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Western Alliance Bancorporation Reports Third Quarter 2019 Financial Results

PHOENIX--(BUSINESS WIRE)--

Western Alliance Bancorporation (WAL):

THIRD QUARTER 2019 FINANCIAL RESULTS

Net income

 

Earnings per share

 

Net interest margin2

 

Efficiency ratio

 

Book value per
common share

$127.4 million

 

$1.24

 

4.41%

 

43.1%

 

$28.48

CEO COMMENTARY:

Western Alliance continues to deliver strong shareholder value and produced another record quarter with third quarter results that generated $127.4 million in net income and earnings per share of $1.24, representing an 18% increase in earnings per share from a year ago,” commented Kenneth Vecchione, Chief Executive Officer. “Thoughtful balance sheet growth continues to be at the forefront of our business plan as demonstrated by our third consecutive quarter of deposit growth of more than $1 billion and loan growth of over $900 million during the quarter. Our asset quality remains stable and we closed out the quarter with $0.6 million of net loan recoveries. Our healthy loan origination volume coupled with a reduction in deposit costs overcame a net interest margin compression of 18 basis points to produce net interest income growth of 18.4%, on a linked quarter annualized basis. Our consistent, broad-based results, combined with our commitment to distribute excess capital to shareholders through stock repurchases and dividends, positions the Company to finish the year with solid shareholder results.”

LINKED-QUARTER BASIS

YEAR-OVER-YEAR

 

 

FINANCIAL HIGHLIGHTS:

 

  • Net income and earnings per share of $127.4 million and $1.24 compared to $122.9 million and $1.19, respectively
  • Net income of $127.4 million and earnings per share of $1.24, up 14.6% and 18.1%, from $111.1 million and $1.05, respectively
  • Net operating revenue1 of $282.5 million, an increase of 5.7%, or $15.2 million, compared to an increase in operating non-interest expenses1 of 6.7%, or $7.7 million
  • Net operating revenue1 of $282.5 million, an increase of 14.4%, or $35.6 million, compared to an increase in operating non-interest expenses1 of 16.7%, or $17.5 million
  • Operating pre-provision net revenue1 of $159.9 million, up $7.4 million from $152.5 million
  • Operating pre-provision net revenue1 of $159.9 million, up $18.1 million from $141.9 million
  • Effective tax rate of 18.30%, compared to 16.76%
  • Effective tax rate of 18.30%, compared to 6.32%

 

 

FINANCIAL POSITION RESULTS:

 

  • Total loans of $20.2 billion, up $903 million, or 18.8% annualized
  • Increase in total loans of $3.4 billion, or 20.4%
  • Total deposits of $22.4 billion, up $1.0 billion, or 18.7% annualized
  • Increase in total deposits of $3.5 billion, or 18.7%
  • Stockholders' equity of $2.9 billion, up $72 million
  • Increase in stockholders' equity of $435 million

 

 

LOANS AND ASSET QUALITY:

 

  • Nonperforming assets (nonaccrual loans and repossessed assets) to total assets of 0.25%, compared to 0.27%
  • Nonperforming assets to total assets of 0.25%, compared to 0.26%
  • Annualized net loan (recoveries) charge-offs to average loans outstanding of (0.01)% compared to 0.03%
  • Annualized net loan (recoveries) charge-offs2 to average loans outstanding of (0.01)%, compared to 0.08%

 

 

KEY PERFORMANCE METRICS:

 

  • Net interest margin of 4.41% compared to 4.59%
  • Net interest margin2 of 4.41%, compared to 4.68%
  • Return on average assets and on tangible common equity1 of 1.94% and 19.41%, compared to 2.05% and 19.72%, respectively
  • Return on average assets2 and on tangible common equity1,2 of 1.94% and 19.41%, compared to 2.05% and 20.40%, respectively
  • Tangible common equity ratio1 of 10.1%, compared to 10.2%
  • Tangible common equity ratio1 of 10.1%, compared to 10.0%
  • Tangible book value per share1, net of tax, of $25.60, an increase of 3.9% from $24.65
  • Tangible book value per share1, net of tax, of $25.60, an increase of 23.7% from $20.70
  • Operating efficiency ratio1 of 42.4%, compared to 42.0%
  • Operating efficiency ratio1 of 42.4%, compared to 41.5%

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 $266.4 million in the third quarter 2019, an increase of $11.7 million from $254.7 million in the second quarter 2019, and an increase of $32.4 million, or 13.8%, compared to the third 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 third quarter 2019 includes $2.7 million of total accretion income from acquired loans, compared to $4.6 million in the second quarter 2019, and $3.3 million in the third quarter 2018.

The Company’s net interest margin in the third quarter 2019 was 4.41%, a decrease from 4.59% in the second quarter 2019 and 4.68% in the third quarter 2018.

Operating non-interest income was $16.1 million for the third quarter 2019, compared to $12.6 million for the second quarter 2019, and $12.9 million for the third quarter 2018.1 The increase in operating non-interest income from the third quarter 2018 primarily relates to an increase in income from warrants.

Net operating revenue was $282.5 million for the third quarter 2019, an increase of $15.2 million, compared to $267.3 million for the second quarter 2019, and an increase of $35.6 million, or 14.4%, compared to $246.9 million for the third quarter 2018.1

Operating non-interest expense was $122.6 million for the third quarter 2019, compared to $114.8 million for the second quarter 2019, and $105.0 million for the third quarter 2018.1 The Company’s operating efficiency ratio1 was 42.4% for the third quarter 2019, compared to 42.0% in the second quarter 2019, and 41.5% for the third quarter 2018.

Income tax expense was $28.5 million for the third quarter 2019, compared to $24.8 million for the second quarter 2019, and $7.5 million for the third quarter 2018. Income tax expense for the third quarter 2018 includes the effect of a carryback election.

Net income was $127.4 million for the third quarter 2019, an increase of $4.4 million from $122.9 million for the second quarter 2019, and an increase of $16.3 million, or 14.6%, from $111.1 million for the third quarter 2018. Earnings per share was $1.24 for the third quarter 2019, compared to $1.19 for the second quarter 2019, and $1.05 for the third 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 third quarter 2019, the Company’s operating PPNR was $159.9 million, up $7.4 million from $152.5 million in the second quarter 2019, and up $18.1 million from $141.9 million in the third quarter 2018.1 Non-operating income1 for the third quarter 2019 consisted of a net gain on sales of investment securities of $3.2 million and net unrealized gains on assets measured at fair value of $0.2 million. Non-operating expense1 for the third quarter 2019 consisted of a net loss on sales and valuations of repossessed and other assets of $3.4 million.

The Company had 1,814 full-time equivalent employees and 47 offices at September 30, 2019, compared to 1,806 employees and 47 offices at June 30, 2019 and 1,795 employees and 47 offices at September 30, 2018.

1

See reconciliation of Non-GAAP Financial Measures.

Balance Sheet

Gross loans totaled $20.2 billion at September 30, 2019, an increase of $903 million from $19.3 billion at June 30, 2019, and an increase of $3.4 billion from $16.7 billion at September 30, 2018. The increase from the prior quarter was driven by an increase of $346 million in CRE, non-owner occupied loans, $282 million in residential real estate loans, and $275 million in commercial and industrial loans. These increases were partially offset by a decrease of $55 million in construction and land development loans. From September 30, 2018, loans increased across all loan types, with the largest increases in commercial and industrial loans of $1.2 billion, CRE, non-owner occupied loans of $1.1 billion, and residential real estate loans of $1.0 billion. At September 30, 2019, the allowance for credit losses to gross loans held for investment was 0.82%, compared to 0.83% at June 30, 2019, and 0.90% at September 30, 2018. At September 30, 2019, the allowance for credit losses to total organic loans was 0.85%, compared to 0.87% at June 30, 2019, and 0.97% at September 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 $7.5 million at September 30, 2019, compared to $10.6 million at June 30, 2019, and $17.2 million at September 30, 2018.

Deposits totaled $22.4 billion at September 30, 2019, an increase of $1.0 billion from $21.4 billion at June 30, 2019, and an increase of $3.5 billion from $18.9 billion at September 30, 2018. The increase from the prior quarter was driven by an increase of $1.2 billion from savings and money market accounts and $78 million in non-interest bearing demand deposits. These increases were offset by a decrease of $221 million from certificates of deposit. From September 30, 2018, deposits increased across all deposit types, with the largest increases in savings and money market accounts of $2.0 billion, non-interest bearing demand deposits of $741 million, interest-bearing demand deposits of $531 million, and certificates of deposit of $261 million. Non-interest bearing deposits were $8.8 billion at September 30, 2019, compared to $8.7 billion at June 30, 2019, and $8.0 billion at September 30, 2018. Non-interest bearing deposits comprised 39.0% of total deposits at September 30, 2019, compared to 40.5% at June 30, 2019, and 42.4% at September 30, 2018. The proportion of savings and money market balances to total deposits was 40.4%, compared to 36.8% at June 30, 2019, and 37.3% at September 30, 2018. Interest-bearing demand deposits as a percentage of total deposits were 11.2% at September 30, 2019, compared to 11.8% at June 30, 2019, and 10.5% at September 30, 2018. Certificates of deposit as a percentage of total deposits were 9.4% at September 30, 2019, compared to 10.9% at June 30, 2019, and 9.8% at September 30, 2018. The Company’s ratio of loans to deposits was 89.8% at September 30, 2019, compared to 89.8% at June 30, 2019, and 88.5% at September 30, 2018.

Qualifying debt totaled $389 million at September 30, 2019, compared to $387 million at June 30, 2019, and $359 million at September 30, 2018.

Stockholders’ equity was $2.9 billion at September 30, 2019 and June 30, 2019, compared to $2.5 billion at September 30, 2018. The increase in stockholders' equity from September 30, 2018 is primarily a function of net income, partially offset by share repurchases and dividends to shareholders. 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 third quarter 2019, the Company repurchased 1.0 million shares of its common stock at a weighted average price of $43.63, for a total of $43.6 million. During the nine months ended September 30, 2019, the Company repurchased a total of 2.7 million shares of its common stock, representing approximately 3% of the Company's outstanding shares. Shares were repurchased at a weighted average price of $42.25, for a total of $115.5 million. During the third quarter 2019, the Company's Board of Directors approved a quarterly cash dividend of $0.25 per share. The Company made its first dividend payment to shareholders totaling $25.7 million on August 30, 2019.

At September 30, 2019, tangible common equity, net of tax, was 10.1% of tangible assets1 and total capital was 12.6% of risk-weighted assets. The Company’s tangible book value per share1 was $25.60 at September 30, 2019, up 23.7% from September 30, 2018.

Total assets increased 4.0% to $26.3 billion at September 30, 2019, from $25.3 billion at June 30, 2019, and increased 18.7% from $22.2 billion at September 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 $4.0 million for the third quarter 2019, compared to $7.0 million for the second quarter 2019, and compared to $6.0 million for the third quarter 2018. Net loan (recoveries)2 in the third quarter 2019 were $(0.6) million, or (0.01)% of average loans (annualized), compared to net charge-offs of $1.6 million, or 0.03%, in the second quarter 2019, and $3.1 million, or 0.08%, in the third quarter 2018.

Nonaccrual loans decreased $1.5 million to $50.3 million during the quarter and increased $13.5 million from September 30, 2018. Loans past due 90 days and still accruing were zero at September 30, 2019, June 30, 2019, and September 30, 2018. Loans past due 30-89 days and still accruing interest totaled $29.5 million at September 30, 2019, an increase from $9.7 million at June 30, 2019, and an increase from $9.4 million at September 30, 2018.

Repossessed assets totaled $15.5 million at September 30, 2019, compared to $17.7 million at June 30, 2019, and a decrease of $4.5 million from $20.0 million at September 30, 2018. Adversely graded loans and non-performing assets totaled $439.2 million at September 30, 2019, an increase of $40.3 million from $399.0 million at June 30, 2019, and an increase of $80.9 million from $358.3 million at September 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 September 30, 2019, compared to 7.8% at June 30, 2019, and 10.2% at September 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 $9.7 billion at September 30, 2019, an increase of $196 million during the quarter, and an increase of $701 million during the last twelve months. The growth in loans during the quarter was spread across all regional segments with increases in the Nevada, Southern California, Arizona, and Northern California segments of $85 million, $50 million, $31 million, and $30 million, respectively. The growth in loans during the last twelve months was driven by increases in the Arizona, Nevada, and Southern California segments, with loan growth of $375 million, $243 million, and $190 million, respectively. These increases were partially offset by a decrease of $107 million in the Northern California segment. Total deposits for the regional segments were $15.3 billion, an increase of $423 million during the quarter, and an increase of $1.6 billion during the last twelve months. The increase in deposits during the quarter was driven by the Northern California, Southern California, and Nevada segments, with deposit growth of $262 million, $217 million, and $81 million, respectively. These increases were partially offset by a decrease of $137 million in the Arizona 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, Northern California, and Southern California segments totaled $639 million, $422 million, $319 million, and $202 million, respectively.

Pre-tax income for the regional segments was $103.9 million for the three months ended September 30, 2019, an increase of $7.1 million from the three months ended June 30, 2019, and an increase of $16.7 million from the three months ended September 30, 2018. The growth in pre-tax income during the quarter was driven by increases in the Arizona and Southern California segments, with pre-tax income growth of $6.0 million and $2.3 million, respectively. These increases were partially offset by decreases of $0.9 million and $0.3 million in the Northern California and Nevada segments, respectively. The Arizona, Southern California, and Nevada segments had the largest increases in pre-tax income from the three months ended September 30, 2018 of $7.3 million, $5.0 million, and $4.0 million, respectively. For the nine months ended September 30, 2019, the regional segments reported total pre-tax income of $289.2 million, an increase of $30.1 million compared to the nine months ended September 30, 2018 with increases across all regional segments. Southern California, Arizona, Nevada, and Northern California had increases in pre-tax income of $9.8 million, $8.6 million, $7.9 million, and $3.9 million, respectively.

The NBL segments reported gross loan balances of $10.5 billion at September 30, 2019, an increase of $709 million during the quarter, and an increase of $2.7 billion during the last twelve months. The increase in loans from the prior quarter was driven by the Other NBLs, HFF, and Technology & Innovation segments, which had loan growth of $369 million, $240 million, and $131 million, respectively. These increases were partially offset by a decrease of $44 million in the Public & Nonprofit Finance segment. During the last twelve months, the largest drivers of loan growth were the Other NBLs, HFF, and Technology & Innovation segments, with increases of $1.9 billion, $461 million, and $271 million, respectively. Total deposits for the NBL segments were $6.4 billion, an increase of $440 million during the quarter, and an increase of $1.5 billion during the last twelve months. The increase in deposits from the prior quarter is primarily attributable to the Technology & Innovation segment, which increased deposits by $436 million. The increase of $1.5 billion during the last twelve months is a result of growth in the Technology & Innovation and HOA Services segments of $970 million and $528 million, respectively.

Pre-tax income for the NBL segments was $71.2 million for the three months ended September 30, 2019, an increase of $11.1 million from the three months ended June 30, 2019, and an increase of $19.7 million from the three months ended September 30, 2018. The increase in pre-tax income from the prior quarter primarily relates to the Technology & Innovation and Other NBLs segments, which increased by $8.4 million and $4.4 million, respectively. These increases were partially offset by decreases in pre-tax income from the HFF segments, which had decreases of $1.8 million. The drivers of the increase in pre-tax income from the same period in the prior year were the Other NBLs, Technology & Innovation, and HOA Services segments, which had increases of $11.7 million, $7.7 million, and $2.4 million, respectively. These increases were partially offset by decreases in pre-tax income for the HFF and Public & Nonprofit Finance segments, which decreased by $1.6 million and $0.5 million, respectively. Pre-tax income for the NBL segments for the nine months ended September 30, 2019 totaled $190.7 million, an increase of $43.9 million compared to the nine months ended September 30, 2018. The largest increases in pre-tax income compared to the nine months ended September 30, 2018 were in the Other NBLs, Technology & Innovation, and HOA Services segments. These segments had increases of $19.6 million, $17.1 million, and $11.5 million, respectively. These increases were partially offset by decreases of $3.3 million and $1.1 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 third quarter 2019 financial results at 12:00 p.m. ET on Friday, October 18, 2019. Participants may access the call by dialing 1-888-317-6003 and using passcode 1909804 or via live audio webcast using the website link https://services.choruscall.com/links/wal191018_1200.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 October 18th through 9:00 a.m. ET November 18th by dialing 1-877-344-7529 passcode: 10134684.

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 September 30,

 

 

 

 

 

 

 

 

2019

 

2018

 

Change %

 

 

 

 

 

 

 

 

(in millions)

 

 

Total assets

 

 

 

 

 

 

 

$

26,324.2

 

 

$

22,176.1

 

 

18.7

%

Gross loans, net of deferred fees

 

 

 

 

 

 

 

20,152.8

 

 

16,732.8

 

 

20.4

 

Securities and money market investments

 

 

 

 

 

4,148.1

 

 

3,633.7

 

 

14.2

 

Total deposits

 

 

 

 

 

 

 

22,440.8

 

 

18,908.6

 

 

18.7

 

Qualifying debt

 

 

 

 

 

 

 

388.9

 

 

359.1

 

 

8.3

 

Stockholders' equity

 

 

 

 

 

 

 

2,923.0

 

 

2,488.4

 

 

17.5

 

Tangible common equity, net of tax (1)

 

 

 

 

 

 

 

2,627.1

 

 

2,191.3

 

 

19.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Income Statement Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30,

 

For the Nine Months Ended September 30,

 

 

2019

 

2018

 

Change %

 

2019

 

2018

 

Change %

 

 

(in thousands, except per share data)

 

 

 

(in thousands, except per share data)

 

 

Interest income

 

$

315,608

 

 

$

265,216

 

 

19.0

%

 

$

909,624

 

 

$

751,515

 

 

21.0

%

Interest expense

 

49,186

 

 

31,178

 

 

57.8

 

 

141,185

 

 

79,149

 

 

78.4

 

Net interest income

 

266,422

 

 

234,038

 

 

13.8

 

 

768,439

 

 

672,366

 

 

14.3

 

Provision for credit losses

 

4,000

 

 

6,000

 

 

(33.3

)

 

14,500

 

 

17,000

 

 

(14.7

)

Net interest income after provision for credit losses

 

262,422

 

 

228,038

 

 

15.1

 

 

753,939

 

 

655,366

 

 

15.0

 

Non-interest income

 

19,441

 

 

4,418

 

 

NM

 

49,069

 

 

29,505

 

 

66.3

 

Non-interest expense

 

125,955

 

 

113,841

 

 

10.6

 

 

353,082

 

 

314,538

 

 

12.3

 

Income before income taxes

 

155,908

 

 

118,615

 

 

31.4

 

 

449,926

 

 

370,333

 

 

21.5

 

Income tax expense

 

28,533

 

 

7,492

 

 

NM

 

78,819

 

 

53,631

 

 

47.0

 

Net income

 

$

127,375

 

 

$

111,123

 

 

14.6

 

 

$

371,107

 

 

$

316,702

 

 

17.2

 

Diluted earnings per share

 

$

1.24

 

 

$

1.05

 

 

18.1

 

 

$

3.59

 

 

$

3.00

 

 

19.7

 

(1)

See Reconciliation of Non-GAAP Financial Measures.

NM

Changes +/- 100% are not meaningful.

Western Alliance Bancorporation and Subsidiaries

Summary Consolidated Financial Data

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Share Data:

 

 

 

 

 

 

 

At or For the Three Months Ended September 30,

 

For the Nine Months Ended September 30,

 

2019

 

2018

 

Change %

 

2019

 

2018

 

Change %

Diluted earnings per share

$

1.24

$

1.05

18.1

%

$

3.59

$

3.00

19.7

%

Book value per common share

28.48

23.51

21.1

 

 

 

 

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

25.60

20.70

23.7

 

 

 

 

Average shares outstanding
(in thousands):

 

 

 

 

 

 

Basic

102,041

104,768

(2.6

)

103,024

104,664

(1.6

)

Diluted

102,451

105,448

(2.8

)

103,468

105,398

(1.8

)

Common shares outstanding

102,639

105,861

(3.0

)

 

 

 

 

Selected Performance Ratios:

 

 

 

 

 

 

Return on average assets (2)

1.94

%

2.05

%

(5.4

)%

2.03

%

2.03

%

%

Return on average tangible common equity (1, 2)

19.41

20.40

(4.9

)

19.86

20.53

(3.3

)

Net interest margin (2)

4.41

4.68

(5.8

)

4.56

4.69

(2.8

)

Operating efficiency ratio - tax equivalent basis (1)

42.4

41.5

2.1

 

42.3

42.1

0.4

 

Loan to deposit ratio

89.80

88.49

1.5

 

 

 

 

 

 

 

 

 

 

 

Asset Quality Ratios:

 

 

 

 

 

 

Net (recoveries) charge-offs to average loans outstanding (2)

(0.01

)%

0.08

%

NM

0.02

%

0.06

%

(66.7

)%

Nonaccrual loans to gross loans

0.25

0.22

13.6

 

 

 

 

Nonaccrual loans and repossessed assets to total assets

0.25

0.26

(3.8

)

 

 

 

Allowance for credit losses to gross loans

0.82

0.90

(8.9

)

 

 

 

Allowance for credit losses to nonaccrual loans

327.83

406.89

(19.4

)

 

 

 

 

Capital Ratios (1):

 

 

 

 

Sep 30, 2019

 

Jun 30, 2019

 

Sep 30, 2018

Tangible common equity (1)

10.1

%

10.2

%

10.0

%

Common Equity Tier 1 (1), (3)

10.3

10.6

10.9

 

Tier 1 Leverage ratio (1), (3)

10.4

11.0

11.0

 

Tier 1 Capital (1), (3)

10.6

10.9

11.3

 

Total Capital (1), (3)

12.6

12.9

13.5

 

(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 September 30, 2019 are preliminary until the Call Report is filed.

NM

Changes +/- 100% are not meaningful.

Western Alliance Bancorporation and Subsidiaries

Condensed Consolidated Income Statements

Unaudited

 

Three Months Ended September 30,

Nine Months Ended September 30,

 

2019

2018

2019

2018

 

(dollars in thousands, except per share data)

Interest income:

 

 

 

 

Loans

$

278,932

$

234,709

 

$

808,099

$

662,703

Investment securities

29,660

27,239

 

87,694

81,305

Other

7,016

3,268

 

13,831

7,507

Total interest income

315,608

265,216

 

909,624

751,515

Interest expense:

 

 

 

 

Deposits

43,354

25,266

 

121,030

59,288

Qualifying debt

5,785

5,794

 

17,898

16,458

Borrowings

47

118

 

2,257

3,403

Total interest expense

49,186

31,178

 

141,185

79,149

Net interest income

266,422

234,038

 

768,439

672,366

Provision for credit losses

4,000

6,000

 

14,500

17,000

Net interest income after provision for credit losses

262,422

228,038

 

753,939

655,366

Non-interest income:

 

 

 

 

Service charges and fees

5,888

5,267

 

17,121

16,684

Income from equity investments

3,742

1,440

 

6,619

5,417

Card income

1,729

2,138

 

5,195

6,143

Foreign currency income

1,321

1,092

 

3,564

3,475

Income from bank owned life insurance

979

868

 

2,938

2,963

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

539

1,422

 

1,343

3,447

Gain (loss) on sales of investment securities

3,152

(7,232

)

3,152

(7,232

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

222

(1,212

)

4,628

(2,971

Other

1,869

635

 

4,509

1,579

Total non-interest income

19,441

4,418

 

49,069

29,505

Non-interest expenses:

 

 

 

 

Salaries and employee benefits

70,978

64,762

 

205,328

188,680

Deposit costs

11,537

4,848

 

24,930

11,888

Occupancy

8,263

7,406

 

24,251

21,671

Legal, professional, and directors' fees

8,248

7,907

 

26,885

21,856

Data processing

7,095

5,895

 

20,563

16,688

Insurance

3,071

3,712

 

8,691

11,466

Loan and repossessed asset expenses

1,953

1,230

 

5,419

2,830

Business development

1,443

1,381

 

4,972

4,523

Marketing

842

687

 

2,640

2,429

Card expense

548

1,282

 

1,892

3,305

Intangible amortization

387

398

 

1,161

1,195

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

3,379

(67

)

2,856

(1,474

Other

8,211

14,400

 

23,494

29,481

Total non-interest expense

125,955

113,841

 

353,082

314,538

Income before income taxes

155,908

118,615

 

449,926

370,333

Income tax expense

28,533

7,492

 

78,819

53,631

Net income

$

127,375

$

111,123

 

$

371,107

$

316,702

 

Earnings per share:

 

 

 

 

Diluted shares

102,451

105,448

 

103,468

105,398

Diluted earnings per share

$

1.24

$

1.05

 

$

3.59

$

3.00

...

Western Alliance Bancorporation and Subsidiaries

Five Quarter Condensed Consolidated Income Statements

Unaudited

 

Three Months Ended

 

Sep 30, 2019

 

Jun 30, 2019

 

Mar 31, 2019

 

Dec 31, 2018

 

Sep 30, 2018

 

(in thousands, except per share data)

Interest income:

 

 

 

 

 

Loans

$

278,932

$

270,349

 

$

258,818

$

247,874

 

$

234,709

 

Investment securities

29,660

28,900

 

29,134

30,367

 

27,239

 

Other

7,016

3,599

 

3,216

3,727

 

3,268

 

Total interest income

315,608

302,848

 

291,168

281,968

 

265,216

 

Interest expense:

 

 

 

 

 

Deposits

43,354

41,888

 

35,788

31,176

 

25,266

 

Qualifying debt

5,785

6,008

 

6,105

5,829

 

5,794

 

Borrowings

47

271

 

1,939

1,450

 

118

 

Total interest expense

49,186

48,167

 

43,832

38,455

 

31,178

 

Net interest income

266,422

254,681

 

247,336

243,513

 

234,038

 

Provision for credit losses

4,000

7,000

 

3,500

6,000

 

6,000

 

Net interest income after provision for credit losses

262,422

247,681

 

243,836

237,513

 

228,038

 

Non-interest income:

 

 

 

 

 

Service charges and fees

5,888

5,821

 

5,412

5,611

 

5,267

 

Income from equity investments

3,742

868

 

2,009

3,178

 

1,440

 

Card income

1,729

1,625

 

1,841

1,866

 

2,138

 

Foreign currency income

1,321

1,148

 

1,095

1,285

 

1,092

 

Income from bank owned life insurance

979

978

 

981

983

 

868

 

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

539

553

 

251

893

 

1,422

 

Gain (loss) on sales of investment securities

3,152

 

(424

)

(7,232

)

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

222

1,572

 

2,834

(640

)

(1,212

)

Other

1,869

1,653

 

987

859

 

635

 

Total non-interest income

19,441

14,218

 

15,410

13,611

 

4,418

 

Non-interest expenses:

 

 

 

 

 

Salaries and employee benefits

70,978

65,794

 

68,556

64,558

 

64,762

 

Deposit costs

11,537

7,669

 

5,724

7,012

 

4,848

 

Occupancy

8,263

7,761

 

8,227

7,733

 

7,406

 

Legal, professional, and directors' fees

8,248

11,105

 

7,532

6,866

 

7,907

 

Data processing

7,095

6,793

 

6,675

6,028

 

5,895

 

Insurance

3,071

2,811

 

2,809

2,539

 

3,712

 

Loan and repossessed asset expenses

1,953

1,460

 

2,006

1,748

 

1,230

 

Business development

1,443

1,444

 

2,085

1,437

 

1,381

 

Marketing

842

1,057

 

741

1,341

 

687

 

Card expense

548

710

 

634

996

 

1,282

 

Intangible amortization

387

387

 

387

399

 

398

 

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

3,379

(620

)

97

1,483

 

(67

)

Other

8,211

7,842

 

7,441

8,989

 

14,400

 

Total non-interest expense

125,955

114,213

 

112,914

111,129

 

113,841

 

Income before income taxes

155,908

147,686

 

146,332

139,995

 

118,615

 

Income tax expense

28,533

24,750

 

25,536

20,909

 

7,492

 

Net income

$

127,375

$

122,936

 

$

120,796

$

119,086

 

$

111,123

 

 

Earnings per share: