Western Alliance: Operating Segment Results

The following excerpt is from the company's SEC filing.

     

  Inter-

(dollars in millions)

At September 30, 2013  

Assets $ 3,346.7 $ 3,288.1 $ 2,076.2 $ 1,127.8 $ (917.4 ) $ 8,921.4

Held for sale loans - - 25.4 - - 25.4

Gross loans and deferred fees, net 2,589.2 2,387.1 1,498.7 58.9 (43.0 ) 6,490.9

Less: Allowance for credit losses   (28.0 )   (51.0 )   (18.3 )   (0.6 )   -     (97.9 )

Loans, net   2,561.2     2,336.1     1,480.4     58.3     (43.0 )   6,393.0  

Goodwill and intangible assets 2.8 25.1 - - - 27.9

Deposits 2,832.0 2,613.5 1,844.7 - (14.9 ) 7,275.3

Borrowings 81.4 203.0 3.2 106.5 - 394.1

Stockholders' equity 291.5 373.7 171.8 844.7 (855.4 ) 826.3

No. of branches 18 12 12 - - 42

No. of FTE 294 392 228 109 - 1,023

(in thousands)

Three Months Ended September 30, 2013:  

Net interest income (expense) $ 33,755 $ 31,888 $ 21,055 $ (2,139 ) $ - $ 84,559

Provision for (recovery of) credit losses   6,277     (6,918 )   2,387     (1,746 )   -     -  

Net interest income (expense) after

provision for credit losses 27,478 38,806 18,668 (393 ) - 84,559

Non-interest income 1,816 2,314 108 2,914 (4,527 ) 2,625

Non-interest expense   (15,520 )   (18,799 )   (11,949 )   (7,934 )   4,527     (49,675 )

Income (loss) from continuing

operations before income taxes 13,774 22,321 6,827 (5,413 ) - 37,509

Income tax expense (benefit)   3,977     6,027     2,230     (2,946 )   -     9,288  

Income (loss) from continuing operations 9,797 16,294 4,597 (2,467 ) - 28,221

Loss from discontinued operations, net   -     -     -     (29 )   -     (29 )

Net income (loss) $ 9,797   $ 16,294   $ 4,597   $ (2,496 ) $ -   $ 28,192  

Nine Months Ended September 30, 2013:  

Net interest income (expense) $ 92,920 $ 91,821 $ 62,435 $ (4,262 ) $ - $ 242,914

Provision for (recovery of) credit losses   9,921     (5,514 )   3,219     1,294     -     8,920  

provision for credit losses 82,999 97,335 59,216 (5,556 ) - 233,994

Non-interest income 14,520 9,383 1,312 4,325 (12,154 ) 17,386

Non-interest expense   (45,688 )   (52,724 )   (35,876 )   (23,001 )   12,154     (145,135 )

operations before income taxes 51,831 53,994 24,652 (24,232 ) - 106,245

Income tax expense (benefit)   13,066     14,292     7,898     (12,343 )   -     22,913  

Income (loss) from continuing operations 38,765 39,702 16,754 (11,889 ) - 83,332

Loss from discontinued operations, net   -     -     -     (160 )   -     (160 )

Net income (loss) $ 38,765   $ 39,702   $ 16,754   $ (12,049 ) $ -   $ 83,172  

* Excludes discontinued operations

                    Western Alliance Bancorporation and Subsidiaries Operating Segment Results Unaudited         Inter- segment Consoli- Western Bank Torrey elimi- dated Alliance Bank of Nevada Pines Bank* Other nations Company (dollars in millions) At September 30, 2012   Assets $ 2,429.8 $ 2,918.0 $ 1,888.7 $ 961.3 $ (794.2 ) $ 7,403.6 Gross loans and deferred fees, net 1,871.4 2,061.0 1,430.6 12.8 (42.9 ) 5,332.9 Less: Allowance for credit losses   (20.4 )   (59.5 )   (17.5 )   -     -     (97.4 ) Loans, net   1,851.0     2,001.5     1,413.1     12.8     (42.9 )   5,235.5   Goodwill and intangible assets - 23.2 - - - 23.2 Deposits 2,150.5 2,408.5 1,613.8 - (10.8 ) 6,162.0 Borrowings - 110.0 40.0 - 150.0 Stockholders' equity 217.3 339.1 168.4 702.3 (729.1 ) 698.0     No. of branches 16 11 12 - - 39 No. of FTE 241 388 234 101 - 964   (in thousands) Three Months Ended September 30, 2012:   Net interest income (expense) $ 24,449 $ 27,717 $ 21,795 $ (2,015 ) $ - $ 71,946 Provision for credit losses   1,112     6,618     1,202     -     -     8,932   Net interest income (expense) after provision for credit losses 23,337 21,099 20,593 (2,015 ) - 63,014 Non-interest income 1,173 3,259 855 4,647 (2,952 ) 6,982 Non-interest expense   (11,980 )   (16,467 )   (11,082 )   (10,966 )   2,952     (47,543 ) Income (loss) from continuing operations before income taxes 12,530 7,891 10,366 (8,334 ) - 22,453 Income tax expense (benefit)   3,768     2,055     3,958     (3,029 )   -     6,752   Income (loss) from continuing operations 8,762 5,836 6,408 (5,305 ) - 15,701 Loss from discontinued operations, net   -     -     -     (243 )   -     (243 ) Net income (loss) $ 8,762   $ 5,836   $ 6,408   $ (5,548 ) $ -   $ 15,458     (in thousands) Nine Months Ended September 30, 2012:   Net interest income (expense) $ 71,564 $ 83,054 $ 64,406 $ (6,216 ) $ - $ 212,808 Provision for credit losses   1,215     28,846     5,282     -     -     35,343   Net interest income (expense) after provision for credit losses 70,349 54,208 59,124 (6,216 ) - 177,465 Non-interest income 5,021 11,132 3,111 8,539 (7,540 ) 20,263 Noninterest expense   (35,986 )   (53,437 )   (33,492 )   (24,496 )   7,540     (139,871 ) Income (loss) from continuing operations before income taxes 39,384 11,903 28,743 (22,173 ) - 57,857 Income tax expense (benefit)   13,031     1,341     11,255     (9,175 )   -     16,452   Income (loss) from continuing operations 26,353 10,562 17,488 (12,998 ) - 41,405 Loss from discontinued operations, net   -     -     -     (686 )   -     (686 ) Net income (loss) $ 26,353   $ 10,562   $ 17,488   $ (13,684 ) $ -   $ 40,719     * Excludes discontinued operations    

                              Western Alliance Bancorporation and Subsidiaries Reconciliation of Non-GAAP Financial Measures (Unaudited)   September 30, June 30, March 31, December 31, September 30, 2013 2013 2013 2012 2012 (dollars in thousands)   Total stockholders' equity $ 826,287 $ 799,524 $ 781,294 $ 759,616 $ 698,011 Less: Goodwill and intangible assets   27,970     28,568     29,166     29,763     28,989   Total tangible stockholders' equity 798,317 770,956 752,128 729,853 669,022 Less: Preferred stock   141,000     141,000     141,000     141,000     141,000   Total tangible common equity 657,317 629,956 611,128 588,853 528,022 Add: Deferred tax   1,661     1,870     2,080     2,289     2,033   Total tangible common equity, net of tax $ 658,978   $ 631,826   $ 613,208   $ 591,142   $ 530,055   Total assets $ 8,921,429 $ 8,593,684 $ 8,174,103 $ 7,622,637 $ 7,403,603 Less: Goodwill and intangible assets   27,970     28,568     29,166     29,763     28,989   Tangible assets 8,893,459 8,565,116 8,144,937 7,592,874 7,374,614 Add: Deferred tax   1,661     1,870     2,080     2,289     2,033   Total tangible assets, net of tax $ 8,895,120   $ 8,566,986   $ 8,147,017   $ 7,595,163   $ 7,376,647   Tangible equity ratio (1) 9.0 % 9.0 % 9.2 % 9.6 % 9.1 % Tangible common equity ratio (2) 7.4 % 7.4 % 7.5 % 7.8 % 7.2 % Common shares outstanding 87,099 86,997 87,079 86,465 83,455 Tangible book value per share, net of tax (3) $ 7.57 $ 7.26 $ 7.04 $ 6.84 $ 6.35   Three Months Ended September 30, June 30, March 31, December 31, September 30, 2013 2013 2013 2012 2012 (in thousands)   Total non-interest income $ 2,625 $ 10,862 $ 3,899 $ 24,463 $ 6,982 Less: Unrealized (losses) gains on assets/liabilities measured at fair value, net (7 ) (3,290 ) (471 ) (48 ) 470 Gain on sale of subsidiary/non-controlling interest - - - 116 776 Bargain purchase gain from acquisition - 10,044 - 17,562 - Legal settlements - - 38 879 - Mutual fund gains - - - 483 - Amortization of affordable housing investments (1,504 ) (900 ) (900 ) (1,069 ) (651 ) (Losses) Gains on sales of investment securities, net   (1,679 )   (5 )   147     1,447     1,031   Total operating non-interest income 5,815 5,013 5,085 5,093 5,356 Add: net interest income   84,559     82,152     76,203     77,455     71,946   Net operating revenue (4) $ 90,374   $ 87,165   $ 81,288   $ 82,548   $ 77,302     Total non-interest expense $ 49,675 $ 48,531 $ 46,929 $ 48,989 $ 47,543 Less: Net loss (gain) on sales and valuations of repossessed assets 371 (1,124 ) 519 529 126 Merger / restructure expense 1,018 2,620 195 2,706 113 Goodwill impairment   -     -     -     -     3,435   Total operating non-interest expense (4) $ 48,286   $ 47,035   $ 46,215   $ 45,754   $ 43,869     Net operating revenue $ 90,374 $ 87,165 $ 81,288 $ 82,548 $ 77,302 Less: Operating non-interest expense   48,286     47,035     46,215     45,754     43,869   Pre-tax, pre-provision operating earnings (5) $ 42,088   $ 40,130   $ 35,073   $ 36,794   $ 33,433      

                              Western Alliance Bancorporation and Subsidiaries Reconciliation of Non-GAAP Financial Measures (Unaudited)   Three Months Ended September 30, June 30, March 31, December 31, September 30, 2013 2013 2013 2012 2012 (in thousands) Total operating non-interest expense $ 48,286   $ 47,035   $ 46,215   $ 45,754   $ 43,869   Divided by: Total net interest income $ 84,559 $ 82,152 $ 76,203 $ 77,455 $ 71,946 Add: Tax equivalent interest adjustment 3,272 2,929 3,382 3,012 2,655 Operating non-interest income   5,815     5,013     5,085     5,093     5,356   $ 93,646   $ 90,094   $ 84,670   $ 85,560   $ 79,957   Efficiency ratio - tax equivalent basis (6) 51.6 % 52.2 % 54.6 % 53.5 % 54.9 %   Three Months Ended September 30, September 30, 2013 2012 (in thousands) Stockholders' equity $ 826,287 $ 698,011 Less: Accumulated other comprehensive (loss) income (14,504 ) 12,109 Non-qualifying goodwill and intangibles 26,373 26,867 Other non-qualifying assets - 25 Disallowed unrealized losses on equity securities 5,112 - Add: Qualifying trust preferred securities 46,918 44,819 Tier 1 capital (regulatory) (7) (10) 856,224 703,829 Less: Qualifying non-controlling interests - 75 Qualifying trust preferred securities 46,918 44,819 Preferred stock   141,000     141,000   Estimated Tier 1 common equity (8) (10) $ 668,306 $ 517,935 Divided by: Estimated risk-weighted assets (regulatory) (8) (10) $ 7,626,352   $ 6,394,105   Tier 1 common equity ratio (8) (10) 8.8 % 8.1 %   September 30, September 30, 2013 2012 (in thousands) Classified assets $ 296,580 $ 316,253 Divide: Tier 1 capital (regulatory) (7) (10) 856,224 703,829 Plus: Allowance for credit losses   95,385     97,410   Total Tier 1 capital plus allowance for credit losses $ 951,609   $ 801,239   Classified assets to Tier 1 capital plus allowance (9) (10) 31 % 39 %  

(1)     We believe this non-GAAP ratio provides a critical metric with which to analyze and evaluate financial condition and capital strength. (2) We believe this non-GAAP ratio provides a critical metric with which to analyze and evaluate financial condition and capital strength. (3) We believe this non-GAAP ratio improves the comparability to other institutions that have not engaged in acquisitions that resulted in recorded goodwill and other intangibles. (4) We believe these non-GAAP measurements provide a useful indication of the cash generating capacity of the Company. (5) We believe this non-GAAP measurement is a key indicator of the earnings power of the Company. (6) We believe this non-GAAP ratio provides a useful metric to measure the operating efficiency of the Company. (7) Under the guidelines of the Federal Reserve and the FDIC in effect, Tier 1 capital consisted of common stock, retained earnings, non-cumulative perpetual preferred stock, trust preferred securities up to a certain limit, and minority interests in certain subsidiaries, less most other intangible assets. (8) Tier 1 common equity is often expressed as a percentage of risk-weighted assets. Under the risk-based capital framework, a bank's balance sheet assets and credit equivalent amounts of off-balance sheet items are assigned to one of four broad risk categories. The aggregated dollar amount in each category is then multiplied by the risk weighting assigned to that category. The resulting weighted values from each of the four categories are added together and this sum is the risk-weighted assets total that, as adjusted, comprises the denominator (risk-weighted assets) to determine the Tier 1 capital ratio. Adjustments are made to Tier 1 capital to arrive at Tier 1 common equity. Tier 1 common equity is divided by the risk-weighted assets to determine the Tier 1 common equity ratio. We believe this non-GAAP ratio with which to analyze and evaluate financial condition and capital strength. (9) We believe this non-GAAP ratio provides a critical regulatory metric in which to analyze asset quality. (10) Current quarter is preliminary until Call Reports are filed.

The above information was disclosed in a filing to the SEC. To see this filing in its entirety, click here. Western Alliance Bancorporation next reports earnings on October 17, 2013.

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