Western Alliance Reports Fourth Quarter 2013 Net Income Of $31.4 Million, Or $0.36 Per Share; Full Year Net Income Of $114.5 Million, Or $1.31 Per Share

Western Alliance Bancorporation (NYSE: WAL) announced today its financial results for the fourth quarter 2013.

Fourth Quarter 2013 Highlights:
  • Net income of $31.4 million, compared to $28.2 million for the third quarter 2013 and $32.1 million for the fourth quarter 2012
  • Net income of $29.8 million for the fourth quarter 2013, excluding the following, net of tax effect: $3.7 million tax benefit related to the Western Liberty acquisition, $1.3 million net gain on other repossessed assets, $1.3 million net loss from debt valuation adjustments and securities gains, $1.2 million merger/restructure expenses, and $0.9 million net loss on extinguishment of debt
  • Earnings per share of $0.36, compared to $0.32 per share in the third quarter 2013 and $0.37 per share in the fourth quarter 2012
  • Earnings per share of $0.34 for the fourth quarter 2013, excluding the following, net of tax effect: $0.04 tax benefit related to the Western Liberty acquisition, $0.02 net gain on other repossessed assets, $0.02 net loss from debt valuation adjustments and securities gains, $0.01 merger/restructure expenses, and $0.01 net loss on extinguishment of debt
  • Pre-tax, pre-provision operating earnings of $43.8 million, up 4.2% from $42.1 million in third quarter 2013 and up 19.1% from $36.8 million in fourth quarter 20121
  • Net interest margin of 4.44%, compared to 4.41% in the third quarter 2013 and 4.55% in the fourth quarter 2012
  • Total loans of $6.80 billion, up $285 million from September 30, 2013
  • Total deposits of $7.84 billion, up $563 million from September 30, 2013
  • Nonperforming assets (nonaccrual loans and repossessed assets) decreased to 1.5% of total assets from 1.7% in the third quarter 2013 and from 2.4% in the fourth quarter 2012
  • Net loan charge-offs (annualized) to average loans outstanding of 0.13%, compared to net loan recoveries to average loans of 0.10% in the third quarter 2013 and net loan charge-offs to average loans of 0.99% in the fourth quarter 2012
  • Tier I Leverage capital of 9.8% and Total Risk-Based Capital ratio of 12.6%, compared to 10.1% and 12.6%, respectively, at December 31, 2013
  • Total equity of $855 million, up $96 million from December 31, 2012

Full Year 2013 Highlights:
  • Net income of $114.5 million, compared to $72.8 million for 2012
  • Return on assets and return on tangible common equity of 1.35% and 16.67%, compared to 1.01% and 12.37%, respectively, in 2012
  • Earnings per share of $1.31, compared to $0.83 per share for 2012
  • Net interest margin of 4.39%, compared to 4.49% in 2012
  • Total loan and deposit growth of $1.09 billion and $1.38 billion, respectively, from December 31, 2012

Financial Performance

“2013 was an outstanding year for Western Alliance, with exceptional balance sheet growth, record revenue and earnings, and low credit losses,” said Robert Sarver, Chairman and Chief Executive Officer of Western Alliance Bancorporation. “Our team of professionals from the front line to the back office have driven our strong performance as we continue to win business. During the fourth quarter, our loan and deposit growth accelerated without sacrificing quality and margin.”

Sarver continued, “On December 31, 2013, we consolidated our three affiliate banks under one charter, which will enable us to improve efficiency and risk identification and management, while maintaining our high level of customer service and responsiveness.”

Income Statement

Net interest income was $90.0 million in the fourth quarter 2013, an increase of $5.4 million, or 6.4%, from $84.6 million in the third quarter of 2013 and an increase of $12.5 million, or 16.2%, compared to the fourth quarter 2012. The Company’s net interest margin increased in the fourth quarter 2013 to 4.44%, compared to 4.41% in the third quarter 2013 and declined from 4.55% in the fourth quarter 2012.

Operating non-interest income was $5.2 million for the fourth quarter 2013, compared to $5.8 million in the third quarter of 2013 and $5.1 million for the fourth quarter of 2012. 1

Net operating revenue was $95.2 million for the fourth quarter 2013, an increase of 5.3% compared to $90.4 million for the third quarter of 2013 and an increase of 15.3% compared to $82.5 million for the fourth quarter 2012. 1

Operating non-interest expense was $51.4 million for the fourth quarter 2013, compared to $48.3 million for the third quarter of 2013 and $45.8 million for the fourth quarter of 2012. 1 The Company’s operating efficiency ratio 1 on a tax equivalent basis was 51.9% for the fourth quarter 2013, compared to 51.6% for the third quarter 2013 and an improvement from 53.5% for the fourth quarter 2012.

Income tax expense decreased as a result of increased deductibility of credit losses related to the Western Liberty acquisition.

The Company had 1,051 full-time equivalent employees and 40 offices at December 31, 2013, compared to 982 employees and 40 offices at December 31, 2012.

The Company views its pre-tax, pre-provision operating earnings as a key metric for assessing the Company’s earning power, which it defines as net operating revenue less operating non-interest expense. For the fourth quarter 2013, the Company’s pre-tax, pre-provision operating earnings were $43.8 million, up from $42.1 million in the third quarter 2013 and up 19.1% from $36.8 million in the fourth quarter 2012. 1

The provision for credit losses was $4.3 million for the fourth quarter 2013, compared to zero in the third quarter 2013 and $11.5 million for the fourth quarter 2012. Net loan charge-offs in the fourth quarter 2013 were $2.1 million, or 0.13% of average loans (annualized), compared to net loan recoveries to average loans of 0.10% for the third quarter 2013. Net charge-offs for the fourth quarter 2012 were $13.5 million, or 0.99% of average loans (annualized).

Nonaccrual loans decreased $1.0 million to $75.7 million during the quarter. Loans past due 90 days and still accruing interest totaled $1.5 million at December 31, 2013, compared to $5.5 million at September 30, 2013 and $1.4 million at December 31, 2012. Loans past due 30-89 days, still accruing interest totaled $13.4 million at quarter end, up from $8.7 million at September 30, 2013 and down from $16.6 million at December 31, 2012.

As the Company’s asset quality improved and its capital increased, the ratio of classified assets to Tier I capital plus the allowance for credit losses, a common regulatory measure of asset quality, improved to 27% at December 31, 2013 from 34% at December 31, 2012. 1

Net gain on repossessed assets (primarily other real estate) was $2.2 million for the fourth quarter 2013, compared to a net loss of $0.4 million in the third quarter 2013 and a net loss of $0.5 million in the fourth quarter 2012. At December 31, 2013, other repossessed assets totaled $67 million, compared to $77 million at September 30, 2013 and December 31, 2012.

Balance Sheet

Gross loans totaled $6.80 billion at December 31, 2013, an increase of $285 million from September 30, 2013 and an increase of $1.09 billion from $5.71 billion at December 31, 2012. At December 31, 2013, the allowance for credit losses was 1.47% of total loans, compared to 1.50% at September 30, 2013 and 1.67% at December 31, 2012, reflecting an improvement in the Company’s asset profile.

Deposits totaled $7.84 billion at December 31, 2013, an increase of $563 million from $7.28 billion at September 30, 2013 and an increase of $1.38 billion from $6.46 billion at December 31, 2012. Non-interest bearing deposits were $2.20 billion at December 31, 2013, compared to $1.97 billion at September 30, 2013 and $1.93 billion at December 31, 2012. Non-interest bearing deposits comprised 28.1% of total deposits at December 31, 2013, compared to 29.9% at December 31, 2012, while the proportion of savings and money market accounts increased to 42.2% from 39.9% during the same period. Certificates of deposit as a percent of total deposits were 20.6% at December 31, 2013, compared to 21.2% at December 31, 2012. The Company’s ratio of loans to deposits was 86.8% at December 31, 2013, compared to 89.6% at September 30, 2013 and 88.5% at December 31, 2012.

Stockholders’ equity at December 31, 2013 increased to $855 million from $826 million at September 30, 2013. At December 31, 2013, tangible common equity was 7.4% of tangible assets 1 and total risk-based capital was 12.6% of risk-weighted assets. The Company’s tangible book value per share 1 was $7.89 at December 31, 2013, up 15.4% during the past year.

Total assets increased 4.3% to $9.31 billion at December 31, 2013 from $8.92 billion at September 30, 2013, and 22.1% from $7.62 billion at December 31, 2012.

Segment Highlights

Western Alliance Bank reported loan growth of $245 million during the fourth quarter 2013 and $797 million during the last 12 months to $2.83 billion. Fourth quarter loan growth came primarily from commercial and industrial and construction and land development loans. Deposits increased $233 million in the fourth quarter and $840 million during the last 12 months to $3.06 billion. Net income for Western Alliance Bank was $12.7 million during the fourth quarter 2013, compared with net income of $9.8 million during the third quarter of 2013 and $10.4 million during the fourth quarter 2012.

Bank of Nevada reported that loans decreased by $102 million during the fourth quarter of 2013 and increased $102 million during the last 12 months to $2.29 billion at December 31, 2013. The decline in fourth quarter loans came primarily from a decrease in commercial real estate and commercial and industrial loans. Deposits increased by $150 million in the fourth quarter of 2013 and increased $194 million over the last twelve months to $2.76 billion. Net income for Bank of Nevada was $13.0 million for the fourth quarter 2013, compared with net income of $16.3 million for the third quarter of 2013 and $7.6 million during the fourth quarter 2012.

Torrey Pines Bank, exclusive of the discontinued operations of PartnersFirst, reported that loans increased $100 million during the fourth quarter 2013 and increased $116 million during the last 12 months to $1.62 billion. The fourth quarter increase in the loan balances were primarily attributable to an increase in commercial real estate and commercial and industrial loans. Deposits increased $177 million in the fourth quarter 2013 and $342 million over the last 12 months to $2.02 billion. Net income for Torrey Pines Bank was $6.0 million during the fourth quarter 2013, compared with net income of $4.6 million for the third quarter of 2013 and $5.2 million during the fourth quarter 2012.

On December 31, 2013, the Company consolidated its three bank subsidiaries under one charter, Western Alliance Bank. Prior to the consolidation, Alliance Bank of Arizona and First Independent Bank operated as divisions of Western Alliance Bank. In 2014, Bank of Nevada and Torrey Pines Bank also will operate as divisions of Western Alliance Bank.

Attached to this press release is summarized financial information for the quarter ended December 31, 2013.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live webcast to discuss its fourth quarter 2013 financial results at 12:00 p.m. ET on Friday, January 24, 2014. Participants may access the call by dialing 1-888-317-6003 and using passcode: 1025905 or via live audio webcast using the website link: http://services.choruscall.com/links/wal140124.html. The webcast is also available via the Company’s website at www.westernalliancebancorp.com. Participants should log in at least 15 minutes early to receive instructions. The call will be recorded and made available for replay after 2:00 p.m. ET January 24th through February 10th at 9:00 a.m. ET by dialing 1-877-344-7529 passcode: 10038670.

About Western Alliance Bancorporation

Western Alliance Bancorporation (NYSE: WAL) is a leading bank holding company providing comprehensive business banking and related financial services through its wholly-owned banking subsidiary, Western Alliance Bank (the "Bank"). With local teams of experienced bankers, the Bank provides a superior level of capabilities, products and service, to assist the growth of local businesses and the quality of life in the markets it serves. In addition to a national platform of specialized financial service units, the Bank operates full service banking divisions in its local markets as Alliance Bank of Arizona, Bank of Nevada, First Independent Bank and Torrey Pines Bank. Western Alliance Bancorporation is publicly traded on the New York Stock Exchange. 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. Examples of forward-looking statements include, among others, statements we make regarding guidance or expectations relating to balance sheet growth, interest margin, operating efficiency, asset quality, and regulatory capital. The forward-looking statements contained herein reflect our current views about future events and financial performance and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from historical results and those expressed in any forward-looking statement. Some factors that could cause actual results to differ materially from historical or expected results include, among others: factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 as filed with the Securities and Exchange Commission; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; inflation, interest rate, market and monetary fluctuations; increases in competitive pressures among financial institutions and businesses offering similar products and services; higher defaults on our loan portfolio than we expect; changes in management’s estimate of the adequacy of the allowance for credit losses; legislative or regulatory changes or changes in accounting principles, policies or guidelines; supervisory actions by regulatory agencies which may limit our ability to pursue certain growth opportunities; management’s estimates and projections of interest rates and interest rate policy; the execution of our business plan; and other factors affecting the financial services industry generally or the banking industry in particular.

Any forward-looking statement made by us in this release is based only on information currently available to us and speaks only as of the date on which it is made. We do not intend and disclaim any duty or obligation to update or revise any industry information or forward-looking statements, whether written or oral, that may be made from time to time, set forth in this press release to reflect new information, future events or otherwise.

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
                       

Western Alliance Bancorporation and Subsidiaries
Summary Consolidated Financial Data
Unaudited
 

At or for the Three Months EndedDecember 31,

For the Twelve Months Ended December 31,
2013 2012 Change % 2013 2012 Change %
 
Selected Balance Sheet Data:
(dollars in millions)
Total assets $ 9,307.1 $ 7,622.6 22.1 %
Loans, net of deferred fees 6,801.4 5,709.3 19.1
Securities and money market investments 1,689.6 1,236.6 36.6
Total deposits 7,838.2 6,455.2 21.4
Borrowings 341.1 193.7 76.1
Junior subordinated debt 41.9 36.2 15.7
Stockholders' equity 855.3 759.6 12.6
 
Selected Income Statement Data:
(dollars in thousands)
Interest income $ 97,582 $ 84,343 15.7 % $ 362,655 $ 318,295 13.9 %
Interest expense 7,601   6,888   10.4 29,760   28,032   6.2
Net interest income 89,981 77,455 16.2 332,895 290,263 14.7
Provision for loan losses 4,300   11,501   (62.6 ) 13,220   46,844   (71.8 )
Net interest income after provision for credit losses 85,681 65,954 29.9 319,675 243,419 31.3
Non-interest (loss) income (158 ) 24,463 (100.6 ) 17,228 44,726 (61.5 )
Non-interest expense 51,131   48,989   4.4 196,266   188,860   3.9
Income from continuing operations, before income tax expense 34,392 41,428 (17.0 ) 140,637 99,285 41.6
Income tax expense 2,341   7,509   (68.8 ) 25,254   23,961   5.4
Income from continuing operations 32,051 33,919 (5.5 ) 115,383 75,324 53.2
Loss on discontinued operations, net (701 ) (1,804 ) (61.1 ) (861 ) (2,490 ) (65.4 )
Net income $ 31,350   $ 32,115   (2.4 )% $ 114,522   $ 72,834   57.2 %
Diluted net income per common share from continuing operations $ 0.37   $ 0.39   (5.1 )% $ 1.32   $ 0.86   53.5 %
Diluted net loss per common share from discontinued operations, net of tax $ (0.01 ) $ (0.02 ) $ (0.01 ) $ (0.03 )
Diluted net income per common share $ 0.36   $ 0.37   (2.7 )% $ 1.31   $ 0.83   57.8 %
 
Common Share Data:
Diluted net income per common share $ 0.36 $ 0.37 (2.7 )% $ 1.31 $ 0.83 57.8 %
Book value per common share $ 8.19 $ 7.15 14.5 %
Tangible book value per share, net of tax (1) $ 7.89 $ 6.84 15.4 %
Average shares outstanding (in thousands):
Basic 85,939 84,416 1.8 85,682 82,285 4.1
Diluted 86,877 85,152 2.0 86,541 82,912 4.4
Common shares outstanding 87,186 86,465 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 EndedDecember 31,

For the Twelve Months Ended December 31,
2013 2012 Change % 2013 2012 Change %
 
Selected Performance Ratios:
Return on average assets (1) 1.37 % 1.68 % (18.5 )% 1.35 % 1.01 % 33.7 %
Return on tangible common equity (2) 18.11 21.70 (16.5 ) 16.67 12.37 34.8
Net interest margin (1) 4.44 4.55 (2.4 ) 4.39 4.49 (2.2 )
Net interest spread 4.27 4.37 (2.3 ) 4.23 4.31 (1.9 )
Efficiency ratio - tax equivalent basis (2) 51.92 53.48 (2.9 ) 52.51 55.39 (5.2 )
Loan to deposit ratio 86.77 88.45 (1.9 )
 
Capital Ratios:
Tangible equity (2) 8.9 % 9.6 % (7.3 )%
Tangible common equity (2) 7.4 7.8 (5.1 )
Tier 1 common equity (2) 8.9 8.6 3.5
Tier 1 Leverage ratio (3) 9.8 10.1 (3.0 )
Tier 1 Risk Based Capital (3) 11.4 11.3 0.9
Total Risk Based Capital (3) 12.6 12.6
 
Asset Quality Ratios:
Net charge-offs to average loans outstanding (1) 0.13 % 0.99 % (86.9 )% 0.14 % 0.99 % (85.9 )%
Nonaccrual loans to gross loans

1.11
1.83

(39.3

)
Nonaccrual loans and repossessed assets to total assets

1.53
2.39

(36.0
)
Loans past due 90 days and still accruing to total loans 0.02 0.02
Allowance for credit losses to loans 1.47 1.67 (12.0 )
Allowance for credit losses to nonaccrual loans

132.20
91.13

45.1
 
(1) Annualized for the three month periods ended December 31, 2013 and 2012.
(2) See Reconciliation of Non-GAAP Financial Measures.
(3) Capital ratios are preliminary until the Call Report is filed.
 

 
Western Alliance Bancorporation and Subsidiaries
Condensed Consolidated Income Statements
Unaudited
   

Three Months EndedDecember 31,
   

Twelve Months EndedDecember 31,
2013     2012 2013     2012
Interest income: (dollars in thousands)
Loans $ 86,902 $ 75,303 $ 326,714 $ 280,985
Investment securities 10,137 8,794 34,403 36,802
Federal funds sold and other 543   246   1,538   508  
Total interest income 97,582   84,343   362,655   318,295  
Interest expense:
Deposits 4,442 3,890 16,335 16,794
Borrowings 2,717 2,528 11,602 9,310
Junior subordinated debt 442   470   1,823   1,928  
Total interest expense 7,601   6,888   29,760   28,032  
Net interest income 89,981 77,455 332,895 290,263
Provision for credit losses 4,300   11,501   13,220   46,844  
Net interest income after provision for credit losses 85,681   65,954   319,675   243,419  
Non-interest income (loss):
Service charges 2,512 2,438 9,920 9,452
Bank owned life insurance 905 1,080 4,809 4,439
Amortization of affordable housing investments (1,714 ) (1,069 ) (5,018 ) (1,779 )
Gains (losses) on sales of investment securities, net 342 1,447 (1,195 ) 3,949
Unrealized (losses) gains on assets/liabilities measured at fair value, net (2,618 ) (48 ) (6,386 ) 653
Loss on extinguishment of debt (1,387 ) (1,387 )
Bargain purchase gain from acquisition 17,562 10,044 17,562
Other 1,802   3,053   6,441   10,450  
Total non-interest (loss) income (158 ) 24,463   17,228   44,726  
Non-interest expenses:
Salaries and employee benefits 30,071 26,885 113,434 105,044
Occupancy 4,626 4,769 19,126 18,815
Legal, professional and directors' fees 4,623 2,418 13,633 10,237
Insurance 1,744 2,188 8,094 8,511
Data Processing 2,040 2,071 7,952 5,749
Marketing 619 575 2,581 2,305
Loan and repossessed asset expenses 793 2,102 4,246 6,675
Customer service 860 678 2,897 2,604
Net (gain) loss on sales and valuations of repossessed assets (2,153 ) 529 (2,387 ) 4,207
Intangible amortization 597 596 2,388 3,256
Merger / restructure expense 1,919 2,706 5,752 2,819
Goodwill and intangible impairment 3,435
Other 5,392   3,472   18,550   15,203  
Total non-interest expense 51,131   48,989   196,266   188,860  
Income from continuing operations before income taxes 34,392 41,428 140,637 99,285
Income tax expense 2,341   7,509   25,254   23,961  
Income from continuing operations $ 32,051 $ 33,919 $ 115,383 $ 75,324
Loss from discontinued operations net of tax benefit (701 ) (1,804 ) (861 ) (2,490 )
Net income $ 31,350 $ 32,115 $ 114,522 $ 72,834
Preferred stock dividends 353   353   1,411   3,793  
Net income available to common stockholders $ 30,997   $ 31,762   $ 113,111   $ 69,041  
 
Diluted net income per share $ 0.36   $ 0.37   $ 1.31   $ 0.83  
 

 
Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Income Statements
Unaudited     Three Months Ended

Dec 31, 2013
   

Sep 30, 2013
   

Jun 30, 2013
   

Mar 31, 2013
   

Dec 31, 2012
Interest income: (in thousands, except per share data)
Loans $ 86,902 $ 83,994 $ 81,093 $ 74,725 $ 75,303
Investment securities 10,137 8,286 7,822 8,158 8,794
Federal funds sold and other 543   400   370   225   246  
Total interest income 97,582   92,680   89,285   83,108   84,343  
Interest expense:
Deposits 4,442 4,232 3,929 3,732 3,890
Borrowings 2,717 3,429 2,749 2,707 2,528
Junior subordinated debt 442   460   455   466   470  
Total interest expense 7,601   8,121   7,133   6,905   6,888  
Net interest income 89,981 84,559 82,152 76,203 77,455
Provision for credit losses 4,300     3,481   5,439   11,501  
Net interest income after provision for credit losses 85,681   84,559   78,671   70,764   65,954  
Non-interest income (loss):
Service charges 2,512 2,425 2,449 2,534 2,438
Bank owned life insurance 905 1,832 1,036 1,036 1,080
Amortization of affordable housing investments (1,714 ) (1,504 ) (900 ) (900 ) (1,069 )
Gains (losses) on sales of investment securities, net 342 (1,679 ) (5 ) 147 1,447
Unrealized losses on assets/liabilities measured at fair value, net (2,618 ) (7 ) (3,290 ) (471 ) (48 )
Loss on extinguishment of debt (1,387 )
Bargain purchase gain from acquisition 10,044 17,562
Other 1,802   1,558   1,528   1,553   3,053  
Total non-interest (loss) income (158 ) 2,625   10,862   3,899   24,463  
Non-interest expenses:
Salaries and employee benefits 30,071 28,689 28,100 26,574 26,885
Occupancy 4,626 4,901 4,753 4,846 4,769
Legal, professional and directors' fees 4,623 3,438 2,549 3,023 2,418
Insurance 1,744 1,884 2,096 2,370 2,188
Data Processing 2,040 1,872 2,175 1,865 2,071
Marketing 619 585 710 667 575
Loan and repossessed asset expenses 793 1,136 721 1,596 2,102
Customer service 860 677 717 643 678
Net (gain) loss on sales and valuations of repossessed assets (2,153 ) 371 (1,124 ) 519 529
Intangible amortization 597 597 597 597 596
Merger / restructure expense 1,919 1,018 2,620 195 2,706
Other 5,392   4,507   4,617   4,034   3,472  
Total non-interest expense 51,131   49,675   48,531   46,929   48,989  
Income from continuing operations before income taxes 34,392 37,509 41,002 27,734 41,428
Income tax expense 2,341   9,288   6,817   6,808   7,509  
Income from continuing operations $ 32,051 $ 28,221 $ 34,185 $ 20,926 $ 33,919
(Loss) Income from discontinued operations, net of tax (701 ) (29 ) (169 ) 38   (1,804 )
Net income $ 31,350   $ 28,192   $ 34,016   $ 20,964   $ 32,115  
Preferred stock dividends 353   352   353   353   353  
Net Income available to common stockholders $ 30,997   $ 27,840   $ 33,663   $ 20,611   $ 31,762  
 
Diluted net income per share $ 0.36   $ 0.32   $ 0.39   $ 0.24   $ 0.37  
 

 
Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Balance Sheets
Unaudited
   

Dec 31, 2013

 
  Sep 30, 2013     Jun 30, 2013     Mar 31, 2013     Dec 31, 2012
(in millions)
Assets:
Cash and due from banks $ 305.2 $ 380.9 $ 248.9 $ 422.3 $ 204.6
Securities purchased under agreement to resell   128.1   134.0   134.0    
Cash and cash equivalents 305.2 509.0 382.9 556.3 204.6
 
Securities and money market investments 1,689.6 1,370.8 1,313.1 1,302.4 1,236.6
Loans held for sale 25.4 27.6 27.9 31.1
Loans held for investment:
Commercial 2,478.2 2,234.9 2,174.1 2,084.9 1,947.8
Commercial real estate - non-owner occupied 1,841.1 1,864.3 1,839.7 1,538.4 1,505.6
Commercial real estate - owner occupied 1,561.9 1,551.2 1,550.0 1,414.3 1,396.8
Construction and land development 535.7 459.8 416.7 381.1 394.3
Residential real estate 350.3 359.0 381.7 388.7 407.9
Consumer 43.1 29.8 28.5 26.0 31.8
Deferred fees, net (8.9 ) (8.1 ) (6.8 ) (6.0 ) (6.0 )
Gross loans and deferred fees, net 6,801.4 6,490.9 6,383.9 5,827.4 5,678.2
Allowance for credit losses (100.1 ) (97.9 ) (96.3 ) (95.5 ) (95.4 )
Loans, net 6,701.3   6,393.0   6,287.6   5,731.9   5,582.8  
 
Premises and equipment, net 120.2 105.9 106.1 107.1 107.9
Other repossessed assets 66.7 76.5 76.5 77.9 77.2
Bank owned life insurance 140.6 139.7 140.4 139.4 138.3
Goodwill and other intangibles 27.4 27.9 28.5 29.2 29.8
Other assets 256.1   273.2   231.0   202.0   214.3  
Total assets $ 9,307.1   $ 8,921.4   $ 8,593.7   $ 8,174.1   $ 7,622.6  
Liabilities and Stockholders' Equity:
Liabilities:
Deposits:
Non-interest bearing demand deposits $ 2,200.0 $ 1,972.5 $ 1,919.6 $ 1,930.4 $ 1,933.2
Interest bearing:
Demand 709.8 673.7 631.3 619.7 582.3
Savings and money market 3,310.4 3,050.0 2,945.1 2,826.7 2,573.5
Time certificates 1,618.0   1,579.1   1,505.3   1,358.1   1,366.2  
Total deposits 7,838.2 7,275.3 7,001.3 6,734.9 6,455.2
Customer repurchase agreements 71.2   55.5   51.9   64.7   79.0  
Total customer funds 7,909.4 7,330.8 7,053.2 6,799.6 6,534.2
Securities sold short 126.6 129.5 132.6
Borrowings 341.1 394.1 418.6 293.8 193.7
Junior subordinated debt 41.9 39.4 39.9 36.7 36.2
Accrued interest payable and other liabilities 159.4   204.2   153.0   130.1   98.9  
Total liabilities 8,451.8   8,095.1   7,794.2   7,392.8   6,863.0  
Stockholders' Equity
Common stock and additional paid-in capital 797.2 792.2 789.5 786.9 784.9
Preferred stock 141.0 141.0 141.0 141.0 141.0
Accumulated deficit (61.4 ) (92.4 ) (120.2 ) (153.8 ) (174.5 )
Accumulated other comprehensive (loss) income (21.5 ) (14.5 ) (10.8 ) 7.2   8.2  
Total stockholders' equity 855.3   826.3   799.5   781.3   759.6  
Total liabilities and stockholders' equity $ 9,307.1   $ 8,921.4   $ 8,593.7   $ 8,174.1   $ 7,622.6  
 

 
Western Alliance Bancorporation and Subsidiaries
Changes in the Allowance For Credit Losses
Unaudited
    Three Months Ended
Dec 31, 2013     Sep 30, 2013     Jun 30, 2013     Mar 31, 2013     Dec 31, 2012
(in thousands)
Balance, beginning of period $ 97,851 $ 96,323 $ 95,494 $ 95,427 $ 97,410
Provision for credit losses 4,300 3,481 5,439 11,501
Recoveries of loans previously charged-off:
Commercial and industrial 666 2,242 1,757 441 372
Commercial real estate - non-owner occupied 395 273 154 440 288
Commercial real estate - owner occupied 297 149 479 502 109
Construction and land development 273 966 120 701 2,033
Residential real estate 549 430 549 569 313
Consumer 179   726   11   14   63  
Total recoveries 2,359 4,786 3,070 2,667 3,178
Loans charged-off:
Commercial and industrial 621 544 1,065 1,770 4,654
Commercial real estate - non-owner occupied 2,268 466 1,000 1,908 2,673
Commercial real estate - owner occupied 238 398 1,391 979 4,470
Construction and land development 686 238 614 405
Residential real estate 281 1,138 2,010 2,493 1,307
Consumer 366   712   18   275   3,153  
Total loans charged-off 4,460 3,258 5,722 8,039 16,662
Net loan charge-offs (recoveries) 2,101   (1,528 ) 2,652   5,372   13,484  
Balance, end of period $ 100,050   $ 97,851   $ 96,323   $ 95,494   $ 95,427  
 
Net charge-offs (recoveries) to average loans outstanding - annualized 0.13 % (0.10 )% 0.17 % 0.38 % 0.99 %
Allowance for credit losses to gross loans 1.47 1.50 1.50 1.63 1.67
Nonaccrual loans $

75,681
$ 76,641 $ 82,899 $ 93,748 $ 104,716
Repossessed assets 66,719 76,475 76,499 77,921 77,247
Loans past due 90 days, still accruing 1,534 5,456 3,893 1,640 1,388
Loans past due 30 to 89 days, still accruing 13,425 8,689 7,341 14,795 16,565
Classified loans on accrual 128,586 144,041 140,192 97,351 112,637
Special mention loans 129,965 137,247 162,482 125,660 103,550
 

                   
Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields and Rates
Unaudited
    Three Months Ended December 31,
2013 2012

AverageBalance
Interest

AverageYield/ Cost

AverageBalance
Interest

AverageYield/ Cost
Interest earning assets ($ in millions) ($ in thousands) ($ in millions) ($ in thousands)
Loans (1) $ 6,515.2 $ 86,902 5.48 % $ 5,450.0 $ 75,303 5.60 %
Investment securities (1) 1,488.8 10,137 3.11 1,329.3 8,794 3.25
Federal funds sold and other 447.5   543   0.49   300.4   246   0.33  
Total interest earning assets 8,451.5 97,582 4.79 7,079.7 84,343 4.94
Non-interest earning assets
Cash and due from banks 132.7 121.2
Allowance for credit losses (98.4 ) (99.1 )
Bank owned life insurance 140.0 137.6
Other assets 465.6   364.0  
Total assets $ 9,091.4   $ 7,603.4  
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts $ 676.8 $ 360 0.21 % $ 528.1 $ 301 0.23 %
Savings and money market 3,175.1 2,390 0.30 2,539.8 1,973 0.31
Time certificates of deposit 1,592.4   1,692   0.43   1,406.9   1,616   0.46  
Total interest-bearing deposits 5,444.3 4,442 0.33 4,474.8 3,890 0.35
Borrowings 414.6 2,717 2.62 299.6 2,528 3.38
Junior subordinated debt 39.5   442   4.48   36.2   470   5.19  
Total interest-bearing liabilities 5,898.4 7,601 0.52 4,810.6 6,888 0.57
Noninterest-bearing liabilities
Noninterest-bearing demand deposits 2,091.8 1,948.4
Other liabilities 249.1 94.4
Stockholders’ equity 852.1   750.0  
Total liabilities and stockholders' equity $ 9,091.4   $ 7,603.4  
Net interest income and margin $ 89,981   4.44 % $ 77,455   4.55 %
Net interest spread 4.27 % 4.37 %
 
(1) Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $3,728 and $3,012 for the fourth quarter ended 2013 and 2012, respectively.
 

                   
Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields and Rates
Unaudited
   
Twelve Months Ended December 31,  
2013 2012

AverageBalance
Interest

AverageYield/ Cost

AverageBalance
Interest

AverageYield/ Cost
Interest earning Assets ($ in millions) ($ in thousands) ($ in millions) ($ in thousands)
Loans (1) $ 6,136.2 $ 326,714 5.43 % $ 5,110.2 $ 280,985 5.55 %
Investment securities (1) 1,342.0 34,403 3.07 1,385.3 36,802 3.17
Federal funds sold & other 409.4   1,538   0.38   189.5   508   0.27  
Total interest earnings assets 7,887.6 362,655 4.77 6,685.0 318,295 4.91
Non-interest earning assets
Cash and due from banks 128.5 116.9
Allowance for credit losses (97.5 ) (98.9 )
Bank owned life insurance 139.8 136.0
Other assets 442.0   354.4  
Total assets $ 8,500.4   $ 7,193.4  
Interest-bearing liabilities
Interest-bearing deposits:
Interest bearing transaction accounts $ 640.1 $ 1,407 0.22 % $ 515.3 $ 1,220 0.24 %
Savings and money market 2,936.1 8,480 0.29 2,371.5 8,088 0.34
Time certificates of deposits 1,488.0   6,448   0.43   1,359.5   7,486   0.55  
Total interest-bearing deposits 5,064.2 16,335 0.32 4,246.3 16,794 0.40
Borrowings 408.6 11,602 2.84 369.0 9,310 2.52
Junior subordinated debt 38.1   1,823   4.78   36.8   1,928   5.24  
Total interest-bearing liabilities 5,510.9 29,760 0.54 4,652.1 28,032 0.60
Noninterest-bearing liabilities
Noninterest-bearing demand deposits 1,954.2 1,788.3
Other liabilities 111.8 62.0
Stockholders’ equity 923.5   691.0  
Total liabilities and stockholders' equity $ 8,500.4   $ 7,193.4  
Net interest income and margin $ 332,895   4.39 % $ 290,263   4.49 %
Net interest spread 4.23 % 4.31 %
 
(1) Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $13,312 and $9,738 for the twelve months ended December 31, 2013 and 2012, respectively.
 

                   
Western Alliance Bancorporation and Subsidiaries
Operating Segment Results
Unaudited
   

WesternAlliance Bank
Bank of Nevada

Torrey PinesBank*
Other

Inter-segmenteliminations

ConsolidatedCompany
At December 31, 2013 (dollars in millions)
Assets 3,551.0 3,426.0 2,258.1 993.1 (921.1 ) 9,307.1
Held for sale loans
Gross loans and deferred fees, net 2,834.3 2,285.6 1,624.5 57.0

 
6,801.4
Less: Allowance for credit losses (30.1 ) (51.0 ) (18.3 ) (0.7 )   (100.1 )
Loans, net 2,804.2   2,234.6   1,606.2   56.3     6,701.3  
 
Goodwill and intangible assets 2.6 24.8 27.4
Deposits 3,064.6 2,763.2 2,021.3 (10.9 ) 7,838.2
Borrowings 73.9 200.0 67.2 341.1
Stockholders' equity 303.5 368.3 174.5 873.1 (864.1 ) 855.3
 
No. of branches 17 11 12 40
No. of FTE 292 393 230 136 1,051
 
Three Months Ended December 31, 2013: (in thousands)
Net interest income (expense) $ 37,299 $ 30,978 $ 22,922 $ (1,218 ) $ $ 89,981
Provision for credit losses 2,579   1,100   621       4,300  

Net interest income (expense) after provision for credit losses
34,720 29,878 22,301 (1,218 ) 85,681
Non-interest income 1,335 4,798 911 (1,584 ) (5,618 ) (158 )
Non-interest expense (17,655 ) (19,487 ) (13,144 ) (6,463 ) 5,618   (51,131 )

Income (loss) from continuing operations before income taxes
18,400 15,189 10,068 (9,265 ) 34,392
Income tax expense (benefit) 5,732   2,166   4,027   (9,584 )   2,341  
Income from continuing operations 12,668 13,023 6,041 319 32,051
Loss from discontinued operations, net       (701 )   (701 )
Net income (loss) $ 12,668   $ 13,023   $ 6,041   $ (382 ) $   $ 31,350  
 
Twelve Months Ended December 31, 2013: (in thousands)
Net interest income (expense) $ 130,219 $ 122,799 $ 85,357 $ (5,480 ) $ $ 332,895
Provision for (recovery of) credit losses 12,500   (4,414 ) 3,840   1,294     13,220  

Net interest income (expense) after provision for credit losses
117,719 127,213 81,517 (6,774 ) 319,675
Non-interest income (1) 15,855 14,181 2,223 2,741 (17,772 ) 17,228
Non-interest expense (63,343 ) (72,211 ) (49,020 ) (29,464 ) 17,772   (196,266 )

Income (loss) from continuing operations before income taxes

70,231
69,183 34,720 (33,497 ) 140,637
Income tax expense (benefit) 18,798   16,458   11,925   (21,927 )   25,254  
Income (loss) from continuing operations 51,433 52,725 22,795 (11,570 ) 115,383
Loss from discontinued operations, net       (861 )   (861 )
Net income (loss) $ 51,433   $ 52,725   $ 22,795   $ (12,431 ) $   $ 114,522  
 
* Excludes discontinued operations
(1) Includes bargain purchase gain from acquisition
 

                   
Western Alliance Bancorporation and Subsidiaries
Operating Segment Results
Unaudited
   
 

WesternAlliance Bank

Bank of Nevada

Torrey PinesBank*
Other

Inter-segmenteliminations

ConsolidatedCompany
At December 31, 2012 (dollars in millions)
Assets 2,565.1 3,029.1 2,019.8 902.0 (893.4 ) 7,622.6
Held for sale loans 31.1 31.1
Gross loans and deferred fees, net 2,037.1 2,183.3 1,477.1 23.5 (42.8 ) 5,678.2
Less: Allowance for credit losses (21.3 ) (58.2 ) (15.6 ) (0.3 )   (95.4 )
Loans, net 2,015.8   2,125.1   1,461.5   23.2   (42.8 ) 5,582.8  
Goodwill and intangible assets 3.5 26.3 29.8
Deposits 2,224.2 2,569.1 1,679.3 (17.4 ) 6,455.2
Borrowings 45.0 110.0 73.7 (35.0 ) 193.7
Stockholders' equity 224.0 378.2 169.1 780.9 (792.6 ) 759.6
 
No. of branches 16 12 12 0 0 40
No. of FTE 254 400 233 95 0 982
 
Three Months Ended December 31, 2012: (in thousands)
Net interest income (expense) $ 26,745 $ 30,127 $ 22,247 $ (1,664 ) $ $ 77,455
Provision for credit losses 1,369   6,532   3,300   300     11,501  

Net interest income (expense) after provision for credit losses

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

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

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

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

                   
Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures (Unaudited)
 
Dec 31, 2013 Sep 30, 2013 Jun 30, 2013 Mar 31, 2013 Dec 31, 2012
(dollars in thousands)
Total stockholders' equity $ 855,250 $ 826,287 $ 799,524 $ 781,294 $ 759,616
Less:
Goodwill and intangible assets 27,374   27,970   28,568   29,166   29,763  
Total tangible stockholders' equity 827,876 798,317 770,956 752,128 729,853
Less:
Preferred stock 141,000   141,000   141,000   141,000   141,000  
Total tangible common equity 686,876 657,317 629,956 611,128 588,853
Add:
Deferred tax 1,452   1,661   1,870   2,080   2,289  
Total tangible common equity, net of tax $ 688,328   $ 658,978   $ 631,826   $ 613,208   $ 591,142  
Total assets $ 9,307,095 $ 8,921,429 $ 8,593,684 $ 8,174,103 $ 7,622,637
Less:
Goodwill and intangible assets 27,374   27,970   28,568   29,166   29,763  
Tangible assets 9,279,721 8,893,459 8,565,116 8,144,937 7,592,874
Add:
Deferred tax 1,452   1,661   1,870   2,080   2,289  
Total tangible assets, net of tax $ 9,281,173   $ 8,895,120   $ 8,566,986   $ 8,147,017   $ 7,595,163  
Tangible equity ratio (1) 8.9 % 9.0 % 9.0 % 9.2 % 9.6 %
Tangible common equity ratio (2) 7.4 % 7.4 % 7.4 % 7.5 % 7.8 %
Common shares outstanding 87,186 87,099 86,997 87,079 86,465
Tangible book value per share, net of tax (3) $ 7.89 $ 7.57 $ 7.26 $ 7.04 $ 6.84
 
Three Months Ended
Dec 31, 2013 Sep 30, 2013 Jun 30, 2013 Mar 31, 2013 Dec 31, 2012
(in thousands)
Total non-interest income $ (158 ) $ 2,625 $ 10,862 $ 3,899 $ 24,463
Less:
Unrealized losses on assets/liabilities measuredat fair value, net (2,618 ) (7 ) (3,290 ) (471 ) (48 )
Gain on sale of subsidiary/non-controlling interest 116
Loss on extinguishment of debt (1,387 )
Bargain purchase gain from acquisition 10,044 17,562
Legal settlements 38 879
Mutual fund gains 483
Amortization of affordable housing investments (1,714 ) (1,504 ) (900 ) (900 ) (1,069 )
(Losses) Gains on sales of investment securities, net 342   (1,679 ) (5 ) 147   1,447  
Total operating non-interest income 5,219 5,815 5,013 5,085 5,093
Add: net interest income 89,981   84,559   82,152   76,203   77,455  
Net operating revenue (4) $ 95,200   $ 90,374   $ 87,165   $ 81,288   $ 82,548  
 
Total non-interest expense $ 51,131 $ 49,675 $ 48,531 $ 46,929 $ 48,989
Less:
Net loss (gain) on sales and valuations of repossessed assets (2,153 ) 371 (1,124 ) 519 529
Merger / restructure expense 1,919   1,018   2,620   195   2,706  
Total operating non-interest expense (4) $ 51,365   $ 48,286   $ 47,035   $ 46,215   $ 45,754  
 
Net operating revenue $ 95,200 $ 90,374 $ 87,165 $ 81,288 $ 82,548
Less:
Operating non-interest expense 51,365   48,286   47,035   46,215   45,754  
Pre-tax, pre-provision operating earnings (5) $ 43,835   $ 42,088   $ 40,130   $ 35,073   $ 36,794  
 

 

Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures (Unaudited)
                   
Three Months Ended

Dec 31, 2013
Sep 30, 2013 Jun 30, 2013 Mar 31, 2013 Dec 31, 2012
(in thousands)

Total operating non-interest expense

 
$ 51,365   $ 48,286   $ 47,035   $ 46,215   $ 45,754  

Divided by:

 

Total net interest income

 
$ 89,981 $ 84,559 $ 82,152 $ 76,203 $ 77,455

Add:

 

Tax equivalent interest adjustment

 
3,728 3,272 2,929 3,382 3,012

Operating non-interest income

 
5,219   5,815   5,013   5,085   5,093  
$ 98,928   $ 93,646   $ 90,094   $ 84,670   $ 85,560  

Efficiency ratio - tax equivalent basis (6)

 
51.9 % 51.6 % 52.2 % 54.6 % 53.5 %
 
Twelve Months Ended December 31,
2013 2012

Total operating non-interest expense

 
$ 192,901   $ 178,399  

Divided by:

 

Total net interest income

 
$ 332,895 $ 290,263

Add:

 

Tax equivalent interest adjustment

 
13,312 9,738

Operating non-interest income

 
21,132   22,087  
$ 367,339   $ 322,088  

Efficiency ratio - tax equivalent basis (6)

 
52.5 % 55.4 %
 
Three Months Ended December 31,
2013 2012
(in thousands)

Stockholders' equity

 
$ 855,250 $ 759,616

Less:

 

Accumulated other comprehensive (loss) income

 
(21,546 ) 8,243

Non-qualifying goodwill and intangibles

 
25,991 27,520

Other non-qualifying assets

 
2

Disallowed unrealized losses on equity securities

 
8,059

Add:

 

Qualifying trust preferred securities

 
48,485   44,819  

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

 
891,231 768,670

Less:

 

Qualifying non-controlling interests

 

Qualifying trust preferred securities

 
48,485 44,819

Preferred stock

 
141,000   141,000  

Estimated Tier 1 common equity (8) (10)

 
$ 701,746 $ 582,851

Divided by:

 

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

 
$ 7,845,866   $ 6,797,170  

Tier 1 common equity ratio (8) (10)

 
8.9 % 8.6 %
 
December 31,
2013 2012
(in thousands)

Classified assets

 
$ 270,375 $ 294,519

Divide:

 

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

 
891,231 768,670

Plus: Allowance for credit losses

 
100,050   95,427  

Total Tier 1 capital plus allowance for credit losses

 
$ 991,281   $ 864,097  

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

 
27 % 34 %
 

 

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

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

(3) We believe this non-GAAP ratio improves the comparability to other institutions that have not engaged in acquisitions that resulted in recorded  goodwill and other intangibles.

(4) We believe these non-GAAP measurements provide a useful indication of the cash generating capacity of the Company.

(5) We believe this non-GAAP measurement is a key indicator of the earnings power of the Company.

(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 Federal Deposit Insurance Corporation in effect, Tier 1 capital consisted of common stock, retained earnings, non-cumulative  perpetual preferred stock, trust preferred securities up to a certain limit, and minority interests in certain subsidiaries, less most other intangible assets.

(8) Tier 1 common equity is often expressed as a percentage of risk-weighted assets.  Under the risk-based capital framework, a bank's balance sheet assets  and credit equivalent amounts of off-balance sheet items are assigned to one of four broad risk categories.  The aggregated dollar amount in each  category is then multiplied by the risk weighting assigned to that category.  The resulting weighted values from each of the four categories are added  together and this sum is the risk-weighted assets total that, as adjusted, comprises the denominator (risk-weighted assets) to determine the Tier 1 capital ratio.  Adjustments are made to Tier 1 capital to arrive at Tier 1 common equity.  Tier 1 common equity is divided by the risk-weighted assets to determine the Tier 1 common equity ratio.  We believe this non-GAAP ratio 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) Current quarter is preliminary until Call Reports are filed.
 

Copyright Business Wire 2010

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