Press Release

Western Alliance Reports Record Second Quarter 2016 Financial Performance

Company Release - 7/21/2016 4:46 PM ET

PHOENIX--(BUSINESS WIRE)-- Western Alliance Bancorporation (NYSE: WAL) (the "Company") announced today its financial results for the second quarter 2016.

Second Quarter 2016 Highlights:

  • Net income of $61.6 million, compared to $61.3 million for the first quarter 2016, and $39.5 million for the second quarter 2015
  • Earnings per share of $0.60, inclusive of $0.02 in acquisition / restructure expense, compared to $0.60 per share in the first quarter 2016, and $0.44 per share, inclusive of $0.06 in acquisition / restructure expense, in the second quarter 2015
  • Total loans of $12.88 billion, up $1.64 billion from March 31, 2016 (includes increase of $1.26 billion at quarter end from the hotel franchise finance loan portfolio purchase), and up $2.52 billion from June 30, 2015
  • Total deposits of $14.20 billion, up $1.12 billion from March 31, 2016, and up $2.79 billion from June 30, 2015
  • Net interest margin of 4.63%, compared to 4.58% in the first quarter 2016, and 4.41% in the second quarter 2015
  • Net operating revenue of $172.2 million constituted quarter-over-quarter growth of $14.4 million, and year-over-year growth of 50.7%, or $57.9 million. Operating non-interest expense of $77.8 million resulted in quarter-over-quarter growth of $2.0 million, and year-over-year growth of 42.5%, or $23.2 million1
  • Operating pre-provision net revenue of $94.5 million, up 15.1% from $82.1 million in the first quarter 2016, and up 58.2% from $59.7 million in the second quarter 20151
  • Efficiency ratio of 43.0%, compared to 45.6% in the first quarter 2016, and 44.7% in the second quarter 20151
  • Nonperforming assets (nonaccrual loans and repossessed assets) decreased to 0.54% of total assets, from 0.57% at March 31, 2016, and 0.88% at June 30, 2015
  • Annualized net (recoveries) charge-offs to average loans outstanding of (0.01)%, compared to 0.08% in the first quarter 2016, and compared to (0.13)% in the second quarter 2015
  • Qualifying debt of $382 million, an increase of $172 million from March 31, 2016 due to issuance of long-term subordinated debt
  • Tangible common equity ratio of 9.1%, compared to 9.1% at March 31, 2016, and 8.7% at June 30, 2015 1
  • Stockholders' equity of $1.80 billion, an increase of $136 million from March 31, 2016 and an increase of $282 million from June 30, 2015 as a result of net income and the at-the-market ("ATM") common stock issuances during the quarter
  • Tangible book value per share, net of tax, of $14.25, an increase of 8.3% from $13.16 at March 31, 2016, and an increase of 26.7% from $11.25 at June 30, 2015 1

1 See Reconciliation of Non-GAAP Financial Measures.

Financial Performance

“Western Alliance delivered another quarter of exceptional results,” commented Robert Sarver, Chairman and Chief Executive Officer of Western Alliance Bancorporation. “For the second quarter in a row, we generated over $1 billion in deposit growth, more than half of which is non-interest bearing. This liquidity funded strong organic loan growth during the period, as well as the acquisition of the hotel franchise loan portfolio from GE. This balance sheet momentum drove record revenue for the quarter and improvement in our operating efficiency to 43%, which is among the best in the industry. Further, our operating earnings per share was up 24% to $0.62. Importantly, we maintained strong asset quality during the quarter with NPAs falling to 0.54% of assets, while loan recoveries exceeded loan losses."

“In pursuing our mission to continue to create shareholder value, we augmented the capital generation from our earnings performance by completing our at-the-market stock offering, which pushed our tangible book value per share to $14.25, up 8% from last quarter and up 27% from a year ago,” Sarver concluded.

Hotel Franchise Finance Asset Purchase

Results include the purchase of the GE domestic select-service hotel franchise finance loan portfolio on April 20, 2016, which increased total loans by $1.28 billion as of the acquisition date. The Company also assumed certain related assets and liabilities as part of the asset purchase. The results of operations from the hotel franchise finance loan portfolio are included in the Company's second quarter 2016 results beginning on April 20, 2016 and are reported in a newly created operating segment called Hotel Franchise Finance ("HFF"). Pursuant to accounting guidance, acquired assets and liabilities are recorded at estimated fair value as of the acquisition date. The estimated fair values of the purchased loans are preliminary and are subject to measurement period adjustments.

Income Statement

Net interest income was $163.7 million in the second quarter 2016, an increase of $18.0 million from $145.7 million in the first quarter 2016, and an increase of $55.0 million, or 50.6%, compared to the second quarter 2015. The Company’s net interest margin increased in the second quarter 2016 to 4.63%, compared to 4.58% in the first quarter 2016, and increased from 4.41% in the second quarter 2015. The increase in net interest margin for the current quarter compared to the first quarter 2016 primarily relates to additional income resulting from HFF. The increase in net interest margin in the current quarter from the second quarter 2015 also relates to additional income resulting from both the acquisition of Bridge and HFF. Net interest income in the second quarter 2016 includes $8.2 million of total accretion income from acquired loans, compared to $5.3 million in the first quarter 2016, and $3.3 million in the second quarter 2015.

Operating non-interest income was $8.6 million for the second quarter 2016, compared to $12.1 million for the first quarter 2016, and $5.6 million for the second quarter 2015.1 This decrease from the first quarter 2016 is primarily the result of a non-recurring gain on sale of loans recognized during the first quarter 2016. Growth in the second quarter 2016 compared to the second quarter 2015 is attributable to Bridge operations of $3.5 million, which generated deposit service charges, foreign currency income, and SBA loan income.

Net operating revenue was $172.2 million for the second quarter 2016, an increase of $14.4 million, or 9.1%, compared to $157.8 million for the first quarter 2016, and an increase of $57.9 million, or 50.7%, compared to $114.3 million for the second quarter 2015.1

Operating non-interest expense was $77.8 million for the second quarter 2016, compared to $75.8 million for the first quarter 2016, and $54.6 million for the second quarter 2015.1 The primary driver of the increase in operating non-interest expense in the second quarter 2016 compared to the first quarter 2016 is data processing costs due to HFF loan servicing and other processing costs to support the growing customer base. The increase year-over-year relates to $14.0 million in new expenses from the acquired Bridge operations as well as increased headcount and operating costs to support the growth in the business. The Company’s operating efficiency ratio1 on a tax equivalent basis was 43.0% for the second quarter 2016, compared to 45.6% for the first quarter 2016, and 44.7% for the second quarter 2015.

The Company views its operating pre-provision net revenue ("PPNR") as a key metric for assessing the Company’s earnings power, which it defines as net operating revenue less operating non-interest expense. For the second quarter 2016, the Company’s operating PPNR was $94.5 million, up 15.1% from $82.1 million in the first quarter 2016, and up 58.2% from $59.7 million in the second quarter 2015.1 The non-operating items1 for the second quarter 2016 consist primarily of acquisition / restructure expenses of $3.7 million related to HFF and system termination costs.

The Company had 1,515 full-time equivalent employees and 48 offices at June 30, 2016, compared to 1,411 employees and 48 offices at June 30, 2015.

1 See Reconciliation of Non-GAAP Financial Measures.

Balance Sheet

Gross loans totaled $12.88 billion at June 30, 2016, an increase of $1.64 billion from $11.24 billion at March 31, 2016, and an increase of $2.52 billion from $10.36 billion at June 30, 2015. The year-over-year increase is comprised of $1.26 billion from HFF and $1.26 billion from organic loan growth. Consistent with GAAP, the allowance for credit losses is not carried over in an acquisition because acquired loans are recorded at fair value, which discounts the loans based on expected future cash flows. At June 30, 2016, the allowance for credit losses was 0.95% of total loans, compared to 1.06% at March 31, 2016, and 1.11% at June 30, 2015. The allowance for credit losses as a percent of total loans, adjusted to include credit discounts on acquired loans, was 1.42% at June 30, 2016, compared to 1.21% at March 31, 2016, and 1.35% at June 30, 2015.

Deposits totaled $14.20 billion at June 30, 2016, an increase of $1.12 billion from $13.08 billion at March 31, 2016, and an increase of $2.79 billion from $11.41 billion at June 30, 2015. The increase from both the prior quarter and from June 30, 2015 is the result of organic deposit growth. Non-interest bearing deposits were $5.28 billion at June 30, 2016, compared to $4.64 billion at March 31, 2016, and $3.92 billion at June 30, 2015. Non-interest bearing deposits comprised 37.1% of total deposits at June 30, 2016, compared to 35.4% at March 31, 2016, and 34.4% at June 30, 2015. The proportion of savings and money market balances to total deposits decreased to 42.3% at June 30, 2016 from 43.2% at March 31, 2016, and increased from 41.5% at June 30, 2015. Certificates of deposit as a percentage of total deposits were 11.6% at June 30, 2016, compared to 13.1% at March 31, 2016, and 15.3% at June 30, 2015. The Company’s ratio of loans to deposits was 90.7% at June 30, 2016, compared to 85.9% at March 31, 2016, and 90.8% at June 30, 2015.

Borrowings decreased to zero at June 30, 2016 from $0.2 million at March 31, 2016 and from $70 million at June 30, 2015. The decrease from the prior quarter relates to a reduction in federal funds purchased. The decrease from the prior year is due primarily to the payoff of the 10% Senior Notes of $58 million and a reduction in FHLB advances of $11 million. Qualifying debt increased to $382 million at June 30, 2016 from $210 million at March 31, 2016, and from $208 million at June 30, 2015. The quarter-over-quarter and year-over-year increase is primarily due to the issuance of $175 million of subordinated debt.

Stockholders’ equity at June 30, 2016 was $1.80 billion, compared to $1.66 billion at March 31, 2016, and $1.51 billion at June 30, 2015. The increase from the prior quarter relates primarily to the ATM common stock issuances and net income for the quarter. During the quarter ended June 30, 2016, we raised $55.9 million in net proceeds from the issuance of 1.5 million shares of common stock under the ATM program, which is now completed.

At June 30, 2016, tangible common equity, net of tax, was 9.1% of tangible assets1 and total capital was 12.9% of risk-weighted assets. The Company’s tangible book value per share1 was $14.25 at June 30, 2016, up 26.7% from June 30, 2015.

Total assets increased 9.7% to $16.73 billion at June 30, 2016 from $15.25 billion at March 31, 2016, and increased 24.2% from $13.47 billion at June 30, 2015. The increase in total assets from June 30, 2015 relates to HFF, which increased total loans by $1.26 billion, and organic loan growth during the year of $1.26 billion.

Asset Quality

The provision for credit losses was $2.5 million for both the second quarter 2016 and the first quarter 2016, and was zero for the second quarter 2015. Net (recoveries) charge-offs in the second quarter 2016 were $(0.4) million, or (0.01)%, of average loans (annualized), compared to $2.3 million, or 0.08%, in the first quarter 2016, and compared to $(3.0) million, or (0.13)%, for the second quarter 2015.

Nonaccrual loans increased $5.9 million to $39.7 million during the quarter and decreased $19.7 million from June 30, 2015. Loans past due 90 days and still accruing interest totaled $7.0 million at June 30, 2016, compared to $4.5 million at March 31, 2016, and $8.3 million at June 30, 2015. Loans past due 30-89 days and still accruing interest totaled $3.5 million at quarter end, a decrease from $9.2 million at March 31, 2016, and a decrease from $4.0 million at June 30, 2015.

Repossessed assets totaled $49.8 million at quarter end, a decrease of $3.0 million from $52.8 million at March 31, 2016, and a decrease of $9.5 million from $59.3 million at June 30, 2015. Adversely graded loans totaled $363.6 million at quarter end, an increase of $51.6 million from $312.0 million at March 31, 2016, and an increase of $11.4 million from $352.2 million at June 30, 2015.

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 13.3% at June 30, 2016, from 15.1% at December 31, 2015, and from 16.7% at June 30, 2015.1

1 See Reconciliation of Non-GAAP Financial Measures.

Segment Highlights

The Company's reportable segments are aggregated primarily based on geographic location, services offered, and markets served. The Company's regional segments, which include Arizona, Nevada, Southern California, and Northern California, provide full service banking and related services to their respective markets. The operations from the regional segments correspond to the following banking divisions: Alliance Bank of Arizona in Arizona, Bank of Nevada and First Independent Bank in Nevada, Torrey Pines Bank in Southern California, and Bridge Bank in Northern California.

The Company's National Business Lines ("NBL") segments provide specialized banking services to niche markets. With the purchase of the HFF loan portfolio, management has created a new HFF operating segment, which is now included as one of the Company's NBL reportable segments. The Company's other NBL reportable segments include Homeowner Associations ("HOA") Services, Public & Nonprofit Finance, Technology & Innovation, and Other NBLs. These NBLs are managed centrally and are broader in geographic scope than our other segments, though still predominately located within our core market areas. The HOA Services NBL corresponds to the Alliance Association Bank division. The newly created HFF NBL includes the hotel franchise loan portfolio purchased from GE on April 20, 2016. Public & Nonprofit Finance consists of the operations of Public and Nonprofit Finance. The Technology & Innovation NBL includes the operations of Equity Fund Resources, the Life Sciences Group, the Renewable Resource Group, and Technology Finance. The Other NBLs segment consists of the operations of Corporate Finance, Mortgage Warehouse Lending, and Resort Finance.

The Corporate & Other segment consists of corporate-related items, income and expense items not allocated to our other reportable segments, and inter-segment eliminations.

Key management metrics for evaluating the performance of the Company's operating segments include loan and deposit growth, asset quality, and pre-tax income.

The regional segments reported gross loan balances of $7.57 billion at June 30, 2016, an increase of $93 million during the quarter, and an increase of $633 million during the last 12 months. Arizona had the largest growth in loans during the quarter, $82 million, which was offset by decreases of $9 million in the Northern California segment. The growth in loans during the last 12 months was driven by increases of $465 million in Arizona and $141 million in Southern California. Total deposits for the regional segments were $11.34 billion, an increase of $867 million during the quarter, and an increase of $2.16 billion during the last 12 months. Arizona and Southern California generated increased deposits during the quarter of $618 million and $348 million, respectively, which was partially offset by a decrease of $92 million in Northern California. With the exception of Northern California, the regional segments each generated increased deposits during the last 12 months, with Arizona contributing the largest increase of $1.43 billion, followed by Southern California and Nevada with increases of $457 million and $306 million, respectively. Pre-tax income for the regional segments was $73.8 million for the three months ended June 30, 2016, an increase of $7.7 million from the three months ended March 31, 2016, and an increase of $20.2 million from the three months ended June 30, 2015. Arizona, Nevada, and Southern California had increases in pre-tax income of $4.9 million, $1.7 million, and $1.7 million, respectively, compared to the three months ended March 31, 2016. This increase was offset by a decrease of $0.6 million in Northern California. All regional segments had increases in pre-tax income from the three months ended June 30, 2015, with Arizona and Northern California contributing the largest increases of $8.2 million and $6.9 million, respectively. For the six months ended June 30, 2016, the regional segments reported total pre-tax income of $139.8 million, an increase of $39.3 million compared to the six months ended June 30, 2015. All regional segments had increases in pre-tax income with Northern California and Arizona contributing the largest increases of $15.0 million and $13.2 million, respectively.

The NBL segments reported gross loan balances of $5.28 billion at June 30, 2016, an increase of $1.54 billion during the quarter, and an increase of $1.90 billion during the last 12 months. The increase in loans for the NBL segments compared to the prior quarter and to the same quarter in the prior year relates primarily to the HFF segment, which increased loans by $1.26 billion at quarter end. The Other NBLs and Technology & Innovation segments also generated growth in loans during the quarter of $161 million and $98 million, respectively. During the last 12 months, other increases were driven by the Technology & Innovation, Public & Nonprofit, and Other NBL segments, which increased loans by $332 million, $187 million, and $93 million, respectively. Total deposits for the NBL segments were $2.67 billion, an increase of $343 million during the quarter, and an increase of $729 million during the last 12 months. The HOA Services and Technology & Innovation segments increased deposits by $183 million and $159 million, respectively, during the quarter. The increase of $729 million during the last 12 months is the result of growth in the HOA Services and Technology & Innovation segments of $548 million and $181 million, respectively. Pre-tax income for the NBL segments was $35.0 million for the three months ended June 30, 2016, an increase of $8.5 million from the three months ended March 31, 2016, and an increase of $21.1 million from the three months ended June 30, 2015. HFF and HOA services had the largest increase in pre-tax income of $9.5 million and $1.1 million, respectively, compared to the three months ended March 31, 2016, which was partially offset by decreases of $1.3 million and $0.6 million in the Technology & Innovation and Public & Nonprofit segments. The Technology & Innovation and HFF segments had the largest increases in pre-tax income of $10.9 million and $9.5 million, respectively, from the three months ended June 30, 2015. Pre-tax income for the NBLs for the six months ended June 30, 2016 totaled $61.5 million. The largest increases in pre-tax income compared to the six months ended June 30, 2015 were in the HFF and Technology & Innovation segments, which increased $23.1 million and $9.5 million, respectively, as a result of the HFF purchase and the Bridge Bank acquisition.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live webcast to discuss its second quarter 2016 financial results at 12:00 p.m. ET on Friday, July 22, 2016. Participants may access the call by dialing 1-888-317-6003 and using passcode 1639792 or via live audio webcast using the website link http://services.choruscall.com/links/wal160722. The webcast is also available via the Company’s website at www.westernalliancebancorporation.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 22nd through 9:00 a.m. ET August 22nd by dialing 1-877-344-7529 passcode: 10089319.

Reclassifications

Certain amounts in the Consolidated Income Statements for the prior periods have been reclassified to conform to the current presentation. The reclassifications have no effect on net income or stockholders’ equity as previously reported.

Use of Non-GAAP Financial Information

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 them to be helpful in understanding the Company’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation 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.

Early Adoption of Accounting Standards

During the first quarter 2016, the Company elected to early adopt Accounting Standards Update ("ASU") 2016-09, Improvements to Employee Share-Based Payment Accounting. The amendments in this ASU require that all excess tax benefits and tax deficiencies be recognized as income tax expense or benefit in the income statement rather than as additional paid-in capital as required under previous generally accepted accounting principles. Due to the early adoption of ASU 2016-09, during the first quarter 2016, the Company recognized a $3.9 million tax benefit as a reduction of income tax expense (that previously would have been reflected as additional paid-in capital).

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 our expectations with regard to our business, financial and operating results, and future economic performance, including our recent domestic select-service hotel franchise finance loan portfolio acquisition. 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: the risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 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, including expansion through acquisitions; additional regulatory requirements resulting from our continued growth; 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.

About Western Alliance Bancorporation

With more than $16 billion in assets, top-performing Western Alliance Bancorporation (NYSE:WAL) is one of the fastest-growing bank holding companies in the U.S. and recognized as #10 on the Forbes 2016 “Best Banks in America” list. Its primary subsidiary, Western Alliance Bank, is the go-to bank for business and succeeds with local teams of experienced bankers who deliver superior service and a full spectrum of deposit, lending, treasury management, international banking and online banking products and services. Western Alliance Bank operates full-service banking divisions: Alliance Bank of Arizona, Bank of Nevada, Bridge Bank, First Independent Bank and Torrey Pines Bank. The bank also serves business customers through a robust national platform of specialized financial services including Corporate Finance, Equity Fund Resources, Hotel Franchise Finance, Life Sciences Group, Mortgage Warehouse Lending, Public and Nonprofit Finance, Renewable Resource Group, Resort Finance, Technology Finance and Alliance Association Bank. For more information, visit westernalliancebancorporation.com.

                   
Western Alliance Bancorporation and Subsidiaries
Summary Consolidated Financial Data
Unaudited
 
 
Selected Balance Sheet Data:
June 30,  
2016 2015 Change %  
(in millions)
Total assets $ 16,728.7 $ 13,470.1 24.2

%

Total loans, net of deferred fees 12,877.8 10,360.7 24.3
Securities and money market investments 2,262.6 1,531.9 47.7
Total deposits 14,201.3 11,406.7 24.5
Borrowings 69.5 (100.0 )
Qualifying debt 382.1 208.4 83.3
Stockholders' equity 1,796.2 1,514.7 18.6
Tangible common equity, net of tax (1) 1,497.5 1,150.8 30.1
 
Selected Income Statement Data:
For the Three Months Ended June 30,   For the Six Months Ended June 30,  
2016 2015 Change %   2016 2015 Change %  
(in thousands, except per share data) (in thousands, except per share data)
Interest income $ 174,089 $ 116,618 49.3

%

$ 328,345 $ 227,580 44.3

%

Interest expense 10,403   7,900   31.7 18,948   15,754   20.3
Net interest income 163,686 108,718 50.6 309,397 211,826 46.1
Provision for credit losses 2,500     NM 5,000   700   NM
Net interest income after provision for credit losses 161,186 108,718 48.3 304,397 211,126 44.2
Non-interest income 8,559 5,545 54.4 21,692 11,787 84.0
Non-interest expense 81,804   61,209   33.6 157,297   115,242   36.5
Income before income taxes 87,941 53,054 65.8 168,792 107,671 56.8
Income tax expense 26,327   13,579   93.9 45,846   27,813   64.8
Net income $ 61,614   $ 39,475   56.1 $ 122,946   $ 79,858   54.0
Diluted earnings per share available to common stockholders $ 0.60   $ 0.44   36.4 $ 1.19   $ 0.90   32.2
 
 
 
(1) See Reconciliation of Non-GAAP Financial Measures.
NM: Changes +/- 100% are not meaningful.
 
 
Western Alliance Bancorporation and Subsidiaries
Summary Consolidated Financial Data
Unaudited
                     
 

Common Share Data:

At or for the Three Months Ended June 30, For the Six Months Ended June 30,  
2016 2015 Change % 2016 2015 Change %  
Diluted earnings per share available to common stockholders $ 0.60 $ 0.44 36.4 % $ 1.19 $ 0.90 32.2 %
Book value per common share 17.09 14.12 21.0
Tangible book value per share, net of tax (1) 14.25 11.25 26.7

Average shares outstanding (in thousands):

Basic 102,688 88,177 16.5 102,294 88,059 16.2 %
Diluted 103,472 88,682 16.7 103,007 88,567 16.3
Common shares outstanding 105,084 102,291 2.7
 

Selected Performance Ratios:

Return on average assets (2) 1.55 % 1.41 % 9.9 % 1.62 % 1.46 % 11.0 %
Return on average tangible common equity (1, 2) 17.36 16.03 8.3 17.88 16.64 7.5
Net interest margin (2) 4.63 4.41 5.0 4.60 4.38 5.0
Net interest spread 4.46 4.28 4.2 4.43 4.25 4.2

Efficiency ratio - tax equivalent basis (1)

42.99 44.68 (3.8 ) 44.23 45.66 (3.1 )
Loan to deposit ratio 90.68 90.83 (0.2 )
 
Asset Quality Ratios:
Net (recoveries) charge-offs to average loans outstanding (2) (0.01 )% (0.13 )% (92.3 )% 0.03 % (0.10 )% NM
Nonaccrual loans to gross loans 0.31 0.58 (46.6 )
Nonaccrual loans and repossessed assets to total assets 0.54 0.88 (38.6 )
Loans past due 90 days and still accruing to total loans 0.05 0.08 (37.5 )
Allowance for credit losses to gross loans 0.95 1.11 (14.4 )
Allowance for credit losses to nonaccrual loans 307.68 193.62 58.9
 
Capital Ratios (1):
Jun 30, 2016 Dec 31, 2015 Jun 30, 2015  
Tangible common equity 9.1 % 9.1 % 8.7 %
Common Equity Tier 1 (3) 9.6 9.7 9.1
Tier 1 Leverage ratio (3) 9.8 9.8 10.0
Tier 1 Capital (3) 10.0 10.2 10.2
Total Capital (3) 12.9 12.2 12.2
 
 
(1) See Reconciliation of Non-GAAP Financial Measures.
(2)

Annualized for the three and six months ended June 30, 2016 and 2015 based on a 30 day month and a 360 day year.

(3) Capital ratios for June 30, 2016 are preliminary until the Call Report is filed.
NM Changes +/- 100% are not meaningful.
 
             
Western Alliance Bancorporation and Subsidiaries
Condensed Consolidated Income Statements
Unaudited
Three Months Ended June 30, Six Months Ended June 30,
2016 2015 2016 2015
(dollars in thousands, except per share data)
Interest income:
Loans $ 160,015 $ 105,468 $ 299,801 $ 205,859
Investment securities 12,871 9,276 26,379 19,064
Other 1,203   1,874   2,165   2,657  
Total interest income 174,089   116,618   328,345   227,580  
Interest expense:
Deposits 7,678 5,362 13,921 10,509
Qualifying debt 2,514 480 4,698 920
Borrowings 211   2,058   329   4,325  
Total interest expense 10,403   7,900   18,948   15,754  
Net interest income 163,686 108,718 309,397 211,826
Provision for credit losses 2,500     5,000   700  
Net interest income after provision for credit losses 161,186   108,718   304,397   211,126  
Non-interest income:
Service charges 4,506 3,128 8,972 6,017
Lending related income and gains (losses) on sale of loans, net 253 118 4,194 319
Card income 1,078 899 2,091 1,712
Gains (losses) on sales of investment securities, net 55 1,001 644
Bank owned life insurance 1,029 772 1,959 1,749
Other 1,693   573   3,475   1,346  
Total non-interest income 8,559   5,545   21,692   11,787  
Non-interest expenses:
Salaries and employee benefits 44,711 32,406 89,566 64,947
Occupancy 7,246 4,949 13,503 9,762
Data processing 5,868 2,683 10,429 5,809
Legal, professional and directors' fees 5,747 4,611 11,319 8,606
Insurance 2,963 2,274 6,286 4,364
Marketing 1,097 463 1,754 840
Loan and repossessed asset expenses 832 1,284 1,734 2,374
Card expense 824 613 1,711 1,087
Intangible amortization 697 281 1,394 562
Net loss (gain) on sales and valuations of repossessed and other assets 357 (1,218 ) 55 (1,569 )
Acquisition / restructure expense 3,662 7,842 3,662 8,001
Other 7,800   5,021   15,884   10,459  
Total non-interest expense 81,804   61,209   157,297   115,242  
Income before income taxes 87,941 53,054 168,792 107,671
Income tax expense 26,327   13,579   45,846   27,813  
Net income $ 61,614   $ 39,475   $ 122,946   $ 79,858  
Preferred stock dividends   247     423  
Net income available to common stockholders $ 61,614   $ 39,228   $ 122,946   $ 79,435  
 
Earnings per share available to common stockholders:
Diluted shares 103,472 88,682 103,007 88,567
Diluted earnings per share $ 0.60 $ 0.44 $ 1.19 $ 0.90
 
                 
Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Income Statements
Unaudited
Three Months Ended
Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015
(in thousands, except per share data)
Interest income:
Loans $ 160,015 $ 139,786 $ 137,471 $ 133,087 $ 105,468
Investment securities 12,871 13,508 12,454 12,039 9,276
Other 1,203   962   1,406   1,107   1,874  
Total interest income 174,089   154,256   151,331   146,233   116,618  
Interest expense:
Deposits 7,678 6,243 5,737 5,550 5,362
Qualifying debt 2,514 2,184 2,107 2,008 480
Borrowings 211   118   144   1,268   2,058  
Total interest expense 10,403   8,545   7,988   8,826   7,900  
Net interest income 163,686 145,711 143,343 137,407 108,718
Provision for credit losses 2,500   2,500   2,500      
Net interest income after provision for credit losses 161,186   143,211   140,843   137,407   108,718  
Non-interest income:
Service charges 4,506 4,466 4,295 4,327 3,128
Lending related income and gains (losses) on sale of loans, net 253 3,941 1,097 532 118
Card income 1,078 1,013 1,013 954 899
Gains (losses) on sales of investment securities, net 1,001 33 (62 ) 55
Bank owned life insurance 1,029 930 1,166 984 772
Other 1,693   1,782   1,875   1,767   573  
Total non-interest income 8,559   13,133   9,479   8,502   5,545  
Non-interest expenses:
Salaries and employee benefits 44,711 44,855 41,221 43,660 32,406
Occupancy 7,246 6,257 6,503 5,915 4,949
Data processing 5,868 4,561 4,629 4,338 2,683
Legal, professional, and directors' fees 5,747 5,572 5,890 4,052 4,611
Insurance 2,963 3,323 3,264 3,375 2,274
Marketing 1,097 657 1,298 747 463
Loan and repossessed asset expenses 832 902 904 1,099 1,284
Card expense 824 887 920 757 613
Intangible amortization 697 697 704 704 281
Net loss (gain) on sales and valuations of repossessed and other assets 357 (302 ) (397 ) (104 ) (1,218 )
Acquisition / restructure expense 3,662 835 7,842
Other 7,800   8,084   7,512   7,538   5,021  
Total non-interest expense 81,804   75,493   72,448   72,916   61,209  
Income before income taxes 87,941 80,851 77,874 72,993 53,054
Income tax expense 26,327   19,519   19,348   17,133   13,579  
Net income $ 61,614   $ 61,332   $ 58,526   $ 55,860   $ 39,475  
Preferred stock dividends     151   176   247  
Net income available to common stockholders $ 61,614   $ 61,332   $ 58,375   $ 55,684   $ 39,228  
 
Earnings per share available to common stockholders:
Diluted shares 103,472 102,538 102,006 101,520 88,682
Diluted earnings per share $ 0.60 $ 0.60 $ 0.57 $ 0.55 $ 0.44
 
                 
Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Balance Sheets
Unaudited
Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015

(in millions)

Assets:
Cash and due from banks $ 696.2 $ 1,031.0 $ 224.6 $ 325.4 $ 700.2
Securities purchased under agreement to resell         58.1  
Cash and cash equivalents 696.2 1,031.0 224.6 325.4 758.3
Securities and money market investments 2,262.6 2,099.9 2,042.2 1,993.6 1,531.9
Loans held for sale 22.3 23.6 23.8 24.4 39.4
Loans held for investment:
Commercial 5,577.6 5,378.5 5,262.8 4,960.4 4,759.7
Commercial real estate - non-owner occupied 3,601.3 2,291.0 2,283.5 2,210.7 2,195.0
Commercial real estate - owner occupied 2,008.3 2,032.3 2,083.3 2,123.6 2,019.3
Construction and land development 1,333.5 1,179.9 1,133.4 1,121.9 1,002.7
Residential real estate 293.0 302.4 323.0 320.7 320.6
Consumer 41.8   33.7   26.9   26.6   24.0