Western Alliance Bancorporation · NYSE:WAL
Western Alliance Bancorporation — Q4 2010 Earnings Presentation
22 slides from Western Alliance Bancorporation's earnings presentation, Jan 26, 2011
Slide 1: 4th Quarter 2010 Earnings Call
Robert Sarver Chairman & CEO Ken Vecchione President & COO Dale Gibbons Executive Vice President & CFO 4th Quarter 2010 Earnings Call Western Alliance Bancorporation (NYSE: WAL) January 27, 2011
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: 4th Quarter 2010 Highlights
4th Quarter 2010 Highlights Pre-tax, pre-credit income $25 million (1)Up $0.4 million or 1.6% from Q3-2010 Up $7.7 million or 44.5% from Q4-2009 Net interest income $60.9 million Up $1.4 million or 2.4% from Q3-2010 Net Interest Margin of 4.26% compared to 4.32% in Q3-2010 and 3.84% in Q4-2009 Opera
Slide 4: 4th Quarter 2010 Highlights (Cont'd)
4th Quarter 2010 Highlights (Cont’d) Net loss of $10.8 million $13.0 million net write-down of repossessed and other assets $6.7 million charge from write up of junior subordinated debt Two out of three banks profitable for the year Maintained strong capital position(1) Tier 1 Common Equity of 8.5%
Slide 5: Strong Pre-Tax, Pre Credit Income Growth
Strong Pre-Tax, Pre Credit Income Growth(1) Pre-tax, pre-credit income growth of 1.8% from Q3-2010; growth of 44% since Q4-2009 Sixth consecutive quarterly increase % of Average Total Assets (in thousands) Q4-2009 Q1-2010 Q2-2010 Q3-2010 Q4-2010 Net Interest Income 51,788 54,718 57,456 59,468 60,911
Slide 6: 2010 Quarterly Net Income Summary
2010 Quarterly Net Income Summary (in millions) Q1-2010 Q2-2010 Q3-2010 Q4-2010 Pre-Tax, Pre-Credit Income $19.1 $22.7 $24.6 $25.0 Provision for loan and lease losses (28.7) (23.1) (23.0) (18.4) Income Net of Provision Expense ($9.7) ($0.4) $1.6 $6.6 Securities gains/ losses & valuation $8.4 $11.3 $
Slide 7: 2009-2010 Income Statement Comparison
2009-2010 Income Statement Comparison (in millions) 2009 2010 % Change Net Interest Income $202.3 $232.6 15.0% Non-Interest Income $28.3 $25.1 -11.5% Operating Expense ($171.9) ($166.3) -3.3% Pre-Tax, Pre-Credit Income $58.7 $91.3 55.6% Provision for loan and lease losses (149.1) (93.2) -37.5% Incom
Slide 8: PTPC Income and Reserves Exceed Losses
PTPC Income and Reserves Exceed Losses(1) Pre-tax, Pre-Credit Income surpassed Provision Expense by $6.6 million in Q4-2010. Second consecutive quarterly surplus. (in thousands) Reserve ratio has exceeded net charge off ratio for each quarter of 2010. Charge Offs vs. Reserves PTPC Income vs. Provisi
Slide 9: Annualized Net Charge Offs/ Average Total Loans
Annualized Net Charge Offs/ Average Total Loans Column1 Q1-2009 Q2-2009 Q3-2009 Q4-2009 Q1-2010 Q2-2010 Q3-2010 Q4-2010 Annualized Net Charge Offs to Total Loans 1.72% 3.00% 3.02% 3.60% 2.43% 2.54% 2.43% 1.54%
Slide 10: Net Interest Margin
Net Interest Margin(1) Net interest margin stable as cost of funding earning assets declined while yield on earning assets remained relatively flat Yield on earning assets down slightly for Q4-2010 as loan yield dropped 2 basis point to 6.18% from Q3-2010 Lower cost of funding reflects improved fund
Slide 11: Operating Expense Summary
Operating Expense Summary $42,144 (in thousands) $41,903 $41,254 Q4-2010 operating expenses moderately higher than Q3-2010, however efficiency continues to improve slightly Q4-09 70.5% Q1-10 68.4% Q2-10 64.4% Q3-10 62.4% Q4-10 62.2%
Slide 12: Trust Preferred Valuation
Trust Preferred Valuation Western Alliance currently has outstanding $64.5 million of aggregate principal trust preferred securities with an average contractual rate of three month LIBOR +248 basis points and average maturity in 2035 The company re-values this debt to current market values based on
Slide 13: Loan Portfolio Composition
Loan Portfolio Composition (in millions) $4,080 27% 23% 15% 20% 14% 2% 2% $4,174 29% 23% 21% 12% 13% $4,241 29% 24% 22% 11% 12% Continued loan growth: Total loan growth of $67 million or 1.6% for Q4-2010 Total loan growth of $161 million or 3.9% since Q4-2009 Continued improvement in loan concentrat
Slide 14: Recent Asset Quality Trends
Recent Asset Quality Trends (in millions) Improvement in asset quality metrics from Q3-2010 to Q4-2010:Non-accrual loans down $14 million to $117 millionRepossessed assets down $2 million to $108 million90+ accruing down $4 million Graded loans down $29 million to $257 million Classified assets down
Slide 15: Classified Assets/ Tier Capital + ALLL
Classified Assets/ Tier 1 Capital + ALLL Total classified assets declined by $32 million or 8% in Q4-2010. Q4-2009 Q1-2010 Q2-2010 Q3-2010 Q4-2010 Bank of Nevada 124.4% 96.6% 89.8% 70.0% 64.9% Western Alliance Bank 64.8% 65.3% 62.2% 48.8% 42.6% Torrey Pines Bank 45.6% 43.6% 34.3% 29.8% 24.1% Western
Slide 16: 4th Quarter OREO Valuation
4th Quarter OREO Valuation Net valuation adjustments on OREO amounted to $12 million during Q4-2010 Incurred $1 million net loss on sale of OREO during Q4-2010 Total OREO Outstanding: $107 Million as of 12/31/10 Western Alliance Bancorporation OREO Appraisals New OREO Added During 4Q-10 17.24 OREO A
Slide 17: Composition of OREO
Composition of OREO $1.3 Billion Western Alliance Bancorporation Total OREO Outstanding: $107 Million as of 12/31/10 12/31/10 Balance Land 61,170 Industrial 14,721 Office 18,815 Retail 1,830 Other 3,390 Single Family Home 6,633 Property Type Arizona 13,194 California 14,485 Nevada 78,372
Slide 18: Summary of Deposits
Summary of Deposits(1) 36% 27% 10% Slight improvement in deposits in Q4-2010 Over $616 million deposit growth since Q4-2009 Non-interest bearing DDA has grown by $286 million or 25% since Q4-2009 27% $4,722 $5,329 $5,338 (in millions) Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Non-Int Bearing DDA 1,157.0 1,348.8
Slide 19: Composition of Liquid Assets
Composition of Liquid Assets (in millions) Liquid Assets: Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Cash and Due From Banks $393 $828 $561 $615 $216 Fed Funds Sold 4 2 0 1 1 Non-Pledged Mktble Securities and MMDA 335 327 440 522 793 Total Liquid Assets $732 $1,157 $1,001 $1,139 $1,010 Total Assets $5,753 $6,096
Slide 20: 2010 Capital Ratios
2010 Capital Ratios(1) (1) Capital ratios are considered estimates until Call Reports are filed. (2) Tier 1 Common is a non-GAAP ratio. Tier 1 Leverage(1) Tier 1 Common(2) 1Q-10 2Q-10 3Q-10 4Q-10 1Q-10 2Q-10 3Q-10 4Q-10 Bank of Nevada 8.5% 8.1% 9.1% 9.2% 10.2% 9.9% 11.1% 11.4% Western Alliance Bank
Slide 21: Dividend Capacity by Affiliate
Dividend Capacity by Affiliate (1) Tier 1 Capital is considered an estimate until Call Reports are filed. (2) Dividend capacity is the lesser of the previous four quarters earnings or capital surplus and are subject to regulatory approval. (in thousands) Q4-2010 Tier 1 Capital (1) Target Tier 1 Capi
Slide 22: Strategic Outlook
Strategic Outlook Focus on core banking operations Reduce non-performing assets Increase market share Strengthen risk management
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