Western Alliance Reports First Quarter 2015 Net Income of $40.2 million, or $0.45 Per Share

PHOENIX--()--Western Alliance Bancorporation (NYSE:WAL) (the "Company") announced today its financial results for the first quarter 2015.

First Quarter 2015 Highlights:

  • Net income of $40.2 million, compared to $40.4 million for the fourth quarter 2014, and $31.1 million for the first quarter 2014
  • Earnings per share of $0.45, compared to $0.46 per share in the fourth quarter 2014, and $0.35 per share in the first quarter 2014
  • Pre-tax, pre-provision operating earnings of $54.5 million, up from $52.0 million in the fourth quarter 2014, and up 22.9% from $44.4 million in the first quarter 20141
  • Net interest margin of 4.35%, compared to 4.44% in the fourth quarter 2014, and 4.41% in the first quarter 2014
  • Total loans of $8.82 billion, an increase of $420 million from December 31, 2014, and an increase of $1.71 billion from March 31, 2014
  • Total deposits of $9.66 billion, an increase of $731 million from December 31, 2014, and an increase of $1.51 billion from March 31, 2014
  • Nonperforming assets (nonaccrual loans and repossessed assets) decreased to 1.11% of total assets, from 1.18% at December 31, 2014, and from 1.30% at March 31, 2014
  • Net loan recoveries (annualized) to average loans outstanding of 0.06%, compared to 0.04% in the fourth quarter 2014, and 0.02% in the first quarter 2014
  • Tier I Leverage ratio of 9.8% and Total Capital ratio of 11.3% under Basel III federal regulatory standards, which became effective on January 1, 2015
  • Stockholders' equity of $1.05 billion, an increase of $50 million from December 31, 2014, and an increase of $156 million from March 31, 2014
  • Tangible book value per share, net of tax, of $10.72, an increase of 5.0% from $10.21 at December 31, 2014, and an increase of 28.8% from $8.32 at March 31, 20141

Financial Performance

"We are pleased with our strong start to 2015. Our balance sheet momentum continued with loan growth of $420 million and record deposit growth of $731 million, half of which was non-interest bearing DDA," remarked Robert Sarver, Chairman and CEO of Western Alliance Bancorporation. "This growth drove net income to $40.2 million for the first quarter of 2015, an increase of 29.3% from the same period last year. Our efficiency ratio improved to 46.7% as our 13% revenue growth was three times as fast as the 4% increase in expenses. Our asset quality metrics remain strong as we experienced our fifth straight quarter of net recoveries."

Sarver continued, "On March 9th, we announced a definitive agreement to acquire Bridge Capital Holdings, headquartered in San Jose, California. This profitable and well-run bank provides new growth opportunities while improving our risk profile through expanded products and geographic diversification. In addition, it will also increase our low-cost funding sources for the organization. Both Bridge and Western Alliance have local teams of highly experienced, knowledgeable bankers who deliver unmatched personalized service and we look forward to combining our teams in the second half of the year."

Income Statement

Net interest income was $103.1 million in the first quarter 2015, an increase of $1.0 million from $102.1 million in the fourth quarter 2014, and an increase of $12.3 million, or 13.6%, compared to the first quarter 2014. The Company’s net interest margin decreased in the first quarter 2015 to 4.35%, compared to 4.44% in the fourth quarter 2014, and 4.41% in the first quarter 2014.

Operating non-interest income was $5.7 million for the first quarter 2015, compared to $6.7 million in the fourth quarter 2014, and $5.5 million for the first quarter 2014.1

Net operating revenue was $108.8 million for the first quarter 2015, compared to $108.8 million for the fourth quarter 2014, and an increase of $12.5 million compared to $96.3 million for the first quarter 2014.1

Operating non-interest expense was $54.2 million for the first quarter 2015, compared to $56.8 million for the fourth quarter 2014, and $51.9 million for the first quarter 2014.1 The Company’s operating efficiency ratio1 on a tax equivalent basis was 46.7% for the first quarter 2015, an improvement from 49.3% for the fourth quarter 2014, and from 50.9% for the first quarter 2014.

Non-operating items for the first quarter 2015 consisted of a net gain on sales and valuations of repossessed and other assets of $0.4 million, net unrealized losses on assets and liabilities measured at fair value of $0.3 million, gains on sales of investment securities of $0.6 million, and merger / restructure expense of $0.2 million incurred in connection with the proposed acquisition of Bridge Capital Holdings.

The Company had 1,131 full-time equivalent employees and 40 offices at March 31, 2015, compared to 1,105 employees and 39 offices at March 31, 2014.

The Company views its pre-tax, pre-provision operating earnings as a key metric for assessing the Company’s earnings power, which it defines as net operating revenue less operating non-interest expense. For the first quarter 2015, the Company’s pre-tax, pre-provision operating earnings were $54.5 million, up from $52.0 million in the fourth quarter 2014, and up 22.9% from $44.4 million in the first quarter 2014.1

Balance Sheet

Gross loans totaled $8.82 billion at March 31, 2015, an increase of $420 million from $8.40 billion at December 31, 2014, and an increase of $1.71 billion from $7.11 billion at March 31, 2014. At March 31, 2015, the allowance for credit losses was 1.27% of total loans, compared to 1.31% at December 31, 2014, and 1.46% at March 31, 2014, reflecting an improvement in the Company’s asset quality profile and historical losses.

Deposits totaled $9.66 billion at March 31, 2015, an increase of approximately $731 million from $8.93 billion at December 31, 2014, and an increase of $1.51 billion from $8.15 billion at March 31, 2014. Non-interest bearing deposits were $2.66 billion at March 31, 2015, compared to $2.29 billion at December 31, 2014, and $2.09 billion at March 31, 2014. Non-interest bearing deposits comprised 27.5% of total deposits at March 31, 2015, compared to 25.6% at December 31, 2014, and 25.7% at March 31, 2014. The proportion of savings and money market accounts decreased to 42.6% from 43.3% at December 31, 2014, and from 45.1% at March 31, 2014. Certificates of deposit as a percentage of total deposits were 20.2% at March 31, 2015, compared to 21.5% at December 31, 2014, and 20.0% at March 31, 2014. The Company’s ratio of loans to deposits was 91.3% at March 31, 2015, compared to 94.0% at December 31, 2014, and 87.2% at March 31, 2014.

Other borrowings totaled $275 million at March 31, 2015, a decrease of $115 million from $390 million at December 31, 2014, and a decrease of $68 million from $343 million at March 31, 2014.

Stockholders’ equity at March 31, 2015 was $1.05 billion, compared to $1.00 billion at December 31, 2014, and $895 million at March 31, 2014.

At March 31, 2015, tangible common equity, net of tax, was 8.5% of tangible assets1 and total capital under Basel III federal regulatory standards was 11.3% of risk-weighted assets. The Company’s tangible book value per share1 was $10.72 at March 31, 2015, up 28.8% from March 31, 2014.

Total assets increased 6.1% to $11.25 billion at March 31, 2015, from $10.60 billion at December 31, 2014, and increased 15.4% from $9.75 billion at March 31, 2014.

Asset Quality

The provision for credit losses was $0.7 million for the first quarter 2015, compared to $0.3 million in the fourth quarter 2014, and $3.5 million for the first quarter 2014. Net loan recoveries in the first quarter 2015 were $1.2 million, or 0.06% of average loans (annualized), compared to $0.8 million, or 0.04%, in the fourth quarter 2014, respectively, and $0.3 million, or 0.02% for the first quarter 2014, respectively.

Nonaccrual loans decreased $6.9 million to $60.7 million during the quarter. Loans past due 90 days and still accruing interest totaled $3.7 million at March 31, 2015, compared to $5.1 million at December 31, 2014, and $0.2 million at March 31, 2014. Loans past due 30-89 days and still accruing interest totaled $14.1 million at quarter end, an increase from $9.8 million at December 31, 2014, and an increase from $11.1 million at March 31, 2014.

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 20% at March 31, 2015 and December 31, 2014, from 24% at March 31, 2014.1

Segment Highlights

The Company's reportable segments are aggregated primarily based on geographic location, services offered, and markets served. The Arizona, Nevada, and California segments provide full service banking and related services to their respective markets. The Company's Central Business Lines (CBL) segment provides banking services to niche markets. These CBLs are managed centrally and are broader in geographic scope compared to our other segments, though still predominately located within our core market areas. The Corporate & Other segment consists of corporate-related items, income and expense items not allocated to our other reportable segments, and inter-segment eliminations.

Key management metrics for evaluating the performance of the Company's Arizona, Nevada, California, and CBL segments include loan and deposit growth, asset quality, and pre-tax income.

Arizona reported a gross loan balance of $2.38 billion at March 31, 2015, an increase of $42 million during the quarter, and an increase of $351 million during the last 12 months. Deposits were $2.34 billion at March 31, 2015, an increase of $166 million during the quarter, and an increase of $178 million during the last 12 months. Pre-tax income was $15.8 million and $12.6 million for the three months ended March 31, 2015 and March 31, 2014, respectively.

Nevada reported a gross loan balance of $1.81 billion at March 31, 2015, an increase of $137 million during the quarter, and an increase of $82 million during the last 12 months. Deposits were $3.36 billion at March 31, 2015, an increase of $132 million during the quarter, and an increase of $338 million during the last 12 months. Pre-tax income was $16.7 million and $16.5 million for the three months ended March 31, 2015 and March 31, 2014, respectively.

California reported a gross loan balance of $1.80 billion at March 31, 2015, an increase of $48 million during the quarter, and an increase of $137 million during the last 12 months. Deposits were $2.51 billion at March 31, 2015, an increase of $186 million during the quarter, and an increase of $647 million during the last 12 months. Pre-tax income was $14.4 million and $10.3 million for the three months ended March 31, 2015 and March 31, 2014, respectively.

CBL reported a gross loan balance of $2.79 billion at March 31, 2015, an increase of $198 million during the quarter, and an increase of $1.17 billion during the last 12 months. Deposits were $1.11 billion at March 31, 2015, an increase of $167 million during the quarter, and an increase of $269 million during the last 12 months. Pre-tax income was $13.3 million and $5.4 million for the three months ended March 31, 2015 and March 31, 2014, respectively.

Attached to this press release is summarized financial information for the quarter ended March 31, 2015.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live webcast to discuss its first quarter 2015 financial results at 12:00 p.m. ET on Tuesday, April 21, 2015. Participants may access the call by dialing 1-888-317-6003 and using passcode 9443418 or via live audio webcast using the website link http://services.choruscall.com/links/wal150417.html. The webcast is also available via the Company’s website at www.westernalliancebancorp.com. Participants should log in at least 15 minutes early to receive instructions. The call will be recorded and made available for replay after 2:00 p.m. ET April 21st through 9:00 a.m. ET May 21st by dialing 1-877-344-7529 passcode: 10062576.

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 it to be helpful in understanding the Company’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Cautionary Note Regarding Forward-Looking Statements

This release contains forward-looking statements that relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Examples of forward-looking statements include, among others, statements we make regarding our proposed acquisition of Bridge Capital Holdings and any guidance, outlook or expectations relating to our business, financial and operating results, and future economic performance. 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, 2014 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; 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

Driving growth in assets and earnings Western Alliance Bancorporation (NYSE:WAL) has more than $10 billion in assets and is one of the fastest growing bank holding companies in the U.S. Its primary subsidiary, Western Alliance Bank, is the go-to bank for business and succeeds with local teams of experienced bankers who deliver superior, personalized services and a full spectrum of deposit, lending, treasury management and online banking products and services. Western Alliance Bank operates through these full-service banking divisions: Alliance Bank of Arizona, Bank of Nevada, First Independent Bank (Nevada) and Torrey Pines Bank (California). The Company also serves business customers through a robust national platform of specialized financial services including Alliance Association Bank, Western Alliance Corporate Finance, Western Alliance Equipment Finance, Western Alliance Public Finance, Western Alliance Resort Finance, and Western Alliance Warehouse Lending. For more information visit westernalliancebancorp.com.

1 See Reconciliation of Non-GAAP Financial Measures beginning on page 16.

 
Western Alliance Bancorporation and Subsidiaries
Summary Consolidated Financial Data
Unaudited
     
 
Selected Balance Sheet Data:
March 31, 2015 March 31, 2014

Change %

(in millions)
Total assets $ 11,251.9 $ 9,746.6 15.4 %
Loans, net of deferred fees 8,818.6 7,108.6 24.1
Securities and money market investments 1,453.7 1,671.3 (13.0 )
Total deposits 9,662.3 8,149.0 18.6
Borrowings 275.2 342.8 (19.7 )
Junior subordinated debt 40.7 42.8 (4.9 )
Stockholders' equity 1,051.3 894.8 17.5
 
Selected Income Statement Data:
For the Three Months Ended March 31,
2015 2014

Change %

(in thousands)
Interest income $ 110,962 $ 98,701 12.4 %
Interest expense 7,854   7,924   (0.9 )
Net interest income 103,108 90,777 13.6
Provision for credit losses 700   3,500   (80.0 )
Net interest income after provision for credit losses 102,408 87,277 17.3
Non-interest income 5,933 4,573 29.7
Non-interest expense 54,033   49,487   9.2
Income from continuing operations before income taxes 54,308 42,363 28.2
Income tax expense 14,118   10,624   32.9
Income from continuing operations 40,190 31,739 26.6
Loss on discontinued operations, net of tax   (654 ) (100.0 )
Net income $ 40,190   $ 31,085   29.3
Diluted earnings per share from continuing operations $ 0.45   $ 0.36   25.0
Diluted loss per share from discontinued operations   (0.01 )
Diluted earnings per share available to common stockholders $ 0.45   $ 0.35   28.6
 
Common Share Data:
At or for the Three Months Ended March 31,
2015 2014

Change %

Diluted earnings per share available to common stockholders $ 0.45 $ 0.35 28.6

%

Book value per common share 11.00 8.61 27.8
Tangible book value per share, net of tax (1) 10.72 8.32 28.8
Average shares outstanding (in thousands):
Basic 87,941 86,256 2.0
Diluted 88,452 87,123 1.5
Common shares outstanding 89,180 87,554 1.9
 
(1) See Reconciliation of Non-GAAP Financial Measures.
 
 
Western Alliance Bancorporation and Subsidiaries
Summary Consolidated Financial Data
Unaudited
     
 
At or for the Three Months Ended March 31,
2015 2014

Change %

Selected Performance Ratios:
Return on average assets (1) 1.49 % 1.33 % 12.0

%

Return on average tangible common equity (2) 17.21 17.31 (0.6 )
Net interest margin (1) 4.35 4.41 (1.4 )
Net interest spread 4.22 4.27 (1.2 )
Efficiency ratio - tax equivalent basis (2) 46.69 50.88 (8.2 )
Loan to deposit ratio 91.27 87.23 4.6
 
Asset Quality Ratios:
Net recoveries to average loans outstanding (1) (0.06 )% (0.02 )% 200.0 %
Nonaccrual loans to gross loans 0.69 0.99 (30.3 )
Nonaccrual loans and repossessed assets to total assets 1.11 1.30 (14.6 )
Loans past due 90 days and still accruing to total loans 0.04 100.0
Allowance for credit losses to gross loans 1.27 1.46 (13.0 )
Allowance for credit losses to nonaccrual loans 184.55 147.58 25.1
 
       
Capital Ratios (2):
Basel III Basel I

Minimum
Requirement for
"Well-Capitalized"
Institution at

March 31, 2015 December 31, 2014 March 31, 2014 March 31, 2015
Tangible common equity 8.5 % 8.6 % 7.5 %
Common Equity Tier 1 (3) 9.0 6.5
Tier 1 Common Equity (2) 9.3 8.8
Tier 1 Leverage ratio (3) 9.8 9.7 9.9 5.0
Tier 1 Capital (3) 10.2 10.5 11.1 8.0
Total Capital (3)

11.3

11.7 12.4 10.0
 
(1)   Annualized for the three-month periods ended March 31, 2015 and 2014.
(2) See Reconciliation of Non-GAAP Financial Measures.
(3) Basel III capital ratios are preliminary until the Call Report is filed.
 
Western Alliance Bancorporation and Subsidiaries
Condensed Consolidated Income Statements
Unaudited
  Three Months Ended March 31,
2015   2014
(dollars in thousands)
Interest income:
Loans $ 100,391 $ 86,804
Investment securities 9,788 11,325
Federal funds sold and other 783   572  
Total interest income 110,962   98,701  
Interest expense:
Deposits 5,146 4,665
Borrowings 2,267 2,838
Junior subordinated debt 441   421  
Total interest expense 7,854   7,924  
Net interest income 103,108 90,777
Provision for credit losses 700   3,500  
Net interest income after provision for credit losses 102,408   87,277  
Non-interest income:
Service charges 2,889 2,561
Bank owned life insurance 977 949
Gains on sales of investment securities, net 589 366
Unrealized losses on assets and liabilities measured at fair value, net (309 ) (1,276 )
Other 1,787   1,973  
Total non-interest income 5,933   4,573  
Non-interest expenses:
Salaries and employee benefits 32,541 29,555
Occupancy 4,813 4,686
Legal, professional and directors' fees 3,995 3,639
Data Processing 3,126 2,729
Insurance 2,090 2,393
Loan and repossessed asset expenses 1,090 1,147
Card expense 474 600
Marketing 377 559
Intangible amortization 281 597
Net gain on sales and valuations of repossessed and other assets (351 ) (2,547 )
Merger / restructure expense 159 157
Other 5,438   5,972  
Total non-interest expense 54,033   49,487  
Income from continuing operations before income taxes 54,308 42,363
Income tax expense 14,118   10,624  
Income from continuing operations $ 40,190 $ 31,739
Loss from discontinued operations, net of tax   (654 )
Net income $ 40,190   $ 31,085  
Preferred stock dividends 176   353  
Net income available to common stockholders $ 40,014   $ 30,732  
Diluted net income per share $ 0.45   $ 0.35  
 
 
Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Income Statements
Unaudited
  Three Months Ended
Mar 31, 2015   Dec 31, 2014   Sep 30, 2014   Jun 30, 2014   Mar 31, 2014
(in thousands, except per share data)
Interest income:
Loans $ 100,391 $ 99,099 $ 94,436 $ 90,583 $ 86,804
Investment securities 9,788 10,455 10,535 10,894 11,325
Federal funds sold and other 783   597   583   496   572  
Total interest income 110,962   110,151   105,554   101,973   98,701  
Interest expense:
Deposits 5,146 5,245 5,172 4,930 4,665
Borrowings 2,267 2,314 1,866 2,702 2,838
Junior subordinated debt 441   447   443   443   421  
Total interest expense 7,854   8,006   7,481   8,075   7,924  
Net interest income 103,108 102,145 98,073 93,898 90,777
Provision for credit losses 700   300   419   507   3,500  
Net interest income after provision for credit losses 102,408   101,845   97,654   93,391   87,277  
Non-interest income:
Service charges 2,889 2,791 2,457 2,758 2,561
Bank owned life insurance 977 1,464 1,136 959 949
Gains (losses) on sales of investment securities, net 589 373 181 (163 ) 366
Unrealized (losses) gains on assets and liabilities measured at fair value, net (309 ) 1,357 896 235 (1,276 )
Loss on extinguishment of debt (502 )
Other 1,787   2,432   1,824   1,809   1,973  
Total non-interest income 5,933   8,417   5,992   5,598   4,573  
Non-interest expenses:
Salaries and employee benefits 32,541 33,094 32,230 31,751 29,555
Occupancy 4,813 4,698 4,479 4,293 4,686
Legal, professional, and directors' fees 3,995 3,425 3,022 4,192 3,639
Data Processing 3,126 2,345 2,404 2,580 2,729
Insurance 2,090 2,386 1,996 2,087 2,393
Loan and repossessed asset expenses 1,090 1,486 901 889 1,147
Card expense 474 678 609 530 600
Marketing 377 857 378 506 559
Intangible amortization 281 281 281 302 597
Net (gain) loss on sales and valuations of repossessed and other assets (351 ) (1,102 ) (1,956 ) 184 (2,547 )
Merger / restructure expense 159 15 26 157
Other 5,438   7,594   5,419   4,901   5,972  
Total non-interest expense 54,033   55,742   49,778   52,241   49,487  
Income from continuing operations before income taxes 54,308 54,520 53,868 46,748 42,363
Income tax expense 14,118   14,111   12,949   10,706   10,624  
Income from continuing operations $ 40,190 $ 40,409 $ 40,919 $ 36,042 $ 31,739
Loss from discontinued operations, net of tax       (504 ) (654 )
Net income $ 40,190   $ 40,409   $ 40,919   $ 35,538   $ 31,085  
Preferred stock dividends 176   329   353   352   353  
Net Income available to common stockholders $ 40,014   $ 40,080   $ 40,566   $ 35,186   $ 30,732  
Diluted net income per share $ 0.45   $ 0.46   $ 0.46   $ 0.40   $ 0.35  
 
 
Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Balance Sheets
Unaudited
  Mar 31, 2015   Dec 31, 2014  

Sep 30, 2014

  Jun 30, 2014   Mar 31, 2014
(in millions)
Assets:
Cash and due from banks $ 492.4 $ 164.4 $ 258.8 $ 379.3 $ 354.8
Securities purchased under agreement to resell         111.1  
Cash and cash equivalents 492.4 164.4 258.8 379.3 465.9
Securities and money market investments 1,453.7 1,547.8 1,597.3 1,606.7 1,671.3
Loans held for investment:
Commercial 3,725.2 3,532.3 3,293.2 3,028.0 2,725.1
Commercial real estate - non-owner occupied 2,113.8 2,052.6 1,993.3 1,934.0 1,844.3
Commercial real estate - owner occupied 1,818.0 1,732.9 1,620.3 1,603.4 1,604.5
Construction and land development 842.9 748.1 671.8 609.1 550.8
Residential real estate 292.2 299.4 317.5 328.6 345.3
Consumer 26.5   33.0   33.4   41.4   38.6  
Gross loans and deferred fees, net 8,818.6 8,398.3 7,929.5 7,544.5 7,108.6
Allowance for credit losses (112.1 ) (110.2 ) (109.2 ) (105.9 ) (103.9 )
Loans, net 8,706.5   8,288.1   7,820.3   7,438.6   7,004.7  
Premises and equipment, net 114.3 113.8 112.1 109.6 106.6
Other assets acquired through foreclosure, net 63.8 57.1 51.8 59.3 56.5
Bank owned life insurance 142.9 142.0 143.2 142.5 141.5
Goodwill and other intangibles, net 25.6 25.9 26.2 26.5 26.8
Other assets 252.7   261.4   279.1   261.1   273.3  
Total assets $ 11,251.9   $ 10,600.5   $ 10,288.8   $ 10,023.6   $ 9,746.6  
Liabilities and Stockholders' Equity:
Liabilities:
Deposits
Non-interest bearing demand deposits $ 2,657.4 $ 2,288.0 $ 2,246.7 $ 2,278.8 $ 2,093.6
Interest bearing:
Demand 936.5 854.9 809.4 794.8 750.4
Savings and money market 4,121.0 3,869.7 3,685.0 3,637.4 3,672.3
Time certificates 1,947.4   1,918.4   1,956.5   1,758.5   1,632.7  
Total deposits 9,662.3 8,931.0 8,697.6 8,469.5 8,149.0
Customer repurchase agreements 47.2   54.9   53.0   53.7   57.4  
Total customer funds 9,709.5 8,985.9 8,750.6 8,523.2 8,206.4
Securities sold short 109.8
Borrowings 275.2 390.3 330.8 337.5 342.8
Junior subordinated debt 40.7 40.4 41.8 42.7 42.8
Accrued interest payable and other liabilities 175.2   183.0   162.5   162.5   150.0  
Total liabilities 10,200.6   9,599.6   9,285.7   9,065.9   8,851.8  
Stockholders' Equity:
Common stock and additional paid-in capital 831.9 828.3 807.2 803.4 795.3
Preferred stock 70.5 70.5 141.0 141.0 141.0
Retained earnings (accumulated deficit) 125.5 85.5 45.4 4.8 (30.4 )
Accumulated other comprehensive income (loss) 23.4   16.6   9.5   8.5   (11.1 )
Total stockholders' equity 1,051.3   1,000.9   1,003.1   957.7   894.8  
Total liabilities and stockholders' equity $ 11,251.9   $ 10,600.5   $ 10,288.8   $ 10,023.6   $ 9,746.6  
 
 
Western Alliance Bancorporation and Subsidiaries
Changes in the Allowance For Credit Losses
Unaudited
  Three Months Ended
Mar 31, 2015   Dec 31, 2014   Sep 30, 2014   Jun 30, 2014   Mar 31, 2014
(in thousands)
Balance, beginning of period $ 110,216 $ 109,161 $ 105,937 $ 103,899 $ 100,050
Provision for credit losses 700 300 419 507 3,500
Recoveries of loans previously charged-off:
Commercial and industrial 916 1,499 1,053 1,254 922
Commercial real estate - non-owner occupied 277 229 1,226 1,052 83
Commercial real estate - owner occupied 106 43 553 196 477
Construction and land development 157 1,268 182 498 211
Residential real estate 533 261 768 314 553
Consumer 40   64   34   191   170  
Total recoveries 2,029 3,364 3,816 3,505 2,416
Loans charged-off:
Commercial and industrial 393 1,743 110 1,039 1,478
Commercial real estate - non-owner occupied 158 99 160
Commercial real estate - owner occupied 270 35 230 11
Construction and land development 8 78
Residential real estate 400 377 423 523 406
Consumer 54   211   285   5   12  
Total loans charged-off 847 2,609 1,011 1,974 2,067
Net loan recoveries (1,182 ) (755 ) (2,805 ) (1,531 ) (349 )
Balance, end of period $ 112,098   $ 110,216   $ 109,161   $ 105,937   $ 103,899  
 
Net recoveries to average loans outstanding - annualized (0.06 )% (0.04 )% (0.15 )% (0.09 )% (0.02 )%
Allowance for credit losses to gross loans 1.27 1.31 1.38 1.40 1.46
Nonaccrual loans $ 60,742 $ 67,659 $ 75,092 $ 64,345 $ 70,401
Repossessed assets 63,759 57,150 51,787 59,292 56,450
Loans past due 90 days, still accruing 3,730 5,132 3,558 3,001 167
Loans past due 30 to 89 days, still accruing 14,137 9,804 16,500 5,123 11,087
Classified loans on accrual 76,090 90,393 107,776 133,220 125,903
Special mention loans 100,345 97,504 98,265 90,534 117,540
 
 
Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields and Rates
Unaudited
  Three Months Ended March 31,
2015   2014

Average
Balance

 

Interest

 

Average Yield /
Cost

Average
Balance

  Interest  

Average Yield /
Cost

($ in millions)

($ in thousands) ($ in millions) ($ in thousands)
Interest earning assets
Loans (1) $ 8,546.8 $ 100,391 4.97 % $ 6,893.2 $ 86,804 5.27 %
Securities (1) 1,479.4 9,788 3.09 1,651.7 11,325 3.15
Federal funds sold and other 136.2   783   2.30   210.3   572   1.09  
Total interest earning assets 10,162.4 110,962 4.66 8,755.2 98,701 4.77
Non-interest earning assets
Cash and due from banks 118.1 137.5
Allowance for credit losses (111.0 ) (101.2 )
Bank owned life insurance 142.4 140.9
Other assets 450.1   433.1  
Total assets $ 10,762.0   $ 9,365.5  
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts $ 920.0 $ 394 0.17 % $ 765.0 $ 384 0.20 %
Savings and money market 3,909.4 2,776 0.28 3,452.3 2,562 0.30
Time certificates of deposit 1,935.5   1,976   0.41   1,619.6   1,719   0.42  
Total interest-bearing deposits 6,764.9 5,146 0.30 5,836.9 4,665 0.32
Short-term borrowings 177.5 1,751 3.95 163.4 130 0.32
Long-term debt 202.0 516 1.02 301.8 2,708 3.59
Junior subordinated debt 40.4   441   4.36   41.9   421   4.02  
Total interest-bearing liabilities 7,184.8 7,854 0.44 6,344.0 7,924 0.50
Non-interest-bearing liabilities
Non-interest-bearing demand deposits 2,369.9 2,054.1
Other liabilities 177.1 81.1
Stockholders’ equity 1,030.2   886.3  
Total liabilities and stockholders' equity $ 10,762.0   $ 9,365.5  
Net interest income and margin $ 103,108   4.35 % $ 90,777   4.41 %
Net interest spread 4.22 % 4.27 %
 

(1) Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $7,389 and $5,705 for the first quarters of 2015 and 2014, respectively.

 
 
Western Alliance Bancorporation and Subsidiaries
Operating Segment Results
Unaudited
           
Balance Sheets:
Arizona Nevada California

Central
Business
Lines

Corporate &
Other

Consolidated
Company

At March 31, 2015 (dollars in millions)
Assets:
Cash, cash equivalents, and investment securities $ 2.3 $ 10.8 $ 2.6 $ $ 1,930.4 $ 1,946.1
Loans, net of deferred loan fees and costs 2,383.5 1,805.5 1,799.6 2,788.3 41.7 8,818.6
Less: allowance for credit losses (30.3 ) (23.0 ) (22.9 ) (35.4 ) (0.5 ) (112.1 )
Total loans 2,353.2   1,782.5   1,776.7   2,752.9   41.2   8,706.5  
Other assets acquired through foreclosure, net 20.5 23.2 20.1 63.8
Goodwill and other intangible assets, net 25.6 25.6
Other assets 42.3   65.8   21.0   22.2   358.6   509.9  
Total assets $ 2,418.3   $ 1,907.9   $ 1,800.3   $ 2,775.1   $ 2,350.3   $ 11,251.9  
Liabilities:
Deposits $ 2,344.0 $ 3,362.3 $ 2,514.1 $ 1,113.7 $ 328.2 $ 9,662.3
Other borrowings 275.2 275.2
Other liabilities 16.5   37.7   4.5   86.1   118.3   263.1  
Total liabilities 2,360.5   3,400.0   2,518.6   1,199.8   721.7   10,200.6  
Allocated equity: 264.0   227.0   208.2   284.3   67.8   1,051.3  
Total liabilities and stockholders' equity $ 2,624.5   $ 3,627.0   $ 2,726.8   $ 1,484.1   $ 789.5   $ 11,251.9  
Excess funds provided (used) 206.2 1,719.1 926.5 (1,291.0 ) (1,560.8 )
 
No. of branches 11 18 11 40
No. of full-time equivalent employees 212 276 220 102 321 1,131
 
At December 31, 2014
Assets:
Cash, cash equivalents, and investment securities $ 2.3 $ 5.0 $ 2.5 $ $ 1,702.4 $ 1,712.2
Loans, net of deferred loan fees and costs 2,341.9 1,668.7 1,751.7 2,590.0 46.0 8,398.3
Less: allowance for credit losses (30.7 ) (21.9 ) (23.0 )   (34.0 ) (0.6 ) (110.2 )
Total loans 2,311.2   1,646.8   1,728.7     2,556.0   45.4   8,288.1  
Other assets acquired through foreclosure, net 15.5 21.0 20.6 57.1
Goodwill and other intangible assets, net 25.9 25.9
Other assets 34.8   64.2   21.5   22.9   373.8   517.2  
Total assets $ 2,363.8   $ 1,762.9   $ 1,752.7   $ 2,578.9   $ 2,142.2   $ 10,600.5  
Liabilities:
Deposits $ 2,178.0 $ 3,230.6 $ 2,328.5 $ 946.6 $ 247.3 $ 8,931.0
Other borrowings 390.3 390.3
Other liabilities 17.4   40.8   9.1   72.4   138.6   278.3  
Total liabilities 2,195.4   3,271.4   2,337.6   1,019.0   776.2   9,599.6  
Allocated equity: 250.8   209.0   197.7   232.9   110.5   1,000.9  
Total liabilities and stockholders' equity $ 2,446.2   $ 3,480.4   $ 2,535.3   $ 1,251.9   $ 886.7   $ 10,600.5  
Excess funds provided (used) 82.4 1,717.5 782.6 (1,327.0 ) (1,255.5 )
 
No. of branches 11 18 11 40
No. of full-time equivalent employees 215 295 227 99 295 1,131
 
Western Alliance Bancorporation and Subsidiaries
Operating Segment Results
Unaudited
 
Arizona Nevada California

Central
Business
Lines

Corporate &
Other

Consolidated
Company

(dollars in millions)
At March 31, 2014
Assets:
Cash, cash equivalents, and investment securities $ 3.3 $ 7.0 $ 2.6 $ 0.5 $ 2,123.8 $ 2,137.2
Loans, net of deferred loan fees and costs 2,032.3 1,723.8 1,663.1 1,621.2 68.2 7,108.6
Less: allowance for credit losses (29.7 ) (25.2 ) (24.3 ) (23.7 ) (1.0 ) (103.9 )
Total loans 2,002.6   1,698.6   1,638.8   1,597.5   67.2   7,004.7  
Other assets acquired through foreclosure, net 11.9 21.9 0.3 22.4 56.5
Goodwill and other intangible assets, net 2.4 24.4 26.8
Other assets 33.8   67.8   25.5   18.0   376.3   521.4  
Total assets $ 2,054.0   $ 1,819.7   $ 1,667.2   $ 1,616.0   $ 2,589.7   $ 9,746.6  
Liabilities:
Deposits $ 2,166.0 $ 3,024.6 $ 1,867.3 $ 845.1 $ 246.0 $ 8,149.0
Other borrowings 342.8 342.8
Other liabilities 21.7   48.3   9.8   20.4   259.8   360.0  
Total liabilities 2,187.7   3,072.9   1,877.1   865.5   848.6   8,851.8  
Allocated equity: 219.4   207.9   178.7   123.2   165.6   894.8  
Total liabilities and stockholders' equity $ 2,407.1   $ 3,280.8   $ 2,055.8   $ 988.7   $ 1,014.2   $ 9,746.6  
Excess funds provided (used) 353.1 1,461.1 388.6 (627.3 ) (1,575.5 )
 
No. of branches 10 18 11 39
No. of full-time equivalent employees 216 326 217 93 253 1,105
 
 
Western Alliance Bancorporation and Subsidiaries
Operating Segment Results
Unaudited
           
Income Statements:
Arizona Nevada California

Central
Business
Lines

Corporate &
Other

Consolidated
Company

(in thousands)
Three Months Ended March 31, 2015:
Net interest income (expense) $ 28,985 $ 29,209 $ 26,943 $ 23,310 $ (5,339 ) $ 103,108
Provision for credit losses (668 ) 349   (395 ) 1,409   5   700  
Net interest income (expense) after provision for credit losses 29,653 28,860 27,338 21,901 (5,344 ) 102,408
Non-interest income 939 2,283 716 716 1,279 5,933
Non-interest expense (14,761 ) (14,474 ) (13,638 ) (9,278 ) (1,882 ) (54,033 )
Income (loss) from continuing operations before income taxes 15,831 16,669 14,416 13,339 (5,947 ) 54,308
Income tax expense (benefit) 6,210   5,834   6,061   5,002   (8,989 ) 14,118  
Net income $ 9,621   $ 10,835   $ 8,355   $ 8,337   $ 3,042   $ 40,190  
 
Three Months Ended March 31, 2014:
Net interest income (expense) $ 26,608 $ 28,595 $ 22,792 $ 13,964 $ (1,182 ) $ 90,777
Provision for credit losses 1,558   (884 ) 655   2,170   1   3,500  
Net interest income (expense) after provision for credit losses 25,050 29,479 22,137 11,794 (1,183 ) 87,277
Non-interest income 777 2,137 1,183 82 394 4,573
Non-interest expense (13,261 ) (15,084 ) (12,976 ) (6,508 ) (1,658 ) (49,487 )
Income (loss) from continuing operations before income taxes 12,566 16,532 10,344 5,368 (2,447 ) 42,363
Income tax expense (benefit) 4,929   5,787   4,350   2,013   (6,455 ) 10,624  
Income from continuing operations 7,637 10,745 5,994 3,355 4,008 31,739
Loss from discontinued operations, net         (654 ) (654 )
Net income $ 7,637   $ 10,745   $ 5,994   $ 3,355   $ 3,354   $ 31,085  
 
 
Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Unaudited
         
Pre-Tax, Pre-Provision Operating Earnings by Quarter:
Three Months Ended
Mar 31, 2015

Dec 31, 2014

Sep 30, 2014 Jun 30, 2014 Mar 31, 2014
(in thousands)
Total non-interest income $ 5,933 $ 8,417 $ 5,992 $ 5,598 $ 4,573
Less:
Gains (losses) on sales of investment securities, net 589 373 181 (163 ) 366
Unrealized (losses) gains on assets and liabilities measured at fair value, net (309 ) 1,357 896 235 (1,276 )
Loss on extinguishment of debt     (502 )    
Total operating non-interest income 5,653 6,687 5,417 5,526 5,483
Plus: net interest income 103,108   102,145   98,073   93,898   90,777  
Net operating revenue (1) $ 108,761   $ 108,832   $ 103,490   $ 99,424   $ 96,260  
 
Total non-interest expense $ 54,033 $ 55,742 $ 49,778 $ 52,241 $ 49,487
Less:
Net (gain) loss on sales and valuations of repossessed and other assets (351 ) (1,102 ) (1,956 ) 184 (2,547 )
Merger / restructure expense 159     15   26   157  
Total operating non-interest expense (1) $ 54,225   $ 56,844   $ 51,719   $ 52,031   $ 51,877  
         
Pre-tax, pre-provision operating earnings (2) $ 54,536   $ 51,988   $ 51,771   $ 47,393   $ 44,383  
 
Tangible Common Equity:
Mar 31, 2015 Dec 31, 2014 Sep 30, 2014 Jun 30, 2014 Mar 31, 2014
(dollars and shares in thousands)
Total stockholders' equity $ 1,051,330 $ 1,000,928 $ 1,003,122 $ 957,664 $ 894,805
Less: goodwill and intangible assets 25,632   25,913   26,194   26,475   26,777  
Total tangible stockholders' equity 1,025,698 975,015 976,928 931,189 868,028
Less: preferred stock 70,500   70,500   141,000   141,000   141,000  
Total tangible common equity 955,198 904,515 835,928 790,189 727,028
Plus: deferred tax - attributed to intangible assets 548   1,006   1,138   1,138   1,243  
Total tangible common equity, net of tax $ 955,746   $ 905,521   $ 837,066   $ 791,327   $ 728,271  
Total assets $ 11,251,943 $ 10,600,498 $ 10,288,824 $ 10,023,587 $ 9,746,624
Less: goodwill and intangible assets, net 25,632   25,913   26,194   26,475   26,777  
Tangible assets 11,226,311 10,574,585 10,262,630 9,997,112 9,719,847
Plus: deferred tax - attributed to intangible assets 548   1,006   1,138   1,138   1,243  
Total tangible assets, net of tax $ 11,226,859   $ 10,575,591   $ 10,263,768   $ 9,998,250   $ 9,721,090  
Tangible common equity ratio (3) 8.5 % 8.6 % 8.2 % 7.9 % 7.5 %
Common shares outstanding 89,180 88,691 87,849 87,774 87,554
Tangible book value per share, net of tax (4) $ 10.72 $ 10.21 $ 9.53 $ 9.02 $ 8.32
 
 
Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Unaudited
         
Efficiency Ratio by Quarter:
Three Months Ended
Mar 31, 2015 Dec 31, 2014 Sep 30, 2014 Jun 30, 2014 Mar 31, 2014
(in thousands)
Total operating non-interest expense $ 54,225 $ 56,844 $ 51,719 $ 52,031 $ 51,877
Divided by:
Total net interest income 103,108 102,145 98,073 93,898 90,777
Plus:
Tax equivalent interest adjustment 7,389 6,489 6,348 6,029 5,705
Operating non-interest income 5,653   6,687   5,417   5,526   5,483  
$ 116,150   $ 115,321   $ 109,838   $ 105,453   $ 101,965  
Efficiency ratio - tax equivalent basis (5) 46.7 % 49.3 % 47.1 % 49.3 % 50.9 %
 
 

Regulatory Capital:

Basel III
March 31, 2015
(in thousands)
Common Equity Tier 1:
Common equity $ 980,830
Less:
Accumulated other comprehensive income 23,423
Non-qualifying goodwill and intangibles

24,127

Disallowed deferred tax asset 1,314
Unrealized gain on trust preferred securities 6,446  
Common equity Tier 1 (regulatory) (6) (9)

925,520

Plus:
Trust preferred securities 64,500
Preferred stock 70,500
Less:
Disallowed deferred tax asset 1,972
Unrealized gain on trust preferred securities 9,669  
Tier 1 capital (7) (9) $

1,048,879

Divided by: estimated risk-weighted assets (regulatory (7) (9) $

10,308,909

 
Common equity Tier 1 ratio (7) (9) 9.0 %
 
Total Capital:
Tier 1 capital (regulatory) (6) (9) $

1,048,879

Plus:
Qualifying allowance for credit losses 112,098
Other 2,124
Less: Tier 2 qualifying capital deductions 2,731  
Tier 2 capital $ 111,491  
Total capital

1,160,370

 
Tier 1 Capital:
Classified assets $ 210,438
Divided by:
Common equity Tier 1 (regulatory) (6) (9)

925,520

Plus: Allowance for credit losses 112,098  
Total Common equity Tier 1 plus allowance for credit losses $

1,037,618

 
Classified assets to common equity Tier 1 plus allowance (8) (9) 20 %
 
(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 ratio 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) 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.
(7) 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.
(8) We believe this non-GAAP ratio provides an important regulatory metric to analyze asset quality.
(9) Current quarter is preliminary until Call Reports are filed.

Contacts

Western Alliance Bancorporation
Dale Gibbons, 602-952-5476

Release Summary

Western Alliance Reports First Quarter 2015 Net Income of $40.2 Million or $0.45 Per Share

Contacts

Western Alliance Bancorporation
Dale Gibbons, 602-952-5476