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Western Alliance Reports Third Quarter 2011 Earnings Of $13.0 Million

Stocks in this article: WAL

We do not intend and disclaim any duty or obligation to update or revise any industry information or forward-looking statements set forth in this press release to reflect new information, future events or otherwise.

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 Western Alliance Bancorporation’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconcilement 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.

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

Western Alliance Bancorporation and Subsidiaries
Summary Consolidated Financial Data
Unaudited
     
At or for the Three Months For the Nine Months
Ended September 30, Ended September 30,
2011   2010  

Change %

2011   2010

Change %

(in thousands, except per share data)
Selected Balance Sheet Data:
(dollars in millions)
Total assets $ 6,545.9 $ 6,179.1 5.9 %
Loans, net of deferred fees 4,526.5 4,173.5 8.5
Securities and money market investments 1,304.6 929.7 40.3
Federal funds sold - 1.0
Total deposits 5,632.9 5,328.5 5.7
Borrowings 215.8 159.7 35.1
Junior subordinated and subordinated debt 36.3 36.3 0.0
Stockholders' equity 632.3 619.8 2.0
 
Selected Income Statement Data:
(dollars in thousands)
Interest income $ 74,133 $ 70,705 4.8 % $ 219,745 $ 209,439 4.9 %
Interest expense   9,548     11,237   (15.0 )   30,776     37,796   (18.6 )
Net interest income 64,585 59,468 8.6 188,969 171,643 10.1
Provision for loan losses   11,180     22,965   (51.3 )   33,112     74,827   (55.7 )
Net interest income after provision for credit losses 53,405 36,503 46.3 155,857 96,816 61.0
Non-interest income 13,082 12,167 7.5 29,509 47,556 (37.9 )
Non-interest expense   45,481     46,109   (1.4 )   144,635     140,213   3.2

Income (loss) from continuing operations before income taxes

21,006 2,561 720.2 40,731 4,159 879.3
Income tax expense (benefit)   7,514     (79 ) 9,611.4   14,838     (1,830 ) 910.8
Income from continuing operations 13,492 2,640 411.1 25,893 5,989 332.3 %
Loss on discontinued operations, net   (481 )   (631 ) 23.8   (1,500 )   (2,368 )
Net income $ 13,011   $ 2,009   547.6 % $ 24,393   $ 3,621  
Diluted net income (loss) from continuing operations $ 0.05   $ 0.00   $ 0.14   $ (0.02 )

Diluted net loss from discontinued operations, net of tax

$ (0.01 ) $ (0.01 ) $ (0.02 ) $ (0.03 )
Diluted net income (loss) per common share $ 0.04   $ (0.01 ) 500.0 % $ 0.12   $ (0.05 ) 345.8 %
 
Common Share Data:
Diluted net income (loss) per common share $ 0.04 $ (0.01 ) 500.0 % $ 0.12 $ (0.05 ) 345.8 %
Book value per common share $ 5.97 $ 6.01 (0.7 ) %
Tangible book value per share, net of tax (1) $ 5.57 $ 5.58 (0.1 ) %
Average shares outstanding (in thousands):
Basic 80,931 75,554 7.1 80,870 73,240 10.4
Diluted 81,125 75,554 7.4 81,121 73,240 10.8
Common shares outstanding 82,263 81,503 0.9
 
(1) See Reconciliation of Non-GAAP Financial Measures

Western Alliance Bancorporation and Subsidiaries
Summary Consolidated Financial Data (continued)
Unaudited
  At or for the Three Months   For the Nine Months
Ended September 30, Ended September 30,
2011 2010

Change %

2011 2010 Change %
(in thousands, except per share data)
Selected Performance Ratios:
Return on average assets (1) 0.79 % 0.13 % 507.7 % 0.51 % 0.08 % 537.5 %
Return on average stockholders' equity (1) 8.13 1.31 520.6 5.22 0.82 536.6
Net interest margin (1) 4.29 4.32 (0.7 ) 4.32 4.22 2.4
Net interest spread 4.05 4.03 0.5 4.06 3.90 4.1
Efficiency ratio - tax equivalent basis (2) 59.60 62.39 (4.5 )
Loan to deposit ratio 80.36 78.32 2.6
 
Capital Ratios:
Tangible equity (2) 9.1 % 9.4 % (3.1 ) %
Tangible common equity (2) 7.0 7.3 (4.6 )
Tier one common equity (2) 8.6 9.0 (4.4 )
Tier 1 Leverage ratio (3) 9.7 10.0 (3.0 )
Tier 1 Risk Based Capital (3) 11.8 12.4 (4.8 )
Total Risk Based Capital (3) 13.1 13.7 (4.4 )
 
Asset Quality Ratios:
Net charge-offs to average loans outstanding (1) 1.40 % 2.41 % (41.9 ) % 1.35 % 2.47 % (45.3 ) %
Nonaccrual loans to gross loans 2.51 3.14 (20.1 )
Nonaccrual loans and repossessed assets to total assets 3.06 3.90 (21.5 )
Loans past due 90 days and still accruing to total loans 0.05 0.14 (64.3 )
Allowance for credit losses to loans 2.21 2.59 (14.7 )
Allowance for credit losses to nonaccrual loans 88.13 82.63 6.7
 
(1) Annualized for the three and nine month periods ended September 30, 2011 and 2010.
(2) See Reconciliation of Non-GAAP Financial Measures.
(3) Capital ratios are preliminary until Call Reports are filed.

Western Alliance Bancorporation and Subsidiaries
Condensed Consolidated Statements of Operations
Unaudited   Three Months Ended   Nine Months Ended
September 30, September 30,
2011   2010 2011   2010
Interest income: (dollars in thousands)
Loans $ 65,540 $ 64,273 $ 194,341 $ 190,641
Investment securities 8,356 6,104 24,828 17,679
Federal funds sold and other   237     328     576     1,119  
Total interest income   74,133     70,705     219,745     209,439  
Interest expense:
Deposits 6,982 9,531 22,428 32,677
Customer repurchase agreements 77 74 263 471
Borrowings 2,024 896 6,229 1,714
Junior subordinated and subordinated debt   465     736     1,856     2,934  
Total interest expense   9,548     11,237     30,776     37,796  
Net interest income 64,585 59,468 188,969 171,643
Provision for credit losses   11,180     22,965     33,112     74,827  
Net interest income after provision for credit losses   53,405     36,503     155,857     96,816  
Non-interest income
Unrealized gains (losses) on assets/liabilities measured at fair value,net 6,420 (210 ) 6,247 6,341
Securities impairment charges - - (226 ) (1,174 )
Gains on sales of investment securities, net 781 5,460 4,826 19,757
Trust and investment advisory services 661 1,001 1,955 3,395
Service charges 2,337 2,276 6,864 6,791
Operating lease income 353 998 1,605 2,928
Bank owned life insurance 1,189 773 4,195 2,271
Gain on extinguishment of debt - - - 3,000
Other   1,341     1,869     4,043     4,247  
  13,082     12,167     29,509     47,556  
Non-interest expenses:
Salaries and employee benefits 23,319 21,860 69,119 65,461
Occupancy 5,126 4,890 15,024 14,505
Insurance 2,664 4,115 8,878 11,366
Repossessed asset and loan expenses 2,059 1,918 6,465 5,847
Net loss on sales and valuations of repossessed assets 2,128 4,855 16,890 15,836
Legal, professional and director's fees 1,912 1,546 5,639 5,553
Marketing 1,090 878 3,382 3,079
Intangible amortization 890 901 2,669 2,714
Customer service 900 987 2,620 3,205
Data Processing 895 842 2,671 2,427
Operating lease depreciation 245 627 993 1,963
Merger/restructure expense 974 - 1,082 -
Other   3,279     2,690     9,203     8,257  
  45,481     46,109     144,635     140,213  
Income from continuing operations before income taxes 21,006 2,561 40,731 4,159
Income tax expense (benefit)   7,514     (79 )   14,838     (1,830 )
Income from continuing operations 13,492 2,640 25,893 5,989
Loss from discontinued operations net of tax benefit   (481 )   (631 )   (1,500 )   (2,368 )
Net income 13,011 2,009 24,393 3,621
Preferred stock dividends 1,752 1,750 5,252 5,250
Accretion on preferred stock discount   7,667     716     9,173     2,149  
Net income (loss) available to common stockholders $ 3,592   $ (457 ) $ 9,968   $ (3,778 )
Diluted net income (loss) per share $ 0.04   $ (0.01 ) $ 0.12   $ (0.05 )

Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Statements of Operations
Unaudited   Three Months Ended
Sept. 30,   June 30,   March 31,   Dec. 31,   Sept. 30,
2011 2011 2011 2010 2010
Interest income: (in thousands, except per share data)
Loans $ 65,540 $ 64,919 $ 63,882 $ 64,985 $ 64,273
Investment securities 8,356 8,542 7,930 7,054 6,104
Federal funds sold and other   237     185     154     335     328  
Total interest income   74,133     73,646     71,966     72,374     70,705  
Interest expense:
Deposits 6,982 7,548 7,898 8,652 9,531
Borrowings and customer repurchase agreements 2,101 2,123 2,268 2,097 970
Junior subordinated and subordinated debt   465     689     702     714     736  
Total interest expense   9,548     10,360     10,868     11,463     11,237  
Net interest income 64,585 63,286 61,098 60,911 59,468
Provision for credit losses   11,180     11,891     10,041     18,384     22,965  
Net interest income after provision for credit losses   53,405     51,395     51,057     42,527     36,503  
Non-interest income
Mark-to-market gains (losses), net 6,420 336 (509 ) (6,710 ) (210 )
Securities impairment charges - (226 ) - (12 ) -
Gains on sales of investment securities, net 781 2,666 1,379 - 5,460
Trust and investment advisory services 661 657 636 608 1,001
Service charges 2,337 2,243 2,284 2,177 2,276
Operating lease income 353 580 671 864 998
Bank owned life insurance 1,189 1,822 1,184 1,027 773
Other   1,341     1,519     1,185     1,326     1,869  
  13,082     9,597     6,830     (720 )   12,167  
Non-interest expenses:
Salaries and employee benefits 23,319 22,960 22,840 21,125 21,860
Occupancy 5,126 5,044 4,854 5,075 4,890
Insurance 2,664 2,352 3,863 4,109 4,115
Repossessed asset and loan expenses 2,059 2,284 2,122 2,230 1,918
Net loss on sales and valuations of repossessed assets 2,128 8,633 6,129 12,991 4,855
Legal, professional and director's fees 1,912 2,361 1,366 2,038 1,546
Marketing 1,090 1,135 1,157 982 878
Intangible amortization 890 890 890 889 901
Customer service 900 828 892 1,050 987
Data Processing 895 928 848 948 842
Operating lease depreciation 245 327 421 542 627
Merger/restructure expense 974 (109 ) 217 1,651 -
Other   3,279     3,375     2,547     2,915     2,690  
  45,481     51,008     48,146     56,545     46,109  
Income (loss) from continuing operations before income taxes 21,006 9,984 9,741 (14,738 ) 2,561
Income tax expense (benefit)   7,514     3,295     4,029     (4,580 )   (79 )
Income (loss) from continuing operations $ 13,492 $ 6,689 $ 5,712 $ (10,158 ) $ 2,640
Loss from discontinued operations, net of tax   (481 )   (460 )   (559 )   (657 )   (631 )
Net income (loss) $ 13,011   $ 6,229   $ 5,153   $ (10,815 ) $ 2,009  
Preferred stock dividends 1,752 1,750 1,750 1,750 1,750
Accretion on preferred stock   7,667     753     753     734     716  
Net Income (loss) available to common stockholders $ 3,592   $ 3,726     $ 2,650     $ (13,299 )   $ (457 )
Diluted net income (loss) per share $ 0.04   $ 0.05   $ 0.03   $ (0.17 ) $ (0.01 )

Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Balance Sheets
Unaudited
         
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2011 2011 2011 2010 2010
Assets: (in millions)
Cash and due from banks $ 306.0 $ 534.6 $ 363.3 $ 215.8 $ 615.0
Federal funds sold   -     -     -     0.9     1.0  
Cash and cash equivalents   306.0     534.6     363.3     216.7     616.0  
 
Securities and money market investments 1,304.6 1,138.2 1,319.6 1,273.1 929.7
Loans:
Commercial 1,152.9 1,029.5 935.9 934.6 876.8
Commercial real estate - owner occupied 1,225.4 1,285.3 1,299.5 1,223.1 1,227.7
Construction and land development 404.4 396.3 391.7 451.5 488.3
Commercial real estate - non-owner occupied 1,239.8 1,170.0 1,086.9 1,038.5 981.4
Residential real estate 450.2 473.9 504.5 527.3 533.6
Consumer 60.3 62.6 65.7 71.5 71.4
Deferred fees, net   (6.5 )   (5.9 )   (6.2 )   (6.0 )   (5.7 )
4,526.5 4,411.7 4,278.0 4,240.5 4,173.5
Allowance for credit losses   (100.2 )   (104.4 )   (106.1 )   (110.7 )   (108.2 )
Loans, net   4,426.3     4,307.3     4,171.9     4,129.8     4,065.3  
 
Premises and equipment, net 106.2 109.2 112.0 114.4 116.5
Other repossessed assets 86.7 85.7 98.3 107.7 110.1
Bank owned life insurance 132.7 131.5 131.0 129.8 94.8
Goodwill and other intangibles 36.6 37.5 38.4 39.3 40.2
Other assets   146.8     164.1     170.3     183.1     206.5  
Total assets $ 6,545.9   $ 6,508.1   $ 6,404.8   $ 6,193.9   $ 6,179.1  
Liabilities and Stockholders' Equity:
Liabilities:
Deposits:
Non-interest bearing demand deposits $ 1,519.0 $ 1,516.8 $ 1,455.1 $ 1,443.3 $ 1,421.7
Interest bearing
Demand 466.0 456.5 521.2 523.8 645.4
Savings and money market 2,151.9 2,105.4 2,100.6 1,926.1 1,892.2
Time certificates   1,496.0     1,509.6     1,420.6     1,445.2     1,369.2  
Total deposits 5,632.9 5,588.3 5,497.5 5,338.4 5,328.5
Customer repurchase agreements   142.6     148.7     163.4     109.4     86.8  
Total customer funds 5,775.5 5,737.0 5,660.9 5,447.8 5,415.3
Borrowings 73.2 73.1 73.0 73.0 72.9
Junior subordinated debt 36.3 42.7 43.0 43.0 36.3
Accrued interest payable and other liabilities   28.6     39.6     26.3     27.9     34.8  
Total liabilities   5,913.6     5,892.4     5,803.2     5,591.7     5,559.3  
Stockholders' Equity
Common stock and additional paid-in capital 743.0 741.6 740.9 739.6 737.8
Preferred Stock 141.0 132.3 131.6 130.8 130.1
Retained earnings (deficit) (248.8 ) (252.4 ) (256.2 ) (258.8 ) (245.5 )
Accumulated other comprehensive income (loss)   (2.9 )   (5.8 )   (14.7 )   (9.4 )   (2.6 )
Total stockholders' equity   632.3     615.7     601.6     602.2     619.8  
Total liabilities and stockholders' equity $ 6,545.9   $ 6,508.1   $ 6,404.8   $ 6,193.9   $ 6,179.1  

Western Alliance Bancorporation and Subsidiaries
Changes in the Allowance For Credit Losses
Unaudited
       
Three Months Ended
Sept. 30,   June 30, March 31, Dec. 31, Sept. 30,
2011 2011 2011 2010 2010
 
(in thousands)
Balance, beginning of period $ 104,375 $ 106,133 $ 110,699 $ 108,170 $ 110,013
Provision for credit losses 11,180 11,891 10,041 18,384 22,965
Recoveries of loans previously charged-off:
Construction and land development 707 677 416 773 214
Commercial real estate 127 804 471 13 160
Residential real estate 440 172 269 304 1,209
Commercial and industrial 1,243 726 829 800 389
Consumer   41     44     25     36     47  
Total recoveries 2,558 2,423 2,010 1,926 2,019
Loans charged-off:
Construction and land development 2,369 1,516 4,198 3,221 3,843
Commercial real estate 2,484 4,286 6,114 7,297 12,813
Residential real estate 10,555 3,339 3,282 3,278 3,695
Commercial and industrial 1,420 5,926 1,407 2,823 5,036
Consumer   1,069     1,005     1,616     1,162     1,440  
Total loans charged-off 17,897 16,072 16,617 17,781 26,827
Net loans charged-off   15,339     13,649     14,607     15,855     24,808  
Balance, end of period $ 100,216   $ 104,375   $ 106,133   $ 110,699   $ 108,170  
 
Net charge-offs (annualized) to average loans outstanding 1.40 % 1.26 % 1.39 % 1.52 % 2.41 %
Allowance for credit losses to gross loans 2.21 2.37 2.48 2.61 2.59
Nonaccrual loans $ 113,713 $ 112,750 $ 114,246 $ 116,999 $ 130,905
Repossessed assets 86,692 85,732 98,312 107,655 110,096
Loans past due 90 days, still accruing 2,096 1,134 1,087 1,458 5,667
Loans past due 30 to 89 days, still accruing 12,414 11,581 30,689 18,164 20,432
Classified loans on accrual 110,654 126,681 128,434 140,377 156,295
Watch loans 167,571 190,045 204,470 194,905 205,114

Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields and Rates
Unaudited
       
Three Months Ended September 30,
2011     2010
Average Balance   Interest Average Yield/ Cost Average Balance Interest Average Yield/ Cost
Interest earning assets ($ in millions) ($ in thousands) ($ in millions) ($ in thousands)
Investment securities (1) $ 1,224.7 $ 8,356 2.91 % $ 903.3 $ 6,075 2.80 %
Federal funds sold and other 0.9 1 0.44 % 11.2 29 1.03 %
Loans (1) 4,393.2 65,540 5.92 % 4,115.9 64,273 6.20 %
Short term investments 380.8 213 0.22 % 421.2 299 0.28 %
Investment in restricted stock   35.4       23   0.26 %   39.8       29   0.29 %
Total interest earning assets 6,035.0 74,133 4.92 % 5,491.4 70,705 5.13 %
Non-interest earning assets
Cash and due from banks 121.7 121.3
Allowance for credit losses (105.3 ) (111.9 )
Bank owned life insurance 131.9 94.3
Other assets   375.0     402.1  
Total assets $ 6,558.3   $ 5,997.2  
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts $ 466.2 $ 410 0.35 % $ 659.3 $ 708 0.43 %
Savings and money market 2,127.8 3,184 0.59 % 1,890.0 4,032 0.85 %
Time certificates of deposit   1,499.2       3,388   0.90 %   1,341.6       4,791   1.42 %
Total interest-bearing deposits 4,093.2 6,982 0.68 % 3,890.9 9,531 0.97 %
Borrowings 220.7 2,101 3.78 % 118.8 970 3.24 %
Junior subordinated and subordinated debt   42.7       465   4.32 %   36.3       736   8.04 %
Total interest-bearing liabilities 4,356.6 9,548 0.87 % 4,046.0 11,237 1.10 %
Noninterest-bearing liabilities
Noninterest-bearing demand deposits 1,532.9 1,317.2
Other liabilities 33.9 27.6
Stockholders’ equity   634.9     606.4  
Total liabilities and stockholders' equity $ 6,558.3   $ 5,997.2  
Net interest income and margin $ 64,585 4.29 % $ 59,468 4.32 %
Net interest spread 4.05 % 4.03 %
 

(1) Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $634 and $307 for the third quarter ended 2011 and 2010, respectively.

Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields and Rates
Unaudited
           
Nine Months Ended September 30,
2011 2010
 
Average Balance Interest Average Yield/ Cost Average Balance Interest Average Yield/ Cost
Interest earning Assets ($ in millions) ($ in thousands) ($ in millions) ($ in thousands)
Investment securities (1) $ 1,258.0 $ 24,828 2.81 % $ 845.2 $ 17,679 2.91 %
Federal funds sold & other - 2 0.00 % 22.2 151 0.91 %
Loans (1) 4,311.6 194,341 6.03 % 4,083.4 190,641 6.24 %
Short term investments 288.0 502 0.23 % 473.1 862 0.24 %
Investment in restricted stock   36.1       72   0.27 %   40.7       106   0.35 %
Total interest earnings assets 5,893.7 219,745 5.02 % 5,464.6 209,439 5.14 %
Non-interest earning assets
Cash and due from banks 121.4 109.7
Allowance for credit losses (107.7 ) (115.0 )
Bank owned life insurance 131.1 93.5
Other assets   390.6     401.0  
Total assets $ 6,429.1   $ 5,953.8  
Interest-bearing liabilities
Interest-bearing deposits:
Interest bearing transaction accounts $ 479.2 $ 1,427 0.40 % $ 563.7 $ 2,223 0.53 %
Savings and money market 2,082.0 10,426 0.67 % 1,837.7 12,894 0.94 %
Time certificates of deposits   1,459.7       10,575   0.97 %   1,447.0       17,560   1.62 %
Total interest-bearing deposits 4,020.9 22,428 0.75 % 3,848.4 32,677 1.14 %
Borrowings 224.0 6,492 3.87 % 157.8 2,185 1.85 %
Junior subordinated and subordinated debt   42.9       1,856   5.78 %   71.1       2,934   5.52 %
Total interest-bearing liabilities $ 4,287.8 30,776 0.96 % $ 4,077.3 37,796 1.24 %
Noninterest-bearing liabilities
Noninterest-bearing demand deposits 1,487.2 1,249.4
Other liabilities 28.8 34.4
Stockholders’ equity   625.3     592.7  
Total liabilities and stockholders' equity $ 6,429.1   $ 5,953.8  
Net interest income and margin $ 188,969 4.32 % $ 171,643 4.22 %
Net interest spread 4.06 % 3.90 %
 

(1) Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $1,588 and $700 for the nine months September 30, 2011 and 2010, respectively.

Western Alliance Bancorporation and Subsidiaries
Operating Segment Results
Unaudited           Inter-  
segment Consoli-
Bank Western Torrey elimi- dated
of Nevada Alliance Bank Pines Bank* Other nations Company
At September 30, 2011 (dollars in millions)
Assets $ 2,853.0 $ 2,073.1 $ 1,623.9 $ 752.6 $ (756.7 ) $ 6,545.9
Gross loans and deferred fees, net 1,851.9 1,484.8 1,232.6 - (42.8 ) 4,526.5
Less: Allowance for credit losses   (63.4 )     (20.2 )     (16.6 )     -       -       (100.2 )
Net loans   1,788.5       1,464.6       1,216.0       -       (42.8 )     4,426.3  
Goodwill 23.2 - - 2.7 - 25.9
Deposits 2,466.5 1,768.4 1,400.3 - (2.3 ) 5,632.9
Stockholders' equity 320.2 189.2 149.2 639.5 (665.8 ) 632.3
 
No. of branches 12 16 11 - - 39
No. of FTE 409 215 209 78 - 911
 
Three Months Ended September 30, 2011:
(in thousands)
Net interest income $ 26,297 $ 20,684 $ 19,660 $ (2,056 ) $ - $ 64,585
Provision for credit losses   8,319       1,275       1,586       -       -       11,180  
Net interest income (loss) after
provision for credit losses 17,978 19,409 18,074 (2,056 ) - 53,405
Non-interest income 4,397 1,504 1,083 8,281 (2,183 ) 13,082
Non-interest expense   (20,245 )     (12,383 )     (10,099 )     (4,937 )     2,183       (45,481 )

Income (loss) from continuing operations before income taxes

2,130 8,530 9,058 1,288 - 21,006
Income tax expense (benefit)   441       3,009       3,680       384       -       7,514  

Income(loss) from continuing operations

1,689 5,521 5,378 904 - 13,492
Loss from discontinued operations, net   -       -       -       (481 )     -       (481 )
Net income (loss) $ 1,689     $ 5,521     $ 5,378     $ 423     $ -     $ 13,011  
 
 
Nine Months Ended September 30, 2011:

(in thousands)

Net interest income $ 79,582 $ 60,450 $ 55,588 $ (6,651 ) $ 188,969
Provision for credit losses   20,622       6,606       5,883       -       -       33,112  
Net interest income (loss) after
provision for credit losses 58,960 53,844 49,705 (6,651 ) - 155,857
Non-interest income 13,772 5,887 4,057 11,531 (5,738 ) 29,509
Non-interest expense   (64,656 )     (37,446 )     (30,588 )     (17,683 )     5,738       (144,635 )

Income (loss) from continuing operations before income taxes

8,076 22,285 23,174 (12,803 ) - 40,731
Income tax expense (benefit)   1,768       8,083       9,597       (4,610 )         14,838  

Income(loss) from continuing operations

6,308

14,202

13,577 (8,193 ) - 25,893
Loss from discontinued operations, net   -       -       -       (1,500 )     -       (1,500 )
Net income (loss) $ 6,308     $ 14,202     $ 13,577     $ (9,693 )   $ -     $ 24,393  
 
* Excludes discontinued operations

Western Alliance Bancorporation and Subsidiaries
Operating Segment Results
Unaudited           Inter-  
segment Consoli-
Bank Western Torrey elimi- dated
of Nevada Alliance Bank Pines Bank* Other nations Company
At September 30, 2010: (dollars in millions)
Assets $ 2,775.4 $ 1,962.1 $ 1,404.1 $ 735.9 $ (698.4 ) $ 6,179.1
Gross loans and deferred fees, net 1,939.5 1,266.8 1,009.9 - (42.7 ) 4,173.5
Less: Allowance for credit losses   (68.2 )     (23.4 )     (16.6 )     -       -       (108.2 )
Net loans   1,871.3       1,243.4       993.3       -       (42.7 )     4,065.3  
Goodwill 23.2 - - 2.7 - 25.9
Deposits 2,407.5 1,730.6 1,232.6 - (42.2 ) 5,328.5
Stockholders' equity 312.8 162.8 134.6 625.6 (616.0 ) 619.8
 
No. of branches 12 16 11 - - 39
No. of FTE 414 235 201 57 - 907
 
Three Months Ended September 30, 2010: (in thousands)
Net interest income $ 26,373 $ 18,368 $ 15,830 $ (1,103 ) $ - $ 59,468
Provision for credit losses   19,600       1,199       2,166       -       -       22,965  

Net interest income after provision for credit losses

6,773 17,169 13,664 (1,103 ) - 36,503
Non-interest income 3,435 3,382 1,150 3,810 390 12,167
Noninterest expense   (21,154 )     (13,707 )     (7,882 )     (4,462 )     1,096       (46,109 )

Income (loss) from continuing operations before income taxes

(10,946 ) 6,844 6,932 (1,755 ) 1,486 2,561
Income tax expense (benefit)   (4,064 )     2,517       2,906       (1,438 )     -       (79 )

Income(loss) from continuing operations

(6,882 ) 4,327 4,026 (317 ) 1,486 2,640
Loss from discontinued operations, net   -       -       -       (631 )     -       (631 )
Net income (loss) $ (6,882 )   $ 4,327     $ 4,026     $ (948 )   $ 1,486     $ 2,009  
 
 
Nine Months Ended September 30, 2010:

(in thousands)

Net interest income $ 77,680 $ 50,226 $ 45,401 $ (1,664 ) $ - $ 171,643
Provision for credit losses   60,734       6,375       7,718       -       -       74,827  
Net interest income (loss) after
provision for credit losses 16,946 43,851 37,683 (1,664 ) - 96,816
Non-interest income 17,547 7,610 3,449 17,741 1,209 47,556
Non-interest expense   (66,923 )     (36,431 )     (28,672 )     (12,709 )     4,522       (140,213 )

Income (loss) from continuing operations before income taxes

(32,430 ) 15,030 12,460 3,368 5,731 4,159
Income tax expense (benefit)   (11,804 )     5,784       5,377       (1,187 )     -       (1,830 )

Income(loss) from continuing operations

(20,626 )

9,246

7,083 4,555 5,731 5,989
Loss from discontinued operations, net   -       -       -       (2,368 )     -       (2,368 )
Net income (loss) $ (20,626 )   $ 9,246     $ 7,083     $ 2,187     $ 5,731     $ 3,621  
 
* Excludes discontinued operations

Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures (Unaudited)
         
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2011 2011 2011 2010 2010
(dollars in thousands)
Total stockholder's equity $ 632,255 $ 615,653 $ 601,576 $ 602,174 $ 619,764
Less:
Goodwill and intangible assets   36,622     37,511     38,401     39,291     40,180  
Total tangible stockholders' equity 595,633 578,142 563,175 562,883 579,584
Less:
Preferred stock   141,000     132,333     131,580     130,827     130,094  
Total tangible common equity 454,633 445,809 431,595 432,056 449,490
Add:
Deferred tax   3,835     4,148     4,461     4,774     5,087  
Total tangible common equity, net of tax $ 458,468   $ 449,957   $ 436,056   $ 436,830   $ 454,577  
Total assets $ 6,545,890 $ 6,508,089 $ 6,404,838 $ 6,193,883 $ 6,179,146
Less:
Goodwill and intangible assets   36,622     37,511     38,401     39,291     40,180  
Tangible assets 6,509,268 6,470,578 6,366,437 6,154,592 6,138,966
Add:
Deferred tax   3,835     4,148     4,461     4,774     5,087  
Total tangible assets, net of tax $ 6,513,103   $ 6,474,726   $ 6,370,898   $ 6,159,366   $ 6,144,053  
Tangible equity ratio (1) 9.1 % 8.9 % 8.8 % 9.1 % 9.4 %
Tangible common equity ratio (2) 7.0 % 6.9 % 6.8 % 7.0 % 7.3 %
Common shares outstanding 82,263 82,139 82,237 81,669 81,503
Tangible book value per share, net of tax (3) $ 5.57 $ 5.48 $ 5.30 $ 5.35 $ 5.58
 
Three Months Ended
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2011 2011 2011 2010 2010
(in thousands)
Total non-interest income $ 13,082 $ 9,597 $ 6,830 $ (720 ) $ 12,167
Less:
Mark-to-market (losses) gains, net 6,420 336 (509 ) (6,710 ) (210 )
Securities impairment charges - (226 ) - (12 ) -
Gains on sales of investment securities, net 781 2,666 1,379 - 5,460
Gain on extinguishment of debt - - - - -
Gain on sale of subsidiary   -     -     -     -     568  
Total operating non-interest income 5,881 6,821 5,960 6,002 6,349
Add: net interest income   64,585     63,286     61,098     60,911     59,468  
Net revenue (4) $ 70,466   $ 70,107   $ 67,058   $ 66,913   $ 65,817  
 
Total non-interest expense $ 45,481 $ 51,008 $ 48,146 $ 56,545 $ 46,109
Less:

Net loss (gain) on sales/valuations of repossessed assets

2,128 8,633 6,129 12,991 4,855
Merger/restructure 974 (109 ) 217 1,651 -
Goodwill impairment   -     -     -     -     -  
Total operating non-interest expense (4) $ 42,379   $ 42,484   $ 41,800   $ 41,903   $ 41,254  
 
Net revenue $ 70,466 $ 70,107 $ 67,058 $ 66,913 $ 65,817
Less:
Operating non-interest expense   42,379     42,484     41,800     41,903     41,254  
Pre-tax, pre-provision operating earnings (5) $ 28,087   $ 27,623   $ 25,258   $ 25,010   $ 24,563  

Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures (Unaudited)
         
Three Months Ended
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2011 2011 2011 2010 2010
(in thousands)
Total operating non-interest expense $ 42,379   $ 42,484   $ 41,800   $ 41,903   $ 41,254  
Divided by:
Total net interest income $ 64,585 $ 63,286 $ 61,098 $ 60,911 $ 59,468
Add:
Tax equivalent interest adjustment 634 473 481 464 307
Operating non-interest income   5,881     6,821     5,960     6,002     6,349  
$ 71,100   $ 70,580   $ 67,539   $ 67,377   $ 66,124  
Efficiency ratio - tax equivalent basis (6) 59.6 % 60.2 % 61.9 % 62.2 % 62.4 %
 
Three Months Ended
Sept. 30, Sept. 30,
2011 2010
(in thousands)
Stockholder's equity $ 632,255 $ 619,764
Less:
Accumulated other comprehensive (loss) income (2,945 ) (2,598 )
Non-qualifying goodwill and intangibles 33,497 35,837
Other non-qualifying assets 3,038 28,919
Disallowed unrealized losses on equity securities - -
Add:
Qualifying trust preferred securities 34,348 34,326
Tier 1 capital (regulatory) (7) (10) 633,013 591,932
Less:
Qualifying non-controlling interests 90 218
Qualifying trust preferred securities 34,348 34,326
Preferred stock   141,000     130,094  
Estimated Tier 1 common equity (8) (10) $ 457,575 $ 427,294
Divided by:
Estimated risk-weighted assets (regulatory (8) (10) $ 5,345,928   $ 4,773,075  
Tier 1 common equity ratio (8) (10) 8.6 % 9.0 %
 
Sept. 30, Sept. 30,
2011 2010
(in thousands)
Classified assets $ 311,392 $ 398,897
Divide:
Tier 1 capital (regulatory) (7) (10) 633,013 591,932
Plus: Allowance for credit losses   100,216     108,170  
Total Tier 1 capital plus allowance for credit losses $ 733,229   $ 700,102  
Classified assets to Tier 1 capital plus allowance (9) (10) 42 % 57 %

(1) We believe this non-GAAP ratio provides a critical metric with which to analyze and evaluate financial condition and capital strength.

(2) We believe this non-GAAP ratio provides critical metrics with which to analyze and evaluate financial condition and capital strength.

(3) 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.

(4) We believe this non-GAAP measurement is better indicative of the cash generating capacity of the Company.

(5) We believe this non-GAAP measurement is a key indicator of the earnings power of the Company which is otherwise obscured by the asset quality issues.

(6) We believe this non-GAAP ratio provides understanding of the operating efficiency of the Company.

(7) Under the guidelines of the Federal Reserve and the FDIC in effect at December 31, 2010, Tier 1 capital consisted of common stock, retained earnings, non-cumulative perpetual preferred stock, trust preferred securities up to a certain limit, and minority interests in certain subsidiaries, less most other intangible assets.

(8) Tier 1 common equity 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 four broad risk categories. The aggregated dollar amount in each category is then multiplied by the risk weighting assigned to that category. The resulting weighted values from each of the four categories are added together and this sum is the risk-weighted assets total that, as adjusted, comprises the denominator (risk-weighted assets) to determine the Tier 1 capital ratio. Adjustments are made to Tier 1 capital to arrive at Tier 1 common equity. Tier 1 common equity is also divided by the risk-weighted assets to determine the Tier 1 common equity ratio. We believe this non-GAAP ratio provides a critical metric with which to analyze and evaluate financial condition and capital strength.

(9) We believe this non-GAAP ratio provides a critical regulatory metric in which to analyze asset quality.
(10) Preliminary until Call Reports are filed.




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