Western Alliance Bancorporation · NYSE:WAL
Western Alliance Bancorporation — Q3 2020 Earnings Presentation
19 slides from Western Alliance Bancorporation's earnings presentation, Oct 23, 2020
Slide 1: Earnings Call 3rd Quarter 2020
EARNINGS CALL 3rd QUARTER 2020 October 23, 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements This release 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 statements in
Slide 3: 3rd Quarter 2020 Financial Highlights
3rd Quarter 2020 | Financial Highlights Q3-20 Q2-20 Q3-19 Earnings & Profitability Net Interest Income $ 284.7 $ 298.4 $ 266.4 Net Income EPS Pre Provision Net Revenue1 181.3 204.9 159.7 Net Income 135.8 93.3 127.4 $135.8 million $1.36 EPS 1.36 0.93 1.24 Net Interest Margin 3.71% 4.19% 4.41% Efficie
Slide 4: Quarterly Consolidated Financial Results
Quarterly Consolidated Financial Results Q3-20 Q2-20 Q3-19 Q3 2020 Highlights Interest Income $ 304.8 $ 318.2 $ 315.6 1• Net Interest Income decreased $13.7 Interest Expense (20.1) (19.8) (49.2) million primarily as a result of changes in Net Interest Income $ 284.7 1 $ 298.4 $ 266.4 prepayment assu
Slide 5: Net Interest Drivers
Net Interest Drivers $9.0 Total Investments and Yield $40.0 Spot 4.00% Loans and Yield Spot Q3 2020 Highlights Rate 6.50% Rate $8.0 $35.0 5.79% 5.58% • Loan yields fell 35bps 2.83% 3.50% 5.27% 4.50% 5.50% $7.0 3.08% $30.0 4.82% following declines across 2.96% 2.98% 3.02% 4.47% $6.0 2.79% 3.00% $25.0
Slide 6: Net Interest Income
Net Interest Income Net Interest Income, NIM, and Impacts on Quarterly NIM Average Interest Earning Assets Components NIM $300.0 $298.4 7.50% Q2 - 20 4.19 % $284.7 6.50% Impact of PPP Loans (0.13) $280.0 $272.0 $266.4 $269.0 Excess Liquidity (0.21) 5.50% $260.0 Loan Rates (0.09) 4.41% 4.39% 4.22% 4.
Slide 7: Expenses and Efficiency
Expenses and Efficiency1 Expenses and Efficiency Ratio Q3 2020 Highlights 50.0% $180.0 • Efficiency ratio1 increased 460bps to 39.7% 44.1% compared to the prior quarter and decreased 43.2% 45.0% $160.0 42.9% 350bps from the same period last year 39.7% $140.0 40.0% • Higher efficiency ratio1 was driv
Slide 8: Pre-Provision Net Revenue, Net Income, and ROA
Pre-Provision Net Revenue1, Net Income, and ROA 2.69% Q3 2020 Highlights $300.0 2.44% 2.37% 2.24% 2.22% •2.50% PPNR ROA1 decreased 47 basis points from 1.94% 1.92% the prior quarter and decreased 22 basis $250.0 1.66% points from Q3-19 1.22% 1.50% 1.22% • ROA increased 44 basis points from the prior
Slide 9: Consolidated Balance Sheet
Consolidated Balance Sheet Q3-20 Q2-20 Q3-19 Q3 2020 Highlights Investments & Cash $ 6,120 $ 5,712 $ 5,020 1• Loans increased $985 million (3.9%) Loans 26,014 1 25,029 20,153 over prior quarter and $5.9 billion Allowance for Credit Losses (311) (311) (165) (29.1%) over prior year Other Assets 1, 513
Slide 10: Five Quarter Loan Growth and Composition
Five Quarter Loan Growth and Composition $5.9 Billion Year Over Year Growth Highlights Total Loans: Quarter-over-quarter Total Loans $20.2 $21.1 $23.1 $25.0 $26.0 loan growth of $985 million driven by Qtr. Change +$0.9 +$1.0 +$2.0 +$1.9 +$1.0 (in millions): C&I $ 892 $2.4 9.3% Construction & Land 10
Slide 11: Five Quarter Deposit Growth and Composition
Five Quarter Deposit Growth and Composition $6.4 Billion Year Over Year Growth Highlights Total Deposits $22.4 $22.8 $24.8 $27.5 $28.8 Quarter-over-quarter deposit growth of $1.3 billion driven by (in millions): Qtr. Change +$1.0 +$0.4 +$2.0 +$2.7 +$1.3 Non-Interest Bearing DDA $ 777 Savings and MMD
Slide 12: Payment Deferral Update
Payment Deferral Update COVID Related Loan Payment Deferrals Q3 2020 Highlights COVID Loan Deferrals June 30, 2020 September 30, 2020 • Declining need for customer relief % of % of % Deferrals Portfolio Deferrals Outstanding Portfolio Reduction • Deferrals declined $1.6bn or 55% Hotel Franchise Fina
Slide 13: Asset Quality
Asset Quality Classified Assets Q3 2020 Highlights $350 $326 $298 • Total Classified Assets of $326 million (0.98% to Total Assets) $300 increased $28 million in Q3 $247 $250 $171 $205 $149 – Non-Performing Loans + OREO of $155 million (47bps $200 $161 to Total Assets) an increase of $6 million in Q
Slide 14: CECL and Allowance for Credit Losses ("ACL")
CECL and Allowance for Credit Losses (“ACL”) ACL Reserve Build Q3 2020 Highlights • Provision expense of $14.7 million for Q3, primarily driven by balance sheet growth • Total ACL balance of $361 million represents an increase of $7 million from Q2, primarily due to growth in unfunded commitments fr
Slide 15: Credit Losses and ACL Ratios
Credit Losses and ACL Ratios Loan ACL Adequacy Ratios Q3 2020 Highlights 3.00% 150% • Total Loan ACL / Funded Loans decreased 2bps to 1.37% in 2.50% 120% 120% 130% Q3 as a result of reduced provision expense 112% 112% − Excluding PPP at 1.46% 2.00% 110% 92% 1.50% 1.39% 1.37% 90% • Total Provision Ex
Slide 16: Capital Accumulation
Capital Accumulation Robust Capital Levels Q3 2020 Highlights 11.3% 11.2% 11.0% 11.1% Common Equity Tier 1 10.6% 10.3% 10.2% • CET1 remains strong at 10.0% 10.0% 10.1% 10.3% 10.0% 9.1% 9.4% Tangible Common Equity / Tangible Assets1 9.0% 8.9% 8.9% • TCE / TA flat from the prior quarter at 8.9% 8.6% 8
Slide 17: Selected Portfolios
Selected Portfolios Hotel Franchise Finance ($2.1 bn) Tech & Innovation: Investor Dependent ($1.3 bn) Financial flexibility is maximized Primarily focused on established Statistics Statistics through deep industry expertise, strong growth companies with successful Loan ACL / Funded operating partner
Slide 18: Management Outlook
Management Outlook • Balance Sheet Growth • Interest Margin • Pre-Provision Net Revenue • Asset Quality • Capital and Liquidity 18 18 18
Slide 19: Questions and Answers
Questions and Answers WA Western Alliance Bancorporation® 19
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