Western Alliance Reports Third Quarter 2016 Financial Performance
PHOENIX--(BUSINESS WIRE)--October 24, 2016--Western Alliance Bancorporation (NYSE:WAL) (the "Company") announced today its financial results for the third quarter 2016.
Third Quarter 2016 Highlights:
• | Net income of $67.1 million, compared to $61.6 million for the second quarter 2016, and $55.9 million for the third quarter 2015 |
• | Earnings per share of $0.64, inclusive of $0.02 in acquisition / restructure expense, compared to $0.60 per share in the second quarter 2016, inclusive of $0.02 in acquisition / restructure expense, and $0.55 per share in the third quarter 2015 |
• | Total loans of $13.03 billion, up $156 million from June 30, 2016, and up $2.25 billion (including $1.28 billion from the hotel franchise finance ("HFF") loan portfolio purchase on April 20, 2016) from September 30, 2015 |
• | Total deposits of $14.44 billion, up $242 million from June 30, 2016, and up $2.83 billion from September 30, 2015, of which more than half was due to increases in non-interest bearing demand deposits |
• | Net interest margin of 4.55%, compared to 4.63% in the second quarter 2016, and 4.59% in the third quarter 2015 |
• | Net operating revenue of $183.2 million, representing quarter-over-quarter growth of $11.0 million, and year-over-year growth of 25.6%, or $37.3 million. Operating non-interest expense of $82.4 million, representing quarter-over-quarter growth of $4.6 million, and year-over-year growth of 14.2%, or $10.2 million1 |
• | Operating pre-provision net revenue of $100.8 million, up 6.7% from $94.5 million in the second quarter 2016, and up 36.7% from $73.7 million in the third quarter 20151 |
• | Efficiency ratio of 43.0%, flat from the second quarter 2016, and an improvement from 46.8% in the third quarter 20151 |
• | Nonperforming assets (nonaccrual loans and repossessed assets) decreased to 0.53% of total assets, from 0.54% at June 30, 2016, and 0.76% at September 30, 2015 |
• | Annualized net charge-offs (recoveries) to average loans outstanding of 0.04%, compared to (0.01)% in the second quarter 2016, and compared to (0.08)% in the third quarter 2015 |
• | Tangible common equity ratio of 9.3%, compared to 9.1% at June 30, 2016, and 8.9% at September 30, 2015 1 |
• | Stockholders' equity of $1.86 billion, an increase of $61 million from June 30, 2016 and an increase of $274 million from September 30, 2015 as a result of net income and the at-the-market ("ATM") common stock issuances during this period |
• | Tangible book value per share, net of tax, of $14.84, an increase of 4.1% from $14.25 at June 30, 2016, and an increase of 25.1% from $11.86 at September 30, 2015 1 |
1 See Reconciliation of Non-GAAP Financial Measures beginning on page 18.
1
Financial Performance
“Western Alliance had another consistent quarter of record performance, with operating earnings per share of 66 cents, up 20% from the 55 cents in the same quarter last year,” remarked Robert Sarver, Chairman and CEO of Western Alliance Bancorporation. “Our operating efficiency held at an impressive 43.0%, and asset quality remains strong with net charge-offs of 0.04% and non-performing assets of 0.53%, essentially unchanged from the second quarter. Tangible book value per share increased a solid 4.1% to $14.84 and capital levels climbed with a tangible common equity ratio of 9.3% at quarter end. We are also pleased with the earnings performance and credit quality of our newly acquired hotel franchise finance portfolio.”
Income Statement
Net interest income was $172.5 million in the third quarter 2016, an increase of $8.8 million from $163.7 million in the second quarter 2016, and an increase of $35.1 million, or 25.6%, compared to the third quarter 2015. The Company’s net interest margin decreased in the third quarter 2016 to 4.55%, compared to 4.63% in the second quarter 2016, and from 4.59% in the third quarter 2015. The decrease in net interest margin for the current quarter compared to the second quarter 2016 primarily relates to an increase in interest expense resulting from the issuance of long-term subordinated debt in June 2016. Net interest income in the third quarter 2016 includes $8.8 million of total accretion income from acquired loans, compared to $8.2 million in the second quarter 2016, and $7.0 million in the third quarter 2015.
Operating non-interest income was $10.7 million for the third quarter 2016, compared to $8.6 million for the second quarter 2016, and $8.5 million for the third quarter 2015.1 The increase in operating non-interest income for the current quarter compared to the second quarter 2016 primarily related to an increase in SBA / warrant income. The increase year-over-year relates to an increase in SBA / warrant income and service charges.
Net operating revenue was $183.2 million for the third quarter 2016, an increase of $11.0 million, or 6.4%, compared to $172.2 million for the second quarter 2016, and an increase of $37.3 million, or 25.6%, compared to $145.9 million for the third quarter 2015.1
Operating non-interest expense was $82.4 million for the third quarter 2016, compared to $77.8 million for the second quarter 2016, and $72.2 million for the third quarter 2015.1 The primary driver of the increase in operating non-interest expense in the third quarter 2016 compared to the second quarter 2016 is increased salaries and employee benefits related to increased headcount and variable incentive compensation linked to business performance. The increase year-over-year relates primarily to an increase in salaries and employee benefits due to increased headcount and operating costs to support the growth in the business. The Company’s operating efficiency ratio1 on a tax equivalent basis was 43.0% for both the third quarter 2016 and the second quarter 2016, an improvement from 46.8% for the third quarter 2015.
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 2016, the Company’s operating PPNR was $100.8 million, up 6.7% from $94.5 million in the second quarter 2016, and up 36.7% from $73.7 million in the third quarter 2015.1 The non-operating items1 for the third quarter 2016 consist primarily of acquisition / restructure expenses of $2.7 million related to HFF and system conversion costs.
The Company had 1,520 full-time equivalent employees and 48 offices at September 30, 2016, compared to 1,415 employees and 47 offices at September 30, 2015.
1 See Reconciliation of Non-GAAP Financial Measures beginning on page 18.
2
Balance Sheet
Gross loans totaled $13.03 billion at September 30, 2016, an increase of $156 million from $12.88 billion at June 30, 2016, and an increase of $2.25 billion from $10.79 billion at September 30, 2015. The year-over-year increase is comprised of $1.28 billion from HFF as of April 20, 2016 and the remainder from organic loan growth. Consistent with 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 September 30, 2016, the allowance for credit losses was 0.94% of total loans, compared to 0.95% at June 30, 2016, and 1.09% at September 30, 2015. The allowance for credit losses as a percent of total loans, adjusted to include credit discounts on acquired loans, was 1.37% at September 30, 2016, compared to 1.42% at June 30, 2016, and 1.32% at September 30, 2015.
Deposits totaled $14.44 billion at September 30, 2016, an increase of $242 million from $14.20 billion at June 30, 2016, and an increase of $2.83 billion from $11.61 billion at September 30, 2015. The increase from both the prior quarter and from September 30, 2015 is the result of organic deposit growth. Non-interest bearing deposits were $5.62 billion at September 30, 2016, compared to $5.28 billion at June 30, 2016, and $4.08 billion at September 30, 2015. Non-interest bearing deposits comprised 38.9% of total deposits at September 30, 2016, compared to 37.1% at June 30, 2016, and 35.1% at September 30, 2015. The proportion of savings and money market balances to total deposits decreased to 41.3% at September 30, 2016 from 42.3% at June 30, 2016, and increased from 40.2% at September 30, 2015. Certificates of deposit as a percentage of total deposits were 11.0% at September 30, 2016, compared to 11.6% at June 30, 2016, and 15.8% at September 30, 2015. The Company’s ratio of loans to deposits was 90.2% at September 30, 2016, compared to 90.7% at June 30, 2016, and 92.9% at September 30, 2015.
Borrowings decreased to zero at September 30, 2016 and June 30, 2016 from $300 million at September 30, 2015. The decrease from the prior year is due to the payoff of short-term FHLB advances. Qualifying debt increased to $383 million at September 30, 2016 from $382 million at June 30, 2016, and from $207 million at September 30, 2015. The year-over-year increase is primarily due to the issuance of $175 million of subordinated debt during the second quarter 2016.
Stockholders’ equity at September 30, 2016 was $1.86 billion, compared to $1.80 billion at June 30, 2016, and $1.58 billion at September 30, 2015. The increase from the prior year relates primarily to the ATM common stock issuances and net income for the respective period.
At September 30, 2016, tangible common equity, net of tax, was 9.3% of tangible assets1 and total capital was 13.1% of risk-weighted assets. The Company’s tangible book value per share1 was $14.84 at September 30, 2016, up 25.1% from $11.86 at September 30, 2015.
Total assets increased to $17.04 billion at September 30, 2016 from $16.73 billion at June 30, 2016, and increased 22.1% from $13.96 billion at September 30, 2015. The increase in total assets from September 30, 2015 relates primarily to HFF, organic loan growth, and an increase in investment securities resulting from increased deposits.
Asset Quality
The provision for credit losses was $2.0 million for the third quarter 2016 and $2.5 million for the second quarter 2016, and was zero for the third quarter 2015. Net charge-offs (recoveries) in the third quarter 2016 were $1.2 million, or 0.04%, of average loans (annualized), compared to $(0.4) million, or (0.01)%, in the second quarter 2016, and compared to $(2.0) million, or (0.08)%, for the third quarter 2015.
Nonaccrual loans increased $0.9 million to $40.6 million during the quarter and decreased $7.1 million from September 30, 2015. Loans past due 90 days and still accruing interest totaled $2.8 million at September 30, 2016, compared to $7.0 million at June 30, 2016, and $5.6 million at September 30, 2015. Loans past due 30-89 days and still accruing interest totaled $18.4 million at quarter end, an increase from $3.5 million at June 30, 2016, and a decrease from $19.6 million at September 30, 2015.
Repossessed assets totaled $49.6 million at quarter end, a decrease of $0.2 million from $49.8 million at June 30, 2016, and a decrease of $8.1 million from $57.7 million at September 30, 2015. Adversely graded loans and non-performing assets totaled $334.9 million at quarter end, a decrease of $28.7 million from $363.6 million at June 30, 2016, and a decrease of $32.3 million from $367.2 million at September 30, 2015.
As the Company’s asset quality improved and its capital increased, the ratio of classified assets to Tier I capital plus the allowance for credit losses, a common regulatory measure of asset quality, improved to 12.3% at September 30, 2016, from 15.1% at December 31, 2015, and from 17.2% at September 30, 2015.1
1 See Reconciliation of Non-GAAP Financial Measures beginning on page 18.
3
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, First Independent Bank, Torrey Pines Bank, and Bridge Bank.
The Company's National Business Lines ("NBL") segments provide specialized banking services to niche markets. With the purchase of the HFF loan portfolio, management has created a new HFF operating segment, which is now included as one of the Company's NBL reportable segments. The Company's other NBL reportable segments include Homeowner Associations ("HOA") Services, 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 newly created 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 operating segments include loan and deposit growth, asset quality, and pre-tax income.
The regional segments reported gross loan balances of $7.54 billion at September 30, 2016, an increase of $25 million during the quarter, and an increase of $182 million during the last 12 months. Arizona and Southern California had loan growth during the quarter of $40 million and $32 million, respectively, which was offset by decreases of $67 million and $30 million, respectively, in Northern California and Nevada. The growth in loans during the last 12 months was driven by increases of $232 million in Arizona and $125 million in Southern California, which were partially offset by decreases of $92.9 million and $82.1 million, respectively in Northern California and Nevada. Total deposits for the regional segments were $11.40 billion, an increase of $65 million during the quarter, and an increase of $2.20 billion during the last 12 months. Arizona and Nevada generated increased deposits during the quarter of $131 million and $89 million, respectively, which was partially offset by a decrease of $149 million in Southern California. Each of the regional segments generated increased deposits during the last 12 months, with Arizona contributing the largest increase of $1.47 billion, followed by Nevada and Southern California with increases of $382 million and $317 million, respectively.
Pre-tax income for the regional segments was $80.7 million for the three months ended September 30, 2016, an increase of $6.9 million from the three months ended June 30, 2016, and an increase of $18.5 million from the three months ended September 30, 2015. Arizona, Northern California, and Nevada had the largest increases in pre-tax income of $2.4 million, $2.2 million, and $2.0 million, respectively, compared to the three months ended June 30, 2016. With the exception of Northern California, all regional segments had increases in pre-tax income from the three months ended September 30, 2015, with Arizona and Nevada contributing the largest increases of $11.5 million and $4.5 million, respectively. For the nine months ended September 30, 2016, the regional segments reported total pre-tax income of $220.5 million, an increase of $57.8 million compared to the nine months ended September 30, 2015. All regional segments had increases in pre-tax income, with Arizona and Northern California contributing the largest increases of $24.7 million and $15.0 million, respectively.
The NBL segments reported gross loan balances of $5.47 billion at September 30, 2016, an increase of $189 million during the quarter, and an increase of $2.08 billion during the last 12 months. The increase in loans for the NBL segments compared to the prior quarter and to the same quarter in the prior year relates primarily to the Other NBL and HFF segments, which increased loans by $175 million and $48 million, respectively, at quarter end. During the last 12 months, the increases were driven by the HFF, Other NBL, and Technology & Innovation segments, which increased loans by $1.31 billion, $490 million, and $253 million, respectively. Total deposits for the NBL segments were $2.88 billion, an increase of $206 million during the quarter, and an increase of $850 million during the last 12 months. The Technology & Innovation and HOA Services segments increased deposits by $104 million and $102 million, respectively, during the quarter. The increase of $850 million during the last 12 months is the result of growth in the HOA Services and Technology & Innovation segments of $614 million and $236 million, respectively.
Pre-tax income for the NBL segments was $38.0 million for the three months ended September 30, 2016, an increase of $3.0 million from the three months ended June 30, 2016, and an increase of $11.2 million from the three months ended September 30, 2015. HOA Services and Technology & Innovation had the largest increases in pre-tax income of $1.1 million and $0.8 million, respectively, compared to the three months ended June 30, 2016. The HFF and HOA segments had the largest increases in pre-tax income of $9.5 million and $3.3 million, respectively, from the three months ended September 30, 2015. Pre-tax income for the NBLs for the nine months ended September 30, 2016 totaled $99.5 million. The largest increases in pre-tax income compared to the nine months ended September 30, 2015 were in the Technology & Innovation and HFF segments, which increased $24.4 million and $19.7 million, respectively, as a result of the HFF purchase and the Bridge Bank acquisition.
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Conference Call and Webcast
Western Alliance Bancorporation will host a conference call and live webcast to discuss its third quarter 2016 financial results at 12:00 p.m. ET on Monday, October 24, 2016. Participants may access the call by dialing 1-888-317-6003 and using passcode 6172554 or via live audio webcast using the website link http://services.choruscall.com/links/wal161021.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 24th through 9:00 a.m. ET November 24th by dialing 1-877-344-7529 passcode: 10093456.
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 accounting principles generally accepted in the United States (“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.
Early Adoption of Accounting Standards
During the first quarter 2016, the Company elected to early adopt Accounting Standards Update ("ASU") 2016-09, Improvements to Employee Share-Based Payment Accounting. The amendments in this ASU require that all excess tax benefits and tax deficiencies be recognized as income tax expense or benefit in the income statement rather than as additional paid-in capital as required under previous generally accepted accounting principles. Due to the early adoption of ASU 2016-09, during the three months ended March 31, 2016, the Company recognized a $3.9 million tax benefit as a reduction of income tax expense (that previously would have been reflected as additional paid-in capital). For the nine months ended September 30, 2016, the Company recognized a tax benefit of $4.1 million as a result of the new guidance.
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, 2015 as filed with the Securities and Exchange Commission; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; inflation, interest rate, market and monetary fluctuations; increases in competitive pressures among financial institutions and businesses offering similar products and services; higher defaults on our loan portfolio than we expect; changes in management’s estimate of the adequacy of the allowance for credit losses; legislative or regulatory changes or changes in accounting principles, policies or guidelines; supervisory actions by regulatory agencies which may limit our ability to pursue certain growth opportunities, including expansion through acquisitions; additional regulatory requirements resulting from our continued growth; management’s estimates and projections of interest rates and interest rate policy; the execution of our business plan; and other factors affecting the financial services industry generally or the banking industry in particular.
Any forward-looking statement made by us in this 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 $17 billion in assets, top-performing Western Alliance Bancorporation (NYSE:WAL) is one of the fastest-growing bank holding companies in the U.S. and recognized as #10 on the Forbes 2016 “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, Bridge Bank, First Independent Bank and Torrey Pines 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.
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Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||||
Summary Consolidated Financial Data | ||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||
Selected Balance Sheet Data: | ||||||||||||||||||||||
September 30, | ||||||||||||||||||||||
2016 | 2015 | Change % | ||||||||||||||||||||
(in millions) | ||||||||||||||||||||||
Total assets | $ | 17,042.6 | $ | 13,955.5 | 22.1 | % | ||||||||||||||||
Total loans, net of deferred fees | 13,033.6 | 10,788.3 | 20.8 | |||||||||||||||||||
Securities and money market investments | 2,778.1 | 1,993.6 | 39.4 | |||||||||||||||||||
Total deposits | 14,443.2 | 11,610.4 | 24.4 | |||||||||||||||||||
Borrowings | — | 300.0 | (100.0 | ) | ||||||||||||||||||
Qualifying debt | 382.9 | 206.8 | 85.2 | |||||||||||||||||||
Stockholders' equity | 1,857.4 | 1,583.7 | 17.3 | |||||||||||||||||||
Tangible common equity, net of tax (1) | 1,559.1 | 1,213.7 | 28.5 | |||||||||||||||||||
Selected Income Statement Data: | ||||||||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||
2016 | 2015 | Change % | 2016 | 2015 | Change % | |||||||||||||||||
(in thousands, except per share data) | (in thousands, except per share data) | |||||||||||||||||||||
Interest income | $ | 184,750 | $ | 146,233 | 26.3 | % | $ | 513,095 | $ | 373,813 | 37.3 | % | ||||||||||
Interest expense | 12,203 | 8,826 | 38.3 | 31,151 | 24,580 | 26.7 | ||||||||||||||||
Net interest income | 172,547 | 137,407 | 25.6 | 481,944 | 349,233 | 38.0 | ||||||||||||||||
Provision for credit losses | 2,000 | — | NM | 7,000 | 700 | NM | ||||||||||||||||
Net interest income after provision for credit losses | 170,547 | 137,407 | 24.1 | 474,944 | 348,533 | 36.3 | ||||||||||||||||
Non-interest income | 10,683 | 8,502 | 25.7 | 32,375 | 20,289 | 59.6 | ||||||||||||||||
Non-interest expense | 85,007 | 72,916 | 16.6 | 242,304 | 188,158 | 28.8 | ||||||||||||||||
Income before income taxes | 96,223 | 72,993 | 31.8 | 265,015 | 180,664 | 46.7 | ||||||||||||||||
Income tax expense | 29,171 | 17,133 | 70.3 | 75,017 | 44,946 | 66.9 | ||||||||||||||||
Net income | $ | 67,052 | $ | 55,860 | 20.0 | $ | 189,998 | $ | 135,718 | 40.0 | ||||||||||||
Diluted earnings per share available to common stockholders | $ | 0.64 | $ | 0.55 | 16.4 | $ | 1.84 | $ | 1.45 | 26.9 | ||||||||||||
(1) See Reconciliation of Non-GAAP Financial Measures. | ||||||||||||||||||||||
NM: Changes +/- 100% are not meaningful. | ||||||||||||||||||||||
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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, | |||||||||||||||||||||
2016 | 2015 | Change % | 2016 | 2015 | Change % | |||||||||||||||||
Diluted earnings per share available to common stockholders | $ | 0.64 | $ | 0.55 | 16.4 | % | $ | 1.84 | $ | 1.45 | 26.9 | % | ||||||||||
Book value per common share | 17.68 | 14.79 | 19.5 | |||||||||||||||||||
Tangible book value per share, net of tax (1) | 14.84 | 11.86 | 25.1 | |||||||||||||||||||
Average shares outstanding (in thousands): | ||||||||||||||||||||||
Basic | 103,768 | 100,776 | 3.0 | 102,791 | 92,345 | 11.3 | ||||||||||||||||
Diluted | 104,564 | 101,520 | 3.0 | 103,532 | 92,932 | 11.4 | ||||||||||||||||
Common shares outstanding | 105,071 | 102,305 | 2.7 | |||||||||||||||||||
Selected Performance Ratios: | ||||||||||||||||||
Return on average assets (2) | 1.58 | % | 1.64 | % | (3.7 | )% | 1.61 | % | 1.52 | % | 5.9 | % | ||||||
Return on average tangible common equity (1, 2) | 17.50 | 19.00 | (7.9 | ) | 17.73 | 17.51 | 1.3 | |||||||||||
Net interest margin (2) | 4.55 | 4.59 | (0.9 | ) | 4.58 | 4.45 | 2.9 | |||||||||||
Net interest spread | 4.33 | 4.43 | (2.3 | ) | 4.40 | 4.31 | 2.1 | |||||||||||
Efficiency ratio - tax equivalent basis (1) | 42.97 | 46.84 | (8.3 | ) | 43.78 | 46.12 | (5.1 | ) | ||||||||||
Loan to deposit ratio | 90.24 | 92.92 | (2.9 | ) | ||||||||||||||
Asset Quality Ratios: | ||||||||||||||||||
Net charge-offs (recoveries) to average loans outstanding (2) | 0.04 | % | (0.08 | )% | NM | 0.04 | % | (0.09 | )% | NM | ||||||||
Nonaccrual loans to gross loans | 0.31 | 0.44 | (29.5 | ) | ||||||||||||||
Nonaccrual loans and repossessed assets to total assets | 0.53 | 0.76 | (30.3 | ) | ||||||||||||||
Loans past due 90 days and still accruing to total loans | 0.02 | 0.05 | (60.0 | ) | ||||||||||||||
Allowance for credit losses to gross loans | 0.94 | 1.09 | (13.8 | ) | ||||||||||||||
Allowance for credit losses to nonaccrual loans | 302.61 | 245.48 | 23.3 | |||||||||||||||
Capital Ratios (1): | |||||||||
Sep 30, 2016 | Jun 30, 2016 | Sep 30, 2015 | |||||||
Tangible common equity | 9.3 | % | 9.1 | % | 8.9 | % | |||
Common Equity Tier 1 (3) | 9.8 | 9.6 | 9.1 | ||||||
Tier 1 Leverage ratio (3) | 9.6 | 9.8 | 9.9 | ||||||
Tier 1 Capital (3) | 10.3 | 10.0 | 10.1 | ||||||
Total Capital (3) | 13.1 | 12.9 | 12.1 | ||||||
(1) | See Reconciliation of Non-GAAP Financial Measures. | ||||||
(2) | Annualized for the three and nine months ended September 30, 2016 and 2015 based on a 30 day month and a 360 day year. | ||||||
(3) | Capital ratios for September 30, 2016 are preliminary until the Call Report is filed. | ||||||
NM | Changes +/- 100% are not meaningful. | ||||||
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Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||
Condensed Consolidated Income Statements | ||||||||||||||||
Unaudited | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||
Interest income: | ||||||||||||||||
Loans | $ | 167,914 | $ | 133,087 | $ | 467,715 | $ | 338,946 | ||||||||
Investment securities | 15,436 | 12,039 | 41,815 | 31,103 | ||||||||||||
Other | 1,400 | 1,107 | 3,565 | 3,764 | ||||||||||||
Total interest income | 184,750 | 146,233 | 513,095 | 373,813 | ||||||||||||
Interest expense: | ||||||||||||||||
Deposits | 8,072 | 5,550 | 21,993 | 16,058 | ||||||||||||
Qualifying debt | 4,048 | 2,008 | 8,746 | 2,900 | ||||||||||||
Borrowings | 83 | 1,268 | 412 | 5,622 | ||||||||||||
Total interest expense | 12,203 | 8,826 | 31,151 | 24,580 | ||||||||||||
Net interest income | 172,547 | 137,407 | 481,944 | 349,233 | ||||||||||||
Provision for credit losses | 2,000 | — | 7,000 | 700 | ||||||||||||
Net interest income after provision for credit losses | 170,547 | 137,407 | 474,944 | 348,533 | ||||||||||||
Non-interest income: | ||||||||||||||||
Service charges | 4,877 | 4,327 | 13,849 | 10,344 | ||||||||||||
SBA / warrant income | 1,457 | 846 | 2,828 | 846 | ||||||||||||
Card income | 1,177 | 954 | 3,268 | 2,666 | ||||||||||||
Bank owned life insurance | 899 | 984 | 2,858 | 2,733 | ||||||||||||
Lending related income and gains (losses) on sale of loans, net | 459 | (314 | ) | 3,282 | 5 | |||||||||||
Gains (losses) on sales of investment securities, net | — | (62 | ) | 1,001 | 582 | |||||||||||
Other | 1,814 | 1,767 | 5,289 | 3,113 | ||||||||||||
Total non-interest income | 10,683 | 8,502 | 32,375 | 20,289 | ||||||||||||
Non-interest expenses: | ||||||||||||||||
Salaries and employee benefits | 49,542 | 43,660 | 139,108 | 108,607 | ||||||||||||
Occupancy | 6,856 | 5,915 | 20,359 | 15,677 | ||||||||||||
Data processing | 6,077 | 4,338 | 16,506 | 10,147 | ||||||||||||
Legal, professional and directors' fees | 5,691 | 4,052 | 17,010 | 12,658 | ||||||||||||
Insurance | 3,144 | 3,375 | 9,430 | 7,739 | ||||||||||||
Marketing | 678 | 747 | 2,432 | 1,587 | ||||||||||||
Loan and repossessed asset expenses | 788 | 1,099 | 2,522 | 3,473 | ||||||||||||
Card expense | 536 | 757 | 2,247 | 1,844 | ||||||||||||
Intangible amortization | 697 | 704 | 2,091 | 1,266 | ||||||||||||
Net (gain) loss on sales and valuations of repossessed and other assets | (146 | ) | (104 | ) | (91 | ) | (1,673 | ) | ||||||||
Acquisition / restructure expense | 2,729 | 835 | 6,391 | 8,836 | ||||||||||||
Other | 8,415 | 7,538 | 24,299 | 17,997 | ||||||||||||
Total non-interest expense | 85,007 | 72,916 | 242,304 | 188,158 | ||||||||||||
Income before income taxes | 96,223 | 72,993 | 265,015 | 180,664 | ||||||||||||
Income tax expense | 29,171 | 17,133 | 75,017 | 44,946 | ||||||||||||
Net income | $ | 67,052 | $ | 55,860 | $ | 189,998 | $ | 135,718 | ||||||||
Preferred stock dividends | — | 176 | — | 599 | ||||||||||||
Net income available to common stockholders | $ | 67,052 | $ | 55,684 | $ | 189,998 | $ | 135,119 | ||||||||
Earnings per share available to common stockholders: | ||||||||||||||||
Diluted shares | 104,564 | 101,520 | 103,532 | 92,932 | ||||||||||||
Diluted earnings per share | $ | 0.64 | $ | 0.55 | $ | 1.84 | $ | 1.45 | ||||||||
8
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||
Five Quarter Condensed Consolidated Income Statements | ||||||||||||||||||||
Unaudited | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
Interest income: | ||||||||||||||||||||
Loans | $ | 167,914 | $ | 160,015 | $ | 139,786 | $ | 137,471 | $ | 133,087 | ||||||||||
Investment securities | 15,436 | 12,871 | 13,508 | 12,454 | 12,039 | |||||||||||||||
Other | 1,400 | 1,203 | 962 | 1,406 | 1,107 | |||||||||||||||
Total interest income | 184,750 | 174,089 | 154,256 | 151,331 | 146,233 | |||||||||||||||
Interest expense: | ||||||||||||||||||||
Deposits | 8,072 | 7,678 | 6,243 | 5,737 | 5,550 | |||||||||||||||
Qualifying debt | 4,048 | 2,514 | 2,184 | 2,107 | 2,008 | |||||||||||||||
Borrowings | 83 | 211 | 118 | 144 | 1,268 | |||||||||||||||
Total interest expense | 12,203 | 10,403 | 8,545 | 7,988 | 8,826 | |||||||||||||||
Net interest income | 172,547 | 163,686 | 145,711 | 143,343 | 137,407 | |||||||||||||||
Provision for credit losses | 2,000 | 2,500 | 2,500 | 2,500 | — | |||||||||||||||
Net interest income after provision for credit losses | 170,547 | 161,186 | 143,211 | 140,843 | 137,407 | |||||||||||||||
Non-interest income: | ||||||||||||||||||||
Service charges | 4,877 | 4,506 | 4,466 | 4,295 | 4,327 | |||||||||||||||
SBA / warrant income | 1,457 | 365 | 1,006 | 733 | 846 | |||||||||||||||
Card income | 1,177 | 1,078 | 1,013 | 1,013 | 954 | |||||||||||||||
Bank owned life insurance | 899 | 1,029 | 930 | 1,166 | 984 | |||||||||||||||
Lending related income and gains (losses) on sale of loans, net | 459 | (112 | ) | 2,935 | 364 | (314 | ) | |||||||||||||
Gains (losses) on sales of investment securities, net | — | — | 1,001 | 33 | (62 | ) | ||||||||||||||
Other | 1,814 | 1,693 | 1,782 | 1,875 | 1,767 | |||||||||||||||
Total non-interest income | 10,683 | 8,559 | 13,133 | 9,479 | 8,502 | |||||||||||||||
Non-interest expenses: | ||||||||||||||||||||
Salaries and employee benefits | 49,542 | 44,711 | 44,855 | 41,221 | 43,660 | |||||||||||||||
Occupancy | 6,856 | 7,246 | 6,257 | 6,503 | 5,915 | |||||||||||||||
Data processing | 6,077 | 5,868 | 4,561 | 4,629 | 4,338 | |||||||||||||||
Legal, professional, and directors' fees | 5,691 | 5,747 | 5,572 | 5,890 | 4,052 | |||||||||||||||
Insurance | 3,144 | 2,963 | 3,323 | 3,264 | 3,375 | |||||||||||||||
Loan and repossessed asset expenses | 788 | 832 | 902 | 904 | 1,099 | |||||||||||||||
Intangible amortization | 697 | 697 | 697 | 704 | 704 | |||||||||||||||
Marketing | 678 | 1,097 | 657 | 1,298 | 747 | |||||||||||||||
Card expense | 536 | 824 | 887 | 920 | 757 | |||||||||||||||
Net (gain) loss on sales and valuations of repossessed and other assets | (146 | ) | 357 | (302 | ) | (397 | ) | (104 | ) | |||||||||||
Acquisition / restructure expense | 2,729 | 3,662 | — | — | 835 | |||||||||||||||
Other | 8,415 | 7,800 | 8,084 | 7,512 | 7,538 | |||||||||||||||
Total non-interest expense | 85,007 | 81,804 | 75,493 | 72,448 | 72,916 | |||||||||||||||
Income before income taxes | 96,223 | 87,941 | 80,851 | 77,874 | 72,993 | |||||||||||||||
Income tax expense | 29,171 | 26,327 | 19,519 | 19,348 | 17,133 | |||||||||||||||
Net income | $ | 67,052 | $ | 61,614 | $ | 61,332 | $ | 58,526 | $ | 55,860 | ||||||||||
Preferred stock dividends | — | — | — | 151 | 176 | |||||||||||||||
Net income available to common stockholders | $ | 67,052 | $ | 61,614 | $ | 61,332 | $ | 58,375 | $ | 55,684 | ||||||||||
Earnings per share available to common stockholders: | ||||||||||||||||||||
Diluted shares | 104,564 | 103,472 | 102,538 | 102,006 | 101,520 | |||||||||||||||
Diluted earnings per share | $ | 0.64 | $ | 0.60 | $ | 0.60 | $ | 0.57 | $ | 0.55 | ||||||||||
9
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||
Five Quarter Condensed Consolidated Balance Sheets | ||||||||||||||||||||
Unaudited | ||||||||||||||||||||
Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Cash and due from banks | $ | 356.1 | $ | 696.2 | $ | 1,031.0 | $ | 224.6 | $ | 325.4 | ||||||||||
Cash and cash equivalents | 356.1 | 696.2 | 1,031.0 | 224.6 | 325.4 | |||||||||||||||
Securities and money market investments | 2,778.1 | 2,262.6 | 2,099.9 | 2,042.2 | 1,993.6 | |||||||||||||||
Loans held for sale | 21.3 | 22.3 | 23.6 | 23.8 | 24.4 | |||||||||||||||
Loans held for investment: | ||||||||||||||||||||
Commercial | 5,715.0 | 5,577.6 | 5,378.5 | 5,262.8 | 4,960.4 | |||||||||||||||
Commercial real estate - non-owner occupied | 3,623.4 | 3,601.3 | 2,291.0 | 2,283.5 | 2,210.7 | |||||||||||||||
Commercial real estate - owner occupied | 1,984.0 | 2,008.3 | 2,032.3 | 2,083.3 | 2,123.6 | |||||||||||||||
Construction and land development | 1,379.7 | 1,333.5 | 1,179.9 | 1,133.4 | 1,121.9 | |||||||||||||||
Residential real estate | 271.8 | 293.0 | 302.4 | 323.0 | 320.7 | |||||||||||||||
Consumer | 38.4 | 41.8 | 33.7 | 26.9 | 26.6 | |||||||||||||||
Gross loans and deferred fees, net | 13,012.3 | 12,855.5 | 11,217.8 | 11,112.9 | 10,763.9 | |||||||||||||||
Allowance for credit losses | (122.9 | ) | (122.1 | ) | (119.2 | ) | (119.1 | ) | (117.1 | ) | ||||||||||
Loans, net | 12,889.4 | 12,733.4 | 11,098.6 | 10,993.8 | 10,646.8 | |||||||||||||||
Premises and equipment, net | 121.3 | 120.5 | 119.8 | 118.5 | 121.7 | |||||||||||||||
Other assets acquired through foreclosure, net | 49.6 | 49.8 | 52.8 | 43.9 | 57.7 | |||||||||||||||
Bank owned life insurance | 163.6 | 164.3 | 163.4 | 162.5 | 161.7 | |||||||||||||||
Goodwill and other intangibles, net | 303.6 | 304.3 | 304.0 | 305.4 | 305.8 | |||||||||||||||
Other assets | 359.6 | 375.3 | 354.9 | 360.4 | 318.4 | |||||||||||||||
Total assets | $ | 17,042.6 | $ | 16,728.7 | $ | 15,248.0 | $ | 14,275.1 | $ | 13,955.5 | ||||||||||
Liabilities and Stockholders' Equity: | ||||||||||||||||||||
Liabilities: | ||||||||||||||||||||
Deposits | ||||||||||||||||||||
Non-interest bearing demand deposits | $ | 5,624.8 | $ | 5,275.1 | $ | 4,635.2 | $ | 4,094.0 | $ | 4,077.5 | ||||||||||
Interest bearing: | ||||||||||||||||||||
Demand | 1,256.7 | 1,278.1 | 1,088.2 | 1,028.1 | 1,024.5 | |||||||||||||||
Savings and money market | 5,969.6 | 6,005.8 | 5,650.9 | 5,296.9 | 4,672.6 | |||||||||||||||
Time certificates | 1,592.1 | 1,642.3 | 1,707.4 | 1,611.6 | 1,835.8 | |||||||||||||||
Total deposits | 14,443.2 | 14,201.3 | 13,081.7 | 12,030.6 | 11,610.4 | |||||||||||||||
Customer repurchase agreements | 44.4 | 38.5 | 36.1 | 38.2 | 53.2 | |||||||||||||||
Total customer funds | 14,487.6 | 14,239.8 | 13,117.8 | 12,068.8 | 11,663.6 | |||||||||||||||
Borrowings | — | — | 0.2 | 150.0 | 300.0 | |||||||||||||||
Qualifying debt | 382.9 | 382.1 | 210.4 | 210.3 | 206.8 | |||||||||||||||
Accrued interest payable and other liabilities | 314.7 | 310.6 | 259.4 | 254.5 | 201.4 | |||||||||||||||
Total liabilities | 15,185.2 | 14,932.5 | 13,587.8 | 12,683.6 | 12,371.8 | |||||||||||||||
Stockholders' Equity: | ||||||||||||||||||||
Preferred stock | — | — | — | — | 70.5 | |||||||||||||||
Common stock and additional paid-in capital | 1,368.4 | 1,364.0 | 1,302.9 | 1,306.6 | 1,273.7 | |||||||||||||||
Retained earnings | 452.6 | 385.6 | 324.0 | 262.6 | 204.2 | |||||||||||||||
Accumulated other comprehensive income | 36.4 | 46.6 | 33.3 | 22.3 | 35.3 | |||||||||||||||
Total stockholders' equity | 1,857.4 | 1,796.2 | 1,660.2 | 1,591.5 | 1,583.7 | |||||||||||||||
Total liabilities and stockholders' equity | $ | 17,042.6 | $ | 16,728.7 | $ | 15,248.0 | $ | 14,275.1 | $ | 13,955.5 | ||||||||||
10
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||
Changes in the Allowance For Credit Losses | ||||||||||||||||||||
Unaudited | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Balance, beginning of period | $ | 122,104 | $ | 119,227 | $ | 119,068 | $ | 117,072 | $ | 115,056 | ||||||||||
Provision for credit losses | 2,000 | 2,500 | 2,500 | 2,500 | — | |||||||||||||||
Recoveries of loans previously charged-off: | ||||||||||||||||||||
Commercial and industrial | 466 | 804 | 1,576 | 1,009 | 1,147 | |||||||||||||||
Commercial real estate - non-owner occupied | 230 | 343 | 3,595 | 482 | 968 | |||||||||||||||
Commercial real estate - owner occupied | 291 | 427 | 70 | 135 | 433 | |||||||||||||||
Construction and land development | 302 | 58 | 95 | 13 | 329 | |||||||||||||||
Residential real estate | 179 | 153 | 257 | 232 | 232 | |||||||||||||||
Consumer | 21 | 43 | 67 | 115 | 24 | |||||||||||||||
Total recoveries | 1,489 | 1,828 | 5,660 | 1,986 | 3,133 | |||||||||||||||
Loans charged-off: | ||||||||||||||||||||
Commercial and industrial | 2,558 | 1,161 | 7,491 | 2,277 | 1,109 | |||||||||||||||
Commercial real estate - non-owner occupied | — | — | — | — | — | |||||||||||||||
Commercial real estate - owner occupied | 72 | 244 | 410 | — | — | |||||||||||||||
Construction and land development | — | — | — | — | — | |||||||||||||||
Residential real estate | 79 | — | 26 | 194 | 8 | |||||||||||||||
Consumer | — | 46 | 74 | 19 | — | |||||||||||||||
Total loans charged-off | 2,709 | 1,451 | 8,001 | 2,490 | 1,117 | |||||||||||||||
Net charge-offs (recoveries) | 1,220 | (377 | ) | 2,341 | 504 | (2,016 | ) | |||||||||||||
Balance, end of period | $ | 122,884 | $ | 122,104 | $ | 119,227 | $ | 119,068 | $ | 117,072 | ||||||||||
Net charge-offs (recoveries) to average loans - annualized | 0.04 | % | (0.01 | )% | 0.08 | % | 0.02 | % | (0.08 | )% | ||||||||||
Allowance for credit losses to gross loans | 0.94 | % | 0.95 | % | 1.06 | % | 1.07 | % | 1.09 | % | ||||||||||
Allowance for credit losses to gross loans, adjusted for acquisition accounting (1) | 1.37 | 1.42 | 1.21 | 1.25 | 1.32 | |||||||||||||||
Allowance for credit losses to nonaccrual loans | 302.61 | 307.68 | 352.72 | 246.10 | 245.48 | |||||||||||||||
Nonaccrual loans | $ | 40,608 | $ | 39,685 | $ | 33,802 | $ | 48,381 | $ | 47,692 | ||||||||||
Nonaccrual loans to gross loans | 0.31 | % | 0.31 | % | 0.30 | % | 0.44 | % | 0.44 | % | ||||||||||
Repossessed assets | $ | 49,619 | $ | 49,842 | $ | 52,776 | $ | 43,942 | $ | 57,719 | ||||||||||
Nonaccrual loans and repossessed assets to total assets | 0.53 | % | 0.54 | % | 0.57 | % | 0.65 | % | 0.76 | % | ||||||||||
Loans past due 90 days, still accruing | $ | 2,817 | $ | 6,991 | $ | 4,488 | $ | 3,028 | $ | 5,550 | ||||||||||
Loans past due 90 days and still accruing to gross loans | 0.02 | % | 0.05 | % | 0.04 | % | 0.03 | % | 0.05 | % | ||||||||||
Loans past due 30 to 89 days, still accruing | $ | 18,446 | $ | 3,475 | $ | 9,207 | $ | 34,541 | $ | 19,630 | ||||||||||
Loans past due 30 to 89 days, still accruing to gross loans | 0.14 | % | 0.03 | % | 0.08 | % | 0.31 | % | 0.18 | % | ||||||||||
Special mention loans | $ | 134,018 | $ | 154,167 | $ | 133,036 | $ | 141,819 | $ | 153,431 | ||||||||||
Special mention loans to gross loans | 1.03 | % | 1.20 | % | 1.19 | % | 1.28 | % | 1.43 | % | ||||||||||
Classified loans on accrual | $ | 110,650 | $ | 119,939 | $ | 92,435 | $ | 118,635 | $ | 108,341 | ||||||||||
Classified loans on accrual to gross loans | 0.85 | % | 0.93 | % | 0.82 | % | 1.07 | % | 1.01 | % | ||||||||||
Classified assets | $ | 212,286 | $ | 219,319 | $ | 187,929 | $ | 221,126 | $ | 224,148 | ||||||||||
Classified assets to total assets | 1.25 | % | 1.31 | % | 1.23 | % | 1.55 | % | 1.61 | % | ||||||||||
(1) See Reconciliation of Non-GAAP Financial Measures.
11
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||||
Analysis of Average Balances, Yields and Rates | ||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||
Three Months Ended September 30, | ||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||
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 | $ | 5,503.0 | $ | 65,447 | 5.24 | % | $ | 4,805.4 | $ | 55,059 | 5.11 | % | ||||||||||
CRE - non-owner occupied | 3,655.6 | 51,708 | 5.66 | 2,220.1 | 30,388 | 5.48 | ||||||||||||||||
CRE - owner occupied | 1,999.5 | 26,620 | 5.33 | 2,036.7 | 27,532 | 5.41 | ||||||||||||||||
Construction and land development | 1,338.2 | 19,793 | 5.92 | 1,064.0 | 15,238 | 5.73 | ||||||||||||||||
Residential real estate | 281.4 | 3,557 | 5.06 | 318.6 | 4,073 | 5.11 | ||||||||||||||||
Consumer | 40.0 | 475 | 4.75 | 24.4 | 382 | 6.26 | ||||||||||||||||
Loans held for sale | 21.9 | 314 | 5.74 | 36.5 | 415 | 4.55 | ||||||||||||||||
Total loans (1) | 12,839.6 | 167,914 | 5.44 | 10,505.7 | 133,087 | 5.31 | ||||||||||||||||
Securities: | ||||||||||||||||||||||
Securities - taxable | 1,895.5 | 10,438 | 2.20 | 1,441.7 | 8,119 | 2.25 | ||||||||||||||||
Securities - tax-exempt | 511.8 | 4,998 | 5.46 | 420.7 | 3,920 | 5.46 | ||||||||||||||||
Total securities (1) | 2,407.3 | 15,436 | 2.90 | 1,862.4 | 12,039 | 2.98 | ||||||||||||||||
Other | 684.7 | 1,400 | 0.82 | 322.2 | 1,107 | 1.37 | ||||||||||||||||
Total interest earning assets | 15,931.6 | 184,750 | 4.85 | 12,690.3 | 146,233 | 4.87 | ||||||||||||||||
Non-interest earning assets | ||||||||||||||||||||||
Cash and due from banks | 146.1 | 158.4 | ||||||||||||||||||||
Allowance for credit losses | (123.6 | ) | (116.1 | ) | ||||||||||||||||||
Bank owned life insurance | 164.0 | 161.1 | ||||||||||||||||||||
Other assets | 834.9 | 772.1 | ||||||||||||||||||||
Total assets | $ | 16,953.0 | $ | 13,665.8 | ||||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||
Interest-bearing transaction accounts | $ | 1,286.1 | $ | 612 | 0.19 | % | $ | 1,004.7 | $ | 447 | 0.18 | % | ||||||||||
Savings and money market | 6,129.2 | 5,314 | 0.35 | 4,723.5 | 3,245 | 0.27 | ||||||||||||||||
Time certificates of deposit | 1,637.3 | 2,146 | 0.52 | 1,763.5 | 1,858 | 0.42 | ||||||||||||||||
Total interest-bearing deposits | 9,052.6 | 8,072 | 0.36 | 7,491.7 | 5,550 | 0.30 | ||||||||||||||||
Short-term borrowings | 39.1 | 83 | 0.85 | 282.0 | 1,268 | 1.80 | ||||||||||||||||
Qualifying debt | 369.1 | 4,048 | 4.39 | 197.8 | 2,008 | 4.06 | ||||||||||||||||
Total interest-bearing liabilities | 9,460.8 | 12,203 | 0.52 | 7,971.5 | 8,826 | 0.44 | ||||||||||||||||
Non-interest-bearing liabilities | ||||||||||||||||||||||
Non-interest-bearing demand deposits | 5,363.7 | 3,961.3 | ||||||||||||||||||||
Other liabilities | 292.2 | 183.4 | ||||||||||||||||||||
Stockholders’ equity | 1,836.3 | 1,549.6 | ||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 16,953.0 | $ | 13,665.8 | ||||||||||||||||||
Net interest income and margin | $ | 172,547 | 4.55 | % | $ | 137,407 | 4.59 | % | ||||||||||||||
Net interest spread | 4.33 | % | 4.43 | % | ||||||||||||||||||
(1) Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $8,599 and $8,183 for the three months ended September 30, 2016 and 2015, respectively. | ||||||||||||||||||||||
12
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||||
Analysis of Average Balances, Yields and Rates | ||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||
Nine Months Ended September 30, | ||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||
Average Balance | Interest | Average Yield / Cost | Average Balance | Interest | Average Yield / Cost | |||||||||||||||||
($ in millions) | ($ in thousands) | ($ in millions) | ($ in thousands) | |||||||||||||||||||
Interest earning assets | ||||||||||||||||||||||
Loans: | ||||||||||||||||||||||
Commercial | $ | 5,343.5 | $ | 189,994 | 5.24 | % | $ | 4,021.2 | $ | 125,191 | 4.76 | % | ||||||||||
CRE - non-owner occupied | 3,064.1 | 130,113 | 5.66 | 2,132.3 | 87,752 | 5.49 | ||||||||||||||||
CRE - owner occupied | 2,024.4 | 78,521 | 5.17 | 1,910.2 | 74,231 | 5.18 | ||||||||||||||||
Construction and land development | 1,266.3 | 56,382 | 5.94 | 903.7 | 39,251 | 5.79 | ||||||||||||||||
Residential real estate | 297.5 | 10,449 | 4.68 | 302.2 | 10,860 | 4.79 | ||||||||||||||||
Consumer | 34.8 | 1,268 | 4.86 | 26.4 | 1,221 | 6.17 | ||||||||||||||||
Loans held for sale | 22.9 | 988 | 5.75 | 13.2 | 440 | 4.44 | ||||||||||||||||
Total loans (1) | 12,053.5 | 467,715 | 5.39 | 9,309.2 | 338,946 | 5.12 | ||||||||||||||||
Securities: | ||||||||||||||||||||||
Securities - taxable | 1,671.4 | 28,290 | 2.26 | 1,195.0 | 20,203 | 2.25 | ||||||||||||||||
Securities - tax-exempt | 478.8 | 13,525 | 5.38 | 395.1 | 10,900 | 5.39 | ||||||||||||||||
Total Securities (1) | 2,150.2 | 41,815 | 2.95 | 1,590.1 | 31,103 | 3.03 | ||||||||||||||||
Other | 567.0 | 3,565 | 0.84 | 257.9 | 3,764 | 1.95 | ||||||||||||||||
Total interest earnings assets | 14,770.7 | 513,095 | 4.86 | 11,157.2 | 373,813 | 4.75 | ||||||||||||||||
Non-interest earning assets | ||||||||||||||||||||||
Cash and due from banks | 140.4 | 131.9 | ||||||||||||||||||||
Allowance for credit losses | (121.8 | ) | (114.0 | ) | ||||||||||||||||||
Bank owned life insurance | 163.5 | 149.0 | ||||||||||||||||||||
Other assets | 830.0 | 561.2 | ||||||||||||||||||||
Total assets | $ | 15,782.8 | $ | 11,885.3 | ||||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||
Interest bearing transaction accounts | $ | 1,191.1 | $ | 1,571 | 0.18 | % | $ | 965.8 | $ | 1,256 | 0.17 | % | ||||||||||
Savings and money market | 5,768.2 | 14,326 | 0.33 | 4,286.9 | 8,997 | 0.28 | ||||||||||||||||
Time certificates of deposits | 1,651.9 | 6,096 | 0.49 | 1,843.9 | 5,805 | 0.42 | ||||||||||||||||
Total interest-bearing deposits | 8,611.2 | 21,993 | 0.34 | 7,096.6 | 16,058 | 0.30 | ||||||||||||||||
Short-term borrowings | 81.5 | 412 | 0.67 | 212.8 | 4,821 | 3.02 | ||||||||||||||||
Long-term debt | — | — | — | 102.5 | 801 | 1.04 | ||||||||||||||||
Qualifying debt | 265.7 | 8,746 | 4.39 | 94.7 | 2,900 | 4.08 | ||||||||||||||||
Total interest-bearing liabilities | 8,958.4 | 31,151 | 0.46 | 7,506.6 | 24,580 | 0.44 | ||||||||||||||||
Non-interest-bearing liabilities | ||||||||||||||||||||||
Non-interest-bearing demand deposits | 4,830.7 | 2,985.1 | ||||||||||||||||||||
Other liabilities | 261.3 | 169.7 | ||||||||||||||||||||
Stockholders’ equity | 1,732.4 | 1,223.9 | ||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 15,782.8 | $ | 11,885.3 | ||||||||||||||||||
Net interest income and margin | $ | 481,944 | 4.58 | % | $ | 349,233 | 4.45 | % | ||||||||||||||
Net interest spread | 4.40 | % | 4.31 | % | ||||||||||||||||||
(1) Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $25,737 and $23,450 for the nine months ended September 30, 2016 and 2015, respectively. | ||||||||||||||||||||||
13
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||
Operating Segment Results | ||||||||||||||||||||
Unaudited | ||||||||||||||||||||
Balance Sheet: | Regional Segments | |||||||||||||||||||
Consolidated Company | Arizona | Nevada | Southern California | Northern California | ||||||||||||||||
At September 30, 2016 | (dollars in millions) | |||||||||||||||||||
Assets: | ||||||||||||||||||||
Cash, cash equivalents, and investment securities | $ | 3,134.2 | $ | 1.9 | $ | 7.9 | $ | 1.9 | $ | 1.3 | ||||||||||
Loans, net of deferred loan fees and costs | 13,033.6 | 2,938.0 | 1,697.3 | 1,833.4 | 1,072.1 | |||||||||||||||
Less: allowance for credit losses | (122.9 | ) | (30.5 | ) | (18.5 | ) | (19.8 | ) | (9.1 | ) | ||||||||||
Total loans | 12,910.7 | 2,907.5 | 1,678.8 | 1,813.6 | 1,063.0 | |||||||||||||||
Other assets acquired through foreclosure, net | 49.6 | 6.8 | 20.4 | — | 0.3 | |||||||||||||||
Goodwill and other intangible assets, net | 303.6 | — | 23.9 | — | 157.8 | |||||||||||||||
Other assets | 644.5 | 43.3 | 59.9 | 16.1 | 14.6 | |||||||||||||||
Total assets | $ | 17,042.6 | $ | 2,959.5 | $ | 1,790.9 | $ | 1,831.6 | $ | 1,237.0 | ||||||||||
Liabilities: | ||||||||||||||||||||
Deposits | $ | 14,443.2 | $ | 3,931.9 | $ | 3,712.0 | $ | 2,255.0 | $ | 1,505.0 | ||||||||||
Borrowings and qualifying debt | 382.9 | — | — | — | — | |||||||||||||||
Other liabilities | 359.1 | 13.2 | 30.7 | 11.1 | 15.8 | |||||||||||||||
Total liabilities | 15,185.2 | 3,945.1 | 3,742.7 | 2,266.1 | 1,520.8 | |||||||||||||||
Allocated equity: | 1,857.4 | 344.1 | 247.8 | 205.8 | 281.7 | |||||||||||||||
Total liabilities and stockholders' equity | $ | 17,042.6 | $ | 4,289.2 | $ | 3,990.5 | $ | 2,471.9 | $ | 1,802.5 | ||||||||||
Excess funds provided (used) | — | 1,329.7 | 2,199.6 | 640.3 | 565.5 | |||||||||||||||
No. of offices | 48 | 10 | 18 | 9 | 3 | |||||||||||||||
No. of full-time equivalent employees | 1,520 | 170 | 223 | 163 | 164 | |||||||||||||||
Income Statement: | ||||||||||||||||||||
Three Months Ended September 30, 2016: | (in thousands) | |||||||||||||||||||
Net interest income (expense) | $ | 172,547 | $ | 45,531 | $ | 35,977 | $ | 26,488 | $ | 22,181 | ||||||||||
Provision for (recovery of) credit losses | 2,000 | 2,399 | (1,009 | ) | (105 | ) | 144 | |||||||||||||
Net interest income (expense) after provision for credit losses | 170,547 | 43,132 | 36,986 | 26,593 | 22,037 | |||||||||||||||
Non-interest income | 10,683 | 1,180 | 2,264 | 686 | 2,916 | |||||||||||||||
Non-interest expense | (85,007 | ) | (16,084 | ) | (14,801 | ) | (11,532 | ) | (12,706 | ) | ||||||||||
Income (loss) before income taxes | 96,223 | 28,228 | 24,449 | 15,747 | 12,247 | |||||||||||||||
Income tax expense (benefit) | 29,171 | 11,074 | 8,557 | 6,621 | 5,150 | |||||||||||||||
Net income | $ | 67,052 | $ | 17,154 | $ | 15,892 | $ | 9,126 | $ | 7,097 | ||||||||||
Nine Months Ended September 30, 2016: | (in thousands) | |||||||||||||||||||
Net interest income (expense) | $ | 481,944 | $ | 125,191 | $ | 102,016 | $ | 76,719 | $ | 67,272 | ||||||||||
Provision for (recovery of) credit losses | 7,000 | 10,875 | (3,526 | ) | 145 | 2,112 | ||||||||||||||
Net interest income (expense) after provision for credit losses | 474,944 | 114,316 | 105,542 | 76,574 | 65,160 | |||||||||||||||
Non-interest income | 32,375 | 5,749 | 6,420 | 1,907 | 7,858 | |||||||||||||||
Non-interest expense | (242,304 | ) | (45,090 | ) | (44,371 | ) | (33,401 | ) | (40,154 | ) | ||||||||||
Income (loss) before income taxes | 265,015 | 74,975 | 67,591 | 45,080 | 32,864 | |||||||||||||||
Income tax expense (benefit) | 75,017 | 29,413 | 23,657 | 18,956 | 13,819 | |||||||||||||||
Net income | $ | 189,998 | $ | 45,562 | $ | 43,934 | $ | 26,124 | $ | 19,045 | ||||||||||
14
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||||||
Operating Segment Results | ||||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||||
Balance Sheet: | National Business Lines | |||||||||||||||||||||||
HOA Services | HFF | Public & Nonprofit Finance | Technology & Innovation | Other NBL | Corporate & Other | |||||||||||||||||||
At September 30, 2016 | (dollars in millions) | |||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Cash, cash equivalents, and investment securities | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 3,121.2 | ||||||||||||
Loans, net of deferred loan fees and costs | 106.4 | 1,311.2 | 1,447.7 | 934.6 | 1,673.9 | 19.0 | ||||||||||||||||||
Less: allowance for credit losses | (1.2 | ) | (0.6 | ) | (15.7 | ) | (8.7 | ) | (18.1 | ) | (0.7 | ) | ||||||||||||
Total loans | 105.2 | 1,310.6 | 1,432.0 | 925.9 | 1,655.8 | 18.3 | ||||||||||||||||||
Other assets acquired through foreclosure, net | — | — | — | — | — | 22.1 | ||||||||||||||||||
Goodwill and other intangible assets, net | — | 0.2 | — | 121.7 | — | — | ||||||||||||||||||
Other assets | 0.3 | 5.4 | 9.9 | 4.9 | 11.0 | 479.1 | ||||||||||||||||||
Total assets | $ | 105.5 | $ | 1,316.2 | $ | 1,441.9 | $ | 1,052.5 | $ | 1,666.8 | $ | 3,640.7 | ||||||||||||
Liabilities: | ||||||||||||||||||||||||
Deposits | $ | 1,813.7 | $ | — | $ | — | $ | 1,066.8 | $ | — | $ | 158.8 | ||||||||||||
Borrowings and qualifying debt | — | — | — | — | — | 382.9 | ||||||||||||||||||
Other liabilities | 0.9 | 1.2 | 98.2 | 0.2 | 59.2 | 128.6 | ||||||||||||||||||
Total liabilities | 1,814.6 | 1.2 | 98.2 | 1,067.0 | 59.2 | 670.3 | ||||||||||||||||||
Allocated equity: | 46.4 | 108.1 | 86.2 | 218.2 | 139.0 | 180.1 | ||||||||||||||||||
Total liabilities and stockholders' equity | $ | 1,861.0 | $ | 109.3 | $ | 184.4 | $ | 1,285.2 | $ | 198.2 | $ | 850.4 | ||||||||||||
Excess funds provided (used) | 1,755.5 | (1,206.9 | ) | (1,257.5 | ) | 232.7 | (1,468.6 | ) | (2,790.3 | ) | ||||||||||||||
No. of offices (1) | 1 | 1 | 1 | 8 | 4 | (7 | ) | |||||||||||||||||
No. of full-time equivalent employees | 62 | 20 | 6 | 60 | 31 | 621 | ||||||||||||||||||
Income Statement: | ||||||||||||||||||||||||
Three Months Ended September 30, 2016: | (in thousands) | |||||||||||||||||||||||
Net interest income (expense) | $ | 11,312 | $ | 13,370 | $ | 5,012 | $ | 18,143 | $ | 12,060 | $ | (17,527 | ) | |||||||||||
Provision for (recovery of) credit losses | 72 | — | (315 | ) | (557 | ) | 1,372 | (1 | ) | |||||||||||||||
Net interest income (expense) after provision for credit losses | 11,240 | 13,370 | 5,327 | 18,700 | 10,688 | (17,526 | ) | |||||||||||||||||
Non-interest income | 125 | — | 19 | 1,871 | 728 | 894 | ||||||||||||||||||
Non-interest expense | (6,062 | ) | (3,207 | ) | (1,974 | ) | (8,837 | ) | (3,972 | ) | (5,832 | ) | ||||||||||||
Income (loss) before income taxes | 5,303 | 10,163 | 3,372 | 11,734 | 7,444 | (22,464 | ) | |||||||||||||||||
Income tax expense (benefit) | 1,989 | 3,811 | 1,265 | 4,400 | 2,791 | (16,487 | ) | |||||||||||||||||
Net income | $ | 3,314 | $ | 6,352 | $ | 2,107 | $ | 7,334 | $ | 4,653 | $ | (5,977 | ) | |||||||||||
Nine Months Ended September 30, 2016: | (in thousands) | |||||||||||||||||||||||
Net interest income (expense) | $ | 29,853 | $ | 25,438 | $ | 15,259 | $ | 51,083 | $ | 35,220 | $ | (46,107 | ) | |||||||||||
Provision for (recovery of) credit losses | 160 | — | (509 | ) | (2,336 | ) | 3,309 | (3,230 | ) | |||||||||||||||
Net interest income (expense) after provision for credit losses | 29,693 | 25,438 | 15,768 | 53,419 | 31,911 | (42,877 | ) | |||||||||||||||||
Non-interest income | 340 | — | 22 | 4,623 | 1,598 | 3,858 | ||||||||||||||||||
Non-interest expense | (17,423 | ) | (5,764 | ) | (5,927 | ) | (23,177 | ) | (11,007 | ) | (15,990 | ) | ||||||||||||
Income (loss) before income taxes | 12,610 | 19,674 | 9,863 | 34,865 | 22,502 | (55,009 | ) | |||||||||||||||||
Income tax expense (benefit) | 4,729 | 7,378 | 3,699 | 13,074 | 8,438 | (48,146 | ) | |||||||||||||||||
Net income | $ | 7,881 | $ | 12,296 | $ | 6,164 | $ | 21,791 | $ | 14,064 | $ | (6,863 | ) | |||||||||||
(1) Negative number in the Corporate & Other segment represents elimination for shared offices among the segments.
15
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||
Operating Segment Results | ||||||||||||||||||||
Unaudited | ||||||||||||||||||||
Balance Sheet: | Regional Segments | |||||||||||||||||||
Consolidated Company | Arizona | Nevada | Southern California | Northern California | ||||||||||||||||
At December 31, 2015 | (dollars in millions) | |||||||||||||||||||
Assets: | ||||||||||||||||||||
Cash, cash equivalents, and investment securities | $ | 2,266.8 | $ | 2.3 | $ | 9.5 | $ | 2.4 | $ | 2.4 | ||||||||||
Loans, net of deferred loan fees and costs | 11,136.7 | 2,811.7 | 1,737.2 | 1,761.9 | 1,188.4 | |||||||||||||||
Less: allowance for credit losses | (119.1 | ) | (30.1 | ) | (18.6 | ) | (18.8 | ) | (12.7 | ) | ||||||||||
Total loans | 11,017.6 | 2,781.6 | 1,718.6 | 1,743.1 | 1,175.7 | |||||||||||||||
Other assets acquired through foreclosure, net | 43.9 | 8.4 | 20.8 | — | 0.3 | |||||||||||||||
Goodwill and other intangible assets, net | 305.4 | — | 24.8 | — | 158.2 | |||||||||||||||
Other assets | 641.4 | 43.9 | 62.3 | 15.7 | 16.1 | |||||||||||||||
Total assets | $ | 14,275.1 | $ | 2,836.2 | $ | 1,836.0 | $ | 1,761.2 | $ | 1,352.7 | ||||||||||
Liabilities: | ||||||||||||||||||||
Deposits | $ | 12,030.6 | $ | 2,880.7 | $ | 3,382.8 | $ | 1,902.5 | $ | 1,541.1 | ||||||||||
Borrowings and qualifying debt | 360.3 | — | — | — | — | |||||||||||||||
Other liabilities | 292.7 | 12.2 | 29.0 | 7.8 | 11.2 | |||||||||||||||
Total liabilities | 12,683.6 | 2,892.9 | 3,411.8 | 1,910.3 | 1,552.3 | |||||||||||||||
Allocated equity: | 1,591.5 | 309.2 | 244.4 | 191.3 | 293.2 | |||||||||||||||
Total liabilities and stockholders' equity | $ | 14,275.1 | $ | 3,202.1 | $ | 3,656.2 | $ | 2,101.6 | $ | 1,845.5 | ||||||||||
Excess funds provided (used) | — | 365.9 | 1,820.2 | 340.4 | 492.8 | |||||||||||||||
No. of offices | 47 | 11 | 18 | 9 | 2 | |||||||||||||||
No. of full-time equivalent employees | 1,446 | 180 | 228 | 161 | 171 | |||||||||||||||
Income Statements: | ||||||||||||||||||||
Three Months Ended September 30, 2015: | (in thousands) | |||||||||||||||||||
Net interest income (expense) | $ | 137,407 | $ | 32,920 | $ | 30,875 | $ | 24,146 | $ | 24,012 | ||||||||||
Provision for (recovery of) credit losses | — | 1,964 | (2,376 | ) | (442 | ) | 1,390 | |||||||||||||
Net interest income (expense) after provision for credit losses | 137,407 | 30,956 | 33,251 | 24,588 | 22,622 | |||||||||||||||
Non-interest income | 8,502 | 962 | 2,199 | 586 | 2,484 | |||||||||||||||
Non-interest expense | (72,916 | ) | (15,159 | ) | (15,513 | ) | (11,910 | ) | (12,846 | ) | ||||||||||
Income (loss) before income taxes | 72,993 | 16,759 | 19,937 | 13,264 | 12,260 | |||||||||||||||
Income tax expense (benefit) | 17,133 | 6,574 | 6,978 | 5,577 | 5,156 | |||||||||||||||
Net income | $ | 55,860 | $ | 10,185 | $ | 12,959 | $ | 7,687 | $ | 7,104 | ||||||||||
Nine Months Ended September 30, 2015: | (in thousands) | |||||||||||||||||||
Net interest income (expense) | $ | 349,233 | $ | 93,996 | $ | 90,030 | $ | 70,706 | $ | 33,681 | ||||||||||
Provision for (recovery of) credit losses | 700 | 2,122 | (5,175 | ) | (176 | ) | 1,876 | |||||||||||||
Net interest income (expense) after provision for credit losses | 348,533 | 91,874 | 95,205 | 70,882 | 31,805 | |||||||||||||||
Non-interest income | 20,289 | 2,909 | 6,852 | 2,101 | 2,806 | |||||||||||||||
Non-interest expense | (188,158 | ) | (44,520 | ) | (45,019 | ) | (35,389 | ) | (16,776 | ) | ||||||||||
Income (loss) before income taxes | 180,664 | 50,263 | 57,038 | 37,594 | 17,835 | |||||||||||||||
Income tax expense (benefit) | 44,946 | 19,718 | 19,963 | 15,808 | 7,500 | |||||||||||||||
Net income | $ | 135,718 | $ | 30,545 | $ | 37,075 | $ | 21,786 | $ | 10,335 | ||||||||||
16
Western Alliance Bancorporation and Subsidiaries | ||||||||||||||||||||
Operating Segment Results | ||||||||||||||||||||
Unaudited | ||||||||||||||||||||
Balance Sheet: | National Business Lines | |||||||||||||||||||
HOA Services | Public & Nonprofit Finance | Technology & Innovation | Other NBL | Corporate & Other | ||||||||||||||||
At December 31, 2015 | (dollars in millions) | |||||||||||||||||||
Assets: | ||||||||||||||||||||
Cash, cash equivalents, and investment securities | $ | — | $ | — | $ | — | $ | — | $ | 2,250.2 | ||||||||||
Loans, net of deferred loan fees and costs | 88.4 | 1,458.9 | 770.3 | 1,280.3 | 39.6 | |||||||||||||||
Less: allowance for credit losses | (0.9 | ) | (15.6 | ) | (8.2 | ) | (13.8 | ) | (0.4 | ) | ||||||||||
Total loans | 87.5 | 1,443.3 | 762.1 | 1,266.5 | 39.2 | |||||||||||||||
Other assets acquired through foreclosure, net | — | — | — | — | 14.4 | |||||||||||||||
Goodwill and other intangible assets, net | — | — | 122.4 | — | — | |||||||||||||||
Other assets | 0.2 | 14.0 | 2.7 | 11.5 | 475.0 | |||||||||||||||
Total assets | $ | 87.7 | $ | 1,457.3 | $ | 887.2 | $ | 1,278.0 | $ | 2,778.8 | ||||||||||
Liabilities: | ||||||||||||||||||||
Deposits | $ | 1,291.9 | $ | — | $ | 842.5 | $ | — | $ | 189.1 | ||||||||||
Borrowings and qualifying debt | — | — | — | — | 360.3 | |||||||||||||||
Other liabilities | 0.5 | 63.8 | — | 40.8 | 127.4 | |||||||||||||||
Total liabilities | 1,292.4 | 63.8 | 842.5 | 40.8 | 676.8 | |||||||||||||||
Allocated equity: | 34.2 | 87.8 | 200.9 | 105.7 | 124.8 | |||||||||||||||
Total liabilities and stockholders' equity | $ | 1,326.6 | $ | 151.6 | $ | 1,043.4 | $ | 146.5 | $ | 801.6 | ||||||||||
Excess funds provided (used) | 1,238.9 | (1,305.7 | ) | 156.2 | (1,131.5 | ) | (1,977.2 | ) | ||||||||||||
No. of offices (1) | 1 | 1 | 7 | 4 | (6 | ) | ||||||||||||||
No. of full-time equivalent employees | 54 | 3 | 40 | 26 | 583 | |||||||||||||||
Income Statements: | ||||||||||||||||||||
Three Months Ended September 30, 2015: | (in thousands) | |||||||||||||||||||
Net interest income (expense) | $ | 6,458 | $ | 5,050 | $ | 14,527 | $ | 11,312 | $ | (11,893 | ) | |||||||||
Provision for (recovery of) credit losses | 57 | 473 | 1,526 | (2,544 | ) | (48 | ) | |||||||||||||
Net interest income (expense) after provision for credit losses | 6,401 | 4,577 | 13,001 | 13,856 | (11,845 | ) | ||||||||||||||
Non-interest income | 83 | 26 | 1,157 | 168 | 837 | |||||||||||||||
Non-interest expense | (4,515 | ) | (1,419 | ) | (3,650 | ) | (3,541 | ) | (4,363 | ) | ||||||||||
Income (loss) before income taxes | 1,969 | 3,184 | 10,508 | 10,483 | (15,371 | ) | ||||||||||||||
Income tax expense (benefit) | 738 | 1,194 | 3,941 | 3,931 | (16,956 | ) | ||||||||||||||
Net income | $ | 1,231 | $ | 1,990 | $ | 6,567 | $ | 6,552 | $ | 1,585 | ||||||||||
Nine Months Ended September 30, 2015: | (in thousands) | |||||||||||||||||||
Net interest income (expense) | $ | 18,662 | $ | 14,534 | $ | 14,527 | $ | 37,366 | $ | (24,269 | ) | |||||||||
Provision for (recovery of) credit losses | 198 | 2,579 | 1,526 | (2,131 | ) | (119 | ) | |||||||||||||
Net interest income (expense) after provision for credit losses | 18,464 | 11,955 | 13,001 | 39,497 | (24,150 | ) | ||||||||||||||
Non-interest income | 236 | 665 | 1,157 | 413 | 3,150 | |||||||||||||||
Non-interest expense | (12,985 | ) | (4,056 | ) | (3,650 | ) | (11,257 | ) | (14,506 | ) | ||||||||||
Income (loss) before income taxes | 5,715 | 8,564 | 10,508 | 28,653 | (35,506 | ) | ||||||||||||||
Income tax expense (benefit) | 2,143 | 3,212 | 3,941 | 10,745 | (38,084 | ) | ||||||||||||||
Net income | $ | 3,572 | $ | 5,352 | $ | 6,567 | $ | 17,908 | $ | 2,578 | ||||||||||
(1) Negative number in the Corporate & Other segment represents elimination for shared offices among the segments.
17
Western Alliance Bancorporation and Subsidiaries | |||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||||
Unaudited | |||||||||||||||||||
Operating Pre-Provision Net Revenue by Quarter: | |||||||||||||||||||
Three Months Ended | |||||||||||||||||||
Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | |||||||||||||||
(in thousands) | |||||||||||||||||||
Total non-interest income | $ | 10,683 | $ | 8,559 | $ | 13,133 | $ | 9,479 | $ | 8,502 | |||||||||
Less: | |||||||||||||||||||
Gains (losses) on sales of investment securities, net | — | — | 1,001 | 33 | (62 | ) | |||||||||||||
Unrealized (losses) gains on assets and liabilities measured at fair value, net | 7 | 6 | (5 | ) | 10 | 47 | |||||||||||||
Total operating non-interest income | 10,676 | 8,553 | 12,137 | 9,436 | 8,517 | ||||||||||||||
Plus: net interest income | 172,547 | 163,686 | 145,711 | 143,343 | 137,407 | ||||||||||||||
Net operating revenue (1) | $ | 183,223 | $ | 172,239 | $ | 157,848 | $ | 152,779 | $ | 145,924 | |||||||||
Total non-interest expense | $ | 85,007 | $ | 81,804 | $ | 75,493 | $ | 72,448 | $ | 72,916 | |||||||||
Less: | |||||||||||||||||||
Net loss (gain) on sales and valuations of repossessed and other assets | (146 | ) | 357 | (302 | ) | (397 | ) | (104 | ) | ||||||||||
Acquisition / restructure expense | 2,729 | 3,662 | — | — | 835 | ||||||||||||||
Total operating non-interest expense (1) | $ | 82,424 | $ | 77,785 | $ | 75,795 | $ | 72,845 | $ | 72,185 | |||||||||
Operating pre-provision net revenue (2) | $ | 100,799 | $ | 94,454 | $ | 82,053 | $ | 79,934 | $ | 73,739 | |||||||||
Plus: | |||||||||||||||||||
Non-operating revenue adjustments | 7 | 6 | 996 | 43 | (15 | ) | |||||||||||||
Less: | |||||||||||||||||||
Provision for credit losses | 2,000 | 2,500 | 2,500 | 2,500 | — | ||||||||||||||
Non-operating expense adjustments | 2,583 | 4,019 | (302 | ) | (397 | ) | 731 | ||||||||||||
Income tax expense | 29,171 | 26,327 | 19,519 | 19,348 | 17,133 | ||||||||||||||
Net income | $ | 67,052 | $ | 61,614 | $ | 61,332 | $ | 58,526 | $ | 55,860 | |||||||||
Tangible Common Equity: | |||||||||||||||||||
Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | |||||||||||||||
(dollars and shares in thousands) | |||||||||||||||||||
Total stockholders' equity | $ | 1,857,354 | $ | 1,796,210 | $ | 1,660,163 | $ | 1,591,502 | $ | 1,583,698 | |||||||||
Less: goodwill and intangible assets | 303,592 | 304,289 | 303,962 | 305,354 | 305,767 | ||||||||||||||
Total tangible stockholders' equity | 1,553,762 | 1,491,921 | 1,356,201 | 1,286,148 | 1,277,931 | ||||||||||||||
Less: preferred stock | — | — | — | — | 70,500 | ||||||||||||||
Total tangible common equity | 1,553,762 | 1,491,921 | 1,356,201 | 1,286,148 | 1,207,431 | ||||||||||||||
Plus: deferred tax - attributed to intangible assets | 5,304 | 5,594 | 5,828 | 6,093 | 6,290 | ||||||||||||||
Total tangible common equity, net of tax | $ | 1,559,066 | $ | 1,497,515 | $ | 1,362,029 | $ | 1,292,241 | $ | 1,213,721 | |||||||||
Total assets | $ | 17,042,602 | $ | 16,728,767 | $ | 15,248,039 | $ | 14,275,089 | $ | 13,955,570 | |||||||||
Less: goodwill and intangible assets, net | 303,592 | 304,289 | 303,962 | 305,354 | 305,767 | ||||||||||||||
Tangible assets | 16,739,010 | 16,424,478 | 14,944,077 | 13,969,735 | 13,649,803 | ||||||||||||||
Plus: deferred tax - attributed to intangible assets | 5,304 | 5,594 | 5,828 | 6,093 | 6,290 | ||||||||||||||
Total tangible assets, net of tax | $ | 16,744,314 | $ | 16,430,072 | $ | 14,949,905 | $ | 13,975,828 | $ | 13,656,093 | |||||||||
Tangible common equity ratio (3) | 9.3 | % | 9.1 | % | 9.1 | % | 9.1 | % | 8.9 | % | |||||||||
Common shares outstanding | 105,071 | 105,084 | 103,513 | 103,087 | 102,305 | ||||||||||||||
Tangible book value per share, net of tax (4) | $ | 14.84 | $ | 14.25 | $ | 13.16 | $ | 12.54 | $ | 11.86 | |||||||||
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Western Alliance Bancorporation and Subsidiaries | |||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||||
Unaudited | |||||||||||||||||||
Efficiency Ratio by Quarter: | |||||||||||||||||||
Three Months Ended | |||||||||||||||||||
Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | |||||||||||||||
(in thousands) | |||||||||||||||||||
Total operating non-interest expense | $ | 82,424 | $ | 77,785 | $ | 75,795 | $ | 72,845 | $ | 72,185 | |||||||||
Divided by: | |||||||||||||||||||
Total net interest income | 172,547 | 163,686 | 145,711 | 143,343 | 137,407 | ||||||||||||||
Plus: | |||||||||||||||||||
Tax equivalent interest adjustment | 8,599 | 8,704 | 8,435 | 8,433 | 8,183 | ||||||||||||||
Operating non-interest income | 10,676 | 8,553 | 12,137 | 9,436 | 8,517 | ||||||||||||||
$ | 191,822 | $ | 180,943 | $ | 166,283 | $ | 161,212 | $ | 154,107 | ||||||||||
Efficiency ratio - tax equivalent basis (5) | 43.0 | % | 43.0 | % | 45.6 | % | 45.2 | % | 46.8 | % | |||||||||
Allowance for Credit Losses, Adjusted for Acquisition Accounting: | |||||||||||||||||||
Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | |||||||||||||||
(in thousands) | |||||||||||||||||||
Allowance for credit losses | $ | 122,884 | $ | 122,104 | $ | 119,227 | $ | 119,068 | $ | 117,072 | |||||||||
Plus: remaining credit marks | |||||||||||||||||||
Acquired performing loans | 41,020 | 45,225 | 9,646 | 12,154 | 14,299 | ||||||||||||||
Purchased credit impaired loans | 15,093 | 16,438 | 6,760 | 8,491 | 11,347 | ||||||||||||||
Adjusted allowance for credit losses | $ | 178,997 | $ | 183,767 | $ | 135,633 | $ | 139,713 | $ | 142,718 | |||||||||
Gross loans held for investment and deferred fees, net | $ | 13,012,262 | $ | 12,855,511 | $ | 11,217,860 | $ | 11,112,854 | $ | 10,763,939 | |||||||||
Plus: remaining credit marks | |||||||||||||||||||
Acquired performing loans | 41,020 | 45,225 | 9,646 | 12,154 | 14,299 | ||||||||||||||
Purchased credit impaired loans | 15,093 | 16,438 | 6,760 | 8,491 | 11,347 | ||||||||||||||
Adjusted loans, net of deferred fees and costs | $ | 13,068,375 | $ | 12,917,174 | $ | 11,234,266 | $ | 11,133,499 | $ | 10,789,585 | |||||||||
Allowance for credit losses to gross loans | 0.94 | % | 0.95 | % | 1.06 | % | 1.07 | % | 1.09 | % | |||||||||
Allowance for credit losses to gross loans, adjusted for acquisition accounting (6) | 1.37 | 1.42 | 1.21 | 1.25 | 1.32 | ||||||||||||||
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Western Alliance Bancorporation and Subsidiaries |
Reconciliation of Non-GAAP Financial Measures |
Unaudited |
Regulatory Capital:
September 30, 2016 | December 31, 2015 | ||||||
(in thousands) | |||||||
Common Equity Tier 1: | |||||||
Common equity | $ | 1,857,354 | $ | 1,591,502 | |||
Less: | |||||||
Non-qualifying goodwill and intangibles | 294,959 | 293,487 | |||||
Disallowed unrealized losses on equity securities | — | — | |||||
Disallowed deferred tax asset | 3,381 | 5,001 | |||||
AOCI related adjustments | 25,850 | 10,228 | |||||
Unrealized gain on changes in fair value liabilities | 8,479 | 6,309 | |||||
Common equity Tier 1 (regulatory) (7) (10) | $ | 1,524,685 | $ | 1,276,477 | |||
Plus: | |||||||
Trust preferred securities | 81,500 | 81,500 | |||||
Preferred stock | — | — | |||||
Less: | |||||||
Disallowed deferred tax asset | 2,254 | 7,502 | |||||
Unrealized gain on changes in fair value liabilities | 5,653 | 9,464 | |||||
Tier 1 capital (8) (10) | $ | 1,598,278 | $ | 1,341,011 | |||
Divided by: estimated risk-weighted assets (regulatory (8) (10) | $ | 15,501,466 | $ | 13,193,563 | |||
Common equity Tier 1 ratio (8) (10) | 9.8 | % | 9.7 | % | |||
Total Capital: | |||||||
Tier 1 capital (regulatory) (7) (10) | $ | 1,598,278 | $ | 1,341,011 | |||
Plus: | |||||||
Subordinated debt | 300,887 | 140,097 | |||||
Qualifying allowance for credit losses | 122,884 | 119,068 | |||||
Other | 11,005 | 3,296 | |||||
Less: Tier 2 qualifying capital deductions | — | — | |||||
Tier 2 capital | $ | 434,776 | $ | 262,461 | |||
Total capital | $ | 2,033,054 | $ | 1,603,472 | |||
Total capital ratio | 13.1 | % | 12.2 | % | |||
Classified assets to Tier 1 capital plus allowance: | |||||||
Classified assets | $ | 212,286 | $ | 221,126 | |||
Divided by: | |||||||
Tier 1 capital (8) (10) | 1,598,278 | 1,341,011 | |||||
Plus: Allowance for credit losses | 122,884 | 119,068 | |||||
Total Tier 1 capital plus allowance for credit losses | $ | 1,721,162 | $ | 1,460,079 | |||
Classified assets to Tier 1 capital plus allowance (9) (10) | 12.3 | % | 15.1 | % | |||
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(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 these non-GAAP ratios provide 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, as under U.S. 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) | 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. | |||||||
(8) | 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. | |||||||
(9) | We believe this non-GAAP ratio provides an important regulatory metric to analyze asset quality. | |||||||
(10) | Current quarter is preliminary until Call Report is filed. | |||||||
CONTACT:
Western Alliance Bancorporation
Dale Gibbons, 602-952-5476
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