Western Alliance Bancorporation (WAL)

[Enterprising Investor]

WAL Reports Second Quarter 2011 Earnings of $6.2 Million (6/21/11)

PHOENIX--(BUSINESS WIRE)--Western Alliance Bancorporation (NYSE:WAL) announced today its financial results for the second quarter 2011.

Second Quarter 2011 Highlights:

•Net income of $0.05 per common share compared to net income of $0.03 for the first quarter 2011 and a $0.02 net loss for the second quarter of 2010

•Pre-tax, pre-provision operating earnings of $27.6 million, up 9.0% from $25.3 million in first quarter 2011 and up 21.6% from $22.7 million in second quarter 2011

•Total loans of $4.41 billion, up $134 million from March 31, 2011 and up $282 million from June 30, 2010

•Total deposits of $5.59 billion, up $91 million from March 31, 2011 and up $358 million from June 30, 2010

•Nonperforming assets (nonaccrual loans and repossessed assets) of 3.1% of total assets, down from 3.3% in first quarter 2011 and 4.0% in second quarter 2010

•Net loan charge-offs of $13.6 million, down from $14.6 million for the first quarter 2011 and $25.8 million in second quarter 2010

•Net income of $6.2 million, including pre-tax loss on repossessed asset valuations/sales of $8.6 million and securities/valuation gains of $2.7 million

•Tier I Leverage capital of 9.5% and Total Risk-Based Capital ratio of 13.1%, compared to 9.1% and 13.0% a year ago Financial Performance

“We have continued improvement on all fronts including asset and revenue growth, expense control and asset quality,” said Robert Sarver, Chairman and Chief Executive Officer of Western Alliance Bancorporation. “I am especially pleased that Bank of Nevada, arguably our toughest market, is now notably contributing to the Company’s overall profitability.”

Ken Vecchione, President and Chief Operating Officer, added, “The substantial decrease in the number of community banks has made us the preferred local lender, and resulted in the strong loan and deposit market share gains we have today. Having increased our capital base during the last several years allowed us to support our customers during this difficult economic environment and supply our credit-worthy clients with the needed borrowing capacity to run their businesses. This quarter, we again improved our performance in multiple areas simultaneously with increased capital, improved asset quality and strong earnings growth. We have put ourselves on the path to consistent and sustainable profitability.”

Western Alliance Bancorporation reported net income of $6.2 million in the second quarter 2011, including a net loss from sales/valuation of repossessed assets of $8.6 million and a loss on discontinued operations net of tax of $0.5 million.

The Company reported net income per common share of $0.05 in the second quarter 2011. The income included $0.07 loss from sales/valuations of repossessed assets after tax, a net loss from discontinued affinity credit card operations held for sale of $0.01 and after tax investment securities gains of $0.02.

Total loans increased $134 million to $4.41 billion at June 30, 2011 from $4.28 billion on March 31, 2011. This increase was driven by growth in commercial and industrial loans and commercial real estate loans, primarily in the California and Arizona markets. Loans increased $282 million, or 6.8 percent from June 30, 2010.

Total deposits increased $91 million to $5.59 billion at June 30, 2011 from $5.50 billion at March 31, 2011, with growth primarily in non-interest bearing demand deposits and certificates of deposits, partially offset by a decline in interest bearing demand deposits. Deposits increased $358 million, or 6.8 percent from June 30, 2010.

Income Statement

Net interest income of $63.3 million in the second quarter 2011 increased by 3.6 percent compared to the first quarter 2011 and 10.1 percent compared to the second quarter 2010. The net interest margin in the second quarter 2011 was 4.34 percent compared to 4.35 percent in the first quarter 2011 and 4.16 percent in the second quarter of 2010.

Operating non-interest income was $6.8 million for the second quarter 2011.1 This performance was an increase from $6.0 million for the first quarter of 2011 and $6.5 million for the second quarter of 2010.1

Net revenue was $70.1 million for the second quarter 2011, a 4.5 percent increase from $67.1 million for the first quarter of 2011 and 9.5 percent from $64.0 million for the second quarter 2010.1

Operating non-interest expenses have been relatively flat at $42.5 million for the second quarter 2011, compared to $41.8 million for the first quarter of 2011 and $41.3 million for the second quarter of 2010.1 The Company’s operating efficiency ratio was 60 percent for the second quarter 2011, improved from 64 percent for the second quarter 2010.1 The Company had 908 full-time equivalent employees at June 30, 2011, compared to 961 one year ago.

A key performance metric for the Company is its pre-tax, pre-provision operating earnings, which it defines as net operating revenue less its operating non-interest expense.1 For the second quarter 2011, the Company’s performance was $27.6 million, up from $25.3 million in the first quarter 2011 and $22.7 million in the second quarter 2010.1

The provision for credit losses was $11.9 million for the second quarter 2011 compared to $10.0 million for the first quarter 2011 as a result of increased loan growth of $134 million in the second quarter 2011 compared to $37 million in the first quarter 2011. The provision for the second quarter of 2010 was $23.1 million. Net loan charge-offs in the second quarter 2011 were $13.6 million or 1.26 percent of average loans (annualized), down from $14.6 million or 1.39 percent of average loans (annualized) for the first quarter 2011 and $25.8 million or 2.53% of average loans (annualized) for the second quarter 2010.

Nonaccrual loans and repossessed assets were $198 million or 3.1 percent of total assets at June 30, 2011, down from $213 million or 3.3 percent of total assets at March 31, 2011 and $239 million or 4.0 percent of total assets at June 30, 2010. Loans past due 90 days and still accruing totaled $1.1 million at June 30, 2011, flat from the first quarter of 2011 and down from $8.2 million at June 30, 2010. Loans past due 30-89 days totaled $11.6 million at quarter end, down from $30.7 million at March 31, 2011 and down from $20.3 million at June 30, 2010.

Classified assets to Tier I capital plus allowance for credit losses, a common regulatory measure of asset quality, improved to 46 percent at June, 2011 from 64 percent at June 30, 2010.1

Net loss on sales and valuation of repossessed assets (primarily other real estate) was $8.6 million for the second quarter 2011 compared to $6.1 million in the prior quarter. At June 30, 2011, other repossessed assets were valued at $86 million compared to $98 million at March 31, 2011 and $104 million one year ago.

Balance Sheet

Gross loans totaled $4.41 billion at June 30, 2011, an increase of $134 million from March 31, 2011 and an increase of $282 million from $4.13 billion at June 30, 2010. At June 30, 2011 the allowance for credit losses was 2.37 percent of total loans down from 2.48 percent at March 31, 2011 and 2.66 percent at June 30, 2010.

Deposits totaled $5.59 billion at June 30, 2011, an increase of $91 million from $5.50 billion at March 31, 2011 and an increase of $358 million from $5.23 billion at June 30, 2010.

Non-interest bearing deposits increased $61.7 million to $1.52 billion at June 30, 2011 from March 31, 2011 and increased $186.4 million from $1.33 billion at June 30, 2010. Non-interest bearing deposits comprised 27.1 percent of total deposits at June 30, 2011, compared to 25.4 percent a year ago.

At June 30, 2011 and 2010, the Company’s loans were 79.0 percent of deposits compared to 77.8 percent at March 31, 2011.

Stockholders’ equity at June 30, 2011 increased to $615.7 million from $601.6 million at March 31, 2011. At June 30, 2011, tangible common equity was 6.9 percent of tangible assets1 and total risk-based capital was 13.1 percent of risk-weighted assets.

Total assets increased 1.7 percent to $6.51 billion at June 30, 2011 from $6.40 billion at March 31, 2011 and increased 9.2 percent from $5.96 billion at June 30, 2010.

Operating Unit Highlights

Bank of Nevada reported that loans declined $17 million during the second quarter of 2011 and declined $118 million during the last 12 months to $1.85 billion at June 30, 2011. Deposits increased $59 million in the second quarter of 2011 and increased $32 million over the last 12 months to $2.45 billion. Net income for Bank of Nevada was $3.7 million for the second quarter 2011, compared with net income of $0.9 million for the first quarter of 2011 and net loss of $10.7 million during the second quarter 2010.

Western Alliance Bank reported loan growth of $85 million during the second quarter 2011 and an increase of $210 million during the last 12 months to $1.43 billion. Deposits increased $67 million in the second quarter and increased $36 million during the last 12 months to $1.76 billion. Net income for Western Alliance Bank was $3.8 million during the second quarter 2011 compared with net income of $4.9 million during the first quarter of 2011 and a net income of $3.8 million during the first quarter 2010.

The Torrey Pines Bank segment, which excludes discontinued operations, reported that loans increased $66 million during the second quarter 2011 and increased $190 million during the last 12 months to $1.17 billion. Deposits decreased $35 million and increased $290 million to $1.38 billion during the same periods, respectively. Net income for Torrey Pines Bank was $4.2 million during the second quarter 2011 compared with net income of $4.0 million for the first quarter of 2011 and net income of $2.6 million during the second quarter 2010.

Attached to this press release is summarized financial information for the quarter ended June 30, 2011.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live webcast to discuss its second quarter 2011 financial results at 12:00 p.m. ET on Friday, July 22, 2011. Participants may access the call by dialing 1-866-843-0890 and using passcode: 2358768 or via live audio webcast using the website link: https://services.choruscall.com/links/wal11072.html. The webcast is also available via our website at www.westernalliancebancorp.com. Participants should log in at least 15 minutes early to receive instructions. The call will be recorded and made available for replay after 2:00 p.m. ET July 22 until 9 a.m. ET August 8th by dialing 1-877-344-7529 using the pass code 10002122.

About Western Alliance Bancorporation

Western Alliance Bancorporation is the parent company of Bank of Nevada, Western Alliance Bank doing business as Alliance Bank of Arizona and First Independent Bank, Torrey Pines Bank, and Shine Investment Advisory Services. These dynamic organizations provide a broad array of deposit and credit services to clients in Nevada, Arizona and California, and investment services in Colorado. Staffed with experienced financial professionals, these organizations deliver a broader product array and larger credit capacity than community banks, yet are empowered to be more responsive to customers' needs than larger institutions. Additional investor information can be accessed on the Investor Relations page of the company's website, www.westernalliancebancorp.com.

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