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Western Alliance Reports Fourth Quarter 2012 Net Income Of $32.1 Million, Or $0.37 Per Share; Full Year Net Income Of $72.8 Million, Or $0.83 Per Share

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 2 Non GAAP Financial Measures

                       
Western Alliance Bancorporation and Subsidiaries
Summary Consolidated Financial Data
Unaudited
 
At or for the Three Months For the Twelve Months
Ended December 31, Ended December 31,
2012 2011 Change % 2012 2011 Change %
Selected Balance Sheet Data:
(dollars in millions)
Total assets $ 7,622.6 $ 6,844.5 11.4 %
Loans, net of deferred fees

5,709.3

4,780.1

19.4

Securities and money market investments 1,236.6 1,490.5 (17.0 )
Total deposits 6,455.2 5,658.5 14.1
Borrowings 272.7 476.9 (42.8 )
Junior subordinated debt 36.2 37.0 (2.2 )
Stockholders' equity 759.6 636.7 19.3
 
Selected Income Statement Data:
(dollars in thousands)
Interest income $ 84,343 $ 76,846 9.8 % $ 318,295 $ 296,591 7.3 %
Interest expense   6,888     8,147   (15.5 )   28,032     38,923   (28.0 )
Net interest income 77,455 68,699 12.7 290,263 257,668 12.6
Provision for loan losses   11,501     13,076   (12.0 )   46,844     46,188   1.4
Net interest income after provision for credit losses 65,954 55,623 18.6 243,419 211,480 15.1
Non-interest income 24,463 4,948 394.4 44,726 34,457 29.8
Non-interest expense   48,989     50,963   (3.9 )   188,860     195,598   (3.4 )

Income from continuing operations before income taxes

41,428 9,608 331.2 99,285 50,339 97.2
Income tax expense   7,509     2,011   273.4   23,961     16,849   42.2
Income from continuing operations 33,919 7,597 346.5 75,324 33,490 124.9 %
Loss on discontinued operations, net   (1,804 )   (496 ) (263.7 )   (2,490 )   (1,996 )
Net income $ 32,115   $ 7,101   352.3 % $ 72,834   $ 31,494  
Diluted net income per common share from continuing operations $ 0.39   $ 0.07   $ 0.86   $ 0.21  
Diluted net loss per common share from discontinued operations, net of tax $ (0.02 ) $ (0.01 ) $ (0.03 ) $ (0.02 )
Diluted net income per common share $ 0.37   $ 0.07   428.6 % $ 0.83   $ 0.19   342.2 %
 
Common Share Data:
Diluted net income per common share $ 0.37 $ 0.07 428.6 % $ 0.83 $ 0.19 342.2 %
Book value per common share $ 7.15 $ 6.02 18.8 %

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

$ 6.84 $ 5.63 21.4 %
Average shares outstanding (in thousands):
Basic 84,416 81,026 4.2 82,285 80,909 1.7
Diluted 85,152 81,368 4.7 82,912 81,183 2.1
Common shares outstanding 86,465 82,362 5.0
 

(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 Twelve Months
Ended December 31, Ended December 31,
2012 2011 Change % 2012 2011 Change %
(in thousands, except per share data)
Selected Performance Ratios:
Return on average assets (1) 1.68 % 0.42 % 300.0 % 1.01 % 0.49 % 106.1 %
Return on average stockholders' equity (1) 17.03 4.34 292.4 10.54 4.99 111.2
Net interest margin (1) 4.55 4.51 0.9 4.49 4.37 2.7
Net interest spread 4.37 4.30 1.6 4.31 4.12 4.6
Efficiency ratio - tax equivalent basis (2) 53.48 56.49 (5.3 ) 55.39 59.46 (6.9 )
Loan to deposit ratio 88.45 84.48 4.7
 
Capital Ratios:
Tangible equity (2) 9.6 % 8.8 % 8.9 %
Tangible common equity (2) 7.8 6.8 14.8
Tier one common equity (2) 8.6 8.1 5.9
Tier 1 Leverage ratio (3) 10.1 9.8 3.1
Tier 1 Risk Based Capital (3) 11.3 11.3 0.0
Total Risk Based Capital (3) 12.6 12.6 0.0
 
Asset Quality Ratios:
Net charge-offs to average loans outstanding (1) 0.99 % 1.24 % (20.2 ) % 0.99 % 1.32 % (25.0 ) %
Nonaccrual loans to gross loans 1.83 1.89 (3.2 )
Nonaccrual loans and repossessed assets to total assets 2.39 2.62 (8.8 )
Loans past due 90 days and still accruing to total loans 0.02 0.05 (60.0 )
Allowance for credit losses to loans 1.67 2.07 (19.3 )
Allowance for credit losses to nonaccrual loans 91.13 109.71 (16.9 )
 

(1)

   

Annualized for the three month periods ended December 31, 2012 and 2011. See tables on page 12 and 13.

(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 Income Statements
Unaudited Three Months Ended Twelve Months Ended
December 31, December 31,
2012 2011 2012 2011
Interest income: (dollars in thousands)
Loans $ 75,303 $ 67,102 $ 280,985 $ 261,443
Investment securities 8,794 9,591 36,802 34,419
Federal funds sold and other   246     153     508     729  
Total interest income   84,343     76,846     318,295     296,591  
Interest expense:
Deposits 3,890 5,549 16,794 27,977
Customer repurchase agreements 35 73 194 336
Borrowings 2,493 2,053 9,116 8,282
Junior subordinated debt   470     472     1,928     2,328  
Total interest expense   6,888     8,147     28,032     38,923  
Net interest income 77,455 68,699 290,263 257,668
Provision for credit losses   11,501     13,076     46,844     46,188  
Net interest income after provision for credit losses   65,954     55,623     243,419     211,480  

Non-interest income:

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

(48 ) (626 ) 653 5,621
Securities impairment charges - - - (226 )
Gains on sales of investment securities, net 1,447 (28 ) 3,949 4,798
Service charges 2,438 2,238 9,452 9,102
Bank owned life insurance 1,080 1,177 4,439 5,372
Amortization of affordable housing investments (1,069 ) - (1,779 ) -
Bargain purchase gain from acquisition 17,562 - 17,562 -
Other   3,053     2,187     10,450     9,790  
  24,463     4,948     44,726     34,457  
Non-interest expenses:
Salaries and employee benefits 26,885 24,021 105,044 93,140
Occupancy 4,769 4,948 18,815 19,972
Net loss on sales and valuations of repossessed assets 529 7,702 4,207 24,592
Insurance 2,188 2,166 8,511 11,045
Loan and repossessed asset expenses 2,102 1,661 6,675 8,126
Legal, professional and director's fees 1,849 2,039 8,229 7,678
Marketing 1,546 1,294 5,607 4,676
Data Processing 2,071 895 5,749 3,566
Intangible amortization 596 889 3,256 3,559
Customer service 678 716 2,604 3,336
Merger/restructure expense 2,706 482 2,819 1,564
Goodwill and intangible impairment - - 3,435 -
Other   3,070     4,150     13,909     14,344  
  48,989     50,963     188,860     195,598  
Income from continuing operations before income taxes 41,428 9,608 99,285 50,339
Income tax expense   7,509     2,011     23,961     16,849  
Income from continuing operations 33,919 7,597 75,324 33,490
Loss from discontinued operations net of tax benefit   (1,804 )   (496 )   (2,490 )   (1,996 )
Net income 32,115 7,101 72,834 31,494
Preferred stock dividends 353 1,781 3,793 7,033
Accretion on preferred stock discount   -     -     -     9,173  
Net income available to common stockholders $ 31,762   $ 5,320   $ 69,041   $ 15,288  
Diluted net income per share $ 0.37   $ 0.07   $ 0.83   $ 0.19  
 
 

                             
Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Income Statements
Unaudited Three Months Ended
December 31, September 30, June 30, March 31, December 31,
2012 2012 2012 2012 2011
Interest income: (in thousands, except per share data)
Loans $ 75,303 $ 69,580 $ 68,342 $ 67,760 $ 67,102
Investment securities 8,794 9,034 9,389 9,585 9,591
Federal funds sold and other   246     55     115     92     153  
Total interest income   84,343     78,669     77,846     77,437     76,846  
Interest expense:
Deposits 3,890 3,974 4,168 4,762 5,549
Borrowings and customer repurchase agreements 2,528 2,262 2,386 2,134 2,126
Junior subordinated debt   470     487     487     484     472  
Total interest expense   6,888     6,723     7,041     7,380     8,147  
Net interest income 77,455 71,946 70,805 70,057 68,699
Provision for credit losses   11,501     8,932     13,330     13,081     13,076  
Net interest income after provision for credit losses   65,954     63,014     57,475     56,976     55,623  

Non-interest income:

Mark-to-market gains (losses), net (48 ) 470 564 (333 ) (626 )
Gains on sales of investment securities, net 1,447 1,031 1,110 361 (28 )
Service charges 2,438 2,412 2,317 2,285 2,238
Bank owned life insurance 1,080 1,116 1,120 1,123 1,177
Amortization of affordable housing investments (1,069 ) (651 ) (59 ) - -
Bargain purchase gain from acquisition 17,562 - - - -
Other   3,053     2,604     2,345     2,448     2,187  
  24,463     6,982     7,397     5,884     4,948  
Non-interest expenses:
Salaries and employee benefits 26,885 25,500 25,995 26,664 24,021
Occupancy 4,769 4,655 4,669 4,722 4,948
Insurance 2,188 2,121 2,152 2,050 2,166
Loan and repossessed asset expenses 2,102 1,236 1,653 1,684 1,661
Net loss on sales and valuations of repossessed assets 529 126 901 2,651 7,702
Legal, professional and director's fees 1,849 2,291 2,517 1,572 2,039
Marketing 1,546 1,231 1,459 1,371 1,294
Intangible amortization 596 880 890 890 889
Customer service 678 653 682 591 716
Data Processing 2,071 1,390 1,293 995 895
Merger/restructure expense 2,706 113 - - 482
Goodwill and intangible impairment - 3,435 - - -
Other   3,070     3,912     3,220     3,707     4,150  
  48,989     47,543     45,431     46,897     50,963  
Income from continuing operations before income taxes 41,428 22,453 19,441 15,963 9,608
Income tax expense   7,509     6,752     5,259     4,441     2,011  
Income from continuing operations $ 33,919 $ 15,701 $ 14,182 $ 11,522 $ 7,597
Loss from discontinued operations, net of tax   (1,804 )   (243 )   (221 )   (222 )   (496 )
Net income $ 32,115   $ 15,458   $ 13,961   $ 11,300   $ 7,101  
Preferred stock dividends 353 352 1,325 1,763 1,781
Net Income available to common stockholders $ 31,762   $ 15,106     $ 12,636     $ 9,537     $ 5,320  
Diluted net income per share $ 0.37   $ 0.18   $ 0.15   $ 0.12   $ 0.07  
 
 

                             
Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Balance Sheets
Unaudited
 
December 31, September 30, June 30, March 31, December 31,
2012 2012 2012 2012 2011
Assets: (in millions)
Cash and due from banks $ 204.6 $ 168.1 $ 178.9 $ 179.8 $ 155.0
Securities purchased under agreement to resell   -     139.8     -     -     -  
Cash and cash equivalents 204.6 307.9 178.9 179.8 155.0
Securities and money market investments 1,236.6 1,338.9 1,401.5 1,423.2 1,490.5
Loans held for sale 31.1 - - - -

Loans held for investment:

Commercial 1,947.8 1,756.0 1,573.6 1,436.5 1,336.6
Commercial real estate - owner occupied 1,396.8 1,331.3 1,310.3 1,289.9 1,252.2
Construction and land development 394.3 379.8 360.6 347.7 381.7
Commercial real estate - non-owner occupied 1,505.6 1,407.1 1,440.4 1,365.6 1,301.2
Residential real estate 407.9 408.4 430.4 434.5 443.0
Consumer 31.8 56.6 55.8 58.7 72.5
Deferred fees, net   (6.0 )   (6.3 )   (6.3 )   (6.7 )   (7.1 )
5,678.2 5,332.9 5,164.8 4,926.2 4,780.1
Allowance for credit losses   (95.4 )   (97.4 )   (97.5 )   (98.1 )   (99.2 )
Loans, net   5,582.8     5,235.5     5,067.3     4,828.1     4,680.9  
Premises and equipment, net 107.9 106.9 106.9 105.1 105.5
Other repossessed assets 77.2 78.2 77.0 81.4 89.1
Bank owned life insurance 138.3 137.3 136.1 135.0 133.9
Goodwill and other intangibles 29.8 29.0 34.0 34.8 35.7
Other assets   214.3     169.9     161.9     137.9     153.9  
Total assets $ 7,622.6   $ 7,403.6   $ 7,163.6   $ 6,925.3   $ 6,844.5  
Liabilities and Stockholders' Equity:
Liabilities:
Deposits:
Non-interest bearing demand deposits $ 1,933.2 $ 1,840.8 $ 1,842.1 $ 1,757.7 $ 1,558.2

Interest bearing:

Demand 582.3 514.7 540.6 527.2 482.7
Savings and money market 2,573.5 2,541.2 2,438.4 2,224.1 2,166.6
Time certificates   1,366.2     1,265.3     1,180.3     1,390.1     1,451.0  
Total deposits 6,455.2 6,162.0 6,001.4 5,899.1 5,658.5
Customer repurchase agreements   79.0     73.1     86.9     114.4     123.6  
Total customer funds 6,534.2 6,235.1 6,088.3 6,013.5 5,782.1
Securities sold short - 138.3 - - -
Borrowings 193.7 223.6 303.5 193.4 353.3
Junior subordinated debt 36.2 36.2 36.7 37.3 37.0
Accrued interest payable and other liabilities   98.9     72.4     63.0     27.0     35.4  
Total liabilities   6,863.0     6,705.6     6,491.5     6,271.2     6,207.8  
Stockholders' Equity
Common stock and additional paid-in capital 784.9 751.1 748.1 746.2 743.8
Preferred Stock 141.0 141.0 141.0 141.0 141.0
Accumulated deficit (174.5 ) (206.2 ) (221.3 ) (234.0 ) (243.5 )
Accumulated other comprehensive income (loss)   8.2     12.1     4.3     0.9     (4.6 )
Total stockholders' equity   759.6     698.0     672.1     654.1     636.7  
Total liabilities and stockholders' equity $ 7,622.6   $ 7,403.6   $ 7,163.6   $ 6,925.3   $ 6,844.5  
 
 

                             
Western Alliance Bancorporation and Subsidiaries
Changes in the Allowance For Credit Losses
Unaudited
 
Three Months Ended
December 31, September 30, June 30, March 31, December 31,
2012 2012 2012 2012 2011
(in thousands)
Balance, beginning of period $ 97,410 $ 97,512 $ 98,122 $ 99,170 $ 100,216
Provision for credit losses 11,501 8,932 13,330 13,081 13,076
Recoveries of loans previously charged-off:
Construction and land development 2,033 567 217 86 354
Commercial real estate 397 633 561 1,705 755
Residential real estate 313 153 274 340 179
Commercial and industrial 372 501 1,417 777 603
Consumer   63     38     214     38     64  
Total recoveries 3,178 1,892 2,683 2,946 1,955
Loans charged-off:
Construction and land development 405 2,315 3,185 5,087 3,155
Commercial real estate 7,143 1,470 5,641 4,912 9,244
Residential real estate 1,307 2,242 2,094 1,420 1,895
Commercial and industrial 4,654 4,100 4,933 3,654 1,004
Consumer (1)   3,153     799     770     2,002     779  
Total loans charged-off 16,662 10,926 16,623 17,075 16,077
Net loans charged-off   13,484     9,034     13,940     14,129     14,122  
Balance, end of period $ 95,427   $ 97,410   $ 97,512   $ 98,122   $ 99,170  
 
Net charge-offs (annualized) to average loans outstanding 0.99 % 0.70 % 1.11 % 1.18 % 1.24 %
Allowance for credit losses to gross loans 1.67 1.83 1.89 1.99 2.07
Nonaccrual loans $ 104,716 $ 121,238 $ 104,324 $ 103,486 $ 90,392
Repossessed assets 77,247 78,234 76,994 81,445 89,104
Loans past due 90 days, still accruing 1,388 1,710 795 1,011 2,589
Loans past due 30 to 89 days, still accruing 16,565 10,181 13,848 12,040 13,731
Classified loans on accrual 112,637 116,841 135,913 98,170 112,147
Watch loans 103,550 97,681 91,924 132,829 147,112
 
(1)     Increase due to planned disposition of affinity credit card business
 
 

                       
Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields and Rates
Unaudited
 
Three Months Ended December 31,

2012 (2)

2011

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) $ 1,329.3 $ 8,794 3.25 % $ 1,452.8 $ 9,591 3.01 %
Federal funds sold and other 1.3 1 0.28 % 2.4 - 0.00 %
Loans (1) 5,450.0 75,303 5.60 % 4,557.0 67,102 5.84 %
Short term investments 267.1 14 0.02 % 125.1 127 0.40 %
Investment in restricted stock   32.0     231 2.89 %   34.1     26 0.30 %
Total interest earning assets 7,079.7 84,343 4.94 % 6,171.4 76,846 5.03 %
Non-interest earning assets
Cash and due from banks 121.2 113.4
Allowance for credit losses (99.1 ) (100.8 )
Bank owned life insurance 137.6 133.1
Other assets   364.0     351.9  
Total assets $ 7,603.4   $ 6,669.0  
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts $ 528.1 $ 301 0.23 % $ 475.8 $ 333 0.28 %
Savings and money market 2,539.8 1,973 0.31 % 2,174.4 2,431 0.44 %
Time certificates of deposit   1,406.9     1,616 0.46 %   1,463.9     2,785 0.75 %
Total interest-bearing deposits 4,474.8 3,890 0.35 % 4,114.1 5,549 0.54 %
Borrowings 299.6 2,528 3.38 % 266.8 2,126 3.16 %
Junior subordinated debt   36.2     470 5.19 %   36.4     472 5.14 %
Total interest-bearing liabilities 4,810.6 6,888 0.57 % 4,417.3 8,147 0.73 %
Noninterest-bearing liabilities
Noninterest-bearing demand deposits 1,948.4 1,575.0
Other liabilities 94.4 27.9
Stockholders’ equity   750.0     648.8  
Total liabilities and stockholders' equity $ 7,603.4   $ 6,669.0  
Net interest income and margin $ 77,455 4.55 % $ 68,699 4.51 %
Net interest spread 4.37 % 4.30 %
 

(1)

   

Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $3,012 and $1,425 for the fourth quarter ended 2012 and 2011, respectively.

(2)

Yields for 2012 calculated on a 30-day month/360-days-per-year basis.

 
 

                     
Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields and Rates
Unaudited
     
Twelve Months Ended December 31,
2012 (2) 2011

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) $ 1,385.3 $ 36,802 3.17 % $ 1,307.1 $ 34,419 2.86 %
Federal funds sold & other 0.6 2 0.33 % 0.9 1 0.11 %
Loans (1) 5,110.2 280,985 5.55 % 4,373.5 261,443 5.98 %
Short term investments 155.8 140 0.09 % 247.0 629 0.25 %
Investment in restricted stock   33.1     366 1.11 %   35.6     99 0.28 %
Total interest earnings assets 6,685.0 318,295 4.91 % 5,964.1 296,591 5.02 %
Non-interest earning assets
Cash and due from banks 116.9 119.5
Allowance for credit losses (98.9 ) (105.9 )
Bank owned life insurance 136.0 131.6
Other assets   354.4     377.1  
Total assets $ 7,193.4   $ 6,486.4  
Interest-bearing liabilities
Interest-bearing deposits:
Interest bearing transaction accounts $ 515.3 $ 1,220 0.24 % $ 478.3 $ 1,759 0.37 %
Savings and money market 2,371.5 8,088 0.34 % 2,105.3 12,858 0.61 %
Time certificates of deposits   1,359.5     7,486 0.55 %   1,460.7     13,360 0.91 %
Total interest-bearing deposits 4,246.3 16,794 0.40 % 4,044.3 27,977 0.69 %
Borrowings 369.0 9,310 2.52 % 234.8 8,618 3.67 %
Junior subordinated debt   36.8     1,928 5.24 %   41.3     2,328 5.64 %
Total interest-bearing liabilities $ 4,652.1 28,032 0.60 % $ 4,320.4 38,923 0.90 %
Noninterest-bearing liabilities
Noninterest-bearing demand deposits 1,788.3 1,509.4
Other liabilities 62.0 25.3
Stockholders’ equity   691.0     631.3  
Total liabilities and stockholders' equity $ 7,193.4   $ 6,486.4  
Net interest income and margin $ 290,263 4.49 % $ 257,668 4.37 %
Net interest spread 4.31 % 4.12 %
 

(1)

   

Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $9,738 and $3,014 for the twelve months December 31, 2012 and 2011, respectively.

(2)

Yields for 2012 were calculated on a 30-day month/360-days-per-year basis.

 
 

                   
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 December 31, 2012 (dollars in millions)
Assets $ 3,029.1 $ 2,565.1 $ 2,019.8 $ 902.0 $ (893.4 ) $ 7,622.6
Held for sale loans - - 31.1 - - 31.1
Gross loans and deferred fees, net 2,183.3 2,037.1 1,477.1 23.5 (42.8 ) 5,678.2
Less: Allowance for credit losses   (58.2 )   (21.3 )   (15.6 )   (0.3 )   -     (95.4 )
Net loans   2,125.1     2,015.8     1,461.5     23.2     (42.8 )   5,582.8  
Goodwill 23.2 - - - - 23.2
Deposits 2,569.1 2,224.2 1,679.3 - (17.4 ) 6,455.2
FHLB advances and other - 25.0 95.0 - - 120.0
Stockholders' equity 378.2 224.0 169.1 780.9 (792.6 ) 759.6
 
No. of branches 12 16 12 - - 40
No. of FTE 400 254 233 95 - 982
 
Three Months Ended December 31, 2012: (in thousands)
Net interest income $ 30,127 $ 26,745 $ 22,247 $ (1,664 ) $ - $ 77,455
Provision for credit losses   6,532     1,369     3,300     300     -     11,501  

Net interest income (loss) after provision for credit losses

23,595 25,376 18,947 (1,964 ) - 65,954
Non-interest income (1) 5,269 1,546 763 19,959 (3,074 ) 24,463
Non-interest expense   (18,616 )   (13,155 )   (11,349 )   (8,943 )   3,074     (48,989 )

Income (loss) from continuing operations before income taxes

10,248 13,767 8,361 9,052 - 41,428
Income tax expense (benefit)   2,692     3,349     3,146     (1,678 )   -     7,509  
Income (loss) from continuing operations 7,556 10,418 5,215 10,730 - 33,919
Loss from discontinued operations, net   -     -     -     (1,804 )   -     (1,804 )
Net income (loss) $ 7,556   $ 10,418   $ 5,215   $ 8,926   $ -   $ 32,115  
 
Twelve Months Ended December 31, 2012: (in thousands)
Net interest income $ 113,181 $ 98,309 $ 86,653 $ (7,880 ) $ - $ 290,263
Provision for credit losses   35,378     2,584     8,582     300     -     46,844  

Net interest income (loss) after provision for credit losses

77,803 95,725 78,071 (8,180 ) - 243,419
Non-interest income (1) 16,401 6,566 3,875 29,684 (11,800 ) 44,726
Non-interest expense   (72,052 )   (49,141 )   (44,841 )   (34,626 )   11,800     (188,860 )

Income (loss) from continuing operations before income taxes

22,152 53,150 37,105 (13,122 ) - 99,285
Income tax expense (benefit)   4,033     16,380     14,401     (10,853 )   -     23,961  
Income (loss) from continuing operations 18,119 36,770 22,704 (2,269 ) - 75,324
Loss from discontinued operations, net   -     -     -     (2,490 )   -     (2,490 )
Net income (loss) $ 18,119   $ 36,770   $ 22,704   $ (4,759 ) $ -   $ 72,834  
 

*

   

Excludes discontinued operations

(1)

Includes bargain purchase gain on acquisition

 
 

                   
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 December 31, 2011 (dollars in millions)
Assets $ 2,877.6 $ 2,234.7 $ 1,728.4 $ 762.3 $ (758.5 ) $ 6,844.5
Gross loans and deferred fees, net 1,859.1 1,644.9 1,318.9 - (42.8 ) 4,780.1
Less: Allowance for credit losses   (61.0 )   (21.7 )   (16.5 )   -     -     (99.2 )
Net loans   1,798.1     1,623.2     1,302.4     -     (42.8 )   4,680.9  
Goodwill 23.2 - - 2.7 - 25.9
Deposits 2,377.3 1,877.5 1,416.8 - (13.1 ) 5,658.5
FHLB advances and other 115.0 55.0 110.0 - - 280.0
Stockholders' equity 320.8 192.7 152.8 644.0 (673.6 ) 636.7
 
No. of branches 11 16 12 - - 39
No. of FTE 405 222 214 101 - 942
 
Three Months Ended December 31, 2011: (in thousands)
Net interest income $ 27,734 $ 22,499 $ 20,554 $ (2,088 ) $ - $ 68,699
Provision for credit losses   9,000     3,470     606     -     -     13,076  

Net interest income (loss) after provision for credit losses

18,734 19,029 19,948 (2,088 ) - 55,623
Non-interest income 3,450 1,491 1,028 1,248 (2,269 ) 4,948
Non-interest expense   (21,159 )   (12,070 )   (10,970 )   (9,033 )   2,269     (50,963 )

Income (loss) from continuing operations before income taxes

1,025 8,450 10,006 (9,873 ) - 9,608
Income tax expense (benefit)   (142 )   2,807     4,078     (4,732 )   -     2,011  

Income (loss) from continuing operations

1,167 5,643 5,928 (5,141 ) - 7,597
Loss from discontinued operations, net   -     -     -     (496 )   -     (496 )
Net income (loss) $ 1,167   $ 5,643   $ 5,928   $ (5,637 ) $ -   $ 7,101  
 
Twelve Months Ended December 31, 2011: (in thousands)
Net interest income $ 107,316 $ 82,949 $ 76,143 $ (8,740 ) $ - $ 257,668
Provision for credit losses   29,623     10,076     6,489     -     -     46,188  

Net interest income (loss) after provision for credit losses

77,693 72,873 69,654 (8,740 ) - 211,480
Non-interest income 17,221 7,378 5,085 12,781 (8,008 ) 34,457
Non-interest expense   (85,813 )   (49,517 )   (41,559 )   (26,717 )   8,008     (195,598 )

Income (loss) from continuing operations before income taxes

9,101 30,734 33,180 (22,676 ) - 50,339
Income tax expense (benefit)   1,626     10,890     13,676     (9,343 )   -     16,849  

Income (loss) from continuing operations

7,475 19,844 19,504 (13,333 ) - 33,490
Loss from discontinued operations, net   -     -     -     (1,996 )   -     (1,996 )
Net income (loss) $ 7,475   $ 19,844   $ 19,504   $ (15,329 ) $ -   $ 31,494  
 
*     Excludes discontinued operations
 
 

                             
Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures (Unaudited)
 
December 31, September 30, June 30, March 31, December 31,
2012 2012 2012 2012 2011
(dollars in thousands)
Total stockholder's equity $ 759,616 $ 698,011 $ 672,120 $ 654,045 $ 636,683
Less:
Goodwill and intangible assets   29,763     28,989     33,953     34,843     35,732  
Total tangible stockholders' equity 729,853 669,022 638,167 619,202 600,951
Less:
Preferred stock   141,000     141,000     141,000     141,000     141,000  
Total tangible common equity 588,853 528,022 497,167 478,202 459,951
Add:
Deferred tax   2,289     2,033     2,896     3,209     3,522  
Total tangible common equity, net of tax $ 591,142   $ 530,055   $ 500,063   $ 481,411   $ 463,473  
Total assets $ 7,622,637 $ 7,403,603 $ 7,163,572 $ 6,925,292 $ 6,844,541
Less:
Goodwill and intangible assets   29,763     28,989     33,953     34,843     35,732  
Tangible assets 7,592,874 7,374,614 7,129,619 6,890,449 6,808,809
Add:
Deferred tax   2,289     2,033     2,896     3,209     3,522  
Total tangible assets, net of tax $ 7,595,163   $ 7,376,647   $ 7,132,515   $ 6,893,658   $ 6,812,331  
Tangible equity ratio (1) 9.6 % 9.1 % 8.9 % 9.0 % 8.8 %
Tangible common equity ratio (2) 7.8 % 7.2 % 7.0 % 6.9 % 6.8 %
Common shares outstanding 86,465 83,455 83,157 83,145 82,362
Tangible book value per share, net of tax (3) $ 6.84 $ 6.35 $ 6.01 $ 5.79 $ 5.63
 
Three Months Ended
December 31, September 30, June 30, March 31, December 31,
2012 2012 2012 2012 2011
(in thousands)
Total non-interest income $ 24,463 $ 6,982 $ 7,397 $ 5,884 $ 4,948
Less:
Mark-to-market (losses) gains, net (48 ) 470 564 (333 ) (626 )
Gain on sale of subsidiary/non-controlling interest 116 776 - - -
Bargain purchase gain from acquisition 17,562 - - - -
Legal settlements 879 - - - -
Mutual fund gains 483 - - - -
Loss on LIHTC investments (1,069 ) (651 ) (59 ) - -
Gains on sales of investment securities, net   1,447     1,031     1,110     361     (28 )
Total operating non-interest income 5,093 5,356 5,782 5,856 5,602
Add: net interest income   77,455     71,946     70,805     70,057     68,699  
Net revenue (4) $ 82,548   $ 77,302   $ 76,587   $ 75,913   $ 74,301  
 
Total non-interest expense $ 48,989 $ 47,543 $ 45,431 $ 46,897 $ 50,963
Less:

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

529 126 901 2,651 7,702
Merger/restructure 2,706 113 - - 482
Goodwill impairment   -     3,435     -     -     -  
Total operating non-interest expense (4) $ 45,754   $ 43,869   $ 44,530   $ 44,246   $ 42,779  
 
Net revenue $ 82,548 $ 77,302 $ 76,587 $ 75,913 $ 74,301
Less:
Operating non-interest expense   45,754     43,869     44,530     44,246     42,779  
Pre-tax, pre-provision operating earnings (5) $ 36,794   $ 33,433   $ 32,057   $ 31,667   $ 31,522  
 
 

                             
Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures (Unaudited)
 
Three Months Ended
December 31, September 30, June 30, March 31, December 31,
2012 2012 2012 2012 2011
(in thousands)
Total operating non-interest expense $ 45,754   $ 43,869   $ 44,530   $ 44,246   $ 42,779  
Divided by:
Total net interest income $ 77,455 $ 71,946 $ 70,805 $ 70,057 $ 68,699
Add:
Tax equivalent interest adjustment 3,012 2,655 2,310 1,761 1,425
Operating non-interest income   5,093     5,356     5,782     5,856     5,602  
$ 85,560   $ 79,957   $ 78,897   $ 77,674   $ 75,726  
Efficiency ratio - tax equivalent basis (6) 53.5 % 54.9 % 56.4 % 57.0 % 56.5 %
 
Twelve Months Ended
December 31, December 31,
2012 2011
(in thousands)
Total operating non-interest expense $ 178,399   $ 169,442  
Divided by:
Total net interest income $ 290,263 $ 257,668
Add:
Tax equivalent interest adjustment 9,738 3,014
Operating non-interest income   22,087     24,264  
$ 322,088   $ 284,946  
Efficiency ratio - tax equivalent basis (6) 55.4 % 59.5 %
 
Three Months Ended
December 31, December 31,
2012 2011
(in thousands)
Stockholder's equity $ 759,616 $ 636,683
Less:
Accumulated other comprehensive (loss) income 8,243 (4,593 )
Non-qualifying goodwill and intangibles 27,520 32,914
Other non-qualifying assets 2 3
Disallowed unrealized losses on equity securities - 2,572
Add:
Qualifying trust preferred securities 44,819 45,317

Tier 1 capital (regulatory) (7)(10)

768,670 651,104
Less:
Qualifying non-controlling interests - 61
Qualifying trust preferred securities 44,819 45,317
Preferred stock   141,000     141,000  

Estimated Tier 1 common equity (8)(10)

$ 582,851 $ 464,726
Divided by:

Estimated risk-weighted assets (regulatory) (8)(10)

$ 6,797,170   $ 5,752,981  

Tier 1 common equity ratio (8)(10)

8.6 % 8.1 %
 
December 31, December 31,
2012 2011
(in thousands)
Classified assets $ 294,519 $ 292,628
Divide:

Tier 1 capital (regulatory) (7)(10)

768,670 651,104
Plus: Allowance for credit losses   95,427     99,170  
Total Tier 1 capital plus allowance for credit losses $ 864,097   $ 750,274  

Classified assets to Tier 1 capital plus allowance (9)(10)

34 % 39 %
 

(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 a critical metric 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 these non-GAAP measurements provide a useful indication 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 a useful metric to measure the operating efficiency of the Company.

(7)

Under the guidelines of the Federal Reserve and the FDIC in effect, 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 divided by the risk-weighted assets to determine the Tier 1 common equity ratio. We believe this non-GAAP ratio 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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