Western Alliance Bancorporation Reports Second Quarter 2023 Financial Results

Rhea-AI Summary

Western Alliance Bancorporation (NYSE:WAL) reported its second quarter 2023 financial results. Net income for the quarter was $215.7 million, with earnings per share of $1.96. The company's net interest margin was 3.42%, and its efficiency ratio was 50.5%. Book value per common share was $49.22. HFI loans increased by 3.1% to $47.9 billion, while total deposits grew by 7.3% to $51.0 billion. Nonperforming assets to total assets ratio was 0.39%.

Positive

• Net income for the second quarter was $215.7 million, a decrease of 17.1% compared to the same period last year.
• Net revenue increased by 21.3% to $669.3 million, while non-interest expenses increased by 11.4% to $387.4 million.
• HFI loans increased by 3.1% to $47.9 billion, while total deposits grew by 7.3% to $51.0 billion.
• Tangible book value per share increased by 3.7% to $43.09.
• The company's net interest margin decreased to 3.42% from 3.79%.
• The company achieved a return on tangible common equity of 18.2%.

Negative

• Earnings per share decreased by 18.0% compared to the same period last year.
• Adjusted net revenue decreased by $42.0 million.
• Pre-provision net revenue decreased by $69.5 million.
• The company's efficiency ratio increased to 50.5% from 40.4%.
• Net interest margin decreased to 3.42% from 3.54%.
• Nonperforming assets to total assets ratio increased to 0.39% from 0.15%.

PHOENIX--(BUSINESS WIRE)-- Western Alliance Bancorporation (NYSE:WAL):

SECOND QUARTER 2023 FINANCIAL RESULTS

Quarter Highlights:
Net income		Earnings per share		PPNR1		Net interest margin		Efficiency ratio1		Book value per common share
$215.7 million		$1.96		$282.1 million		3.42%		50.5%		$49.22
										$43.091, excluding goodwill and intangibles

CEO COMMENTARY:

“Western Alliance continued to successfully execute its balance sheet repositioning strategy and return to normal business operations by bolstering liquidity and capital, sustaining profitability and expanding core client relationships,” said Kenneth A. Vecchione, President and Chief Executive Officer. “Quarterly deposit growth of $3.5 billion lowered our HFI loan-to-deposit ratio to 94%, with total insured and collateralized deposits representing 81% of deposits and available liquidity coverage of 276% of uninsured deposits. We achieved net income of $215.7 million and earnings per share of $1.96 for the second quarter 2023, which resulted in a return on tangible common equity1 of 18.2%. Tangible book value per share1 climbed 3.7% quarterly to $43.09, or 17.5% year-over-year, with a CET1 ratio of 10.1%.”

LINKED-QUARTER BASIS		YEAR-OVER-YEAR
FINANCIAL HIGHLIGHTS:
Net income of $215.7 million and earnings per share of $1.96, compared to $142.2 million and $1.28 (or $2.30, as adjusted1), respectively		Net income of $215.7 million and earnings per share of $1.96, down 17.1% and 18.0%, from $260.2 million and $2.39, respectively
Net revenue of $669.3 million, an increase of 21.3%, or $117.4 million, compared to an increase in non-interest expenses of 11.4%, or $39.5 million		Net revenue of $669.3 million, an increase of 8.0%, or $49.3 million, compared to an increase in non-interest expenses of 44.1%, or $118.5 million
Adjusted net revenue1 of $670.2 million, a decrease of $42.0 million		Adjusted net revenue1 of $670.2 million, an increase of $40.0 million
Pre-provision net revenue1 of $282.1 million, down $69.5 million from $351.6 million		Pre-provision net revenue1 of $282.1 million, down $79.2 million from $361.3 million
Effective tax rate of 17.1%, compared to 23.0%		Effective tax rate of 17.1%, compared to 19.6%
FINANCIAL POSITION RESULTS:
HFI loans of $47.9 billion, up $1.4 billion, or 3.1%		Decrease in HFI loans of $697 million, or 1.4%
Total deposits of $51.0 billion, up $3.5 billion, or 7.3%		Decrease in total deposits of $2.7 billion, or 5.0%
Stockholders' equity of $5.7 billion, up $164 million		Increase in stockholders' equity of $726 million
LOANS AND ASSET QUALITY:
Nonperforming assets (nonaccrual loans and repossessed assets) to total assets of 0.39%, compared to 0.17%		Nonperforming assets to total assets of 0.39%, compared to 0.15%
Annualized net loan charge-offs to average loans outstanding of 0.06%, compared to 0.05%		Annualized net loan charge-offs to average loans outstanding of 0.06%, compared to 0.01%
KEY PERFORMANCE METRICS:
Net interest margin of 3.42% decreased from 3.79%		Net interest margin of 3.42% decreased from 3.54%
Return on average assets and on tangible common equity1 of 1.23% and 18.2%, compared to 0.81% and 12.2%, respectively		Return on average assets and on tangible common equity1 of 1.23% and 18.2%, compared to 1.62% and 25.6%, respectively
Return on average assets and tangible common equity1 of 1.23% and 18.2% compared to 1.43% and 21.9% as adjusted1, respectively		Return on average assets and tangible common equity1 of 1.23% and 18.2% compared to 1.68% and 26.4% as adjusted1, respectively
Tangible common equity ratio1 of 7.0%, compared to 6.5%		Tangible common equity ratio1 of 7.0% increased from 6.1%
CET 1 ratio of 10.1% increased from 9.4%		CET 1 ratio of 10.1% increased from 9.0%
Tangible book value per share1, net of tax, of $43.09, an increase of 3.7% from $41.56		Tangible book value per share1, net of tax, of $43.09, an increase of 17.5% from $36.67
Adjusted efficiency ratio1 of 50.5%, compared to 43.2%		Adjusted efficiency ratio1 of 50.5%, compared to 40.4%

¹ See reconciliation of Non-GAAP Financial Measures.

Income Statement

Net interest income totaled $550.3 million in the second quarter 2023, a decrease of $59.6 million, or 9.8%, from $609.9 million in the first quarter 2023, and an increase of $25.3 million, or 4.8%, compared to the second quarter 2022. The decrease in net interest income from the first quarter 2023 is due to an increase in average short-term borrowings, combined with higher interest rates and was partially offset by higher yields on loans. The increase in net interest income from the second quarter 2022 was driven by higher yields on HFI loans, partially offset by an increase in both the balances and rates of borrowings and deposits.

The Company recorded a provision for credit losses of $21.8 million in the second quarter 2023, an increase of $2.4 million from $19.4 million in the first quarter 2023, and a decrease of $5.7 million from $27.5 million in the second quarter 2022. The increase in the provision for credit losses during the second quarter 2023 is primarily due to heightened economic uncertainty, particularly in the commercial real estate market.

The Company’s net interest margin in the second quarter 2023 was 3.42%, a decrease from 3.79% in the first quarter 2023, and a decrease from 3.54% in the second quarter 2022. An increase in short-term borrowings and higher rates on these borrowings and on deposits drove a decrease in net interest margin from the first quarter 2023, with higher yields on loans partially offsetting this decrease. The decrease in net interest margin from the second quarter 2022 was driven by higher average balances and rates on deposits and borrowings.

Non-interest income was $119.0 million for the second quarter 2023, compared to $(58.0) million for the first quarter 2023, and $95.0 million for the second quarter 2022. Non-interest income for the first quarter 2023 was impacted by significant non-operating losses that were incurred in response to actions undertaken by the Company to reposition its balance sheet in light of the disruption in the banking industry caused by recent bank failures. After adjusting for losses on security sales and fair value adjustments primarily related to the transfer of $6.0 billion of held for investment loans to held for sale to further strengthen the Company's capital and liquidity position, adjusted non-interest income¹ was $102.3 million for the first quarter 2023. Total non-operating items for the second quarter 2023 were not significant as losses on security sales of $13.6 million were offset by fair value gain adjustments of $12.7 million. Also contributing to the increase in non-interest income for the quarter was an increase of $30.9 million in net gain on loan origination and sale activities from higher spreads and volume, partially offset by a $17.8 million decrease in net loan servicing revenue due to losses on MSR hedges and lower servicing income. The $24.0 million increase in non-interest income from the second quarter 2022 was driven by a higher net gain on loan origination and sale activities and gains on fair value adjustments compared to a loss in the second quarter of 2022, partially offset by lower net loan servicing revenue and losses from sales of investment securities.

Net revenue totaled $669.3 million for the second quarter 2023, compared to $551.9 million and $620.0 million for the first quarter 2023 and second quarter 2022, respectively. After adjusting for losses on security sales and fair value adjustments, adjusted net revenue¹ was $670.2 million for the second quarter 2023, a decrease of $42.0 million, compared to $712.2 million for the first quarter 2023, and an increase of $40.0 million, or 6.3%, compared to $630.2 million for the second quarter 2022.

Non-interest expense was $387.4 million for the second quarter 2023, compared to $347.9 million for the first quarter 2023, and $268.9 million for the second quarter 2022. After adjusting first quarter 2023 non-interest expense for a net gain on extinguishment of debt from payoff of credit linked notes of $12.7 million, adjusted non-interest expense¹ was $360.6 million. The increase in non-interest expense from the first quarter 2023 is due primarily to higher insurance costs related to elevated insured and brokered deposit levels. The increase in non-interest expense from the second quarter 2022 is attributable to an increase in deposit and insurance costs. The Company’s adjusted efficiency ratio¹ was 50.5% for the second quarter 2023, compared to 43.2% in the first quarter 2023, and 40.4% for the second quarter 2022.

Income tax expense was $44.4 million for the second quarter 2023, compared to $42.4 million for the first quarter 2023, and $63.4 million for the second quarter 2022.

Net income was $215.7 million for the second quarter 2023, an increase of $73.5 million from $142.2 million for the first quarter 2023, and a decrease of $44.5 million from $260.2 million for the second quarter 2022. Earnings per share totaled $1.96 for the second quarter 2023, compared to $1.28 for the first quarter 2023, and $2.39 for the second quarter 2022. After adjusting for the non-operating items noted above, adjusted earnings per share totaled $2.30 for the first quarter 2023.

The Company views its pre-provision net revenue¹ ("PPNR") as a key metric for assessing the Company’s earnings power, which it defines as adjusted net revenue¹ less adjusted non-interest expense¹. For the second quarter 2023, the Company’s PPNR¹ was $282.1 million, down $69.5 million from $351.6 million in the first quarter 2023, and down $79.2 million from $361.3 million in the second quarter 2022.

The Company had 3,336 full-time equivalent employees and 56 offices at June 30, 2023, compared to 3,340 employees and 57 offices at March 31, 2023, and 3,254 employees and 60 offices at June 30, 2022.

¹ See reconciliation of Non-GAAP Financial Measures.

Balance Sheet

HFI loans, net of deferred fees totaled $47.9 billion at June 30, 2023, compared to $46.4 billion at March 31, 2023, and $48.6 billion at June 30, 2022. The increase in HFI loans of $1.4 billion from the prior quarter was driven by an increase of $1.2 billion in commercial and industrial and $296 million in CRE non-owner occupied loans, with approximately half of this increase attributable to loan transfers from HFS to HFI. The decrease in HFI loans of $697 million from June 30, 2022 was driven by a $4.1 billion decrease in commercial and industrial loans, resulting from the transfer of a significant portion of HFI loans to HFS in the first quarter 2023 as part of the Company's balance sheet repositioning strategy. This decrease was partially offset by increases in CRE non-owner occupied and construction and land development loans of $2.1 billion and $1.2 billion, respectively. HFS loans totaled $3.2 billion at June 30, 2023, compared to $7.0 billion at March 31, 2023, and $2.8 billion at June 30, 2022. The decrease of $3.9 billion in HFS loans from the prior quarter is primarily related to execution of the Company's balance sheet repositioning strategy, with loan dispositions totaling $3.5 billion during the quarter. The increase of $353 million in HFS loans from June 30, 2022 relates to loans transferred to HFS during the first quarter 2023, partially offset by a decrease in AmeriHome HFS 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 June 30, 2023, the allowance for loan losses to funded HFI loans ratio was 0.67%, compared to 0.66% at March 31, 2023, and 0.56% at June 30, 2022. The allowance for credit losses, which includes the allowance for unfunded loan commitments, to funded HFI loans ratio was 0.76% at June 30, 2023, compared to 0.75% at March 31, 2023, and 0.67% at June 30, 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 $9.4 billion, $9.8 billion, and $11.1 billion as of June 30, 2023, March 31, 2023, and June 30, 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 $21.4 million as of June 30, 2023, $20.8 million as of March 31, 2023, and $18.5 million as of June 30, 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 0.94% at June 30, 2023, 0.95% at March 31, 2023, and 0.87% at June 30, 2022.

Deposits totaled $51.0 billion at June 30, 2023, an increase of $3.5 billion from $47.6 billion at March 31, 2023, and a decrease of $2.7 billion from $53.7 billion at June 30, 2022. By deposit type, the increase from the prior quarter is attributable to increases of $2.0 billion from certificates of deposits, $1.9 billion from interest bearing demand deposits, and $268 million from non-interest bearing demand deposits, partially offset by a $760 million decrease in savings and money market accounts. From June 30, 2022, non-interest bearing demand deposits and savings and money market accounts decreased $7.0 billion and $5.9 billion, respectively. These decreases were partially offset by increases in certificates of deposit and interest-bearing demand deposits of $6.0 billion and $4.3 billion, respectively. Non-interest bearing deposits were $16.7 billion at June 30, 2023, compared to $16.5 billion at March 31, 2023, and $23.7 billion at June 30, 2022.

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

		Jun 30, 2023			Mar 31, 2023			Jun 30, 2022
Non-interest bearing		32.8	%		34.6	%		44.2	%
Savings and money market		25.6			29.1			35.4
Interest-bearing demand		24.8			22.5			15.6
Certificates of deposit		16.8			13.8			4.8

The Company’s ratio of HFI loans to deposits was 93.8% at June 30, 2023, compared to 97.6% at March 31, 2023, and 90.4% at June 30, 2022.

Borrowings were $9.6 billion at June 30, 2023, $15.9 billion at March 31, 2023, and $5.2 billion at June 30, 2022. Borrowings decreased from March 31, 2023 due primarily to a decrease in short-term borrowings of $6.0 billion and payoffs of credit linked notes of $266 million. The increase in borrowings from June 30, 2022 is due to an increase in short-term borrowings of $3.8 billion, partially offset by payoffs of credit linked notes in the first half of 2023.

Qualifying debt totaled $888 million at June 30, 2023, compared to $895 million at March 31, 2023, and $891 million at June 30, 2022.

Stockholders’ equity was $5.7 billion at June 30, 2023, compared to $5.5 billion at March 31, 2023 and $5.0 billion at June 30, 2022. The increase in stockholders’ equity quarter over quarter was due to net income, partially offset by dividends to shareholders and unrealized fair value losses of $24 million on the Company's available for sale securities, which are recorded in other comprehensive loss, net of tax. Cash dividends of $39.4 million ($0.36 per common share) and $3.2 million ($0.27 per depository share) were paid to shareholders during the second quarter 2023. The increase in stockholders' equity from June 30, 2022 is primarily a function of net income and sales of common stock under the Company's ATM program, partially offset by dividends to shareholders and an increase in unrealized fair value losses on available for sale securities.

At June 30, 2023, tangible common equity, net of tax¹, was 7.0% of tangible assets¹ and total capital was 13.0% of risk-weighted assets. The Company’s tangible book value per share¹ was $43.09 at June 30, 2023, an increase of 3.7% from $41.56 at March 31, 2023, and up 17.5% from $36.67 at June 30, 2022. The increase in tangible book value per share from March 31, 2023 is attributable to net income.

Total assets decreased 4.1% to $68.2 billion at June 30, 2023, from $71.0 billion at March 31, 2023, and increased 3.2% from $66.1 billion at June 30, 2022. The decrease in total assets from March 31, 2023 was driven by a decrease in HFS loans and cash, partially offset by an increase in HFI loans. The increase in total assets from June 30, 2022 was driven by an increase in investments 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 $21.8 million for the second quarter 2023, compared to $19.4 million for the first quarter 2023, and $27.5 million for the second quarter 2022. Net loan charge-offs in the second quarter 2023 were $7.4 million, or 0.06% of average loans (annualized), compared to $6.0 million, or 0.05%, in the first quarter 2023, and $1.4 million, or 0.01%, in the second quarter 2022.

Nonaccrual loans increased $149 million to $256 million during the quarter and increased $171 million from June 30, 2022. Loans past due 90 days and still accruing interest were zero, compared to $1 million at March 31, 2023, and zero at June 30, 2022 (excluding government guaranteed loans of $481 million, $494 million, and $555 million, respectively). Loans past due 30-89 days and still accruing interest totaled $121 million at June 30, 2023, an increase from $58 million at March 31, 2023, and an increase from $117 million at June 30, 2022 (excluding government guaranteed loans of $289 million, $281 million, and $161 million, respectively).

Repossessed assets totaled $11 million at June 30, 2023, flat from March 31, 2023, and a $1 million decrease from $12 million at June 30, 2022. Classified assets totaled $604 million at June 30, 2023, an increase of $145 million from $459 million at March 31, 2023, and an increase of $258 million from $346 million at June 30, 2022.

The ratio of classified assets to Tier 1 capital plus the allowance for credit losses, a common regulatory measure of asset quality, was 10.0% at June 30, 2023, compared to 7.8% at March 31, 2023, and 6.7% at June 30, 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 $28.1 billion at June 30, 2023, an increase of $857 million during the quarter, and a decrease of $1.3 billion during the last twelve months. The Commercial segment also has loans held for sale of $1.0 billion at June 30, 2023, a decrease of $3.7 billion during the quarter. Deposits for the Commercial segment totaled $21.5 billion at June 30, 2023, a decrease of $531 million during the quarter, and a decrease of $8.0 billion during the last twelve months.

Pre-tax income for the Commercial segment was $221.4 million for the three months ended June 30, 2023, an increase of $62.0 million from the three months ended March 31, 2023, and a decrease of $18.5 million from the three months ended June 30, 2022. For the six months ended June 30, 2023, the Commercial segment reported total pre-tax income of $380.9 million, a decrease of $95.7 million compared to the six months ended June 30, 2022.

The Consumer Related segment reported an HFI loan balance of $19.7 billion at June 30, 2023, an increase of $583 million during the quarter, and an increase of $612 million during the last twelve months. The Consumer Related segment also has loans held for sale of $2.1 billion at June 30, 2023, a decrease of $183 million during the quarter, and a decrease of $696 million during the last twelve months. Deposits for the Consumer Related segment totaled $22.4 billion, an increase of $2.4 billion during the quarter and an increase of $2.7 billion during the last twelve months.

Pre-tax income for the Consumer Related segment was $56.7 million for the three months ended June 30, 2023, a decrease of $0.1 million from the three months ended March 31, 2023, and a decrease of $103.4 million from the three months ended June 30, 2022. Pre-tax income for the Consumer Related segment for the six months ended June 30, 2023 totaled $113.3 million, a decrease of $173.8 million compared to the six months ended June 30, 2022.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live webcast to discuss its second quarter 2023 financial results at 12:00 p.m. ET on Wednesday, July 19, 2023. Participants may access the call by dialing 1-833-470-1428 and using access code 389791 or via live audio webcast using the website link https://events.q4inc.com/attendee/147801611. 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 July 19th through 11:00 p.m. ET August 19th by dialing 1-866-813-9403, using access code 616595.

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 recent bank failures 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 war between Russia and Ukraine; 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 $65 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, business clients benefit from a full spectrum of tailored banking solutions and outstanding service delivered by industry experts who put customers first. Major accolades include #2 best-performing of the 50 largest public U.S. banks in the S&P Global Market Intelligence listing for 2021, and #1 Best Emerging Regional Bank for 2022 by 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 June 30,
											2023			2022			Change %
											(in millions)
Total assets											$	68,160		$	66,055		3.2	%
Loans held for sale												3,156			2,803		12.6
HFI loans, net of deferred fees												47,875			48,572		(1.4	)
Investment securities												10,374			8,802		17.9
Total deposits												51,041			53,712		(5.0	)
Borrowings												9,567			5,210		83.6
Qualifying debt												888			891		(0.3	)
Stockholders' equity												5,685			4,959		14.6
Tangible common equity, net of tax (1)												4,718			3,971		18.8
Common equity Tier 1 capital												5,348			4,897		9.2
Selected Income Statement Data:
		For the Three Months Ended June 30,									For the Six Months Ended June 30,
		2023			2022			Change %			2023			2022			Change %
		(in millions, except per share data)									(in millions, except per share data)
Interest income		$	1,000.8		$	579.6		72.7	%		$	1,969.7		$	1,064.1		85.1	%
Interest expense			450.5			54.6		NM				809.5			89.6		NM
Net interest income			550.3			525.0		4.8				1,160.2			974.5		19.1
Provision for credit losses			21.8			27.5		(20.7	)			41.2			36.5		12.9
Net interest income after provision for credit losses			528.5			497.5		6.2				1,119.0			938.0		19.3
Non-interest income			119.0			95.0		25.3				61.0			201.3		(69.7	)
Non-interest expense			387.4			268.9		44.1				735.3			517.5		42.1
Income before income taxes			260.1			323.6		(19.6	)			444.7			621.8		(28.5	)
Income tax expense			44.4			63.4		(30.0	)			86.8			121.5		(28.6	)
Net income			215.7			260.2		(17.1	)			357.9			500.3		(28.5	)
Dividends on preferred stock			3.2			3.2		—				6.4			6.4		—
Net income available to common stockholders		$	212.5		$	257.0		(17.3	)		$	351.5		$	493.9		(28.8	)
Diluted earnings per common share		$	1.96		$	2.39		(18.0	)		$	3.24		$	4.61		(29.7	)

(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 June 30,									For the Six Months Ended June 30,
		2023			2022			Change %			2023			2022			Change %
Diluted earnings per common share		$	1.96		$	2.39		(18.0	)%		$	3.24		$	4.61		(29.7	)%
Book value per common share			49.22			43.07		14.3
Tangible book value per common share, net of tax (1)			43.09			36.67		17.5
Average common shares outstanding (in millions):
Basic			108.3			107.3		0.9				108.2			106.7		1.5
Diluted			108.3			107.7		0.6				108.3			107.1		1.1
Common shares outstanding			109.5			108.3		1.1

Selected Performance Ratios:
Return on average assets (2)		1.23	%		1.62	%		(24.1	)%		1.02	%		1.63	%		(37.4	)%
Return on average tangible common equity (1, 2)		18.2			25.6			(28.9	)		15.2			24.8			(38.7	)
Net interest margin (2)		3.42			3.54			(3.4	)		3.60			3.44			4.7
Efficiency ratio - tax equivalent basis (1)		50.5			40.4			25.0			46.7			43.1			8.4
HFI loan to deposit ratio		93.8			90.4			3.8
Asset Quality Ratios:
Net charge-offs to average loans outstanding (2)		0.06	%		0.01	%		NM			0.05	%		0.01	%		NM
Nonaccrual loans to funded HFI loans		0.53			0.18			NM
Nonaccrual loans and repossessed assets to total assets		0.39			0.15			NM
Allowance for loan losses to funded HFI loans		0.67			0.56			19.6
Allowance for loan losses to nonaccrual HFI loans		125			321			(61.0	)

Capital Ratios:
		Jun 30, 2023		Mar 31, 2023		Jun 30, 2022
Tangible common equity (1)		7.0 %		6.5 %		6.1 %
Common Equity Tier 1 (3)		10.1		9.4		9.0
Tier 1 Leverage ratio (3)		8.1		7.8		7.6
Tier 1 Capital (3)		10.8		10.1		9.7
Total Capital (3)		13.0		12.1		11.9

(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 June 30, 2023 are preliminary.
NM		Changes +/- 100% are not meaningful.

Western Alliance Bancorporation and Subsidiaries
Condensed Consolidated Income Statements
Unaudited
		Three Months Ended June 30,								Six Months Ended June 30,
		2023				2022				2023				2022
		(dollars in millions, except per share data)
Interest income:
Loans		$	857.2			$	516.6			$	1,689.9			$	951.3
Investment securities			112.4				59.3				208.5				107.3
Other			31.2				3.7				71.3				5.5
Total interest income			1,000.8				579.6				1,969.7				1,064.1
Interest expense:
Deposits			251.1				27.1				482.7				41.2
Qualifying debt			9.5				8.6				18.8				17.0
Borrowings			189.9				18.9				308.0				31.4
Total interest expense			450.5				54.6				809.5				89.6
Net interest income			550.3				525.0				1,160.2				974.5
Provision for credit losses			21.8				27.5				41.2				36.5
Net interest income after provision for credit losses			528.5				497.5				1,119.0				938.0
Non-interest income:
Net gain on loan origination and sale activities			62.3				27.2				93.7				64.1
Net loan servicing revenue			24.1				45.4				66.0				86.5
Service charges and fees			20.8				7.6				30.3				14.6
Commercial banking related income			6.0				5.8				12.2				10.9
Gain on recovery from credit guarantees			1.2				9.0				4.5				11.3
Income from equity investments			0.7				5.2				2.1				9.3
(Loss) gain on sales of investment securities			(13.6	)			(0.2	)			(26.1	)			6.7
Fair value gain (loss) adjustments, net			12.7				(10.0	)			(135.1	)			(16.6	)
Other			4.8				5.0				13.4				14.5
Total non-interest income			119.0				95.0				61.0				201.3
Non-interest expenses:
Salaries and employee benefits			145.6				139.0				294.5				277.3
Deposit costs			91.0				18.1				177.9				27.4
Insurance			33.0				6.9				48.7				14.1
Data processing			28.6				19.7				55.0				37.3
Legal, professional, and directors' fees			26.4				25.1				49.5				49.1
Loan servicing expenses			18.4				14.7				32.2				25.5
Occupancy			15.4				13.0				31.9				25.8
Loan acquisition and origination expenses			5.6				6.4				10.0				12.9
Business development and marketing			5.0				5.4				10.2				9.8
Net loss on sales and valuations of repossessed and other assets			0.5				(0.3	)			0.5				(0.2	)
Gain on extinguishment of debt			(0.7	)			—				(13.4	)			—
Other			18.6				20.9				38.3				38.5
Total non-interest expense			387.4				268.9				735.3				517.5
Income before income taxes			260.1				323.6				444.7				621.8
Income tax expense			44.4				63.4				86.8				121.5
Net income			215.7				260.2				357.9				500.3
Dividends on preferred stock			3.2				3.2				6.4				6.4
Net income available to common stockholders		$	212.5			$	257.0			$	351.5			$	493.9
Earnings per common share:
Diluted shares			108.3				107.7				108.3				107.1
Diluted earnings per share		$	1.96			$	2.39			$	3.24			$	4.61

Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Income Statements
Unaudited
		Three Months Ended
		Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022
		(in millions, except per share data)
Interest income:
Loans		$	857.2			$	832.7			$	785.1			$	657.0			$	516.6
Investment securities			112.4				96.1				89.4				75.9				59.3
Other			31.2				40.1				13.8				6.5				3.7
Total interest income			1,000.8				968.9				888.3				739.4				579.6
Interest expense:
Deposits			251.1				231.6				157.6				77.6				27.1
Qualifying debt			9.5				9.3				9.1				8.9				8.6
Borrowings			189.9				118.1				81.9				50.8				18.9
Total interest expense			450.5				359.0				248.6				137.3				54.6
Net interest income			550.3				609.9				639.7				602.1				525.0
Provision for credit losses			21.8				19.4				3.1				28.5				27.5
Net interest income after provision for credit losses			528.5				590.5				636.6				573.6				497.5
Non-interest income:
Net gain on loan origination and sale activities			62.3				31.4				25.4				14.5				27.2
Net loan servicing revenue			24.1				41.9				21.4				23.0				45.4
Service charges and fees			20.8				9.5				5.9				6.5				7.6
Commercial banking related income			6.0				6.2				5.5				5.1				5.8
Gain on recovery from credit guarantees			1.2				3.3				3.0				0.4				9.0
Income from equity investments			0.7				1.4				4.2				4.3				5.2
(Loss) gain on sales of investment securities			(13.6	)			(12.5	)			0.1				—				(0.2	)
Fair value gain (loss) adjustments, net			12.7				(147.8	)			(9.2	)			(2.8	)			(10.0	)
Other			4.8				8.6				5.2				10.8				5.0
Total non-interest income			119.0				(58.0	)			61.5				61.8				95.0
Non-interest expenses:
Salaries and employee benefits			145.6				148.9				125.7				136.5				139.0
Deposit costs			91.0				86.9				82.2				56.2				18.1
Insurance			33.0				15.7				8.9				8.1				6.9
Data processing			28.6				26.4				23.9				21.8				19.7
Legal, professional, and directors' fees			26.4				23.1				26.0				24.8				25.1
Loan servicing expenses			18.4				13.8				14.8				15.2				14.7
Occupancy			15.4				16.5				15.8				13.9				13.0
Loan acquisition and origination expenses			5.6				4.4				4.4				5.8				6.4
Business development and marketing			5.0				5.2				7.3				5.0				5.4
Net loss (gain) on sales and valuations of repossessed and other assets			0.5				—				(0.3	)			(0.2	)			(0.3	)
Gain on extinguishment of debt			(0.7	)			(12.7	)			—				—				—
Other			18.6				19.7				24.7				18.7				20.9
Total non-interest expense			387.4				347.9				333.4				305.8				268.9
Income before income taxes			260.1				184.6				364.7				329.6				323.6
Income tax expense			44.4				42.4				71.7				65.6				63.4
Net income			215.7				142.2				293.0				264.0				260.2
Dividends on preferred stock			3.2				3.2				3.2				3.2				3.2
Net income available to common stockholders		$	212.5			$	139.0			$	289.8			$	260.8			$	257.0
Earnings per common share:
Diluted shares			108.3				108.3				108.4				107.9				107.7
Diluted earnings per share		$	1.96			$	1.28			$	2.67			$	2.42			$	2.39

Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Balance Sheets
Unaudited
		Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022
		(in millions)
Assets:
Cash and due from banks		$	2,153			$	3,639			$	1,043			$	1,610			$	1,886
Investment securities			10,374				9,493				8,760				8,603				8,802
Loans held for sale			3,156				7,022				1,184				2,204				2,803
Loans held for investment:
Commercial and industrial			16,657				15,503				20,710				22,318				20,754
Commercial real estate - non-owner occupied			9,913				9,617				9,319				8,668				7,775
Commercial real estate - owner occupied			1,805				1,809				1,818				1,848				1,848
Construction and land development			4,428				4,407				4,013				3,621				3,231
Residential real estate			15,000				15,024				15,928				15,674				14,908
Consumer			72				75				74				72				56
Loans HFI, net of deferred fees			47,875				46,435				51,862				52,201				48,572
Allowance for loan losses			(321	)			(305	)			(310	)			(304	)			(273	)
Loans HFI, net of deferred fees and allowance			47,554				46,130				51,552				51,897				48,299
Mortgage servicing rights			1,007				910				1,148				1,044				826
Premises and equipment, net			315				293				276				237				210
Operating lease right-of-use asset			151				156				163				131				136
Other assets acquired through foreclosure, net			11				11				11				11				12
Bank owned life insurance			184				183				182				181				180
Goodwill and other intangibles, net			674				677				680				682				695
Other assets			2,581				2,533				2,735				2,565				2,206
Total assets		$	68,160			$	71,047			$	67,734			$	69,165			$	66,055
Liabilities and Stockholders' Equity:
Liabilities:
Deposits
Non-interest bearing demand deposits		$	16,733			$	16,465			$	19,691			$	24,926			$	23,721
Interest bearing:
Demand			12,646				10,719				9,507				8,350				8,387
Savings and money market			13,085				13,845				19,397				19,202				19,026
Certificates of deposit			8,577				6,558				5,049				3,111				2,578
Total deposits			51,041				47,587				53,644				55,589				53,712
Borrowings			9,567				15,853				6,299				6,319				5,210
Qualifying debt			888				895				893				889				891
Operating lease liability			179				184				185				149				151
Accrued interest payable and other liabilities			800				1,007				1,357				1,198				1,132
Total liabilities			62,475				65,526				62,378				64,144				61,096
Stockholders' Equity:
Preferred stock			295				295				295				295				295
Common stock and additional paid-in capital			2,064				2,054				2,058				2,049				1,990
Retained earnings			3,937				3,764				3,664				3,413				3,192
Accumulated other comprehensive loss			(611	)			(592	)			(661	)			(736	)			(518	)
Total stockholders' equity			5,685				5,521				5,356				5,021				4,959
Total liabilities and stockholders' equity		$	68,160			$	71,047			$	67,734			$	69,165			$	66,055

Western Alliance Bancorporation and Subsidiaries
Changes in the Allowance For Credit Losses on Loans
Unaudited
		Three Months Ended
		Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022
		(in millions)
Allowance for loan losses
Balance, beginning of period		$	304.7			$	309.7			$	304.1			$	273.2			$	257.6
Provision for credit losses (1)			23.8				1.0				7.4				29.0				17.0
Recoveries of loans previously charged-off:
Commercial and industrial			0.7				3.2				0.3				3.8				0.8
Commercial real estate - non-owner occupied			—				—				—				0.1				—
Commercial real estate - owner occupied			—				—				0.1				—				0.1
Construction and land development			—				—				—				0.1				—
Residential real estate			—				—				—				—				0.1
Consumer			0.1				—				—				—				—
Total recoveries			0.8				3.2				0.4				4.0				1.0
Loans charged-off:
Commercial and industrial			6.0				9.1				1.1				2.1				2.4
Commercial real estate - non-owner occupied			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			8.2				9.2				2.2				2.1				2.4
Net loan charge-offs (recoveries)			7.4				6.0				1.8				(1.9	)			1.4
Balance, end of period		$	321.1			$	304.7			$	309.7			$	304.1			$	273.2
Allowance for unfunded loan commitments
Balance, beginning of period		$	44.8			$	47.0			$	52.1			$	53.8			$	43.3
(Recovery of) provision for credit losses (1)			(3.7	)			(2.2	)			(5.1	)			(1.7	)			10.5
Balance, end of period (2)		$	41.1			$	44.8			$	47.0			$	52.1			$	53.8
Components of the allowance for credit losses on loans
Allowance for loan losses		$	321.1			$	304.7			$	309.7			$	304.1			$	273.2
Allowance for unfunded loan commitments			41.1				44.8				47.0				52.1				53.8
Total allowance for credit losses on loans		$	362.2			$	349.5			$	356.7			$	356.2			$	327.0
Net charge-offs (recoveries) to average loans - annualized			0.06	%			0.05	%			0.01	%			(0.02	)%			0.01	%
Allowance ratios
Allowance for loan losses to funded HFI loans (3)			0.67	%			0.66	%			0.60	%			0.58	%			0.56	%
Allowance for credit losses to funded HFI loans (3)			0.76				0.75				0.69				0.68				0.67
Allowance for loan losses to nonaccrual HFI loans			125				285				364				338				321
Allowance for credit losses to nonaccrual HFI loans			141				327				420				396				385

(1)		The above tables reflect the provision for credit losses on funded and unfunded loans. There was a $2.2 million provision for credit losses on AFS investment securities and a $0.5 million provision release on HTM investment securities for the three months ended June 30, 2023. The allowance for credit losses on AFS and HTM investment securities totaled $4.4 million and $6.0 million, respectively, as of June 30, 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 $21.4 million as of June 30, 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
		Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022
		(in millions)
Nonaccrual loans and repossessed assets
Nonaccrual loans		$	256			$	107			$	85			$	90			$	85
Nonaccrual loans to funded HFI loans			0.53	%			0.23	%			0.16	%			0.17	%			0.17	%
Repossessed assets		$	11			$	11			$	11			$	11			$	12
Nonaccrual loans and repossessed assets to total assets			0.39	%			0.17	%			0.14	%			0.15	%			0.15	%
Loans Past Due
Loans past due 90 days, still accruing (1)		$	—			$	1			$	—			$	—			$	—
Loans past due 90 days, still accruing to funded HFI loans			—	%			—	%			—	%			—	%			—	%
Loans past due 30 to 89 days, still accruing (2)		$	121			$	58			$	70			$	56			$	117
Loans past due 30 to 89 days, still accruing to funded HFI loans			0.25	%			0.13	%			0.13	%			0.11	%			0.24	%
Other credit quality metrics
Special mention loans		$	694			$	320			$	351			$	312			$	317
Special mention loans to funded HFI loans			1.45	%			0.69	%			0.68	%			0.60	%			0.65	%
Classified loans on accrual		$	324			$	325			$	280			$	268			$	232
Classified loans on accrual to funded HFI loans			0.68	%			0.70	%			0.54	%			0.51	%			0.48	%
Classified assets		$	604			$	459			$	393			$	385			$	346
Classified assets to total assets			0.89	%			0.65	%			0.58	%			0.56	%			0.52	%

(1)		Excludes government guaranteed residential mortgage loans of $481 million, $494 million, $582 million, $644 million, and $555 million as of each respective date in the table above.
(2)		Excludes government guaranteed residential mortgage loans of $289 million, $281 million, $334 million, $245 million, and $161 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
		June 30, 2023										March 31, 2023
		Average Balance				Interest			Average Yield / Cost			Average Balance				Interest			Average Yield / Cost
		($ in millions)
Interest earning assets
Loans held for sale		$	6,343			$	105.2		6.65	%		$	2,153			$	31.3		5.90	%
Loans held for investment:
Commercial and industrial			15,712				302.3		7.78				20,481				368.2		7.35
CRE - non-owner occupied			9,754				180.7		7.44				9,520				169.4		7.22
CRE - owner occupied			1,816				25.1		5.66				1,809				24.6		5.62
Construction and land development			4,420				103.6		9.40				4,230				93.3		8.94
Residential real estate			15,006				139.0		3.72				15,839				144.7		3.71
Consumer			73				1.3		7.15				73				1.2		6.82
Total HFI loans (1), (2), (3)			46,781				752.0		6.48				51,952				801.4		6.28
Securities:
Securities - taxable			7,879				91.4		4.65				6,658				75.2		4.58
Securities - tax-exempt			2,062				21.0		5.12				2,117				20.9		5.00
Total securities (1)			9,941				112.4		4.76				8,775				96.1		4.68
Cash and other			2,584				31.2		4.84				3,331				40.1		4.88
Total interest earning assets			65,649				1,000.8		6.17				66,211				968.9		5.99
Non-interest earning assets
Cash and due from banks			259										265
Allowance for credit losses			(314	)									(315	)
Bank owned life insurance			183										182
Other assets			4,361										4,931
Total assets		$	70,138									$	71,274
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts		$	11,893			$	80.2		2.71	%		$	10,534			$	68.2		2.63	%
Savings and money market			13,167				87.2		2.66				18,066				115.5		2.59
Certificates of deposit			7,626				83.7		4.40				5,520				47.9		3.52
Total interest-bearing deposits			32,686				251.1		3.08				34,120				231.6		2.75
Short-term borrowings			12,195				170.4		5.60				7,288				87.5		4.87
Long-term debt			826				19.5		9.45				1,275				30.6		9.73
Qualifying debt			895				9.5		4.27				893				9.3		4.24
Total interest-bearing liabilities			46,602				450.5		3.88				43,576				359.0		3.34
Interest cost of funding earning assets									2.75										2.20
Non-interest-bearing liabilities
Non-interest-bearing demand deposits			16,701										20,521
Other liabilities			1,183										1,589
Stockholders’ equity			5,652										5,588
Total liabilities and stockholders' equity		$	70,138									$	71,274
Net interest income and margin (4)						$	550.3		3.42	%						$	609.9		3.79	%

(1)		Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $8.7 million and $8.8 million for the three months ended June 30, 2023 and March 31, 2023, respectively.
(2)		Included in the yield computation are net loan fees of $36.8 million and $35.6 million for the three months ended June 30, 2023 and March 31, 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
		June 30, 2023										June 30, 2022
		Average Balance				Interest			Average Yield / Cost			Average Balance				Interest			Average Yield / Cost
		($ in millions)
Interest earning assets
Loans held for sale		$	6,343			$	105.2		6.65	%		$	4,333			$	43.1		3.99	%
Loans held for investment:
Commercial and industrial			15,712				302.3		7.78				19,576				205.6		4.27
CRE - non-owner-occupied			9,754				180.7		7.44				7,152				83.1		4.67
CRE - owner-occupied			1,816				25.1		5.66				1,836				22.7		5.05
Construction and land development			4,420				103.6		9.40				3,336				47.7		5.73
Residential real estate			15,006				139.0		3.72				13,698				113.8		3.33
Consumer			73				1.3		7.15				58				0.6		4.29
Total loans HFI (1), (2), (3)			46,781				752.0		6.48				45,656				473.5		4.19
Securities:
Securities - taxable			7,879				91.4		4.65				6,674				41.3		2.48
Securities - tax-exempt			2,062				21.0		5.12				2,017				18.0		4.53
Total securities (1)			9,941				112.4		4.76				8,691				59.3		2.94
Cash and other			2,584				31.2		4.84				1,650				3.7		0.91
Total interest earning assets			65,649				1,000.8		6.17				60,330				579.6		3.91
Non-interest earning assets
Cash and due from banks			259										262
Allowance for credit losses			(314	)									(266	)
Bank owned life insurance			183										179
Other assets			4,361										3,766
Total assets		$	70,138									$	64,271
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts		$	11,893			$	80.2		2.71	%		$	8,346			$	8.0		0.38	%
Savings and money market accounts			13,167				87.2		2.66				18,771				16.5		0.35
Certificates of deposit			7,626				83.7		4.40				2,040				2.6		0.52
Total interest-bearing deposits			32,686				251.1		3.08				29,157				27.1		0.37
Short-term borrowings			12,195				170.4		5.60				2,917				8.6		1.19
Long-term debt			826				19.5		9.45				786				10.3		5.24
Qualifying debt			895				9.5		4.27				894				8.6		3.85
Total interest-bearing liabilities			46,602				450.5		3.88				33,754				54.6		0.65
Interest cost of funding earning assets									2.75										0.37
Non-interest-bearing liabilities
Non-interest-bearing demand deposits			16,701										24,327
Other liabilities			1,183										1,169
Stockholders’ equity			5,652										5,021
Total liabilities and stockholders' equity		$	70,138									$	64,271
Net interest income and margin (4)						$	550.3		3.42	%						$	525.0		3.54	%

(1)		Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $8.7 million and $8.2 million for the three months ended June 30, 2023 and 2022, respectively.
(2)		Included in the yield computation are net loan fees of $36.8 million and $36.4 million for the three months ended June 30, 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
		Six Months Ended
		June 30, 2023										June 30, 2022
		Average Balance				Interest			Average Yield / Cost			Average Balance				Interest			Average Yield / Cost
		($ in millions)
Interest earning assets
Loans HFS		$	4,260			$	136.5		6.46	%		$	5,421			$	93.6		3.48	%
Loans HFI:
Commercial and industrial			18,083				670.5		7.54				18,537				371.5		4.10
CRE - non-owner occupied			9,638				350.1		7.33				6,922				156.2		4.56
CRE - owner occupied			1,812				49.7		5.64				1,847				45.5		5.06
Construction and land development			4,325				196.8		9.18				3,214				89.3		5.61
Residential real estate			15,420				283.8		3.71				12,050				194.1		3.25
Consumer			73				2.5		6.99				55				1.1		4.14
Total loans HFI (1), (2), (3)			49,351				1,553.4		6.38				42,625				857.7		4.09
Securities:
Securities - taxable			7,271				166.6		4.62				6,107				71.1		2.35
Securities - tax-exempt			2,090				41.9		5.06				2,076				36.2		4.41
Total securities (1)			9,361				208.5		4.72				8,183				107.3		2.86
Other			2,956				71.3		4.86				1,853				5.5		0.60
Total interest earning assets			65,928				1,969.7		6.08				58,082				1,064.1		3.75
Non-interest earning assets
Cash and due from banks			262										254
Allowance for credit losses			(314	)									(264	)
Bank owned life insurance			183										180
Other assets			4,644										3,534
Total assets		$	70,703									$	61,786
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts		$	11,217			$	148.5		2.67	%		$	8,046			$	10.7		0.27	%
Savings and money market accounts			15,604				202.7		2.62				18,453				26.1		0.29
Certificates of deposit			6,578				131.5		4.03				1,981				4.4		0.45
Total interest-bearing deposits			33,399				482.7		2.90				28,480				41.2		0.29
Short-term borrowings			9,757				258.0		5.33				2,038				10.4		1.03
Long-term debt			1,049				50.0		9.62				778				21.0		5.45
Qualifying debt			894				18.8		4.24				895				17.0		3.83
Total interest-bearing liabilities			45,099				809.5		3.62				32,191				89.6		0.56
Interest cost of funding earning assets									2.48										0.31
Non-interest-bearing liabilities
Non-interest-bearing demand deposits			18,600										23,458
Other liabilities			1,384										1,132
Stockholders’ equity			5,620										5,005
Total liabilities and stockholders' equity		$	70,703									$	61,786
Net interest income and margin (4)						$	1,160.2		3.60	%						$	974.5		3.44	%

(1)		Yields on loans and securities have been adjusted to a tax equivalent basis. The tax equivalent adjustment was $17.5 million and $16.2 million for the six ended June 30, 2023 and 2022, respectively.
(2)		Included in the yield computation are net loan fees of $72.4 million and $65.5 million for the six ended June 30, 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
Operating Segment Results
Unaudited
Balance Sheet:
		Consolidated Company				Commercial				Consumer Related				Corporate & Other
At June 30, 2023:		(dollars in millions)
Assets:
Cash, cash equivalents, and investment securities		$	12,527			$	13			$	150			$	12,364
Loans HFS			3,156				1,049				2,107				—
Loans HFI, net of deferred fees and costs			47,875				28,139				19,736				—
Less: allowance for credit losses			(321	)			(269	)			(52	)			—
Net loans HFI			47,554				27,870				19,684				—
Other assets acquired through foreclosure, net			11				11				—				—
Goodwill and other intangible assets, net			674				293				381				—
Other assets			4,238				567				1,693				1,978
Total assets		$	68,160			$	29,803			$	24,015			$	14,342
Liabilities:
Deposits		$	51,041			$	21,460			$	22,380			$	7,201
Borrowings and qualifying debt			10,455				6				1,489				8,960
Other liabilities			979				70				173				736
Total liabilities			62,475				21,536				24,042				16,897
Allocated equity:			5,685				2,516				1,729				1,440
Total liabilities and stockholders' equity		$	68,160			$	24,052			$	25,771			$	18,337
Excess funds provided (used)			—				(5,751	)			1,756				3,995
No. of offices			56				46				8				2
No. of full-time equivalent employees			3,336				652				726				1,958
Income Statement:
Three Months Ended June 30, 2023:		(in millions)
Net interest income		$	550.3			$	356.5			$	204.8			$	(11.0	)
Provision for credit losses			21.8				18.2				1.9				1.7
Net interest income (expense) after provision for credit losses			528.5				338.3				202.9				(12.7	)
Non-interest income			119.0				30.8				86.1				2.1
Non-interest expense			387.4				147.7				232.3				7.4
Income (loss) before income taxes			260.1				221.4				56.7				(18.0	)
Income tax expense (benefit)			44.4				21.7				(2.2	)			24.9
Net income (loss)		$	215.7			$	199.7			$	58.9			$	(42.9	)
Six Months Ended June 30, 2023:		(in millions)
Net interest income		$	1,160.2			$	746.0			$	404.0			$	10.2
Provision for credit losses			41.2				15.6				3.4				22.2
Net interest income (expense) after provision for credit losses			1,119.0				730.4				400.6				(12.0	)
Non-interest income			61.0				(65.9	)			137.1				(10.2	)
Non-interest expense			735.3				283.6				424.4				27.3
Income (loss) before provision for income taxes			444.7				380.9				113.3				(49.5	)
Income tax expense (benefit)			86.8				60.2				10.5				16.1
Net income (loss)		$	357.9			$	320.7			$	102.8			$	(65.6	)

Western Alliance Bancorporation and Subsidiaries
Operating Segment Results
Unaudited
Balance Sheet:
		Consolidated Company				Commercial				Consumer Related				Corporate & Other
At December 31, 2022:		(dollars in millions)
Assets:
Cash, cash equivalents, and investment securities		$	9,803			$	12			$	—			$	9,791
Loans held for sale			1,184				—				1,184				—
Loans, net of deferred fees and costs			51,862				31,414				20,448				—
Less: allowance for credit losses			(310	)			(262	)			(48	)			—
Total loans			51,552				31,152				20,400				—
Other assets acquired through foreclosure, net			11				11				—				—
Goodwill and other intangible assets, net			680				293				387				—
Other assets			4,504				435				2,180				1,889
Total assets		$	67,734			$	31,903			$	24,151			$	11,680
Liabilities:
Deposits		$	53,644			$	29,494			$	18,492			$	5,658
Borrowings and qualifying debt			7,192				27				340				6,825
Other liabilities			1,542				83				656				803
Total liabilities			62,378				29,604				19,488				13,286
Allocated equity:			5,356				2,684				1,691				981
Total liabilities and stockholders' equity		$	67,734			$	32,288			$	21,179			$	14,267
Excess funds provided (used)			—				385				(2,972	)			2,587
No. of offices			56				46				8				2
No. of full-time equivalent employees			3,365				671				785				1,909
Income Statement:
Three Months Ended June 30, 2022:		(in millions)
Net interest income		$	525.0			$	370.5			$	219.4			$	(64.9	)
Provision for (recovery of) credit losses			27.5				32.7				(5.2	)			—
Net interest income (expense) after provision for credit losses			497.5				337.8				224.6				(64.9	)
Non-interest income			95.0				18.0				74.6				2.4
Non-interest expense			268.9				115.9				139.1				13.9
Income (loss) before income taxes			323.6				239.9				160.1				(76.4	)
Income tax expense (benefit)			63.4				57.3				38.1				(32.0	)
Net income (loss)		$	260.2			$	182.6			$	122.0			$	(44.4	)
Six Months Ended June 30, 2022:		(in millions)
Net interest income		$	974.5			$	705.3			$	402.7			$	(133.5	)
Provision for credit losses (recovery of)			36.5				33.2				5.3				(2.0	)
Net interest income (expense) after provision for credit losses			938.0				672.1				397.4				(131.5	)
Non-interest income			201.3				34.9				153.8				12.6
Non-interest expense			517.5				230.4				264.1				23.0
Income (loss) before income taxes			621.8				476.6				287.1				(141.9	)
Income tax expense (benefit)			121.5				113.4				68.5				(60.4	)
Net income (loss)		$	500.3			$	363.2			$	218.6			$	(81.5	)

Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Unaudited
Pre-Provision Net Revenue by Quarter:
		Three Months Ended
		6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022
		(in millions)
Net interest income		$	550.3			$	609.9			$	639.7			$	602.1			$	525.0
Total non-interest income			119.0				(58.0	)			61.5				61.8				95.0
Adjusted for:
Loss (gain) on sales of investment securities			13.6				12.5				(0.1	)			—				0.2
Fair value (gain) loss adjustments, net			(12.7	)			147.8				9.2				2.8				10.0
Total non-interest income, adjusted		$	119.9			$	102.3			$	70.6			$	64.6			$	105.2
Net revenue, adjusted		$	670.2			$	712.2			$	710.3			$	666.7			$	630.2
Total non-interest expense			387.4				347.9				333.4				305.8				268.9
Adjusted for:
Gain on extinguishment of debt			0.7				12.7				—				—				—
Total non-interest expense, adjusted		$	388.1			$	360.6			$	333.4			$	305.8			$	268.9
Pre-provision net revenue (1)		$	282.1			$	351.6			$	376.9			$	360.9			$	361.3
Less:
Provision for credit losses			21.8				19.4				3.1				28.5				27.5
Income tax expense			44.4				42.4				71.7				65.6				63.4
Loss (gain) on sales of investment securities			13.6				12.5				(0.1	)			—				0.2
Fair value (gain) loss adjustments, net			(12.7	)			147.8				9.2				2.8				10.0
Plus: Gain on extinguishment of debt			0.7				12.7				—				—				—
Net income		$	215.7			$	142.2			$	293.0			$	264.0			$	260.2
Efficiency Ratio by Quarter:
Total non-interest expense, adjusted		$	388.1			$	360.6			$	333.4			$	305.8			$	268.9
Less: Deposit costs			91.0				86.9				82.2				56.2				18.1
Divided by:
Total net interest income			550.3				609.9				639.7				602.1				525.0
Plus:
Tax equivalent interest adjustment			8.7				8.8				9.0				8.5				8.2
Total non-interest income, adjusted			119.9				102.3				70.6				64.6				105.2
Less: Deposit costs			91.0				86.9				82.2				56.2				18.1
		$	587.9			$	634.1			$	637.1			$	619.0			$	620.3
Efficiency ratio - tax equivalent basis (2)			50.5	%			43.2	%			39.4	%			40.3	%			40.4	%

Earnings per Share, Adjusted:
Three Months Ended 3/31/2023:	(in millions)
Net income available to common stockholders	$	139.0
Adjusted for:
Loss on sales of investment securities		12.5
Fair value loss adjustments, net		147.8
Gain on extinguishment of debt		(12.7	)
Tax effect of adjustments		(37.9	)
Net income available to common stockholders, adjusted	$	248.7
Diluted shares		108.3
Diluted earnings per share, adjusted (1)	$	2.30

Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Unaudited
Tangible Common Equity:
		6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022
		(dollars and shares in millions)
Total stockholders' equity		$	5,685			$	5,521			$	5,356			$	5,021			$	4,959
Less:
Goodwill and intangible assets			674				677				680				682				695
Preferred stock			295				295				295				295				295
Total tangible common equity			4,716				4,549				4,381				4,044				3,969
Plus: deferred tax - attributed to intangible assets			2				2				2				3				2
Total tangible common equity, net of tax		$	4,718			$	4,551			$	4,383			$	4,047			$	3,971
Total assets		$	68,160			$	71,047			$	67,734			$	69,165			$	66,055
Less: goodwill and intangible assets, net			674				677				680				682				695
Tangible assets			67,486				70,370				67,054				68,483				65,360
Plus: deferred tax - attributed to intangible assets			2				2				2				3				2
Total tangible assets, net of tax		$	67,488			$	70,372			$	67,056			$	68,486			$	65,362
Tangible common equity ratio (3)			7.0	%			6.5	%			6.5	%			5.9	%			6.1	%
Common shares outstanding			109.5				109.5				108.9				108.9				108.3
Tangible book value per share, net of tax (3)		$	43.09			$	41.56			$	40.25			$	37.16			$	36.67

Non-GAAP Financial Measures Footnotes
(1)		We believe this non-GAAP measurement is a key indicator of the earnings power of the Company.
(2)		We believe this non-GAAP ratio provides a useful metric to measure the efficiency of the Company.
(3)		We believe this non-GAAP metric provides an important metric with which to analyze and evaluate the financial condition and capital strength of the Company.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230717039374/en/

Western Alliance Bancorporation

Dale Gibbons, 602-952-5476

Source: Western Alliance Bancorporation

FAQ

What is the net income for Western Alliance Bancorporation in the second quarter of 2023?

The net income for the second quarter of 2023 was $215.7 million.

What is the net interest margin for the company?

The net interest margin for the company was 3.42%.

How much did HFI loans and total deposits increase by?

HFI loans increased by 3.1% to $47.9 billion, and total deposits grew by 7.3% to $51.0 billion.

What is the tangible book value per share?

The tangible book value per share is $43.09.

What is the efficiency ratio for the company?

The efficiency ratio for the company is 50.5%.