Western Alliance Bancorporation · NYSE:WAL
Western Alliance Bancorporation — Q4 2024 Earnings Presentation
23 slides from Western Alliance Bancorporation's earnings presentation, Jan 28, 2025
Slide 1: Earnings Call 4th Quarter 2024
Q2 20241 EARNINGS CALL 4th Quarter 2024 January 28, 2025
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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. Examples of forward-looking statemen
Slide 3: Q4 2024 Financial Highlights
Q4 2024 Highlights 4th Quarter 2024 | Financial Highlights Net Income EPS Earnings & Profitability Q4 2024 Q3 2024 Q4 2023 Earnings per Share $ 1.95 $ 1.80 $ 1.33 $216.9 million $1.95 Net Income 216.9 199.8 147.9 Net Revenue 838.4 823.1 682.2 Pre-Provision Net Revenue1 319.4 285.7 220.3 PPNR1 ROTCE1
Slide 4: 2024 Highlights Annual Consolidated Financial Results
2024 Highlights Annual Consolidated Financial Results Dollars in millions, except EPS 2024 2023 Net Interest Income increased $280.0 million, Interest Income $ 4,541.1 $ 4,035.3 1 primarily from higher HFI loan and securities Interest Expense (1,922.2) (1,696.4) balances and a decrease in short-term
Slide 5: Quarterly Income Statement
Q4 2024 Highlights Quarterly Income Statement Net Interest Income decreased $30.4 million primarily Q4-24 Q3-24 Q4-23 1 from lower yields on interest earning assets Interest Income $ 1,138.6 $ 1,200.0 $ 1,039.0 Interest Expense (472.1) (503.1) (447.3) Non-Interest Income increased $45.7 million prim
Slide 6: Net Interest Drivers
Q4 2024 Highlights Net Interest Drivers Securities Portfolio and Yield Loans and HFI Yield • Securities Portfolio yields decreased 22 bps, primarily due to the impact of lower rates on floating 6.65% 6.77% 6.79% 6.65% 4.99% 4.66% 4.87% 4.89% 4.67% 6.34% rate securities tied to SOFR $2.3 $2.3 $2.0 •
Slide 7: Net Interest Income
Q4 2024 Highlights Net Interest Income Net Interest Income and Net Interest Margin Average Earning Assets & Average Yield • Net Interest Income decreased $30.4 million, or 4.4%, primarily due to a lower yields on interest Dollars in millions Dollars in billions earning assets 6.37% 6.29% 6.30% 6.19%
Slide 8: Non-Interest Expenses and Efficiency
Q4 2024 Highlights Non-Interest Expenses and Efficiency Non-Interest Expenses and Efficiency Ratio 1 Breakdown of Non-Interest Expenses • Adjusted efficiency ratio1 (excluding deposit costs) decreased 160 bps to 51.1%, driven 66.8% primarily by an increase in non-interest income 65.2% 62.3% 64.5% 61
Slide 9: Earnings-at-Risk Interest Rate Sensitivity
Q4 2024 Highlights Interest Rate Sensitivity • A Shock Scenario assumes a static balance sheet Shock Scenario 1 Ramp Scenario 1 and reflects an asset sensitive position on NII and a neutral position on EaR 4.6% 3.1% • A Ramp Scenario assumes a dynamic balance sheet Net Interest Income – WAL estimate
Slide 10: Consolidated Balance Sheet
Q4 2024 Highlights Consolidated Balance Sheet Q4-24 Q3-24 Q4-23 Securities and Cash increased $217 million, or Securities and Cash $ 19,191 1 $ 18,974 $ 14,288 1 1.1%, to $19.2 billion and increased $4.9 billion, or Loans, HFS 2,286 2,327 1,402 34.3%, over prior year Loans, HFI 53,676 2 53,346 50,29
Slide 11: Loan Composition
Q4 2024 Highlights Loan Composition Loan growth from C&I businesses within Regional Banking and Mortgage Warehouse Increase (Decrease) by Loan Type: $3.4 Billion Year-over-Year Growth (in millions) QoQ YoY C&I $ 577 $ 4,025 Total Loans, HFI $50.3 $50.7 $52.4 $53.3 $53.7 CRE, Non-OO 67 218 Qtr Change
Slide 12: Deposit Composition
Q4 2024 Highlights Deposit Composition Diversified deposit growth across Regional Banking & Specialty Escrow Services partially offset expected seasonal decline in Mortgage Warehouse Increase (Decrease) by Deposit Type: $11.0 Billion Year-over-Year Growth (in millions) QoQ YoY Interest-Bearing DDA $
Slide 13: Asset Quality
Q4 2024 Highlights Asset Quality Special Mention Loans Asset Quality Ratios • Criticized Assets increased $61 million quarterly to $1.4 billion and increased $87 million over prior year 1.27% 1.25% 0.78% 1.01% 0.94% – Special Mention Loans decreased $110 million 0.73% 1.05% 0.95% 1.01% to $392 milli
Slide 14: Credit Losses and ACL Ratios
Q4 2024 Highlights Credit Losses and ACL Ratios Allowance for Credit Losses Gross Loan Charge-offs and Recoveries • Provision Expense of $60.0 million, primarily reflective of net charge-offs and an incremental Gross Charge-Offs Recoveries $17 qualitative adjustment on the CRE portfolio $10 $10 $40
Slide 15: Key Reserve Level Ratios
Q4 2024 Highlights Key Reserve Level Ratios • WAL remains appropriately reserved Reserve levels enhanced by credit protection and low loss loan categories • Total Loan ACL / Funded Loans of 0.77% Adjusted Total Loan ACL / Funded Loans: Q4-24 – CLNs offer credit protection from first losses on covere
Slide 16: Capital Accumulation
Q4 2024 Highlights Capital Accumulation Common Capital Levels Regulatory Capital Levels • Continue to exceed “well-capitalized” levels with 11.2% 11.3% 10.8% 11.0% 11.0% CET1 of 11.3% Tangible Common Equity / Tangible Assets1 7.3% 7.2% 7.2% • TCE/TA remained flat at 7.2% 6.8% 6.7% Capital Accretion
Slide 17: Tangible Book Value Growth
Q4 2024 Highlights Tangible Book Value Growth Long-Term Growth in TBV per Share1 Tangible Book Value per Share1 7x WAL 650% • TBVPS increased $0.29 to $52.27 from organic WAL with Dividends Added Back earnings Peer Median 6x 563% – Increased 0.6% quarter-over-quarter, non- Peer Median with Dividends
Slide 18: Management Outlook
Management Outlook 2024 Baseline 2025 Outlook Loans (HFI): $53.7 bn L (HFI): +$5.0 bn Balance Sheet Growth Deposits: $66.3 bn D: +$8.0 bn Capital (CET1) 11.3% Consistent with Q4-24 level Net Interest Income $2.62 bn Up 6% - 8% Non-interest Income $543 mm Up 6% - 8% Non-interest Expense $2.025 bn Dow
Slide 19: Questions & Answers
Questions & Answers
Slide 20: Appendix
NVA Western Alliance Bancorporation® Appendix
Slide 21: Fortified Adjusted Capital
Fortified Adjusted Capital CET1 capital adjusted for AOCI securities marks & reserves remains solidly above peer median levels Adjusted CET1 (incl. of AOCI Unrealized Securities Marks & Loan Loss Reserves)1 15% 14% 13% 12% Q4 Q3 11.8%: 75th pctl 11.0% 11.1% 11% 10.8%: Median 10.1%: 25th pctl 10% 9%
Slide 22: Commercial Real Estate Investor Statistics
Commercial Real Estate Investor Statistics $9.9 billion; 18% of Total Loans Underwriting Criteria and Mitigating Factors CRE Investor Portfolio (At Origination or Most Recent Appraisal) • Low LTV & LTC (50% to low 60%) range underwriting in areas 67% minimizes tail risk 62% 56% 57% • Simple capital
Slide 23: Commercial Real Estate Investor: Office
Commercial Real Estate Investor: Office $2.3 Billion; 23% of Total CRE Investor; 4% of Total Loans Distribution by LTV (At Origination or Most Recent Appraisal) Underwriting Criteria and Mitigating Factors 28% • Primarily shorter-term bridge loans for repositioning or redevelopment projects • Strong
Western Alliance Bancorporation Common Stock (DE) — Q4 2024 Earnings Presentation on 6ix