Western Alliance Bancorporation · NYSE:WAL
Western Alliance Bancorporation — Q3 2022 Earnings Presentation
21 slides from Western Alliance Bancorporation's earnings presentation, Oct 21, 2022
Slide 1: Earnings Call 3rd Quarter 2022
EARNINGS CALL 3rd Quarter 2022 OCTOBER 21, 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: 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 4: Quarterly Income Statement
Q3 2022 Highlights Quarterly Income Statement Net Interest Income increased $77.1 million, primarily Q3-22 Q2-22 Q3-21 1 from strong loan growth and expanding NIM Interest Income $739.4 $579.6 $442.8 (137.3) (54.6) (32.4) Non-Interest Income decreased $33.2 million, driven by Interest Expense 2 the
Slide 5: Net Interest Drivers
Q3 2022 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 due to a 3.66% 4.84% 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
Slide 6: Net Interest Income
Q3 2022 Highlights Net Interest Income Net Interest Income and Net Interest Margin Average Earning Assets & Average Yield • Net Interest Income increased $77.1 million, or 14.7%, over prior quarter Dollars in millions $602.1 Dollars in billions primarily due to strong loan growth and 4.62% the incre
Slide 7: Net Interest Income in a Rising Rate Environment
Q3 2022 Highlights Net Interest Income in a Rising Rate Environment • WAL expects a 6.0% increase in NII under a NII Sensitivity – Shock Scenario, +100 bps 100 bps rate shock on a static balance sheet Static Balance Sheet • 53% of loans (ex-HFS) are contractually variable Growth Balance Sheet 1 ($27
Slide 8: Expenses and Efficiency
Q3 2022 Highlights Expenses and Efficiency1 Non-Interest Expenses and Efficiency Ratio Breakdown of Non-Interest Expenses • Efficiency ratio1 increased 270 bps to 45.5% compared to the prior quarter and 350 bps from the same period last year 45.5% 44.1% 42.0% 41.8% 42.8% • Higher efficiency ratio1 w
Slide 9: Pre-Provision Net Revenue, Net Income, and ROA
Q3 2022 Highlights Pre-Provision Net Revenue1, Net Income, and ROA • PPNR1 increased $7.0 million from the PPNR, Net Income & ROA prior quarter and $43.4 million, or 13.8%, from the same period last year 2.43% 2.19% • PPNR ROA1 decreased 11 bps from the 2.23% 2.10% 2.08% prior quarter and 35 bps fro
Slide 10: Consolidated Balance Sheet
Q3 2022 Highlights Consolidated Balance Sheet Q3-22 Q2-22 Q3-21 Loans increased $3.6 billion, or 29.6% 1 annualized, and $15.6 billion, or 44.8% Investments & Cash $10,213 $10,688 $8,614 over prior year2 Loans, HFS 2,204 2,803 6,534 Deposits increased $1.9 billion, or 13.9% Loans HFI, net 52,201 1 4
Slide 11: Five Quarter Loan Growth and Composition
Q3 2022 Highlights Five Quarter Loan Growth and Composition Quarter-over-quarter loan growth of $15.61 Billion Year-Over-Year Growth $3.6 billion driven by (in millions): C&I $1,564 Total Loans, HFI $34.8 $39.1 $41.1 $48.6 $52.2 CRE, Non-OO 893 Qtr. Change +$4.8 +$4.3 +$2.0 +$5.52 +$3.6 Residential
Slide 12: Five Quarter Deposit Growth and Composition
Q3 2022 Highlights Five Quarter Deposit Growth and Composition Quarter-over-quarter deposit growth of $10.3 Billion Year-Over-Year Growth $1.9 billion driven by (in millions): Non-Interest Bearing DDA $1,205 Total Deposits $45.3 $47.6 $52.1 $53.7 $55.6 CDs 533 Qtr. Change +$3.4 +$2.3 +$4.5 +$1.6 +$1
Slide 13: Asset Quality
Q3 2022 Highlights Asset Quality Classified Assets Special Mention Loans • Total Classified Assets of $385 million (56 $385 bps to Total Assets) increased $39 million $365 $346 in Q3 $301 1.05% • Non-Performing Loans + OREO of $265 0.85% 0.85% $284 0.65% 0.60% $101 million (15 bps to Total Assets) $
Slide 14: Credit Losses and ACL Ratios
Q3 2022 Highlights Credit Losses and ACL Ratios Allowance for Credit Losses Gross Charge-offs and Recoveries • Provision expense of $28.5 million, driven by loan growth and changes in economic $4 Gross Charge Offs $3 $52 environment $3 Recoveries $5 $54 $5 $37 $43 $32 $3.9 • Total Loan ACL / Funded
Slide 15: 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 16: Demonstrated Conservative Credit Culture
Highlights Demonstrated Conservative Credit Culture Net Charge-Offs / Average Loans Non-Accrual Loans / Loans • A decade of business transformation has 0.23% resulted in consistent relative 1.11% 0.21% outperformance in asset quality and credit 0.17% 0.16% 0.16% 0.18% metrics 0.14% 0.77% 0.71% 0.67%
Slide 17: Consistently Strong Earnings Trajectory
Highlights Consistently Strong Earnings Trajectory WAL’s excess, risk-adjusted earnings growth normalized for historical volatility Profitability Leadership Maintained via Business Diversification Net Income Growth 10-Year Excess 10-Year Excess • WAL’s risk-adjusted net income growth has Bank Risk-A
Slide 18: Capital Accumulation
Q3 2022 Highlights Capital Accumulation Robust Common Capital Levels Regulatory Capital Levels • Continue to exceed “well-capitalized” levels 8.7% 9.1% 9.0% 9.0% • CET1 at 8.7% 8.7% 6.9% 7.3% 6.7% 6.1% 5.9% Tangible Common Equity / Tangible Assets1 • TCE / TA decreased (20) bps from the prior quarte
Slide 19: Tangible Book Value Growth
Q3 2022 Highlights Tangible Book Value Growth Long-Term Growth in TBV per Share1 Tangible Book Value per Share1 WAL • TBVPS increased $0.49 to $37.16 from prior 417% quarter WAL with Dividends Added Back Peer Avg • Increased 7.2% year-over-year Peer Avg with Dividends Added Back 372% • Increased 1.3
Slide 20: Management Outlook
Management Outlook Balance Sheet Growth Capital and Liquidity Net Interest Income Net Interest Margin Pre-Provision Net Revenue 20
Slide 21: Questions & Answers
ee M\VAN | Nes Wester Alliance Questions & Answers
Western Alliance Bancorporation — Q3 2022 Earnings Presentation on 6ix