Western Alliance Bancorporation · NYSE:WAL
Western Alliance Bancorporation — Q3 2011 Earnings Presentation
27 slides from Western Alliance Bancorporation's earnings presentation, Oct 17, 2011
Slide 1: 3rd Quarter 2011 Earnings Call
Ken Vecchione President & COO Dale Gibbons Executive Vice President & CFO 3rd Quarter 2011 Earnings Call Western Alliance Bancorporation (NYSE: WAL) October 18, 2011
Slide 2: Forward-Looking Information
Pg. 2 Forward-Looking Information This presentation 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 statement
Slide 3: 3rd Quarter 2011 Financial Highlights
3rd Quarter 2011 Financial Highlights oEarnings Power –Net income of $13.0 million, up $11 million or 548% from last year –Net interest income of $64.6 million, up $5.1 million or 8.6% from last year –Net interest margin of 4.29%, down 3 bps from 4.32% last year –Pre-tax, pre-credit income of $28.1
Slide 4: 3rd Quarter Loan Portfolio Summary
3rd Quarter Loan Portfolio Summary $4.17 $4.24 $4.28 $4.41 $4.53 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Total Loans (in billions) Total Loan Growth of $353 Million Since Q3-2010 21% 29% 12% 23% 13% 2% Q3-2010: $4.17 Billion Commercial CRE, Owner Occupied Construction & Land CRE, Non-Owner Occupied Residentia
Slide 5: 3rd Quarter Deposit Summary
3rd Quarter Deposit Summary $5.33 $5.34 $5.50 $5.59 $5.63 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Total Deposits (in billions) Total Deposit Growth of $304 Million Since Q3-2010 27% 12% 35% 26% Q3-10: $5.33 Billion Non-Int Bearing DDA NOW MMDA and Savings CDs Pg. 5 Q3-11: $5.63 Billion
Slide 6: 2011 Nevada Deposit Market Share
2011 Nevada Deposit Market Share(1) Rank Institution Deposits (in millions) Market Share 1 Wells Fargo $12,814 33.0% 2 Bank of America 10,712 27.6% 3 Zions Bancorp 3,576 9.2% 4 Western Alliance Bancorporation 2,952 7.6% 5 US Bank 2,897 7.5% 6 7 8 9 10 Others JP Morgan Chase Citibank City National Ba
Slide 7: 2011 Arizona Deposit Market Share
2011 Arizona Deposit Market Share (1) Rank Institution Deposits (in millions) Market Share 1 2 3 4 5 9 7 8 9 10 Others Total: 64 Wells Fargo JP Morgan Chase Bank of America Compass Bank Zions Bancorp M&I Bank Western Alliance Bancorporation US Bank Northern Trust Bank of the West $22,102 19,930 16,3
Slide 8: 2011 San Diego MSA Deposit Market Share
Pg. 8 2011 San Diego MSA Deposit Market Share (1) Rank Institution Deposits (in millions) Market Share 1 2 3 4 5 6 7 8 9 10 All Other Banks Total: 52 San Diego MSA Market Wells Fargo Bank Bank of America Union Bank JP Morgan Chase US Bank Zions Bancorp Citibank Pacific Western Bank Western Alliance
Slide 9: Growing Income Despite Lower Rate Environment
Pg. 9 Growing Income Despite Lower Rate Environment oNet Interest Margin Compression Factors: –Flatter yield curve –Moving up market has reduced loan yields, but reduces credit costs –Pricing competition from large financial institutions oFactors & Actions to Maintain Net Income Growth: –Stronger lo
Slide 10: Composition & Yield of Earning Assets
Pg. 10 Composition & Yield of Earning Assets 9% 66% 16% 9% Q3-10 $5.5 Billion Investment Grade/ High Pass Loans (Grades 1-3) Other Loans (Excluding Grades 1-3) Investment Securities Fed Funds/ Other Short Term 0.30% 5.50% 6.33% 15% 58% 20% 7% Q3-11 $6.0 Billion 2.80% 0.23% 5.11% 6.06% 2.91%
Slide 11: OREO Summary @ 9/30/11
Pg. 11 OREO Summary @ 9/30/11(1) (in millions) OREO Valuation @ 6/30/11 $84.9 Q3-11 Changes: Additions to OREO 7.0 Sales of OREO(2) -3.9 Valuation Adjustments(3) -2.2 OREO Valuation @ 9/30/11 $85.8 Net OREO Sale Proceeds/ Book Value 85.7% Original Loan Amount $166.0 Original Appraised Amount $398.9
Slide 12: 3rd Quarter 2011 Status Updates
Pg. 12 3rd Quarter 2011 Status Updates oReceived $141 million in funding under the U.S. Department of the Treasury’s Small Business Lending Fund –WAL was the largest of the 332 institutions to receive funds and received the largest amount of any recipient oRepaid $140 million in preferred stock issu
Slide 13: Small Business Lending Fund Program Savings
Pg. 13 Small Business Lending Fund Program Savings(1) 5% Tier No Savings 4% Tier Save $1.4 Million 3% Tier Save $3.0 Million 2% Tier Save $4.2 Million 1% Tier Save $5.6 Million $0 $50 $100 $150 $200 Qualifying Loan Growth 10% Growth 7.5% Growth 5.0% Growth 2.5% Growth Baseline: $1.5 Billion Balance
Slide 14: Key Financial Metrics
Pg. 14 Key Financial Metrics $59.5 $60.9 $61.1 $63.3 $64.6 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Net Interest Income (in millions) $41.3 $41.9 $41.8 $42.5 $42.4 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Operating Expense(1) $24.6 $25.0 $25.3 $27.6 $28.1 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Pre-Tax, Pre-Credit Income(2) $23.0
Slide 15: Pre-Tax, Pre Credit Income Growth
Pre-Tax, Pre Credit Income Growth(1) (in millions) Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Net Interest Income $59.5 $60.9 $61.1 $63.3 $64.6 Non-Interest Income(2) 6.3 6.0 6.0 6.8 5.9 Non-Interest Expense(2) 41.3 41.9 41.8 42.5 42.4 Pre-Tax, Pre-Credit Income(1) $24.6 $25.0 $25.3 $27.6 $28.1 % Increase to Q3-
Slide 16: 3rd Quarter Net Income Comparison
Pg. 16 3rd Quarter Net Income Comparison (in millions, except EPS) Q3-11 Q2-11 Q3-10 Pre-Tax, Pre-Credit Income(1) $28.1 $27.6 $24.6 Provision for Loan & Lease Losses -11.2 -11.9 -23.0 Repossessed & Other Asset Valuation -2.1 -8.6 -4.3 TRUPS Valuation, Securities Gains & Restructuring Costs 6.2 2.9
Slide 17: Net Interest Margin Summary
Pg. 17 Net Interest Margin Summary (1) Reported on a tax-equivalent basis. 4.32% 4.26% 4.35% 4.34% 4.29% Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Net Interest Margin(1) 0.81% 0.80% 0.77% 0.71% 0.63% Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Cost of Funding 5.13% 5.06% 5.11% 5.05% 4.91% Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Yield
Slide 18: Performance Ratios
Pg. 18 Performance Ratios (1) Reported on a tax-equivalent basis. (2) Pre-tax pre-credit income is a non-GAAP number, for definition see table on page 15. 62.4% 62.2% 61.9% 60.2% 59.6% Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Efficiency Ratio(1) 1.62% 1.59% 1.63% 1.72% 1.70% Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 PTPC-
Slide 19: Decline in Problem Loans & Repossessed Assets
Pg. 19 Decline in Problem Loans & Repossessed Assets(1) $110 $108 $98 $86 $87 $137 $118 $115 $114 $116 $156 $140 $128 $127 $109 $205 $195 $204 $190 $168 $0 $125 $250 $375 $500 $625 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Repossessed Assets Non-Performing Loans Classifed Accruing Loans Watch Loans (in millions
Slide 20: Recent Asset Quality Trends
Recent Asset Quality Trends oNPAs remained at 3.1% of total assets compared last quarter, but declined from 3.9% a year ago oClassified loans were 4.9% of total loans, down from 5.4% last quarter and 6.9% a year ago oWatch loans were 3.7% of total loans, down from 4.3% last quarter and 4.9% a year a
Slide 21: Net Charge-Offs / Average Total Loans
Pg. 21 Net Charge-Offs / Average Total Loans(1) (1) Annualized. 3.05% 3.68% 2.41% 1.26% 1.40% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 WAL 3.90% 5.37% 3.83% 1.94% 2.55% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11
Slide 22: Classified Assets to Tier Capital + ALLL
Pg. 22 Classified Assets to Tier 1 Capital + ALLL 57.0% 52.2% 48.5% 46.0% 43.9% Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 WAL 70.0% 64.9% 56.6% 58.3% 54.3% Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Bank of Nevada 48.8% 42.6% 41.3% 30.4% 29.9% Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Western Alliance Bank 29.8% 24.1% 24.9% 21.4% 19.8%
Slide 23: Cumulative Charge-Offs January 2000 – September 2011
Pg. 23 Pg. 23 - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Cumulative Charge-Offs January 2000 – September 2011 Construction & Land Residential RE CRE Non-Owner Occupied CRE Owner Occupied Commercial Consumer (in 000s) 76% of cu
Slide 24: Status of Remaining Bubble Years Loans
Pg. 24 Status of Remaining “Bubble Years” Loans $1.3 Billion 8% 29% 63% Total Loan Portfolio as of 9/30/11 $4.5 Billion Originated Before 2005 Bubble Year Loans 2005-2007 Originated After 2007 82% 7% 11% Bubble Years Loans as of 9/30/11 $1.3 Billion Pass Watch Classified There were no Bubble Years l
Slide 25: Strong Capital Ratios
Pg. 25 Strong Capital Ratios(1) Tier 1 Leverage Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Bank of Nevada 9.1% 9.3% 9.3% 9.5% 9.5% Western Alliance Bank 8.3% 8.3% 8.7% 9.0% 9.0% Torrey Pines Bank 9.7% 9.3% 9.3% 9.1% 9.2% WAL 10.0% 9.5% 9.6% 9.5% 9.7% (1) Capital ratios are considered estimates until Call Reports
Slide 26: WAL Capital Under Basel III
Pg. 26 WAL WAL Capital Under BASEL III(1) Level Required by: Actual 1/1/13 1/1/19 9/30/11 Tier 1 Common 3.5% 7.0% 8.5% Total Tier 1 4.5% 8.5% 11.8% Total Capital 8.0% 10.5% 12.9% (1) Current estimate based on available information. Rule making process is not complete.
Slide 27: Question & Answer
WA WESTERN ALLIANCE BANCORPORATION™ Question & Answer
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