Western Alliance Bancorporation · NYSE:WAL
Western Alliance Bancorporation — Q1 2011 Earnings Presentation
22 slides from Western Alliance Bancorporation's earnings presentation, Apr 25, 2011
Slide 1: 1st Quarter 2011 Earnings Call
Robert Sarver Chairman & CEO Ken Vecchione President & COO Dale Gibbons Executive Vice President & CFO 1st Quarter 2011 Earnings Call Western Alliance Bancorporation (NYSE: WAL) April 25, 2011
Slide 2: Forward-Looking Information
Forward-Looking Information 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. The forward-looking statements cont
Slide 3: 1st Quarter 2011 Highlights
1st Quarter 2011 Highlights Increasing Earning Power Net income of $5.2 million, up from $0.4 million from last year Net interest income of $61.1 million, up $6.4 million or 11.7% from last year Net interest margin of 4.35%, up 0.18% from 4.17% last year Operating expense(1) of $41.8 million, down 0
Slide 4: Key Financial Metrics
Key Financial Metrics (in Millions) (in Millions) (in Millions) (in Millions) Net Interest Income Operating Expense (1) Pre-Tax, Pre-Credit Income(2) Provision Expense Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q1-10 Q2-10 Q3- 10 Q4-10 Q1-11 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 $54.7 $57.5
Slide 5: Continued Pre-Tax, Pre Credit Income Growth
Continued Pre-Tax, Pre Credit Income Growth(1) Pre-tax, pre-credit income growth of 1.0% from Q4-2010; growth of 32.4% since Q1-2010 7th consecutive quarterly increase % of Average Total Assets (in Thousands) Q1-2010 Q2-2010 Q3-2010 Q4-2010 Q1-2011 2.00% 1.80% 1.60% 1.40% 1.20% 1.00% 1.33% 1.50% 1.6
Slide 6: 1st Quarter Net Income Comparison
1st Quarter Net Income Comparison (in Millions) Pre-Tax, Pre-Credit Income (1) Provision for loan and lease losses Income Net of Provision Expense Securities gains/ losses & valuation Repossessed & other asset valuation Merger related expenses Pre-Tax Income Income tax Income from disc. operations N
Slide 7: Net Interest Margin Summary
Net Interest Margin Summary Loan Yield Cost of Funding Net Interest Margin (1 ) Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 6.50% 6.00% 5.50% 5.00% 6.22% 6.31% 6.20% 6.18% 6.16% Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 1.10% 1.00% 0.90% 0.80% 0.70% 0.60% 0.50% 1.06% 0.90% 0.81% 0.80% 0.77% Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 4.40
Slide 8: Improvement in Efficiency
Improvement in Efficiency(1) 72% 69% 66% 63% 60% Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 68.4% 64.4% 62.4% 62.2% 61.9% Efficiency Ratio Future Opportunities Expense Savings FDIC premium assessment base Legacy asset costs Merger benefits Asset quality improvement Reinvestment: Branch office expansion Business
Slide 9: Loan Portfolio Composition
Loan Portfolio Composition (in Millions) $4,059 14% 22% 14% 30% 18% $4,241 12% 24% 11% 29% 22% $4,278 12% 25% 9% 30% 22% 2% 2% 2% $5,000 $4,000 $3,000 $2,000 $1,000 $0 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Commerical CRE, Non-Owner Occpd CRE, Owner Occupied Residential RE Construction & Land Consumer Contin
Slide 10: Summary of Deposits
Summary of Deposits(1) $5,190 30% 35% 10% 26% $5,338 27% 36% 10% 27% $5,497 26% 38% 9% 26% Total deposits grew by $159 million or 3.0% since Q4-2010 Over $307 million total deposit growth since Q1-2010 Non-interest bearing DDAs: Up $12 million or 0.8% since Q4-2010 Up $106 million or 7.9% since Q1-2
Slide 11: Recent Asset Quality Trends
Recent Asset Quality Trends (in Millions) $866 $678 $659 $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 NPAs Classified Watch Continued improvement in asset quality: NPAs were 3.3% of total assets compared to 3.6% at year end and 4.2% a year ago Classified loans we
Slide 12: Expanding Gap of Earning Power Over Credit Costs
Expanding Gap of Earning Power Over Credit Costs(1) PTPC Income vs. Provision Expense $25 Million $10 Million Pre-Tax Pre-Credit Income Provision Expense Pre-tax, pre-credit income surpassed provision expense by $15 million in Q1-2011. Third consecutive quarterly surplus. $30.0 $25.0 $20.0 $15.0 $10
Slide 13: Annualized Net Charge-Offs / Average Total Loans
Annualized Net Charge-Offs / Average Total Loans Western Alliance Bancorporation 1.72% 3.60% 2.43% 1.39% Bank of Nevada 1.65% 5.12% 3.82% 2.09% Western Alliance Bank 2.13% 3.00% 1.61% 0.71% Torrey Pines Bank 1.33% 1.97% 0.25% 0.91% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-
Slide 14: Classified Assets / Tier Capital + ALLL
Classified Assets/ Tier 1 Capital + ALLL Western Alliance Bancorporation Total classified assets(1) declined by $25.3 million or 6.9% in Q1-2011 75% 70% 65% 60% 55% 50% 45% 69.9% 63.6% 57.0% 52.2% 48.5% Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Bank of Nevada 96.6% 89.8% 70.0% 64.9% 56.6% Western Alliance Bank
Slide 15: 1st Quarter OREO Valuation
1st Quarter OREO Valuation(1) Total OREO Outstanding: $97.2 Million as of 3/31/11 (in Millions) Reconciliation of OREO OREO at 12/31/10 $106.6 Q1-2011 Changes: Additions to OREO 11.8 Sales of OREO -13.8 Valuation Adjustments (2) -7.4 OREO at 3/31/11 $97.2 65% 23% 12% New OREO Added During Q1-11 OREO
Slide 16: Composition of OREO
Composition of OREO(1) $1.3 Billion Total OREO Outstanding: $97.2 Million as of 3/31/11 (in Millions) Q1-2011 OREO Sales Valuation prior to sale $16.6 Net proceeds $13.8 Net proceeds as % of valuation 84% Average sales price to 89% valuation since 2009 Current OREO Portfolio Original appraised amoun
Slide 17: Composition of Liquid Assets
Composition of Liquid Assets Liquid Assets Cash and Due From Banks $828 $561 $615 $216 $363 Fed Funds Sold 2 - 1 1 - Non-Pledged Marketable Securities & MMDA 327 440 522 793 699 Total Liquid Assets $1,157 $1,001 $1,139 $1,010 $1,062 Total Assets $6,096 $5,959 $6,179 $6,194 $6,405 Primary Liquidity R
Slide 18: Strong Capital Ratios
Strong Capital Ratios(1) Tier 1 Leverage Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Bank of Nevada 8.5% 8.1% 9.1% 9.2% 9.3% Western Alliance Bank 6.9% 6.8% 8.3% 8.3% 8.7% Torrey Pines Bank 9.8% 9.7% 10.0% 9.5% 9.3% Western Alliance Bancorporation 9.5% 9.1% 10.0% 9.5% 9.6% Tier 1 Common(2) Q1-10 Q2-10 Q3-10 Q4-10
Slide 19: Dividend Capacity by Affiliate
Dividend Capacity by Affiliate (in Millions) Q1-2011 Tier 1 Capital(1) Target Tier 1 Capital Capital Surplus Last 4 Qtr's Net Income Dividend Capacity(2) Bank of Nevada $255.4 $246.4 $8.9 ($22.5) $0 Western Alliance Bank $168.0 $154.6 $13.5 $16.5 $13.5 Torrey Pines Bank $138.7 $119.6 $19.1 $11.2 $11
Slide 20: Performance Focus: Increase Earning Power
Performance Focus: Increase Earning Power Strong capital and ability to redeploy securities into loans to businesses Continuing deployment of excess liquidity Diversifying into municipal bonds Maximizing return on new deposit growth with real-time acquisition of securities Stable/expanding interest
Slide 21: Performance Focus: Improve Asset Quality
Performance Focus: Improve Asset Quality Growing portfolio while reducing risk profile Moving up market and attracting stronger credits Loan grades on new loan relationships exceeds the current portfolio average Growth coming from stronger economic markets Reducing classified assets Incentivizing lo
Slide 22: Performance Focus: Grow Market Share
Performance Focus: Grow Market Share Four consecutive quarters of loan growth Targeting larger higher quality relationships Attracting and recruiting established, high performing business development teams from competitors Five consecutive quarters of deposit growth Leveraging off reduced competitio
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