Western Alliance Reports Second Quarter 2012 Net Income Of $14.0 Million, Or $0.15 Per Share

Western Alliance Bancorporation (NYSE:WAL) announced today its financial results for the second quarter 2012.

Second Quarter 2012 Highlights:
  • Net income of $14.0 million, an increase of 23.9% compared to $11.3 million for the first quarter 2012 and an increase of 126% compared to $6.2 million for the second quarter 2011
  • Earnings per share of $0.15, an increase of 25% compared to $0.12 per share for the first quarter 2012 and an increase of three times compared to $0.05 per share in the second quarter 2011
  • Pre-tax, pre-provision operating earnings of $32.1 million, up from $31.7 million in first quarter 2012 and up 16.3% from $27.6 million in second quarter 20111
  • Net interest margin of 4.46% compared to 4.53% in the first quarter of 2012 and 4.34% in the second quarter 2011
  • Total loans of $5.16 billion, up $239 million from March 31, 2012, and up $753 million from June 30, 2011
  • Total deposits of $6.0 billion, up $102 million from March 31, 2012 and up $413 million from June 30, 2011
  • Nonperforming assets (nonaccrual loans and repossessed assets) decreased to 2.5% of total assets from 2.7% in first quarter 2012 and 3.1% in second quarter 2011
  • Net loan charge-offs (annualized) to average loans outstanding declined to 1.11% from 1.18% in the first quarter 2012 and 1.26% in the second quarter of 2011
  • Tier I Leverage capital of 9.7% and Total Risk-Based Capital ratio of 12.3%, compared to 9.5% and 13.1% a year ago
  • Total equity of $672.1 million, up $18.0 million from March 31, 2012 and up $35.4 million from December 31, 2011

Financial Performance

“Our strong growth trends continued in the second quarter with record revenue during the period and tripling our earnings per share from a year ago,” said Robert Sarver, Chairman and Chief Executive Officer of Western Alliance Bancorporation. “With over $300 million in both loan and deposit growth in 2012, we have maintained our earnings power momentum while continuing to improve the asset quality composition of our balance sheet. From our success in achieving the goals as a participant in the Small Business Lending Fund, we expect to see the dividend rate on our preferred stock fall to one percent this quarter from 3.7 percent during the second.”

Ken Vecchione, President and Chief Operating Officer, added, “Our record revenue, coupled with improved efficiency, drove our pre-tax, pre-credit income to $32.1 million during the second quarter, a new high. 1 This quarter, REO valuations/losses declined to less than $1 million as some properties in our REO portfolio experienced increases in appraised values. Offsetting the good news this quarter, charge-offs and the provision for loan losses remained flat to the prior quarter. Nevada asset quality has not exhibited the same rate of improvement as California or Arizona.”

Western Alliance Bancorporation reported net income of $14.0 million, or $0.15 per share, in the second quarter 2012 including a $0.6 million after-tax charge from repossessed assets valuations/sales and a $1.1 million after tax gain from securities sales.

Total loans increased $239 million, or 4.9 percent, to $5.16 billion at June 30, 2012 from $4.93 billion on March 31, 2012. This increase was primarily driven by growth in commercial and industrial loans, commercial leases and commercial real estate loans. Loans increased $753 million from June 30, 2011.

Total deposits increased $102 million, or 1.7 percent, to $6.0 billion at June 30, 2012 from $5.90 billion at March 31, 2012, with growth primarily in money market accounts, non-interest bearing demand and interest bearing demand partially offset by declines in certificates of deposit. Deposits increased $413 million from June 30, 2011.

Income Statement

Net interest income was $70.8 million in the second quarter 2012, an increase of 1.0 percent compared to the first quarter 2012 and 11.9 percent compared to the second quarter 2011. The Company’s net interest margin in the second quarter 2012 was 4.46 percent compared to 4.53 percent in the first quarter 2012 and 4.34 percent in the second quarter 2011.

Operating non-interest income was $5.8 million for the second quarter 2012, almost flat from $5.9 million for the first quarter of 2012 and a decrease from $6.8 million for the second quarter of 2011. 1

Net revenue was $76.6 million for the second quarter 2012, a 1.0 percent increase from $75.9 million for the first quarter of 2012 and 9.3 percent from $70.1 million for the second quarter 2011. 1

Operating non-interest expense was $44.5 million for the second quarter 2012, compared to $44.2 million for the first quarter of 2012 and $42.3 million for the second quarter of 2011. 1 The Company’s operating efficiency ratio on a tax equivalent basis was 56.4 percent for the second quarter 2012, improved from 60.2 percent for the second quarter 2011. 1

The Company had 953 full-time equivalent employees June 30, 2012, 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. For the second quarter 2012, the Company’s performance on this metric was $32.1 million, up from $31.7 million in the first quarter 2012 and $27.6 million in the second quarter 2011. 1

The provision for credit losses was $13.3 million for the second quarter 2012 compared to $13.1 million for the first quarter 2012. The provision for the second quarter of 2011 was $11.9 million. Net loan charge-offs in the second quarter 2012 were $13.9 million, or 1.11 percent of average loans (annualized), down from 1.18 percent of average loans (annualized) for the first quarter 2012. Net charge-offs for the second quarter 2011 were $13.6 million or 1.26% of average loans (annualized).

Nonaccrual loans increased slightly to $104.3 million during the quarter. Loans past due 90 days and still accruing interest totaled $0.8 million at June 30, 2012, down from $1.0 million at March 31, 2012 and $1.1 million at June 30, 2011. Loans past due 30-89 days totaled $13.8 million at quarter end, up from $12.0 million at March 31, 2012 and from $11.6 million at June 30, 2011.

Classified assets to Tier I capital plus allowance for credit losses, a common regulatory measure of asset quality, improved to 42 percent at June 30, 2012 from 46 percent at June 30, 2011. 1

Net loss on sales and valuation of repossessed assets (primarily other real estate) was $0.9 million for the second quarter of 2012 compared to $2.7 million for the first quarter 2012 and $8.6 million in the second quarter 2011. At June 30, 2012, other repossessed assets were valued at $77 million compared to $81 million at March 31, 2012 and $86 million one year ago.

Balance Sheet

Gross loans totaled $5.16 billion at June 30, 2012, an increase of $239 million from March 31, 2012 and an increase of $753 million from $4.41 billion at June 30, 2011. At June 30, 2012 the allowance for credit losses was 1.89 percent of total loans, down from 1.99 percent at March 31, 2012 and 2.37 percent at June 30, 2011.

Deposits totaled $6.0 billion at June 30, 2012, an increase of $102 million from $5.90 billion at March 31, 2012 and an increase of $413 million from $5.59 billion at June 30, 2011.

Non-interest bearing deposits increased $84 million at June 30, 2012 from March 31, 2012 and increased $325 million from $1.52 billion at June 30, 2011. Non-interest bearing deposits comprised 30.7 percent of total deposits at June 30, 2012, compared to 27.1 percent a year ago.

At June 30, 2012, the Company’s loans were 86.1 percent of deposits compared to 83.5 percent at March 31, 2012 and 79.0 percent at June 30, 2011.

Stockholders’ equity at June 30, 2012 increased to $672.1 million from $654.1 million at March 31, 2012. At June 30, 2012, tangible common equity was 7.0 percent of tangible assets 1 and total risk-based capital was 12.3 percent of risk-weighted assets.

Total assets increased to $7.16 billion at June 30, 2012 from $6.93 billion at March 31, 2012 and increased 10.0 percent from $6.51 billion at June 30, 2011.

Operating Unit Highlights

Bank of Nevada reported that loans increased by $76 million during the second quarter of 2012, primarily due to intercompany transfers from Western Alliance Bank, and increased $147 million during the last 12 months to $2.0 billion at June 30, 2012. Deposits decreased slightly in the second quarter of 2012 and decreased $18 million over the last twelve months to $2.43 billion. Net income for Bank of Nevada was $3.8 million for the second quarter 2012, compared with net income of $1.0 million for the first quarter of 2012 and net income of $3.7 million during the second quarter 2011.

Western Alliance Bank reported loan growth of $74 million during the second quarter 2012 and $354 million during the last 12 months to $1.78 billion. Deposits increased $45 million in the second quarter and $238 million during the last 12 months to $2.0 billion. Net income for Western Alliance Bank was $7.8 million during the second quarter 2012 compared with net income of $9.8 million during the first quarter of 2012 and net income of $3.8 million during the second quarter 2011.

The Torrey Pines Bank segment, which excludes discontinued operations, reported that loans increased $89 million during the second quarter 2012 and $251 million during the last 12 months to $1.42 billion. Deposits increased $62 million in the second quarter 2012 and $211 million over the last 12 months to $1.59 billion. Net income for Torrey Pines Bank was $5.3 million during the second quarter 2012 compared with net income of $5.8 million for the first quarter of 2012 and net income of $4.2 million during the second quarter 2011.

Attached to this press release is summarized financial information for the quarter ended June 30, 2012.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live webcast to discuss its second quarter 2012 financial results at 12:00 p.m. ET on Friday, July 20, 2012. Participants may access the call by dialing 1-866-843-0890 and using passcode: 9684410 or via live audio webcast using the website link: https://services.choruscall.com/links/wal120720.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 July 20 th through September 4 th at 9:00 a.m. ET by dialing 1-877-344-7529 using the conference number 10016260.

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 Six Months
Ended June 30, Ended June 30,
2012 2011 Change % 2012 2011 Change %
 
Selected Balance Sheet Data:
(dollars in millions)
Total assets $ 7,163.6 $ 6,508.1 10.1 %
Loans, net of deferred fees 5,164.8 4,411.7 17.1
Securities and money market investments 1,401.5 1,138.2 23.1
Total deposits 6,001.4 5,588.3 7.4
Borrowings 390.4 221.8 76.0
Junior subordinated debt 36.7 42.7 (14.1 )
Stockholders' equity 672.1 615.7 9.2
 
Selected Income Statement Data:
(dollars in thousands)
Interest income $ 77,846 $ 73,646 5.7 % $ 155,283 $ 145,612 6.6 %
Interest expense   7,041     10,360   (32.0 )   14,421     21,227   (32.1 )
Net interest income 70,805 63,286 11.9 140,862 124,385 13.2
Provision for loan losses   13,330     11,891   12.1   26,411     21,932   20.4
Net interest income after provision for credit losses 57,475 51,395 11.8 114,451 102,453 11.7
Non-interest income 7,397 9,597 (22.9 ) 13,281 16,427 (19.2 )
Non-interest expense   45,431     51,008   (10.9 )   92,328     99,155   (6.9 )

Income from continuing operations before income taxes
19,441 9,984 94.7 35,404 19,725 79.5
Income tax expense   5,259     3,295   59.6   9,700     7,324   32.4
Income from continuing operations 14,182 6,689 112.0 25,704 12,401 107.3 %
Loss on discontinued operations, net   (221 )   (460 ) 52.0   (443 )   (1,019 )
Net income $ 13,961   $ 6,229   124.1 % $ 25,261   $ 11,382  
Diluted net income per common share from continuing operations $ 0.16   $ 0.05   $ 0.28   $ 0.09  
Diluted net loss per common share from discontinued operations, net of tax $ 0.00   $ (0.01 ) $ (0.01 ) $ (0.01 )
Diluted net income per common share $ 0.15   $ 0.05   200.0 % $ 0.27   $ 0.08   243.6 %
 
Common Share Data:
Diluted net income per common share $ 0.15 $ 0.05 200.0 % $ 0.27 $ 0.08 243.6 %
Book value per common share $ 6.39 $ 5.89 8.5 %
Tangible book value per share, net of tax (1) $ 6.01 $ 5.48 9.7 %
Average shares outstanding (in thousands):
Basic 81,590 80,883 0.9 81,475 80,838 0.8
Diluted 81,955 81,223 0.9 82,091 81,119 1.2
Common shares outstanding 83,157 82,139 1.2
(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 Six Months
Ended June 30,

Ended June 30,
2012 2011 Change % 2012 2011 Change %
(in thousands, except per share data)
Selected Performance Ratios:
Return on average assets (1) 0.80 % 0.39 % 105.1 % 0.74 % 0.36 % 105.6 %
Return on average stockholders' equity (1) 8.48 3.98 113.1 7.73 3.70 108.9
Net interest margin (1) 4.46 4.34 2.8 4.49 4.34 3.5
Net interest spread 4.27 4.08 4.7 4.31 4.07 5.9
Efficiency ratio - tax equivalent basis (2) 56.44 60.19 (6.2 )
Loan to deposit ratio 86.06 78.95 9.0
 
Capital Ratios:
Tangible equity (2) 8.9 % 8.9 % 0.2 %
Tangible common equity (2) 7.0 6.9 1.2
Tier one common equity (2) 8.0 8.4 (4.7 )
Tier 1 Leverage ratio (3) 9.7 9.5 2.1
Tier 1 Risk Based Capital (3) 11.0 11.8 (6.8 )
Total Risk Based Capital (3) 12.3 13.1 (6.1 )
 
Asset Quality Ratios:
Net charge-offs to average loans outstanding (1) 1.11 % 1.26 % (11.9 ) % 1.15 % 1.32 % (12.9 ) %
Nonaccrual loans to gross loans 2.02 2.56 (21.1 )
Nonaccrual loans and repossessed assets to total assets 2.53 3.05 (17.0 )
Loans past due 90 days and still accruing to total loans 0.02 0.03 (33.3 )
Allowance for credit losses to loans 1.89 2.37 (20.3 )
Allowance for credit losses to nonaccrual loans 93.47 92.57 1.0
 
(1) Annualized for the three and six month periods ended June 30, 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 Six Months Ended
June 30, June 30,
2012 2011 2012 2011
Interest income: (dollars in thousands)
Loans $ 68,342 $ 64,919 $ 136,102 $ 128,801
Investment securities 9,389 8,542 18,974 16,472
Federal funds sold and other   115     185     207     339  
Total interest income   77,846     73,646     155,283     145,612  
Interest expense:
Deposits 4,168 7,548 8,930 15,446
Customer repurchase agreements 58 100 122 186
Borrowings 2,328 2,023 4,398 4,204
Junior subordinated debt   487     689     971     1,391  
Total interest expense   7,041     10,360     14,421     21,227  
Net interest income 70,805 63,286 140,862 124,385
Provision for credit losses   13,330     11,891     26,411     21,932  
Net interest income after provision for credit losses   57,475     51,395     114,451     102,453  
Non-interest income

Unrealized gains (losses) on assets/liabilities measured at fair value, net
564 336 232 (173 )
Securities impairment charges - (226 ) - (226 )
Gains on sales of investment securities, net 1,110 2,666 1,471 4,045
Service charges 2,317 2,243 4,602 4,527
Bank owned life insurance 1,120 1,822 2,243 3,006
Other   2,286     2,756     4,733     5,248  
  7,397     9,597     13,281     16,427  
Non-interest expenses:
Salaries and employee benefits 25,995 22,960 52,659 45,800
Occupancy 4,669 5,044 9,391 9,898
Net loss on sales and valuations of repossessed assets 901 8,633 3,552 14,762
Insurance 2,152 2,352 4,202 6,214
Loan and repossessed asset expenses 1,653 2,284 3,337 4,406
Legal, professional and director's fees 2,517 2,361 4,089 3,727
Marketing 1,459 1,135 2,830 2,292
Data Processing 1,293 928 2,288 1,776
Intangible amortization 890 890 1,779 1,779
Customer service 682 828 1,274 1,720
Merger/restructure expense - (109 ) - 109
Other   3,220     3,702     6,927     6,672  
  45,431     51,008     92,328     99,155  
Income from continuing operations before income taxes 19,441 9,984 35,404 19,725
Income tax expense   5,259     3,295     9,700     7,324  
Income from continuing operations 14,182 6,689 25,704 12,401
Loss from discontinued operations net of tax benefit   (221 )   (460 )   (443 )   (1,019 )
Net income 13,961 6,229 25,261 11,382
Preferred stock dividends 1,325 1,750 3,088 3,500
Accretion on preferred stock discount   -     753     -     1,506  
Net income available to common stockholders $ 12,636   $ 3,726   $ 22,173   $ 6,376  
Diluted net income per share $ 0.15   $ 0.05   $ 0.27   $ 0.08  
 
 

                     
Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Income Statements
Unaudited Three Months Ended
June 30, March 31, December 31, September 30, June 30,
2012 2012 2011 2011 2011
Interest income: (in thousands, except per share data)
Loans $ 68,342 $ 67,760 $ 67,102 $ 65,540 $ 64,919
Investment securities 9,389 9,585 9,591 8,356 8,542
Federal funds sold and other   115     92     153     237     185  
Total interest income   77,846     77,437     76,846     74,133     73,646  
Interest expense:
Deposits 4,168 4,762 5,549 6,982 7,548
Borrowings and customer repurchase agreements 2,386 2,134 2,126 2,101 2,123
Junior subordinated and subordinated debt   487     484     472     465     689  
Total interest expense   7,041     7,380     8,147     9,548     10,360  
Net interest income 70,805 70,057 68,699 64,585 63,286
Provision for credit losses   13,330     13,081     13,076     11,180     11,891  
Net interest income after provision for credit losses   57,475     56,976     55,623     53,405     51,395  
Non-interest income
Mark-to-market gains (losses), net 564 (333 ) (626 ) 6,420 336
Securities impairment charges - - - - (226 )
Gains on sales of investment securities, net 1,110 361 (28 ) 781 2,666
Service charges 2,317 2,285 2,238 2,337 2,243
Bank owned life insurance 1,120 1,123 1,177 1,189 1,822
Other   2,286     2,448     2,187     2,355     2,756  
  7,397     5,884     4,948     13,082     9,597  
Non-interest expenses:
Salaries and employee benefits 25,995 26,664 24,021 23,319 22,960
Occupancy 4,669 4,722 4,948 5,126 5,044
Insurance 2,152 2,050 2,166 2,664 2,352
Loan and repossessed asset expenses 1,653 1,684 1,661 2,059 2,284
Net loss on sales and valuations of repossessed assets 901 2,651 7,702 2,128 8,633
Legal, professional and director's fees 2,517 1,572 2,039 1,912 2,361
Marketing 1,459 1,371 1,294 1,090 1,135
Intangible amortization 890 890 889 890 890
Customer service 682 591 716 900 828
Data Processing 1,293 995 895 895 928
Merger/restructure expense - - 482 974 (109 )
Other   3,220     3,707     4,150     3,524     3,702  
  45,431     46,897     50,963     45,481     51,008  
Income from continuing operations before income taxes 19,441 15,963 9,608 21,006 9,984
Income tax expense   5,259     4,441     2,011     7,514     3,295  
Income from continuing operations $ 14,182 $ 11,522 $ 7,597 $ 13,492 $ 6,689
Loss from discontinued operations, net of tax   (221 )   (222 )   (496 )   (481 )   (460 )
Net income $ 13,961   $ 11,300   $ 7,101   $ 13,011   $ 6,229  
Preferred stock dividends 1,325 1,763 1,781 1,752 1,750
Accretion on preferred stock   -     -     -     7,667     753  
Net Income available to common stockholders $ 12,636   $ 9,537   $ 5,320   $ 3,592   $ 3,726  
Diluted net income per share $ 0.15   $ 0.12   $ 0.07   $ 0.04   $ 0.05  
 
 

               
Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Balance Sheets
Unaudited
      June 30, March 31, December 31, September 30, June 30,
2012 2012 2011 2011 2011
Assets: (in millions)
Cash and due from banks $ 178.9 $ 179.8 $ 155.0 $ 306.0 $ 534.6
 
Securities and money market investments 1,401.5 1,423.2 1,490.5 1,304.6 1,138.2
Loans:
Commercial 1,573.6 1,436.5 1,336.6 1,152.9 1,029.5
Commercial real estate - owner occupied 1,310.3 1,289.9 1,252.2 1,225.4 1,285.3
Construction and land development 360.6 347.7 381.7 404.4 396.3
Commercial real estate - non-owner occupied 1,440.4 1,365.6 1,301.2 1,239.8 1,170.0
Residential real estate 430.4 434.5 443.0 450.2 473.9
Consumer 55.8 58.7 72.5 60.3 62.6
Deferred fees, net   (6.3 )   (6.7 )   (7.1 )   (6.5 )   (5.9 )
5,164.8 4,926.2 4,780.1 4,526.5 4,411.7
Allowance for credit losses   (97.5 )   (98.1 )   (99.2 )   (100.2 )   (104.4 )
Loans, net   5,067.3     4,828.1     4,680.9     4,426.3     4,307.3  
 
Premises and equipment, net 106.9 105.1 105.5 106.2 109.2
Other repossessed assets 77.0 81.4 89.1 86.7 85.7
Bank owned life insurance 136.1 135.0 133.9 132.7 131.5
Goodwill and other intangibles 34.0 34.8 35.7 36.6 37.5
Other assets   161.9     137.9     153.9     146.8     164.1  
Total assets $ 7,163.6   $ 6,925.3   $ 6,844.5   $ 6,545.9   $ 6,508.1  
Liabilities and Stockholders' Equity:
Liabilities:
Deposits:
Non-interest bearing demand deposits $ 1,842.1 $ 1,757.7 $ 1,558.2 $ 1,519.0 $ 1,516.8
Interest bearing
Demand 540.6 527.2 482.7 466.0 456.5
Savings and money market 2,438.4 2,224.1 2,166.6 2,151.9 2,105.4
Time certificates   1,180.3     1,390.1     1,451.0     1,496.0     1,509.6  
Total deposits 6,001.4 5,899.1 5,658.5 5,632.9 5,588.3
Customer repurchase agreements   86.9     114.4     123.6     142.6     148.7  
Total customer funds 6,088.3 6,013.5 5,782.1 5,775.5 5,737.0
Borrowings 303.5 193.4 353.3 73.2 73.1
Junior subordinated debt 36.7 37.3 37.0 36.3 42.7
Accrued interest payable and other liabilities   63.0     27.0     35.4     28.6     39.6  
Total liabilities   6,491.5     6,271.2     6,207.8     5,913.6     5,892.4  
Stockholders' Equity
Common stock and additional paid-in capital 748.1 746.2 743.8 743.0 741.6
Preferred Stock 141.0 141.0 141.0 141.0 132.3
Accumulated deficit (221.3 ) (234.0 ) (243.5 ) (248.8 ) (252.4 )
Accumulated other comprehensive income (loss)   4.3     0.9     (4.6 )   (2.9 )   (5.8 )
Total stockholders' equity   672.1     654.1     636.7     632.3     615.7  
Total liabilities and stockholders' equity $ 7,163.6   $ 6,925.3   $ 6,844.5   $ 6,545.9   $ 6,508.1  
 

               
Western Alliance Bancorporation and Subsidiaries
Changes in the Allowance For Credit Losses
Unaudited
      Three Months Ended
June 30, March 31, December 31, September 30, June 30,
2012 2012 2011 2011 2011
 
(in thousands)
Balance, beginning of period $ 98,122 $ 99,170 $ 100,216 $ 104,375 $ 106,133
Provision for credit losses 13,330 13,081 13,076 11,180 11,891
Recoveries of loans previously charged-off:
Construction and land development 217 86 354 707 677
Commercial real estate 561 1,705 755 127 804
Residential real estate 274 340 179 440 172
Commercial and industrial 1,417 777 603 1,243 726
Consumer   214     38     64     41     44  
Total recoveries 2,683 2,946 1,955 2,558 2,423
Loans charged-off:
Construction and land development 3,185 5,087 3,155 2,369 1,516
Commercial real estate 5,641 4,912 9,244 2,484 4,286
Residential real estate 2,094 1,420 1,895 10,555 3,339
Commercial and industrial 4,933 3,654 1,004 1,420 5,926
Consumer   770     2,002     779     1,069     1,005  
Total loans charged-off 16,623 17,075 16,077 17,897 16,072
Net loans charged-off   13,940     14,129     14,122     15,339     13,649  
Balance, end of period $ 97,512   $ 98,122   $ 99,170   $ 100,216   $ 104,375  
 
Net charge-offs (annualized) to average loans outstanding 1.11 % 1.18 % 1.24 % 1.40 % 1.26 %
Allowance for credit losses to gross loans 1.89 1.99 2.07 2.21 2.37
Nonaccrual loans $ 104,324 $ 103,486 $ 90,392 $ 113,713 $ 112,750
Repossessed assets 76,994 81,445 89,104 86,692 85,732
Loans past due 90 days, still accruing 795 1,011 2,589 2,096 1,134
Loans past due 30 to 89 days, still accruing 13,848 12,040 13,731 12,414 11,581
Classified loans on accrual 135,913 98,170 112,147 110,654 126,681
Watch loans 91,924 132,829 147,112 167,571 190,045
 
 

                     
Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields and Rates
Unaudited
  Three Months Ended June 30,

2012 (2)
2011

AverageBalance
    Interest

AverageYield/Cost

AverageBalance
Interest

AverageYield/Cost
Interest earning assets

($ inmillions)

($ inthousands)

($ inmillions)

($ inthousands)
Investment securities (1) $ 1,417.1 $ 9,389 3.15 % $ 1,272.1 $ 8,542 2.84 %
Federal funds sold and other 18.8 1 0.01 % - - 0.00 %
Loans (1) 5,014.1 68,342 5.50 % 4,336.3 64,919 6.00 %
Short term investments 80.9 60 0.30 % 248.1 157 0.25 %
Investment in restricted stock   33.4         54     0.65 %   36.2         28     0.31 %
Total interest earning assets 6,564.3 77,846 4.88 % 5,892.7 73,646 5.05 %
Non-interest earning assets
Cash and due from banks 113.1 126.0
Allowance for credit losses (97.5 ) (107.2 )
Bank owned life insurance 135.4 131.3
Other assets   346.9     387.7  
Total assets $ 7,062.2   $ 6,430.5  
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts $ 518.4 $ 310 0.24 % $ 470.4 $ 484 0.41 %
Savings and money market 2,296.0 1,956 0.34 % 2,108.7 3,676 0.70 %
Time certificates of deposit   1,320.7         1,902     0.58 %   1,440.0         3,388     0.94 %
Total interest-bearing deposits 4,135.1 4,168 0.40 % 4,019.1 7,548 0.75 %
Borrowings 425.7 2,386 2.24 % 230.4 2,123 3.70 %
Junior subordinated debt   37.3         487     5.22 %   43.0         689     6.43 %
Total interest-bearing liabilities 4,598.1 7,041 0.61 % 4,292.5 10,360 0.97 %
Noninterest-bearing liabilities
Noninterest-bearing demand deposits 1,744.1 1,486.4
Other liabilities 52.1 24.1
Stockholders’ equity   667.9     627.4  
Total liabilities and stockholders' equity $ 7,062.2   $ 6,430.4  
Net interest income and margin $ 70,805 4.46 % $ 63,286 4.34 %
Net interest spread 4.27 % 4.08 %
 

(1) Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $2,310 and $473 for the second 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
 
Six Months Ended June 30,

2012 (2)
2011
 

AverageBalance
Interest

AverageYield/Cost

AverageBalance
Interest

AverageYield/Cost

Interest earning assets

($ inmillions)

($ inthousands)

($ inmillions)

($ inthousands)
Investment securities (1) $ 1,420.2 $ 18,974 3.14 % $ 1,274.9 $ 16,472 2.76 %
Federal funds sold & other 9.5 1 0.02 % 0.1 1 1.56 %
Loans (1) 4,898.5 136,102 5.59 % 4,270.1 128,801 6.08 %
Short term investments 89.4 110 0.25 % 241.6 288 0.24 %
Investment in restricted stock   33.4         96     0.57 %   36.5         50     0.28 %

Total interest earning assets
6,451.0 155,283 4.94 % 5,823.2 145,612 5.08 %
Non-interest earning assets
Cash and due from banks 113.3 120.5
Allowance for credit losses (99.1 ) (108.9 )
Bank owned life insurance 134.8 130.7
Other assets   352.4     398.1  
Total assets $ 6,952.4   $ 6,363.6  
Interest-bearing liabilities
Interest-bearing deposits:
Interest bearing transaction accounts $ 511.3 $ 624 0.24 % $ 485.8 $ 1,017 0.42 %
Savings and money market 2,264.8 4,124 0.36 % 2,058.8 7,242 0.71 %
Time certificates of deposits   1,372.5         4,182     0.61 %   1,439.5         7,187     1.01 %
Total interest-bearing deposits 4,148.6 8,930 0.44 % 3,984.1 15,446 0.78 %
Borrowings 360.3 4,520 2.51 % 225.6 4,390 3.92 %
Junior subordinated debt   37.1         971     5.23 %   43.0         1,391     6.52 %
Total interest-bearing liabilities $ 4,546.0 14,421 0.63 % $ 4,252.7 21,227 1.01 %
Noninterest-bearing liabilities
Noninterest-bearing demand deposits 1,694.9 1,464.0
Other liabilities 48.7 26.7
Stockholders’ equity   662.8     620.2  
Total liabilities and stockholders' equity $ 6,952.4   $ 6,363.6  
Net interest income and margin $ 140,862 4.49 % $ 124,385 4.34 %
Net interest spread 4.31 % 4.07 %
 

(1) Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $4,071 and $954 for the six months ended June 30, 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 June 30, 2012 (dollars in millions)
Assets $ 2,920.2 $ 2,349.6 $ 1,895.9 $ 800.7 $ (802.8 ) $ 7,163.6
Gross loans and deferred fees, net 2,002.1 1,783.6 1,422.0 - (42.9 ) 5,164.8
Less: Allowance for credit losses   (60.5 )       (20.3 )       (16.7 )       -         -         (97.5 )
Net loans   1,941.6         1,763.3         1,405.3         -         (42.9 )       5,067.3  
Goodwill 23.2 - - 2.7 - 25.9
Deposits 2,430.9 1,998.2 1,592.5 - (20.2 ) 6,001.4
FHLB advances and other 100.0 70.0 72.0 - (12.0 ) 230.0
Stockholders' equity 329.5 208.7 161.6 680.4 (708.1 ) 672.1
 
No. of branches 11 16 12 - - 39
No. of FTE 386 239 228 100 - 953
 
Three Months Ended June 30, 2012: (in thousands)
Net interest income $ 27,498 $ 24,060 $ 21,374 $ (2,127 ) $ - $ 70,805
Provision for credit losses   8,747         2,100         2,483         -         -         13,330  

Net interest income (loss) after provision for credit losses
18,751 21,960 18,891 (2,127 ) - 57,475
Non-interest income 4,291 1,994 1,079 19,833 (19,800 ) 7,397
Non-interest expense   (18,140 )       (12,086 )       (11,338 )       (5,763 )       1,896         (45,431 )

Income (loss) from continuing operations before income taxes
4,902 11,868 8,632 11,943 (17,904 ) 19,441
Income tax expense (benefit)   1,137         4,091         3,340         (3,309 )       -         5,259  
Income (loss) from continuing operations 3,765 7,777 5,292 15,252 (17,904 ) 14,182
Loss from discontinued operations, net   -         -         -         (221 )       -         (221 )
Net income (loss) $ 3,765       $ 7,777       $ 5,292       $ 15,031       $ (17,904 )     $ 13,961  
 
 
Six Months Ended June 30, 2012: (in thousands)
Net interest income $ 55,337 $ 47,116 $ 42,610 $ (4,201 ) $ - $ 140,862
Provision for credit losses   22,229         103         4,079         -         -         26,411  

Net interest income (loss) after provision for credit losses
33,108 47,013 38,531 (4,201 ) - 114,451
Non-interest income 7,874 3,847 2,256 38,289 (38,985 ) 13,281
Non-interest expense   (36,970 )       (24,005 )       (22,410 )       (13,532 )       4,589         (92,328 )

Income (loss) from continuing operations before income taxes
4,012 26,855 18,377 20,556 (34,396 ) 35,404
Income tax expense (benefit)   (714 )       9,263         7,297         (6,146 )       -         9,700  
Income (loss) from continuing operations 4,726 17,592 11,080 26,702 (34,396 ) 25,704
Loss from discontinued operations, net   -         -         -         (443 )       -         (443 )
Net income (loss) $ 4,726       $ 17,592       $ 11,080       $ 26,259       $ (34,396 )     $ 25,261  
 
* 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 June 30, 2011 (dollars in millions)
Assets $ 2,842.6 $ 2,055.6 $ 1,565.3 $ 748.7 $ (704.1 ) $ 6,508.1
Gross loans and deferred fees, net 1,854.8 1,429.2 1,170.6 - (42.9 ) 4,411.7
Less: Allowance for credit losses   (66.8 )       (21.2 )       (16.4 )       -         -         (104.4 )
Net loans   1,788.0         1,408.0         1,154.2         -         (42.9 )       4,307.3  
Goodwill 23.2 - - 2.7 - 25.9
Deposits 2,449.2 1,760.2 1,382.0 - (3.1 ) 5,588.3
Stockholders' equity 317.4 181.5 143.3 622.6 (649.1 ) 615.7
 
No. of branches 12 16 11 - - 39
No. of FTE 411 217 208 73 - 908
 
Three Months Ended June 30, 2011: (in thousands)
Net interest income $ 26,856 $ 20,110 $ 18,611 $ (2,291 ) $ - $ 63,286
Provision for credit losses   5,300         3,731         2,860         -         -         11,891  

Net interest income (loss) after provision for credit losses
21,556 16,379 15,751 (2,291 ) - 51,395
Non-interest income 5,982 2,351 1,235 1,816 (1,787 ) 9,597
Non-interest expense   (22,738 )       (12,680 )       (9,998 )       (7,379 )       1,787         (51,008 )

Income (loss) from continuing operations before income taxes
4,800 6,050 6,988 (7,854 ) - 9,984
Income tax expense (benefit)   1,076         2,224         2,812         (2,817 )       -         3,295  

Income (loss) from continuing operations
3,724 3,826 4,176 (5,037 ) - 6,689
Loss from discontinued operations, net   -         -         -         (460 )       -         (460 )
Net income (loss) $ 3,724       $ 3,826       $ 4,176       $ (5,497 )     $ -       $ 6,229  
 
Six Months Ended June 30, 2011: (in thousands)
Net interest income $ 53,284 $ 39,767 $ 35,928 $ (4,594 ) $ - $ 124,385
Provision for credit losses   12,303         5,331         4,298         -         -         21,932  

Net interest income (loss) after provision for credit losses
40,981 34,436 31,630 (4,594 ) - 102,453
Non-interest income 9,374 4,383 2,974 (304 ) - 16,427
Non-interest expense   (44,410 )       (25,064 )       (20,487 )       (12,677 )       3,483         (99,155 )

Income (loss) from continuing operations before income taxes
5,945 13,755 14,117 (17,575 ) 3,483 19,725

Income tax expense (benefit)
  1,327         5,074         5,918         (4,995 )       -         7,324  

Income (loss) from continuing operations
4,618

8,681
8,199 (12,580 ) 3,483 12,401
Loss from discontinued operations, net   -        

-
        -         (1,019 )       -         (1,019 )
Net income (loss) $ 4,618       $ 8,681       $ 8,199       $ (13,599 )     $ 3,483       $ 11,382  
 
* Excludes discontinued operations
 
 

                     
Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures (Unaudited)
June 30, March 31, December 31, September 30, June 30,
2012 2012 2011 2011 2011
(dollars in thousands)
Total stockholder's equity $ 672,120 $ 654,045 $ 636,683 $ 632,255 $ 615,653
Less:
Goodwill and intangible assets   33,953     34,843     35,732     36,622     37,511  
Total tangible stockholders' equity 638,167 619,202 600,951 595,633 578,142
Less:
Preferred stock   141,000     141,000     141,000     141,000     132,333  
Total tangible common equity 497,167 478,202 459,951 454,633 445,809
Add:
Deferred tax   2,896     3,209     3,522     3,835     4,148  
Total tangible common equity, net of tax $ 500,063   $ 481,411   $ 463,473   $ 458,468   $ 449,957  
Total assets $ 7,163,572 $ 6,925,292 $ 6,844,541 $ 6,545,890 $ 6,508,089
Less:
Goodwill and intangible assets   33,953     34,843     35,732     36,622     37,511  
Tangible assets 7,129,619 6,890,449 6,808,809 6,509,268 6,470,578
Add:
Deferred tax   2,896     3,209     3,522     3,835     4,148  
Total tangible assets, net of tax $ 7,132,515   $ 6,893,658   $ 6,812,331   $ 6,513,103   $ 6,474,726  
Tangible equity ratio (1) 8.9 % 9.0 % 8.8 % 9.1 % 8.9 %
Tangible common equity ratio (2) 7.0 % 6.9 % 6.8 % 7.0 % 6.9 %
Common shares outstanding 83,157 83,145 82,362 82,263 82,139
Tangible book value per share, net of tax (3) $ 6.01 $ 5.79 $ 5.63 $ 5.57 $ 5.48
 
Three Months Ended
June 30, March 31, December 31, September 30, June 30,
2012 2012 2011 2011 2011
(in thousands)
Total non-interest income $ 7,397 $ 5,884 $ 4,948 $ 13,082 $ 9,597
Less:
Mark-to-market (losses) gains, net 564 (333 ) (626 ) 6,420 336
Securities impairment charges - - - - (226 )
Loss on LIHTC investments (59 ) - - - -
Gains on sales of investment securities, net   1,110     361     (28 )   781     2,666  
Total operating non-interest income 5,782 5,856 5,602 5,881 6,821
Add: net interest income   70,805     70,057     68,699     64,585     63,286  
Net revenue (4) $ 76,587   $ 75,913   $ 74,301   $ 70,466   $ 70,107  
 
Total non-interest expense $ 45,431 $ 46,897 $ 50,963 $ 45,481 $ 51,008
Less:

Net loss (gain) on sales/valuations of repossessed assets
901 2,651 7,702 2,128 8,633
Merger/restructure   -     -     482     974     (109 )
Total operating non-interest expense (4) $ 44,530   $ 44,246   $ 42,779   $ 42,379   $ 42,484  
 
Net revenue $ 76,587 $ 75,913 $ 74,301 $ 70,466 $ 70,107
Less:
Operating non-interest expense   44,530     44,246     42,779     42,379     42,484  
Pre-tax, pre-provision operating earnings (5) $ 32,057   $ 31,667   $ 31,522   $ 28,087   $ 27,623  
 
 
Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures (Unaudited)
Three Months Ended
June 30, March 31, December 31, September 30, June 30,
2012 2012 2011 2011 2011
(in thousands)
Total operating non-interest expense $ 44,530   $ 44,246   $ 42,779   $ 42,379   $ 42,484  
Divided by:
Total net interest income $ 70,805 $ 70,057 $ 68,699 $ 64,585 $ 63,286
Add:
Tax equivalent interest adjustment 2,310 1,761 1,425 634 473
Operating non-interest income   5,782     5,856     5,602     5,881     6,821  
$ 78,897   $ 77,674   $ 75,726   $ 71,100   $ 70,580  
Efficiency ratio - tax equivalent basis (6) 56.4 % 57.0 % 56.5 % 59.6 % 60.2 %
 
Three Months Ended
June 30, June 30,
2012 2011
(in thousands)
Stockholder's equity $ 672,120 $ 615,653
Less:
Accumulated other comprehensive (loss) income 4,291 (5,795 )
Non-qualifying goodwill and intangibles 31,748 34,080
Other non-qualifying assets 3 24,057
Add:
Qualifying trust preferred securities 45,123 40,737
Tier 1 capital (regulatory) (7) (10) 681,201 604,048
Less:
Qualifying non-controlling interests 423 104
Qualifying trust preferred securities 45,123 40,737
Preferred stock   141,000     132,333  
Estimated Tier 1 common equity (8) (10) $ 494,655 $ 430,874
Divided by:

Estimated risk-weighted assets (regulatory) (8) (10)
$ 6,181,246   $ 5,110,812  
Tier 1 common equity ratio (8) (10) 8.0 % 8.4 %
 
June 30, June 30,
2012 2011
(in thousands)
Classified assets $ 325,165 $ 325,760
Divide:
Tier 1 capital (regulatory) (7) (10) 681,201 604,048
Plus: Allowance for credit losses   97,512     104,375  
Total Tier 1 capital plus allowance for credit losses $ 778,713   $ 708,423  
Classified assets to Tier 1 capital plus allowance (9) (10) 42 % 46 %
 

(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 this non-GAAP measurement provides 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 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

More from Press Releases

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

21st Century Fox Scoops Up Local News Stations

21st Century Fox Scoops Up Local News Stations

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Three-Part FREE Webinar Series

Three-Part FREE Webinar Series

March 24 Full-Day Course Offering: Professional Approach to Trading SPX

March 24 Full-Day Course Offering: Professional Approach to Trading SPX