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Section 1: 8-K (8-K)

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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):  January 24, 2019
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 January 24, 2019, Western Alliance Bancorporation (the “Company”) issued a press release reporting results for the fiscal quarter ended December 31, 2018 and posted on its website its fourth quarter 2018 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 January 24, 2019.
99.2         Fourth Quarter 2018 Earnings Conference Call dated January 25, 2019.





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:
January 24, 2019
 



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Western Alliance Bancorporation
 
396475790_wallogo05.jpg
One East Washington Street
 
Phoenix, AZ 85004
 
www.westernalliancebancorporation.com
 
 
 


PHOENIX--(BUSINESS WIRE)--January 24, 2019

FOURTH QUARTER AND FULL YEAR 2018 FINANCIAL RESULTS
Net income
 
Earnings per share
 
Net interest margin
 
Efficiency ratio
 
Book value per
common share
$119.1 million
 
$1.13
 
4.72%
 
42.2%
 
$24.90
CEO COMMENTARY:
“Western Alliance again posted strong financial performance with linked-quarter annualized loan growth of 23 percent and net revenues1 rising 18 percent, supported by stable asset quality," said Chief Executive Officer Kenneth Vecchione. "Net income rose to $435.8 million and earnings per share of $4.14 for 2018 represented more than a 30 percent rise from prior year."
“For the quarter, loans increased $978 million, net interest margin remained flat at 4.72 percent, deposits rose $269 million and our revenue to expense efficiency ratio was 2.5 to 1, providing positive operating leverage and lifting earnings to $119.1 million or $1.13 earnings per share. I am pleased with the Company's performance and the momentum we carry into 2019.”
LINKED-QUARTER BASIS
FULL YEAR
 
 
FINANCIAL HIGHLIGHTS:
Net income and earnings per share of $119.1 million and $1.13 compared to $111.1 million and $1.05, respectively
Net operating revenue of $258.2 million constituting growth of 4.6%, or $11.3 million, compared to an increase in operating non-interest expenses of 4.4%, or $4.6 million1
Operating pre-provision net revenue of $148.5 million, up $6.6 million from $141.9 million1 
Effective tax rate of 14.94%, compared to 6.32%, as the prior quarter included a benefit from the Company's carryback election
 
Net income of $435.8 million and earnings per share of $4.14, compared to $325.5 million and $3.10, respectively
Net operating revenue of $970.3 million constituting year-over-year growth of 17.2%, or $142.6 million, compared to an increase in operating non-interest expenses of 15.4%, or $55.8 million1  
Operating pre-provision net revenue of $553.5 million, up $86.9 million from $466.6 million 1 
Effective tax rate of 14.61%, compared to 27.96%, due to the effect of the Tax Cuts and Jobs Act ("TCJA") and carryback election

FINANCIAL POSITION RESULTS:
Total loans of $17.71 billion, up $978 million
Total deposits of $19.18 billion, up $269 million
Stockholders' equity of $2.61 billion, up $125 million
 
Increase in total loans of $2.62 billion, or 17.3%
Increase in total deposits of $2.20 billion, or 13.0%
Increase in stockholders' equity of $384 million
LOANS AND ASSET QUALITY:
Nonperforming assets (nonaccrual loans and repossessed assets) to total assets of 0.20%, compared to 0.26%
Annualized net loan charge-offs to average loans outstanding of 0.08% for each period

 
Nonperforming assets to total assets of 0.20%, compared to 0.36%
Net loan charge-offs to average loans outstanding of 0.06%, compared to 0.01%
KEY PERFORMANCE METRICS:
Net interest margin of 4.72% for each period
Return on average assets and on tangible common equity1 of 2.13% and 21.10%, compared to 2.07% and 20.57%, respectively
Tangible common equity ratio of 10.2%, compared to 10.0% 1 
Tangible book value per share, net of tax, of $22.07, an increase from $20.70 1 
Operating efficiency ratio of 41.5%1 for each period
 
Net interest margin of 4.68%, compared to 4.65%
Return on average assets and on tangible common equity1 of 2.05% and 20.64%, compared to 1.72% and 18.31%, respectively
Tangible common equity ratio of 10.2%, compared to 9.6% 1 
Tangible book value per share, net of tax, of $22.07, an increase of 20.5% from $18.31 1 
Operating efficiency ratio of 41.9%, compared to 41.5% 1 

1  
See reconciliation of Non-GAAP Financial Measures beginning on page 20.  

1



Income Statement
Net interest income was $243.5 million in the fourth quarter 2018, an increase of $9.5 million from $234.0 million in the third quarter 2018, and an increase of $32.5 million, or 15.4%, compared to the fourth quarter 2017. For 2018, net interest income was $915.9 million, an increase of $131.2 million, or 16.7%, compared to $784.7 million in 2017. As acquired loans are recorded at fair value in an acquisition, purchase discounts on these acquired loans are recorded and accreted into interest income based on expected future cash flows over the life of the loans and may be accelerated upon prepayment of acquired loans. Net interest income in the fourth quarter 2018 includes $4.5 million of total accretion income from acquired loans, compared to $3.3 million in the third quarter 2018, and $7.1 million in the fourth quarter 2017. Net interest income in 2018 includes $18.4 million of total accretion income from acquired loans, compared to $28.2 million in 2017.
The Company’s net interest margin in the fourth quarter 2018 was 4.72%, consistent with the third quarter 2018, and a decrease from 4.73% in the fourth quarter 2017. Adjusting net interest margin to include the effects of the TCJA, which reduced the tax equivalent adjustment from tax-exempt securities and loans, results in adjusted net interest margin1 of 4.61% for the fourth quarter 2017.
Operating non-interest income was $14.7 million for the fourth quarter 2018, compared to $12.9 million for the third quarter 2018, and $12.3 million for the fourth quarter 2017.1 The increase in operating non-interest income from both the third quarter 2018 and the fourth quarter 2017 primarily relates to an increase in income from warrants. For 2018, operating non-interest income was $54.4 millionan increase of $11.4 million, or 26%, compared to $43.0 million in 2017.1 The increase in operating non-interest income from 2017 primarily relates to an increase in income from equity investments and lending related income.
Net operating revenue was $258.2 million for the fourth quarter 2018, an increase of $11.3 million, compared to $246.9 million for the third quarter 2018, and an increase of $34.9 million, or 15.6%, compared to $223.3 million for the fourth quarter 2017.1 For 2018, net operating revenue was $970.3 millionan increase of $142.6 million, or 17%, compared to $827.7 million in 2017.1 
Operating non-interest expense was $109.6 million for the fourth quarter 2018, compared to $105.0 million for the third quarter 2018, and $95.4 million for the fourth quarter 2017.1 The Company’s operating efficiency ratio1 on a tax equivalent basis was 41.5% for the fourth quarter 2018, consistent with the third quarter 2018, and an increase from 40.7% for the fourth quarter 2017. Adjusting the operating efficiency ratio1 to include the effects of the lower statutory corporate federal tax rate would result in an operating efficiency ratio of 41.7% for the fourth quarter 2017. For 2018, operating non-interest expense was $416.8 million, an increase of $55.8 million, or 15%, compared to $361.0 million in 2017.1 
Income tax expense was $20.9 million for the fourth quarter 2018, compared to $7.5 million for the third quarter 2018, and $35.0 million for the fourth quarter 2017. Income tax expense for the third quarter 2018 includes the effect of management’s election to carryback to prior tax years its 2017 federal net operating losses ("NOL"). These federal NOLs resulted from the acceleration of deductions into and deferral of revenue from 2017. Because the federal income tax rate was higher in the years to which the carryback is applicable, a larger tax benefit resulted from the decision to carryback the 2017 federal NOLs, rather than carryforward these losses to future taxable years. Income tax expense for 2018 was $74.5 million, a decrease of $51.8 million, or 41.0%, compared to $126.3 million in 2017. Income tax expense for 2018 includes the effect of the TCJA, which lowered the statutory corporate tax rate from 35% to 21%.
Net income was $119.1 million for the fourth quarter 2018, an increase of $8.0 million from $111.1 million for the third quarter 2018, and an increase of $29.7 million, or 33.3%, from $89.3 million for the fourth quarter 2017. Earnings per share was $1.13 for the fourth quarter 2018, compared to $1.05 for the third quarter 2018, and $0.85 for the fourth quarter 2017. For 2018, net income was $435.8 millionan increase of $110.3 million, or 33.9%, compared to $325.5 million in 2017. Earnings per share for 2018 was $4.14an increase of 33.4%, compared to $3.10 in 2017.
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 fourth quarter 2018, the Company’s operating PPNR was $148.5 million, up from $141.9 million in the third quarter 2018, and up 16.2% from $127.8 million in the fourth quarter 2017.1 The non-operating income items1 for the fourth quarter 2018 consisted of net unrealized losses on assets measured at fair value of $0.6 million and a net loss on sales of investment securities of $0.4 million. The non-operating expense item for the fourth quarter 2018 consisted of a net loss on sales and valuations of repossessed and other assets of $1.5 million. For 2018, operating PPNR was $553.5 millionan increase of $86.9 million, or 19%, from $466.6 million in 2017.1 The non-operating income items1 for 2018 consisted of a net loss on sales of investment securities of $7.7 million and net unrealized losses on assets measured at fair value of $3.6 million. The non-operating or non-recurring expense items for 2018 consisted of a $7.6 million charitable contribution and a $1.2 million adjustment related to the Company's 401(k) plan and other miscellaneous items.
The Company had 1,787 full-time equivalent employees and 47 offices at December 31, 2018, compared to 1,795 employees and 47 offices at September 30, 2018, and 1,725 employees and 47 offices at December 31, 2017.







1 
See reconciliation of Non-GAAP Financial Measures beginning on page 20.

2



Balance Sheet
Gross loans totaled $17.71 billion at December 31, 2018, an increase of $978 million from $16.73 billion at September 30, 2018, and an increase of $2.62 billion from $15.09 billion at December 31, 2017. The increase from the prior quarter was driven by an increase of $377 million in residential real estate loans, $275 million in commercial and industrial loans, and $260 million in CRE, non-owner occupied loans. From December 31, 2017, loans increased across all loan types, with the largest increases in commercial and industrial loans of $922 million, residential real estate loans of $778 million, construction and land development loans of $503 million, and CRE, non-owner occupied loans of $309 million. At December 31, 2018, the allowance for credit losses to gross loans held for investment was 0.86%, compared to 0.90% at September 30, 2018, and 0.93% at December 31, 2017. At December 31, 2018, the allowance for credit losses to total organic loans was 0.92%, compared to 0.97% at September 30, 2018, and 1.03% at December 31, 2017. 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 $14.6 million at December 31, 2018, compared to $17.2 million at September 30, 2018, and $27.0 million at December 31, 2017.
Deposits totaled $19.18 billion at December 31, 2018, an increase of $269 million from $18.91 billion at September 30, 2018, and an increase of $2.20 billion from $16.97 billion at December 31, 2017. The increase from the prior quarter was driven by an increase of $577 million from interest-bearing demand deposits and $272 million from savings and money market accounts, partially offset by a decrease of $559 million in non-interest bearing demand deposits. From December 31, 2017, deposits increased across all deposit types, with the largest increases in savings and money market accounts of $1.00 billion, interest-bearing demand deposits of $969 million, and certificates of deposit of $214 million. Non-interest bearing deposits were $7.46 billion at December 31, 2018, compared to $8.01 billion at September 30, 2018, and $7.43 billion at December 31, 2017. Non-interest bearing deposits comprised 38.9% of total deposits at December 31, 2018, compared to 42.4% at September 30, 2018, and 43.8% at December 31, 2017. The proportion of savings and money market balances to total deposits was 38.2%, compared to 37.3% at September 30, 2018, and 37.3% at December 31, 2017. Interest-bearing demand deposits as a percentage of total deposits were 13.3% at December 31, 2018, compared to 10.5% at September 30, 2018, and 9.3% at December 31, 2017. Certificates of deposit as a percentage of total deposits were 9.6% at December 31, 2018, compared to 9.8% at September 30, 2018, and 9.6% at December 31, 2017. The Company’s ratio of loans to deposits was 92.4% at December 31, 2018, compared to 88.5% at September 30, 2018, and 88.9% at December 31, 2017.
Borrowings were $491 million at December 31, 2018, compared to zero at September 30, 2018, and $390 million at December 31, 2017. The increase in borrowings from September 30, 2018 and December 31, 2017 is due to an increase in overnight advances.
Qualifying debt totaled $361 million at December 31, 2018, compared to $359 million at September 30, 2018, and $377 million at December 31, 2017.
Stockholders’ equity at December 31, 2018 was $2.61 billion, compared to $2.49 billion at September 30, 2018, and $2.23 billion at December 31, 2017. The increase in stockholders' equity from September 30, 2018 and December 31, 2017 is primarily a function of net income, partially offset by share repurchases. Under the Company's common stock repurchase program, the Company is authorized to repurchase up to $250 million of its shares of common stock. In December 2018, the Company repurchased 900,883 shares of its common stock, representing approximately 1% of the Company's outstanding shares. Shares were repurchased at a weighted average price of $39.58, for a total payment of $35.7 million.
At December 31, 2018, tangible common equity, net of tax, was 10.2% of tangible assets1 and total capital was 13.2% of risk-weighted assets. The Company’s tangible book value per share1 was $22.07 at December 31, 2018, up 20.5% from December 31, 2017.
Total assets increased 4.2% to $23.11 billion at December 31, 2018, from $22.18 billion at September 30, 2018, and increased 13.7% from $20.33 billion at December 31, 2017. The increase in total assets from the prior year relates primarily to organic loan growth.
Asset Quality
The provision for credit losses was $6.0 million for the fourth and third quarter 2018, compared to $5.0 million for the fourth quarter 2017. Net loan charge-offs in the fourth quarter 2018 were $3.3 million, or 0.08% of average loans (annualized), compared to $3.1 million, or 0.08%, in the third quarter 2018, and $1.4 million, or 0.04%, in the fourth quarter 2017.
Nonaccrual loans decreased $9.1 million to $27.7 million during the quarter and decreased $16.2 million during the year. Loans past due 90 days and still accruing totaled $0.6 million at December 31, 2018, compared to zero at September 30, 2018, and less than $0.1 million at December 31, 2017. Loans past due 30-89 days and still accruing interest totaled $16.6 million at December 31, 2018, an increase from $9.4 million at September 30, 2018, and an increase from $10.1 million at December 31, 2017.
Repossessed assets totaled $17.9 million at December 31, 2018, a decrease of $2.1 million from $20.0 million at September 30, 2018, and a decrease of $10.6 million from $28.5 million at December 31, 2017. Adversely graded loans and non-performing assets totaled $315.6 million at December 31, 2018, a decrease of $42.7 million from $358.3 million at September 30, 2018, and a decrease of $39.5 million from $355.2 million at December 31, 2017.
The ratio of classified assets to Tier 1 capital plus the allowance for credit losses, a common regulatory measure of asset quality, was 9.4% at December 31, 2018, compared to 10.2% at September 30, 2018, and 10.3% at December 31, 2017.1 

1
See reconciliation of Non-GAAP Financial Measures beginning on page 20.

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 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 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 $9.11 billion at December 31, 2018, an increase of $134 million during the quarter, and an increase of $734 million during the year. The growth in loans during the quarter was driven by increases across all regional segments, with the exception of Northern California. Nevada, Arizona, and Southern California had loan growth of $67 million, $54 million, and $45 million, respectively. These increases in loans were partially offset by a decrease of $32 million in Northern California. All regional segments contributed to the growth in loans during the year. The largest increases were in Arizona, Southern California, and Nevada, with increases of $324 million, $226 million, and $159 million, respectively. Total deposits for the regional segments were $13.27 billion, a decrease of $408 million during the quarter, and an increase of $338 million during the year. During the quarter, Arizona, Southern California, and Northern California had decreased deposits of $242 million, $203 million, and $112 million, respectively, which were partially offset by increased deposits of $149 million in Nevada. During the year, Arizona and Northern California had the largest increases in deposits of $249 million and $157 million, respectively, which were partially offset by a decrease in deposits of $114 million in Southern California.
Pre-tax income for the regional segments was $86.8 million for the three months ended December 31, 2018, a decrease of $0.4 million from the three months ended September 30, 2018, and an increase of $3.3 million from the three months ended December 31, 2017. Nevada, Southern California and Northern California had increases in pre-tax income of $1.2 million, $1.1 million, and $0.5 million, respectively, compared to the three months ended September 30, 2018, which were offset by a decrease of $3.3 million in Arizona. Nevada, Southern California, and Arizona had the largest increases in pre-tax income from the three months ended December 31, 2017 of $2.0 million, $0.7 million, and $0.5 million, respectively. For the year ended December 31, 2018, the regional segments reported total pre-tax income of $345.8 million, an increase of $18.9 million compared to the year ended December 31, 2017. Arizona, Northern California and Nevada had increases of $12.9 million, $5.7 million, and $1.5 million, respectively. These increases were partially offset by a decrease of $1.3 million in Southern California.
The NBL segments reported gross loan balances of $8.59 billion at December 31, 2018, an increase of $846 million during the quarter, and an increase of $1.88 billion during the year. The largest increases in loans from the prior quarter relate to the Other NBLs and Technology & Innovation segments, which increased loans by $672 million and $94 million, respectively. During the year, the largest drivers of the increase in loans were Other NBLs, HFF, and Technology & Innovation segments, with increases of $1.61 billion, $152 million, and $103 million, respectively. These increases were partially offset by a decrease in the Public & Nonprofit Finance segment of $33 million. Total deposits for the NBL segments were $5.17 billion, an increase of $323 million during the quarter, and an increase of $1.20 billion during the year. The increase in deposits from the prior quarter is attributable to the Technology & Innovation and HOA Services segments, which increased deposits by $240 million and $83 million, respectively. The increase of $1.20 billion during the year is also the result of growth in both the Technology & Innovation and HOA Services segments of $821 million and $377 million, respectively.
Pre-tax income for the NBL segments was $55.6 million for the three months ended December 31, 2018, an increase of $4.2 million from the three months ended September 30, 2018, and an increase of $4.9 million from the three months ended December 31, 2017. The increase in pre-tax income from the prior quarter relates to the Technology & Innovation and Public & Nonprofit Finance segments, which increased by $4.5 million and $0.2 million, respectively. These increases were partially offset by decreases in pre-tax income from the Other NBLs, HOA Services, and HFF segments, which had decreases of $0.3 million, $0.2 million, and $0.1 million, respectively. The drivers of the increase in pre-tax income from the same period in the prior year were the Technology & Innovation and HOA Services segments, which had increases of $9.7 million and $2.5 million, respectively. These increases were partially offset by decreases in pre-tax income for the Other NBLs, Public & Nonprofit Finance, and HFF segments, which decreased by $4.2 million, $2.5 million, and $0.6 million, respectively. Pre-tax income for the NBL segments for the year ended December 31, 2018 totaled $202.5 million, an increase of $26.0 million compared to the year ended December 31, 2017. The largest increases were in the Technology & Innovation, HOA Services, and Other NBLs segments. These segments had increases of $21.0 million, $9.1 million, and $6.9 million, respectively. These increases were partially offset by a decrease of $11.1 million in the Public & Nonprofit Finance segment.

4



Conference Call and Webcast
Western Alliance Bancorporation will host a conference call and live webcast to discuss its fourth quarter 2018 financial results at 12:00 p.m. ET on Friday, January 25, 2019. Participants may access the call by dialing 1-888-317-6003 and using passcode 3714893 or via live audio webcast using the website link https://services.choruscall.com/links/wal190125CfXVCCZ8.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 January 25th through 9:00 a.m. ET February 25th by dialing 1-877-344-7529 passcode: 10127283.
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.
Adoption of Accounting Standards
During the first quarter 2018, the Company adopted Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers, ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities and ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.
The amendments in ASU 2014-09 create a common revenue standard and clarify the principles for recognizing revenue that can be applied consistently across various transactions, industries, and capital markets. Although this new accounting guidance brings considerable changes to how many companies account for revenue and disclose revenue-related information, the effect on the Company has not been significant as substantially all of the Company's revenue is generated from interest income related to loans and investment securities, which are not within the scope of this guidance. For the Company's revenue streams that are within the scope of this guidance, the guidance was adopted on January 1, 2018 using the modified retrospective method. Upon adoption, the Company's accounting policies did not change materially as the principles of revenue recognition in the ASU are largely consistent with current practices applied by the Company.
The amendments in ASU 2016-01 require that equity investments be measured at fair value with changes in fair value recognized in net income, rather than accumulated other comprehensive income. Upon adoption of the new accounting guidance, on January 1, 2018, the Company recorded a cumulative-effect adjustment of $0.4 million to decrease accumulated other comprehensive income with a corresponding increase to opening retained earnings. During the year ended December 31, 2018, the Company recognized a loss of $3.6 million related to fair value changes in equity securities.
The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings from tax effects resulting from the TCJA so that tax effects of items within other comprehensive income reflect the current tax rate. Previously, the effect of a change in tax laws or rates on deferred tax liabilities and assets were included in income from continuing operations even in situations in which the related income tax effects of items in accumulated other comprehensive income were originally recognized in comprehensive income. Upon adoption of the new accounting guidance, on January 1, 2018, the Company recorded a cumulative-effect adjustment of $0.6 million to decrease accumulated other comprehensive income with a corresponding increase to opening retained earnings.
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, including our recent domestic select-service hotel franchise finance loan portfolio acquisition. 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, 2017 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.

5



About Western Alliance Bancorporation
With more than $20 billion in assets, Western Alliance Bancorporation (NYSE:WAL) is one of the country’s top-performing banking companies and has ranked in the top 10 on the Forbes “Best Banks in America” list for four consecutive years, 2016-2019. Its primary subsidiary, Western Alliance Bank, Member FDIC, helps business clients meet their growth ambitions with local teams of experienced bankers who deliver superior service and a full spectrum of customized loan, deposit and treasury management capabilities. Business clients also benefit from a powerful array of specialized financial services that provide strong expertise and tailored solutions for a wide variety of industries and sectors. A national presence with a regional footprint, Western Alliance Bank operates individually branded, full-service banking divisions and has offices in key markets nationwide. For more information, visit westernalliancebank.com.


6



Western Alliance Bancorporation and Subsidiaries
 
 
 
 
 
 
 
 
 
 
Summary Consolidated Financial Data
 
 
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Balance Sheet Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31,
 
 
 
 
 
 
 
 
2018
 
2017
 
Change %
 
 
 
 
 
 
(in millions)
 
 
Total assets
 
 
 
 
 
 
 
$
23,109.5

 
$
20,329.1

 
13.7
 %
Gross loans, net of deferred fees
 
 
 
 
 
 
 
17,710.6

 
15,093.9

 
17.3

Securities and money market investments
 
 
 
 
 
 
 
3,761.1

 
3,820.4

 
(1.6
)
Total deposits
 
 
 
 
 
 
 
19,177.4

 
16,972.5

 
13.0

Qualifying debt
 
 
 
 
 
 
 
360.5

 
376.9

 
(4.4
)
Stockholders' equity
 
 
 
 
 
 
 
2,613.7

 
2,229.7

 
17.2

Tangible common equity, net of tax (1)
 
 
 
 
 
 
 
2,316.5

 
1,931.6

 
19.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Income Statement Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended December 31,
 
For the Year Ended December 31,
 
 
2018
 
2017
 
Change %
 
2018
 
2017
 
Change %
 
 
(in thousands, except per share data)
 
 
 
(in thousands, except per share data)
 
 
Interest income
 
$
281,968

 
$
228,459

 
23.4
 %
 
$
1,033,483

 
$
845,513

 
22.2
 %
Interest expense
 
38,455

 
17,430

 
120.6

 
117,604

 
60,849

 
93.3

Net interest income
 
243,513

 
211,029

 
15.4

 
915,879

 
784,664

 
16.7

Provision for credit losses
 
6,000

 
5,000

 
20.0

 
23,000

 
17,250

 
33.3

Net interest income after provision for credit losses
 
237,513

 
206,029

 
15.3

 
892,879

 
767,414

 
16.3

Non-interest income
 
13,611

 
13,688

 
(0.6
)
 
43,116

 
45,344

 
(4.9
)
Non-interest expense
 
111,129

 
95,398

 
16.5

 
425,667

 
360,941

 
17.9

Income before income taxes
 
139,995

 
124,319

 
12.6

 
510,328

 
451,817

 
13.0

Income tax expense
 
20,909

 
34,973

 
(40.2
)
 
74,540

 
126,325

 
(41.0
)
Net income
 
$
119,086

 
$
89,346

 
33.3

 
$
435,788

 
$
325,492

 
33.9

Diluted earnings per share
 
$
1.13

 
$
0.85

 
32.9

 
$
4.14

 
$
3.10

 
33.5


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




7



Western Alliance Bancorporation and Subsidiaries
 
 
 
 
 
 
 
 
 
 
Summary Consolidated Financial Data
 
 
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At or For the Three Months Ended December 31,
 
For the Year Ended December 31,
 
 
2018
 
2017
 
Change %
 
2018
 
2017
 
Change %
Diluted earnings per share
 
$
1.13

 
$
0.85

 
32.9
 %
 
$
4.14

 
$
3.10

 
33.5
%
Book value per common share
 
24.90

 
21.14

 
17.8

 
 
 
 
 
 
Tangible book value per share, net of tax (1)
 
22.07

 
18.31

 
20.5

 
 
 
 
 
 
Average shares outstanding
(in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
104,684

 
104,342

 
0.3

 
104,669

 
104,179

 
0.5

Diluted
 
105,286

 
105,164

 
0.1

 
105,370

 
104,997

 
0.4

Common shares outstanding
 
104,949

 
105,487

 
(0.5
)
 
 
 
 
 
 
Selected Performance Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (2)
 
2.13
%
 
1.79
%
 
19.0
 %
 
2.05
%
 
1.72
%
 
19.2
%
Return on average tangible common equity (1, 2)
 
21.10

 
18.80

 
12.2

 
20.64

 
18.31

 
12.7

Net interest margin (2)
 
4.72

 
4.73

 
(0.2
)
 
4.68

 
4.65

 
0.6

Operating efficiency ratio - tax equivalent basis (1)
 
41.5

 
40.7

 
1.8

 
41.9

 
41.5

 
1.0

Loan to deposit ratio
 
92.35

 
88.93

 
3.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset Quality Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
Net charge-offs to average loans outstanding (2)
 
0.08
%
 
0.04
%
 
NM

 
0.06
%
 
0.01
%
 
NM

Nonaccrual loans to gross loans
 
0.16

 
0.29

 
(44.8
)
 
 
 
 
 
 
Nonaccrual loans and repossessed assets to total assets
 
0.20

 
0.36

 
(44.4
)
 
 
 
 
 
 
Allowance for credit losses to gross loans
 
0.86

 
0.93

 
(7.5
)
 
 
 
 
 
 
Allowance for credit losses to nonaccrual loans
 
550.41

 
318.84

 
72.6

 
 
 
 
 
 
Capital Ratios (1):
 
 
 
 
 
 
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Dec 31, 2017
Tangible common equity (1)
 
10.2
%
 
10.0
%
 
9.6
%
Common Equity Tier 1 (1), (3)
 
10.7

 
10.9

 
10.4

Tier 1 Leverage ratio (1), (3)
 
10.9

 
11.0

 
10.3

Tier 1 Capital (1), (3)
 
11.0

 
11.3

 
10.8

Total Capital (1), (3)
 
13.2

 
13.5

 
13.3


(1)    See Reconciliation of Non-GAAP Financial Measures.
(2)    Annualized for periods less than 12 months.
(3)    Capital ratios for December 31, 2018 are preliminary until the Call Report is filed.
NM    Changes +/- 100% are not meaningful.







8



Western Alliance Bancorporation and Subsidiaries
 
 
 
 
 
 
 
 
Condensed Consolidated Income Statements
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
 
2018
 
2017
 
2018
 
2017
 
 
(dollars in thousands, except per share data)
Interest income:
 
 
 
 
 
 
 
 
Loans
 
$
247,874

 
$
200,204

 
$
910,577

 
$
747,510

Investment securities
 
30,367

 
26,312

 
111,672

 
88,639

Other
 
3,727

 
1,943

 
11,234

 
9,364

Total interest income
 
281,968

 
228,459

 
1,033,483

 
845,513

Interest expense:
 
 
 
 
 
 
 
 
Deposits
 
31,176

 
12,459

 
90,464

 
41,965

Qualifying debt
 
5,829

 
4,734

 
22,287

 
18,273

Borrowings
 
1,450

 
237

 
4,853

 
611

Total interest expense
 
38,455

 
17,430

 
117,604

 
60,849

Net interest income
 
243,513

 
211,029

 
915,879

 
784,664

Provision for credit losses
 
6,000

 
5,000

 
23,000

 
17,250

Net interest income after provision for credit losses
 
237,513

 
206,029

 
892,879

 
767,414

Non-interest income:
 
 
 
 
 
 
 
 
Service charges and fees
 
5,611

 
5,157

 
22,295

 
20,346

Income from equity investments
 
3,178

 
1,519

 
8,595

 
4,496

Card income
 
1,866

 
1,796

 
8,009

 
6,313

Foreign currency income
 
1,285

 
906

 
4,760

 
3,536

Income from bank owned life insurance
 
983

 
965

 
3,946

 
3,861

Lending related income and gains (losses) on sale of loans, net
 
893

 
1,466

 
4,340

 
2,212

(Loss) gain on sales of investment securities, net
 
(424
)
 
1,436

 
(7,656
)
 
2,343

Unrealized (losses) gains on assets measured at fair value, net
 
(640
)
 

 
(3,611
)
 
(1
)
Other
 
859

 
443

 
2,438

 
2,238

Total non-interest income
 
13,611

 
13,688

 
43,116

 
45,344

Non-interest expenses:
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
64,558

 
57,704

 
253,238

 
214,344

Occupancy
 
7,733

 
6,532

 
29,404

 
27,860

Deposit costs
 
7,012

 
2,953

 
18,900

 
9,731

Legal, professional, and directors' fees
 
6,866

 
6,490

 
28,722

 
29,814

Data processing
 
6,028

 
5,062

 
22,716

 
19,225

Insurance
 
2,539

 
3,687

 
14,005

 
14,042

Loan and repossessed asset expenses
 
1,748

 
978

 
4,578

 
4,617

Marketing
 
1,341

 
1,176

 
3,770

 
3,804

Business development
 
1,437

 
1,179

 
5,960

 
6,128

Card expense
 
996

 
855

 
4,301

 
3,413

Intangible amortization
 
399

 
408

 
1,594

 
2,074

Net loss (gain) on sales and valuations of repossessed and other assets
 
1,483

 
(34
)
 
9

 
(80
)
Other
 
8,989

 
8,408

 
38,470

 
25,969

Total non-interest expense
 
111,129

 
95,398

 
425,667

 
360,941

Income before income taxes
 
139,995

 
124,319

 
510,328

 
451,817

Income tax expense
 
20,909

 
34,973

 
74,540

 
126,325

Net income
 
$
119,086

 
$
89,346

 
$
435,788

 
$
325,492

 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
Diluted shares
 
105,286

 
105,164

 
105,370

 
104,997

Diluted earnings per share
 
$
1.13

 
$
0.85

 
$
4.14

 
$
3.10





9



Western Alliance Bancorporation and Subsidiaries
 
 
 
 
 
 
 
 
Five Quarter Condensed Consolidated Income Statements
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
 
(in thousands, except per share data)
Interest income:
 
 
 
 
 
 
 
 
 
 
Loans
 
$
247,874

 
$
234,709

 
$
222,035

 
$
205,959

 
$
200,204

Investment securities
 
30,367

 
27,239

 
27,445

 
26,621

 
26,312

Other
 
3,727

 
3,268

 
2,122

 
2,117

 
1,943

Total interest income
 
281,968

 
265,216

 
251,602

 
234,697

 
228,459

Interest expense:
 
 
 
 
 
 
 
 
 
 
Deposits
 
31,176

 
25,266

 
19,849

 
14,173

 
12,459

Qualifying debt
 
5,829

 
5,794

 
5,695

 
4,969

 
4,734

Borrowings
 
1,450

 
118

 
1,950

 
1,335

 
237

Total interest expense
 
38,455

 
31,178

 
27,494

 
20,477

 
17,430

Net interest income
 
243,513

 
234,038

 
224,108

 
214,220

 
211,029

Provision for credit losses
 
6,000

 
6,000

 
5,000

 
6,000

 
5,000

Net interest income after provision for credit losses
 
237,513

 
228,038

 
219,108

 
208,220

 
206,029

Non-interest income:
 
 
 
 
 
 
 
 
 
 
Service charges and fees
 
5,611

 
5,267

 
5,672

 
5,745

 
5,157

Income from equity investments
 
3,178

 
1,440

 
2,517

 
1,460

 
1,519

Card income
 
1,866

 
2,138

 
2,033

 
1,972

 
1,796

Foreign currency income
 
1,285

 
1,092

 
1,181

 
1,202

 
906

Income from bank owned life insurance
 
983

 
868

 
1,167

 
928

 
965

Lending related income and gains (losses) on sale of loans, net
 
893

 
1,422

 
1,047

 
978

 
1,466

(Loss) gain on sales of investment securities, net
 
(424
)
 
(7,232
)
 

 

 
1,436

Unrealized (losses) gains on assets measured at fair value, net
 
(640
)
 
(1,212
)
 
(685
)
 
(1,074
)
 

Other
 
859

 
635

 
512

 
432

 
443

Total non-interest income
 
13,611

 
4,418

 
13,444

 
11,643

 
13,688

Non-interest expenses:
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
64,558

 
64,762

 
61,785

 
62,133

 
57,704

Occupancy
 
7,733

 
7,406

 
7,401

 
6,864

 
6,532

Deposit costs
 
7,012

 
4,848

 
4,114

 
2,926

 
2,953

Legal, professional, and directors' fees
 
6,866

 
7,907

 
7,946

 
6,003

 
6,490

Data processing
 
6,028

 
5,895

 
5,586

 
5,207

 
5,062

Insurance
 
2,539

 
3,712

 
3,885

 
3,869

 
3,687

Loan and repossessed asset expenses
 
1,748

 
1,230

 
1,017

 
583

 
978

Marketing
 
1,341

 
687

 
1,146

 
596

 
1,176

Business development
 
1,437

 
1,381

 
1,414

 
1,728

 
1,179

Card expense
 
996

 
1,282

 
1,081

 
942

 
855

Intangible amortization
 
399

 
398

 
399

 
398

 
408

Net loss (gain) on sales and valuations of repossessed and other assets
 
1,483

 
(67
)
 
(179
)
 
(1,228
)
 
(34
)
Other
 
8,989

 
14,400

 
6,953

 
8,128

 
8,408

Total non-interest expense
 
111,129

 
113,841

 
102,548

 
98,149

 
95,398

Income before income taxes
 
139,995

 
118,615

 
130,004

 
121,714

 
124,319

Income tax expense
 
20,909

 
7,492

 
25,325

 
20,814

 
34,973

Net income
 
$
119,086

 
$
111,123

 
$
104,679

 
$
100,900

 
$
89,346

 
 
 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
 
 
Diluted shares
 
105,286

 
105,448

 
105,420

 
105,324

 
105,164

Diluted earnings per share
 
$
1.13

 
$
1.05

 
$
0.99

 
$
0.96

 
$
0.85



10




Western Alliance Bancorporation and Subsidiaries
 
 
 
 
 
 
 
 
 
 
Five Quarter Condensed Consolidated Balance Sheets
 
 
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
 
(in millions)
Assets:
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
 
$
498.6

 
$
700.5

 
$
506.8

 
$
439.4

 
$
416.8

Securities and money market investments
 
3,761.1

 
3,633.7

 
3,688.7

 
3,734.3

 
3,820.4

Loans held for investment:
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
7,762.6

 
7,487.7

 
7,278.4

 
6,944.4

 
6,841.4

Commercial real estate - non-owner occupied
 
4,213.4

 
3,953.0

 
4,010.6

 
3,925.3

 
3,904.0

Commercial real estate - owner occupied
 
2,325.4

 
2,288.2

 
2,270.5

 
2,264.6

 
2,241.6

Construction and land development
 
2,134.7

 
2,107.6

 
1,978.3

 
1,957.5

 
1,632.2

Residential real estate
 
1,204.4

 
827.1

 
545.3

 
418.1

 
425.9

Consumer
 
70.1

 
69.2

 
55.2

 
50.5

 
48.8

Gross loans, net of deferred fees
 
17,710.6

 
16,732.8


16,138.3

 
15,560.4

 
15,093.9

Allowance for credit losses
 
(152.7
)
 
(150.0
)
 
(147.1
)
 
(144.7
)
 
(140.0
)
Loans, net
 
17,557.9

 
16,582.8

 
15,991.2

 
15,415.7

 
14,953.9

Premises and equipment, net
 
119.5

 
119.2

 
115.4

 
116.7

 
118.7

Other assets acquired through foreclosure, net
 
17.9

 
20.0

 
27.5

 
30.2

 
28.5

Bank owned life insurance
 
170.1

 
169.2

 
168.7

 
168.6

 
167.8

Goodwill and other intangibles, net
 
299.2

 
299.5

 
300.0

 
300.4

 
300.7

Other assets
 
685.2

 
651.2

 
569.2

 
555.4

 
522.3

Total assets
 
$
23,109.5

 
$
22,176.1

 
$
21,367.5

 
$
20,760.7

 
$
20,329.1

Liabilities and Stockholders' Equity:
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
Deposits
 
 
 
 
 
 
 
 
 
 
Non-interest bearing demand deposits
 
$
7,456.1

 
$
8,014.7

 
$
7,947.9

 
$
7,502.0

 
$
7,434.0

Interest bearing:
 
 
 
 
 
 
 
 
 
 
Demand
 
2,555.6

 
1,978.4

 
1,864.6

 
1,776.3

 
1,586.2

Savings and money market
 
7,330.7

 
7,059.1

 
6,468.8

 
6,314.9

 
6,330.9

Time certificates
 
1,835.0

 
1,856.4

 
1,806.2

 
1,761.3

 
1,621.4

Total deposits
 
19,177.4

 
18,908.6

 
18,087.5

 
17,354.5

 
16,972.5

Customer repurchase agreements
 
22.4

 
20.9

 
18.0

 
21.7

 
26.0

Total customer funds
 
19,199.8

 
18,929.5

 
18,105.5

 
17,376.2

 
16,998.5

Borrowings
 
491.0

 

 
75.0

 
300.0

 
390.0

Qualifying debt
 
360.5

 
359.1

 
361.1

 
363.9

 
376.9

Accrued interest payable and other liabilities
 
444.5

 
399.1

 
434.2

 
426.9

 
334.0

Total liabilities
 
20,495.8

 
19,687.7

 
18,975.8

 
18,467.0

 
18,099.4

Stockholders' Equity:
 
 
 
 
 
 
 
 
 
 
Common stock and additional paid-in capital
 
1,364.6

 
1,392.6

 
1,387.9

 
1,385.0

 
1,384.3

Retained earnings
 
1,282.7

 
1,166.2

 
1,055.1

 
950.4

 
848.5

Accumulated other comprehensive (loss) income
 
(33.6
)
 
(70.4
)
 
(51.3
)
 
(41.7
)
 
(3.1
)
Total stockholders' equity
 
2,613.7

 
2,488.4

 
2,391.7

 
2,293.7

 
2,229.7

Total liabilities and stockholders' equity
 
$
23,109.5

 
$
22,176.1

 
$
21,367.5

 
$
20,760.7

 
$
20,329.1



11



Western Alliance Bancorporation and Subsidiaries
 
 
 
 
 
 
 
 
 
 
Changes in the Allowance For Credit Losses
 
 
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
 
(in thousands)
Balance, beginning of period
 
$
150,011

 
$
147,083

 
$
144,659

 
$
140,050

 
$
136,421

Provision for credit losses
 
6,000

 
6,000

 
5,000

 
6,000

 
5,000

Recoveries of loans previously charged-off:
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
690

 
362

 
916

 
459

 
406

Commercial real estate - non-owner occupied
 

 
804

 
15

 
105

 
58

Commercial real estate - owner occupied
 
9

 
52

 
231

 
21

 
119

Construction and land development
 
13

 
24

 
8

 
1,388

 
218

Residential real estate
 
116

 
440

 
141

 
250

 
120

Consumer
 
8

 
11

 
14

 
10

 
3

Total recoveries
 
836

 
1,693

 
1,325

 
2,233

 
924

Loans charged-off:
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
4,130

 
4,610

 
2,777

 
3,517

 
2,019

Commercial real estate - non-owner occupied
 

 

 
233

 

 
275

Commercial real estate - owner occupied
 

 

 

 

 

Construction and land development
 

 

 
1

 

 

Residential real estate
 

 
46

 
885

 
107

 

Consumer
 

 
109

 
5

 

 
1

Total loans charged-off
 
4,130

 
4,765

 
3,901

 
3,624

 
2,295

Net loan charge-offs
 
3,294

 
3,072

 
2,576

 
1,391

 
1,371

Balance, end of period
 
$
152,717

 
$
150,011

 
$
147,083

 
$
144,659

 
$
140,050

 
 
 
 
 
 
 
 
 
 
 
Net charge-offs to average loans - annualized
 
0.08
%
 
0.08
%
 
0.07
%
 
0.04
%
 
0.04
%
 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses to gross loans
 
0.86
%
 
0.90
%
 
0.91
%
 
0.93
%
 
0.93
%
Allowance for credit losses to gross organic loans
 
0.92

 
0.97

 
0.99

 
1.02

 
1.03

Allowance for credit losses to nonaccrual loans
 
550.41

 
406.89

 
432.38

 
387.86

 
318.84

 
 
 
 
 
 
 
 
 
 
 
Nonaccrual loans
 
$
27,746

 
$
36,868

 
$
34,017

 
$
37,297

 
$
43,925

Nonaccrual loans to gross loans
 
0.16
%
 
0.22
%
 
0.21
%
 
0.24
%
 
0.29
%
Repossessed assets
 
$
17,924

 
$
20,028

 
$
27,541

 
$
30,194

 
$
28,540

Nonaccrual loans and repossessed assets to total assets
 
0.20
%
 
0.26
%
 
0.29
%
 
0.33
%
 
0.36
%
 
 
 
 
 
 
 
 
 
 
 
Loans past due 90 days, still accruing
 
$
594

 
$

 
$

 
$
37

 
$
43

Loans past due 90 days and still accruing to gross loans
 
0.00
%
 
%
 
%
 
0.00
%
 
0.00
%
Loans past due 30 to 89 days, still accruing
 
$
16,557

 
$
9,360

 
$
1,545

 
$
6,479

 
$
10,142

Loans past due 30 to 89 days, still accruing to gross loans
 
0.09
%
 
0.06
%
 
0.01
%
 
0.04
%
 
0.07
%
 
 
 
 
 
 
 
 
 
 
 
Special mention loans
 
$
88,856

 
$
124,689

 
$
150,278

 
$
184,702

 
$
155,032

Special mention loans to gross loans
 
0.50
%
 
0.75
%
 
0.93
%
 
1.19
%
 
1.03
%
 
 
 
 
 
 
 
 
 
 
 
Classified loans on accrual
 
$
181,105

 
$
176,727

 
$
156,659

 
$
126,538

 
$
127,681

Classified loans on accrual to gross loans
 
1.02
%
 
1.06
%
 
0.97
%
 
0.81
%
 
0.85
%
Classified assets
 
$
242,101

 
$
252,770

 
$
240,063

 
$
213,482

 
$
222,004

Classified assets to total assets
 
1.05
%
 
1.14
%
 
1.12
%
 
1.03
%