth of $467 million, $189 million, $91 million, and $65 million, respectively. During the last twelve months, the largest drivers of loan growth were the Other NBLs and HFF segments, with increases of $2.0 billion and $224 million, respectively. Total deposits for the NBL segments were $5.9 billion, an increase of $560 million during the quarter, and an increase of $1.4 billion during the last twelve months. The increase in deposits from the prior quarter is primarily attributable to the Technology & Innovation and HOA Services segments, which increased deposits by $449 million and $84 million, respectively. The increase of $1.4 billion during the last twelve months is a result of growth in the Technology & Innovation and HOA Services segments of $860 million and $533 million, respectively.

Pre-tax income for the NBL segments was $60.1 million for the three months ended June 30, 2019, an increase of $0.7 million from the three months ended March 31, 2019, and an increase of $11.4 million from the three months ended June 30, 2018. The increase in pre-tax income from the prior quarter relates to the Other NBLs, HFF, and HOA Services segments, which increased by $3.7 million, $0.7 million, and $0.1 million, respectively. These increases were partially offset by decreases in pre-tax income from the Technology & Innovation and Public & Nonprofit Finance segments, which had decreases of $3.8 million and $0.1 million, respectively. The drivers of the increase in pre-tax income from the same period in the prior year were the Other NBLs, HOA Services, and Technology & Innovation segments, which had increases of $5.9 million, $4.4 million, and $2.0 million, respectively. These increases were partially offset by decreases in pre-tax income for the HFF and Public & Nonprofit Finance segments, which decreased by $0.6 million and $0.3 million, respectively. Pre-tax income for the NBL segments for the six months ended June 30, 2019 totaled $119.5 million, an increase of $24.2 million compared to the six months ended June 30, 2018. The largest increases in pre-tax income compared to the six months ended June 30, 2018 were in the Technology & Innovation, HOA Services, and Other NBLs segments. These segments had increases of $9.4 million, $9.0 million, and $7.9 million, respectively. These increases were partially offset by decreases of $1.6 million and $0.5 million in the HFF and Public & Nonprofit segments.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live webcast to discuss its second quarter 2019 financial results at 12:00 p.m. ET on Friday, July 19, 2019. Participants may access the call by dialing 1-888-317-6003 and using passcode 0520110 or via live audio webcast using the website link https://services.choruscall.com/links/wal190719.html. The webcast is also available via the Company’s website at www.westernalliancebancorporation.com. Participants should log in at least 15 minutes early to receive instructions. The call will be recorded and made available for replay after 2:00 p.m. ET July 19th through 9:00 a.m. ET August 19th by dialing 1-877-344-7529 passcode: 10132284.

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.

Adoption of Accounting Standards

During the first quarter 2019, the Company adopted the Accounting Standards Updates ("ASU") related to leases, which include ASU 2016-02, Leases, ASU 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases (Topic 842) Targeted Improvements.

The amendments in ASU 2016-02 require lessees to recognize the lease assets and lease liabilities arising from operating leases in the statement of financial position, resulting in a gross up of assets and liabilities on the balance sheet. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The Company elected to apply the package of practical expedients, which permitted the Company to forgo reassessment of 1) expired or existing contracts that may contain leases; 2) lease classification of expired or existing leases; and 3) initial direct costs for any existing leases. Upon adoption of this standard on January 1, 2019, the Company recorded a right-of-use asset and corresponding lease liability of $42.5 million and $46.1 million, respectively. No cumulative effect adjustment to retained earnings was recorded as of January 1, 2019. The new standard does not have a material impact on the Company's results of operations or cash flow.

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, future economic performance, and dividends, 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, 2018 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 $25 billion in assets, Western Alliance Bancorporation (WAL) is one of the country’s top-performing banking companies. Western Alliance is ranked #1 regional bank by S&P Global Market Intelligence for 2018 and in the top 10 on the Forbes “Best Banks in America” list for four consecutive years, 2016-2019. Its primary subsidiary, Western Alliance Bank, Member FDIC, helps business clients realize their growth ambitions with local teams of experienced bankers who deliver superior service and a full spectrum of customized loan, deposit and treasury management capabilities. Business clients also benefit from a powerful array of specialized financial services that provide strong expertise and tailored solutions for a wide variety of industries and sectors. A national presence with a regional footprint, Western Alliance Bank operates individually branded, full-service banking divisions and has offices in key markets nationwide. For more information, visit westernalliancebank.com.

Western Alliance Bancorporation and Subsidiaries

Summary Consolidated Financial Data

Unaudited

Selected Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of June 30,

 

 

 

 

 

 

 

 

2019

 

2018

 

Change %

 

 

 

 

 

 

 

 

(in millions)

 

 

Total assets

 

 

 

 

 

 

 

$

25,314.8

 

 

$

21,367.5

 

 

18.5

%

Gross loans, net of deferred fees

 

 

 

 

 

 

 

19,250.3

 

 

16,138.3

 

 

19.3

 

Securities and money market investments

 

 

 

 

 

3,870.1

 

 

3,688.7

 

 

4.9

 

Total deposits

 

 

 

 

 

 

 

21,439.9

 

 

18,087.5

 

 

18.5

 

Qualifying debt

 

 

 

 

 

 

 

387.2

 

 

361.1

 

 

7.2

 

Stockholders' equity

 

 

 

 

 

 

 

2,851.3

 

 

2,391.7

 

 

19.2

 

Tangible common equity, net of tax (1)

 

 

 

 

 

 

 

2,555.0

 

 

2,094.3

 

 

22.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Income Statement Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30,

 

For the Six Ended June 30,

 

 

2019

 

2018

 

Change %

 

2019

 

2018

 

Change %

 

 

(in thousands, except per share data)

 

 

 

(in thousands, except per share data)

 

 

Interest income

 

$

302,848

 

 

$

251,602

 

 

20.4

%

 

$

594,016

 

 

$

486,299

 

 

22.2

%

Interest expense

 

48,167

 

 

27,494

 

 

75.2

 

 

91,999

 

 

47,971

 

 

91.8

 

Net interest income

 

254,681

 

 

224,108

 

 

13.6

 

 

502,017

 

 

438,328

 

 

14.5

 

Provision for credit losses

 

7,000

 

 

5,000

 

 

40.0

 

 

10,500

 

 

11,000

 

 

(4.5

)

Net interest income after provision for credit losses

 

247,681

 

 

219,108

 

 

13.0

 

 

491,517

 

 

427,328

 

 

15.0

 

Non-interest income

 

14,218

 

 

13,444

 

 

5.8

 

 

29,628

 

 

25,087

 

 

18.1

 

Non-interest expense

 

114,213

 

 

102,548

 

 

11.4

 

 

227,127

 

 

200,697

 

 

13.2

 

Income before income taxes

 

147,686

 

 

130,004

 

 

13.6

 

 

294,018

 

 

251,718

 

 

16.8

 

Income tax expense

 

24,750

 

 

25,325

 

 

(2.3

)

 

50,286

 

 

46,139

 

 

9.0

 

Net income

 

$

122,936

 

 

$

104,679

 

 

17.4

 

 

$

243,732

 

 

$

205,579

 

 

18.6

 

Diluted earnings per share

 

$

1.19

 

 

$

0.99

 

 

20.2

 

 

$

2.34

 

 

$

1.95

 

 

20.0

 

 

(1)

See Reconciliation of Non-GAAP Financial Measures.

Western Alliance Bancorporation and Subsidiaries

 

 

 

 

 

 

Summary Consolidated Financial Data

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Share Data:

 

 

 

 

 

 

 

 

 

At or For the Three Months Ended June 30,

For the Six Ended June 30,

 

 

2019

 

2018

 

Change %

 

2019

 

2018

 

Change %

Diluted earnings per share

 

$

1.19

$

0.99

20.2

%

$

2.34

$

1.95

20.0

%

Book value per common share

 

27.51

22.59

21.8

 

 

 

 

Tangible book value per share, net of tax (1)

 

24.65

19.78

24.6

 

 

 

 

Average shares outstanding (in thousands):

 

 

 

 

 

 

 

Basic

 

103,019

104,691

(1.6

)

103,523

104,611

(1.0

)

Diluted

 

103,501

105,420

(1.8

)

103,985

105,372

(1.3

)

Common shares outstanding

 

103,654

105,876

(2.1

)

 

 

 

   

Selected Performance Ratios:

 

 

 

 

 

 

 

Return on average assets (2)

 

2.05

%

2.02

%

1.5

%

2.08

%

2.02

%

3.0

%

Return on average tangible common equity (1, 2)

 

19.72

 

20.47

 

(3.7

)

20.10

 

20.60

 

(2.4

)

Net interest margin (2)

 

4.59

 

4.71

 

(2.5

)

4.65

 

4.69

 

(0.9

)

Operating efficiency ratio - tax equivalent basis (1)

 

42.0

 

42.1

 

(0.2

)

42.2

 

42.4

 

(0.4

)

Loan to deposit ratio

 

89.79

 

89.22

 

0.6

 

 

 

 

 

 

 

 

 

 

 

 

Asset Quality Ratios:

 

 

 

 

 

 

 

Net charge-offs to average loans outstanding (2)

 

0.03

%

0.07

%

(57.1

)%

0.03

%

0.05

%

(40.0

)%

Nonaccrual loans to gross loans

 

0.27

 

0.21

 

28.6

 

 

 

 

Nonaccrual loans and repossessed assets to total assets

 

0.27

 

0.29

 

(6.9

)

 

 

 

Allowance for credit losses to gross loans

 

0.83

 

0.91

 

(8.8

)

 

 

 

Allowance for credit losses to nonaccrual loans

 

309.52

 

432.38

 

(28.4

)

 

 

 

   

Capital Ratios (1):

 

 

 

 

 

 

Jun 30, 2019

Mar 31, 2019

Jun 30, 2018

Tangible common equity (1)

 

10.2

%

10.3

%

9.9

%

Common Equity Tier 1 (1), (3)

 

10.6

 

10.7

 

10.7

 

Tier 1 Leverage ratio (1), (3)

 

11.0

 

11.0

 

10.8

 

Tier 1 Capital (1), (3)

 

10.9

 

11.1

 

11.1

 

Total Capital (1), (3)

 

12.9

 

13.2

 

13.4

  

(1)

See Reconciliation of Non-GAAP Financial Measures.

(2)

Annualized on an actual/actual basis for periods less than 12 months.

(3)

Capital ratios for June 30, 2019 are preliminary until the Call Report is filed.

Western Alliance Bancorporation and Subsidiaries

Condensed Consolidated Income Statements

Unaudited

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2019

 

2018

 

2019

 

2018

 

 

(dollars in thousands, except per share data)

Interest income:

 

 

 

 

 

 

 

 

Loans

 

$

270,349

 

 

$

222,035

 

 

$

529,167

 

 

$

427,994

 

Investment securities

 

28,900

 

 

27,445

 

 

58,034

 

 

54,066

 

Other

 

3,599

 

 

2,122

 

 

6,815

 

 

4,239

 

Total interest income

 

302,848

 

 

251,602

 

 

594,016

 

 

486,299

 

Interest expense:

 

 

 

 

 

 

 

 

Deposits

 

41,888

 

 

19,849

 

 

77,676

 

 

34,022

 

Qualifying debt

 

6,008

 

 

5,695

 

 

12,113

 

 

10,664

 

Borrowings

 

271

 

 

1,950

 

 

2,210

 

 

3,285

 

Total interest expense

 

48,167

 

 

27,494

 

 

91,999

 

 

47,971

 

Net interest income

 

254,681

 

 

224,108

 

 

502,017

 

 

438,328

 

Provision for credit losses

 

7,000

 

 

5,000

 

 

10,500

 

 

11,000

 

Net interest income after provision for credit losses

 

247,681

 

 

219,108

 

 

491,517

 

 

427,328

 

Non-interest income:

 

 

 

 

 

 

 

 

Service charges and fees

 

5,821

 

 

5,672

 

 

11,233

 

 

11,417

 

Card income

 

1,625

 

 

2,033

 

 

3,466

 

 

4,005

 

Foreign currency income

 

1,148

 

 

1,181

 

 

2,243

 

 

2,383

 

Income from bank owned life insurance

 

978

 

 

1,167

 

 

1,959

 

 

2,095

 

Income from equity investments

 

868

 

 

2,517

 

 

2,877

 

 

3,977

 

Lending related income and gains (losses) on sale of loans, net

 

553

 

 

1,047

 

 

804

 

 

2,025

 

Unrealized gains (losses) on assets measured at fair value, net

 

1,572

 

 

(685

)

 

4,406

 

 

(1,759

)

Other

 

1,653

 

 

512

 

 

2,640

 

 

944

 

Total non-interest income

 

14,218

 

 

13,444

 

 

29,628

 

 

25,087

 

Non-interest expenses:

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

65,794

 

 

61,785

 

 

134,350

 

 

123,918

 

Legal, professional, and directors' fees

 

11,105

 

 

7,946

 

 

18,637

 

 

13,949

 

Occupancy

 

7,761

 

 

7,401

 

 

15,988

 

 

14,265

 

Deposit costs

 

7,669

 

 

4,114

 

 

13,393

 

 

7,040

 

Data processing

 

6,793

 

 

5,586

 

 

13,468

 

 

10,793

 

Insurance

 

2,811

 

 

3,885

 

 

5,620

 

 

7,754

 

Loan and repossessed asset expenses

 

1,460

 

 

1,017

 

 

3,466

 

 

1,600

 

Business development

 

1,444

 

 

1,414

 

 

3,529

 

 

3,142

 

Marketing

 

1,057

 

 

1,146

 

 

1,798

 

 

1,742

 

Card expense

 

710

 

 

1,081

 

 

1,344

 

 

2,023

 

Intangible amortization

 

387

 

 

399

 

 

774

 

 

797

 

Net (gain) loss on sales and valuations of repossessed and other assets

 

(620

)

 

(179

)

 

(523

)

 

(1,407

)

Other

 

7,842

 

 

6,953

 

 

15,283

 

 

15,081

 

Total non-interest expense

 

114,213

 

 

102,548

 

 

227,127

 

 

200,697

 

Income before income taxes

 

147,686

 

 

130,004

 

 

294,018

 

 

251,718

 

Income tax expense

 

24,750

 

 

25,325

 

 

50,286

 

 

46,139

 

Net income

 

$

122,936

 

 

$

104,679

 

 

$

243,732

 

 

$

205,579

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

Diluted shares

 

103,501

 

 

105,420

 

 

103,985

 

 

105,372

 

Diluted earnings per share

 

$

1.19

 

 

$

0.99

 

 

$

2.34

 

 

$

1.95

 

Western Alliance Bancorporation and Subsidiaries

Five Quarter Condensed Consolidated Income Statements

Unaudited

 

 

Three Months Ended

 

 

Jun 30, 2019

 

Mar 31, 2019

 

Dec 31, 2018

 

Sep 30, 2018

 

Jun 30, 2018

 

 

(in thousands, except per share data)

Interest income:

 

 

 

 

 

 

 

 

 

 

Loans

 

$

270,349

 

 

$

258,818

 

 

$

247,874

 

 

$

234,709

 

 

$

222,035

 

Investment securities

 

28,900

 

 

29,134

 

 

30,367

 

 

27,239

 

 

27,445

 

Other

 

3,599

 

 

3,216

 

 

3,727

 

 

3,268

 

 

2,122

 

Total interest income

 

302,848

 

 

291,168

 

 

281,968

 

 

265,216

 

 

251,602

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

Deposits

 

41,888

 

 

35,788

 

 

31,176

 

 

25,266

 

 

19,849

 

Qualifying debt

 

6,008

 

 

6,105

 

 

5,829

 

 

5,794

 

 

5,695

 

Borrowings

 

271

 

 

1,939

 

 

1,450

 

 

118

 

 

1,950

 

Total interest expense

 

48,167

 

 

43,832

 

 

38,455

 

 

31,178

 

 

27,494

 

Net interest income

 

254,681

 

 

247,336

 

 

243,513

 

 

234,038

 

 

224,108

 

Provision for credit losses

 

7,000

 

 

3,500

 

 

6,000

 

 

6,000

 

 

5,000

 

Net interest income after provision for credit losses

 

247,681

 

 

243,836

 

 

237,513

 

 

228,038

 

 

219,108

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

Service charges and fees

 

5,821

 

 

5,412

 

 

5,611

 

 

5,267

 

 

5,672

 

Card income

 

1,625

 

 

1,841

 

 

1,866

 

 

2,138

 

 

2,033

 

Foreign currency income

 

1,148

 

 

1,095

 

 

1,285

 

 

1,092

 

 

1,181

 

Income from bank owned life insurance

 

978

 

 

981

 

 

983

 

 

868

 

 

1,167

 

Income from equity investments

 

868

 

 

2,009

 

 

3,178

 

 

1,440

 

 

2,517

 

Lending related income and gains (losses) on sale of loans, net

 

553

 

 

251

 

 

893

 

 

1,422

 

 

1,047

 

Gain (loss) on sales of investment securities

 

 

 

 

 

(424

)

 

(7,232

)

 

 

Unrealized gains (losses) on assets measured at fair value, net

 

1,572

 

 

2,834

 

 

(640

)

 

(1,212

)

 

(685

)

Other

 

1,653

 

 

987

 

 

859

 

 

635

 

 

512

 

Total non-interest income

 

14,218

 

 

15,410

 

 

13,611

 

 

4,418

 

 

13,444

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

65,794

 

 

68,556

 

 

64,558

 

 

64,762

 

 

61,785

 

Legal, professional, and directors' fees

 

11,105

 

 

7,532

 

 

6,866

 

 

7,907

 

 

7,946

 

Occupancy

 

7,761

 

 

8,227

 

 

7,733

 

 

7,406

 

 

7,401

 

Deposit costs

 

7,669

 

 

5,724

 

 

7,012

 

 

4,848

 

 

4,114

 

Data processing

 

6,793

 

 

6,675

 

 

6,028

 

 

5,895

 

 

5,586

 

Insurance

 

2,811

 

 

2,809

 

 

2,539

 

 

3,712

 

 

3,885

 

Loan and repossessed asset expenses

 

1,460

 

 

2,006

 

 

1,748

 

 

1,230

 

 

1,017

 

Business development

 

1,444

 

 

2,085

 

 

1,437

 

 

1,381

 

 

1,414

 

Marketing

 

1,057

 

 

741

 

 

1,341

 

 

687

 

 

1,146

 

Card expense

 

710

 

 

634

 

 

996

 

 

1,282

 

 

1,081

 

Intangible amortization

 

387

 

 

387

 

 

399

 

 

398

 

 

399

 

Net (gain) loss on sales and valuations of repossessed and other assets

 

(620

)

 

97

 

 

1,483

 

 

(67

)

 

(179

)

Other

 

7,842

 

 

7,441

 

 

8,989

 

 

14,400

 

 

6,953

 

Total non-interest expense

 

114,213

 

 

112,914

 

 

111,129

 

 

113,841

 

 

102,548

 

Income before income taxes

 

147,686

 

 

146,332

 

 

139,995

 

 

118,615

 

 

130,004

 

Income tax expense

 

24,750

 

 

25,536

 

 

20,909

 

 

7,492

 

 

25,325

 

Net income

 

$

122,936

 

 

$

120,796

 

 

$

119,086

 

 

$

111,123

 

 

$

104,679

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

Diluted shares

 

103,501

 

 

104,475

 

 

105,286

 

 

105,448

 

 

105,420

 

Diluted earnings per share

 

$

1.19

 

 

$

1.16

 

 

$

1.13

 

 

$

1.05

 

 

$

0.99

 

Western Alliance Bancorporation and Subsidiaries

Five Quarter Condensed Consolidated Balance Sheets

Unaudited

 

 

Jun 30, 2019

 

Mar 31, 2019

 

Dec 31, 2018

 

Sep 30, 2018

 

Jun 30, 2018

 

 

(in millions)

Assets:

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

1,067.7

 

 

$

...