Western Alliance Bancorporation · NYSE:WAL
Western Alliance Bancorporation — Investor Presentation (February 2024)
24 slides from Western Alliance Bancorporation's investor presentation, Feb 14, 2024
Slide 1: Investor Update 1st Quarter 2024
INVESTOR UPDATE 1st Quarter 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: Western Alliance Bancorporation Overview
Note: Financial data as of December 31, 2023; 1) Market data as of February 12, 2023; 2) Refer to slide 2 for further discussion of Non-GAAP financial measures. 3) Nonperforming assets includes nonaccrual loans and repossessed assets 3 Western Alliance Bancorporation Overview Summary The Bank for Al
Slide 4: 2023 Q4-23 Interest Income $4,035.3 $1,039.0 Interest Expense (1,696.4) (447.3) Net Interest Income $2,338.9)
2023 Q4-23 Interest Income $4,035.3 $1,039.0 Interest Expense (1,696.4) (447.3) Net Interest Income $2,338.9) $591.7 Mortgage Banking Related Income 295.8) 56.9 Fair Value Loss Adjustments, Net (116.0)) 1.3 (Loss) Gain on Sales of Investment Securities, Net (40.8)) (14.8) Other 141.7) 47.1 Non-Inter
Slide 5: WAL's Value Proposition
WAL’s Value Proposition 5 1 Diversified business model – flexibility to sustain sound growth across market cycles 2 Specialized, high quality loan portfolio – deep client segment expertise and underwriting acumen 3 Differentiated deposit franchise – specialized, national channels serving secularly s
Slide 6: WAL's Thoughtful Evolution
WAL’s Thoughtful Evolution 6 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 7: Branch-Lite, National Commercial Bank
Branch-Lite, National Commercial Bank 7 A national commercial bank anchored in attractive regional markets with specialty business lines providing sophisticated sector and product expertise to clients WAL’s branch network represented by major MSAs Physical office location of business development emp
Slide 8: WAL actively adapts business and capital allocation in response to changing external environment
8 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. Treasury Mgmt. SalesGeographic Diversification Regi
Slide 9: Deliberate business transformation strategy
9 • 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 NCOs
Slide 10: Specialized, High Quality Loan Portfolio
Peers1 Median: 9.0% Top Quart.: 14.8% Specialized, High Quality Loan Portfolio 10 Highlights Diversified by product, client-type and geography emphasizing underwriting discipline 30% 10% 19% 4% 38% Resi. & Consumer Const. & Land CRE, NOO CRE, OO C&I Q4 2023 Loans HFI by Product Type Warehouse Lendin
Slide 11: Asset quality and credit metrics outperformance
11 • 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 12: Early Identification and Elevation Credit Strategy
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% Max Average Historical Loan Migration Near Peer Median Reflects “Early Identification and Elevation” Credit Strategy 12 Quarterly Criticized Loans / Gross Loans Q1-14 to Q3-23 Peers consist of 19 major exchange traded US banks with total assets between $50 b
Slide 13: Proactive migration mitigates credit losses
0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% Max Average Proactive migration enhances oversight and mitigates credit losses 13 Annualized Net Charge-Offs Q 1-14 to Q4-23 Peers consist of 19 major exchange traded US banks with total assets between $50 bn and $250 bn as of December 31, 2023. Data include
Slide 14: Conservative, Economically Resilient Portfolio Positioning
14 Specialized underwriting expertise and conservative sector allocations position portfolio to withstand economic uncertainty Conservative, Economically Resilient Portfolio Positioning Insured (21%) • Residential • Early Buyout (“EBO”) Resi. & Other Government-Guaranteed or Cash-Secured Assets • Wa
Slide 15: ACL Supported by Loan Mix and Strong Capital
1) Total Loan ACL includes allowance for unfunded commitments. 2) Ratio includes an allowance for credit losses of $14.7 million as of December 31, 2023 related to a pool of loans covered under 3 separate credit linked notes. 3) Early Buyout Loans are government guaranteed. 4) Loss rates are based o
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: Net Interest Drivers
Total Investments and Yield Interest Bearing Deposits and Cost Loans and HFI Yield Deposits, Borrowings & Cost of Liability Funding Net Interest Drivers 17 • Loan yields decreased 8 bps due to full-quarter impact of the $1.3 billion reclassification of loans from HFS to HFI at the end of Q3 • Yield
Slide 18: Leading Profitability
ROAA Leading Profitability 18 • ROAA and ROATCE have consistently exceeded peers over the last 10 years • Net Interest Income continues to rise through strong earning asset growth • Net Interest Income increased $123 million, or 5.6%, from 2022 due to average earning asset growth and the rising rate
Slide 19: Shareholder-Focused Capital Management
493% 562% 77% 124% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Note: Peers consist of 19 publicly traded banks headquartered in the US with total assets between $50B and $250B, excluding target banks of pending acquisitions, as of December 31, 2023. TSR through December 31, 2023. Source:
Slide 20: Appendix
VAN Western Alliance Bancorporation® Appendix
Slide 21: Superior Deposit Liquidity and Fortified Adjusted Capital
Superior Deposit Liquidity and Fortified Adjusted Capital 21 Excellent Combined Insured/Collateralized Deposits & CET1 Capital Adjusting for AOCI Securities Marks Insured/collateralized deposits for peers from SEC filings or 9/30/23 RC-O data and Collateralized deposits for peers uses YE22 RC-E data
Slide 22: Commercial Real Estate Investor Statistics
Commercial Real Estate Investor Statistics 22 CRE Investor Portfolio ($9.6 Billion; 19% of Total Loans) Distribution by LTV Underwriting Criteria and Mitigating Factors 23% 25% 29% 14% 4% 5% <=40% 41-50% 51-60% 61-70% 71-80% >80% • Low LTV & LTC (50% to low 60%) range underwriting in areas minimizes
Slide 23: Commercial Real Estate Investor: Office
Commercial Real Estate Investor: Office 23 Distribution by LTV Underwriting Criteria and Mitigating Factors • Primarily shorter-term bridge loans for repositioning or redevelopment projects • Strong sponsorship from institutional equity and large regional and national developers • All direct relatio
Slide 24: Western Alliance Bancorporation
VAN Western Alliance Bancorporation®
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