Western Alliance Bancorporation · NYSE:WAL
Western Alliance Bancorporation — Investor Presentation (May 2023)
29 slides from Western Alliance Bancorporation's investor presentation, May 16, 2023
Slide 1: Investor Update 2Q 2023
INVESTOR UPDATE 2Q 2023
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: Quarter-to-Date Financial Update
Quarter-to-Date Financial Update 3 1 Stable Deposits –WAL’s deposit balances stabilized by March 20 and resumed growth trajectory • QTD deposit growth exceeded $2 billion as of May 12, up from $47.6 billion as of March 31 2 Balance Sheet Repositioning On Track – Imminent completion of ~50% in sales
Slide 4: Priorities and Goals
Priorities and Goals 4 1 Reduce reliance on non-core funding – Lower FHLB borrowings to more normal level & repay BTFP 2 Loan/Deposit ratio to the mid-80s through increased focus on cultivating full banking relationships 3 Maintain high insured deposit mix through reciprocal products 6 Organic balan
Slide 5: Western Alliance Bancorporation Overview
Note: Financial data as of March 31, 2023 1) Market data as of May 15, 2023. 2) Refer to slide 2 for further discussion of Non-GAAP financial measures. 3) Nonperforming assets includes nonaccrual loans and repossessed assets. 5 Western Alliance Bancorporation Overview Summary The Bank for All Season
Slide 6: 1st Quarter 2023 Financial Highlights
1st Quarter 2023 | Financial Highlights Earnings & Profitability 1Q23 4Q22 Q1-22 EPS / Adjusted1 $1.28 / $2.30 $2.67 $2.22 Net Income / Adjusted1 $142.2 / $251.9 $293.0 $240.1 Net Revenue / Adjusted1 $551.9 / $712.2 $701.2 $555.8 Pre-Provision Net Revenue1 $351.6 $367.9 $306.9 Net Interest Margin 3.
Slide 7: WAL actively adapts business and capital allocation in response to changing external environment
7 WAL actively adapts business and capital allocation in response to changing external environment Note: Illustrative as business objectives are not mutually exclusive and image does not represent full suite of WAL divisions, products and services. Capital Call Lines Residential Mortgages Geographic
Slide 8: Balance Sheet Repositioning Plan
Balance Sheet Repositioning Plan 8 Balance sheet repositioning, which included surgical sale of assets and Loan HFS reclassifications, resulted in net non- operating charges of $110 million, but will have an immediate accretive impact to regulatory capital and allow us to prioritize core client rela
Slide 9: CET1 Ratio Build and 2Q23 Target
9 • Strong organic capital generation drove net CET1 increase in 1Q23 and allowed us to raise liquidity through other B/S actions • HFS reclassification in 1Q23 optimizes RWA and positions for stronger capital build going forward through asset sales (with a material amount under contract) • HFS loan
Slide 10: Strong Earnings & Capital
10 • 1Q23 Adjusted ROAA of 1.43% vs. 1.67% for 4Q22 and 1.64% ROAA for 1Q22 • WAL is top decile in ROAA • 1Q23 CET1 of 9.4% and ~9.7% as of April 30th • Adj. CET1 (inclusive of AOCI and HTM unrealized marks) increased to ~8.1% in 1Q23 from ~7.9% in 4Q22 • WAL is at median for Adj. CET1 Highlights 1)
Slide 11: Focused Efforts to Drive Increased Deposit Liquidity
JPM BAC WFC USB TFC PNC CFG FCNC.A FITB MTB KEY HBAN RF NYCB CMA ZION FHN WBS WAL BPOP EWBC VLY SNV COLB WTFC CADE CFR ONB BOKF PNFP SSB PACW FNBASB UMBF PB HWC BKU CBSH FIBK UBSI OZK TCBI GBCI SFNC FULT ABCB UCBI FHB 45% 50% 55% 60% 65% 70% 75% 80% 85% 40%50%60%70%80%90%100% 11 • WAL prioritizes co
Slide 12: Specialized, High Quality Loan Portfolio
Specialized, High Quality Loan Portfolio 12 Highlights Diversified by product, client-type and geography emphasizing underwriting discipline 33% 9% 21% 4% 33% Residential C&D CRE, NOO CRE, OO C&I 1Q23 Loans HFI by Product Type Warehouse Lending 10% Municipal & Nonprofit 3% Tech & Innovation 5% Other
Slide 13: Asset Quality Outperformance vs Peers
13 • A decade of business transformation has resulted in consistent relative outperformance in asset quality and credit metrics • Asset quality remained strong during height of the pandemic • Improvement / stabilization in non- accruals reflects timely identification and resolution of problem loans
Slide 14: Demonstrated Conservative Credit Culture
Demonstrated Conservative Credit Culture 14 Deliberate business transformation, emphasizing underwriting specialization and diversification strategy, has produced sustained superior asset quality with reduced dispersion in realized credit losses Note: Peers consist of 34 publicly traded banks headqu
Slide 15: Substantial Reserve Levels
15 • WAL remains appropriately reserved, especially when considering credit protection from Credit Linked Notes (CLNs) and historically low loss loan categories • Total Loan ACL / Funded Loans increased to 0.75% in Q1 as a result of heightened economic uncertainty • Total Loan ACL / Funded Loans les
Slide 16: Scalable, Differentiated Deposit Franchise
Note: Borrowings include customer repurchase agreements; Cost of Funds defined as total expense paid on interest bearing liabilities divided by the sum of average interest- bearing liabilities and average non-interest bearing demand deposits. Diversified funding channels provide secular growth trend
Slide 17: Historical Deposit Seasonality Trends
17 Daily Deposit Trends (1/4/21 – 2/28/23) • Intra-month deposit trends reflect typical cyclicality in escrow deposit flows and mortgage warehouse disbursements (principal & interest and tax & insurance payments) • Prioritizing growth in tax & insurance accounts in Mortgage Warehouse to dampen intra
Slide 18: Leading Efficiency Produces Strong Op. Leverage
Leading Efficiency Produces Strong Op. Leverage 18 • Continued focus on expense management, while investing in growth initiatives and scalable infrastructure to become a leading nationwide banking platform • Efficiency ratio1 increased to 62.1% year-to- date compared to 2022 • Higher efficiency rati
Slide 19: Significant Available Liquidity
Significant Available Liquidity Significant Access to Liquidity & Funding Capacity 19 • Repaid all borrowings from Federal Reserve discount window by 3/31 • Higher advance rates at FRB’s discount window available, if necessary • Ample access to contingent liquidity (as of 5/12) • On-Balance Sheet Ca
Slide 20: Industry-Leading Profitability
ROAA Industry-Leading Profitability 20 • Outstanding performance compared to peers with ROAA and ROATCE among highest in industry • Net Interest Income continues to rise through strong earning asset growth • Net Interest Income increased $161 million, or 7.3%, from 2022 due to the rising rate enviro
Slide 21: Shareholder-Focused Capital Management
427% 482% 102% 135% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 MRQ Note: Peers consist of 34 publicly traded banks headquartered in the U.S. with total assets between $25B and $150B as of March 31, 2023 Source: S&P Global Market Intelligence. 1) MRQ is 1Q23 for WAL and most peers and 4Q22 for
Slide 22: Appendix
VAN Western Alliance Bancorporation® Appendix
Slide 23: Top Banks by Assets - CET1 & ROAA
23 Top 50 Banks by Assets - CET1 & ROAA Rank Name CET1 Adj. for AOCI & HTM CET1 Avg. ROAA 1 JPMorgan Chase & Co. 11.4% 13.8% 1.11% 2 First Citizens BancShares, Inc. 11.3% 12.5% 6.64% 3 United Bankshares, Inc. 11.3% 12.5% 1.36% 4 East West Bancorp, Inc. 10.9% 13.1% 1.90% 5 Bank OZK 10.8% 11.2% 2.25%
Slide 24: Focused Efforts to Drive Increased Deposit Liquidity
Focused Efforts to Drive Increased Deposit Liquidity 24 Deposit-led growth driving loan-to-deposit ratio to mid-80s poised to lift WAL from top-quintile for largest banks to top-10 Note: Deposit % as of March 31, 2023, except for WAL, which is as of May 12, 2023. Deposit insurance includes direct, c
Slide 25: WAL's Thoughtful Evolution
WAL’s Thoughtful Evolution 25 Deliberate evolution from a Nevada-focused community bank to a national commercial bank Nevada Community Bank (1994 – 2002) Regional Bank with a National Reach (2010 – 2017) 1994 Founded as Bank West of Nevada 2003 Opened de novo Torrey Pines Bank in SoCal 2005 IPO 2015
Slide 26: Deliberate business transformation emphasizes underwriting specialization
26 • Deliberate, decade-long business transformation strategy • Nearly 70% of GFC losses from 4Q09 to 4Q12 came from categories comprising 44% of portfolio at 4Q09, which today makes up <6% of loans • Losses concentrated in Nevada and consumer lending during GFC • Since year-end 2013, cumulative NCO
Slide 27: Branch-Lite, National Commercial Bank
Branch-Lite, National Commercial Bank 27 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 WAL’s branch network represented by m
Slide 28: Commercial Real Estate Statistics
Commercial Real Estate Statistics 28 ($B) 3/31/23 Special Mention % Sub-Std % Hotel $4.3 ($3.9 – CRE Inv.) 0.2% 4.9% Office $2.5 (~$2.4 – CRE Inv.) 2.6% 1.5% CRE ($11.2 Billion; 25% of Total Loans) Asset Quality Office ($2.5 Billion; 5% of Total Loans) • Primarily shorter-term bridge loans for repos
Slide 29: Western Alliance Bancorporation
VAN Western Alliance Bancorporation®
Western Alliance Bancorporation — Investor Presentation (May 2023) on 6ix