Western Alliance Reports Fourth Quarter 2011 Net Income Of $7.1 Million, Or $0.07 Per Share

Western Alliance Bancorporation (NYSE:WAL) announced today its financial results for the fourth quarter 2011.

Fourth Quarter 2011 Highlights:
  • Net income of $7.1 million, including loss on repossessed assets valuations/sales of $5.0 million, net of tax
  • Earnings per share of $0.07, compared to $0.04 per share for the third quarter 2011
  • Pre-tax, pre-provision operating earnings of $31.5 million, up 12.1% from $28.1 million in third quarter 2011 and up 26.0% from $25.0 million in fourth quarter 2010 1
  • Net interest margin of 4.51% compared to 4.29% in the third quarter 2011 and 4.26% in the fourth quarter 2010
  • Total loans of $4.78 billion, up $254 million from September 30, 2011 and up $540 million from December 31, 2010
  • Total deposits of $5.66 billion, up $26 million from September 30, 2011 and up $320 million from December 31, 2010
  • Nonperforming assets (nonaccrual loans and repossessed assets) declined to 2.6% of total assets from 3.1% in third quarter 2011 and 3.6% in fourth quarter 2010
  • Net loan charge-offs of $14.1 million, down from $15.3 million for the third quarter 2011 and from $15.9 million in fourth quarter 2010
  • Tier I Leverage capital of 9.8% and Total Risk-Based Capital ratio of 12.6%, compared to 9.5% and 13.2% a year ago
  • Total equity of $636.7 million, up $4.4 million from September 30, 2011 and up $34.5 million from December 31, 2010

Financial Performance

Robert Sarver, Chairman and Chief Executive Officer of Western Alliance Bancorporation, commented, “We are very pleased with our 2011 results as we substantially increased loans to small businesses, produced consistent quarterly net income while growing net interest margin and improving our efficiency ratio. Asset quality improved throughout the year as nonaccrual, watch, and classified loans all declined from the prior year. I am proud of the people at Western Alliance Bancorporation and the leadership they demonstrated in accomplishing these results.” Mr. Sarver also noted, “Fourth quarter results will position the Company for success in 2012 by riding the momentum of higher loan growth, along with a stable net interest margin, expense management, and continued improvement in asset quality.”

Ken Vecchione, President and Chief Operating Officer, added, “As the economy continues to recover, Western Alliance Bancorporation stands ready to support the businesses and communities we serve by providing continued access to credit. Our capital strength and commitment to serve our customers leads us to be optimistic regarding our loan and deposit pipelines in 2012.” Mr. Vecchione further added, “Our disciplined approach to pricing both loans and deposits, and the management of our investment portfolio produced a fourth quarter net interest margin of 4.51 percent and full year net interest margin of 4.37 percent. Higher net interest income and contained expenses supported our record $31.5 million pre-tax, pre-credit income. 1 Our core earnings momentum and favorable trends in asset quality, position us for increased operating net income in future quarters.”

Western Alliance Bancorporation reported net income of $7.1 million, or $0.7 per share in the fourth quarter 2011. Income from continuing operations before income tax was $9.6 million, including pre-tax net unrealized losses from assets/liabilities measured at fair value of $0.6 million. The income included a $0.06 per common share charge from repossessed assets valuations/sales.

Full year net income was $31.5 million compared to a $7.2 million loss in 2010. Full year earnings per share were $0.19 compared to a $0.23 per share loss for 2010.

Total loans increased $254 million to $4.78 billion at December 31, 2011 from $4.53 billion on September 30, 2011. This increase was driven by growth in commercial and industrial loans and commercial real estate loans. Loans increased $540 million, or 12.7 percent from December 31, 2010.

Total deposits increased $26 million to $5.66 billion at December 31, 2011 from $5.63 billion at September 30, 2011, with growth primarily in non-interest bearing demand, interest bearing demand and savings and money market accounts, partially offset by declines in certificates of deposit. Deposits increased $320 million, or 6.0 percent from December 31, 2010.

Income Statement

Net interest income of $68.7 million in the fourth quarter 2011 increased by 6.4 percent compared to the third quarter 2011 and 12.8 percent compared to the fourth quarter 2010. The net interest margin in the fourth quarter 2011 was 4.51 percent compared to 4.29 percent in the third quarter 2011 and 4.26 percent in the fourth quarter of 2010.

Operating non-interest income was $5.6 million for the fourth quarter 2011, 1 a decrease from $5.9 million for the third quarter of 2011 and $6.0 million for the fourth quarter of 2010. 1

Net revenue was $74.3 million for the fourth quarter 2011, a 5.4 percent increase from $70.5 million for the third quarter of 2011 and 11.1 percent from $66.9 million for the fourth quarter 2010. 1

Operating non-interest expense was $42.8 million for the fourth quarter 2011, compared to $42.4 million for the third quarter of 2011 and $41.9 million for the fourth quarter of 2010. 1 The Company’s operating efficiency ratio on a tax equivalent basis was 56.5 percent for the fourth quarter 2011, improved from 62.2 percent for the fourth quarter 2010. 1

The Company had 942 full-time equivalent employees at December 31, 2011, compared to 908 one year ago.

A key performance metric for the Company is its pre-tax, pre-provision operating earnings, which it defines as net operating revenue less its operating non-interest expense. 1 For the fourth quarter 2011, the Company’s performance on this metric was $31.5 million, up from $28.1 million in the third quarter 2011 and $25.0 million in the fourth quarter 2010. 1

The provision for credit losses was $13.1 million for the fourth quarter 2011 compared to $11.2 million for the third quarter 2011. The provision for the fourth quarter of 2010 was $18.4 million. Net loan charge-offs in the fourth quarter 2011 were $14.1 million or 1.24 percent of average loans (annualized), down from $15.3 million or 1.40 percent of average loans (annualized) for the third quarter 2011 due to decreased residential real estate loan charge-offs. Net charge-offs for the fourth quarter 2010 were $15.9 million or 1.52% of average loans (annualized).

Nonaccrual loans and repossessed assets decreased to $179.5 million or 2.6 percent of total assets at December 31, 2011, from $200.4 million or 3.1 percent of total assets at September 30, 2011, and from $224.7 million or 3.6 percent of total assets at December 31, 2010. Loans past due 90 days and still accruing totaled $2.6 million at December 31, 2011, up from $2.1 million at September 30, 2011 and $1.5 million at December 31, 2010. Loans past due 30-89 days totaled $13.7 million at quarter end, up slightly from $12.4 million at September 30, 2011 and down from $18.2 million at December 31, 2010.

Classified assets to Tier I capital plus allowance for credit losses, a common regulatory measure of asset quality, improved to 39 percent at December 31, 2011 from 52 percent at December 31, 2010. 1

Net loss on sales and valuation of repossessed assets (primarily other real estate) was $7.7 million for the fourth quarter 2011 compared to $2.1 million in the prior quarter. At December 31, 2011, other repossessed assets were valued at $89 million compared to $87 million at September 30, 2011 and $108 million one year ago.

Balance Sheet

Gross loans totaled $4.78 billion at December 31, 2011, an increase of $254 million from September 30, 2011 and an increase of $540 million from $4.24 billion at December 31, 2010. At December 31, 2011 the allowance for credit losses was 2.07 percent of total loans down from 2.21 percent at September 30, 2011 and 2.61 percent at December 31, 2010.

Deposits totaled $5.66 billion at December 31, 2011, an increase of $26 million from $5.63 billion at September 30, 2011 and an increase of $320 million from $5.34 billion at December 31, 2010.

Non-interest bearing deposits increased $39 million at December 31, 2011 from September 30, 2011 and increased $115 million from $1.44 billion at December 31, 2010. Non-interest bearing deposits comprised 27.5 percent of total deposits at December 31, 2011, compared to 27.0 percent a year ago.

At December 31, 2011, the Company’s loans were 84.5 percent of deposits compared to 80.4 percent at September 30, 2011 and 79.4 percent at December 31, 2010.

Stockholders’ equity at December 31, 2011 increased to $636.7 million from $632.3 million at September 30, 2011. At December 31, 2011, tangible common equity was 6.8 percent of tangible assets 1 and total risk-based capital was 12.6 percent of risk-weighted assets.

Total assets increased to $6.84 billion at December 31, 2011 from $6.55 billion at September 30, 2011 and increased 11 percent from $6.19 billion at December 31, 2010.

Operating Unit Highlights

Bank of Nevada reported that loans increased by $7 million during the fourth quarter of 2011 and declined $55 million during the last 12 months to $1.86 billion at December 31, 2011. Deposits decreased $89 million in the fourth quarter of 2011 and decreased $11 million over the last twelve months to $2.38 billion. Net income for Bank of Nevada was $1.2 million for the fourth quarter 2011, compared with net income of $1.7 million for the third quarter of 2011 and net loss of $5.8 million during the fourth quarter 2010.

Western Alliance Bank reported loan growth of $160 million during the fourth quarter 2011 and $340 million during the last 12 months to $1.64 billion. Deposits increased $109 million in the fourth quarter and $206 million during the last 12 months to $1.88 billion. Net income for Western Alliance Bank was $5.6 million during the fourth quarter 2011 compared with net income of $5.5 million during the third quarter of 2011 and net income of $3.6 million during the fourth quarter 2010.

The Torrey Pines Bank segment, which excludes discontinued operations, reported that loans increased $86 million during the fourth quarter 2011 and $255 million during the last 12 months to $1.32 billion. Deposits increased $17 million in the fourth quarter 2011 and $135 million over the last 12 months to $1.42 billion. Net income for Torrey Pines Bank was $5.9 million during the fourth quarter 2011 compared with net income of $5.4 million for the third quarter of 2011 and net income of $3.2 million during the fourth quarter 2010.

Attached to this press release is summarized financial information for the quarter ended December 31, 2011.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live webcast to discuss its fourth quarter 2011 financial results at 12:00 p.m. ET on Friday, January 20, 2012. Participants may access the call by dialing 1-866-843-0890 and using passcode: 2758674 or via live audio webcast using the website link: https://services.choruscall.com/links/wal120120.html. The webcast is also available via our 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 January 20th through January 31st at 2:00 p.m. ET by dialing 1-877-344-7529 using the conference number 10008804.

About Western Alliance Bancorporation

Western Alliance Bancorporation is the parent company of Bank of Nevada, Western Alliance Bank doing business as Alliance Bank of Arizona and First Independent Bank, Torrey Pines Bank, and Shine Investment Advisory Services. These dynamic organizations provide a broad array of deposit and credit services to clients in Nevada, Arizona and California, and investment services in Colorado. Staffed with experienced financial professionals, these organizations deliver a broader product array and larger credit capacity than community banks, yet are empowered to be more responsive to customers' needs than larger institutions. Additional investor information can be accessed on the Investor Relations page of the company's website, www.westernalliancebancorp.com.

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. 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: factors listed in the Form 10-K 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; 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.

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 Twelve Months
Ended December 31, Ended December 31,
2011 2010 Change % 2011 2010

Change %
(in thousands, except per share data)
Selected Balance Sheet Data:
(dollars in millions)
Total assets $ 6,844.5 $ 6,193.9 10.5 %
Loans, net of deferred fees 4,780.1 4,240.5 12.7
Securities and money market investments 1,490.5 1,273.1 17.1
Federal funds sold - 0.9
Total deposits 5,658.5 5,338.4 6.0
Borrowings 476.9 182.4 161.5
Junior subordinated debt 37.0 43.0 (14.0 )
Stockholders' equity 636.7 602.2 5.7
 
Selected Income Statement Data:
(dollars in thousands)
Interest income $ 76,846 $ 72,374 6.2 % $ 296,591 $ 281,813 5.2 %
Interest expense   8,147     11,463   (28.9 )   38,923     49,260   (21.0 )
Net interest income 68,699 60,911 12.8 257,668 232,553 10.8
Provision for loan losses   13,076     18,384   (28.9 )   46,188     93,211   (50.4 )
Net interest income after provision for credit losses 55,623 42,527 30.8 211,480 139,342 51.8
Non-interest income (loss) 4,948 (720 ) (787.2 ) 34,457 46,836 (26.4 )
Non-interest expense   50,963     56,545   (9.9 )   195,598     196,758   (0.6 )

Income (loss) from continuing operations before income taxes
9,608 (14,738 ) (165.2 ) 50,339 (10,580 ) (575.8 )
Income tax expense (benefit)   2,011     (4,580 ) 143.9   16,849     (6,410 ) 362.9
Income (loss) from continuing operations 7,597 (10,158 ) (174.8 ) 33,490 (4,170 ) (903.1 ) %
Loss on discontinued operations, net   (496 )   (657 ) 24.5   (1,996 )   (3,025 )
Net income (loss) $ 7,101   $ (10,815 ) (165.7 ) % $ 31,494   $ (7,195 )
Diluted net income (loss) from continuing operations $ 0.07   $ (0.16 ) $ 0.21   $ (0.19 )
Diluted net loss from discontinued operations, net of tax $ (0.01 ) $ (0.01 ) $ (0.02 ) $ (0.04 )
Diluted net income (loss) per common share $ 0.07   $ (0.17 ) 141.2 % $ 0.19   $ (0.23 ) 181.9 %
 
Common Share Data:
Diluted net income (loss) per common share $ 0.07 $ (0.17 ) 141.2 % $ 0.19 $ (0.23 ) 181.9 %
Book value per common share $ 6.02 $ 5.77 4.3 %
Tangible book value per share, net of tax (1) $ 5.63 $ 5.35 5.2 %
Average shares outstanding (in thousands):
Basic 81,026 80,522 0.6 80,909 75,083 7.8
Diluted 81,368 80,522 1.1 81,183 75,083 8.1
Common shares outstanding 82,362 81,669 0.8
 
(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,
2011 2010 Change % 2011 2010 Change %
(in thousands, except per share data)
Selected Performance Ratios:
Return on average assets (1) 0.42 % (0.69 ) % (160.9 ) % 0.49 % (0.12 ) % (508.3 ) %
Return on average stockholders' equity (1) 4.34 (6.85 ) (163.4 ) 4.99 (1.20 ) (515.8 )
Net interest margin (1) 4.51 4.26 5.9 4.37 4.23 3.3
Net interest spread 4.30 3.97 8.3 4.12 3.92 5.1
Efficiency ratio - tax equivalent basis (2) 56.49 62.19 (9.2 )
Loan to deposit ratio 84.48 79.43 6.4
 
Capital Ratios:
Tangible equity (2) 8.8 % 9.1 % (3.5 ) %
Tangible common equity (2) 6.8 7.0 (3.7 )
Tier one common equity (2) 8.1 8.5 (4.9 )
Tier 1 Leverage ratio (3) 9.8 9.5 3.2
Tier 1 Risk Based Capital (3) 11.3 12.0 (5.8 )
Total Risk Based Capital (3) 12.6 13.2 (4.5 )
 
Asset Quality Ratios:
Net charge-offs to average loans outstanding (1) 1.24 % 1.52 % (18.4 ) % 1.32 % 2.22 % (40.5 ) %
Nonaccrual loans to gross loans 1.89 2.76 (31.5 )
Nonaccrual loans and repossessed assets to total assets 2.62 3.63 (27.8 )
Loans past due 90 days and still accruing to total loans 0.05 0.03 66.7
Allowance for credit losses to loans 2.07 2.61 (20.7 )
Allowance for credit losses to nonaccrual loans 109.71 94.62 15.9
 
(1) Annualized for the three month periods ended December 31, 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 Twelve Months Ended
December 31, December 31,
2011 2010 2011 2010

(dollars in thousands)
Interest income:

 
Loans $ 67,102 $ 64,985 $ 261,443 $ 255,626
Investment securities 9,591 7,054 34,419 24,916
Federal funds sold and other   153     335     729     1,271  
Total interest income   76,846     72,374     296,591     281,813  
Interest expense:
Deposits 5,549 8,652 27,977 41,329
Customer repurchase agreements 73 65 336 538
Borrowings 2,053 2,032 8,282 3,745
Junior subordinated and subordinated debt   472     714     2,328     3,648  
Total interest expense   8,147     11,463     38,923     49,260  
Net interest income 68,699 60,911 257,668 232,553
Provision for credit losses   13,076     18,384     46,188     93,211  
Net interest income after provision for credit losses   55,623     42,527     211,480     139,342  
Non-interest income (loss)
Unrealized gains (losses) on assets/liabilities measured at fair value,net (626 ) (6,710 ) 5,621 (369 )
Securities impairment charges - (12 ) (226 ) (1,186 )
Gains on sales of investment securities, net (28 ) - 4,798 19,757
Trust and investment advisory services 583 608 2,537 4,003
Service charges 2,238 2,177 9,102 8,969
Operating lease income 274 864 1,878 3,793
Bank owned life insurance 1,177 1,027 5,372 3,299
Gain on extinguishment of debt - - - 3,000
Other   1,330     1,326     5,375     5,570  
  4,948     (720 )   34,457     46,836  
Non-interest expenses:
Salaries and employee benefits 24,021 21,125 93,140 86,586
Occupancy 4,948 5,075 19,972 19,580
Insurance 2,166 4,109 11,045 15,475
Repossessed asset and loan expenses 1,661 2,230 8,126 8,076
Net loss on sales and valuations of repossessed assets 7,702 12,991 24,592 28,826
Legal, professional and director's fees 2,039 2,038 7,678 7,591
Marketing 1,294 982 4,676 4,061
Intangible amortization 889 889 3,559 3,604
Customer service 716 1,050 3,336 4,256
Data Processing 895 948 3,566 3,374
Operating lease depreciation 208 542 1,201 2,506
Merger/restructure expense 482 1,651 1,564 1,651
Other   3,942     2,915     13,143     11,172  
  50,963     56,545     195,598     196,758  
Income from continuing operations before income taxes 9,608 (14,738 ) 50,339 (10,580 )
Income tax expense (benefit)   2,011     (4,580 )   16,849     (6,410 )
Income (loss) from continuing operations 7,597 (10,158 ) 33,490 (4,170 )
Loss from discontinued operations net of tax benefit   (496 )   (657 )   (1,996 )   (3,025 )
Net income (loss) 7,101 (10,815 ) 31,494 (7,195 )
Preferred stock dividends 1,781 1,750 7,033 7,000
Accretion on preferred stock discount   -     734     9,173     2,882  
Net income (loss) available to common stockholders $ 5,320   $ (13,299 ) $ 15,288   $ (17,077 )
Diluted net income (loss) per share $ 0.07   $ (0.17 ) $ 0.19   $ (0.23 )
 
 

                             
Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Statements of Operations

Unaudited
 

 
Three Months Ended
December 31, September 30, June 30, March 31, December 31,
2011 2011 2011 2011 2010

(in thousands, except per share data)
Interest income:

 
Loans $ 67,102 $ 65,540 $ 64,919 $ 63,882 $ 64,985
Investment securities 9,591 8,356 8,542 7,930 7,054
Federal funds sold and other   153     237     185     154     335  
Total interest income   76,846     74,133     73,646     71,966     72,374  
Interest expense:
Deposits 5,549 6,982 7,548 7,898 8,652
Borrowings and customer repurchase agreements 2,126 2,101 2,123 2,268 2,097
Junior subordinated and subordinated debt   472     465     689     702     714  
Total interest expense   8,147     9,548     10,360     10,868     11,463  
Net interest income 68,699 64,585 63,286 61,098 60,911
Provision for credit losses   13,076     11,180     11,891     10,041     18,384  
Net interest income after provision for credit losses   55,623     53,405     51,395     51,057     42,527  
Non-interest income
Mark-to-market gains (losses), net (626 ) 6,420 336 (509 ) (6,710 )
Securities impairment charges - - (226 ) - (12 )
Gains on sales of investment securities, net (28 ) 781 2,666 1,379 -
Trust and investment advisory services 583 661 657 636 608
Service charges 2,238 2,337 2,243 2,284 2,177
Operating lease income 274 353 580 671 864
Bank owned life insurance 1,177 1,189 1,822 1,184 1,027
Other   1,330     1,341     1,519     1,185     1,326  
  4,948     13,082     9,597     6,830     (720 )
Non-interest expenses:
Salaries and employee benefits 24,021 23,319 22,960 22,840 21,125
Occupancy 4,948 5,126 5,044 4,854 5,075
Insurance 2,166 2,664 2,352 3,863 4,109
Repossessed asset and loan expenses 1,661 2,059 2,284 2,122 2,230
Net loss on sales and valuations of repossessed assets 7,702 2,128 8,633 6,129 12,991
Legal, professional and director's fees 2,039 1,912 2,361 1,366 2,038
Marketing 1,294 1,090 1,135 1,157 982
Intangible amortization 889 890 890 890 889
Customer service 716 900 828 892 1,050
Data Processing 895 895 928 848 948
Operating lease depreciation 208 245 327 421 542
Merger/restructure expense 482 974 (109 ) 217 1,651
Other   3,942     3,279     3,375     2,547     2,915  
  50,963     45,481     51,008     48,146     56,545  
Income (loss) from continuing operations before income taxes 9,608 21,006 9,984 9,741 (14,738 )
Income tax expense (benefit)   2,011     7,514     3,295     4,029     (4,580 )
Income (loss) from continuing operations $ 7,597 $ 13,492 $ 6,689 $ 5,712 $ (10,158 )
Loss from discontinued operations, net of tax   (496 )   (481 )   (460 )   (559 )   (657 )
Net income (loss) $ 7,101   $ 13,011   $ 6,229   $ 5,153   $ (10,815 )
Preferred stock dividends 1,781 1,752 1,750 1,750 1,750
Accretion on preferred stock   -     7,667     753     753     734  
Net Income (loss) available to common stockholders $ 5,320   $ 3,592     $ 3,726     $ 2,650     $ (13,299 )
Diluted net income (loss) per share $ 0.07   $ 0.04   $ 0.05   $ 0.03   $ (0.17 )
 
 

                       
Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Balance Sheets
Unaudited
     
December 31, September 30, June 30, March 31, December 31,
2011 2011 2011 2011 2010

(in millions)
Assets:

 
Cash and due from banks $ 155.0 $ 306.0 $ 534.6 $ 363.3 $ 215.8
Federal funds sold   -     -     -     -     0.9  
Cash and cash equivalents   155.0     306.0     534.6     363.3     216.7  
 
Securities and money market investments 1,490.5 1,304.6 1,138.2 1,319.6 1,273.1
Loans:
Commercial 1,336.6 1,152.9 1,029.5 935.9 934.6
Commercial real estate - owner occupied 1,252.2 1,225.4 1,285.3 1,299.5 1,223.1
Construction and land development 381.7 404.4 396.3 391.7 451.5
Commercial real estate - non-owner occupied 1,301.2 1,239.8 1,170.0 1,086.9 1,038.5
Residential real estate 443.0 450.2 473.9 504.5 527.3
Consumer 72.5 60.3 62.6 65.7 71.5
Deferred fees, net   (7.1 )   (6.5 )   (5.9 )   (6.2 )   (6.0 )
4,780.1 4,526.5 4,411.7 4,278.0 4,240.5
Allowance for credit losses   (99.2 )   (100.2 )   (104.4 )   (106.1 )   (110.7 )
Loans, net   4,680.9     4,426.3     4,307.3     4,171.9     4,129.8  
 
Premises and equipment, net 105.5 106.2 109.2 112.0 114.4
Other repossessed assets 89.1 86.7 85.7 98.3 107.7
Bank owned life insurance 133.9 132.7 131.5 131.0 129.8
Goodwill and other intangibles 35.7 36.6 37.5 38.4 39.3
Other assets   153.9     146.8     164.1     170.3     183.1  
Total assets $ 6,844.5   $ 6,545.9   $ 6,508.1   $ 6,404.8   $ 6,193.9  
Liabilities and Stockholders' Equity:
Liabilities:
Deposits:
Non-interest bearing demand deposits $ 1,558.2 $ 1,519.0 $ 1,516.8 $ 1,455.1 $ 1,443.3
Interest bearing
Demand 482.7 466.0 456.5 521.2 523.8
Savings and money market 2,166.6 2,151.9 2,105.4 2,100.6 1,926.1
Time certificates   1,451.0     1,496.0     1,509.6     1,420.6     1,445.2  
Total deposits 5,658.5 5,632.9 5,588.3 5,497.5 5,338.4
Customer repurchase agreements   123.6     142.6     148.7     163.4     109.4  
Total customer funds 5,782.1 5,775.5 5,737.0 5,660.9 5,447.8
Borrowings 353.3 73.2 73.1 73.0 73.0
Junior subordinated debt 37.0 36.3 42.7 43.0 43.0
Accrued interest payable and other liabilities   35.4     28.6     39.6     26.3     27.9  
Total liabilities   6,207.8     5,913.6     5,892.4     5,803.2     5,591.7  
Stockholders' Equity
Common stock and additional paid-in capital 743.8 743.0 741.6 740.9 739.6
Preferred Stock 141.0 141.0 132.3 131.6 130.8
Retained earnings (deficit) (243.5 ) (248.8 ) (252.4 ) (256.2 ) (258.8 )
Accumulated other comprehensive income (loss)   (4.6 )   (2.9 )   (5.8 )   (14.7 )   (9.4 )
Total stockholders' equity   636.7     632.3     615.7     601.6     602.2  
Total liabilities and stockholders' equity $ 6,844.5   $ 6,545.9   $ 6,508.1   $ 6,404.8   $ 6,193.9  
 
 

                             
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,
2011 2011 2011 2011 2010

(in thousands)

 
Balance, beginning of period $ 100,216 $ 104,375 $ 106,133 $ 110,699 $ 108,170
Provision for credit losses 13,076 11,180 11,891 10,041 18,384
Recoveries of loans previously charged-off:
Construction and land development 354 707 677 416 773
Commercial real estate 755 127 804 471 13
Residential real estate 179 440 172 269 304
Commercial and industrial 603 1,243 726 829 800
Consumer   64     41     44     25     36  
Total recoveries 1,955 2,558 2,423 2,010 1,926
Loans charged-off:
Construction and land development 3,155 2,369 1,516 4,198 3,221
Commercial real estate 9,244 2,484 4,286 6,114 7,297
Residential real estate 1,895 10,555 3,339 3,282 3,278
Commercial and industrial 1,004 1,420 5,926 1,407 2,823
Consumer   779     1,069     1,005     1,616     1,162  
Total loans charged-off 16,077 17,897 16,072 16,617 17,781
Net loans charged-off   14,122     15,339     13,649     14,607     15,855  
Balance, end of period $ 99,170   $ 100,216   $ 104,375   $ 106,133   $ 110,699  
 
Net charge-offs (annualized) to average loans outstanding 1.24 % 1.40 % 1.26 % 1.39 % 1.52 %
Allowance for credit losses to gross loans 2.07 2.21 2.37 2.48 2.61
Nonaccrual loans $ 90,392 $ 113,713 $ 112,750 $ 114,246 $ 116,999
Repossessed assets 89,104 86,692 85,732 98,312 107,655
Loans past due 90 days, still accruing 2,589 2,096 1,134 1,087 1,458
Loans past due 30 to 89 days, still accruing 13,731 12,414 11,581 30,689 18,164
Classified loans on accrual 112,147 110,654 126,681 128,434 140,377
Watch loans 147,112 167,571 190,045 204,470 194,905
 
 

                       
Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields and Rates
Unaudited
         
Three Months Ended December 31,
2011 2010

Average

Balance
Interest

Average Yield/ Cost

Average Balance
Interest

Average Yield/ Cost

($ in millions)

($ in thousands)

($ in millions)

($ in thousands)
Interest earning assets

 

 

 

 
Investment securities (1) $ 1,452.8 $ 9,591 3.01 % $ 1,122.8 $ 7,054 2.66 %
Federal funds sold and other 2.4 - 0.00 % 3.0 9 1.19 %
Loans (1) 4,557.0 67,102 5.84 % 4,169.3 64,985 6.18 %
Short term investments 125.1 127 0.40 % 376.7 269 0.28 %
Investment in restricted stock   34.1           26       0.30 %   38.5           57       0.59 %
Total interest earning assets 6,171.4 76,846 5.03 % 5,710.3 72,374 5.06 %
Non-interest earning assets
Cash and due from banks 113.4 137.1
Allowance for credit losses (100.8 ) (111.4 )
Bank owned life insurance 133.1 117.0
Other assets   351.9     406.9  
Total assets $ 6,669.0   $ 6,259.9  
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts $ 475.8 $ 333 0.28 % $ 632.5 $ 676 0.42 %
Savings and money market 2,174.4 2,431 0.44 % 1,930.8 3,830 0.79 %
Time certificates of deposit   1,463.9           2,785       0.75 %   1,408.3           4,146       1.17 %
Total interest-bearing deposits 4,114.1 5,549 0.54 % 3,971.6 8,652 0.86 %
Borrowings 266.8 2,126 3.16 % 160.0 2,097 5.20 %
Junior subordinated and subordinated debt   36.4           472       5.14 %   36.4           714       7.78 %
Total interest-bearing liabilities 4,417.3 8,147 0.73 % 4,168.0 11,463 1.09 %
Noninterest-bearing liabilities
Noninterest-bearing demand deposits 1,575.0 1,434.4
Other liabilities 27.9 31.4
Stockholders’ equity   648.8     626.1  
Total liabilities and stockholders' equity $ 6,669.0   $ 6,259.9  
Net interest income and margin $ 68,699 4.51 % $ 60,911 4.26 %
Net interest spread 4.30 % 3.97 %
 

(1) Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $1,425 and $464 for the fourth quarter ended 2011 and 2010, respectively.

 
 

                             
Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields and Rates
Unaudited
     
Twelve Months Ended December 31,
2011 2010
 

Average Balance
Interest

Average Yield/Cost

Average Balance
Interest

Average Yield/Cost

($ in millions)

($ in thousands)

($ in millions)

($ in thousands)
Interest earning Assets

 

 

 

 
Investment securities (1) $ 1,307.1 $ 34,419 2.86 % $ 915.2 $ 24,753 2.83 %
Federal funds sold & other 0.9 1 0.00 % 17.3 141 0.82 %
Loans (1) 4,373.5 261,443 5.98 % 4,105.0 255,626 6.23 %
Short term investments 247.0 629 0.25 % 448.8 1,130 0.25 %
Investment in restricted stock   35.6           99       0.28 %   40.2           163       0.41 %
Total interest earnings assets 5,964.1 296,591 5.02 % 5,526.5 281,813 5.12 %
Non-interest earning assets
Cash and due from banks 119.5 116.6
Allowance for credit losses (105.9 ) (114.1 )
Bank owned life insurance 131.6 99.4
Other assets   377.1     402.2  
Total assets $ 6,486.4   $ 6,030.6  
Interest-bearing liabilities
Interest-bearing deposits:
Interest bearing transaction accounts $ 478.3 $ 1,759 0.37 % $ 581.1 $ 2,898 0.50 %
Savings and money market 2,105.3 12,858 0.61 % 1,861.7 16,724 0.90 %
Time certificates of deposits   1,460.7           13,360       0.91 %   1,437.2           21,707       1.51 %
Total interest-bearing deposits 4,044.3 27,977 0.69 % 3,880.0 41,329 1.07 %
Borrowings 234.8 8,618 3.67 % 158.4 4,283 2.70 %
Junior subordinated and subordinated debt   41.3           2,328       5.64 %   62.3           3,648       5.86 %
Total interest-bearing liabilities $ 4,320.4 38,923 0.90 % $ 4,100.7 49,260 1.20 %
Noninterest-bearing liabilities
Noninterest-bearing demand deposits 1,509.4 1,296.6
Other liabilities 25.3 32.1
Stockholders’ equity   631.3     601.2  
Total liabilities and stockholders' equity $ 6,486.4   $ 6,030.6  
Net interest income and margin $ 257,668 4.37 % $ 232,553 4.23 %
Net interest spread 4.12 % 3.92 %
 

(1) Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $3,014 and $1,164 for the twelve months December 31, 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 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
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
Operating Segment Results
     
Inter-
segment Consoli-
Bank Western Torrey elimi- dated
of Nevada       Alliance Bank       Pines Bank*       Other       nations       Company
At December 31, 2010: (dollars in millions)
Assets $ 2,771.4 $ 1,927.5 $ 1,452.2 $ 731.0 $ (714.2 ) $ 6,167.9
Gross loans and deferred fees, net 1,914.1 1,305.4 1,063.8 - (42.8 ) 4,240.5
Less: Allowance for credit losses   (73.5 )         (20.4 )         (16.8 )         -           -           (110.7 )
Net loans   1,840.6           1,285.0           1,047.0           -           (42.8 )         4,129.8  
Goodwill 23.2 - - 2.7 - 25.9
Deposits 2,388.3 1,671.1 1,281.6 - (2.6 ) 5,338.4
Stockholders' equity 310.6 163.3 135.5 609.6 (616.8 ) 602.2
 
No. of branches 12 16 11 - - 39
No. of FTE 421 225 203 59 - 908
 
Three Months Ended December 31, 2010:

 

(in thousands)
Net interest income $ 26,857 $ 18,997 $ 17,311 $ (2,254 ) $ - $ 60,911
Provision for credit losses   15,935           -           2,449           -           -           18,384  

Net interest income after provision for credit losses
10,922 18,997 14,862 (2,254 ) - 42,527
Non-interest income 3,506 1,760 1,040 (4,853 ) (2,173 ) (720 )
Noninterest expense   (23,414 )         (14,840 )         (10,220 )         (10,244 )         2,173           (56,545 )

Income (loss) from continuing operations before income taxes
(8,986 ) 5,917 5,682 (17,351 ) - (14,738 )
Income tax expense (benefit)   (3,206 )         2,361           2,449           (6,184 )         -           (4,580 )

Income(loss) from continuing operations
(5,780 ) 3,556 3,233 (11,167 ) - (10,158 )
Loss from discontinued operations, net   -           -           -           (657 )         -           (657 )
Net income (loss) $ (5,780 )       $ 3,556         $ 3,233         $ (11,824 )       $ -         $ (10,815 )
 
Twelve Months Ended December 31, 2010:

 

(in thousands)
Net interest income $ 104,536 $ 69,223 $ 62,714 $ (3,920 ) $ - $ 232,553
Provision for credit losses   76,669           6,374           10,168           -           -           93,211  

Net interest income after provision for credit losses
27,867 62,849 52,546 (3,920 ) - 139,342
Non-interest income 21,053 9,369 4,489 13,598 (1,673 ) 46,836
Noninterest expense   (90,336 )         (51,270 )         (38,893 )         (17,932 )         1,673           (196,758 )

Income (loss) from continuing operations before income taxes
(41,416 ) 20,948 18,142 (8,254 ) - (10,580 )
Income tax expense (benefit)   (15,010 )         8,147           7,825           (7,372 )         -           (6,410 )

Income(loss) from continuing operations
(26,406 ) 12,801 10,317 (882 ) - (4,170 )
Loss from discontinued operations, net   -           -           -           (3,025 )         -           (3,025 )
Net income (loss) $ (26,406 )       $ 12,801         $ 10,317         $ (3,907 )       $ -         $ (7,195 )
 
* 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,
2011 2011 2011 2011 2010
(dollars in thousands)
 
Total stockholder's equity $ 636,683 $ 632,255 $ 615,653 $ 601,576 $ 602,174
Less:
Goodwill and intangible assets   35,732     36,622     37,511     38,401     39,291  
Total tangible stockholders' equity 600,951 595,633 578,142 563,175 562,883
Less:
Preferred stock   141,000     141,000     132,333     131,580     130,827  
Total tangible common equity 459,951 454,633 445,809 431,595 432,056
Add:
Deferred tax   3,522     3,835     4,148     4,461     4,774  
Total tangible common equity, net of tax $ 463,473   $ 458,468   $ 449,957   $ 436,056   $ 436,830  
Total assets $ 6,844,541 $ 6,545,890 $ 6,508,089 $ 6,404,838 $ 6,193,883
Less:
Goodwill and intangible assets   35,732     36,622     37,511     38,401     39,291  
Tangible assets 6,808,809 6,509,268 6,470,578 6,366,437 6,154,592
Add:
Deferred tax   3,522     3,835     4,148     4,461     4,774  
Total tangible assets, net of tax $ 6,812,331   $ 6,513,103   $ 6,474,726   $ 6,370,898   $ 6,159,366  
Tangible equity ratio (1) 8.8 % 9.1 % 8.9 % 8.8 % 9.1 %
Tangible common equity ratio (2) 6.8 % 7.0 % 6.9 % 6.8 % 7.0 %
Common shares outstanding 82,362 82,263 82,139 82,237 81,669
Tangible book value per share, net of tax (3) $ 5.63 $ 5.57 $ 5.48 $ 5.30 $ 5.35
 
 
Three Months Ended
December 31, September 30, June 30, March 31, December 31,
2011 2011 2011 2011 2010
(in thousands)
 
Total non-interest income $ 4,948 $ 13,082 $ 9,597 $ 6,830 $ (720 )
Less:
Mark-to-market (losses) gains, net (626 ) 6,420 336 (509 ) (6,710 )
Securities impairment charges - - (226 ) - (12 )
Gains on sales of investment securities, net   (28 )   781     2,666     1,379     -  
Total operating non-interest income 5,602 5,881 6,821 5,960 6,002
Add: net interest income   68,699     64,585     63,286     61,098     60,911  
Net revenue (4) $ 74,301   $ 70,466   $ 70,107   $ 67,058   $ 66,913  
 
Total non-interest expense $ 50,963 $ 45,481 $ 51,008 $ 48,146 $ 56,545
Less:

Net loss (gain) on sales/valuations of repossessed assets
7,702 2,128 8,633 6,129 12,991
Merger/restructure   482     974     (109 )   217     1,651  
Total operating non-interest expense (4) $ 42,779   $ 42,379   $ 42,484   $ 41,800   $ 41,903  
 
Net revenue $ 74,301 $ 70,466 $ 70,107 $ 67,058 $ 66,913
Less:
Operating non-interest expense   42,779     42,379     42,484     41,800     41,903  
Pre-tax, pre-provision operating earnings (5) $ 31,522   $ 28,087   $ 27,623   $ 25,258   $ 25,010  
 
 

                             
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,
2011 2011 2011 2011 2010
(in thousands)
 
Total operating non-interest expense $ 42,779   $ 42,379   $ 42,484   $ 41,800   $ 41,903  
Divided by:
Total net interest income $ 68,699 $ 64,585 $ 63,286 $ 61,098 $ 60,911
Add:
Tax equivalent interest adjustment 1,425 634 473 481 464
Operating non-interest income   5,602     5,881     6,821     5,960     6,002  
$ 75,726   $ 71,100   $ 70,580   $ 67,539   $ 67,377  
Efficiency ratio - tax equivalent basis (6) 56.5 % 59.6 % 60.2 % 61.9 % 62.2 %
 
Three Months Ended
December 31, December 31,
2011 2010
(in thousands)
 
Stockholder's equity $ 636,683 $ 602,174
Less:
Accumulated other comprehensive (loss) income (4,593 ) (9,422 )
Non-qualifying goodwill and intangibles 32,914 35,269
Other non-qualifying assets 3 25,730
Disallowed unrealized losses on equity securities 2,572 -
Add:
Qualifying trust preferred securities 45,317 41,037
Tier 1 capital (regulatory) (7) (10) 651,104 591,634
Less:
Qualifying non-controlling interests 61 214
Qualifying trust preferred securities 45,317 41,037
Preferred stock   141,000     130,827  
Estimated Tier 1 common equity (8) (10) $ 464,726 $ 419,556
Divided by:
Estimated risk-weighted assets (regulatory (8) (10) $ 5,752,981   $ 4,940,918  
Tier 1 common equity ratio (8) (10) 8.1 % 8.5 %
 
December 31, December 31,
2011 2010
(in thousands)
 
Classified assets $ 292,628 $ 366,915
Divide:
Tier 1 capital (regulatory) (7) (10) 651,104 591,634
Plus: Allowance for credit losses   99,170     110,699  
Total Tier 1 capital plus allowance for credit losses $ 750,274   $ 702,333  
Classified assets to Tier 1 capital plus allowance (9) (10) 39 % 52 %
 
 

 

(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, 2011, 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.  

Copyright Business Wire 2010

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