Western Alliance Bancorporation · NYSE:WAL
Western Alliance Bancorporation — Investor Presentation (February 2019)
22 slides from Western Alliance Bancorporation's investor presentation, Feb 11, 2019
Slide 1: Investor Update February 2019
Investor Update February 2019
Slide 2: Western Alliance Bank Overview
Western Alliance Bank Overview With a national presence and regional footprint, Western Top 10 on Alliance Bank is one of the country’s top performing banks Forbes 2019 $23B+ 80,000+ 1,800+ Best Banks in IN ASSETS COMMERCIAL ACCOUNTS EMPLOYEES America list 22.8% 20.7% 17.3% TANGIBLE BOOK VALUE ROTCE
Slide 3: Western Alliance's Key Strengths
Western Alliance’s Key Strengths Proven Business Model Diversified Business Mix The Go-to-Business Bank Loans by Product Type . Entrepreneurial regional bank with a commercial Resi. & Consumer focus that targets business opportunities with 7% higher risk-adjusted returns Const. & . Land Diverse mix
Slide 4: Executive Leadership Team
Executive Leadership Team Experienced leadership team that fosters an entrepreneurial, customer-focused culture Kenneth A. Vecchione Dale M. Gibbons Chief Executive Officer Vice Chairman, Chief Financial Officer 11 total years at WAL 15 years at WAL 35+ years’ experience, including 30+ years in comm
Slide 5: 4th Quarter 2018 Financial Highlights
4th Quarter 2018 | Financial Highlights Record results with high organic loan and deposit balances, stable net interest margin and improving efficiency ratio, while maintaining asset quality Q4 Highlights Year-Over-Year Growth • ROAA: 2.13% • Deposits: +$2.2 billion / 13.0% • ROTCE: 21.1% • Loans: +
Slide 6: Superior Return on Assets and TCE
Superior Return on Assets and TCE ROAA WAL Peer Median • Outstanding performance compared to peers 2.05% with ROAA and ROATCE among highest in 1.72% 1.61% 1.50% 1.56% industry 1.35% • As one of the highest taxed industries, banks 1.29% benefited from tax reform in Q4 2017 0.98% 0.99% 0.98% 1.00% 0.9
Slide 7: Our Business Transformation
Our Business Transformation WAL has dramatically evolved through national growth and product diversification 2008 20182018 Total Assets $5.2bn $23.1bn Locations 41 47 States with Lending 181 49 Relationships Geographic Lending $0.8bn (19.7%)1 $5.6bn (31.8%) Diversification 2 Nevada Loan Concentratio
Slide 8: WAL's Balance Sheet Growth and Transformation
WAL’s Balance Sheet Growth and Transformation 2008 2018 Loans ($4.1 billion) Loans ($17.7 billion) Loans Resi. & Consumer 7% • Increased loan diversification Resi. & C&I Const. Consumer • Established National Business 21% & Land 16% Lines 12% Const. & C&I • Smaller residential mix, yet Land 44% rene
Slide 9: A National Platform of Specialized Financial Services
A National Platform of Specialized Financial Services WAL leverages deep segment expertise to provide specialized banking services to niche markets across the country Conservative Portfolio Size Characteristics1 Unique Attributes • 94% with top three franchisors • Debt Yield: 12.4% • Healthy RevPAR
Slide 10: An Entrepreneurial Banking Mindset
An Entrepreneurial Banking Mindset WAL continuously looks to deepen existing client relationships to offer unique solutions and expand our product offering Conservative Portfolio Size Characteristics1 Unique Attributes • Portfolio of large corporate borrowers • Corp. Rating : BB+ Corporate • Borrowe
Slide 11: Well-Positioned Loan Portfolio
Well-Positioned Loan Portfolio Diversified by product, client-type and geography with emphasis on underwriting discipline • Target opportunities with superior risk-adjusted Loans Predominantly Floating Rate returns • Relationship banking approach • Lending relationships in 49 states Fixed Rate LIBOR
Slide 12: Stable, Low Cost Deposits
Stable, Low Cost Deposits Diversified funding sources reflect long-term, stable relationships Solid Noninterest Bearing Deposit Base • Deposit funding 96% of total liabilities • 39% of total deposits are noninterest-bearing CDs 10% • 27.6% 5-year CAGR Nonint. Bearing DDA • 92% Loan-to-Deposit ratio
Slide 13: Consistent Net Interest Margin
Consistent Net Interest Margin Remains well-positioned in rising rate environment Est. Interest Rate Sensitivity ($000s) • 28% total earning assets beta and 26% total funding cost beta, year - 200bps - 100bps Base +100bps +200bps over year Interest Income $1,000 $1,077 $1,186 $1,306 $1,426 Interest
Slide 14: Strong Efficiency Ratio
Strong Efficiency Ratio Historically stable efficiency ratio • Continued focus on expense management, while investing in growth initiatives and scalable infrastructure to be a leading nationwide banking platform 65.0% 63.4% 61.7% 60.1% 60.0% 58.8% 57.3% 55.4% 55.0% 52.1% 50.0% 47.4% 45.2% 45.0% 43.2
Slide 15: Adversely Graded Loans and Non-Performing Assets
Adversely Graded Loans and Non-Performing Assets While loans have historically seen double digit growth, adversely graded loans and non-performance assets have been consistent and declining in 2018 • Non-performing assets have gradually declined, representing 36% of both adversely graded and non- pe
Slide 16: Charge-Offs, Recoveries, ALLL, and Provision
Charge-Offs, Recoveries, ALLL, and Provision Credit quality is placed before profitability Reserve / Total Loans 1.47% WAL Peers • Strong risk management culture and framework 1.31% established throughout organization 1.07% • Significant investments of time and 1.22% 1.00% 0.93% resources over past
Slide 17: Capital Growth
Capital Growth WAL capital growth has outstripped peers, while supporting above industry trend loan and deposit growth Robust Capital Levels TBV Growth and Returns 11.0% 22.0% 22.8% TBV per Share CAGR $25.00 10.7% 21.1% 10.5% 10.2% 20.0% $22.07 $20.00 10.0% 18.7% 18.4% 17.8% 18.0% 18.2% $18.31 9.5%
Slide 18: Consistent EPS Growth
Consistent EPS Growth WAL has experienced 14 consecutive quarters of EPS stability and growth Quarterly EPS & Stock Price $70.00 $1.20 Stock Price Quarterly EPS $1.13 EPS Growth & P/E Comparison $60.00 $1.00 WAL SPX KRX EPS (FY'18) $4.14 $150.25 $8.10 EPS 5-Yr. CAGR 26% 7% 13% $50.00P/E (TTM) 10.8x
Slide 19: Historical Valuation Multiples (P / LTM EPS)
Historical Valuation Multiples (P / LTM EPS) 24.0x P / LTM EPS WAL Peers 22.0x 20.0x 18.0x 16.0x 14.0x 13.5x 12.0x 10.8x 10.0x 12/31/13 6/30/14 12/31/14 6/30/15 12/31/15 6/30/16 12/31/16 6/30/17 12/31/17 6/30/18 12/31/18 1.10x Implied Premium / Discount to Peer Multiples 1.05x 1.00x 0.95x Avg. 0.92x
Slide 20: Growth in TBV per Share
Growth in TBV per Share 250% WAL 214% Peer Avg Peer Avg with Dividends Added Back 200% 150% 100% 81% 50% 58% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 Note: Peers consist of 70 pu
Slide 21: Historical Valuation Multiples (P / TBV)
Historical Valuation Multiples (P / TBV) 400% P / TBV WAL Peers 350% 300% 250% 203% 200% 191% 150% 12/31/13 6/30/14 12/31/14 6/30/15 12/31/15 6/30/16 12/31/16 6/30/17 12/31/17 6/30/18 12/31/18 1.70x Implied Premium / Discount to Peer Multiples 1.60x 1.50x Avg. 1.41x 1.40x 1.30x 1.20x 1.10x 1.06x 1.0
Slide 22: 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 stateme
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