Western Alliance Bancorporation · NYSE:WAL
Western Alliance Bancorporation — Q4 2023 Earnings Presentation
23 slides from Western Alliance Bancorporation's earnings presentation, Jan 26, 2024
Slide 1: Earnings Call 4th Quarter 2023
EARNINGS CALL 4th Quarter 2023 JANUARY 26, 2024
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: Highlights: 4th Quarter 2023 Financial Highlights
Highlights 4th Quarter 2023 | Financial Highlights Net Income EPS Earnings & Profitability Q4-23 Q3-23 Q4-22 $147.9 million $1.33 Earnings per Share / Ex. Notable Items1 $1.33 / $1.91 $1.97 $2.67 $210.9, Ex. Notable Items $1.91, Ex. Notable Items $147.9 / $210.9 $216.6 $293.0 Net Income / Ex. Notabl
Slide 4: 2023 Highlights: Annual Consolidated Financial Results
2023 Highlights Annual Consolidated Financial Results Dollars in millions, except EPS 2023 2022 Interest Income $4,035.3 $2,691.8 1 Net Interest Income increased $122.6 million, primarily from higher yields on interest earning Interest Expense (1,696.4) (475.5) assets Net Interest Income $2,338.9) 1
Slide 5: Quarterly Income Statement
Q4 2023 Highlights Quarterly Income Statement 1 Net Interest Income increased $4.7 million, primarily from Dollars in millions, except EPS Q4-23 Q3-23 Q4-22 higher earning asset balances and lower average borrowings Interest Income $1,039.0 $1,026.6 $888.3 Non-Interest Income decreased $38.7 million
Slide 6: Consolidated Balance Sheet
Q4 2023 Highlights Consolidated Balance Sheet Q4-23 Q3-23 Q4-22 Investments & Cash decreased $351 million to Investments & Cash $14,569 1 $14,920 $9,803 1 $14.6 billion, or (2.4%), primarily due to paydown of debt HFS Loans 1,402 1,766 1,184 HFI Loans, Net 50,297 2 49,447 51,862 HFI Loans increased
Slide 7: Five Quarter Loan Composition
Q4 2023 Highlights Five Quarter Loan Composition Quarter-over-quarter loan increase of $850 million driven by (in millions): ($1.6) Billion Year-Over-Year Change C&I $759 Total Loans, HFI $51.9 $46.4 $47.9 $49.4 $50.3 Construction & Land 220 Qtr. Change -$0.3 -$5.4 +$1.4 +$1.6 +$0.9 CRE, OO 39 Q4-23
Slide 8: Five Quarter Deposit Composition
Q4 2023 Highlights Five Quarter Deposit Composition Quarter-over-quarter deposit increase of $1.0 $1.7 Billion Year-Over-Year Change billion driven by (in millions): Interest-Bearing DDA $3,073 Total Deposits $53.6 $47.6 $51.0 $54.3 $55.3 CDs 1,325 Qtr. Change -$1.9 -$6.1 +$3.5 +$3.2 +$1.0 Q4-23 Avg
Slide 9: Net Interest Drivers
Q4 2023 Highlights Net Interest Drivers Total Investments and Yield Loans and HFI Yield • Loan yields decreased 8 bps due to full-quarter impact of the $1.3 billion reclassification of loans from HFS to HFI 6.28% 6.48% 6.73% 6.65% 4.91% 4.99% 5.70% at the end of Q3 4.68% 4.76% 4.45% $13.0 $1.2 $1.1
Slide 10: Net Interest Income
Q4 2023 Highlights Net Interest Income Net Interest Income and Net Interest Margin Average Earning Assets & Average Yield • Net Interest Income increased $4.7 million, or 0.8%, over prior quarter Dollars in millions Dollars in billions primarily due to a higher average earning 5.99% 6.17% 6.37% 6.37
Slide 11: Non-Interest Expenses and Efficiency
Q4 2023 Highlights Non-Interest Expenses and Efficiency1 • Adjusted efficiency ratio1 (excluding deposit costs and notable items) increased 100 bps to Non-Interest Expenses and Efficiency Ratio Breakdown of Non-Interest Expenses 51.0% from the prior quarter, driven primarily by higher insurance expe
Slide 12: Asset Quality
Q4 2023 Highlights Asset Quality Special Mention Loans Asset Quality Ratios • Asset quality remained stable, as the aggregate net change in Special Mention Loans and 1.45% 0.89% 0.90% 0.95% 1.35% 1.27% Classified Assets was only $7 million 0.68% 0.69% 0.65% 0.58% • Special Mention Loans decreased $2
Slide 13: Credit Losses and ACL Ratios
Q4 2023 Highlights Credit Losses and ACL Ratios Allowance for Credit Losses Gross Loan Charge-offs and Recoveries • Provision expense of $9.3 million, primarily reflective of a normalizing economic Gross Charge Offs $5 $9 $10 $11 $32 $9 environment and heightened attention on $41 $38 $47 $45 $9.2 Re
Slide 14: Key Reserve Level Ratios
Q4 2023 Highlights Key Reserve Level Ratios Reserve levels enhanced by credit protection and low loss loan categories • WAL remains appropriately reserved, especially when considering credit protection from CLNs and historically low loss loan categories Adjusted Total Loan ACL / Funded Loans: Q4-23
Slide 15: Capital Accumulation
Q4 2023 Highlights Capital Accumulation Robust Common Capital Levels Regulatory Capital Levels 10.1% 10.6% 10.8% • Continue to exceed “well-capitalized” levels 9.3% 9.4% • CET1 up 20 bps in Q4-23 to 10.8% 7.0% 7.3% 6.5% 6.5% 6.8% Tangible Common Equity / Tangible Assets1 • TCE / TA increased from th
Slide 16: Tangible Book Value Growth
Q4 2023 Highlights Tangible Book Value Growth Long-Term Growth in TBV per Share1 Tangible Book Value per Share1 6x WAL • TBVPS increased $3.06 to $46.72 from prior 562% WAL with Dividends Added Back quarter from improvement in AOCI and Peer Median organic earnings 5x 493% Peer Median with Dividends
Slide 17: Management Outlook
Management Outlook Reference Period Baseline 2024 Outlook Loans (HFI): $50.3 bn Loans (HFI): +$2.0 bn Balance Sheet Growth YE 2023 Deposits: $55.3 bn Deposits: +$8.0 bn Capital (CET1) YE 2023 10.8% >11.0% Net Interest Income Q4 2023 Ann. $2.37 bn Up 5% – 10% Non-Interest Income (Ex.) 1 FY 2023 $397
Slide 18: Questions & Answers
Questions & Answers
Slide 19: Appendix
VAN Western Alliance Bancorporation® Appendix
Slide 20: Notable Income Statement Items
Notable Items Notable Income Statement Items Dollars in millions, except EPS Q4-23 Balance Sheet Optimization efforts included the Net Income Available to Common Stockholders $144.7 1 following: Exclusion for Notable Items: • MSR fair value adjustments and sales Non-Interest Income • Loan sales MSR
Slide 21: Commercial Real Estate Investor Statistics
Commercial Real Estate Investor Statistics CRE Investor Portfolio ($9.6 Billion; 19% of Total Loans) Underwriting Criteria and Mitigating Factors 60% 70% 59% 61% • Low LTV & LTC (50% to low 60%) range underwriting in areas 48% 50% 50% 51% 49% 48% minimizes tail risk 50% 50% 42% • Simple capital stru
Slide 22: Commercial Real Estate Investor: Office
Commercial Real Estate Investor: Office $2.4 Billion; 25% of Total CRE Investor; 5% of Total Loans Distribution by LTV Underwriting Criteria and Mitigating Factors 37% • Primarily shorter-term bridge loans for repositioning or redevelopment projects 28% • Strong sponsorship from institutional equity
Slide 23: Superior Deposit Liquidity and Fortified Adjusted Capital
Superior Deposit Liquidity and Fortified Adjusted Capital Excellent Combined Insured/Collateralized Deposits & CET1 Capital Adjusting for AOCI Securities Marks Insured Deposits % vs. CET1 Adj. (Incl. of AOCI Unrealized Securities Marks) for Top 50 Banks by Assets 85% WAL Adj. CET1: 9.8% (Q4-23) BANC
Western Alliance Bancorporation Common Stock (DE) — Q4 2023 Earnings Presentation on 6ix