Western Alliance Bancorporation · NYSE:WAL
Western Alliance Bancorporation — Q3 2024 Earnings Presentation
22 slides from Western Alliance Bancorporation's earnings presentation, Oct 18, 2024
Slide 1: Earnings Call 3rd Quarter 2024
Q2 20241 EARNINGS CALL 3rd Quarter 2024 October 18, 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: Q3 2024 Financial Highlights
Q3 2024 Highlights 3rd Quarter 2024 | Financial Highlights Net Income EPS Earnings & Profitability Q3 2024 Q2 2024 Q3 2023 Earnings per Share $ 1.80 $ 1.75 $ 1.97 $199.8 million $1.80 Net Income 199.8 193.6 216.6 Net Revenue 823.1 771.8 716.2 Pre-Provision Net Revenue1 285.7 285.0 290.0 PPNR1 ROTCE1
Slide 4: Quarterly Income Statement
Q3 2024 Highlights Quarterly Income Statement Q3-24 Q2-24 Q3-23 Interest Income $ 1,200.0 $ 1,147.5 $ 1,026.6 1 Net Interest Income increased $40.3 million primarily Interest Expense (503.1) (490.9) (439.6) from higher average earning asset balances Net Interest Income $ 696.9 1 $ 656.6 $ 587.0 Non-
Slide 5: Consolidated Balance Sheet
Q3 2024 Highlights Consolidated Balance Sheet Q3-24 Q2-24 Q3-23 Securities and Cash decreased $2.4 billion, or Securities and Cash $ 18,974 1 $ 21,345 $ 14,701 1 11.1%, to $19.0 billion and increased $4.3 billion, or Loans, HFS 2,327 2,007 1,766 29.1%, over prior year Loans, HFI 53,346 2 52,430 49,4
Slide 6: Loan Composition
Q3 2024 Highlights Loan Composition Diversified loan growth from Regional Banking and Mortgage Warehouse Quarter-over-quarter loan increase of $3.9 Billion Year-over-Year Growth $916 million driven by (in millions): C&I $861 Total Loans, HFI $49.4 $50.3 $50.7 $52.4 $53.3 CRE, Non-OO 154 Qtr Change +
Slide 7: Deposit Composition
Q3 2024 Highlights Deposit Composition Continued market share gains in Mortgage Warehouse and Consumer Digital Quarter-over-quarter deposit growth of $1.8 $13.8 Billion Year-over-Year Growth billion as follows (in millions): Non-Interest Bearing $3,443 Total Deposits $54.3 $55.3 $62.2 $66.2 $68.0 Sa
Slide 8: Net Interest Drivers
Q3 2024 Highlights Net Interest Drivers Spot Rate Spot Rate Securities Portfolio and Yield 4.86% Loans and HFI Yield 6.46% • Securities Portfolio yields increased 2 bps, primarily due to mix shift 6.73% 6.65% 6.77% 6.79% 6.65% 4.91% 4.99% 4.87% 4.89% 4.66% $2.3 • Loan yields decreased 14 bps due to
Slide 9: Net Interest Income
Q3 2024 Highlights Net Interest Income Net Interest Income and Net Interest Margin Average Earning Assets & Average Yield • Net Interest Income increased $40.3 million, or 6.1%, primarily due to a higher average earning asset Dollars in millions Dollars in billions balance 6.37% 6.37% 6.29% 6.30% 6.
Slide 10: Interest Rate Sensitivity
Q3 2024 Highlights Interest Rate Sensitivity NII Sensitivity - Ramp Scenario, 12 Mo. Balance Sheet1 • Simulation assesses impact from a ramp scenario in market interest rates based on a dynamic balance sheet 2.0% • WAL estimates a -100 bps ramp scenario to reduce NII by (1.8%) • EaR is liability sen
Slide 11: Non-Interest Expenses and Efficiency
Q3 2024 Highlights Non-Interest Expenses and Efficiency Non-Interest Expenses and Efficiency Ratio 1 Breakdown of Non-Interest Expenses • Adjusted efficiency ratio1 (excluding deposit costs) increased 120 bps to 52.7%, driven 66.8% primarily by an increase in deposit costs 65.2% 64.5% 62.3% 58.8% •
Slide 12: Asset Quality
Q3 2024 Highlights Asset Quality Special Mention Loans Asset Quality Ratios • Criticized Assets increased $60 million quarterly to $1.34 billion and increased $33 million over prior year 1.35% 1.27% 1.01% 0.94% • Special Mention Loans decreased $30 million to 0.78% 1.01% 1.05% 0.90% 0.95% 0.93% $502
Slide 13: Credit Losses and ACL Ratios
Q3 2024 Highlights Credit Losses and ACL Ratios Allowance for Credit Losses Gross Loan Charge-offs and Recoveries • Provision Expense of $33.6 million, primarily reflective of net charge-offs and loan growth Gross Charge-Offs Recoveries $10 • Net Loan Charge-Offs of $26.6 million, 20 bps, $10 $11 $9
Slide 14: Key Reserve Level Ratios
Q3 2024 Highlights Key Reserve Level Ratios • WAL remains appropriately reserved Reserve levels enhanced by credit protection and low loss loan categories • Total Loan ACL / Funded Loans of 0.74% Adjusted Total Loan ACL / Funded Loans: Q3-24 • CLNs offer credit protection from first losses on covere
Slide 15: Capital Accumulation
Q3 2024 Highlights Capital Accumulation Common Capital Levels Regulatory Capital Levels 11.0% 11.0% 11.2% • Continue to exceed “well-capitalized” levels with 10.8% 10.6% CET1 of 11.2% Tangible Common Equity / Tangible Assets1 7.3% 7.2% • TCE / TA increased 50 bps to 7.2% due to AOCI 6.8% 6.8% 6.7% r
Slide 16: Tangible Book Value Growth
Q3 2024 Highlights Tangible Book Value Growth Long-Term Growth in TBV per Share1 Tangible Book Value per Share1 7x WAL • TBVPS increased $3.19 to $51.98 from organic 642% WAL with Dividends Added Back earnings Peer Median 6x 559% • Increased 6.5% quarter-over-quarter, non- Peer Median with Dividends
Slide 17: Management Outlook
Management Outlook FY2024 Q4 2024 QoQ Baseline Commentary Outlook Outlook Loans (HFI): $50.3 bn L (HFI): +$1.25 bn L (HFI): +$4.5 bn • Q4 seasonal decline in property tax & Balance Sheet Growth Deposits: $55.3 bn insurance escrows for Mortgage (YE 2023) D: +$11.0 bn D: $(2.0) bn Warehouse clients 10
Slide 18: Questions & Answers
Questions & Answers
Slide 19: Appendix
NVA Western Alliance Bancorporation® Appendix
Slide 20: Fortified Adjusted Capital
Fortified Adjusted Capital CET1 capital adjusted for AOCI securities marks & reserves remains solidly above peer median levels Adjusted CET1 (incl. of AOCI Unrealized Securities Marks & Loan Loss Reserves)1 15% 14% 13% 12% Q3 Q2 11.1% 10.6% 11.1%: 75th pctl 11% 10.0%: Median 10% 9.2%: 25th pctl 9% 8
Slide 21: Commercial Real Estate Investor Statistics
Commercial Real Estate Investor Statistics $9.8 billion; 18% of Total Loans Underwriting Criteria and Mitigating Factors CRE Investor Portfolio (At Origination or Most Recent Appraisal) • Low LTV & LTC (50% to low 60%) range underwriting in areas 64% minimizes tail risk 61% 57% 57% • Simple capital
Slide 22: Commercial Real Estate Investor: Office
Commercial Real Estate Investor: Office $2.4 Billion; 24% of Total CRE Investor; 5% of Total Loans Distribution by LTV (At Origination or Most Recent Appraisal) Underwriting Criteria and Mitigating Factors 37% • Primarily shorter-term bridge loans for repositioning or redevelopment projects • Strong
Western Alliance Bancorporation Common Stock (DE) — Q3 2024 Earnings Presentation on 6ix