Western Alliance Bancorporation · NYSE:WAL
Western Alliance Bancorporation — BancAnalysts Association of Boston Annual Bank Conference 2022
23 slides from Western Alliance Bancorporation's conference presentation, Nov 3, 2022
Slide 1: Investor Update 4Q 2022
MN\VAN | Western Alliance Bancorporation® INVESTOR UPDATE 4Q 2022
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
Summary Western Alliance Bancorporation Overview The Bank for All Seasons NYSE Headquarters A national banking platform of specialized financial services paired with WAL Phoenix, AZ attractive regional markets provides complementary, diversified revenue streams and high operating leverage to produce
Slide 4: 3rd Quarter 2022 Financial Highlights
Highlights 3rd Quarter 2022 | Financial Highlights Earnings & Profitability Q3-22 Q2-22 Q3-21 $2.42 $2.39 $2.28 Earnings per Share Net Income EPS Net Income $264.0 $260.2 $236.9 Net Revenue $663.9 $620.0 $548.5 $264.0 million $2.42 Pre Provision Net Revenue1 $358.1 $351.1 $314.7 Net Interest Margin
Slide 5: WAL's Value Proposition
WAL’s Value Proposition Leading national commercial bank with unique combination of sustained high-quality growth, leading profitability, and stable earnings 1 Flexible business model – sustainable growth across market cycles 2 Specialized, high quality loan portfolio – deep client segment expertise
Slide 6: WAL's Thoughtful Evolution
WAL’s Thoughtful Evolution Deliberate evolution from a Nevada-focused community bank to national commercial bank Total Assets 4Q’02 2Q’05 4Q’09 2Q’14 4Q’17 2Q’19 3Q’21 3Q’22 ($Bn) $0.9 $2.6 $5.8 $10.0 $20.3 $25.3 $52.8 $69.2 Key Corporate Events Dec-2002 2016 2021 1994 2021 WAL 2015 Acquisition Acqu
Slide 7: Branch-lite, National Commercial Bank
Branch-lite, National Commercial Bank 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 National Business Line Growth Business d
Slide 8: Diversified Business Model Allows Flexibility to Sustain Growth
Diversified Business Model Allows Flexibility to Sustain Growth WAL actively adapts business and capital allocation in response to changing external environment Growth trajectory maintained with Regional CRE Banking prudent credit Divisions Technology Ample growth & Innovation risk management potent
Slide 9: Business Transformation
Highlights Business Transformation Deliberate business transformation emphasizes underwriting specialization and diversification • Deliberate, decade-long business transformation strategy, which sustains superior asset quality strategy • Nearly 70% of GFC losses from Q4-09 – Q4-12 Loan Portfolio: 20
Slide 10: Specialized, High Quality Loan Portfolio
Highlights Specialized, High Quality Loan Portfolio Diversified by product, client-type and geography emphasizing underwriting • Diverse mix of regionally-focused commercial discipline banking divisions & nationally-oriented specialized businesses Loans by Product Type Loans by Borrower Type • Lever
Slide 11: Demonstrated Conservative Credit Culture
Highlights Demonstrated Conservative Credit Culture Classified Loans / Loans Non-Accrual Loans / Loans • A decade of business transformation has resulted in consistent relative 1.11% outperformance in asset quality and credit 2.99% metrics 2.11% 2.18% 2.08% 2.04% 1.81% 0.77% 0.71% 0.67% • Asset qual
Slide 12: Conservative, Economically Resilient Portfolio Positioning
Conservative, Economically Resilient Portfolio Positioning Specialized underwriting expertise and conservative sector allocations position portfolio to withstand economic uncertainty Insured (24%) Resistant (33%) Resilient (31%) More Sensitive (12%) Limited uncovered collateral risk, Credit protecte
Slide 13: Scalable, Differentiated Deposit Franchise
Highlights Scalable, Differentiated Deposit Franchise Diversified funding channels provide secular growth trends and reflect long- term relationships • $55.6Bn in total deposits, typically tied to lending relationships Deposit Base Deposit Composition • WAL benefits from holding customers’ primary r
Slide 14: Leading Efficiency Produces Strong Operating Leverage
Highlights Leading Efficiency Produces Strong Operating Leverage Track record of simultaneously driving industry-leading growth and efficiency • Continued focus on expense management, while investing in growth initiatives and scalable infrastructure to become a leading nationwide banking platform Ef
Slide 15: Industry-Leading Profitability
Highlights Industry-Leading Profitability ROAA Pre-Provision Net Revenue ($MM) • Outstanding performance compared to WAL Peers peers with ROAA and ROATCE among $1,340 highest in industry 2.05% 2.00% $1,102 1.83% 1.61% 1.72% 1.61% 1.62% • Net Interest Income continues to rise 1.50% 1.56% 1.35% $746 t
Slide 16: Net Interest Drivers
Highlights Net Interest Drivers Spot Rate Spot Rate Total Investments and Yield 3.89% Loans and HFI Yield 5.43% • Loan yields increased 65 bps in Q3 due to 3.66% 4.84% a higher rate environment 2.77% 2.94% 2.46% 2.51% 4.28% 4.19% 4.03% 3.98% $2.2 • Yield on Loans Held for Sale increased $8.3 $8.8 $8
Slide 17: Net Interest Income in a Rising Rate Environment
Highlights Net Interest Income in a Rising Rate Environment • WAL expects a 6.0% increase in NII under a 100 NII Sensitivity – Shock Scenario, +100 bps bps rate shock on a static balance sheet Static Balance Sheet • 53% of loans (ex-HFS) are contractually variable Growth Balance Sheet 1 ($27.9 billi
Slide 18: Shareholder-Focused Capital Management
Highlights Shareholder-Focused Capital Management WAL consistently generates more capital than needed to support Common Equity Tier 1 organic growth • CET1 remains healthy at 8.7% Robust Capital Levels Tangible Common Equity / Tangible Assets1 11.8% 11.6% • TCE / TA decreased 140 bps from 2021 to 11
Slide 19: Consistently Strong Earnings Trajectory
Highlights Consistently Strong Earnings Trajectory WAL’s excess, risk-adjusted earnings growth normalized for historical volatility Relative Rankings Profitability Leadership Maintained via Highest Lowest Highest Lowest 23 P/E Business Diversification Avg. EPS Avg. Std "EPS 2023 / Bank - Rf Dev. Sha
Slide 20: Appendix
VAN Western Alliance Bancorporation® Appendix
Slide 21: Unique Mortgage Banking Platform That Enhances Growth, Returns and Diversification
Unique Mortgage Banking Platform That Enhances Growth, Returns and Diversification 2 Custodial Deposits 1 HFS Loans Enhance • Augments stable funding • Deploy excess liquidity Earning Asset into HFS loans as a Mix • Access to $4.6 billion of core deposits higher yielding, equally liquid alternative
Slide 22: Credit-Linked Note (CLN) Trade Dynamics
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 Pre-Trade Post-Trade Risk-Weighted Asset Relief Capital Savings CLN / Credit Protection A A $228MM x 50% = $114MM $1.4Bn x 10%
Slide 23: VAN Western Alliance
VAN Western Alliance Bancorporation®