Western Alliance Bancorporation · NYSE:WAL
Western Alliance Bancorporation — Q2 2010 Earnings Presentation
23 slides from Western Alliance Bancorporation's earnings presentation, Jul 22, 2010
Slide 1: 2nd Quarter 2010 Earnings Conference Call
Robert Sarver Chairman & CEO Ken Vecchione President & COO Dale Gibbons Executive Vice President & CFO 2ndQuarter 2010 Earnings Conference Call Western Alliance Bancorporation July 23, 2010 Exhibit 99.2
Slide 2: 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. The forward-looking statements contained herein reflect our cur
Slide 3: Achieving Strategic Initiatives
Achieving Strategic Initiatives Focus on core banking operations Partners First Letter of Intent signed July 14, 2010 Reduce Non-Performing Assets Non-accrual loans continue to decline since September 2009 Delinquency improvement since year end Increase Market Share Loan growth of $71 million, sixth
Slide 4: 2nd Qtr 2010 Financial Highlights
2 nd Qtr 2010 Financial Highlights Increase pre-tax, pre-credit income* Up 19% or $3.6 million to $22.7 million from 1stquarterFourth consecutive quarterly increase Net interest income: $57.5 million$2.7 million or 5% increase over Q1 performance Interest margin of 4.16% Net income of $1.2 million $
Slide 5: 2nd Qtr 2010 Financial Highlights (cont'd.)
2 nd Qtr 2010 Financial Highlights (cont’d.) $40 million total deposit growth in 2ndquarter$838 million total deposit growth since June 2009 o$71 million total loan growth in 2ndquarter$101 million total loan growth since June 2009 Asset quality metrics from 1stquarter mostly improved Non-accrual lo
Slide 6: Strong Pre-Tax, Pre Credit Income Growth
Strong Pre-Tax, Pre Credit Income Growth (in thousands) Q2-2009 Q3-2009 Q4-2009 Q1-2010 Q2-2010 Net Interest Income 50,801 48,970 51,788 54,718 57,456 Non-Interest Income* 6,703 7,458 7,724 6,213 6,502 Non-Interest Expense* 46,199 42,589 42,144 41,857 41,268 Pre-Tax, Pre-Credit Income $11,305 $13,83
Slide 7: Consecutive Profitable Quarters
Consecutive Profitable Quarters Four banks profitable in 2nd quarter Two banks profitable for two consecutive quarters Continued volatility in OREO and other asset valuation Lower provision expense: $5.6 million less than 1stqtr Charge offs increased marginally: $1.2 million over 1stquarter (from $2
Slide 8: Net-Interest Margin
Net-Interest Margin 1.57% 1.07%0.90% 4.12% 4.17% 4.16% 5.69% 5.24% 5.06% 0.50% 1.50% 2.50% 3.50% 4.50% 5.50% 6.50% Q2-09Q3-09Q4-09 Q1-10 Q2-10 Cost of Funding Earning Assets Net Int Margin* Yield on Int Earning Assets Reduced Cost of Funds Interest expense dropped $1.5 million from 1 st qtr Redeemed
Slide 9: Non-Interest Income
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Q2-09 Q3-09Q4-09 Q1-10 Q2-10 Trust and investment advisory services Service charges Operating lease income Bank owned life insurance Other income* Non-Interest Income Service charge revenue increased by $122k or 5.5% in 2ndqtr Trust and advisor
Slide 10: Controlling Operating Expenses
Controlling Operating Expenses 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Salaries & benefits Occupancy Legal, professional & director's fees Marketing & customer service Insurance Data processing Other expenses* $41,857(in millions) $41,268$
Slide 11: Strong, Stable Deposit Growth
Strong, Stable Deposit Growth 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 Q2-09 Q3-09 Q4-09 Q1-10Q2-10 Non-Int Bearing DDA MMDA and Savings NOWCDs* 25.4%25.4%25.4% (in millions) 29% 39% 7% 25% $4,392 * Includes brokered and CDARS deposits. 28% 35% 12% 25% $5,230 Total deposits
Slide 12: Loan Portfolio Composition
Slide: 12 Title: Loan Portfolio Composition $71 million loan growth in 2nd qtr with steady improvement in portfolio composition Owner-occupied commercial real estate and commercial loans increasing Construction & land loans decreasing (in millions) 41,233 $4,080 $3,968 $4,059 (Gp:) $4,130 (Gp:) 20%
Slide 13: Composition of Liquid Assets
Composition of Liquid Assets (in millions) Liquid Assets Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Cash and Due From Banks 548.6 752.9 393.3 827.6 560.6 Fed Funds Sold 20.3 5.0 3.5 2.4 - Money Market Cash Account 167.7 77.5 75.1 35.3 - Non-Pledged Marketable Securities 25.8 88.3 281.3 313.6 434.8 Total Liquid A
Slide 14: Capital Position Remains Strong
Capital Position Remains Strong (in millions) Q2-2009 Q1-2010 Q2-2010 Tangible Common Equity $441.7 $404.5 $404.9 Tier I Capital $613.0 $547.9 $546.5 Total Risk Based Capital $731.3 $665.8 $605.3 Ratios: Q2-2009 Q1-2010 Q2-2010 Tangible Common Equity 7.82% 6.68% 6.84% Tier I Leverage 11.49% 9.53% 9.
Slide 15: Recent Asset Quality Trends
Recent Asset Quality Trends 3.00% 3.68% 2.53%2.09% 2.66% 2.66% 2.0% 2.5% 3.0% 3.5% 4.0% Q2-09 Q3-09 Q4-09Q1-10Q2-10 Net Charge Offs/Total Loans Reserve/Total Loans 59.4% 68.4% 74.0% 69.9% 63.58% 55% 60% 65% 70% 75% 80% Q2-09Q3-09Q4-09 Q1-10 Q2-10 Classified Assets/ ALLL + Tie r 1 Capital Charge-Offs
Slide 16: National Real Estate Values
National Real Estate Values100125150 175 200 Dec-00 May-01 Oct-01 Mar-02 Aug-02 Jan-03 Jun-03 Nov-03 Apr-04 Sep-04 Feb-05 Jul-05 Dec-05 May-06 Oct-06 Mar-07Aug-07 Jan-08 Jun-08 Nov-08 Apr-09 Sep-09 Feb-10 Change in Value to 12/31/00 Par Commerical -Moody's REAL CPPI Residential -S&P/Case-Shiller *S&
Slide 17: Charge-Offs by Vintage & Loan Type
Charge-Offs by Vintage & Loan Type - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Construction & Land Residential RE CRE, Non-Owner Occupied CRE, Owner Occupied Commercial Consumer Cumulative Charge-Offs Jan 2000
Slide 18: Loan Composition by Year of Origination
Loan Composition by Year of Origination20% 80% Loan Portfolio as of 12/31/2007 Originated Before 2005 Originated in "Bubble Years" (2005-2007) $2.9 Billion 11% 41% 48% Loan Portfolio as of 6/30/2010 Originated Before 2005Originated in "Bubble Years" (2005-2007) Originated After 2007$1.7 Billion Tota
Slide 19: "Bubble Years" Loan Reductions
“Bubble Years” Loan Reductions 76% 10% 14% Composition of “Bubble Years” Loan Reductions New Funding/Payment Repossessed Charged Off •$1.2 billion in reductions between 12/31/07 and 6/30/10 for loans originated during 2005 and 2007 •$169 million charged off •$122 million repossessed •$919 million in
Slide 20: Composition of Remaining "Bubble Years" Loans
Composition of Remaining “Bubble Years” Loans Breakdown by Type Breakdown by Rating Total Bubble Years Loans $1.7 Billion 2% 14% 12% 18% 8% 11% 0.53% 20% 35% $1.3 Billion 79% 9% Commercial Construction & Land Consumer CRE, Non-Owner Occupied CRE Residential Pass Watch Substandard Doubtful Pg. 20
Slide 21: 2nd Quarter OREO Valuation
2 nd Quarter OREO Valuation 13% 54% 33% New OREO Added During 2Q-10 OREO Appraised 2Q-10 OREO To Be Appraised 3Q-10 $103 million in OREO outstanding as of 6/30/10 Valuation adjustments amounted to $12 million (net) during 2ndqtr* Incurred $0.3 million net loss on sale on OREO sold during 2ndqtr Tota
Slide 22: Composition of OREO
Slide: 22 Title: Composition of OREO Breakdown by Type Location by State Total OREO $103 Million Composition of OREO 1.1% 0.8% 5% 71% 1.2% 17% 3% 0.9% Commercial Condo Industrial Land Multi-Family Office 3% 16% 81% Arizona California Nevada Breakdown by Type Location by State Total OREO $103 Million
Slide 23: Strategic Outlook
Strategic Outlook Focus on core banking operations Reduce non-performing assets Increase market share Strengthen risk management Impacts of regulatory changes
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