Western Alliance Bancorporation · NYSE:WAL
Western Alliance Bancorporation — Q3 2010 Earnings Presentation
25 slides from Western Alliance Bancorporation's earnings presentation, Oct 21, 2010
Slide 1: 3rd Quarter 2010 Earnings Conference Call
Robert Sarver Chairman & CEO Ken Vecchione President & COO Dale Gibbons Executive Vice President & CFO (Gp:) 3rd Quarter 2010 Earnings Conference Call (Gp:) Western Alliance Bancorporation (NYSE: WAL) (Gp:) October 22, 2010
Slide 2: Forward-Looking Information
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 statements cont
Slide 3: Achieving Strategic Initiatives
Achieving Strategic Initiatives Focus on Core Banking Operations: Plans underway to consolidate bank charters from five to three by the end of Q4-2010. Sale of Premier Trust closed September 1st, realized gain of $0.6 million. Reduce Non-Performing Assets: Continued improvement in non-performing, cl
Slide 4: Charter Consolidation
Charter Consolidation WAL has submitted applications to merge the following affiliate banks: Alta Alliance Bank into Torrey Pines Bank, First Independent Bank of Nevada into Alliance Bank of Arizona. Execution of this plan will reduce the number of bank charters from five to three which will mitigat
Slide 5: 3rd Qtr 2010 Financial Highlights
3rd Qtr 2010 Financial Highlights Increased pre-tax, pre-credit income* by $1.9 million or 8.3% to $24.6 million from Q2-10: Fifth consecutive quarterly increase. Net interest income up $2.0 million or 3.5% over Q2-2010 to $59.5 million Net Interest Margin increased to 4.32% from 4.16% in Q2-2010. N
Slide 6: 3rd Qtr 2010 Financial Highlights (cont'd.)
3rd Qtr 2010 Financial Highlights (cont’d.) Other Placeholder: Raised $121 million in liquidity at holding company: Proceeds over $48 million from new common equity, Proceeds over $73 million from new long term debt. Utilized new capital to shore up banks’ reserves and reduce burden of non-performin
Slide 7: Strong Pre-Tax, Pre Credit Income Growth
Strong Pre-Tax, Pre Credit Income(1) Growth Pre-tax, pre-credit income continues to climb toward interim goal of 2% of average total assets.% of Average Total Assets 8.3% growth in pre-tax, pre-credit income from Q2-2010. (in thousands) Q3-2009 Q4-2009 Q1-2010 Q2-2010 Q3-2010 Net Interest Income Non
Slide 8: Three Consecutive Profitable Quarters
Three Consecutive Profitable Quarters Steady improvement in pre-tax, pre-credit (PTPC) income. Continuing decline in provision expense. Continued volatility in repossessed asset valuation. Securities gains offset valuation losses. (in thousands) Q1-2010 Q2-2010 Q3-2010 Pre-Tax, Pre-Credit Income* $1
Slide 9: PTPC Income and Reserves Exceed Losses
PTPC Income* and Reserves Exceed Losses PTPC Income vs. Provision Expense 55,000 45,000 35,000 25,000 15,000 5,000 $25 Million $23 Million (in thousands) Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Pre-Tax Pre-Credit Income Provision Expense Charge Offs vs. Reserves 2.78% 2.63% 2.66% 2.66% 2.63% 2.43% 2.53% 2.42%
Slide 10: Net Interest Margin Rising
Net Interest Margin Rising 6.50% 5.50% 5.11% 5.07% 5.24% 5.06% 5.13% 4.50% 3.50% 3.69% 3.84% 4.17% 4.16% 4.32% 2.50% 1.50% 1.42% 1.23% 1.07% 0.90% 0.81% 0.50% Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Cost of Funding Earning Assets Net Int Margin* Yield on Int Earning Assets* Yield on earning assets improved du
Slide 11: Non-Interest Income
Non-Interest Income Trust and advisory service revenue continue to decline due to divestitures. Miller/Russell sold Q4-09. Premier Trust sold Q3-10. 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 $6,502 36% 15% 18% 19% 12% $7,458 30% 14% 32% 16% 8% (in thousands) 36% 16% 16% 20% 12% $6,349
Slide 12: Controlling Operating Expenses
Controlling Operating Expenses 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 $42,589 (in thousands) $41,254 $41,268 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Operating expenses held flat from Q2-2010. Down over 3% since Q3-09. Efficiency ratio steadily improving. 80% 75% 70% 65% 60% 55%
Slide 13: Loan Portfolio Composition
Loan Portfolio Co mposition (in millions) 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 (in millions) Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Commercial CRE, Owner Occupied Construction & Land CRE, Non-Owner Occpd Residential RE Consumer $3,968 « 2% 28% 21% 17% 17% 15% 2% 2% $4,130 « 2% 30% 22% 20% 13
Slide 14: Loan Distribution by Bank
Loan Distribution by Bank Q4-2007 15% 69% 16% Q3-2010 24% 55% 21% Nevada Arizona California Pg. 14
Slide 15: Stable Deposit Growth
Stable Deposit Growth 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 $4,752 31% 38% 7% 24% $5,230 28% 35% 12% 25% $5,328 36% 26% 12% 27% (in millions) Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Non-Int Bearing DDA NOW MMDA and Savings CDs* Total deposits continue to steadily climb: Over
Slide 16: Deposit Distribution by Bank
Deposit Distribution by Bank Q4-2007 15% 68% 17% Q3-2010 23% 54% 23% Nevada Arizona California
Slide 17: Deposit Market Share by Region
Nevada Deposit Market Share* Rank Institution Deposits (in millions) Market Share 1 Wells Fargo $12,347 33.0% 2 Bank of America 10,190 27.2% 3 Zions Bancorp 3,398 9.1% 4 Western Alliance Bancorp 2,911 7.8% < font color="white" style="FONT-SIZE: 1pt; FONT-FAMILY: Times New Roman"> 5 US Bank 2,789 7.4
Slide 18: Increasing Market Share
Increasing Market Share WAL Regional Market Share* Arizona San Diego County Nevada 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2008 0.9% 1.5% 6.5% 2009 1.0% 1.8% 7.1% 2010 1.5% 1.8% 7.8% Ranking 2008 2009 2010 Arizona 12 11 7 San Diego County 11 10 9 Nevada 4 4 4< /font> WAL has steadily increased
Slide 19: Composition of Liquid Assets
Composition of Liquid Assets (in millions) Liquid Assets: Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Cash and Due From Banks $753 $393 $828 $561 615 Fed Funds Sold 5 4 2 0 1 Money Market Cash Account 55 54 13 5 2 Non-Pledged Marketable Securities 88 281 314 435 521 Total Liquid Assets $901 $732 $1,157 $1,001 $1,
Slide 20: Funds Raised in Capital Markets
Funds Raised in Capital Markets Equity 8/18/2010 Closing Share Price $6.83 Discount 8.5% $0.58 Sale Price $6.25 Commission 4.5% $0.28 Net Proceeds per share $5.97 Number of Shares 8,050,000 Total Net Proceeds $48,059,000 Current Shares Outstanding 73,426,774 Dilution % 9.9% New Total Shares 81,476,7
Slide 21: 2010 Capital Ratios
2010 Capital Ratios Tier 1 Leverage Tier 1 Common 1Q10 2Q10 3Q10* 1Q10 2Q10 3Q10* Bank of Nevada 8.5% 8.1% 9.1% 10.2% 9.9% 11.1% Alliance Bank of Arizona 6.2% 6.1% 8.2% 9.1% 9.3% 11.2% First Independent Bank 8.7% 8.5% 8.7% 10.3% 10.3% 11.1% Torrey Pines Bank 9.5% 9.4% 9.7% 10.9% 10.7% 10.9% Alta All
Slide 22: Dividend Capacity by Affiliate Beginning in 2011
Dividend Capacity by Affiliate Beginning in 2011 (in thousands) Q3-2010 Tier 1 Capital (1) Target Tier 1 Capital Capital Surplus 2010 YTD Net Income YTD Dividend Capacity (2) (in Bank of Nevada $243,020 $240,279 $2,741 $(20,626) $0 Alliance Bank of Arizona 109,833 107,629 2,204 6,731 2,204 Torrey Pi
Slide 23: Recent Asset Quality Trends
Recent Asset Quality Trends 600,000 500,000 400,000 300,000 200,000 100,000 0 (in thousands) Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 NPA's Graded Classified Assets Watch Asset quality metrics from Q2-2010 mostly improved: • Non-accrual loans down $3 million to $131 million. • Repossessed assets up $6 mil
Slide 24: Classified Assets / Tier 1 Capital + ALLL
Classified Assets/ Tier 1 Capital + ALLL Western Alliance Total Classified Assets/ Tier 1 Capital + ALLL 75% 70% 65% 60% 55% 68.4% 74.0% 69.9% 63.6% 57.0% Total classified assets declined by $18.7 million or 4.5% in Q3-2010. Q3-2009 Q4-2009 Q1-2010 Q2-2010 Q3-2010Q3-2009Q4-2009Q1-2010Q2-2010Q3-2010
Slide 25: Strategic Outlook
Strategic Outlook Focus on core banking operations Reduce non-performing assets Increase market share Strengthen risk management Pg. 25
Western Alliance Bancorporation — Q3 2010 Earnings Presentation on 6ix