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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):  October 19, 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 October 19, 2017, Western Alliance Bancorporation (the “Company”) issued a press release reporting results for the fiscal quarter ended September 30, 2017 and posted on its website its third 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 October 19, 2017.
99.2        Third Quarter 2017 Earnings Conference Call dated October 20, 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:
October 19, 2017
 



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Western Alliance Bancorporation
 
390709082_wallogo04.jpg
One East Washington Street
 
Phoenix, AZ 85004
 
www.westernalliancebancorporation.com
 
 
 


PHOENIX--(BUSINESS WIRE)--October 19, 2017

THIRD QUARTER 2017 FINANCIAL RESULTS
Net income
 
Earnings per share
 
Net interest margin
 
Efficiency ratio
 
Book value per
common share
$82.9 million
 
$0.79
 
4.65%
 
40.0%
 
$20.34
 
 
 
40.0%, excluding non-operating adjustments1
 
$17.53, excluding intangible
assets
1
CEO COMMENTARY:
Robert Sarver, Chairman and CEO, commented, “The economy continues to steadily expand and our clients are growing their businesses. Our highly experienced bankers have deep local roots and are among the best and brightest in our markets. This quarter was marked by continued momentum in key financial metrics and reaffirms our outstanding 2017 results for shareholders. Tangible book value per share increased 5% to $17.531 from the prior quarter. Robust loan growth of $532 million and deposit growth of $874 million during the quarter has us well-positioned for future success. Our quarterly operating results, with net income of $82.9 million, EPS of $0.79 and an operating efficiency ratio of 40%1 reflect our strong fundamentals."
LINKED-QUARTER BASIS
YEAR-OVER-YEAR
 
 
FINANCIAL HIGHLIGHTS:
Net income and earnings per share of $82.9 million and $0.79, compared to $80.0 million and $0.76, respectively
Net operating revenue of $211.5 million, an increase of 4.1%, or$8.3 million, and an increase in operating non-interest expenses of $0.8 million 1
Operating pre-provision net revenue of $122.7 million, up $7.5 million from $115.2 million 1 
 
Net income of $82.9 million and earnings per share of $0.79, compared to $67.1 million and $0.64, respectively
Net operating revenue of $211.5 million, an increase of 15.4%, or $28.3 million, and an increase in operating non-interest expenses of 7.8%, or $6.4 million1  
Operating pre-provision net revenue of $122.7 million, up $21.9 million from $100.8 million 1 
FINANCIAL POSITION RESULTS:
Total loans of $14.52 billion, up $532 million
Total deposits of $16.90 billion, up $874 million
Stockholders' equity of $2.15 billion, up $87 million
 
Increase in total loans of $1.49 billion
Increase in total deposits of $2.46 billion
Increase in stockholders' equity of $288 million
LOANS AND ASSET QUALITY:
Nonperforming assets (nonaccrual loans and repossessed assets) to total assets of 0.42%2, compared to 0.32%
Annualized net charge-offs (recoveries) to average loans outstanding of 0.01%, compared to (0.03)%
 
Nonperforming assets to total assets of 0.42%2, compared to 0.53%
Annualized net charge-offs (recoveries) to average loans outstanding of 0.01%, compared to 0.04%
KEY PERFORMANCE METRICS:
Net interest margin of 4.65%, compared to 4.61%
Return on average assets and return on tangible common equity1 of 1.71% and 18.18%, compared to 1.71% and 18.42%, respectively
Tangible common equity ratio of 9.4%, compared to 9.5% 1 
Tangible book value per share, net of tax, of $17.53, an increase of 4.9% from $16.71 1 
Operating efficiency ratio of 40.0%, compared to 41.2% 1 
 
Net interest margin of 4.65%, compared to 4.55%
Return on average assets and return on tangible common equity1 of 1.70% and 18.15%, compared to 1.61% and 17.74%, respectively
Tangible common equity ratio of 9.4%, compared to 9.3% 1 
Tangible book value per share, net of tax, of $17.53, an increase of 18.1% from $14.84 1 
Operating efficiency ratio of 40.0%, compared to 43.0% 1 



1 See reconciliation of Non-GAAP Financial Measures beginning on page 19.  
2 Includes one loan with a net balance of $23 million, which the Company sold subsequent to quarter-end.  

1



Income Statement
Net interest income was $201.6 million in the third quarter 2017, an increase of $8.8 million from $192.7 million in the second quarter 2017 and an increase of $29.0 million, or 16.8%, compared to the third quarter 2016. Net interest income in the third quarter 2017 includes $7.5 million of accretion income from acquired loans, compared to $7.1 million in the second quarter 2017, and $8.8 million in the third quarter 2016.
The Company’s net interest margin in the third quarter 2017 was 4.65%, an increase from 4.61% in the second quarter 2017, and from 4.55% in the third quarter 2016. The increase in net interest margin from the second quarter 2017 and the third quarter 2016 is attributable to higher yields on loans as a result of rising interest rates, as well as an increase in yields from investment securities.
Operating non-interest income was $9.9 million for the third quarter 2017, compared to $10.5 million for the second quarter 2017, and $10.7 million for the third quarter 2016.1 The decrease in operating non-interest income from the prior quarter primarily relates to a decrease in income from equity investments. The decrease in operating non-interest income from the third quarter 2016 is due primarily to a decrease in lending related income, resulting from decreased SBA income.
Net operating revenue was $211.5 million for the third quarter 2017, an increase of $8.3 million, or 4.1%, compared to $203.2 million for the second quarter 2017, and an increase of $28.3 million, or 15.4%, compared to $183.2 million for the third quarter 2016.1  
Operating non-interest expense was $88.8 million for the third quarter 2017, compared to $88.0 million for the second quarter 2017, and $82.4 million for the third quarter 2016.1 Operating non-interest expense held relatively flat from the prior quarter as the decrease in legal, professional and directors' fees resulting from vesting of director restricted stock awards at the end of the second quarter 2017 was offset by increases in deposit costs and charitable contributions during the quarter. The increase in operating non-interest expense from the third 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 40.0% for the third quarter 2017, compared to 41.2% for the second quarter 2017, and 43.0% for the third quarter 2016.
Net income was $82.9 million for the third quarter 2017, an increase of $2.9 million, or 3.6%, from $80.0 million for the second quarter 2017, and an increase of $15.8 million, or 23.6%, from $67.1 million for the third quarter 2016. Earnings per share was $0.79 for the third quarter 2017, compared to $0.76 for the second quarter 2017, and $0.64 for the third 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 third quarter 2017, the Company’s operating PPNR was $122.7 million, up 6.5% from $115.2 million in the second quarter 2017, and up 21.7% from $100.8 million in the third quarter 2016.1 The non-operating items1 for the third quarter 2017 consisted primarily of a net gain on sales of investment securities of $0.3 million, offset by a net loss on sales / valuations of repossessed and other assets of $0.3 million. The non-operating items1 for the third quarter 2016 consisted primarily of acquisition / restructure expenses of $2.7 million related to the HFF and system conversion costs.
The Company had 1,673 full-time equivalent employees and 47 offices at September 30, 2017, compared to 1,628 employees and 46 offices at June 30, 2017 and 1,520 employees and 48 offices at September 30, 2016.


2



Balance Sheet
Gross loans totaled $14.52 billion at September 30, 2017, an increase of $532 million from $13.99 billion at June 30, 2017, and an increase of $1.49 billion from $13.03 billion at September 30, 2016. The increase from both the prior quarter and from September 30, 2016 is due to organic loan growth. At September 30, 2017, the allowance for credit losses to gross loans held for investment was 0.94%, compared to 0.94% at June 30, 2017, and 0.94% at September 30, 2016. At September 30, 2017, the allowance for credit losses to total organic loans was 1.06%, compared to 1.08% at June 30, 2017, and 1.13% at September 30, 2016. The Company defines its organic loans as those loans that have not been acquired in a transaction accounted for as a business combination.
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 $32.7 million at September 30, 2017, compared to $37.8 million at June 30, 2017, and $56.1 million at September 30, 2016.
Deposits totaled $16.90 billion at September 30, 2017, an increase of $874 million from $16.03 billion at June 30, 2017, and an increase of $2.46 billion from $14.44 billion at September 30, 2016. The increase from both the prior quarter and from September 30, 2016 is the result of organic deposit growth. Non-interest bearing deposits were $7.61 billion at September 30, 2017, compared to $6.86 billion at June 30, 2017, and $5.62 billion at September 30, 2016. Non-interest bearing deposits comprised 45.0% of total deposits at September 30, 2017, compared to 42.8% at June 30, 2017, and 38.9% at September 30, 2016. The proportion of savings and money market balances to total deposits decreased to 37.3% from 38.1% at June 30, 2017, and from 41.3% at September 30, 2016. Certificates of deposit as a percentage of total deposits were 9.4% at September 30, 2017, compared to 9.9% at June 30, 2017, and 11.0% at September 30, 2016. The Company’s ratio of loans to deposits was 85.9% at September 30, 2017, compared to 87.3% at June 30, 2017, and 90.2% at September 30, 2016.
Qualifying debt totaled $373 million at September 30, 2017, compared to $375 million at June 30, 2017, and $383 million at September 30, 2016.
Stockholders’ equity at September 30, 2017 was $2.15 billion, compared to $2.06 billion at June 30, 2017, and $1.86 billion at September 30, 2016. The increase from the prior quarter and prior year relates primarily to net income for the respective period.
At September 30, 2017, tangible common equity, net of tax, was 9.4% of tangible assets1 and total capital was 13.3% of risk-weighted assets. The Company’s tangible book value per share1 was $17.53 at September 30, 2017, up 18.1% from September 30, 2016.
Total assets increased 5.7% to $19.92 billion at September 30, 2017, from $18.84 billion at June 30, 2017, and increased 16.9% from $17.04 billion at September 30, 2016. The increase in total assets from the prior quarter and prior year relates primarily to loan growth of $532 million and $1.49 billion, respectively.
Asset Quality
The provision for credit losses was $5.0 million for the third quarter 2017, compared to $3.0 million for the second quarter 2017, and $2.0 million for the third quarter 2016. Net charge-offs (recoveries) in the third quarter 2017 were $0.4 million, or 0.01% of average loans (annualized), compared to $(1.2) million in net recoveries, or (0.03)%, in the second quarter 2017 and $1.2 million in net charge-offs, or 0.04%, in the third quarter 2016.
Nonaccrual loans increased $24.9 million to $55.0 million during the quarter, which primarily relates to one loan with a net balance of $23 million, which the Company sold subsequent to quarter end. The Company incurred a loss of $1.4 million on the sale of the loan, which was recognized as a charge-off during the quarter. Loans past due 90 days and still accruing interest totaled less than $0.1 million at September 30, 2017, compared to $4.0 million at June 30, 2017, and $2.8 million at September 30, 2016. Loans past due 30-89 days and still accruing interest totaled $5.2 million at quarter end, an increase from $4.1 million at June 30, 2017, and a decrease from $18.4 million at September 30, 2016.
Repossessed assets totaled $29.0 million at quarter end, a decrease of $2.0 million from $31.0 million at June 30, 2017, and a decrease of $20.6 million from $49.6 million at September 30, 2016. Adversely graded loans and non-performing assets totaled $406.2 million at quarter end, an increase of $38.4 million from $367.8 million at June 30, 2017, and an increase of $71.3 million from $334.9 million at September 30, 2016. The increase in non-performing assets during the quarter primarily relates to the $23 million loan discussed above.
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 10.7% at September 30, 2017, compared to 12.7% at June 30, 2017, and 12.3% at September 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 $7.95 billion at September 30, 2017, an increase of $121 million during the quarter, and an increase of $410 million during the last twelve months. All regional segments, with the exception of Nevada, had loan growth during the quarter, with Northern California contributing the largest growth of $88 million, followed by Arizona and Southern California with growth of $41 million and $35 million, respectively. The growth in loans during the last twelve months was primarily driven by increases of $193 million in Arizona, $189 million in Northern California, and $40 million in Southern California. Total deposits for the regional segments were $13.20 billion, an increase of $693 million during the quarter, and an increase of $1.79 billion during the last twelve months. Arizona and Southern California generated increased deposits during the quarter of $420 million and $261 million, respectively, which was partially offset by a decrease of $12 million in Northern California. During the last twelve months, each regional segment generated increased deposits, with Arizona, Southern California, and Nevada contributing increases of $1.27 billion, $257 million, and $239 million, respectively.
Pre-tax income for the regional segments was $86.1 million for the three months ended September 30, 2017, an increase of $1.4 million from the three months ended June 30, 2017, and an increase of $5.4 million from the three months ended September 30, 2016. Arizona generated the largest increase in pre-tax income of $3.2 million, compared to the three months ended June 30, 2017, which was partially offset by a decrease in Southern California of $1.5 million. Arizona and Nevada had increases in pre-tax income from the three months ended September 30, 2016 of $7.1 million and $1.5 million, respectively, which were offset by decreases in Northern California and Southern California of $3.0 million and $0.2 million, respectively. For the nine months ended September 30, 2017, the regional segments reported total pre-tax income of $243.1 million, an increase of $22.6 million compared to the nine months ended September 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 $18.9 million and $6.9 million, respectively.
The NBL segments reported gross loan balances of $6.57 billion at September 30, 2017, an increase of $414 million during the quarter, and an increase of $1.09 billion during the last twelve months. All NBL segments had loan growth during the quarter, with the Other NBLs segment contributing the largest growth of $340 million, followed by increases in HFF and Public & Nonprofit Finance of $34 million and $29 million, respectively. The increase in loans for the NBL segments over the last twelve months relates primarily to the Other NBLs, Public & Nonprofit Finance, and Technology & Innovation segments, which increased loans by $839 million, $127 million, and $115 million, respectively. Total deposits for the NBL segments were $3.61 billion, an increase of $154 million during the quarter, and an increase of $732 million during the last twelve months. During the quarter, the Technology & Innovation segment increased deposits by $187 million, which was partially offset by a decrease of $34 million in HOA Services. The increase of $732 million during the last twelve months is the result of growth in the Technology & Innovation and HOA Services segments of $393 million and $339 million, respectively.
Pre-tax income for the NBL segments was $45.6 million for the three months ended September 30, 2017, an increase of $3.0 million from the three months ended June 30, 2017, and an increase of $7.6 million from the three months ended September 30, 2016. The increase in pre-tax income from the prior quarter relates primarily to the HFF segment as it had an increase in pre-tax income of $3.8 million. This increase was offset by a decrease in pre-tax income from the Other NBLs segment of $1.3 million. The increase in pre-tax income compared to the three months ended September 30, 2016 was driven by increases across all NBL segments. The largest increases were generated by HFF, Public & Nonprofit Finance, and Technology & Innovation with increases of $2.2 million, $2.0 million, and $1.8 million, respectively. Pre-tax income for the NBL segments for the nine months ended September 30, 2017 totaled $125.8 million, an increase of $26.2 million compared to the nine months ended September 30, 2016. The largest increases in pre-tax income compared to the nine months ended September 30, 2016 were in the HFF, HOA Services, and Public & Nonprofit Finance segments, which increased $11.8 million, $6.3 million, and $4.5 million, respectively.

4



Conference Call and Webcast
Western Alliance Bancorporation will host a conference call and live webcast to discuss its third quarter 2017 financial results at 12:00 p.m. ET on Friday, October 20, 2017. Participants may access the call by dialing 1-888-317-6003 and using passcode 0722330 or via live audio webcast using the website link https://services.choruscall.com/links/wal171020.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 October 20th through 9:00 a.m. ET November 20th by dialing 1-877-344-7529 passcode: 10112871.
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 $19 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 September 30,
 
 
 
 
 
 
 
 
2017
 
2016
 
Change %
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
Total assets
 
$
19,922.2

 
$
17,042.6

 
16.9
 %
 
 
 
 
 
 
Total loans, net
 
14,521.9

 
13,033.6

 
11.4

 
 
 
 
 
 
Securities and money market investments
 
3,773.6

 
2,778.1

 
35.8

 
 
 
 
 
 
Total deposits
 
16,904.8

 
14,443.2

 
17.0

 
 
 
 
 
 
Qualifying debt
 
372.9

 
382.9

 
(2.6
)
 
 
 
 
 
 
Stockholders' equity
 
2,145.6

 
1,857.4

 
15.5

 
 
 
 
 
 
Tangible common equity, net of tax (1)
 
1,848.8

 
1,559.1

 
18.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Income Statement Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
 
2017
 
2016
 
Change %
 
2017
 
2016
 
Change %
 
 
(in thousands, except per share data)
 
 
 
(in thousands, except per share data)
 
 
Interest income
 
$
217,836

 
$
184,750

 
17.9
 %
 
$
617,054

 
$
513,095

 
20.3
 %
Interest expense
 
16,253

 
12,203

 
33.2

 
43,419

 
31,151

 
39.4

Net interest income
 
201,583

 
172,547

 
16.8

 
573,635

 
481,944

 
19.0

Provision for credit losses
 
5,000

 
2,000

 
NM

 
12,250

 
7,000

 
75.0

Net interest income after provision for credit losses
 
196,583

 
170,547

 
15.3

 
561,385

 
474,944

 
18.2

Non-interest income
 
10,288

 
10,683

 
(3.7
)
 
31,281

 
32,375

 
(3.4
)
Non-interest expense
 
89,114

 
85,007

 
4.8

 
265,128

 
242,304

 
9.4

Income before income taxes
 
117,757

 
96,223

 
22.4

 
327,538

 
265,015

 
23.6

Income tax expense
 
34,899

 
29,171

 
19.6

 
91,352

 
75,017

 
21.8

Net income
 
$
82,858

 
$
67,052

 
23.6

 
$
236,186

 
$
189,998

 
24.3

Diluted earnings per share
 
$
0.79

 
$
0.64

 
23.4

 
$
2.25

 
$
1.84

 
22.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) See Reconciliation of Non-GAAP Financial Measures.
 
 
 
 
 
 
 
 
 
 
NM: Changes +/- 100% are not meaningful.
 
 
 
 
 
 
 
 
 
 

6



Western Alliance Bancorporation and Subsidiaries
 
 
 
 
 
 
 
 
 
 
Summary Consolidated Financial Data
 
 
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
 
2017
 
2016
 
Change %
 
2017
 
2016
 
Change %
Diluted earnings per share
 
$
0.79

 
$
0.64

 
23.4
%
 
$
2.25

 
$
1.84

 
22.3
%
Book value per common share
 
20.34

 
17.68

 
15.0

 
 
 
 
 
 
Tangible book value per share, net of tax (1)
 
17.53

 
14.84

 
18.1

 
 
 
 
 
 
Average shares outstanding
(in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
104,221

 
103,768

 
0.4

 
104,124

 
102,791

 
1.3

Diluted
 
104,942

 
104,564

 
0.4

 
104,941

 
103,532

 
1.4

Common shares outstanding
 
105,493

 
105,071

 
0.4

 
 
 
 
 
 
Selected Performance Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (2)
 
1.71
%
 
1.58
%
 
8.2
 %
 
1.70
%
 
1.61
%
 
5.6
 %
Return on average tangible common equity (1, 2)
 
18.18

 
17.50

 
3.9

 
18.15

 
17.74

 
2.3

Net interest margin (2)
 
4.65

 
4.55

 
2.2

 
4.63

 
4.58

 
1.1

Operating efficiency ratio - tax equivalent basis (1)
 
39.95

 
42.97

 
(7.0
)
 
41.76

 
43.78

 
(4.6
)
Loan to deposit ratio
 
85.90

 
90.24

 
(4.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset Quality Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
Net charge-offs (recoveries) to average loans outstanding (2)
 
0.01
%
 
0.04
%
 
(75.0
)%
 
0.01
%
 
0.04
%
 
(75.0
)%
Nonaccrual loans to gross loans
 
0.38

 
0.31

 
22.6

 
 
 
 
 
 
Nonaccrual loans and repossessed assets to total assets
 
0.42

 
0.53

 
(20.8
)
 
 
 
 
 
 
Loans past due 90 days and still accruing to gross loans
 

 
0.02

 
(100.0
)
 
 
 
 
 
 
Allowance for credit losses to gross organic loans
 
1.06

 
1.13

 
(6.2
)
 
 
 
 
 
 
Allowance for credit losses to nonaccrual loans
 
248.07

 
302.61

 
(18.0
)
 
 
 
 
 
 
Capital Ratios:
 
 
 
 
 
 
 
 
Sep 30, 2017
 
Jun 30, 2017
 
Sep 30, 2016
Tangible common equity (1)
 
9.4
%
 
9.5
%
 
9.3
%
Common Equity Tier 1 (1), (3)
 
10.4

 
10.3

 
9.8

Tier 1 Leverage ratio (1), (3)
 
10.1

 
9.9

 
9.6

Tier 1 Capital (1), (3)
 
10.8

 
10.8

 
10.3

Total Capital (1), (3)
 
13.3

 
13.4

 
13.1





(1)
See Reconciliation of Non-GAAP Financial Measures.
(2)
Annualized for the three month periods ended September 30, 2017 and 2016.
(3)
Capital ratios for September 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 September 30,
 
Nine Months Ended September 30,
 
 
2017
 
2016
 
2017
 
2016
 
 
(dollars in thousands, except per share data)
Interest income:
 
 
 
 
 
 
 
 
Loans
 
$
191,096

 
$
167,914

 
$
547,306

 
$
467,715

Investment securities
 
23,584

 
15,436

 
62,327

 
41,815

Other
 
3,156

 
1,400

 
7,421

 
3,565

Total interest income
 
217,836

 
184,750

 
617,054

 
513,095

Interest expense:
 
 
 
 
 
 
 
 
Deposits
 
11,449

 
8,072

 
29,506

 
21,993

Qualifying debt
 
4,708

 
4,048

 
13,539

 
8,746

Borrowings
 
96

 
83

 
374

 
412

Total interest expense
 
16,253

 
12,203

 
43,419

 
31,151

Net interest income
 
201,583

 
172,547

 
573,635

 
481,944

Provision for credit losses
 
5,000

 
2,000

 
12,250

 
7,000

Net interest income after provision for credit losses
 
196,583

 
170,547

 
561,385

 
474,944

Non-interest income:
 
 
 
 
 
 
 
 
Service charges
 
5,248

 
4,916

 
15,189

 
13,958

Card income
 
1,344

 
1,381

 
4,146

 
3,844

Income from equity investments
 
950

 
1,208

 
2,933

 
1,610

Income from bank owned life insurance
 
975

 
899

 
2,896

 
2,858

Foreign currency income
 
756

 
888

 
2,630

 
2,672

Lending related income and gains (losses) on sale of loans, net
 
97

 
708

 
746

 
4,509

Gain (loss) on sales of investment securities, net
 
319

 

 
907

 
1,001

Other income
 
599

 
683

 
1,834

 
1,923

Total non-interest income
 
10,288

 
10,683

 
31,281

 
32,375

Non-interest expenses:
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
52,730

 
49,542

 
156,596

 
139,108

Legal, professional and directors' fees
 
6,038

 
5,691

 
23,324

 
17,010

Occupancy
 
7,507

 
6,856

 
21,328

 
20,359

Data processing
 
4,524

 
5,266

 
14,163

 
15,028

Insurance
 
3,538

 
3,144

 
10,355

 
9,430

Deposit costs
 
2,904

 
1,363

 
6,778

 
3,121

Marketing
 
776

 
678

 
2,628

 
2,432

Loan and repossessed asset expenses
 
1,263

 
788

 
3,639

 
2,522

Card expense
 
801

 
252

 
2,187

 
1,376

Intangible amortization
 
489

 
697

 
1,666

 
2,091

Net loss (gain) on sales and valuations of repossessed and other assets
 
266

 
(146
)
 
(46
)
 
(91
)
Acquisition / restructure expense
 

 
2,729

 

 
6,391

Other
 
8,278

 
8,147

 
22,510

 
23,527

Total non-interest expense
 
89,114

 
85,007

 
265,128

 
242,304

Income before income taxes
 
117,757

 
96,223

 
327,538

 
265,015

Income tax expense
 
34,899

 
29,171

 
91,352

 
75,017

Net income
 
$
82,858

 
$
67,052

 
$
236,186

 
$
189,998

 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
Diluted shares
 
104,942

 
104,564

 
104,941

 
103,532

Diluted earnings per share
 
$
0.79

 
$
0.64

 
$
2.25

 
$
1.84


8



Western Alliance Bancorporation and Subsidiaries
 
 
 
 
 
 
 
 
Five Quarter Condensed Consolidated Income Statements
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
 
Dec 31, 2016
 
Sep 30, 2016
 
 
(in thousands, except per share data)
Interest income:
 
 
 
 
 
 
 
 
 
 
Loans
 
$
191,096

 
$
183,657

 
$
172,553

 
$
168,881

 
$
167,914

Investment securities
 
23,584

 
20,629

 
18,114

 
16,725

 
15,436

Other
 
3,156

 
2,667

 
1,598

 
1,805

 
1,400

Total interest income
 
217,836

 
206,953

 
192,265

 
187,411

 
184,750

Interest expense:
 
 
 
 
 
 
 
 
 
 
Deposits
 
11,449

 
9,645

 
8,412

 
7,729

 
8,072

Qualifying debt
 
4,708

 
4,493

 
4,338

 
4,252

 
4,048

Borrowings
 
96

 
72

 
206

 
161

 
83

Total interest expense
 
16,253

 
14,210

 
12,956

 
12,142

 
12,203

Net interest income
 
201,583

 
192,743

 
179,309

 
175,269

 
172,547

Provision for credit losses
 
5,000

 
3,000

 
4,250

 
1,000

 
2,000

Net interest income after provision for credit losses
 
196,583

 
189,743

 
175,059

 
174,269

 
170,547

Non-interest income:
 
 
 
 
 
 
 
 
 
 
Service charges and fees
 
5,248

 
5,203

 
4,738

 
4,865

 
4,916

Card income
 
1,344

 
1,380

 
1,422

 
1,381

 
1,381

Income from equity investments
 
950

 
1,291

 
692

 
1,054

 
1,208

Income from bank owned life insurance
 
975

 
973

 
948

 
904

 
899

Foreign currency income
 
756

 
832

 
1,042

 
747

 
888

Lending related income and gains (losses) on sale of loans, net
 
97

 
227

 
422

 
488

 
708

Gain (loss) on sales of investment securities, net
 
319

 
(47
)
 
635

 
58

 

Other income
 
599

 
590

 
645

 
1,043

 
683

Total non-interest income
 
10,288

 
10,449

 
10,544

 
10,540

 
10,683

Non-interest expenses:
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
52,730

 
52,246

 
51,620

 
49,702

 
49,542

Legal, professional, and directors' fees
 
6,038

 
8,483

 
8,803

 
7,600

 
5,691

Occupancy
 
7,507

 
6,927

 
6,894

 
6,944

 
6,856

Data processing
 
4,524

 
4,375

 
5,264

 
4,504

 
5,266

Insurance
 
3,538

 
3,589

 
3,228

 
3,468

 
3,144

Deposit costs
 
2,904

 
2,133

 
1,741

 
1,862

 
1,363

Marketing
 
776

 
1,131

 
721

 
1,164

 
678

Loan and repossessed asset expenses
 
1,263

 
1,098

 
1,278

 
477

 
788

Card expense
 
801

 
725

 
661

 
689

 
252

Intangible amortization
 
489

 
488

 
689

 
697

 
697

Net loss (gain) on sales and valuations of repossessed and other assets
 
266

 
231

 
(543
)
 
(34
)
 
(146
)
Acquisition / restructure expense
 

 

 

 
6,021

 
2,729

Other
 
8,278

 
6,831

 
7,401

 
5,551

 
8,147

Total non-interest expense
 
89,114

 
88,257

 
87,757

 
88,645

 
85,007

Income before income taxes
 
117,757

 
111,935

 
97,846

 
96,164

 
96,223

Income tax expense
 
34,899

 
31,964

 
24,489

 
26,364

 
29,171

Net income
 
$
82,858

 
$
79,971

 
$
73,357

 
$
69,800

 
$
67,052

 
 
 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
Diluted shares
 
104,942

 
105,045

 
104,836

 
104,765

 
104,564

Diluted earnings per share
 
$
0.79

 
$
0.76

 
$
0.70

 
$
0.67

 
$
0.64


9



Western Alliance Bancorporation and Subsidiaries
 
 
 
 
 
 
 
 
Five Quarter Condensed Consolidated Balance Sheets
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
 
Dec 31, 2016
 
Sep 30, 2016
 
 
(in millions, except per share data)
Assets:
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
 
$
650.4

 
$
606.7

 
$
647.0

 
$
284.5

 
$
356.1

Securities and money market investments
 
3,773.6

 
3,283.0

 
2,869.1

 
2,767.8

 
2,778.1

Loans held for sale
 
16.3

 
16.7

 
17.8

 
18.9

 
21.3

Loans held for investment:
 
 
 
 
 
 
 
 
 
 
Commercial
 
6,735.9

 
6,318.5

 
6,039.1

 
5,855.8

 
5,715.0

Commercial real estate - non-owner occupied
 
3,628.4

 
3,649.1

 
3,607.8

 
3,544.0

 
3,623.4

Commercial real estate - owner occupied
 
2,047.5

 
2,021.2

 
2,043.4

 
2,013.3

 
1,984.0

Construction and land development
 
1,666.4

 
1,601.7

 
1,601.7

 
1,478.1

 
1,379.7

Residential real estate
 
376.7

 
334.8

 
309.9

 
259.4

 
271.8

Consumer
 
50.7

 
47.9

 
43.0

 
39.0

 
38.4

Gross loans and deferred fees, net
 
14,505.6

 
13,973.2

 
13,644.9

 
13,189.6

 
13,012.3

Allowance for credit losses
 
(136.4
)
 
(131.8
)
 
(127.6
)
 
(124.7
)
 
(122.9
)
Loans, net
 
14,369.2

 
13,841.4

 
13,517.3

 
13,064.9

 
12,889.4

Premises and equipment, net
 
120.1

 
120.5

 
120.0

 
119.8

 
121.3

Other assets acquired through foreclosure, net
 
29.0

 
31.0

 
45.2

 
47.8

 
49.6

Bank owned life insurance
 
166.8

 
166.4

 
165.5

 
164.5

 
163.6

Goodwill and other intangibles, net
 
301.2

 
301.6

 
302.1

 
302.9

 
303.6

Other assets
 
495.6

 
477.4

 
438.5

 
429.7

 
359.6

Total assets
 
$
19,922.2

 
$
18,844.7

 
$
18,122.5

 
$
17,200.8

 
$
17,042.6

Liabilities and Stockholders' Equity:
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
Deposits
 
 
 
 
 
 
 
 
 
 
Non-interest bearing demand deposits
 
$
7,608.7

 
$
6,859.4

 
$
6,114.1

 
$
5,632.9

 
$
5,624.8

Interest bearing:
 
 
 
 
 
 
 
 
 
 
Demand
 
1,406.4

 
1,480.8

 
1,449.3

 
1,346.7

 
1,256.7

Savings and money market
 
6,300.2

 
6,104.0

 
6,253.8

 
6,120.9

 
5,969.6

Time certificates
 
1,589.5

 
1,586.9

 
1,538.8

 
1,449.3

 
1,592.1

Total deposits
 
16,904.8

 
16,031.1

 
15,356.0

 
14,549.8

 
14,443.2

Customer repurchase agreements
 
26.1

 
32.7

 
35.7

 
41.7

 
44.4

Total customer funds
 
16,930.9

 
16,063.8

 
15,391.7

 
14,591.5

 
14,487.6

Borrowings
 

 

 

 
80.0

 

Qualifying debt
 
372.9

 
375.4

 
366.9

 
367.9

 
382.9

Accrued interest payable and other liabilities
 
472.8

 
346.8

 
394.9

 
269.9

 
314.7

Total liabilities
 
17,776.6

 
16,786.0

 
16,153.5

 
15,309.3

 
15,185.2

Stockholders' Equity:
 
 
 
 
 
 
 
 
 
 
Common stock and additional paid-in capital
 
1,378.8

 
1,376.4

 
1,370.3

 
1,373.8

 
1,368.4

Retained earnings
 
758.6

 
675.8

 
595.8

 
522.4

 
452.6

Accumulated other comprehensive income (loss)
 
8.2

 
6.5

 
2.9

 
(4.7
)
 
36.4

Total stockholders' equity
 
2,145.6

 
2,058.7

 
1,969.0

 
1,891.5

 
1,857.4

Total liabilities and stockholders' equity
 
$
19,922.2

 
$
18,844.7

 
$
18,122.5

 
$
17,200.8

 
$
17,042.6



10



Western Alliance Bancorporation and Subsidiaries
 
 
 
 
 
 
 
 
Changes in the Allowance For Credit Losses
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
 
Dec 31, 2016
 
Sep 30, 2016
 
 
(in thousands)
Balance, beginning of period
 
$
131,811

 
$
127,649

 
$
124,704

 
$
122,884

 
$
122,104

Provision for credit losses
 
5,000

 
3,000

 
4,250

 
1,000

 
2,000

Recoveries of loans previously charged-off:
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
619

 
1,759

 
328

 
1,144

 
466

Commercial real estate - non-owner occupied
 
1,168

 
360

 
355

 
691

 
230

Commercial real estate - owner occupied
 
613

 
46

 
178

 
45

 
291

Construction and land development
 
226

 
508

 
277

 
30

 
302

Residential real estate
 
108

 
1,299

 
251

 
287

 
179

Consumer
 
33

 

 
49

 
11

 
21

Total recoveries
 
2,767

 
3,972

 
1,438

 
2,208

 
1,489

Loans charged-off:
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
2,921

 
651

 
2,595

 
1,267

 
2,558

Commercial real estate - non-owner occupied
 
175

 
1,808

 

 
1

 

Commercial real estate - owner occupied
 

 
11

 

 
1

 
72

Construction and land development
 

 

 

 
18

 

Residential real estate
 

 
332

 
115

 
60

 
79

Consumer
 
61

 
8

 
33

 
41

 

Total loans charged-off
 
3,157

 
2,810

 
2,743

 
1,388

 
2,709

Net charge-offs (recoveries)
 
390

 
(1,162
)
 
1,305

 
(820
)
 
1,220

Balance, end of period
 
$
136,421

 
$
131,811

 
$
127,649

 
$
124,704

 
$
122,884

 
 
 
 
 
 
 
 
 
 
 
Net charge-offs (recoveries) to average loans- annualized
 
0.01
%
 
(0.03
)%
 
0.04
%
 
(0.03
)%
 
0.04
%
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses to gross loans
 
0.94
%
 
0.94
 %
 
0.94
%
 
0.95
 %
 
0.94
%
Allowance for credit losses to gross organic loans
 
1.06

 
1.08

 
1.08

 
1.11

 
1.13

Allowance for credit losses to nonaccrual loans
 
248.07

 
438.33

 
370.45

 
309.65

 
302.61

 
 
 
 
 
 
 
 
 
 
 
Nonaccrual loans1
 
$
54,994

 
$
30,071

 
$
34,458

 
$
40,272

 
$
40,608

Nonaccrual loans to gross loans
 
0.38
%
 
0.22
 %
 
0.25
%
 
0.31
 %
 
0.31
%
Repossessed assets
 
$
28,992

 
$
30,988

 
$
45,200

 
$
47,815

 
$
49,619

Nonaccrual loans and repossessed assets to total assets
 
0.42
%
 
0.32
 %
 
0.44
%
 
0.51
 %
 
0.53
%
 
 
 
 
 
 
 
 
 
 
 
Loans past due 90 days, still accruing
 
$
44

 
$
4,021

 
$
3,659

 
$
1,067

 
$
2,817

Loans past due 90 days and still accruing to gross loans
 
%
 
0.03
 %
 
0.03
%
 
0.01
 %
 
0.02
%
Loans past due 30 to 89 days, still accruing
 
$
5,179

 
$
4,071

 
$
10,764

 
$
6,294

 
$
18,446

Loans past due 30 to 89 days, still accruing to gross loans
 
0.04
%
 
0.03
 %
 
0.08
%
 
0.05
 %
 
0.14
%
 
 
 
 
 
 
 
 
 
 
 
Special mention loans
 
$
199,965

 
$
141,036