Western Alliance Bancorporation · NYSE:WAL
Western Alliance Bancorporation — Q4 2022 Earnings Presentation
25 slides from Western Alliance Bancorporation's earnings presentation, Feb 14, 2023
Slide 1: Investor Update 1Q 2023
INVESTOR UPDATE 1Q 2023
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: Western Alliance Bancorporation Overview
Note: Financial data as of December 31, 2022; 1) Market data as of February 10, 2023; 2) Refer to slide 2 for further discussion of Non-GAAP financial measures. 3) Nonperforming assets includes nonaccrual loans and repossessed assets 3 Western Alliance Bancorporation Overview Summary The Bank for Al
Slide 4: 4th Quarter 2022 Financial Highlights
4th Quarter 2022 | Financial Highlights Earnings & Profitability Q4-22 Q3-22 Q4-21 Earnings per Share $2.67 $2.42 $2.32 Net Income $293.0 $264.0 $246.0 Net Revenue $701.2 $663.9 $561.0 Pre Provision Net Revenue1 $367.8 $358.1 $323.2 Net Interest Margin 3.98% 3.78% 3.33% Efficiency Ratio1 46.9% 45.5%
Slide 5: WAL's Value Proposition
WAL’s Value Proposition 5 1 Flexible business model – sustainable growth across market cycles 2 Specialized, high quality loan portfolio – deep client segment expertise and underwriting acumen 3 Differentiated deposit franchise – specialized, national channels serving secularly strong industries 6 D
Slide 6: WAL's Thoughtful Evolution
WAL’s Thoughtful Evolution 6 Deliberate evolution from a Nevada-focused community bank to a national commercial bank Nevada Community Bank (1994 – 2002) Regional Bank with a National Reach (2010 – 2017) 1994 Founded as Bank West of Nevada 2003 Opened de novo Torrey Pines Bank in SoCal 2005 IPO 2015
Slide 7: Branch-Lite, National Commercial Bank
Branch-Lite, National Commercial Bank 7 A national banking platform of specialized financial services, paired with attractive regional markets, provides complementary, diversified revenue streams and high operating leverage to produce superior financial returns WAL’s branch network represented by ma
Slide 8: WAL actively adapts business and capital allocation to changing environment
8 WAL actively adapts business and capital allocation in response to changing external environment Note: Illustrative as business objectives are not mutually exclusive and image does not represent full suite of WAL divisions, products and services. Capital Call Lines Residential Mortgages Geographic
Slide 9: Deliberate business transformation strategy
9 • Deliberate, decade-long business transformation strategy • Nearly 70% of GFC losses from Q4-09 to Q4-12 came from categories comprising 44% of portfolio at Q4-09, which today makes up <6% of loans • Losses concentrated in Nevada and consumer lending during GFC • Since year-end 2013, cumulative N
Slide 10: Specialized, High Quality Loan Portfolio
Peers1 Median: 13.0% Top Quart.: 14.7% Specialized, High Quality Loan Portfolio 10 Highlights Diversified by product, client-type and geography emphasizing underwriting discipline 31% 8% 18%3% 40% Resi. & Consumer Const. & Land CRE, NOO CRE, OO C&I Loans by Product Type Warehouse Lending 11% Municip
Slide 11: Asset quality and credit metrics outperformance
11 • A decade of business transformation has resulted in consistent relative outperformance in asset quality and credit metrics • Asset quality remained strong during height of the pandemic • Improvement / stabilization in non- accruals reflects timely identification and resolution of problem loans
Slide 12: Demonstrated Conservative Credit Culture
Demonstrated Conservative Credit Culture 12 Deliberate business transformation, emphasizing underwriting specialization and diversification strategy, has produced sustained superior asset quality with reduced dispersion in realized credit losses Note: Peers consist of 33 publicly traded banks headqu
Slide 13: Conservative, Economically Resilient Portfolio Positioning
13 Specialized underwriting expertise and conservative sector allocations position portfolio to withstand economic uncertainty Conservative, Economically Resilient Portfolio Positioning Insured (27%) • Residential • Equity Fund Resources • Warehouse Lending • Early Buyout (“EBO”) Resi. & Other Gover
Slide 14: Substantial Reserve Levels
14 • WAL remains appropriately reserved, especially when considering credit protection from Credit Linked Notes (CLNs) and historically low loss loan categories • Total Loan ACL / Funded Loans increased to 0.69% in Q4 as a result of heightened economic uncertainty • Total Loan ACL / Funded Loans les
Slide 15: Scalable, Differentiated Deposit Franchise
Note: Borrowings include customer repurchase agreements; Cost of Funds defined as total expense paid on interest bearing liabilities divided by the sum of average interest- bearing liabilities and average non-interest bearing demand deposits. Diversified funding channels provide secular growth trend
Slide 16: Leading Efficiency Produces Strong Operating Leverage
Leading Efficiency Produces Strong Operating Leverage 16 • Continued focus on expense management, while investing in growth initiatives and scalable infrastructure to become a leading nationwide banking platform • Efficiency ratio1 increased 200 bps to 44.9% compared to 2021 • Increased 140 bps to 4
Slide 17: Industry-Leading Profitability
ROAA Industry-Leading Profitability 17 • Outstanding performance compared to peers with ROAA and ROATCE among highest in industry • Net Interest Income continues to rise through strong earning asset growth • Net Interest Income increased $668 million, or 43.1%, from 2021 due to strong loan growth an
Slide 18: Net Interest Drivers
Total Investments and Yield Interest Bearing Deposits and Cost Loans and HFI Yield Deposits, Borrowings & Cost of Liability Funding Net Interest Drivers 18 • Loan yields increased 86 bps in Q4 due to a higher rate environment • Yield on Loans Held for Sale of 5.63% increased from 4.87% in Q3 • Inves
Slide 19: Net Interest Income Sensitivity
Net Interest Income Sensitivity 19 • WAL expects a 3.1% increase in NII under a +100 bps rate shock on a static balance sheet • 52% of loans (ex-HFS) are contractually variable ($27.1 billion) • 73% of variable rate loans have rate floors • Moderate NII sensitivity, driven primarily by balance sheet
Slide 20: Shareholder-Focused Capital Management
411% 461% 99% 130% 2013 2014 2015 2016 2017 2018 2019 2020 2021 MRQ Note: Peers consist of 33 publicly traded banks headquartered in the US with total assets between $25B and $150B, excluding target banks of pending acquisitions, as of December 31, 2022. TSR through February 10, 2023. Source: S&P Gl
Slide 21: Consistently Strong Earnings Trajectory
Consistently Strong Earnings Trajectory 21 Profitability Leadership Maintained Through Business Diversification • WAL’s risk-adjusted net income growth has significantly outperformed peers since 2013 • Strong earnings growth has been accompanied by lower-than-peer earnings volatility • WAL is No. 3
Slide 22: Appendix
VAN Western Alliance Bancorporation® Appendix
Slide 23: Unique Mortgage Banking Platform
23 Unique Mortgage Banking Platform That Enhances Growth, Returns and Diversification Enhance Earning Asset Mix Enhance Deposit Franchise Optimize Mortgage Warehouse Franchise Maximize Client Relationships AmeriHome Stability Levers Correspondent Lending (GOS) Servicing / MSR Sales Consumer Direct (
Slide 24: Credit-Linked Note (CLN) Trade Dynamics
24 Credit-Linked Note (CLN) Trade Dynamics Issuing CLNs enables WAL to optimize the amount of capital held against loans in the reference portfolio and reduces credit tail risk Agency Non- QMJumbo QM Risk-Weighted Asset Relief ($4.6Bn - $228MM) x (50% - 20%) = $1.3Bn Total RWA Relief: $114MM + $1.3B
Slide 25: Western Alliance Bancorporation
VAN Western Alliance Bancorporation®
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