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Western Alliance Bancorporation Reports Fourth Quarter and Full Year 2023 Financial Results

Western Alliance Bancorporation (NYSE:WAL):

FOURTH QUARTER AND FULL YEAR 2023 FINANCIAL RESULTS

Quarter Highlights:

 

 

 

 

 

 

 

 

 

 

 

Net income

 

Earnings per share

 

PPNR1

 

Net interest margin

 

Adjusted efficiency ratio1

 

Book value per common share

$147.9 million

 

$1.33

 

$220.3 million

 

3.65%

 

59.1%

 

$52.81

 

$1.911, excluding notable items

 

 

 

 

$46.721, excluding goodwill and intangibles

CEO COMMENTARY:

“Western Alliance’s diversified, national commercial business strategy continued to drive strong momentum in the fourth quarter as we generated earnings per share of $1.911, excluding $0.58 of notable items. We view this quarter’s solid loan and deposit momentum, continued net interest income growth, and sustained stable asset quality as positioning us to deliver leading profitability in 2024, supported by sturdy capital and liquidity levels,” said Kenneth A. Vecchione, President and Chief Executive Officer. “CET1 capital reached 10.8% at year-end, and tangible book value per share rose 16% year-over-year to $46.721. Additionally, our strong deposit growth allowed us to repay $1.5 billion of debt and borrowings, including our entire loan from the Bank Term Funding Program. As we turn the page on 2023, we are encouraged by how our employees responded to the year’s challenges as well as the ongoing trust placed in us by our customers and shareholders.”

LINKED-QUARTER BASIS

FULL YEAR

 

FINANCIAL HIGHLIGHTS:

  • Net income of $147.9 million and earnings per share of $1.33, compared to $216.6 million and $1.97, respectively
  • Net revenue of $682.2 million, a decrease of 4.7%, or $34.0 million, compared to an increase in non-interest expenses of 8.4%, or $35.7 million
  • Pre-provision net revenue1 of $220.3 million, down $69.7 million from $290.0 million
  • Effective tax rate of 29.9%, compared to 22.1%
  • Net income of $722.4 million and earnings per share of $6.54, down 31.7% and 32.6%, from $1.1 billion and $9.70, respectively
  • Net revenue of $2.6 billion, an increase of 3.1%, or $78.7 million, compared to an increase in non-interest expenses of 40.3%, or $466.7 million
  • Pre-provision net revenue1 of $996.2 million, down $388.0 million from $1.4 billion
  • Effective tax rate of 22.6%, compared to 19.7%

FINANCIAL POSITION RESULTS:

  • HFI loans of $50.3 billion, up $850 million, or 1.7%.
  • Total deposits of $55.3 billion, up $1.0 billion, or 1.9%
  • Stockholders' equity of $6.1 billion, up $332 million
  • Decrease in HFI loans of $1.6 billion, or 3.0%
  • Increase in total deposits of $1.7 billion, or 3.1%
  • Increase in stockholders' equity of $722 million

LOANS AND ASSET QUALITY:

  • Nonperforming assets (nonaccrual loans and repossessed assets) to total assets of 0.40%, compared to 0.35%
  • Annualized net loan charge-offs to average loans outstanding of 0.07%, flat from the prior quarter
  • Nonperforming assets to total assets of 0.40%, compared to 0.14%
  • Net loan charge-offs to average loans outstanding of 0.06%, compared to approximately 0.00%

KEY PERFORMANCE METRICS:

  • Net interest margin of 3.65% decreased from 3.67%
  • Return on average assets and on tangible common equity1 of 0.84% and 11.9%, compared to 1.24% and 17.3%, respectively
  • Tangible common equity ratio1 of 7.3%, compared to 6.8%
  • CET 1 ratio of 10.8% increased from 10.6%
  • Tangible book value per share1, net of tax, of $46.72, an increase of 7.0% from $43.66
  • Adjusted efficiency ratio1 of 59.1%, compared to 50.0%
  • Net interest margin of 3.63% decreased from 3.67%
  • Return on average assets and on tangible common equity1 of 1.03% and 14.9%, compared to 1.62% and 25.4%, respectively
  • Tangible common equity ratio1 of 7.3% increased from 6.5%
  • CET 1 ratio of 10.8% increased from 9.3%
  • Tangible book value per share1, net of tax, of $46.72, an increase of 16.1% from $40.25
  • Adjusted efficiency ratio1 of 53.5%, compared to 41.1%

1

See reconciliation of Non-GAAP Financial Measures.

Income Statement

Net interest income totaled $591.7 million in the fourth quarter 2023, an increase of $4.7 million, or 0.8%, from $587.0 million in the third quarter 2023, and a decrease of $48.0 million, or 7.5%, compared to the fourth quarter 2022. The increase in net interest income from the third quarter 2023 is due to an increase in average HFI loan and securities balances combined with a decrease in average short-term borrowings, and was partially offset by an increase in deposit balances and rates. The decrease in net interest income from the fourth quarter 2022 was driven by an increase in both the balances and rates of deposits and short-term borrowings, partially offset by higher yields on HFI loans.

The Company recorded a provision for credit losses of $9.3 million in the fourth quarter 2023, a decrease of $2.8 million from $12.1 million in the third quarter 2023, and an increase of $6.2 million from $3.1 million in the fourth quarter 2022. The decrease in provision for credit losses during the fourth quarter 2023 is primarily due to improvement in the macroeconomic outlook and stable asset quality.

The Company’s net interest margin in the fourth quarter 2023 was 3.65%, a decrease from 3.67% in the third quarter 2023, and a decrease from 3.98% in the fourth quarter 2022. An increase in deposit balances and rates drove a decrease in net interest margin from the third quarter 2023, with higher average HFI loan and securities balances partially offsetting this decrease. The decrease in net interest margin from the fourth quarter 2022 was driven by higher average balances and rates on deposits and short-term borrowings.

Non-interest income was $90.5 million for the fourth quarter 2023, compared to $129.2 million for the third quarter 2023, and $61.5 million for the fourth quarter 2022. The $38.7 million decrease in non-interest income for the third quarter 2023 was due to a decrease in fair value gain adjustments of $16.5 million and a $14.8 million loss on sale of securities in the fourth quarter compared to a gain of $0.1 million in the third quarter, combined with an $18.1 million decrease in net loan servicing revenue due to losses on MSR sales and fair value changes, partially offset by higher servicing income, and a $4.2 million decrease in net gain on loan origination and sale activities from lower spreads. These decreases were offset by a $12.6 million increase in income from equity investments. The $29.0 million increase in non-interest income from the fourth quarter 2022 was driven by a higher net gain on loan origination and sale activities, service charges and fees, and fair value gain adjustments.

Net revenue totaled $682.2 million for the fourth quarter 2023, a decrease of $34.0 million or 4.7%, compared to $716.2 million for the third quarter 2023, and a decrease of $19.0 million or 2.7%, compared to $701.2 million for the fourth quarter 2022.

Non-interest expense was $461.9 million for the fourth quarter 2023, compared to $426.2 million for the third quarter 2023, and $333.4 million for the fourth quarter 2022. The Company’s adjusted efficiency ratio1 was 59.1% for the fourth quarter 2023, compared to 50.0% in the third quarter 2023, and 40.0% for the fourth quarter 2022. The increase in non-interest expense from the third quarter 2023 is due primarily to increased insurance costs largely related to the FDIC special assessment, partially offset by a gain on debt extinguishment related to the early payoff of the AmeriHome senior notes. The increase in non-interest expense from the fourth quarter 2022 is primarily attributable to an increase in insurance and deposit costs.

Income tax expense was $63.1 million for the fourth quarter 2023, compared to $61.3 million for the third quarter 2023, and $71.7 million for the fourth quarter 2022. The increase in income tax expense from the third quarter 2023 is primarily related to a higher effective tax rate resulting from lower utilization of tax credits due to timing of projects being placed in service, the AOCI impact of AFS securities gains during the quarter, and discrete nondeductible items.

Net income was $147.9 million for the fourth quarter 2023, a decrease of $68.7 million from $216.6 million for the third quarter 2023, and a decrease of $145.1 million from $293.0 million for the fourth quarter 2022. Earnings per share totaled $1.33 for the fourth quarter 2023, compared to $1.97 for the third quarter 2023, and $2.67 for the fourth quarter 2022. Earnings per share, excluding notable items1, totaled $1.91 for the fourth quarter 2023. The Company views its earnings per share, excluding notable items1 as a key metric for assessing the Company’s earnings power.

The Company views its pre-provision net revenue1 ("PPNR") as a key metric for assessing the Company’s earnings power, which it defines as net revenue less non-interest expense. For the fourth quarter 2023, the Company’s PPNR1 was $220.3 million, down $69.7 million from $290.0 million in the third quarter 2023, and down $147.5 million from $367.8 million in the fourth quarter 2022.

The Company had 3,260 full-time equivalent employees and 57 offices at December 31, 2023, compared to 3,272 employees and 56 offices at September 30, 2023, and 3,365 employees and 56 offices at December 31, 2022.

1

See reconciliation of Non-GAAP Financial Measures.

Balance Sheet

HFI loans, net of deferred fees totaled $50.3 billion at December 31, 2023, compared to $49.4 billion at September 30, 2023, and $51.9 billion at December 31, 2022. The increase in HFI loans of $850 million from the prior quarter was driven by an increase of $759 million in commercial and industrial loans and $220 million in construction and land development loans. This increase was partially offset by a decrease in CRE non-owner occupied loans of $160 million. The decrease in HFI loans of $1.6 billion from December 31, 2022 was driven by a $1.6 billion decrease in commercial and industrial loans and a $1.2 billion decrease in residential real estate loans, resulting from loan dispositions undertaken as part of the Company's balance sheet repositioning strategy. This decrease was partially offset by increases in construction and land development loans and CRE non-owner occupied of $876 million and $331 million, respectively. HFS loans totaled $1.4 billion at December 31, 2023, compared to $1.8 billion at September 30, 2023, and $1.2 billion at December 31, 2022. The balance of HFS loans at December 31, 2023 primarily consisted of AmeriHome HFS loans, consistent with the balance at December 31, 2022 and prior periods. The decrease of $364 million in HFS loans from the prior quarter is primarily related to loan sales. The increase of $218 million in HFS loans from December 31, 2022 primarily related to an increase in agency conforming loans.

The Company's allowance for credit losses on HFI loans consists of an allowance for funded HFI loans and an allowance for unfunded loan commitments. At December 31, 2023, the allowance for loan losses to funded HFI loans ratio was 0.67%, compared to 0.66% at September 30, 2023, and 0.60% at December 31, 2022. The allowance for credit losses, which includes the allowance for unfunded loan commitments, to funded HFI loans ratio was 0.73% at December 31, 2023, compared to 0.74% at September 30, 2023, and 0.69% at December 31, 2022. The Company is a party to credit linked note transactions, which effectively transfer a portion of the risk of losses on reference pools of loans to the purchasers of the notes. The Company is protected from first credit losses on reference pools of loans totaling $9.1 billion, $9.3 billion, and $12.0 billion as of December 31, 2023, September 30, 2023, and December 31, 2022, respectively, under these transactions. However, as these note transactions are considered to be free standing credit enhancements, the allowance for credit losses cannot be reduced by the expected credit losses that may be mitigated by these notes. Accordingly, the allowance for loan and credit losses ratios include an allowance of $14.7 million as of December 31, 2023, $17.4 million as of September 30, 2023, and $18.5 million as of December 31, 2022, related to these pools of loans. The allowance for credit losses to funded HFI loans ratio, adjusted to reduce the HFI loan balance by the amount of loans in covered reference pools, was 0.89% at December 31, 2023, 0.91% at September 30, 2023, and 0.89% at December 31, 2022.

Deposits totaled $55.3 billion at December 31, 2023, an increase of $1.0 billion from $54.3 billion at September 30, 2023, and an increase of $1.7 billion from $53.6 billion at December 31, 2022. By deposit type, the increase from the prior quarter is attributable to increases of $3.1 billion from interest-bearing demand deposits and $1.3 billion from certificates of deposits, offset by a decrease of $3.5 billion from non-interest bearing demand deposits. From December 31, 2022, interest-bearing demand deposits and certificates of deposit increased $6.4 billion and $5.1 billion, respectively. These increases were partially offset by decreases in non-interest bearing demand deposits and savings and money market accounts of $5.2 billion and $4.6 billion, respectively. Non-interest bearing deposits were $14.5 billion at December 31, 2023, compared to $18.0 billion at September 30, 2023, and $19.7 billion at December 31, 2022.

The table below shows the Company's deposit types as a percentage of total deposits:

 

Dec 31, 2023

Sep 30, 2023

Dec 31, 2022

Non-interest bearing

26.2

%

33.1

%

36.7

%

Savings and money market

26.7

27.0

36.2

Interest-bearing demand

28.8

23.7

17.7

Certificates of deposit

18.3

16.2

9.4

The Company’s ratio of HFI loans to deposits was 90.9% at December 31, 2023, compared to 91.1% at September 30, 2023, and 96.7% at December 31, 2022.

Borrowings were $7.2 billion at December 31, 2023, $8.7 billion at September 30, 2023, and $6.3 billion at December 31, 2022. Borrowings decreased $1.5 billion from September 30, 2023 due to payoff of the Bank Term Funding Program advances and the AmeriHome senior notes. The increase in borrowings from December 31, 2022 is due primarily to an increase in short-term borrowings of $1.8 billion, partially offset by payoffs of credit linked notes and the AmeriHome senior notes.

Qualifying debt totaled $895 million at December 31, 2023, compared to $890 million at September 30, 2023, and $893 million at December 31, 2022.

Stockholders’ equity was $6.1 billion at December 31, 2023, compared to $5.7 billion at September 30, 2023 and $5.4 billion at December 31, 2022. The increase in stockholders’ equity from the prior quarter was due to net income and unrealized fair value gains of $222 million on the Company's available-for-sale securities, which are recorded in other comprehensive loss, net of tax. These increases were partially offset by dividends to shareholders. Cash dividends of $40.5 million ($0.37 per common share) and $3.2 million ($0.27 per depository share) were paid to shareholders during the fourth quarter 2023. The increase in stockholders' equity from December 31, 2022 is primarily a function of net income, partially offset by dividends to shareholders.

At December 31, 2023, tangible common equity, net of tax1, was 7.3% of tangible assets1 and total capital was 13.7% of risk-weighted assets. The Company’s tangible book value per share1 was $46.72 at December 31, 2023, an increase of 7.0% from $43.66 at September 30, 2023, and up 16.1% from $40.25 at December 31, 2022. The increase in tangible book value per share from September 30, 2023 is attributable to net income.

Total assets remained flat from September 30, 2023 to December 31, 2023 at $70.9 billion, and increased 4.6% from $67.7 billion at December 31, 2022. The slight decrease in total assets from September 30, 2023 was driven by a decrease in cash and HFS loans, offset by an increase in investment securities. The increase in total assets from December 31, 2022 was driven by an increase in investments, cash, and HFS loans, partially offset by a decrease in HFI loans.

1

See reconciliation of Non-GAAP Financial Measures.

Asset Quality

Provision for credit losses totaled $9.3 million for the fourth quarter 2023, compared to $12.1 million for the third quarter 2023, and $3.1 million for the fourth quarter 2022. Net loan charge-offs in the fourth quarter 2023 were $8.5 million, or 0.07% of average loans (annualized), compared to $8.0 million, or 0.07%, in the third quarter 2023, and $1.8 million, or 0.01%, in the fourth quarter 2022.

Nonaccrual loans increased $36 million to $273 million during the quarter and increased $188 million from December 31, 2022. Loans past due 90 days and still accruing interest totaled $42 million at December 31, 2023 and zero at September 30, 2023 and December 31, 2022 (excluding government guaranteed loans of $399 million, $439 million, and $582 million, respectively). Loans past due 30-89 days and still accruing interest totaled $164 million at December 31, 2023, a decrease from $189 million at September 30, 2023, and an increase from $70 million at December 31, 2022 (excluding government guaranteed loans of $279 million, $261 million, and $334 million, respectively).

Repossessed assets totaled $8 million at December 31, 2023, flat from September 30, 2023, and a decrease of $3 million from December 31, 2022. Classified assets totaled $673 million at December 31, 2023, an increase of $34 million from $639 million at September 30, 2023, and an increase of $280 million from $393 million at December 31, 2022.

The ratio of classified assets to Tier 1 capital plus the allowance for credit losses, a common regulatory measure of asset quality, was 10.5% at December 31, 2023, compared to 10.2% at September 30, 2023, and 6.8% at December 31, 2022.

1

See reconciliation of Non-GAAP Financial Measures.

Segment Highlights

The Company's reportable segments are aggregated with a focus on products and services offered and consist of three reportable segments:

Commercial segment: provides commercial banking and treasury management products and services to small and middle-market businesses, specialized banking services to sophisticated commercial institutions and investors within niche industries, as well as financial services to the real estate industry.

Consumer Related segment: offers both commercial banking services to enterprises in consumer-related sectors and consumer banking services, such as residential mortgage banking.

Corporate & Other segment: consists of the Company's investment portfolio, Corporate borrowings and other related items, income and expense items not allocated to our other reportable segments, and inter-segment eliminations.

Key management metrics for evaluating the performance of the Company's Commercial and Consumer Related segments include loan and deposit growth, asset quality, and pre-tax income.

The Commercial segment reported an HFI loan balance of $29.1 billion at December 31, 2023, an increase of $416 million during the quarter, and a decrease of $2.3 billion during the year. Deposits for the Commercial segment totaled $23.9 billion at December 31, 2023, an increase of $1.3 billion during the quarter, and a decrease of $5.6 billion during the year.

Pre-tax income for the Commercial segment was $168.4 million for the three months ended December 31, 2023, a decrease of $27.7 million from the three months ended September 30, 2023, and a decrease of $152.1 million from the three months ended December 31, 2022. For the year ended December 31, 2023, the Commercial segment reported total pre-tax income of $745.2 million, a decrease of $350.1 million compared to the year ended December 31, 2022.

The Consumer Related segment reported an HFI loan balance of $21.2 billion at December 31, 2023, an increase of $434 million during the quarter, and an increase of $713 million during the year. The Consumer Related segment also has loans held for sale of $1.4 billion at December 31, 2023, a decrease of $364 million during the quarter, and an increase of $218 million during the year. Deposits for the Consumer Related segment totaled $24.9 billion, a decrease of $169 million during the quarter, and an increase of $6.4 billion during the year.

Pre-tax income for the Consumer Related segment was $75.6 million for the three months ended December 31, 2023, an increase of $6.7 million from the three months ended September 30, 2023, and an increase of $5.8 million from the three months ended December 31, 2022. Pre-tax income for the Consumer Related segment for the year ended December 31, 2023 totaled $258.0 million, a decrease of $192.1 million compared to the year ended December 31, 2022.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live webcast to discuss its fourth quarter and full year 2023 financial results at 12:00 p.m. ET on Friday, January 26, 2024. Participants may access the call by dialing 1-833-470-1428 and using access code 941447 or via live audio webcast using the website link https://events.q4inc.com/attendee/536267609. The webcast is also available via the Company’s website at www.westernalliancebancorporation.com. Participants should log in at least 15 minutes early to receive instructions. The call will be recorded and made available for replay after 3:00 p.m. ET January 26th through 11:00 p.m. ET February 26th by dialing 1-866-813-9403, using access code 690232.

Reclassifications

Certain amounts in the Consolidated Income Statements for the prior periods have been reclassified to conform to the current presentation. The reclassifications have no effect on net income or stockholders’ equity as previously reported.

Use of Non-GAAP Financial Information

This press release contains both financial measures based on GAAP and non-GAAP based financial measures, which are used where management believes them to be helpful in understanding the Company’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Cautionary Note Regarding Forward-Looking Statements

This release contains forward-looking statements that relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Examples of forward-looking statements include, among others, statements we make regarding our expectations with regard to our business, financial and operating results, future economic performance and dividends. The forward-looking statements contained herein reflect our current views about future events and financial performance and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from historical results and those expressed in any forward-looking statement. Some factors that could cause actual results to differ materially from historical or expected results include, among others: the risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and the Company's subsequent Quarterly Reports on Form 10-Q, each as filed with the Securities and Exchange Commission; adverse developments in the financial services industry generally such as the bank failures in 2023 and any related impact on depositor behavior; risks related to the sufficiency of liquidity; the potential adverse effects of unusual and infrequently occurring events such as the COVID-19 pandemic and any governmental or societal responses thereto; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; the impact on financial markets from geopolitical conflicts such as the wars in Ukraine and the Middle East; 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 $70 billion in assets, Western Alliance Bancorporation (NYSE:WAL) is one of the country’s top-performing banking companies. Through its primary subsidiary, Western Alliance Bank, Member FDIC, clients benefit from a full spectrum of tailored commercial banking solutions and consumer products, all delivered with outstanding service by industry experts who put customers first. Major accolades include being ranked as a top U.S. bank in 2023 by American Banker and Bank Director. Serving clients across the country wherever business happens, Western Alliance Bank operates individual, full-service banking and financial brands with offices in key markets nationwide. For more information, visit westernalliancebank.com.

Western Alliance Bancorporation and Subsidiaries

Summary Consolidated Financial Data

Unaudited

 
 

Selected Balance Sheet Data:

 

 

 

 

 

 

 

 

As of December 31,

 

 

 

 

 

 

 

 

2023

 

2022

 

Change %

 

 

 

 

 

 

 

 

(in millions)

 

 

Total assets

 

 

 

 

 

 

 

$

70,862

 

$

67,734

 

4.6

%

Loans held for sale

 

 

 

 

 

 

 

 

1,402

 

 

1,184

 

18.4

 

HFI loans, net of deferred fees

 

 

 

 

 

 

 

 

50,297

 

 

51,862

 

(3.0

)

Investment securities

 

12,993

 

 

8,760

 

48.3

 

Total deposits

 

 

 

 

 

 

 

 

55,333

 

 

53,644

 

3.1

 

Borrowings

 

 

 

 

 

 

 

 

7,230

 

 

6,299

 

14.8

 

Qualifying debt

 

 

 

 

 

 

 

 

895

 

 

893

 

0.2

 

Stockholders' equity

 

 

 

 

 

 

 

 

6,078

 

 

5,356

 

13.5

 

Tangible common equity, net of tax (1)

 

 

 

 

 

 

 

 

5,116

 

 

4,383

 

16.7

 

Common equity Tier 1 capital

 

 

 

 

 

 

 

 

5,659

 

 

5,073

 

11.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Income Statement Data:

 

 

For the Three Months Ended December 31,

 

For the Year Ended December 31,

 

 

2023

 

2022

 

Change %

 

2023

 

2022

 

Change %

 

 

(in millions, except per share data)

 

 

 

(in millions, except per share data)

 

 

Interest income

 

$

1,039.0

 

$

888.3

 

17.0

%

 

$

4,035.3

 

$

2,691.8

 

49.9

%

Interest expense

 

 

447.3

 

 

248.6

 

79.9

 

 

 

1,696.4

 

 

475.5

 

NM

 

Net interest income

 

 

591.7

 

 

639.7

 

(7.5

)

 

 

2,338.9

 

 

2,216.3

 

5.5

 

Provision for credit losses

 

 

9.3

 

 

3.1

 

NM

 

 

 

62.6

 

 

68.1

 

(8.1

)

Net interest income after provision for credit losses

 

 

582.4

 

 

636.6

 

(8.5

)

 

 

2,276.3

 

 

2,148.2

 

6.0

 

Non-interest income

 

 

90.5

 

 

61.5

 

47.2

 

 

 

280.7

 

 

324.6

 

(13.5

)

Non-interest expense

 

 

461.9

 

 

333.4

 

38.5

 

 

 

1,623.4

 

 

1,156.7

 

40.3

 

Income before income taxes

 

 

211.0

 

 

364.7

 

(42.1

)

 

 

933.6

 

 

1,316.1

 

(29.1

)

Income tax expense

 

 

63.1

 

 

71.7

 

(12.0

)

 

 

211.2

 

 

258.8

 

(18.4

)

Net income

 

 

147.9

 

 

293.0

 

(49.5

)

 

 

722.4

 

 

1,057.3

 

(31.7

)

Dividends on preferred stock

 

 

3.2

 

 

3.2

 

 

 

 

12.8

 

 

12.8

 

 

Net income available to common stockholders

 

$

144.7

 

$

289.8

 

(50.1

)

 

$

709.6

 

$

1,044.5

 

(32.1

)

Diluted earnings per common share

 

$

1.33

 

$

2.67

 

(50.2

)

 

$

6.54

 

$

9.70

 

(32.6

)

(1)

See Reconciliation of Non-GAAP Financial Measures.

NM

Changes +/- 100% are not meaningful.

Western Alliance Bancorporation and Subsidiaries

Summary Consolidated Financial Data

Unaudited

 
 

Common Share Data:

 

 

At or For the Three Months Ended December 31,

 

For the Year Ended December 31,

 

 

2023

 

2022

 

Change %

 

2023

 

2022

 

Change %

Diluted earnings per common share

 

$

1.33

 

$

2.67

 

(50.2

)%

 

$

6.54

 

$

9.70

 

(32.6

)%

Book value per common share

 

 

52.81

 

 

46.47

 

13.6

 

 

 

 

 

 

 

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

 

 

46.72

 

 

40.25

 

16.1

 

 

 

 

 

 

 

Average common shares outstanding

(in millions):

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

108.4

 

 

108.0

 

0.3

 

 

 

108.3

 

 

107.2

 

1.0

 

Diluted

 

 

108.7

 

 

108.4

 

0.3

 

 

 

108.5

 

 

107.6

 

0.8

 

Common shares outstanding

 

 

109.5

 

 

108.9

 

0.5

 

 

 

 

 

 

 

Selected Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (2)

 

0.84

%

 

1.67

%

 

(49.7

)%

 

1.03

%

 

1.62

%

 

(36.4

)%

Return on average tangible common equity (1, 2)

 

11.9

 

 

27.0

 

 

(55.9

)

 

14.9

 

 

25.4

 

 

(41.3

)

Net interest margin (2)

 

3.65

 

 

3.98

 

 

(8.3

)

 

3.63

 

 

3.67

 

 

(1.1

)

Efficiency ratio, adjusted for deposit costs (1)

 

59.1

 

 

40.0

 

 

47.8

 

 

53.5

 

 

41.1

 

 

30.2

 

HFI loan to deposit ratio

 

90.9

 

 

96.7

 

 

(6.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Quality Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs to average loans outstanding (2)

 

0.07

%

 

0.01

%

 

NM

 

 

0.06

%

 

0.00

%

 

NM

 

Nonaccrual loans to funded HFI loans

 

0.54

 

 

0.16

 

 

NM

 

 

 

 

 

 

 

Nonaccrual loans and repossessed assets to total assets

 

0.40

 

 

0.14

 

 

NM

 

 

 

 

 

 

 

Allowance for loan losses to funded HFI loans

 

0.67

 

 

0.60

 

 

11.7

 

 

 

 

 

 

 

Allowance for loan losses to nonaccrual HFI loans

 

123

 

 

364

 

 

(66.2

)

 

 

 

 

 

 

Capital Ratios:

 

 

 

 

 

 

 

 

Dec 31, 2023

 

Sep 30, 2023

 

Dec 31, 2022

Tangible common equity (1)

 

7.3

%

 

6.8

%

 

6.5

%

Common Equity Tier 1 (3)

 

10.8

 

 

10.6

 

 

9.3

 

Tier 1 Leverage ratio (3)

 

8.6

 

 

8.5

 

 

7.8

 

Tier 1 Capital (3)

 

11.5

 

 

11.3

 

 

10.0

 

Total Capital (3)

 

13.7

 

 

13.5

 

 

12.1

 

(1)

See Reconciliation of Non-GAAP Financial Measures.

(2)

Annualized on an actual/actual basis for periods less than 12 months.

(3)

Capital ratios for December 31, 2023 are preliminary.

NM

Changes +/- 100% are not meaningful.

Western Alliance Bancorporation and Subsidiaries

Condensed Consolidated Income Statements

Unaudited

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

(dollars in millions, except per share data)

Interest income:

 

 

 

 

 

 

 

 

Loans

 

$

859.0

 

 

$

785.1

 

 

$

3,409.7

 

 

$

2,393.4

 

Investment securities

 

 

136.2

 

 

 

89.4

 

 

 

467.5

 

 

 

272.6

 

Other

 

 

43.8

 

 

 

13.8

 

 

 

158.1

 

 

 

25.8

 

Total interest income

 

 

1,039.0

 

 

 

888.3

 

 

 

4,035.3

 

 

 

2,691.8

 

Interest expense:

 

 

 

 

 

 

 

 

Deposits

 

 

343.7

 

 

 

157.6

 

 

 

1,142.6

 

 

 

276.4

 

Qualifying debt

 

 

9.6

 

 

 

9.1

 

 

 

37.9

 

 

 

35.0

 

Borrowings

 

 

94.0

 

 

 

81.9

 

 

 

515.9

 

 

 

164.1

 

Total interest expense

 

 

447.3

 

 

 

248.6

 

 

 

1,696.4

 

 

 

475.5

 

Net interest income

 

 

591.7

 

 

 

639.7

 

 

 

2,338.9

 

 

 

2,216.3

 

Provision for credit losses

 

 

9.3

 

 

 

3.1

 

 

 

62.6

 

 

 

68.1

 

Net interest income after provision for credit losses

 

 

582.4

 

 

 

636.6

 

 

 

2,276.3

 

 

 

2,148.2

 

Non-interest income:

 

 

 

 

 

 

 

 

Net gain on loan origination and sale activities

 

 

47.8

 

 

 

25.4

 

 

 

193.5

 

 

 

104.0

 

Service charges and fees

 

 

22.7

 

 

 

5.9

 

 

 

76.3

 

 

 

27.0

 

Income from equity investments

 

 

13.1

 

 

 

4.2

 

 

 

15.7

 

 

 

17.8

 

Net loan servicing revenue

 

 

9.1

 

 

 

21.4

 

 

 

102.3

 

 

 

130.9

 

Commercial banking related income

 

 

5.9

 

 

 

5.5

 

 

 

23.7

 

 

 

21.5

 

(Loss) gain on recovery from credit guarantees

 

 

(2.7

)

 

 

3.0

 

 

 

(2.2

)

 

 

14.7

 

(Loss) gain on sales of investment securities

 

 

(14.8

)

 

 

0.1

 

 

 

(40.8

)

 

 

6.8

 

Fair value gain (loss) adjustments, net

 

 

1.3

 

 

 

(9.2

)

 

 

(116.0

)

 

 

(28.6

)

Other

 

 

8.1

 

 

 

5.2

 

 

 

28.2

 

 

 

30.5

 

Total non-interest income

 

 

90.5

 

 

 

61.5

 

 

 

280.7

 

 

 

324.6

 

Non-interest expenses:

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

134.6

 

 

 

125.7

 

 

 

566.3

 

 

 

539.5

 

Deposit costs

 

 

131.0

 

 

 

82.2

 

 

 

436.7

 

 

 

165.8

 

Insurance

 

 

108.6

 

 

 

8.9

 

 

 

190.4

 

 

 

31.1

 

Data processing

 

 

33.1

 

 

 

23.9

 

 

 

122.0

 

 

 

83.0

 

Legal, professional, and directors' fees

 

 

29.4

 

 

 

26.0

 

 

 

107.2

 

 

 

99.9

 

Occupancy

 

 

16.9

 

 

 

15.8

 

 

 

65.6

 

 

 

55.5

 

Loan servicing expenses

 

 

14.7

 

 

 

14.8

 

 

 

58.8

 

 

 

55.5

 

Business development and marketing

 

 

6.7

 

 

 

7.3

 

 

 

21.8

 

 

 

22.1

 

Loan acquisition and origination expenses

 

 

4.8

 

 

 

4.4

 

 

 

20.4

 

 

 

23.1

 

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

 

 

0.3

 

 

 

(0.3

)

 

 

3.0

 

 

 

(0.7

)

Gain on extinguishment of debt

 

 

(39.3

)

 

 

 

 

 

(52.7

)

 

 

 

Other

 

 

21.1

 

 

 

24.7

 

 

 

83.9

 

 

 

81.9

 

Total non-interest expense

 

 

461.9

 

 

 

333.4

 

 

 

1,623.4

 

 

 

1,156.7

 

Income before income taxes

 

 

211.0

 

 

 

364.7

 

 

 

933.6

 

 

 

1,316.1

 

Income tax expense

 

 

63.1

 

 

 

71.7

 

 

 

211.2

 

 

 

258.8

 

Net income

 

 

147.9

 

 

 

293.0

 

 

 

722.4

 

 

 

1,057.3

 

Dividends on preferred stock

 

 

3.2

 

 

 

3.2

 

 

 

12.8

 

 

 

12.8

 

Net income available to common stockholders

 

$

144.7

 

 

$

289.8

 

 

$

709.6

 

 

$

1,044.5

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

Diluted shares

 

 

108.7

 

 

 

108.4

 

 

 

108.5

 

 

 

107.6

 

Diluted earnings per share

 

$

1.33

 

 

$

2.67

 

 

$

6.54

 

 

$

9.70

 

Western Alliance Bancorporation and Subsidiaries

Five Quarter Condensed Consolidated Income Statements

Unaudited

 

 

Three Months Ended

 

 

Dec 31, 2023

 

Sep 30, 2023

 

Jun 30, 2023

 

Mar 31, 2023

 

Dec 31, 2022

 

 

(in millions, except per share data)

Interest income:

 

 

 

 

 

 

 

 

 

 

Loans

 

$

859.0

 

 

$

860.8

 

 

$

857.2

 

 

$

832.7

 

 

$

785.1

 

Investment securities

 

 

136.2

 

 

 

122.8

 

 

 

112.4

 

 

 

96.1

 

 

 

89.4

 

Other

 

 

43.8

 

 

 

43.0

 

 

 

31.2

 

 

 

40.1

 

 

 

13.8

 

Total interest income

 

 

1,039.0

 

 

 

1,026.6

 

 

 

1,000.8

 

 

 

968.9

 

 

 

888.3

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

343.7

 

 

 

316.2

 

 

 

251.1

 

 

 

231.6

 

 

 

157.6

 

Qualifying debt

 

 

9.6

 

 

 

9.5

 

 

 

9.5

 

 

 

9.3

 

 

 

9.1

 

Borrowings

 

 

94.0

 

 

 

113.9

 

 

 

189.9

 

 

 

118.1

 

 

 

81.9

 

Total interest expense

 

 

447.3

 

 

 

439.6

 

 

 

450.5

 

 

 

359.0

 

 

 

248.6

 

Net interest income

 

 

591.7

 

 

 

587.0

 

 

 

550.3

 

 

 

609.9

 

 

 

639.7

 

Provision for credit losses

 

 

9.3

 

 

 

12.1

 

 

 

21.8

 

 

 

19.4

 

 

 

3.1

 

Net interest income after provision for credit losses

 

 

582.4

 

 

 

574.9

 

 

 

528.5

 

 

 

590.5

 

 

 

636.6

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

Net gain on loan origination and sale activities

 

 

47.8

 

 

 

52.0

 

 

 

62.3

 

 

 

31.4

 

 

 

25.4

 

Service charges and fees

 

 

22.7

 

 

 

23.3

 

 

 

20.8

 

 

 

9.5

 

 

 

5.9

 

Income from equity investments

 

 

13.1

 

 

 

0.5

 

 

 

0.7

 

 

 

1.4

 

 

 

4.2

 

Net loan servicing revenue

 

 

9.1

 

 

 

27.2

 

 

 

24.1

 

 

 

41.9

 

 

 

21.4

 

Commercial banking related income

 

 

5.9

 

 

 

5.6

 

 

 

6.0

 

 

 

6.2

 

 

 

5.5

 

(Loss) gain on recovery from credit guarantees

 

 

(2.7

)

 

 

(4.0

)

 

 

1.2

 

 

 

3.3

 

 

 

3.0

 

(Loss) gain on sales of investment securities

 

 

(14.8

)

 

 

0.1

 

 

 

(13.6

)

 

 

(12.5

)

 

 

0.1

 

Fair value gain (loss) adjustments, net

 

 

1.3

 

 

 

17.8

 

 

 

12.7

 

 

 

(147.8

)

 

 

(9.2

)

Other

 

 

8.1

 

 

 

6.7

 

 

 

4.8

 

 

 

8.6

 

 

 

5.2

 

Total non-interest income

 

 

90.5

 

 

 

129.2

 

 

 

119.0

 

 

 

(58.0

)

 

 

61.5

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

134.6

 

 

 

137.2

 

 

 

145.6

 

 

 

148.9

 

 

 

125.7

 

Deposit costs

 

 

131.0

 

 

 

127.8

 

 

 

91.0

 

 

 

86.9

 

 

 

82.2

 

Insurance

 

 

108.6

 

 

 

33.1

 

 

 

33.0

 

 

 

15.7

 

 

 

8.9

 

Data processing

 

 

33.1

 

 

 

33.9

 

 

 

28.6

 

 

 

26.4

 

 

 

23.9

 

Legal, professional, and directors' fees

 

 

29.4

 

 

 

28.3

 

 

 

26.4

 

 

 

23.1

 

 

 

26.0

 

Occupancy

 

 

16.9

 

 

 

16.8

 

 

 

15.4

 

 

 

16.5

 

 

 

15.8

 

Loan servicing expenses

 

 

14.7

 

 

 

11.9

 

 

 

18.4

 

 

 

13.8

 

 

 

14.8

 

Business development and marketing

 

 

6.7

 

 

 

4.9

 

 

 

5.0

 

 

 

5.2

 

 

 

7.3

 

Loan acquisition and origination expenses

 

 

4.8

 

 

 

5.6

 

 

 

5.6

 

 

 

4.4

 

 

 

4.4

 

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

 

 

0.3

 

 

 

2.2

 

 

 

0.5

 

 

 

0.0

 

 

 

(0.3

)

Gain on extinguishment of debt

 

 

(39.3

)

 

 

 

 

 

(0.7

)

 

 

(12.7

)

 

 

 

Other

 

 

21.1

 

 

 

24.5

 

 

 

18.6

 

 

 

19.7

 

 

 

24.7

 

Total non-interest expense

 

 

461.9

 

 

 

426.2

 

 

 

387.4

 

 

 

347.9

 

 

 

333.4

 

Income before income taxes

 

 

211.0

 

 

 

277.9

 

 

 

260.1

 

 

 

184.6

 

 

 

364.7

 

Income tax expense

 

 

63.1

 

 

 

61.3

 

 

 

44.4

 

 

 

42.4

 

 

 

71.7

 

Net income

 

 

147.9

 

 

 

216.6

 

 

 

215.7

 

 

 

142.2

 

 

 

293.0

 

Dividends on preferred stock

 

 

3.2

 

 

 

3.2

 

 

 

3.2

 

 

 

3.2

 

 

 

3.2

 

Net income available to common stockholders

 

$

144.7

 

 

$

213.4

 

 

$

212.5

 

 

$

139.0

 

 

$

289.8

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

Diluted shares

 

 

108.7

 

 

 

108.5

 

 

 

108.3

 

 

 

108.3

 

 

 

108.4

 

Diluted earnings per share

 

$

1.33

 

 

$

1.97

 

 

$

1.96

 

 

$

1.28

 

 

$

2.67

 

Western Alliance Bancorporation and Subsidiaries

Five Quarter Condensed Consolidated Balance Sheets

Unaudited

 

 

Dec 31, 2023

 

Sep 30, 2023

 

Jun 30, 2023

 

Mar 31, 2023

 

Dec 31, 2022

 

 

(in millions)

Assets:

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

1,576

 

 

$

3,497

 

 

$

2,153

 

 

$

3,639

 

 

$

1,043

 

Investment securities

 

 

12,993

 

 

 

11,423

 

 

 

10,374

 

 

 

9,493

 

 

 

8,760

 

Loans held for sale

 

 

1,402

 

 

 

1,766

 

 

 

3,156

 

 

 

7,022

 

 

 

1,184

 

Loans held for investment:

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

19,103

 

 

 

18,344

 

 

 

16,657

 

 

 

15,503

 

 

 

20,710

 

Commercial real estate - non-owner occupied

 

 

9,650

 

 

 

9,810

 

 

 

9,913

 

 

 

9,617

 

 

 

9,319

 

Commercial real estate - owner occupied

 

 

1,810

 

 

 

1,771

 

 

 

1,805

 

 

 

1,809

 

 

 

1,818

 

Construction and land development

 

 

4,889

 

 

 

4,669

 

 

 

4,428

 

 

 

4,407

 

 

 

4,013

 

Residential real estate

 

 

14,778

 

 

 

14,779

 

 

 

15,000

 

 

 

15,024

 

 

 

15,928

 

Consumer

 

 

67

 

 

 

74

 

 

 

72

 

 

 

75

 

 

 

74

 

Loans HFI, net of deferred fees

 

 

50,297

 

 

 

49,447

 

 

 

47,875

 

 

 

46,435

 

 

 

51,862

 

Allowance for loan losses

 

 

(337

)

 

 

(327

)

 

 

(321

)

 

 

(305

)

 

 

(310

)

Loans HFI, net of deferred fees and allowance

 

 

49,960

 

 

 

49,120

 

 

 

47,554

 

 

 

46,130

 

 

 

51,552

 

Mortgage servicing rights

 

 

1,124

 

 

 

1,233

 

 

 

1,007

 

 

 

910

 

 

 

1,148

 

Premises and equipment, net

 

 

339

 

 

 

327

 

 

 

315

 

 

 

293

 

 

 

276

 

Operating lease right-of-use asset

 

 

145

 

 

 

150

 

 

 

151

 

 

 

156

 

 

 

163

 

Other assets acquired through foreclosure, net

 

 

8

 

 

 

8

 

 

 

11

 

 

 

11

 

 

 

11

 

Bank owned life insurance

 

 

186

 

 

 

184

 

 

 

184

 

 

 

183

 

 

 

182

 

Goodwill and other intangibles, net

 

 

669

 

 

 

672

 

 

 

674

 

 

 

677

 

 

 

680

 

Other assets

 

 

2,460

 

 

 

2,511

 

 

 

2,581

 

 

 

2,533

 

 

 

2,735

 

Total assets

 

$

70,862

 

 

$

70,891

 

 

$

68,160

 

 

$

71,047

 

 

$

67,734

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

Non-interest bearing demand deposits

 

$

14,520

 

 

$

17,991

 

 

$

16,733

 

 

$

16,465

 

 

$

19,691

 

Interest bearing:

 

 

 

 

 

 

 

 

 

 

Demand

 

 

15,916

 

 

 

12,843

 

 

 

12,646

 

 

 

10,719

 

 

 

9,507

 

Savings and money market

 

 

14,791

 

 

 

14,672

 

 

 

13,085

 

 

 

13,845

 

 

 

19,397

 

Certificates of deposit

 

 

10,106

 

 

 

8,781

 

 

 

8,577

 

 

 

6,558

 

 

 

5,049

 

Total deposits

 

 

55,333

 

 

 

54,287

 

 

 

51,041

 

 

 

47,587

 

 

 

53,644

 

Borrowings

 

 

7,230

 

 

 

8,745

 

 

 

9,567

 

 

 

15,853

 

 

 

6,299

 

Qualifying debt

 

 

895

 

 

 

890

 

 

 

888

 

 

 

895

 

 

 

893

 

Operating lease liability

 

 

179

 

 

 

180

 

 

 

179

 

 

 

184

 

 

 

185

 

Accrued interest payable and other liabilities

 

 

1,147

 

 

 

1,043

 

 

 

800

 

 

 

1,007

 

 

 

1,357

 

Total liabilities

 

 

64,784

 

 

 

65,145

 

 

 

62,475

 

 

 

65,526

 

 

 

62,378

 

Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

295

 

 

 

295

 

 

 

295

 

 

 

295

 

 

 

295

 

Common stock and additional paid-in capital

 

 

2,081

 

 

 

2,073

 

 

 

2,064

 

 

 

2,054

 

 

 

2,058

 

Retained earnings

 

 

4,215

 

 

 

4,111

 

 

 

3,937

 

 

 

3,764

 

 

 

3,664

 

Accumulated other comprehensive loss

 

 

(513

)

 

 

(733

)

 

 

(611

)

 

 

(592

)

 

 

(661

)

Total stockholders' equity

 

 

6,078

 

 

 

5,746

 

 

 

5,685

 

 

 

5,521

 

 

 

5,356

 

Total liabilities and stockholders' equity

 

$

70,862

 

 

$

70,891

 

 

$

68,160

 

 

$

71,047

 

 

$

67,734

 

Western Alliance Bancorporation and Subsidiaries

Changes in the Allowance For Credit Losses on Loans

Unaudited

 

 

Three Months Ended

 

 

Dec 31, 2023

 

Sep 30, 2023

 

Jun 30, 2023

 

Mar 31, 2023

 

Dec 31, 2022

 

 

(in millions)

Allowance for loan losses

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

327.4

 

 

$

321.1

 

 

$

304.7

 

 

$

309.7

 

 

$

304.1

 

Provision for credit losses (1)

 

 

17.8

 

 

 

14.3

 

 

 

23.8

 

 

 

1.0

 

 

 

7.4

 

Recoveries of loans previously charged-off:

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

0.7

 

 

 

0.4

 

 

 

0.7

 

 

 

3.2

 

 

 

0.3

 

Commercial real estate - non-owner occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate - owner occupied

 

 

0.1

 

 

 

 

 

 

 

 

 

 

 

 

0.1

 

Construction and land development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

 

 

 

 

0.1

 

 

 

 

 

 

 

 

 

 

Consumer

 

 

 

 

 

 

 

 

0.1

 

 

 

 

 

 

 

Total recoveries

 

 

0.8

 

 

 

0.5

 

 

 

0.8

 

 

 

3.2

 

 

 

0.4

 

Loans charged-off:

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

9.3

 

 

 

5.5

 

 

 

6.0

 

 

 

9.1

 

 

 

1.1

 

Commercial real estate - non-owner occupied

 

 

 

 

 

3.0

 

 

 

2.2

 

 

 

 

 

 

 

Commercial real estate - owner occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.5

 

Construction and land development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.6

 

Residential real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

0.1

 

 

 

 

Total loans charged-off

 

 

9.3

 

 

 

8.5

 

 

 

8.2

 

 

 

9.2

 

 

 

2.2

 

Net loan charge-offs

 

 

8.5

 

 

 

8.0

 

 

 

7.4

 

 

 

6.0

 

 

 

1.8

 

Balance, end of period

 

$

336.7

 

 

$

327.4

 

 

$

321.1

 

 

$

304.7

 

 

$

309.7

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for unfunded loan commitments

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

37.9

 

 

$

41.1

 

 

$

44.8

 

 

$

47.0

 

 

$

52.1

 

Recovery of credit losses (1)

 

 

(6.3

)

 

 

(3.2

)

 

 

(3.7

)

 

 

(2.2

)

 

 

(5.1

)

Balance, end of period (2)

 

$

31.6

 

 

$

37.9

 

 

$

41.1

 

 

$

44.8

 

 

$

47.0

 

 

 

 

 

 

 

 

 

 

 

 

Components of the allowance for credit losses on loans

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses

 

$

336.7

 

 

$

327.4

 

 

$

321.1

 

 

$

304.7

 

 

$

309.7

 

Allowance for unfunded loan commitments

 

 

31.6

 

 

 

37.9

 

 

 

41.1

 

 

 

44.8

 

 

 

47.0

 

Total allowance for credit losses on loans

 

$

368.3

 

 

$

365.3

 

 

$

362.2

 

 

$

349.5

 

 

$

356.7

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs to average loans - annualized

 

 

0.07

%

 

 

0.07

%

 

 

0.06

%

 

 

0.05

%

 

 

0.01

%

 

 

 

 

 

 

 

 

 

 

 

Allowance ratios

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses to funded HFI loans (3)

 

 

0.67

%

 

 

0.66

%

 

 

0.67

%

 

 

0.66

%

 

 

0.60

%

Allowance for credit losses to funded HFI loans (3)

 

 

0.73

 

 

 

0.74

 

 

 

0.76

 

 

 

0.75

 

 

 

0.69

 

Allowance for loan losses to nonaccrual HFI loans

 

 

123

 

 

 

138

 

 

 

125

 

 

 

285

 

 

 

364

 

Allowance for credit losses to nonaccrual HFI loans

 

 

135

 

 

 

154

 

 

 

141

 

 

 

327

 

 

 

420

 

(1)

 

The above tables reflect the provision for credit losses on funded and unfunded loans. There was a $3.3 million provision release on AFS investment securities and a $1.1 million provision for credit losses on HTM investment securities for the three months ended December 31, 2023. The allowance for credit losses on AFS and HTM investment securities totaled $1.4 million and $7.8 million, respectively, as of December 31, 2023.

(2)

 

The allowance for unfunded loan commitments is included as part of accrued interest payable and other liabilities on the balance sheet.

(3)

 

Ratio includes an allowance for credit losses of $14.7 million as of December 31, 2023 related to a pool of loans covered under three separate credit linked note transactions.

Western Alliance Bancorporation and Subsidiaries

Asset Quality Metrics

Unaudited

 

 

Three Months Ended

 

 

Dec 31, 2023

 

Sep 30, 2023

 

Jun 30, 2023

 

Mar 31, 2023

 

Dec 31, 2022

 

 

(in millions)

Nonaccrual loans and repossessed assets

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans

 

$

273

 

 

$

237

 

 

$

256

 

 

$

107

 

 

$

85

 

Nonaccrual loans to funded HFI loans

 

 

0.54

%

 

 

0.48

%

 

 

0.53

%

 

 

0.23

%

 

 

0.16

%

Repossessed assets

 

$

8

 

 

$

8

 

 

$

11

 

 

$

11

 

 

$

11

 

Nonaccrual loans and repossessed assets to total assets

 

 

0.40

%

 

 

0.35

%

 

 

0.39

%

 

 

0.17

%

 

 

0.14

%

 

 

 

 

 

 

 

 

 

 

 

Loans Past Due

 

 

 

 

 

 

 

 

 

 

Loans past due 90 days, still accruing (1)

 

$

42

 

 

$

 

 

$

 

 

$

1

 

 

$

 

Loans past due 90 days, still accruing to funded HFI loans

 

 

0.08

%

 

 

%

 

 

%

 

 

0.00

%

 

 

%

Loans past due 30 to 89 days, still accruing (2)

 

$

164

 

 

$

189

 

 

$

121

 

 

$

58

 

 

$

70

 

Loans past due 30 to 89 days, still accruing to funded HFI loans

 

 

0.33

%

 

 

0.38

%

 

 

0.25

%

 

 

0.13

%

 

 

0.13

%

 

 

 

 

 

 

 

 

 

 

 

Other credit quality metrics

 

 

 

 

 

 

 

 

 

 

Special mention loans

 

$

641

 

 

$

668

 

 

$

694

 

 

$

320

 

 

$

351

 

Special mention loans to funded HFI loans

 

 

1.27

%

 

 

1.35

%

 

 

1.45

%

 

 

0.69

%

 

 

0.68

%

 

 

 

 

 

 

 

 

 

 

 

Classified loans on accrual

 

$

379

 

 

$

381

 

 

$

324

 

 

$

325

 

 

$

280

 

Classified loans on accrual to funded HFI loans

 

 

0.75

%

 

 

0.77

%

 

 

0.68

%

 

 

0.70

%

 

 

0.54

%

Classified assets

 

$

673

 

 

$

639

 

 

$

604

 

 

$

459

 

 

$

393

 

Classified assets to total assets

 

 

0.95

%

 

 

0.90

%

 

 

0.89

%

 

 

0.65

%

 

 

0.58

%

(1)

 

Excludes government guaranteed residential mortgage loans of $399 million, $439 million, $481 million, $494 million, and $582 million as of each respective date in the table above.

(2)

 

Excludes government guaranteed residential mortgage loans of $279 million, $261 million, $289 million, $281 million, and $334 million as of each respective date in the table above.

Western Alliance Bancorporation and Subsidiaries

Analysis of Average Balances, Yields and Rates

Unaudited

 

 

Three Months Ended

 

 

December 31, 2023

 

September 30, 2023

 

 

Average

Balance

 

Interest

 

Average Yield /

Cost

 

Average

Balance

 

Interest

 

Average Yield /

Cost

 

 

($ in millions)

Interest earning assets

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

$

1,830

 

 

$

29.6

 

6.42

%

 

$

3,069

 

 

$

47.3

 

6.11

%

Loans held for investment:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

18,530

 

 

 

343.2

 

7.40

 

 

 

16,855

 

 

 

324.3

 

7.70

 

CRE - non-owner occupied

 

 

9,715

 

 

 

188.7

 

7.71

 

 

 

9,950

 

 

 

196.1

 

7.83

 

CRE - owner occupied

 

 

1,786

 

 

 

26.0

 

5.88

 

 

 

1,790

 

 

 

26.4

 

5.97

 

Construction and land development

 

 

4,789

 

 

 

112.6

 

9.33

 

 

 

4,545

 

 

 

110.3

 

9.63

 

Residential real estate

 

 

14,758

 

 

 

157.6

 

4.24

 

 

 

14,914

 

 

 

155.0

 

4.12

 

Consumer

 

 

71

 

 

 

1.3

 

7.52

 

 

 

73

 

 

 

1.4

 

7.43

 

Total HFI loans (1), (2), (3)

 

 

49,649

 

 

 

829.4

 

6.65

 

 

 

48,127

 

 

 

813.5

 

6.73

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

Securities - taxable

 

 

9,168

 

 

 

113.5

 

4.91

 

 

 

8,272

 

 

 

101.1

 

4.85

 

Securities - tax-exempt

 

 

2,106

 

 

 

22.7

 

5.35

 

 

 

2,103

 

 

 

21.7

 

5.12

 

Total securities (1)

 

 

11,274

 

 

 

136.2

 

4.99

 

 

 

10,375

 

 

 

122.8

 

4.91

 

Cash and other

 

 

2,572

 

 

 

43.8

 

6.75

 

 

 

2,911

 

 

 

43.0

 

5.87

 

Total interest earning assets

 

 

65,325

 

 

 

1,039.0

 

6.37

 

 

 

64,482

 

 

 

1,026.6

 

6.37

 

Non-interest earning assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

287

 

 

 

 

 

 

 

279

 

 

 

 

 

Allowance for credit losses

 

 

(340

)

 

 

 

 

 

 

(334

)

 

 

 

 

Bank owned life insurance

 

 

185

 

 

 

 

 

 

 

184

 

 

 

 

 

Other assets

 

 

4,525

 

 

 

 

 

 

 

4,513

 

 

 

 

 

Total assets

 

$

69,982

 

 

 

 

 

 

$

69,124

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing transaction accounts

 

$

14,268

 

 

$

104.6

 

2.91

%

 

$

12,947

 

 

$

98.9

 

3.03

%

Savings and money market

 

 

14,595

 

 

 

119.1

 

3.24

 

 

 

13,832

 

 

 

106.3

 

3.05

 

Certificates of deposit

 

 

9,453

 

 

 

120.0

 

5.03

 

 

 

9,125

 

 

 

111.0

 

4.83

 

Total interest-bearing deposits

 

 

38,316

 

 

 

343.7

 

3.56

 

 

 

35,904

 

 

 

316.2

 

3.49

 

Short-term borrowings

 

 

5,492

 

 

 

79.4

 

5.74

 

 

 

6,260

 

 

 

97.2

 

6.16

 

Long-term debt

 

 

594

 

 

 

14.6

 

9.73

 

 

 

764

 

 

 

16.7

 

8.68

 

Qualifying debt

 

 

891

 

 

 

9.6

 

4.26

 

 

 

888

 

 

 

9.5

 

4.26

 

Total interest-bearing liabilities

 

 

45,293

 

 

 

447.3

 

3.92

 

 

 

43,816

 

 

 

439.6

 

3.98

 

Interest cost of funding earning assets

 

 

 

2.72

 

 

 

 

 

 

2.70

 

Non-interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing demand deposits

 

 

17,579

 

 

 

 

 

 

 

18,402

 

 

 

 

 

Other liabilities

 

 

1,330

 

 

 

 

 

 

 

1,052

 

 

 

 

 

Stockholders’ equity

 

 

5,780

 

 

 

 

 

 

 

5,854

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

69,982

 

 

 

 

 

 

$

69,124

 

 

 

 

 

Net interest income and margin (4)

 

 

 

$

591.7

 

3.65

%

 

 

 

$

587.0

 

3.67

%

(1)

 

Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $9.1 million and $8.9 million for the three months ended December 31, 2023 and September 30, 2023, respectively.

(2)

 

Included in the yield computation are net loan fees of $30.8 million and $28.0 million for the three months ended December 31, 2023 and September 30, 2023, respectively.

(3)

 

Includes non-accrual loans.

(4)

 

Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis.

Western Alliance Bancorporation and Subsidiaries

Analysis of Average Balances, Yields and Rates

Unaudited

 

 

Three Months Ended

 

 

December 31, 2023

 

December 31, 2022

 

 

Average

Balance

 

Interest

 

Average Yield /

Cost

 

Average

Balance

 

Interest

 

Average Yield /

Cost

 

 

($ in millions)

Interest earning assets

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

$

1,830

 

 

$

29.6

 

6.42

%

 

$

2,659

 

 

$

37.8

 

5.63

%

Loans held for investment:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

18,530

 

 

 

343.2

 

7.40

 

 

 

21,654

 

 

 

349.3

 

6.45

 

CRE - non-owner-occupied

 

 

9,715

 

 

 

188.7

 

7.71

 

 

 

9,077

 

 

 

148.8

 

6.51

 

CRE - owner-occupied

 

 

1,786

 

 

 

26.0

 

5.88

 

 

 

1,830

 

 

 

24.4

 

5.39

 

Construction and land development

 

 

4,789

 

 

 

112.6

 

9.33

 

 

 

3,798

 

 

 

80.2

 

8.38

 

Residential real estate

 

 

14,758

 

 

 

157.6

 

4.24

 

 

 

15,803

 

 

 

143.5

 

3.60

 

Consumer

 

 

71

 

 

 

1.3

 

7.52

 

 

 

71

 

 

 

1.1

 

6.26

 

Total loans HFI (1), (2), (3)

 

 

49,649

 

 

 

829.4

 

6.65

 

 

 

52,233

 

 

 

747.3

 

5.70

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

Securities - taxable

 

 

9,168

 

 

 

113.5

 

4.91

 

 

 

6,397

 

 

 

68.4

 

4.25

 

Securities - tax-exempt

 

 

2,106

 

 

 

22.7

 

5.35

 

 

 

2,068

 

 

 

21.0

 

5.07

 

Total securities (1)

 

 

11,274

 

 

 

136.2

 

4.99

 

 

 

8,465

 

 

 

89.4

 

4.45

 

Cash and other

 

 

2,572

 

 

 

43.8

 

6.75

 

 

 

1,361

 

 

 

13.8

 

4.02

 

Total interest earning assets

 

 

65,325

 

 

 

1,039.0

 

6.37

 

 

 

64,718

 

 

 

888.3

 

5.50

 

Non-interest earning assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

 

287

 

 

 

 

 

 

 

289

 

 

 

 

 

Allowance for credit losses

 

 

(340

)

 

 

 

 

 

 

(308

)

 

 

 

 

Bank owned life insurance

 

 

185

 

 

 

 

 

 

 

181

 

 

 

 

 

Other assets

 

 

4,525

 

 

 

 

 

 

 

4,613

 

 

 

 

 

Total assets

 

$

69,982

 

 

 

 

 

 

$

69,493

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing transaction accounts

 

$

14,268

 

 

$

104.6

 

2.91

%

 

$

8,754

 

 

$

43.6

 

1.98

%

Savings and money market accounts

 

 

14,595

 

 

 

119.1

 

3.24

 

 

 

18,651

 

 

 

88.0

 

1.87

 

Certificates of deposit

 

 

9,453

 

 

 

120.0

 

5.03

 

 

 

4,260

 

 

 

26.0

 

2.42

 

Total interest-bearing deposits

 

 

38,316

 

 

 

343.7

 

3.56

 

 

 

31,665

 

 

 

157.6

 

1.97

 

Short-term borrowings

 

 

5,492

 

 

 

79.4

 

5.74

 

 

 

5,440

 

 

 

54.8

 

3.99

 

Long-term debt

 

 

594

 

 

 

14.6

 

9.73

 

 

 

1,240

 

 

 

27.1

 

8.68

 

Qualifying debt

 

 

891

 

 

 

9.6

 

4.26

 

 

 

890

 

 

 

9.1

 

4.08

 

Total interest-bearing liabilities

 

 

45,293

 

 

 

447.3

 

3.92

 

 

 

39,235

 

 

 

248.6

 

2.51

 

Interest cost of funding earning assets

 

 

 

2.72

 

 

 

 

 

 

1.52

 

Non-interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing demand deposits

 

 

17,579

 

 

 

 

 

 

 

23,729

 

 

 

 

 

Other liabilities

 

 

1,330

 

 

 

 

 

 

 

1,296

 

 

 

 

 

Stockholders’ equity

 

 

5,780

 

 

 

 

 

 

 

5,233

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

69,982

 

 

 

 

 

 

$

69,493

 

 

 

 

 

Net interest income and margin (4)

 

 

 

$

591.7

 

3.65

%

 

 

 

$

639.7

 

3.98

%

(1)

 

Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $9.1 million and $9.0 million for the three months ended December 31, 2023 and 2022, respectively.

(2)

 

Included in the yield computation are net loan fees of $30.8 million and $34.8 million for the three months ended December 31, 2023 and 2022, respectively.

(3)

 

Includes non-accrual loans.

(4)

 

Net interest margin is computed by dividing net interest income by total average earning assets, annualized on an actual/actual basis.

Western Alliance Bancorporation and Subsidiaries

Analysis of Average Balances, Yields and Rates

Unaudited

 

 

Year Ended

 

 

December 31, 2023

 

December 31, 2022

 

 

Average

Balance

 

Interest

 

Average Yield /

Cost

 

Average

Balance

 

Interest

 

Average Yield /

Cost

 

 

($ in millions)

Interest earning assets

 

 

 

 

 

 

 

 

 

 

 

 

Loans HFS

 

$

3,347

 

 

$

213.4

 

6.38

%

 

$

4,364

 

 

$

180.3

 

4.13

%

Loans HFI:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

17,886

 

 

 

1,337.9

 

7.54

 

 

 

20,083

 

 

 

1,002.8

 

5.05

 

CRE - non-owner occupied

 

 

9,736

 

 

 

734.8

 

7.56

 

 

 

7,769

 

 

 

416.4

 

5.37

 

CRE - owner occupied

 

 

1,800

 

 

 

102.3

 

5.79

 

 

 

1,841

 

 

 

93.2

 

5.16

 

Construction and land development

 

 

4,498

 

 

 

419.7

 

9.33

 

 

 

3,426

 

 

 

229.1

 

6.69

 

Residential real estate

 

 

15,126

 

 

 

596.4

 

3.94

 

 

 

13,771

 

 

 

468.5

 

3.40

 

Consumer

 

 

72

 

 

 

5.2

 

7.23

 

 

 

61

 

 

 

3.1

 

5.07

 

Total loans HFI (1), (2), (3)

 

 

49,118

 

 

 

3,196.3

 

6.53

 

 

 

46,951

 

 

 

2,213.1

 

4.74

 

Securities: