Western Alliance Bancorporation (NYSE:WAL):
SECOND QUARTER 2023 FINANCIAL RESULTS
Quarter Highlights:
Net income
Earnings per share
PPNR1
Net interest margin
Efficiency
ratio1
Book value per
common share
$215.7 million
$1.96
$282.1 million
3.42%
50.5%
$49.22
$43.091, excluding
goodwill and intangibles
CEO COMMENTARY:
“Western Alliance continued to
successfully execute its balance sheet repositioning strategy and
return to normal business operations by bolstering liquidity and
capital, sustaining profitability and expanding core client
relationships,” said Kenneth A. Vecchione, President and Chief
Executive Officer. “Quarterly deposit growth of $3.5 billion
lowered our HFI loan-to-deposit ratio to 94%, with total insured
and collateralized deposits representing 81% of deposits and
available liquidity coverage of 276% of uninsured deposits. We
achieved net income of $215.7 million and earnings per share of
$1.96 for the second quarter 2023, which resulted in a return on
tangible common equity1 of 18.2%. Tangible book value per share1
climbed 3.7% quarterly to $43.09, or 17.5% year-over-year, with a
CET1 ratio of 10.1%.”
LINKED-QUARTER BASIS
YEAR-OVER-YEAR
FINANCIAL HIGHLIGHTS:
- Net income of $215.7 million and earnings per share of $1.96,
compared to $142.2 million and $1.28 (or $2.30, as adjusted1),
respectively
- Net income of $215.7 million and earnings per share of $1.96,
down 17.1% and 18.0%, from $260.2 million and $2.39,
respectively
- Net revenue of $669.3 million, an increase of 21.3%, or $117.4
million, compared to an increase in non-interest expenses of 11.4%,
or $39.5 million
- Net revenue of $669.3 million, an increase of 8.0%, or $49.3
million, compared to an increase in non-interest expenses of 44.1%,
or $118.5 million
- Adjusted net revenue1 of $670.2 million, a decrease of $42.0
million
- Adjusted net revenue1 of $670.2 million, an increase of $40.0
million
- Pre-provision net revenue1 of $282.1 million, down $69.5
million from $351.6 million
- Pre-provision net revenue1 of $282.1 million, down $79.2
million from $361.3 million
- Effective tax rate of 17.1%, compared to 23.0%
- Effective tax rate of 17.1%, compared to 19.6%
FINANCIAL POSITION RESULTS:
- HFI loans of $47.9 billion, up $1.4 billion, or 3.1%
- Decrease in HFI loans of $697 million, or 1.4%
- Total deposits of $51.0 billion, up $3.5 billion, or 7.3%
- Decrease in total deposits of $2.7 billion, or 5.0%
- Stockholders' equity of $5.7 billion, up $164 million
- Increase in stockholders' equity of $726 million
LOANS AND ASSET QUALITY:
- Nonperforming assets (nonaccrual loans and repossessed assets)
to total assets of 0.39%, compared to 0.17%
- Nonperforming assets to total assets of 0.39%, compared to
0.15%
- Annualized net loan charge-offs to average loans outstanding of
0.06%, compared to 0.05%
- Annualized net loan charge-offs to average loans outstanding of
0.06%, compared to 0.01%
KEY PERFORMANCE METRICS:
- Net interest margin of 3.42% decreased from 3.79%
- Net interest margin of 3.42% decreased from 3.54%
- Return on average assets and on tangible common equity1 of
1.23% and 18.2%, compared to 0.81% and 12.2%, respectively
- Return on average assets and on tangible common equity1 of
1.23% and 18.2%, compared to 1.62% and 25.6%, respectively
- Return on average assets and tangible common equity1 of 1.23%
and 18.2% compared to 1.43% and 21.9% as adjusted1,
respectively
- Return on average assets and tangible common equity1 of 1.23%
and 18.2% compared to 1.68% and 26.4% as adjusted1,
respectively
- Tangible common equity ratio1 of 7.0%, compared to 6.5%
- Tangible common equity ratio1 of 7.0% increased from 6.1%
- CET 1 ratio of 10.1% increased from 9.4%
- CET 1 ratio of 10.1% increased from 9.0%
- Tangible book value per share1, net of tax, of $43.09, an
increase of 3.7% from $41.56
- Tangible book value per share1, net of tax, of $43.09, an
increase of 17.5% from $36.67
- Adjusted efficiency ratio1 of 50.5%, compared to 43.2%
- Adjusted efficiency ratio1 of 50.5%, compared to 40.4%
1 See reconciliation of Non-GAAP Financial Measures.
Income Statement
Net interest income totaled $550.3 million in the second quarter
2023, a decrease of $59.6 million, or 9.8%, from $609.9 million in
the first quarter 2023, and an increase of $25.3 million, or 4.8%,
compared to the second quarter 2022. The decrease in net interest
income from the first quarter 2023 is due to an increase in average
short-term borrowings, combined with higher interest rates and was
partially offset by higher yields on loans. The increase in net
interest income from the second quarter 2022 was driven by higher
yields on HFI loans, partially offset by an increase in both the
balances and rates of borrowings and deposits.
The Company recorded a provision for credit losses of $21.8
million in the second quarter 2023, an increase of $2.4 million
from $19.4 million in the first quarter 2023, and a decrease of
$5.7 million from $27.5 million in the second quarter 2022. The
increase in the provision for credit losses during the second
quarter 2023 is primarily due to heightened economic uncertainty,
particularly in the commercial real estate market.
The Company’s net interest margin in the second quarter 2023 was
3.42%, a decrease from 3.79% in the first quarter 2023, and a
decrease from 3.54% in the second quarter 2022. An increase in
short-term borrowings and higher rates on these borrowings and on
deposits drove a decrease in net interest margin from the first
quarter 2023, with higher yields on loans partially offsetting this
decrease. The decrease in net interest margin from the second
quarter 2022 was driven by higher average balances and rates on
deposits and borrowings.
Non-interest income was $119.0 million for the second quarter
2023, compared to $(58.0) million for the first quarter 2023, and
$95.0 million for the second quarter 2022. Non-interest income for
the first quarter 2023 was impacted by significant non-operating
losses that were incurred in response to actions undertaken by the
Company to reposition its balance sheet in light of the disruption
in the banking industry caused by recent bank failures. After
adjusting for losses on security sales and fair value adjustments
primarily related to the transfer of $6.0 billion of held for
investment loans to held for sale to further strengthen the
Company's capital and liquidity position, adjusted non-interest
income1 was $102.3 million for the first quarter 2023. Total
non-operating items for the second quarter 2023 were not
significant as losses on security sales of $13.6 million were
offset by fair value gain adjustments of $12.7 million. Also
contributing to the increase in non-interest income for the quarter
was an increase of $30.9 million in net gain on loan origination
and sale activities from higher spreads and volume, partially
offset by a $17.8 million decrease in net loan servicing revenue
due to losses on MSR hedges and lower servicing income. The $24.0
million increase in non-interest income from the second quarter
2022 was driven by a higher net gain on loan origination and sale
activities and gains on fair value adjustments compared to a loss
in the second quarter of 2022, partially offset by lower net loan
servicing revenue and losses from sales of investment
securities.
Net revenue totaled $669.3 million for the second quarter 2023,
compared to $551.9 million and $620.0 million for the first quarter
2023 and second quarter 2022, respectively. After adjusting for
losses on security sales and fair value adjustments, adjusted net
revenue1 was $670.2 million for the second quarter 2023, a decrease
of $42.0 million, compared to $712.2 million for the first quarter
2023, and an increase of $40.0 million, or 6.3%, compared to $630.2
million for the second quarter 2022.
Non-interest expense was $387.4 million for the second quarter
2023, compared to $347.9 million for the first quarter 2023, and
$268.9 million for the second quarter 2022. After adjusting first
quarter 2023 non-interest expense for a net gain on extinguishment
of debt from payoff of credit linked notes of $12.7 million,
adjusted non-interest expense1 was $360.6 million. The increase in
non-interest expense from the first quarter 2023 is due primarily
to higher insurance costs related to elevated insured and brokered
deposit levels. The increase in non-interest expense from the
second quarter 2022 is attributable to an increase in deposit and
insurance costs. The Company’s adjusted efficiency ratio1 was 50.5%
for the second quarter 2023, compared to 43.2% in the first quarter
2023, and 40.4% for the second quarter 2022.
Income tax expense was $44.4 million for the second quarter
2023, compared to $42.4 million for the first quarter 2023, and
$63.4 million for the second quarter 2022.
Net income was $215.7 million for the second quarter 2023, an
increase of $73.5 million from $142.2 million for the first quarter
2023, and a decrease of $44.5 million from $260.2 million for the
second quarter 2022. Earnings per share totaled $1.96 for the
second quarter 2023, compared to $1.28 for the first quarter 2023,
and $2.39 for the second quarter 2022. After adjusting for the
non-operating items noted above, adjusted earnings per share
totaled $2.30 for the first quarter 2023.
The Company views its pre-provision net revenue1 ("PPNR") as a
key metric for assessing the Company’s earnings power, which it
defines as adjusted net revenue1 less adjusted non-interest
expense1. For the second quarter 2023, the Company’s PPNR1 was
$282.1 million, down $69.5 million from $351.6 million in the first
quarter 2023, and down $79.2 million from $361.3 million in the
second quarter 2022.
The Company had 3,336 full-time equivalent employees and 56
offices at June 30, 2023, compared to 3,340 employees and 57
offices at March 31, 2023, and 3,254 employees and 60 offices at
June 30, 2022.
1 See reconciliation of Non-GAAP Financial Measures.
Balance Sheet
HFI loans, net of deferred fees totaled $47.9 billion at June
30, 2023, compared to $46.4 billion at March 31, 2023, and $48.6
billion at June 30, 2022. The increase in HFI loans of $1.4 billion
from the prior quarter was driven by an increase of $1.2 billion in
commercial and industrial and $296 million in CRE non-owner
occupied loans, with approximately half of this increase
attributable to loan transfers from HFS to HFI. The decrease in HFI
loans of $697 million from June 30, 2022 was driven by a $4.1
billion decrease in commercial and industrial loans, resulting from
the transfer of a significant portion of HFI loans to HFS in the
first quarter 2023 as part of the Company's balance sheet
repositioning strategy. This decrease was partially offset by
increases in CRE non-owner occupied and construction and land
development loans of $2.1 billion and $1.2 billion, respectively.
HFS loans totaled $3.2 billion at June 30, 2023, compared to $7.0
billion at March 31, 2023, and $2.8 billion at June 30, 2022. The
decrease of $3.9 billion in HFS loans from the prior quarter is
primarily related to execution of the Company's balance sheet
repositioning strategy, with loan dispositions totaling $3.5
billion during the quarter. The increase of $353 million in HFS
loans from June 30, 2022 relates to loans transferred to HFS during
the first quarter 2023, partially offset by a decrease in AmeriHome
HFS loans.
The Company's allowance for credit losses on HFI loans consists
of an allowance for funded HFI loans and an allowance for unfunded
loan commitments. At June 30, 2023, the allowance for loan losses
to funded HFI loans ratio was 0.67%, compared to 0.66% at March 31,
2023, and 0.56% at June 30, 2022. The allowance for credit losses,
which includes the allowance for unfunded loan commitments, to
funded HFI loans ratio was 0.76% at June 30, 2023, compared to
0.75% at March 31, 2023, and 0.67% at June 30, 2022. The Company is
a party to credit linked note transactions, which effectively
transfer a portion of the risk of losses on reference pools of
loans to the purchasers of the notes. The Company is protected from
first credit losses on reference pools of loans totaling $9.4
billion, $9.8 billion, and $11.1 billion as of June 30, 2023, March
31, 2023, and June 30, 2022, respectively, under these
transactions. However, as these note transactions are considered to
be free standing credit enhancements, the allowance for credit
losses cannot be reduced by the expected credit losses that may be
mitigated by these notes. Accordingly, the allowance for loan and
credit losses ratios include an allowance of $21.4 million as of
June 30, 2023, $20.8 million as of March 31, 2023, and $18.5
million as of June 30, 2022, related to these pools of loans. The
allowance for credit losses to funded HFI loans ratio, adjusted to
reduce the HFI loan balance by the amount of loans in covered
reference pools, was 0.94% at June 30, 2023, 0.95% at March 31,
2023, and 0.87% at June 30, 2022.
Deposits totaled $51.0 billion at June 30, 2023, an increase of
$3.5 billion from $47.6 billion at March 31, 2023, and a decrease
of $2.7 billion from $53.7 billion at June 30, 2022. By deposit
type, the increase from the prior quarter is attributable to
increases of $2.0 billion from certificates of deposits, $1.9
billion from interest bearing demand deposits, and $268 million
from non-interest bearing demand deposits, partially offset by a
$760 million decrease in savings and money market accounts. From
June 30, 2022, non-interest bearing demand deposits and savings and
money market accounts decreased $7.0 billion and $5.9 billion,
respectively. These decreases were partially offset by increases in
certificates of deposit and interest-bearing demand deposits of
$6.0 billion and $4.3 billion, respectively. Non-interest bearing
deposits were $16.7 billion at June 30, 2023, compared to $16.5
billion at March 31, 2023, and $23.7 billion at June 30, 2022.
The table below shows the Company's deposit types as a
percentage of total deposits:
Jun 30, 2023
Mar 31, 2023
Jun 30, 2022
Non-interest bearing
32.8
%
34.6
%
44.2
%
Savings and money market
25.6
29.1
35.4
Interest-bearing demand
24.8
22.5
15.6
Certificates of deposit
16.8
13.8
4.8
The Company’s ratio of HFI loans to deposits was 93.8% at June
30, 2023, compared to 97.6% at March 31, 2023, and 90.4% at June
30, 2022.
Borrowings were $9.6 billion at June 30, 2023, $15.9 billion at
March 31, 2023, and $5.2 billion at June 30, 2022. Borrowings
decreased from March 31, 2023 due primarily to a decrease in
short-term borrowings of $6.0 billion and payoffs of credit linked
notes of $266 million. The increase in borrowings from June 30,
2022 is due to an increase in short-term borrowings of $3.8
billion, partially offset by payoffs of credit linked notes in the
first half of 2023.
Qualifying debt totaled $888 million at June 30, 2023, compared
to $895 million at March 31, 2023, and $891 million at June 30,
2022.
Stockholders’ equity was $5.7 billion at June 30, 2023, compared
to $5.5 billion at March 31, 2023 and $5.0 billion at June 30,
2022. The increase in stockholders’ equity quarter over quarter was
due to net income, partially offset by dividends to shareholders
and unrealized fair value losses of $24 million on the Company's
available for sale securities, which are recorded in other
comprehensive loss, net of tax. Cash dividends of $39.4 million
($0.36 per common share) and $3.2 million ($0.27 per depository
share) were paid to shareholders during the second quarter 2023.
The increase in stockholders' equity from June 30, 2022 is
primarily a function of net income and sales of common stock under
the Company's ATM program, partially offset by dividends to
shareholders and an increase in unrealized fair value losses on
available for sale securities.
At June 30, 2023, tangible common equity, net of tax1, was 7.0%
of tangible assets1 and total capital was 13.0% of risk-weighted
assets. The Company’s tangible book value per share1 was $43.09 at
June 30, 2023, an increase of 3.7% from $41.56 at March 31, 2023,
and up 17.5% from $36.67 at June 30, 2022. The increase in tangible
book value per share from March 31, 2023 is attributable to net
income.
Total assets decreased 4.1% to $68.2 billion at June 30, 2023,
from $71.0 billion at March 31, 2023, and increased 3.2% from $66.1
billion at June 30, 2022. The decrease in total assets from March
31, 2023 was driven by a decrease in HFS loans and cash, partially
offset by an increase in HFI loans. The increase in total assets
from June 30, 2022 was driven by an increase in investments and HFS
loans, partially offset by a decrease in HFI loans.
1 See reconciliation of Non-GAAP Financial Measures.
Asset Quality
Provision for credit losses totaled $21.8 million for the second
quarter 2023, compared to $19.4 million for the first quarter 2023,
and $27.5 million for the second quarter 2022. Net loan charge-offs
in the second quarter 2023 were $7.4 million, or 0.06% of average
loans (annualized), compared to $6.0 million, or 0.05%, in the
first quarter 2023, and $1.4 million, or 0.01%, in the second
quarter 2022.
Nonaccrual loans increased $149 million to $256 million during
the quarter and increased $171 million from June 30, 2022. Loans
past due 90 days and still accruing interest were zero, compared to
$1 million at March 31, 2023, and zero at June 30, 2022 (excluding
government guaranteed loans of $481 million, $494 million, and $555
million, respectively). Loans past due 30-89 days and still
accruing interest totaled $121 million at June 30, 2023, an
increase from $58 million at March 31, 2023, and an increase from
$117 million at June 30, 2022 (excluding government guaranteed
loans of $289 million, $281 million, and $161 million,
respectively).
Repossessed assets totaled $11 million at June 30, 2023, flat
from March 31, 2023, and a $1 million decrease from $12 million at
June 30, 2022. Classified assets totaled $604 million at June 30,
2023, an increase of $145 million from $459 million at March 31,
2023, and an increase of $258 million from $346 million at June 30,
2022.
The ratio of classified assets to Tier 1 capital plus the
allowance for credit losses, a common regulatory measure of asset
quality, was 10.0% at June 30, 2023, compared to 7.8% at March 31,
2023, and 6.7% at June 30, 2022.
1 See reconciliation of Non-GAAP Financial Measures.
Segment Highlights
The Company's reportable segments are aggregated with a focus on
products and services offered and consist of three reportable
segments:
–
Commercial segment: provides commercial
banking and treasury management products and services to small and
middle-market businesses, specialized banking services to
sophisticated commercial institutions and investors within niche
industries, as well as financial services to the real estate
industry.
–
Consumer Related segment: offers both
commercial banking services to enterprises in consumer-related
sectors and consumer banking services, such as residential mortgage
banking.
–
Corporate & Other segment: consists of
the Company's investment portfolio, Corporate borrowings and other
related items, income and expense items not allocated to our other
reportable segments, and inter-segment eliminations.
Key management metrics for evaluating the performance of the
Company's Commercial and Consumer Related segments include loan and
deposit growth, asset quality, and pre-tax income.
The Commercial segment reported an HFI loan balance of $28.1
billion at June 30, 2023, an increase of $857 million during the
quarter, and a decrease of $1.3 billion during the last twelve
months. The Commercial segment also has loans held for sale of $1.0
billion at June 30, 2023, a decrease of $3.7 billion during the
quarter. Deposits for the Commercial segment totaled $21.5 billion
at June 30, 2023, a decrease of $531 million during the quarter,
and a decrease of $8.0 billion during the last twelve months.
Pre-tax income for the Commercial segment was $221.4 million for
the three months ended June 30, 2023, an increase of $62.0 million
from the three months ended March 31, 2023, and a decrease of $18.5
million from the three months ended June 30, 2022. For the six
months ended June 30, 2023, the Commercial segment reported total
pre-tax income of $380.9 million, a decrease of $95.7 million
compared to the six months ended June 30, 2022.
The Consumer Related segment reported an HFI loan balance of
$19.7 billion at June 30, 2023, an increase of $583 million during
the quarter, and an increase of $612 million during the last twelve
months. The Consumer Related segment also has loans held for sale
of $2.1 billion at June 30, 2023, a decrease of $183 million during
the quarter, and a decrease of $696 million during the last twelve
months. Deposits for the Consumer Related segment totaled $22.4
billion, an increase of $2.4 billion during the quarter and an
increase of $2.7 billion during the last twelve months.
Pre-tax income for the Consumer Related segment was $56.7
million for the three months ended June 30, 2023, a decrease of
$0.1 million from the three months ended March 31, 2023, and a
decrease of $103.4 million from the three months ended June 30,
2022. Pre-tax income for the Consumer Related segment for the six
months ended June 30, 2023 totaled $113.3 million, a decrease of
$173.8 million compared to the six months ended June 30, 2022.
Conference Call and Webcast
Western Alliance Bancorporation will host a conference call and
live webcast to discuss its second quarter 2023 financial results
at 12:00 p.m. ET on Wednesday, July 19, 2023. Participants may
access the call by dialing 1-833-470-1428 and using access code
389791 or via live audio webcast using the website link
https://events.q4inc.com/attendee/147801611. The webcast is also
available via the Company’s website at
www.westernalliancebancorporation.com. Participants should log in
at least 15 minutes early to receive instructions. The call will be
recorded and made available for replay after 3:00 p.m. ET July 19th
through 11:00 p.m. ET August 19th by dialing 1-866-813-9403, using
access code 616595.
Reclassifications
Certain amounts in the Consolidated Income Statements for the
prior periods have been reclassified to conform to the current
presentation. The reclassifications have no effect on net income or
stockholders’ equity as previously reported.
Use of Non-GAAP Financial Information
This press release contains both financial measures based on
GAAP and non-GAAP based financial measures, which are used where
management believes them to be helpful in understanding the
Company’s results of operations or financial position. Where
non-GAAP financial measures are used, the comparable GAAP financial
measure, as well as the reconciliation to the comparable GAAP
financial measure, can be found in this press release. These
disclosures should not be viewed as a substitute for operating
results determined in accordance with GAAP, nor are they
necessarily comparable to non-GAAP performance measures that may be
presented by other companies.
Cautionary Note Regarding Forward-Looking Statements
This release 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
statements include, among others, statements we make regarding our
expectations with regard to our business, financial and operating
results, future economic performance and dividends. The
forward-looking statements contained herein reflect our current
views about future events and financial performance and are subject
to risks, uncertainties, assumptions and changes in circumstances
that may cause our actual results to differ significantly from
historical results and those expressed in any forward-looking
statement. Some factors that could cause actual results to differ
materially from historical or expected results include, among
others: the risk factors discussed in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2022 and the Company's
subsequent Quarterly Reports on Form 10-Q, each as filed with the
Securities and Exchange Commission; adverse developments in the
financial services industry generally such as the recent bank
failures and any related impact on depositor behavior; risks
related to the sufficiency of liquidity; the potential adverse
effects of unusual and infrequently occurring events such as the
COVID-19 pandemic and any governmental or societal responses
thereto; changes in general economic conditions, either nationally
or locally in the areas in which we conduct or will conduct our
business; the impact on financial markets from geopolitical
conflicts such as the war between Russia and Ukraine; inflation,
interest rate, market and monetary fluctuations; increases in
competitive pressures among financial institutions and businesses
offering similar products and services; higher defaults on our loan
portfolio than we expect; changes in management’s estimate of the
adequacy of the allowance for credit losses; legislative or
regulatory changes or changes in accounting principles, policies or
guidelines; supervisory actions by regulatory agencies which may
limit our ability to pursue certain growth opportunities, including
expansion through acquisitions; additional regulatory requirements
resulting from our continued growth; management’s estimates and
projections of interest rates and interest rate policy; the
execution of our business plan; and other factors affecting the
financial services industry generally or the banking industry in
particular.
Any forward-looking statement made by us in this release is
based only on information currently available to us and speaks only
as of the date on which it is made. We do not intend and disclaim
any duty or obligation to update or revise any industry information
or forward-looking statements, whether written or oral, that may be
made from time to time, set forth in this press release to reflect
new information, future events or otherwise.
About Western Alliance Bancorporation
With more than $65 billion in assets, Western Alliance
Bancorporation (NYSE:WAL) is one of the country’s top-performing
banking companies. Through its primary subsidiary, Western Alliance
Bank, Member FDIC, business clients benefit from a full spectrum of
tailored banking solutions and outstanding service delivered by
industry experts who put customers first. Major accolades include
#2 best-performing of the 50 largest public U.S. banks in the
S&P Global Market Intelligence listing for 2021, and #1 Best
Emerging Regional Bank for 2022 by Bank Director. Serving clients
across the country wherever business happens, Western Alliance Bank
operates individual, full-service banking and financial brands with
offices in key markets nationwide. For more information, visit
westernalliancebank.com.
Western Alliance Bancorporation and
Subsidiaries
Summary Consolidated Financial
Data
Unaudited
Selected Balance Sheet Data:
As of June 30,
2023
2022
Change %
(in millions)
Total assets
$
68,160
$
66,055
3.2
%
Loans held for sale
3,156
2,803
12.6
HFI loans, net of deferred fees
47,875
48,572
(1.4
)
Investment securities
10,374
8,802
17.9
Total deposits
51,041
53,712
(5.0
)
Borrowings
9,567
5,210
83.6
Qualifying debt
888
891
(0.3
)
Stockholders' equity
5,685
4,959
14.6
Tangible common equity, net of tax (1)
4,718
3,971
18.8
Common equity Tier 1 capital
5,348
4,897
9.2
Selected Income Statement Data:
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2023
2022
Change %
2023
2022
Change %
(in millions, except per share data)
(in millions, except per share
data)
Interest income
$
1,000.8
$
579.6
72.7
%
$
1,969.7
$
1,064.1
85.1
%
Interest expense
450.5
54.6
NM
809.5
89.6
NM
Net interest income
550.3
525.0
4.8
1,160.2
974.5
19.1
Provision for credit losses
21.8
27.5
(20.7
)
41.2
36.5
12.9
Net interest income after provision for
credit losses
528.5
497.5
6.2
1,119.0
938.0
19.3
Non-interest income
119.0
95.0
25.3
61.0
201.3
(69.7
)
Non-interest expense
387.4
268.9
44.1
735.3
517.5
42.1
Income before income taxes
260.1
323.6
(19.6
)
444.7
621.8
(28.5
)
Income tax expense
44.4
63.4
(30.0
)
86.8
121.5
(28.6
)
Net income
215.7
260.2
(17.1
)
357.9
500.3
(28.5
)
Dividends on preferred stock
3.2
3.2
—
6.4
6.4
—
Net income available to common
stockholders
$
212.5
$
257.0
(17.3
)
$
351.5
$
493.9
(28.8
)
Diluted earnings per common share
$
1.96
$
2.39
(18.0
)
$
3.24
$
4.61
(29.7
)
(1)
See Reconciliation of Non-GAAP Financial
Measures.
NM
Changes +/- 100% are not meaningful.
Western Alliance Bancorporation and
Subsidiaries
Summary Consolidated Financial
Data
Unaudited
Common Share Data:
At or For the Three Months
Ended June 30,
For the Six Months Ended June
30,
2023
2022
Change %
2023
2022
Change %
Diluted earnings per common share
$
1.96
$
2.39
(18.0
)%
$
3.24
$
4.61
(29.7
)%
Book value per common share
49.22
43.07
14.3
Tangible book value per common share, net
of tax (1)
43.09
36.67
17.5
Average common shares outstanding
(in millions):
Basic
108.3
107.3
0.9
108.2
106.7
1.5
Diluted
108.3
107.7
0.6
108.3
107.1
1.1
Common shares outstanding
109.5
108.3
1.1
Selected Performance Ratios:
Return on average assets (2)
1.23
%
1.62
%
(24.1
)%
1.02
%
1.63
%
(37.4
)%
Return on average tangible common equity
(1, 2)
18.2
25.6
(28.9
)
15.2
24.8
(38.7
)
Net interest margin (2)
3.42
3.54
(3.4
)
3.60
3.44
4.7
Efficiency ratio - tax equivalent basis
(1)
50.5
40.4
25.0
46.7
43.1
8.4
HFI loan to deposit ratio
93.8
90.4
3.8
Asset Quality Ratios:
Net charge-offs to average loans
outstanding (2)
0.06
%
0.01
%
NM
0.05
%
0.01
%
NM
Nonaccrual loans to funded HFI loans
0.53
0.18
NM
Nonaccrual loans and repossessed assets to
total assets
0.39
0.15
NM
Allowance for loan losses to funded HFI
loans
0.67
0.56
19.6
Allowance for loan losses to nonaccrual
HFI loans
125
321
(61.0
)
Capital Ratios:
Jun 30, 2023
Mar 31, 2023
Jun 30, 2022
Tangible common equity (1)
7.0 %
6.5 %
6.1 %
Common Equity Tier 1 (3)
10.1
9.4
9.0
Tier 1 Leverage ratio (3)
8.1
7.8
7.6
Tier 1 Capital (3)
10.8
10.1
9.7
Total Capital (3)
13.0
12.1
11.9
(1)
See Reconciliation of Non-GAAP Financial
Measures.
(2)
Annualized on an actual/actual basis for
periods less than 12 months.
(3)
Capital ratios for June 30, 2023 are
preliminary.
NM
Changes +/- 100% are not meaningful.
Western Alliance Bancorporation and
Subsidiaries
Condensed Consolidated Income
Statements
Unaudited
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(dollars in millions, except per
share data)
Interest income:
Loans
$
857.2
$
516.6
$
1,689.9
$
951.3
Investment securities
112.4
59.3
208.5
107.3
Other
31.2
3.7
71.3
5.5
Total interest income
1,000.8
579.6
1,969.7
1,064.1
Interest expense:
Deposits
251.1
27.1
482.7
41.2
Qualifying debt
9.5
8.6
18.8
17.0
Borrowings
189.9
18.9
308.0
31.4
Total interest expense
450.5
54.6
809.5
89.6
Net interest income
550.3
525.0
1,160.2
974.5
Provision for credit losses
21.8
27.5
41.2
36.5
Net interest income after provision for
credit losses
528.5
497.5
1,119.0
938.0
Non-interest income:
Net gain on loan origination and sale
activities
62.3
27.2
93.7
64.1
Net loan servicing revenue
24.1
45.4
66.0
86.5
Service charges and fees
20.8
7.6
30.3
14.6
Commercial banking related income
6.0
5.8
12.2
10.9
Gain on recovery from credit
guarantees
1.2
9.0
4.5
11.3
Income from equity investments
0.7
5.2
2.1
9.3
(Loss) gain on sales of investment
securities
(13.6
)
(0.2
)
(26.1
)
6.7
Fair value gain (loss) adjustments,
net
12.7
(10.0
)
(135.1
)
(16.6
)
Other
4.8
5.0
13.4
14.5
Total non-interest income
119.0
95.0
61.0
201.3
Non-interest expenses:
Salaries and employee benefits
145.6
139.0
294.5
277.3
Deposit costs
91.0
18.1
177.9
27.4
Insurance
33.0
6.9
48.7
14.1
Data processing
28.6
19.7
55.0
37.3
Legal, professional, and directors'
fees
26.4
25.1
49.5
49.1
Loan servicing expenses
18.4
14.7
32.2
25.5
Occupancy
15.4
13.0
31.9
25.8
Loan acquisition and origination
expenses
5.6
6.4
10.0
12.9
Business development and marketing
5.0
5.4
10.2
9.8
Net loss on sales and valuations of
repossessed and other assets
0.5
(0.3
)
0.5
(0.2
)
Gain on extinguishment of debt
(0.7
)
—
(13.4
)
—
Other
18.6
20.9
38.3
38.5
Total non-interest expense
387.4
268.9
735.3
517.5
Income before income taxes
260.1
323.6
444.7
621.8
Income tax expense
44.4
63.4
86.8
121.5
Net income
215.7
260.2
357.9
500.3
Dividends on preferred stock
3.2
3.2
6.4
6.4
Net income available to common
stockholders
$
212.5
$
257.0
$
351.5
$
493.9
Earnings per common share:
Diluted shares
108.3
107.7
108.3
107.1
Diluted earnings per share
$
1.96
$
2.39
$
3.24
$
4.61
Western Alliance Bancorporation and
Subsidiaries
Five Quarter Condensed Consolidated
Income Statements
Unaudited
Three Months Ended
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
Jun 30, 2022
(in millions, except per share
data)
Interest income:
Loans
$
857.2
$
832.7
$
785.1
$
657.0
$
516.6
Investment securities
112.4
96.1
89.4
75.9
59.3
Other
31.2
40.1
13.8
6.5
3.7
Total interest income
1,000.8
968.9
888.3
739.4
579.6
Interest expense:
Deposits
251.1
231.6
157.6
77.6
27.1
Qualifying debt
9.5
9.3
9.1
8.9
8.6
Borrowings
189.9
118.1
81.9
50.8
18.9
Total interest expense
450.5
359.0
248.6
137.3
54.6
Net interest income
550.3
609.9
639.7
602.1
525.0
Provision for credit losses
21.8
19.4
3.1
28.5
27.5
Net interest income after provision for
credit losses
528.5
590.5
636.6
573.6
497.5
Non-interest income:
Net gain on loan origination and sale
activities
62.3
31.4
25.4
14.5
27.2
Net loan servicing revenue
24.1
41.9
21.4
23.0
45.4
Service charges and fees
20.8
9.5
5.9
6.5
7.6
Commercial banking related income
6.0
6.2
5.5
5.1
5.8
Gain on recovery from credit
guarantees
1.2
3.3
3.0
0.4
9.0
Income from equity investments
0.7
1.4
4.2
4.3
5.2
(Loss) gain on sales of investment
securities
(13.6
)
(12.5
)
0.1
—
(0.2
)
Fair value gain (loss) adjustments,
net
12.7
(147.8
)
(9.2
)
(2.8
)
(10.0
)
Other
4.8
8.6
5.2
10.8
5.0
Total non-interest income
119.0
(58.0
)
61.5
61.8
95.0
Non-interest expenses:
Salaries and employee benefits
145.6
148.9
125.7
136.5
139.0
Deposit costs
91.0
86.9
82.2
56.2
18.1
Insurance
33.0
15.7
8.9
8.1
6.9
Data processing
28.6
26.4
23.9
21.8
19.7
Legal, professional, and directors'
fees
26.4
23.1
26.0
24.8
25.1
Loan servicing expenses
18.4
13.8
14.8
15.2
14.7
Occupancy
15.4
16.5
15.8
13.9
13.0
Loan acquisition and origination
expenses
5.6
4.4
4.4
5.8
6.4
Business development and marketing
5.0
5.2
7.3
5.0
5.4
Net loss (gain) on sales and valuations of
repossessed and other assets
0.5
—
(0.3
)
(0.2
)
(0.3
)
Gain on extinguishment of debt
(0.7
)
(12.7
)
—
—
—
Other
18.6
19.7
24.7
18.7
20.9
Total non-interest expense
387.4
347.9
333.4
305.8
268.9
Income before income taxes
260.1
184.6
364.7
329.6
323.6
Income tax expense
44.4
42.4
71.7
65.6
63.4
Net income
215.7
142.2
293.0
264.0
260.2
Dividends on preferred stock
3.2
3.2
3.2
3.2
3.2
Net income available to common
stockholders
$
212.5
$
139.0
$
289.8
$
260.8
$
257.0
Earnings per common share:
Diluted shares
108.3
108.3
108.4
107.9
107.7
Diluted earnings per share
$
1.96
$
1.28
$
2.67
$
2.42
$
2.39
Western Alliance Bancorporation and
Subsidiaries
Five Quarter Condensed Consolidated
Balance Sheets
Unaudited
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
Jun 30, 2022
(in millions)
Assets:
Cash and due from banks
$
2,153
$
3,639
$
1,043
$
1,610
$
1,886
Investment securities
10,374
9,493
8,760
8,603
8,802
Loans held for sale
3,156
7,022
1,184
2,204
2,803
Loans held for investment:
Commercial and industrial
16,657
15,503
20,710
22,318
20,754
Commercial real estate - non-owner
occupied
9,913
9,617
9,319
8,668
7,775
Commercial real estate - owner
occupied
1,805
1,809
1,818
1,848
1,848
Construction and land development
4,428
4,407
4,013
3,621
3,231
Residential real estate
15,000
15,024
15,928
15,674
14,908
Consumer
72
75
74
72
56
Loans HFI, net of deferred fees
47,875
46,435
51,862
52,201
48,572
Allowance for loan losses
(321
)
(305
)
(310
)
(304
)
(273
)
Loans HFI, net of deferred fees and
allowance
47,554
46,130
51,552
51,897
48,299
Mortgage servicing rights
1,007
910
1,148
1,044
826
Premises and equipment, net
315
293
276
237
210
Operating lease right-of-use asset
151
156
163
131
136
Other assets acquired through foreclosure,
net
11
11
11
11
12
Bank owned life insurance
184
183
182
181
180
Goodwill and other intangibles, net
674
677
680
682
695
Other assets
2,581
2,533
2,735
2,565
2,206
Total assets
$
68,160
$
71,047
$
67,734
$
69,165
$
66,055
Liabilities and Stockholders'
Equity:
Liabilities:
Deposits
Non-interest bearing demand deposits
$
16,733
$
16,465
$
19,691
$
24,926
$
23,721
Interest bearing:
Demand
12,646
10,719
9,507
8,350
8,387
Savings and money market
13,085
13,845
19,397
19,202
19,026
Certificates of deposit
8,577
6,558
5,049
3,111
2,578
Total deposits
51,041
47,587
53,644
55,589
53,712
Borrowings
9,567
15,853
6,299
6,319
5,210
Qualifying debt
888
895
893
889
891
Operating lease liability
179
184
185
149
151
Accrued interest payable and other
liabilities
800
1,007
1,357
1,198
1,132
Total liabilities
62,475
65,526
62,378
64,144
61,096
Stockholders' Equity:
Preferred stock
295
295
295
295
295
Common stock and additional paid-in
capital
2,064
2,054
2,058
2,049
1,990
Retained earnings
3,937
3,764
3,664
3,413
3,192
Accumulated other comprehensive loss
(611
)
(592
)
(661
)
(736
)
(518
)
Total stockholders' equity
5,685
5,521
5,356
5,021
4,959
Total liabilities and stockholders'
equity
$
68,160
$
71,047
$
67,734
$
69,165
$
66,055
Western Alliance Bancorporation and
Subsidiaries
Changes in the Allowance For Credit
Losses on Loans
Unaudited
Three Months Ended
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
Jun 30, 2022
(in millions)
Allowance for loan losses
Balance, beginning of period
$
304.7
$
309.7
$
304.1
$
273.2
$
257.6
Provision for credit losses (1)
23.8
1.0
7.4
29.0
17.0
Recoveries of loans previously
charged-off:
Commercial and industrial
0.7
3.2
0.3
3.8
0.8
Commercial real estate - non-owner
occupied
—
—
—
0.1
—
Commercial real estate - owner
occupied
—
—
0.1
—
0.1
Construction and land development
—
—
—
0.1
—
Residential real estate
—
—
—
—
0.1
Consumer
0.1
—
—
—
—
Total recoveries
0.8
3.2
0.4
4.0
1.0
Loans charged-off:
Commercial and industrial
6.0
9.1
1.1
2.1
2.4
Commercial real estate - non-owner
occupied
2.2
—
—
—
—
Commercial real estate - owner
occupied
—
—
0.5
—
—
Construction and land development
—
—
0.6
—
—
Residential real estate
—
—
—
—
—
Consumer
—
0.1
—
—
—
Total loans charged-off
8.2
9.2
2.2
2.1
2.4
Net loan charge-offs (recoveries)
7.4
6.0
1.8
(1.9
)
1.4
Balance, end of period
$
321.1
$
304.7
$
309.7
$
304.1
$
273.2
Allowance for unfunded loan
commitments
Balance, beginning of period
$
44.8
$
47.0
$
52.1
$
53.8
$
43.3
(Recovery of) provision for credit losses
(1)
(3.7
)
(2.2
)
(5.1
)
(1.7
)
10.5
Balance, end of period (2)
$
41.1
$
44.8
$
47.0
$
52.1
$
53.8
Components of the allowance for credit
losses on loans
Allowance for loan losses
$
321.1
$
304.7
$
309.7
$
304.1
$
273.2
Allowance for unfunded loan
commitments
41.1
44.8
47.0
52.1
53.8
Total allowance for credit losses on
loans
$
362.2
$
349.5
$
356.7
$
356.2
$
327.0
Net charge-offs (recoveries) to average
loans - annualized
0.06
%
0.05
%
0.01
%
(0.02
)%
0.01
%
Allowance ratios
Allowance for loan losses to funded HFI
loans (3)
0.67
%
0.66
%
0.60
%
0.58
%
0.56
%
Allowance for credit losses to funded HFI
loans (3)
0.76
0.75
0.69
0.68
0.67
Allowance for loan losses to nonaccrual
HFI loans
125
285
364
338
321
Allowance for credit losses to nonaccrual
HFI loans
141
327
420
396
385
(1)
The above tables reflect the provision for
credit losses on funded and unfunded loans. There was a $2.2
million provision for credit losses on AFS investment securities
and a $0.5 million provision release on HTM investment securities
for the three months ended June 30, 2023. The allowance for credit
losses on AFS and HTM investment securities totaled $4.4 million
and $6.0 million, respectively, as of June 30, 2023.
(2)
The allowance for unfunded loan
commitments is included as part of accrued interest payable and
other liabilities on the balance sheet.
(3)
Ratio includes an allowance for credit
losses of $21.4 million as of June 30, 2023 related to a pool of
loans covered under three separate credit linked note
transactions.
Western Alliance Bancorporation and
Subsidiaries
Asset Quality Metrics
Unaudited
Three Months Ended
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
Jun 30, 2022
(in millions)
Nonaccrual loans and repossessed
assets
Nonaccrual loans
$
256
$
107
$
85
$
90
$
85
Nonaccrual loans to funded HFI loans
0.53
%
0.23
%
0.16
%
0.17
%
0.17
%
Repossessed assets
$
11
$
11
$
11
$
11
$
12
Nonaccrual loans and repossessed assets to
total assets
0.39
%
0.17
%
0.14
%
0.15
%
0.15
%
Loans Past Due
Loans past due 90 days, still accruing
(1)
$
—
$
1
$
—
$
—
$
—
Loans past due 90 days, still accruing to
funded HFI loans
—
%
—
%
—
%
—
%
—
%
Loans past due 30 to 89 days, still
accruing (2)
$
121
$
58
$
70
$
56
$
117
Loans past due 30 to 89 days, still
accruing to funded HFI loans
0.25
%
0.13
%
0.13
%
0.11
%
0.24
%
Other credit quality metrics
Special mention loans
$
694
$
320
$
351
$
312
$
317
Special mention loans to funded HFI
loans
1.45
%
0.69
%
0.68
%
0.60
%
0.65
%
Classified loans on accrual
$
324
$
325
$
280
$
268
$
232
Classified loans on accrual to funded HFI
loans
0.68
%
0.70
%
0.54
%
0.51
%
0.48
%
Classified assets
$
604
$
459
$
393
$
385
$
346
Classified assets to total assets
0.89
%
0.65
%
0.58
%
0.56
%
0.52
%
(1)
Excludes government guaranteed residential
mortgage loans of $481 million, $494 million, $582 million, $644
million, and $555 million as of each respective date in the table
above.
(2)
Excludes government guaranteed residential
mortgage loans of $289 million, $281 million, $334 million, $245
million, and $161 million as of each respective date in the table
above.
Western Alliance Bancorporation and
Subsidiaries
Analysis of Average Balances, Yields
and Rates
Unaudited
Three Months Ended
June 30, 2023
March 31, 2023
Average
Balance
Interest
Average Yield /
Cost
Average
Balance
Interest
Average Yield /
Cost
($ in millions)
Interest earning assets
Loans held for sale
$
6,343
$
105.2
6.65
%
$
2,153
$
31.3
5.90
%
Loans held for investment:
Commercial and industrial
15,712
302.3
7.78
20,481
368.2
7.35
CRE - non-owner occupied
9,754
180.7
7.44
9,520
169.4
7.22
CRE - owner occupied
1,816
25.1
5.66
1,809
24.6
5.62
Construction and land development
4,420
103.6
9.40
4,230
93.3
8.94
Residential real estate
15,006
139.0
3.72
15,839
144.7
3.71
Consumer
73
1.3
7.15
73
1.2
6.82
Total HFI loans (1), (2), (3)
46,781
752.0
6.48
51,952
801.4
6.28
Securities:
Securities - taxable
7,879
91.4
4.65
6,658
75.2
4.58
Securities - tax-exempt
2,062
21.0
5.12
2,117
20.9
5.00
Total securities (1)
9,941
112.4
4.76
8,775
96.1
4.68
Cash and other
2,584
31.2
4.84
3,331
40.1
4.88
Total interest earning assets
65,649
1,000.8
6.17
66,211
968.9
5.99
Non-interest earning assets
Cash and due from banks
259
265
Allowance for credit losses
(314
)
(315
)
Bank owned life insurance
183
182
Other assets
4,361
4,931
Total assets
$
70,138
$
71,274
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts
$
11,893
$
80.2
2.71
%
$
10,534
$
68.2
2.63
%
Savings and money market
13,167
87.2
2.66
18,066
115.5
2.59
Certificates of deposit
7,626
83.7
4.40
5,520
47.9
3.52
Total interest-bearing deposits
32,686
251.1
3.08
34,120
231.6
2.75
Short-term borrowings
12,195
170.4
5.60
7,288
87.5
4.87
Long-term debt
826
19.5
9.45
1,275
30.6
9.73
Qualifying debt
895
9.5
4.27
893
9.3
4.24
Total interest-bearing
liabilities
46,602
450.5
3.88
43,576
359.0
3.34
Interest cost of funding earning
assets
2.75
2.20
Non-interest-bearing
liabilities
Non-interest-bearing demand deposits
16,701
20,521
Other liabilities
1,183
1,589
Stockholders’ equity
5,652
5,588
Total liabilities and stockholders'
equity
$
70,138
$
71,274
Net interest income and margin (4)
$
550.3
3.42
%
$
609.9
3.79
%
(1)
Yields on loans and securities have been
adjusted to a tax equivalent basis. The tax equivalent adjustment
was $8.7 million and $8.8 million for the three months ended June
30, 2023 and March 31, 2023, respectively.
(2)
Included in the yield computation are net
loan fees of $36.8 million and $35.6 million for the three months
ended June 30, 2023 and March 31, 2023, respectively.
(3)
Includes non-accrual loans.
(4)
Net interest margin is computed by
dividing net interest income by total average earning assets,
annualized on an actual/actual basis.
Western Alliance Bancorporation and
Subsidiaries
Analysis of Average Balances, Yields
and Rates
Unaudited
Three Months Ended
June 30, 2023
June 30, 2022
Average
Balance
Interest
Average Yield /
Cost
Average
Balance
Interest
Average Yield /
Cost
($ in millions)
Interest earning assets
Loans held for sale
$
6,343
$
105.2
6.65
%
$
4,333
$
43.1
3.99
%
Loans held for investment:
Commercial and industrial
15,712
302.3
7.78
19,576
205.6
4.27
CRE - non-owner-occupied
9,754
180.7
7.44
7,152
83.1
4.67
CRE - owner-occupied
1,816
25.1
5.66
1,836
22.7
5.05
Construction and land development
4,420
103.6
9.40
3,336
47.7
5.73
Residential real estate
15,006
139.0
3.72
13,698
113.8
3.33
Consumer
73
1.3
7.15
58
0.6
4.29
Total loans HFI (1), (2), (3)
46,781
752.0
6.48
45,656
473.5
4.19
Securities:
Securities - taxable
7,879
91.4
4.65
6,674
41.3
2.48
Securities - tax-exempt
2,062
21.0
5.12
2,017
18.0
4.53
Total securities (1)
9,941
112.4
4.76
8,691
59.3
2.94
Cash and other
2,584
31.2
4.84
1,650
3.7
0.91
Total interest earning assets
65,649
1,000.8
6.17
60,330
579.6
3.91
Non-interest earning assets
Cash and due from banks
259
262
Allowance for credit losses
(314
)
(266
)
Bank owned life insurance
183
179
Other assets
4,361
3,766
Total assets
$
70,138
$
64,271
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts
$
11,893
$
80.2
2.71
%
$
8,346
$
8.0
0.38
%
Savings and money market accounts
13,167
87.2
2.66
18,771
16.5
0.35
Certificates of deposit
7,626
83.7
4.40
2,040
2.6
0.52
Total interest-bearing deposits
32,686
251.1
3.08
29,157
27.1
0.37
Short-term borrowings
12,195
170.4
5.60
2,917
8.6
1.19
Long-term debt
826
19.5
9.45
786
10.3
5.24
Qualifying debt
895
9.5
4.27
894
8.6
3.85
Total interest-bearing
liabilities
46,602
450.5
3.88
33,754
54.6
0.65
Interest cost of funding earning
assets
2.75
0.37
Non-interest-bearing
liabilities
Non-interest-bearing demand deposits
16,701
24,327
Other liabilities
1,183
1,169
Stockholders’ equity
5,652
5,021
Total liabilities and stockholders'
equity
$
70,138
$
64,271
Net interest income and margin (4)
$
550.3
3.42
%
$
525.0
3.54
%
(1)
Yields on loans and securities have been
adjusted to a tax equivalent basis. The tax equivalent adjustment
was $8.7 million and $8.2 million for the three months ended June
30, 2023 and 2022, respectively.
(2)
Included in the yield computation are net
loan fees of $36.8 million and $36.4 million for the three months
ended June 30, 2023 and 2022, respectively.
(3)
Includes non-accrual loans.
(4)
Net interest margin is computed by
dividing net interest income by total average earning assets,
annualized on an actual/actual basis.
Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields
and Rates
Unaudited
Six Months Ended
June 30, 2023
June 30, 2022
Average
Balance
Interest
Average Yield /
Cost
Average
Balance
Interest
Average Yield /
Cost
($ in millions)
Interest earning assets
Loans HFS
$
4,260
$
136.5
6.46
%
$
5,421
$
93.6
3.48
%
Loans HFI:
Commercial and industrial
18,083
670.5
7.54
18,537
371.5
4.10
CRE - non-owner occupied
9,638
350.1
7.33
6,922
156.2
4.56
CRE - owner occupied
1,812
49.7
5.64
1,847
45.5
5.06
Construction and land development
4,325
196.8
9.18
3,214
89.3
5.61
Residential real estate
15,420
283.8
3.71
12,050
194.1
3.25
Consumer
73
2.5
6.99
55
1.1
4.14
Total loans HFI (1), (2), (3)
49,351
1,553.4
6.38
42,625
857.7
4.09
Securities:
Securities - taxable
7,271
166.6
4.62
6,107
71.1
2.35
Securities - tax-exempt
2,090
41.9
5.06
2,076
36.2
4.41
Total securities (1)
9,361
208.5
4.72
8,183
107.3
2.86
Other
2,956
71.3
4.86
1,853
5.5
0.60
Total interest earning assets
65,928
1,969.7
6.08
58,082
1,064.1
3.75
Non-interest earning assets
Cash and due from banks
262
254
Allowance for credit losses
(314
)
(264
)
Bank owned life insurance
183
180
Other assets
4,644
3,534
Total assets
$
70,703
$
61,786
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts
$
11,217
$
148.5
2.67
%
$
8,046
$
10.7
0.27
%
Savings and money market accounts
15,604
202.7
2.62
18,453
26.1
0.29
Certificates of deposit
6,578
131.5
4.03
1,981
4.4
0.45
Total interest-bearing deposits
33,399
482.7
2.90
28,480
41.2
0.29
Short-term borrowings
9,757
258.0
5.33
2,038
10.4
1.03
Long-term debt
1,049
50.0
9.62
778
21.0
5.45
Qualifying debt
894
18.8
4.24
895
17.0
3.83
Total interest-bearing
liabilities
45,099
809.5
3.62
32,191
89.6
0.56
Interest cost of funding earning
assets
2.48
0.31
Non-interest-bearing
liabilities
Non-interest-bearing demand deposits
18,600
23,458
Other liabilities
1,384
1,132
Stockholders’ equity
5,620
5,005
Total liabilities and stockholders'
equity
$
70,703
$
61,786
Net interest income and margin (4)
$
1,160.2
3.60
%
$
974.5
3.44
%
(1)
Yields on loans and securities have been
adjusted to a tax equivalent basis. The tax equivalent adjustment
was $17.5 million and $16.2 million for the six ended June 30, 2023
and 2022, respectively.
(2)
Included in the yield computation are net
loan fees of $72.4 million and $65.5 million for the six ended June
30, 2023 and 2022, respectively.
(3)
Includes non-accrual loans.
(4)
Net interest margin is computed by
dividing net interest income by total average earning assets,
annualized on an actual/actual basis.
Western Alliance Bancorporation and
Subsidiaries
Operating Segment Results
Unaudited
Balance Sheet:
Consolidated Company
Commercial
Consumer Related
Corporate & Other
At June 30, 2023:
(dollars in millions)
Assets:
Cash, cash equivalents, and investment
securities
$
12,527
$
13
$
150
$
12,364
Loans HFS
3,156
1,049
2,107
—
Loans HFI, net of deferred fees and
costs
47,875
28,139
19,736
—
Less: allowance for credit losses
(321
)
(269
)
(52
)
—
Net loans HFI
47,554
27,870
19,684
—
Other assets acquired through foreclosure,
net
11
11
—
—
Goodwill and other intangible assets,
net
674
293
381
—
Other assets
4,238
567
1,693
1,978
Total assets
$
68,160
$
29,803
$
24,015
$
14,342
Liabilities:
Deposits
$
51,041
$
21,460
$
22,380
$
7,201
Borrowings and qualifying debt
10,455
6
1,489
8,960
Other liabilities
979
70
173
736
Total liabilities
62,475
21,536
24,042
16,897
Allocated equity:
5,685
2,516
1,729
1,440
Total liabilities and stockholders'
equity
$
68,160
$
24,052
$
25,771
$
18,337
Excess funds provided (used)
—
(5,751
)
1,756
3,995
No. of offices
56
46
8
2
No. of full-time equivalent employees
3,336
652
726
1,958
Income Statement:
Three Months Ended June 30,
2023:
(in millions)
Net interest income
$
550.3
$
356.5
$
204.8
$
(11.0
)
Provision for credit losses
21.8
18.2
1.9
1.7
Net interest income (expense) after
provision for credit losses
528.5
338.3
202.9
(12.7
)
Non-interest income
119.0
30.8
86.1
2.1
Non-interest expense
387.4
147.7
232.3
7.4
Income (loss) before income taxes
260.1
221.4
56.7
(18.0
)
Income tax expense (benefit)
44.4
21.7
(2.2
)
24.9
Net income (loss)
$
215.7
$
199.7
$
58.9
$
(42.9
)
Six Months Ended June 30, 2023:
(in millions)
Net interest income
$
1,160.2
$
746.0
$
404.0
$
10.2
Provision for credit losses
41.2
15.6
3.4
22.2
Net interest income (expense) after
provision for credit losses
1,119.0
730.4
400.6
(12.0
)
Non-interest income
61.0
(65.9
)
137.1
(10.2
)
Non-interest expense
735.3
283.6
424.4
27.3
Income (loss) before provision for income
taxes
444.7
380.9
113.3
(49.5
)
Income tax expense (benefit)
86.8
60.2
10.5
16.1
Net income (loss)
$
357.9
$
320.7
$
102.8
$
(65.6
)
Western Alliance Bancorporation and
Subsidiaries
Operating Segment Results
Unaudited
Balance Sheet:
Consolidated Company
Commercial
Consumer Related
Corporate & Other
At December 31, 2022:
(dollars in millions)
Assets:
Cash, cash equivalents, and investment
securities
$
9,803
$
12
$
—
$
9,791
Loans held for sale
1,184
—
1,184
—
Loans, net of deferred fees and costs
51,862
31,414
20,448
—
Less: allowance for credit losses
(310
)
(262
)
(48
)
—
Total loans
51,552
31,152
20,400
—
Other assets acquired through foreclosure,
net
11
11
—
—
Goodwill and other intangible assets,
net
680
293
387
—
Other assets
4,504
435
2,180
1,889
Total assets
$
67,734
$
31,903
$
24,151
$
11,680
Liabilities:
Deposits
$
53,644
$
29,494
$
18,492
$
5,658
Borrowings and qualifying debt
7,192
27
340
6,825
Other liabilities
1,542
83
656
803
Total liabilities
62,378
29,604
19,488
13,286
Allocated equity:
5,356
2,684
1,691
981
Total liabilities and stockholders'
equity
$
67,734
$
32,288
$
21,179
$
14,267
Excess funds provided (used)
—
385
(2,972
)
2,587
No. of offices
56
46
8
2
No. of full-time equivalent employees
3,365
671
785
1,909
Income Statement:
Three Months Ended June 30,
2022:
(in millions)
Net interest income
$
525.0
$
370.5
$
219.4
$
(64.9
)
Provision for (recovery of) credit
losses
27.5
32.7
(5.2
)
—
Net interest income (expense) after
provision for credit losses
497.5
337.8
224.6
(64.9
)
Non-interest income
95.0
18.0
74.6
2.4
Non-interest expense
268.9
115.9
139.1
13.9
Income (loss) before income taxes
323.6
239.9
160.1
(76.4
)
Income tax expense (benefit)
63.4
57.3
38.1
(32.0
)
Net income (loss)
$
260.2
$
182.6
$
122.0
$
(44.4
)
Six Months Ended June 30, 2022:
(in millions)
Net interest income
$
974.5
$
705.3
$
402.7
$
(133.5
)
Provision for credit losses (recovery
of)
36.5
33.2
5.3
(2.0
)
Net interest income (expense) after
provision for credit losses
938.0
672.1
397.4
(131.5
)
Non-interest income
201.3
34.9
153.8
12.6
Non-interest expense
517.5
230.4
264.1
23.0
Income (loss) before income taxes
621.8
476.6
287.1
(141.9
)
Income tax expense (benefit)
121.5
113.4
68.5
(60.4
)
Net income (loss)
$
500.3
$
363.2
$
218.6
$
(81.5
)
Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial
Measures
Unaudited
Pre-Provision Net Revenue by Quarter:
Three Months Ended
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
(in millions)
Net interest income
$
550.3
$
609.9
$
639.7
$
602.1
$
525.0
Total non-interest income
119.0
(58.0
)
61.5
61.8
95.0
Adjusted for:
Loss (gain) on sales of investment
securities
13.6
12.5
(0.1
)
—
0.2
Fair value (gain) loss adjustments,
net
(12.7
)
147.8
9.2
2.8
10.0
Total non-interest income,
adjusted
$
119.9
$
102.3
$
70.6
$
64.6
$
105.2
Net revenue, adjusted
$
670.2
$
712.2
$
710.3
$
666.7
$
630.2
Total non-interest expense
387.4
347.9
333.4
305.8
268.9
Adjusted for:
Gain on extinguishment of debt
0.7
12.7
—
—
—
Total non-interest expense,
adjusted
$
388.1
$
360.6
$
333.4
$
305.8
$
268.9
Pre-provision net revenue (1)
$
282.1
$
351.6
$
376.9
$
360.9
$
361.3
Less:
Provision for credit losses
21.8
19.4
3.1
28.5
27.5
Income tax expense
44.4
42.4
71.7
65.6
63.4
Loss (gain) on sales of investment
securities
13.6
12.5
(0.1
)
—
0.2
Fair value (gain) loss adjustments,
net
(12.7
)
147.8
9.2
2.8
10.0
Plus: Gain on extinguishment of debt
0.7
12.7
—
—
—
Net income
$
215.7
$
142.2
$
293.0
$
264.0
$
260.2
Efficiency Ratio by Quarter:
Total non-interest expense, adjusted
$
388.1
$
360.6
$
333.4
$
305.8
$
268.9
Less: Deposit costs
91.0
86.9
82.2
56.2
18.1
Divided by:
Total net interest income
550.3
609.9
639.7
602.1
525.0
Plus:
Tax equivalent interest adjustment
8.7
8.8
9.0
8.5
8.2
Total non-interest income, adjusted
119.9
102.3
70.6
64.6
105.2
Less: Deposit costs
91.0
86.9
82.2
56.2
18.1
$
587.9
$
634.1
$
637.1
$
619.0
$
620.3
Efficiency ratio - tax equivalent basis
(2)
50.5
%
43.2
%
39.4
%
40.3
%
40.4
%
Earnings per Share, Adjusted:
Three Months Ended 3/31/2023:
(in millions)
Net income available to common
stockholders
$
139.0
Adjusted for:
Loss on sales of investment securities
12.5
Fair value loss adjustments, net
147.8
Gain on extinguishment of debt
(12.7
)
Tax effect of adjustments
(37.9
)
Net income available to common
stockholders, adjusted
$
248.7
Diluted shares
108.3
Diluted earnings per share,
adjusted (1)
$
2.30
Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial
Measures
Unaudited
Tangible Common Equity:
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
(dollars and shares in
millions)
Total stockholders' equity
$
5,685
$
5,521
$
5,356
$
5,021
$
4,959
Less:
Goodwill and intangible assets
674
677
680
682
695
Preferred stock
295
295
295
295
295
Total tangible common equity
4,716
4,549
4,381
4,044
3,969
Plus: deferred tax - attributed to
intangible assets
2
2
2
3
2
Total tangible common equity, net of
tax
$
4,718
$
4,551
$
4,383
$
4,047
$
3,971
Total assets
$
68,160
$
71,047
$
67,734
$
69,165
$
66,055
Less: goodwill and intangible assets,
net
674
677
680
682
695
Tangible assets
67,486
70,370
67,054
68,483
65,360
Plus: deferred tax - attributed to
intangible assets
2
2
2
3
2
Total tangible assets, net of
tax
$
67,488
$
70,372
$
67,056
$
68,486
$
65,362
Tangible common equity ratio (3)
7.0
%
6.5
%
6.5
%
5.9
%
6.1
%
Common shares outstanding
109.5
109.5
108.9
108.9
108.3
Tangible book value per share, net of tax
(3)
$
43.09
$
41.56
$
40.25
$
37.16
$
36.67
Non-GAAP Financial Measures
Footnotes
(1)
We believe this non-GAAP measurement is a
key indicator of the earnings power of the Company.
(2)
We believe this non-GAAP ratio provides a
useful metric to measure the efficiency of the Company.
(3)
We believe this non-GAAP metric provides
an important metric with which to analyze and evaluate the
financial condition and capital strength of the Company.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230717039374/en/
Western Alliance Bancorporation Dale Gibbons, 602-952-5476
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