Western Alliance Bancorporation (WAL)

[Enterprising Investor]

WAL Reports Fourth Quarter 2011 Earnings of $7.1 million (1/19/12)

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

“Fourth quarter results will position the Company for success in 2012 by riding the momentum of higher loan growth, along with a stable net interest margin, expense management, and continued improvement in asset quality.”

.Fourth Quarter 2011 Highlights:

•Net income of $7.1 million, including loss on repossessed assets valuations/sales of $5.0 million, net of tax

•Earnings per share of $0.07, compared to $0.04 per share for the third quarter 2011

•Pre-tax, pre-provision operating earnings of $31.5 million, up 12.1% from $28.1 million in third quarter 2011 and up 26.0% from $25.0 million in fourth quarter 2010

•Net interest margin of 4.51% compared to 4.29% in the third quarter 2011 and 4.26% in the fourth quarter 2010

•Total loans of $4.78 billion, up $254 million from September 30, 2011 and up $540 million from December 31, 2010

•Total deposits of $5.66 billion, up $26 million from September 30, 2011 and up $320 million from December 31, 2010

•Nonperforming assets (nonaccrual loans and repossessed assets) declined to 2.6% of total assets from 3.1% in third quarter 2011 and 3.6% in fourth quarter 2010

•Net loan charge-offs of $14.1 million, down from $15.3 million for the third quarter 2011 and from $15.9 million in fourth quarter 2010

•Tier I Leverage capital of 9.8% and Total Risk-Based Capital ratio of 12.6%, compared to 9.5% and 13.2% a year ago

•Total equity of $636.7 million, up $4.4 million from September 30, 2011 and up $34.5 million from December 31, 2010
Financial Performance

Robert Sarver, Chairman and Chief Executive Officer of Western Alliance Bancorporation, commented, “We are very pleased with our 2011 results as we substantially increased loans to small businesses, produced consistent quarterly net income while growing net interest margin and improving our efficiency ratio. Asset quality improved throughout the year as nonaccrual, watch, and classified loans all declined from the prior year. I am proud of the people at Western Alliance Bancorporation and the leadership they demonstrated in accomplishing these results.” Mr. Sarver also noted, “Fourth quarter results will position the Company for success in 2012 by riding the momentum of higher loan growth, along with a stable net interest margin, expense management, and continued improvement in asset quality.”

Ken Vecchione, President and Chief Operating Officer, added, “As the economy continues to recover, Western Alliance Bancorporation stands ready to support the businesses and communities we serve by providing continued access to credit. Our capital strength and commitment to serve our customers leads us to be optimistic regarding our loan and deposit pipelines in 2012.” Mr. Vecchione further added, “Our disciplined approach to pricing both loans and deposits, and the management of our investment portfolio produced a fourth quarter net interest margin of 4.51 percent and full year net interest margin of 4.37 percent. Higher net interest income and contained expenses supported our record $31.5 million pre-tax, pre-credit income.1 Our core earnings momentum and favorable trends in asset quality, position us for increased operating net income in future quarters.”

Western Alliance Bancorporation reported net income of $7.1 million, or $0.7 per share in the fourth quarter 2011. Income from continuing operations before income tax was $9.6 million, including pre-tax net unrealized losses from assets/liabilities measured at fair value of $0.6 million. The income included a $0.06 per common share charge from repossessed assets valuations/sales.

Full year net income was $31.5 million compared to a $7.2 million loss in 2010. Full year earnings per share were $0.19 compared to a $0.23 per share loss for 2010.

Total loans increased $254 million to $4.78 billion at December 31, 2011 from $4.53 billion on September 30, 2011. This increase was driven by growth in commercial and industrial loans and commercial real estate loans. Loans increased $540 million, or 12.7 percent from December 31, 2010.

Total deposits increased $26 million to $5.66 billion at December 31, 2011 from $5.63 billion at September 30, 2011, with growth primarily in non-interest bearing demand, interest bearing demand and savings and money market accounts, partially offset by declines in certificates of deposit. Deposits increased $320 million, or 6.0 percent from December 31, 2010.

Income Statement

Net interest income of $68.7 million in the fourth quarter 2011 increased by 6.4 percent compared to the third quarter 2011 and 12.8 percent compared to the fourth quarter 2010. The net interest margin in the fourth quarter 2011 was 4.51 percent compared to 4.29 percent in the third quarter 2011 and 4.26 percent in the fourth quarter of 2010.

Operating non-interest income was $5.6 million for the fourth quarter 2011,1 a decrease from $5.9 million for the third quarter of 2011 and $6.0 million for the fourth quarter of 2010.1

Net revenue was $74.3 million for the fourth quarter 2011, a 5.4 percent increase from $70.5 million for the third quarter of 2011 and 11.1 percent from $66.9 million for the fourth quarter 2010.1

Operating non-interest expense was $42.8 million for the fourth quarter 2011, compared to $42.4 million for the third quarter of 2011 and $41.9 million for the fourth quarter of 2010.1 The Company’s operating efficiency ratio on a tax equivalent basis was 56.5 percent for the fourth quarter 2011, improved from 62.2 percent for the fourth quarter 2010.1

The Company had 942 full-time equivalent employees at December 31, 2011, compared to 908 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 fourth quarter 2011, the Company’s performance on this metric was $31.5 million, up from $28.1 million in the third quarter 2011 and $25.0 million in the fourth quarter 2010.1

The provision for credit losses was $13.1 million for the fourth quarter 2011 compared to $11.2 million for the third quarter 2011. The provision for the fourth quarter of 2010 was $18.4 million. Net loan charge-offs in the fourth quarter 2011 were $14.1 million or 1.24 percent of average loans (annualized), down from $15.3 million or 1.40 percent of average loans (annualized) for the third quarter 2011 due to decreased residential real estate loan charge-offs. Net charge-offs for the fourth quarter 2010 were $15.9 million or 1.52% of average loans (annualized).

Nonaccrual loans and repossessed assets decreased to $179.5 million or 2.6 percent of total assets at December 31, 2011, from $200.4 million or 3.1 percent of total assets at September 30, 2011, and from $224.7 million or 3.6 percent of total assets at December 31, 2010. Loans past due 90 days and still accruing totaled $2.6 million at December 31, 2011, up from $2.1 million at September 30, 2011 and $1.5 million at December 31, 2010. Loans past due 30-89 days totaled $13.7 million at quarter end, up slightly from $12.4 million at September 30, 2011 and down from $18.2 million at December 31, 2010.

Classified assets to Tier I capital plus allowance for credit losses, a common regulatory measure of asset quality, improved to 39 percent at December 31, 2011 from 52 percent at December 31, 2010.1

Net loss on sales and valuation of repossessed assets (primarily other real estate) was $7.7 million for the fourth quarter 2011 compared to $2.1 million in the prior quarter. At December 31, 2011, other repossessed assets were valued at $89 million compared to $87 million at September 30, 2011 and $108 million one year ago.

Balance Sheet

Gross loans totaled $4.78 billion at December 31, 2011, an increase of $254 million from September 30, 2011 and an increase of $540 million from $4.24 billion at December 31, 2010. At December 31, 2011 the allowance for credit losses was 2.07 percent of total loans down from 2.21 percent at September 30, 2011 and 2.61 percent at December 31, 2010.

Deposits totaled $5.66 billion at December 31, 2011, an increase of $26 million from $5.63 billion at September 30, 2011 and an increase of $320 million from $5.34 billion at December 31, 2010.

Non-interest bearing deposits increased $39 million at December 31, 2011 from September 30, 2011 and increased $115 million from $1.44 billion at December 31, 2010. Non-interest bearing deposits comprised 27.5 percent of total deposits at December 31, 2011, compared to 27.0 percent a year ago.

At December 31, 2011, the Company’s loans were 84.5 percent of deposits compared to 80.4 percent at September 30, 2011 and 79.4 percent at December 31, 2010.

Stockholders’ equity at December 31, 2011 increased to $636.7 million from $632.3 million at September 30, 2011. At December 31, 2011, tangible common equity was 6.8 percent of tangible assets1 and total risk-based capital was 12.6 percent of risk-weighted assets.

Total assets increased to $6.84 billion at December 31, 2011 from $6.55 billion at September 30, 2011 and increased 11 percent from $6.19 billion at December 31, 2010.

Operating Unit Highlights

Bank of Nevada reported that loans increased by $7 million during the fourth quarter of 2011 and declined $55 million during the last 12 months to $1.86 billion at December 31, 2011. Deposits decreased $89 million in the fourth quarter of 2011 and decreased $11 million over the last twelve months to $2.38 billion. Net income for Bank of Nevada was $1.2 million for the fourth quarter 2011, compared with net income of $1.7 million for the third quarter of 2011 and net loss of $5.8 million during the fourth quarter 2010.

Western Alliance Bank reported loan growth of $160 million during the fourth quarter 2011 and $340 million during the last 12 months to $1.64 billion. Deposits increased $109 million in the fourth quarter and $206 million during the last 12 months to $1.88 billion. Net income for Western Alliance Bank was $5.6 million during the fourth quarter 2011 compared with net income of $5.5 million during the third quarter of 2011 and net income of $3.6 million during the fourth quarter 2010.

The Torrey Pines Bank segment, which excludes discontinued operations, reported that loans increased $86 million during the fourth quarter 2011 and $255 million during the last 12 months to $1.32 billion. Deposits increased $17 million in the fourth quarter 2011 and $135 million over the last 12 months to $1.42 billion. Net income for Torrey Pines Bank was $5.9 million during the fourth quarter 2011 compared with net income of $5.4 million for the third quarter of 2011 and net income of $3.2 million during the fourth quarter 2010.

Attached to this press release is summarized financial information for the quarter ended December 31, 2011.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live webcast to discuss its fourth quarter 2011 financial results at 12:00 p.m. ET on Friday, January 20, 2012. Participants may access the call by dialing 1-866-843-0890 and using passcode: 2758674 or via live audio webcast using the website link: https://services.choruscall.com/links/wal120120.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 January 20th through January 31st at 2:00 p.m. ET by dialing 1-877-344-7529 using the conference number 10008804.

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.

http://www.businesswire.com/news/home/20120119006550/en/Western-Alliance-Reports-Fourth-Quarter-2011-Net