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Section 1: 8-K (8-K)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):  July 20, 2017
WESTERN ALLIANCE BANCORPORATION
(Exact name of registrant as specified in its charter)
Delaware
001-32550
88-0365922
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
One E. Washington Street, Phoenix, Arizona  85004
 (Address of principal executive offices)               (Zip Code)
(602) 389-3500
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ⃞
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ⃞






ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On July 20, 2017, Western Alliance Bancorporation (the “Company”) issued a press release reporting results for the fiscal quarter ended June 30, 2017 and posted on its website its second quarter 2017 Earnings Conference Call Presentation, which contains certain additional historical and forward-looking information relating to the Company.  Copies of the press release and presentation slides are attached hereto as Exhibits 99.1 and 99.2, respectively.  
The information in this report (including Exhibits 99.1 and 99.2 hereto) is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, is not subject to the liabilities of that section and is not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such filing.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
99.1         Press Release dated July 20, 2017.
99.2         Second Quarter 2017 Earnings Conference Call dated July 21, 2017.





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
WESTERN ALLIANCE BANCORPORATION
 
(Registrant)
 
 
 
 
 
 
 
/s/ Dale Gibbons
 
 
 
 
 
Dale Gibbons
 
 
Executive Vice President and
 
Chief Financial Officer
 
 
 
 
 
 
 
 
 
Date:
July 20, 2017
 



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Western Alliance Bancorporation
 
389540757_wallogo03.jpg
One East Washington Street
 
Phoenix, AZ 85004
 
www.westernalliancebancorporation.com
 
 
 


PHOENIX--(BUSINESS WIRE)--July 20, 2017

SECOND QUARTER 2017 FINANCIAL RESULTS
Net income
 
Earnings per share
 
Net interest margin
 
Efficiency ratio
 
Book value per
common share
$80.0 million
 
$0.76
 
4.61%
 
41.3%
 
$19.53
 
 
 
41.2%, excluding non-operating adjustments1
 
$16.71, excluding intangible
assets
1
CEO COMMENTARY:
Robert Sarver, Chairman and CEO, commented, “We delivered excellent results this quarter marked by robust revenue growth coupled with flat expenses, solid deposit and loan increases and continued healthy credit quality.  Our net income of $80 million and $0.76 EPS for Q2 2017 set a compelling course for returns this year. Tangible book value per share1 for the company increased to $16.71 and return on assets rose to 1.71%.  As expected, expenses leveled during the quarter while revenues increased bringing the operating efficiency ratio1 to 41.2%.  We experienced solid growth as deposits grew $675 million to $16 billion and loans grew $327 million to nearly $14 billion. Our vigilant credit culture resulted in continued stable asset quality with non-performing assets to total assets of 0.32% and net recoveries of $1.2 million for the quarter.”
LINKED-QUARTER BASIS
YEAR-OVER-YEAR
 
 
FINANCIAL HIGHLIGHTS:
Net income and earnings per share of $80.0 million and $0.76, compared to $73.4 million and $0.70, respectively
Net operating revenue of $203.2 million, constituting growth of $14.0 million, and a decrease in operating non-interest expenses of $0.3 million 1
Operating pre-provision net revenue of $115.2 million, up $14.3 million from $100.9 million 1
 
Net income of $80.0 million and earnings per share of $0.76, compared to $61.6 million and $0.60, respectively
Net operating revenue of $203.2 million, constituting year-over-year growth of 18.0%, or $31.0 million, and an increase in operating non-interest expenses of 13.2%, or $10.2 million1  
Operating pre-provision net revenue of $115.2 million, up $20.7 million from $94.5 million 1 
FINANCIAL POSITION RESULTS:
Total loans of $13.99 billion, up $327 million
Total deposits of $16.03 billion, up $675 million
Stockholders' equity of $2.06 billion, up $90 million
 
Increase in total loans of $1.11 billion
Increase in total deposits of $1.83 billion
Increase in stockholders' equity of $263 million
LOANS AND ASSET QUALITY:
Nonperforming assets (nonaccrual loans and repossessed assets) decreased to 0.32% of total assets, from 0.44%
Annualized net loan (recoveries) charge-offs to average loans outstanding of (0.03)%, compared to 0.04%
 
Nonperforming assets to total assets of 0.32%, compared to 0.54%
Annualized net loan (recoveries) charge-offs to average loans outstanding of (0.03)%, compared to (0.01)%
KEY PERFORMANCE METRICS:
Net interest margin of 4.61%, compared to 4.63%
Return on average assets and return on tangible common equity1 of 1.71% and 18.42%, compared to 1.69% and 17.85%, respectively
Tangible common equity ratio of 9.5%, compared to 9.4% 1 
Tangible book value per share, net of tax, of $16.71, an increase from $15.86 1 
Operating efficiency ratio of 41.2%, compared to 44.4% 1 
 
Net interest margin of 4.61%, compared to 4.63%
Return on average assets and return on tangible common equity1 of 1.70%and 18.14%, compared to 1.62% and 17.88%, respectively
Tangible common equity ratio of 9.5%, compared to 9.1% 1 
Tangible book value per share, net of tax, of $16.71, an increase of 17.3% from $14.25 1 
Operating efficiency ratio of 41.2%, compared to 43.0% 1 



1 See reconciliation of Non-GAAP Financial Measures beginning on page 19.  

1



Income Statement
Net interest income was $192.7 million in the second quarter 2017, an increase of $13.4 million from $179.3 million in the first quarter 2017 and an increase of $29.1 million, or 17.8%, compared to the second quarter 2016. Net interest income in the second quarter 2017 includes $7.1 million of total accretion income from acquired loans, compared to $6.4 million in the first quarter 2017, and $8.2 million in the second quarter 2016.
The Company’s net interest margin in the second quarter 2017 was 4.61%, a decrease from 4.63% in the first quarter 2017, and from 4.63% in the second quarter 2016. The decrease in net interest margin from the first quarter 2017 is attributable an increase in the average cash balance, higher costs on interest-bearing deposits, as well as a decrease in yield from investment securities, which offset the higher yields on loans as a result of rising interest rates. The decrease in net interest margin from the second quarter 2016 primarily relates to a increases in the cost of interest-bearing deposits and interest expense resulting from the issuance of long-term subordinated debt in June 2016, partially offset by higher yields on loans and securities.
Operating non-interest income was $10.5 million for the second quarter 2017, compared to $9.9 million for the first quarter 2017, and $8.6 million for the second quarter 2016.1  
Net operating revenue was $203.2 million for the second quarter 2017, an increase of $14.0 million, compared to $189.2 million for the first quarter 2017, and an increase of $31.0 million, or 18.0%, compared to $172.2 million for the second quarter 2016.1  
Operating non-interest expense was $88.0 million for the second quarter 2017, compared to $88.3 million for the first quarter 2017, and $77.8 million for the second quarter 2016.1 Operating non-interest expense held relatively flat from the prior quarter. The increase in operating non-interest expense from the second quarter 2016 relates primarily to higher compensation costs resulting from an increase in the number of employees to support growth, as well as higher incentive compensation related to achievement of performance targets. The Company’s operating efficiency ratio1 on a tax equivalent basis was 41.2% for the second quarter 2017, compared to 44.4% for the first quarter 2017, and 43.0% for the second quarter 2016.
Net income was $80.0 million for the second quarter 2017, an increase of $6.6 million from $73.4 million for the first quarter 2017, and an increase of $18.4 million, or 29.8%, from $61.6 million for the second quarter 2016. Earnings per share was $0.76 for the second quarter 2017, compared to $0.70 for the first quarter 2017, and $0.60 for the second quarter 2016.
The Company views its operating pre-provision net revenue ("PPNR") as a key metric for assessing the Company’s earnings power, which it defines as net operating revenue less operating non-interest expense. For the second quarter 2017, the Company’s operating PPNR was $115.2 million, up from $100.9 million in the first quarter 2017, and up 21.9% from $94.5 million in the second quarter 2016.1 The non-operating items1 for the second quarter 2017 consisted primarily of a net loss on sales / valuations of repossessed and other assets of $0.2 million.
The Company had 1,628 full-time equivalent employees and 46 offices at June 30, 2017, compared to 1,560 employees and 45 offices at March 31, 2017 and 1,514 employees and 48 offices at June 30, 2016.


2



Balance Sheet
Gross loans totaled $13.99 billion at June 30, 2017, an increase of $327 million from $13.66 billion at March 31, 2017, and an increase of $1.11 billion from $12.88 billion at June 30, 2016. The increase from both the prior quarter and from June 30, 2016 is due to organic loan growth. At June 30, 2017, the allowance for credit losses was 1.08% of total organic loans, compared to 1.08% at March 31, 2017, and 1.15% at June 30, 2016.
Consistent with accounting principles generally accepted in the United States ("GAAP"), the allowance for credit losses is not carried over in an acquisition because acquired loans are recorded at fair value, which discounts the loans based on expected future cash flows. Credit discounts on acquired loans are included as a reduction to gross loans. These discounts totaled $37.8 million at June 30, 2017, compared to $45.1 million at March 31, 2017 and $61.7 million at June 30, 2016.
Deposits totaled $16.03 billion at June 30, 2017, an increase of $675 million from $15.36 billion at March 31, 2017, and an increase of $1.83 billion from $14.20 billion at June 30, 2016. The increase from both the prior quarter and from June 30, 2016 is the result of organic deposit growth. Non-interest bearing deposits were $6.86 billion at June 30, 2017, compared to $6.11 billion at March 31, 2017, and $5.28 billion at June 30, 2016. Non-interest bearing deposits comprised 42.8% of total deposits at June 30, 2017, compared to 39.8% at March 31, 2017, and 37.1% at June 30, 2016. The proportion of savings and money market balances to total deposits decreased to 38.1% from 40.7% at March 31, 2017, and from 42.3% at June 30, 2016. Certificates of deposit as a percentage of total deposits were 9.9% at June 30, 2017, compared to 10.0% at March 31, 2017, and 11.6% at June 30, 2016. The Company’s ratio of loans to deposits was 87.3% at June 30, 2017, compared to 89.0% at March 31, 2017, and 90.7% at June 30, 2016.
Qualifying debt totaled $375 million at June 30, 2017, compared to $367 million at March 31, 2017, and $382 million at June 30, 2016.
Stockholders’ equity at June 30, 2017 was $2.06 billion, compared to $1.97 billion at March 31, 2017, and $1.80 billion at June 30, 2016. The increase from the prior year relates primarily to net income for the respective period, which was partially offset by valuation declines on available-for-sale investment securities.
At June 30, 2017, tangible common equity, net of tax, was 9.5% of tangible assets1 and total capital was 13.3% of risk-weighted assets. The Company’s tangible book value per share1 was $16.71 at June 30, 2017, up 17.3% from June 30, 2016.
Total assets increased to $18.84 billion at June 30, 2017, from $18.12 billion at March 31, 2017, and increased 12.6% from $16.73 billion at June 30, 2016. The increase in total assets from the prior year relates primarily to organic loan growth and an increase in investment securities resulting from increased deposits.
Asset Quality
The provision for credit losses was $3.0 million for the second quarter 2017, compared to $4.3 million for the first quarter 2017, and $2.5 million for the second quarter 2016. Net loan (recoveries) charge-offs in the second quarter 2017 were $(1.2) million, or (0.03)% of average loans (annualized), compared to $1.3 million in net charge-offs, or 0.04%, in the first quarter 2017 and $(0.4) million in net recoveries, or (0.01)%, in the second quarter 2016.
Nonaccrual loans decreased $4.4 million to $30.1 million during the quarter. Loans past due 90 days and still accruing interest totaled $4.0 million at June 30, 2017, compared to $3.7 million at March 31, 2017, and $7.0 million at June 30, 2016. Loans past due 30-89 days and still accruing interest totaled $4.1 million at quarter end, a decrease from $10.8 million at March 31, 2017, and an increase from $3.5 million at June 30, 2016.
Repossessed assets totaled $31.0 million at quarter end, a decrease of $14.2 million from $45.2 million at March 31, 2017, and a decrease of $18.9 million from $49.8 million at June 30, 2016. Adversely graded loans and non-performing assets totaled $367.8 million at quarter end, a decrease of $20.4 million from $388.2 million at March 31, 2017, and an increase of $4.2 million from $363.6 million at June 30, 2016.
As the Company’s asset quality and capital remain strong, the ratio of classified assets to Tier I capital plus the allowance for credit losses, a common regulatory measure of asset quality, was 12.7% at June 30, 2017, compared to 12.6% at March 31, 2017, and 13.3% at June 30, 2016.1 






1 See reconciliation of Non-GAAP Financial Measures beginning on page 19.

3



Segment Highlights
The Company's reportable segments are aggregated primarily based on geographic location, services offered, and markets served. The Company's regional segments, which include Arizona, Nevada, Southern California, and Northern California, provide full service banking and related services to their respective markets. The operations from the regional segments correspond to the following banking divisions: Alliance Bank of Arizona, Bank of Nevada and First Independent Bank, Torrey Pines Bank, and Bridge Bank.
The Company's National Business Lines ("NBL") segment provides specialized banking services to niche markets. The Company's NBL reportable segments include Homeowner Associations ("HOA") Services, Hotel Franchise Finance ("HFF"), Public & Nonprofit Finance, Technology & Innovation, and Other NBLs. These NBLs are managed centrally and are broader in geographic scope than our other segments, though still predominately located within our core market areas. The HOA Services NBL corresponds to the Alliance Association Bank division. The HFF NBL includes the hotel franchise loan portfolio purchased from GE Capital on April 20, 2016. The operations of Public and Nonprofit Finance are combined into one reportable segment. The Technology & Innovation NBL includes the operations of Equity Fund Resources, the Life Sciences Group, the Renewable Resource Group, and Technology Finance. The Other NBLs segment consists of the operations of Corporate Finance, Mortgage Warehouse Lending, and Resort Finance.
The Corporate & Other segment consists of corporate-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 Arizona, Nevada, Southern California, Northern California, and NBL segments include loan and deposit growth, asset quality, and pre-tax income.
The regional segments reported gross loan balances of $7.83 billion at June 30, 2017, an increase of $84 million during the quarter, and an increase of $265 million during the last twelve months. All regional segments, with the exception of Nevada, had loan growth during the quarter, with Arizona contributing the largest growth of $50 million, followed by Northern California and Southern California with growth of $42 million and $32 million, respectively. The growth in loans during the last twelve months was primarily driven by an increase of $192 million in Arizona. Total deposits for the regional segments were $12.50 billion, an increase of $494 million during the quarter, and an increase of $1.16 billion during the last twelve months. Arizona and Northern California generated increased deposits during the quarter of $524 million and $87 million, respectively, which was partially offset by a decrease of $146 million in Southern California. During the last twelve months, with the exception of Southern California, each regional segment generated increased deposits, with Arizona and Nevada contributing increases of $977 million and $302 million, respectively.
Pre-tax income for the regional segments was $84.7 million for the three months ended June 30, 2017, an increase of $12.3 million from the three months ended March 31, 2017, and an increase of $10.9 million from the three months ended June 30, 2016. All regional segments except Northern California, had an increase in pre-tax income from the prior quarter. Arizona and Nevada generated the largest increases in pre-tax income with increases of $5.8 million and $5.0 million, respectively, compared to the three months ended March 31, 2017. With the exception of Northern California, which had a decrease in pre-tax income of $1.2 million, each regional segment had increases in pre-tax income from the three months ended June 30, 2016, with Arizona and Nevada contributing the largest increases of $6.3 million and $4.3 million, respectively. For the six months ended June 30, 2017, the regional segments reported total pre-tax income of $157.1 million, an increase of $17.2 million compared to the six months ended June 30, 2016. All regional segments with the exception of Northern California had increases in pre-tax income with Arizona and Nevada contributing the largest increases of $11.8 million and $5.4 million, respectively.
The NBL segments reported gross loan balances of $6.15 billion at June 30, 2017, an increase of $245 million during the quarter, and an increase of $868 million during the last twelve months. The increase in loans for the NBL segments compared to the prior quarter relates primarily to the Other NBLs segment, which increased loans by $218 million. The increase in loans for the NBL segments over the last twelve months relates primarily to the Other NBLs and Technology & Innovation segments, which increased loans by $675 million, and $101 million, respectively. Total deposits for the NBL segments were $3.46 billion, an increase of $204 million during the quarter, and an increase of $785 million during the last twelve months. During the quarter, the Technology & Innovation and HOA Services segments increased deposits by $130 million and $74 million, respectively. The increase of $785 million during the last twelve months is the result of growth in the HOA Services and Technology & Innovation segments of $476 million and $309 million, respectively.
Pre-tax income for the NBL segments was $42.6 million for the three months ended June 30, 2017, an increase of $5.1 million from the three months ended March 31, 2017, and an increase of $7.6 million from the three months ended June 30, 2016. The increase in pre-tax income from the prior quarter relates primarily to the Other NBLs and Technology & Innovation segments as both segments had an increase in pre-tax income of $2.3 million. This increase was offset by a decrease in pre-tax income from the HFF segment of $2.0 million. The increase in pre-tax income compared to the three months ended June 30, 2016 was driven by an increase of $2.4 million in both the Public & Nonprofit Finance and Technology & Innovation segments as well as an increase in pre-tax income from the HOA Services segment of $2.3 million. These increases were partially offset by a decrease in pre-tax income for the HFF segment of $1.0 million. Pre-tax income for the NBL segments for the six months ended June 30, 2017 totaled $80.1 million, an increase of $18.6 million compared to the six months ended June 30, 2016. The largest increases in pre-tax income compared to the six months ended June 30, 2016 were in the HFF, HOA Services, and Public & Nonprofit Finance segments, which increased $9.6 million, $4.8 million, and $2.6 million, respectively.

4



Conference Call and Webcast
Western Alliance Bancorporation will host a conference call and live webcast to discuss its second quarter 2017 financial results at 12:00 p.m. ET on Friday, July 21, 2017. Participants may access the call by dialing 1-888-317-6003 and using passcode 2161427 or via live audio webcast using the website link http://services.choruscall.com/links/wal170721.html. 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 2:00 p.m. ET July 21st through 9:00 a.m. ET August 21st by dialing 1-877-344-7529 passcode: 10109628.
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, and future economic performance. 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, 2016 as filed with the Securities and Exchange Commission; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; 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 $18 billion in assets, Western Alliance Bancorporation (NYSE:WAL) is one of the country’s top-performing banking companies and is ranked #4 on the Forbes 2017 “Best Banks in America” list. Its primary subsidiary, Western Alliance Bank, is the go-to bank for business and succeeds with local teams of experienced bankers who deliver superior service and a full spectrum of deposit, lending, treasury management, international banking and online banking products and services. Western Alliance Bank operates full-service banking divisions: Alliance Bank of Arizona, Bank of Nevada and First Independent Bank, Torrey Pines Bank and Bridge Bank. The bank also serves business customers through a robust national platform of specialized financial services including Corporate Finance, Equity Fund Resources, Hotel Franchise Finance, Life Sciences Group, Mortgage Warehouse Lending, Public and Nonprofit Finance, Renewable Resource Group, Resort Finance, Technology Finance and Alliance Association Bank. For more information, visit westernalliancebancorporation.com.

5



Western Alliance Bancorporation and Subsidiaries
 
 
 
 
 
 
 
 
 
 
Summary Consolidated Financial Data
 
 
 
 
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Balance Sheet Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of June 30,
 
 
 
 
 
 
 
 
2017
 
2016
 
Change %
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
Total assets
 
$
18,844.7

 
$
16,728.7

 
12.6
 %
 
 
 
 
 
 
Total loans, net
 
13,989.9

 
12,877.8

 
8.6

 
 
 
 
 
 
Securities and money market investments
 
3,283.0

 
2,262.6

 
45.1

 
 
 
 
 
 
Total deposits
 
16,031.1

 
14,201.3

 
12.9

 
 
 
 
 
 
Qualifying debt
 
375.4

 
382.1

 
(1.8
)
 
 
 
 
 
 
Stockholders' equity
 
2,058.7

 
1,796.2

 
14.6

 
 
 
 
 
 
Tangible common equity, net of tax (1)
 
1,761.6

 
1,497.5

 
17.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Income Statement Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2017
 
2016
 
Change %
 
2017
 
2016
 
Change %
 
 
(in thousands, except per share data)
 
 
 
(in thousands, except per share data)
 
 
Interest income
 
$
206,953

 
$
174,089

 
18.9
 %
 
$
399,218

 
$
328,345

 
21.6
 %
Interest expense
 
14,210

 
10,403

 
36.6

 
27,166

 
18,948

 
43.4

Net interest income
 
192,743

 
163,686

 
17.8

 
372,052

 
309,397

 
20.3

Provision for credit losses
 
3,000

 
2,500

 
20.0

 
7,250

 
5,000

 
45.0

Net interest income after provision for credit losses
 
189,743

 
161,186

 
17.7

 
364,802

 
304,397

 
19.8

Non-interest income
 
10,449

 
8,559

 
22.1

 
20,993

 
21,692

 
(3.2
)
Non-interest expense
 
88,257

 
81,804

 
7.9

 
176,014

 
157,297

 
11.9

Income before income taxes
 
111,935

 
87,941

 
27.3

 
209,781

 
168,792

 
24.3

Income tax expense
 
31,964

 
26,327

 
21.4

 
56,453

 
45,846

 
23.1

Net income
 
$
79,971

 
$
61,614

 
29.8

 
$
153,328

 
$
122,946

 
24.7

Diluted earnings per share
 
$
0.76

 
$
0.60

 
26.7

 
$
1.46

 
$
1.19

 
22.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) See Reconciliation of Non-GAAP Financial Measures.
 
 
 
 
 
 
 
 
 
 

6



Western Alliance Bancorporation and Subsidiaries
 
 
 
 
 
 
 
 
 
 
Summary Consolidated Financial Data
 
 
 
 
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2017
 
2016
 
Change %
 
2017
 
2016
 
Change %
Diluted earnings per share
 
$
0.76

 
$
0.60

 
26.7
%
 
$
1.46

 
$
1.19

 
22.7
%
Book value per common share
 
19.53

 
17.09

 
14.3

 
 
 
 
 
 
Tangible book value per share, net of tax (1)
 
16.71

 
14.25

 
17.3

 
 
 
 
 
 
Average shares outstanding
(in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
104,161

 
102,688

 
1.4

 
104,075

 
102,294

 
1.7

Diluted
 
105,045

 
103,472

 
1.5

 
104,941

 
103,007

 
1.9

Common shares outstanding
 
105,429

 
105,084

 
0.3

 
 
 
 
 
 
Selected Performance Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (2)
 
1.71
 %
 
1.55
 %
 
10.3
 %
 
1.70
%
 
1.62
%
 
4.9
 %
Return on average tangible common equity (1, 2)
 
18.42

 
17.36

 
6.1

 
18.14

 
17.88

 
1.5

Net interest margin (2)
 
4.61

 
4.63

 
(0.4
)
 
4.62

 
4.60

 
0.4

Net interest spread
 
4.34

 
4.46

 
(2.7
)
 
4.37

 
4.43

 
(1.4
)
Operating efficiency ratio - tax equivalent basis (1)
 
41.20

 
42.99

 
(4.2
)
 
40.66

 
44.23

 
(8.1
)
Loan to deposit ratio
 
87.27

 
90.68

 
(3.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset Quality Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
Net (recoveries) charge-offs to average loans outstanding (2)
 
(0.03
)%
 
(0.01
)%
 
NM

 
0.00
%
 
0.03
%
 
(100.0
)%
Nonaccrual loans to gross loans
 
0.22

 
0.31

 
(29.0
)
 
 
 
 
 
 
Nonaccrual loans and repossessed assets to total assets
 
0.32

 
0.54

 
(40.7
)
 
 
 
 
 
 
Loans past due 90 days and still accruing to gross loans
 
0.03

 
0.05

 
(40.0
)
 
 
 
 
 
 
Allowance for credit losses to gross organic loans
 
1.08

 
1.15

 
(6.1
)
 
 
 
 
 
 
Allowance for credit losses to nonaccrual loans
 
438.33

 
307.68

 
42.5

 
 
 
 
 
 
Capital Ratios (1):
 
 
 
 
 
 
 
 
Jun 30, 2017
 
Mar 31, 2017
 
Jun 30, 2016
Tangible common equity (1)
 
9.5
%
 
9.4
%
 
9.1
%
Common Equity Tier 1 (3)
 
10.3

 
10.0

 
9.6

Tier 1 Leverage ratio (3)
 
9.9

 
10.2

 
9.8

Tier 1 Capital (3)
 
10.8

 
10.5

 
10.0

Total Capital (3)
 
13.3

 
13.1

 
12.9





(1)
See Reconciliation of Non-GAAP Financial Measures.
(2)
Annualized for the three month periods ended June 30, 2017 and 2016.
(3)
Capital ratios for June 30, 2017 are preliminary until the Call Report is filed.
NM
Changes +/- 100% are not meaningful.

7



Western Alliance Bancorporation and Subsidiaries
 
 
 
 
 
 
 
 
Condensed Consolidated Income Statements
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2017
 
2016
 
2017
 
2016
 
 
(dollars in thousands, except per share data)
Interest income:
 
 
 
 
 
 
 
 
Loans
 
$
183,657

 
$
160,015

 
$
356,210

 
$
299,801

Investment securities
 
20,629

 
12,871

 
38,743

 
26,379

Other
 
2,667

 
1,203

 
4,265

 
2,165

Total interest income
 
206,953

 
174,089

 
399,218

 
328,345

Interest expense:
 
 
 
 
 
 
 
 
Deposits
 
9,645

 
7,678

 
18,057

 
13,921

Qualifying debt
 
4,493

 
2,514

 
8,831

 
4,698

Borrowings
 
72

 
211

 
278

 
329

Total interest expense
 
14,210

 
10,403

 
27,166

 
18,948

Net interest income
 
192,743

 
163,686

 
372,052

 
309,397

Provision for credit losses
 
3,000

 
2,500

 
7,250

 
5,000

Net interest income after provision for credit losses
 
189,743

 
161,186

 
364,802

 
304,397

Non-interest income:
 
 
 
 
 
 
 
 
Service charges
 
5,203

 
4,544

 
9,941

 
9,043

Card income
 
1,380

 
1,274

 
2,802

 
2,464

Income from bank owned life insurance
 
973

 
1,029

 
1,921

 
1,959

Foreign currency income
 
832

 
842

 
1,874

 
1,783

Warrant income
 
738

 
59

 
1,324

 
393

Lending related income and gains (losses) on sale of loans, net
 
227

 
194

 
649

 
3,801

(Loss) gain on sales of investment securities, net
 
(47
)
 

 
588

 
1,001

Other
 
1,143

 
617

 
1,894

 
1,248

Total non-interest income
 
10,449

 
8,559

 
20,993

 
21,692

Non-interest expenses:
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
52,246

 
44,711

 
103,866

 
89,566

Legal, professional and directors' fees
 
8,483

 
5,747

 
17,286

 
11,319

Occupancy
 
6,927

 
7,246

 
13,821

 
13,503

Data processing
 
4,396

 
5,114

 
9,667

 
9,175

Insurance
 
3,589

 
2,963

 
6,817

 
6,286

Deposit costs
 
2,133

 
986

 
3,874

 
1,758

Marketing
 
1,131

 
1,097

 
1,852

 
1,754

Loan and repossessed asset expenses
 
1,098

 
832

 
2,376

 
1,734

Card expense
 
704

 
824

 
1,358

 
1,711

Intangible amortization
 
488

 
697

 
1,177

 
1,394

Net loss (gain) on sales and valuations of repossessed and other assets
 
231

 
357

 
(312
)
 
55

Acquisition / restructure expense
 

 
3,662

 

 
3,662

Other
 
6,831

 
7,568

 
14,232

 
15,380

Total non-interest expense
 
88,257

 
81,804

 
176,014

 
157,297

Income before income taxes
 
111,935

 
87,941

 
209,781

 
168,792

Income tax expense
 
31,964

 
26,327

 
56,453

 
45,846

Net income
 
$
79,971

 
$
61,614

 
$
153,328

 
$
122,946

 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
Diluted shares
 
105,045

 
103,472

 
104,941

 
103,007

Diluted earnings per share
 
$
0.76

 
$
0.60

 
$
1.46

 
$
1.19


8



Western Alliance Bancorporation and Subsidiaries
 
 
 
 
 
 
 
 
Five Quarter Condensed Consolidated Income Statements
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
Jun 30, 2017
 
Mar 31, 2017
 
Dec 31, 2016
 
Sep 30, 2016
 
Jun 30, 2016
 
 
(in thousands, except per share data)
Interest income:
 
 
 
 
 
 
 
 
 
 
Loans
 
$
183,657

 
$
172,553

 
$
168,881

 
$
167,914

 
$
160,015

Investment securities
 
20,629

 
18,114

 
16,725

 
15,436

 
12,871

Other
 
2,667

 
1,598

 
1,805

 
1,400

 
1,203

Total interest income
 
206,953

 
192,265

 
187,411

 
184,750

 
174,089

Interest expense:
 
 
 
 
 
 
 
 
 
 
Deposits
 
9,645

 
8,412

 
7,729

 
8,072

 
7,678

Qualifying debt
 
4,493

 
4,338

 
4,252

 
4,048

 
2,514

Borrowings
 
72

 
206

 
161

 
83

 
211

Total interest expense
 
14,210

 
12,956

 
12,142

 
12,203

 
10,403

Net interest income
 
192,743

 
179,309

 
175,269

 
172,547

 
163,686

Provision for credit losses
 
3,000

 
4,250

 
1,000

 
2,000

 
2,500

Net interest income after provision for credit losses
 
189,743

 
175,059

 
174,269

 
170,547

 
161,186

Non-interest income:
 
 
 
 
 
 
 
 
 
 
Service charges
 
5,203

 
4,738

 
4,865

 
4,916

 
4,544

Card income
 
1,380

 
1,422

 
1,381

 
1,381

 
1,274

Income from bank owned life insurance
 
973

 
948

 
904

 
899

 
1,029

Foreign currency income
 
832

 
1,042

 
747

 
888

 
842

Warrant income
 
738

 
586

 
1,353

 
1,457

 
59

Lending related income and gains (losses) on sale of loans, net
 
227

 
422

 
488

 
459

 
194

(Losses) gains on sales of investment securities, net
 
(47
)
 
635

 
58

 

 

Other
 
1,143

 
751

 
744

 
683

 
617

Total non-interest income
 
10,449

 
10,544

 
10,540

 
10,683

 
8,559

Non-interest expenses:
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
52,246

 
51,620

 
49,702

 
49,542

 
44,711

Legal, professional, and directors' fees
 
8,483

 
8,803

 
7,600

 
5,691

 
5,747

Occupancy
 
6,927

 
6,894

 
6,944

 
6,856

 
7,246

Data processing
 
4,396

 
5,271

 
4,504

 
4,982

 
5,114

Insurance
 
3,589

 
3,228

 
3,468

 
3,144

 
2,963

Deposit costs
 
2,133

 
1,741

 
1,862

 
1,363

 
986

Marketing
 
1,131

 
721

 
1,164

 
678

 
1,097

Loan and repossessed asset expenses
 
1,098

 
1,278

 
477

 
788

 
832

Card expense
 
704

 
654

 
689

 
536

 
824

Intangible amortization
 
488

 
689

 
697

 
697

 
697

Net loss (gain) on sales and valuations of repossessed and other assets
 
231

 
(543
)
 
(34
)
 
(146
)
 
357

Acquisition / restructure expense
 

 

 
6,021

 
2,729

 
3,662

Other
 
6,831

 
7,401

 
5,551

 
8,147

 
7,568

Total non-interest expense
 
88,257

 
87,757

 
88,645

 
85,007

 
81,804

Income before income taxes
 
111,935

 
97,846

 
96,164

 
96,223

 
87,941

Income tax expense
 
31,964

 
24,489

 
26,364

 
29,171

 
26,327

Net income
 
$
79,971

 
$
73,357

 
$
69,800

 
$
67,052

 
$
61,614

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
Diluted shares
 
105,045

 
104,836

 
104,765

 
104,564

 
103,472

Diluted earnings per share
 
$
0.76

 
$
0.70

 
$
0.67

 
$
0.64

 
$
0.60


9



Western Alliance Bancorporation and Subsidiaries
 
 
 
 
 
 
 
 
Five Quarter Condensed Consolidated Balance Sheets
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
Jun 30, 2017
 
Mar 31, 2017
 
Dec 31, 2016
 
Sep 30, 2016
 
Jun 30, 2016
 
 
(in millions, except per share data)
Assets:
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
 
$
606.7

 
$
647.0

 
$
284.5

 
$
356.1

 
$
696.2

Securities and money market investments
 
3,283.0

 
2,869.1

 
2,767.8

 
2,778.1

 
2,262.6

Loans held for sale
 
16.7

 
17.8

 
18.9

 
21.3

 
22.3

Loans held for investment:
 
 
 
 
 
 
 
 
 
 
Commercial
 
6,318.5

 
6,039.1

 
5,855.8

 
5,715.0

 
5,577.6

Commercial real estate - non-owner occupied
 
3,649.1

 
3,607.8

 
3,544.0

 
3,623.4

 
3,601.3

Commercial real estate - owner occupied
 
2,021.2

 
2,043.4

 
2,013.3

 
1,984.0

 
2,008.3

Construction and land development
 
1,601.7

 
1,601.7

 
1,478.1

 
1,379.7

 
1,333.5

Residential real estate
 
334.8

 
309.9

 
259.4

 
271.8

 
293.0

Consumer
 
47.9

 
43.0

 
39.0

 
38.4

 
41.8

Gross loans and deferred fees, net
 
13,973.2

 
13,644.9

 
13,189.6

 
13,012.3

 
12,855.5

Allowance for credit losses
 
(131.8
)
 
(127.6
)
 
(124.7
)
 
(122.9
)
 
(122.1
)
Loans, net
 
13,841.4

 
13,517.3

 
13,064.9

 
12,889.4

 
12,733.4

Premises and equipment, net
 
120.5

 
120.0

 
119.8

 
121.3

 
120.5

Other assets acquired through foreclosure, net
 
31.0

 
45.2

 
47.8

 
49.6

 
49.8

Bank owned life insurance
 
166.4

 
165.5

 
164.5

 
163.6

 
164.3

Goodwill and other intangibles, net
 
301.6

 
302.1

 
302.9

 
303.6

 
304.3

Other assets
 
477.4

 
438.5

 
429.7

 
359.6

 
375.3

Total assets
 
$
18,844.7

 
$
18,122.5

 
$
17,200.8

 
$
17,042.6

 
$
16,728.7

Liabilities and Stockholders' Equity:
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
Deposits
 
 
 
 
 
 
 
 
 
 
Non-interest bearing demand deposits
 
$
6,859.4

 
$
6,114.1

 
$
5,632.9

 
$
5,624.8

 
$
5,275.1

Interest bearing:
 
 
 
 
 
 
 
 
 
 
Demand
 
1,480.8

 
1,449.3

 
1,346.7

 
1,256.7

 
1,278.1

Savings and money market
 
6,104.0

 
6,253.8

 
6,120.9

 
5,969.6

 
6,005.8

Time certificates
 
1,586.9

 
1,538.8

 
1,449.3

 
1,592.1

 
1,642.3

Total deposits
 
16,031.1

 
15,356.0

 
14,549.8

 
14,443.2

 
14,201.3

Customer repurchase agreements
 
32.7

 
35.7

 
41.7

 
44.4

 
38.5

Total customer funds
 
16,063.8

 
15,391.7

 
14,591.5

 
14,487.6

 
14,239.8

Borrowings
 

 

 
80.0

 

 

Qualifying debt
 
375.4

 
366.9

 
367.9

 
382.9

 
382.1

Accrued interest payable and other liabilities
 
346.8

 
394.9

 
269.9

 
314.7

 
310.6

Total liabilities
 
16,786.0

 
16,153.5

 
15,309.3

 
15,185.2

 
14,932.5

Stockholders' Equity:
 
 
 
 
 
 
 
 
 
 
Common stock and additional paid-in capital
 
1,376.4

 
1,370.3

 
1,373.8

 
1,368.4

 
1,364.0

Retained earnings
 
675.8

 
595.8

 
522.4

 
452.6

 
385.6

Accumulated other comprehensive income (loss)
 
6.5

 
2.9

 
(4.7
)
 
36.4

 
46.6

Total stockholders' equity
 
2,058.7

 
1,969.0

 
1,891.5

 
1,857.4

 
1,796.2

Total liabilities and stockholders' equity
 
$
18,844.7

 
$
18,122.5

 
$
17,200.8

 
$
17,042.6

 
$
16,728.7



10



Western Alliance Bancorporation and Subsidiaries
 
 
 
 
 
 
 
 
Changes in the Allowance For Credit Losses
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
Jun 30, 2017
 
Mar 31, 2017
 
Dec 31, 2016
 
Sep 30, 2016
 
Jun 30, 2016
 
 
(in thousands)
Balance, beginning of period
 
$
127,649

 
$
124,704

 
$
122,884

 
$
122,104

 
$
119,227

Provision for credit losses
 
3,000

 
4,250

 
1,000

 
2,000

 
2,500

Recoveries of loans previously charged-off:
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
1,759

 
328

 
1,144

 
466

 
804

Commercial real estate - non-owner occupied
 
360

 
355

 
691

 
230

 
343

Commercial real estate - owner occupied
 
46

 
178

 
45

 
291

 
427

Construction and land development
 
508

 
277

 
30

 
302

 
58

Residential real estate
 
1,299

 
251

 
287

 
179

 
153

Consumer
 

 
49

 
11

 
21

 
43

Total recoveries
 
3,972

 
1,438

 
2,208

 
1,489

 
1,828

Loans charged-off:
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
651

 
2,595

 
1,267

 
2,558

 
1,161

Commercial real estate - non-owner occupied
 
1,808

 

 
1

 

 

Commercial real estate - owner occupied
 
11

 

 
1

 
72

 
244

Construction and land development
 

 

 
18

 

 

Residential real estate
 
332

 
115

 
60

 
79

 

Consumer
 
8

 
33

 
41

 

 
46

Total loans charged-off
 
2,810

 
2,743

 
1,388

 
2,709

 
1,451

Net loan (recoveries) charge-offs
 
(1,162
)
 
1,305

 
(820
)
 
1,220

 
(377
)
Balance, end of period
 
$
131,811

 
$
127,649

 
$
124,704

 
$
122,884

 
$
122,104

 
 
 
 
 
 
 
 
 
 
 
Net (recoveries) charge-offs to average loans- annualized
 
(0.03
)%
 
0.04
%
 
(0.03
)%
 
0.04
%
 
(0.01
)%
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses to gross organic loans
 
1.08
 %
 
1.08
%
 
1.11
 %
 
1.13
%
 
1.15
 %
Allowance for credit losses to nonaccrual loans
 
438.33

 
370.45

 
309.65

 
302.61

 
307.68

 
 
 
 
 
 
 
 
 
 
 
Nonaccrual loans
 
$
30,071

 
$
34,458

 
$
40,272

 
$
40,608

 
$
39,685

Nonaccrual loans to gross loans
 
0.22
 %
 
0.25
%
 
0.31
 %
 
0.31
%
 
0.31
 %
Repossessed assets
 
$
30,988

 
$
45,200

 
$
47,815

 
$
49,619

 
$
49,842

Nonaccrual loans and repossessed assets to total assets
 
0.32
 %
 
0.44
%
 
0.51
 %
 
0.53
%
 
0.54
 %
 
 
 
 
 
 
 
 
 
 
 
Loans past due 90 days, still accruing
 
$
4,021

 
$
3,659

 
$
1,067

 
$
2,817

 
$
6,991

Loans past due 90 days and still accruing to gross loans
 
0.03
 %
 
0.03
%
 
0.01
 %
 
0.02
%
 
0.05
 %
Loans past due 30 to 89 days, still accruing
 
$
4,071

 
$
10,764

 
$
6,294

 
$
18,446

 
$
3,475

Loans past due 30 to 89 days, still accruing to gross loans
 
0.03
 %
 
0.08
%
 
0.05
 %
 
0.14
%
 
0.03
 %
 
 
 
 
 
 
 
 
 
 
 
Special mention loans
 
$
141,036

 
$
175,080

 
$
148,144

 
$
134,018

 
$
154,167

Special mention loans to gross loans
 
1.01
 %
 
1.28
%
 
1.12
 %
 
1.03
%
 
1.20
 %