Western Alliance Bancorporation · NYSE:WAL
Western Alliance Bancorporation — Q2 2019 Earnings Presentation
18 slides from Western Alliance Bancorporation's earnings presentation, Jul 18, 2019
Slide 1: Earnings Call 2nd Quarter 2019
EARNINGS CALL 2nd QUARTER 2019 July 19, 2019
Slide 2: 2nd Quarter 2019 Financial Highlights
2nd Quarter 2019 | Financial Highlights Earnings • Record net income of $122.9 million increased 17.4% from $104.7 million a year ago ◦ Earnings per share growth of 20.2% to $1.19 from $0.99 per share Balance Sheet Growth • Total loans of $19.3 billion, up $1.1 billion from prior quarter, or 25.0% a
Slide 3: Quarterly Consolidated Financial Results
Quarterly Consolidated Financial Results $ in millions, except EPS Q2 2019 Highlights Q2-19 Q1-19 Q2-18 Interest Income $ 302.8 $ 291.2 $ 251.6 • Net Interest Income increased Interest Expense (48.2) (43.8) (27.5) $7.3 million primarily as a result of loan growth outweighing Net Interest Income $ 25
Slide 4: Net Interest Drivers
Net Interest Drivers1 $ in billions, unless otherwise indicated Total Investments and Yield Loans and Yield Q2 2019 Highlights • Flattening yield curve reduced 6.02% 5.98% 5.83% 5.86% 5.92% investment portfolio yields and 3.47% 3.46% 3.34% 3.24% 3.21% incremental loan yield on new business $19.3 $16
Slide 5: Net Interest Income
Net Interest Income $ in millions Net Interest Income, NIM1, and Q2 2019 Highlights Average Interest Earning Assets • NIM decreased 12 basis points to 4.59%, QOQ • 32% total earning assets beta and 64% total funding $254.7 cost beta, YOY $243.5 $247.3 $234.0 • Non-PCI accretion of $3.0 million due t
Slide 6: Interest Rate Environment
Interest Rate Environment Percentage Increase/(Decrease) to Net Interest Income Q2 2019 Highlights Down 100bps • Flattening yield curve and decline in LIBOR Scenario contributed to 6 basis points of NIM compression Steepening2 as 32% of earnings assets float with 1-month Shock Ramp1 Short-End Down L
Slide 7: Operating Expenses and Efficiency
Operating Expenses and Efficiency $ in millions Operating Expenses and Efficiency Ratio Q2 2019 Highlights • The operating efficiency ratio improved 40 basis points to 42.0% compared to the prior quarter as revenue growth outpaced expense growth, 42.4% 42.1% 42.0% and improved 10 basis points over t
Slide 8: Operating Pre-Provision Net Revenue, Net Income, and ROA
Operating Pre-Provision Net Revenue, Net Income, and ROA1 $ in millions Q2 2019 Highlights • Return on assets decreased 7 basis point from the prior quarter 2.63% 2.62% 2.62% 2.58% 2.54% and increased 3 basis points from Q2-18 2.11% 2.12% 2.02% 2.05% 2.05% • Operating PPNR ROA decreased 4 basis poin
Slide 9: Consolidated Balance Sheet
Consolidated Balance Sheet $ in millions Q2-19 Q1-19 Q2-18 Q2 2019 Highlights Investments & Cash $ 4,938 $ 4,525 $ 4,196 • Loans increased $1.1 billion (6.3%) Loans 19,250 18,117 16,138 over prior quarter and $3.1 billion Allowance for Credit Losses (160) (155) (147) (19.3%) over prior year Other As
Slide 10: Five Quarter Loan Growth and Portfolio Composition
Five Quarter Loan Growth and Portfolio Composition $ in billions, unless otherwise indicated $3.1 Billion Year Over Year Growth Highlights $16.1 $16.7 $17.7 $18.1 $19.3 Quarter-over-quarter loan growth of +$0.6 +$0.6 +$1.0 +$0.4 +$1.1 $1.1 billion driven by (in millions): C&I $ 730 CRE, Non-OO 381 $
Slide 11: Five Quarter Deposit Growth and Composition
Five Quarter Deposit Growth and Composition $ in billions, unless otherwise indicated $3.4 Billion Year Over Year Growth Highlights $18.1 $18.9 $19.2 $20.2 $21.4 Quarter-over-quarter deposit growth +$0.7 +$0.8 +$0.3 +$1.0 +$1.2 of $1.2 billion driven by all deposit types (in millions): Non-Interest
Slide 12: Adversely Graded Loans and Non-Performing Assets
Adversely Graded Loans and Non-Performing Assets1 $ in millions Asset Quality Ratios $399 $368 $358 $358 $316 $150 $124 $134 $198 Adversely $89 Graded Loans 1.83% 1.70% 1.57% 1.64% 1.43% $156 $177 $181 $162 $131 $34 0.29% 0.26% 0.26% 0.27% NPAs $37 $28 $44 $52 0.20% $28 $20 $18 $18 $18 Q2-18 Q3-18 Q
Slide 13: Charge-Offs, Recoveries, ALLL, and Provision
Charge-Offs, Recoveries, ALLL, and Provision $ in millions Gross Charge-Offs and Recoveries ALLL and ALLL to Organic Loans Ratio $160 $147 $150 $153 $155 $3.9 $4.8 $4.1 $2.3 $2.6 0.99% 0.97% 0.92% $(1.3) $(1.7) $(0.8) $(1.1) $(1.0) 0.90% 0.87% Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q2-18 Q3-18 Q4-18 Q1-19 Q2
Slide 14: Superior Capital Growth, Robust Capital Levels
Superior Capital Growth Robust Capital Levels Growth in TBV per Share 213% 11.3% 10.8% 10.6% 10.2% 8.8% 8.9% 8.5% 67% 54% 7.4% 2013 2014 2015 2016 2017 2018 MRQ 1 Q4-13 Q4-14 Q4-15 Q4-16 Q4-17 Q4-18 Q1-19 Q2-19 CET1 Peer CET1 WAL Peer Avg with Dividends Added Back TCE Peer TCE Peer Avg 14 Note: Peer
Slide 15: Capital Allocation
Capital Allocation Strong capital creation allows for a proactive capital allocation plan Total Risk Based Capital Ratio: Q2 2019 Highlights Impacts Quarter over Quarter • Total risk based capital and CET1 remain robust at 12.9% and 10.6%, respectively • Repurchased 792,688 shares at an average pric
Slide 16: Management Outlook
Management Outlook • Loan and Deposit Growth ◦ Estimate $600 million in loan growth and $600 million in deposit growth per quarter ◦ Mix shift from Construction to Residential loans • Interest Margin ◦ NIM compression from loan mix shift and lower rate environment, offset by balance sheet growth dri
Slide 17: Questions and Answers
WA Western Alliance Bancorporation” Questions and Answers 17
Slide 18: 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 stateme
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