2014. Item 1.WASHINGTON,Washington, D.C. 20549xý Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended September 30, 2013or¨o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from__________ to __________ For the transition period fromtoFile Number:file number: 001-32550Nevada 88-0365922 One E. Washington Street Suite 1400, Phoenix, AZ 85004 (Address of principal executive offices) (Zip Code) xý No ¨Website,Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes xý No ¨“accelerated filer”"accelerated filer" and “smaller"smaller reporting company”company" in Rule 12b-2 of the Exchange Act.Large accelerated filer ¨ý Accelerated filer x¨Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company ¨ xý87,198,76987,588,436 shares as of OctoberApril 25, 2013.Index Page Consolidated Balance Sheets as of September 30, 2013 (unaudited) and December 31, 20123 4 6 7 81050Item 4. 70 73Item 1.Item 1A. Item 6. ENTITIES: AAB Alliance Association Bank Parent WAL Holding Company ABA Alliance Bank of Arizona TPB Torrey Pines Bank Company Western Alliance Bancorporation and Subsidiaries WAB Western Alliance Bank BON Bank of Nevada WAEF Western Alliance Equipment Finance FIB First Independent Bank WAL Western Alliance Bancorporation LVSP Las Vegas Sunset Properties 73TERMS: AFS Available-for-Sale FVO 73Fair Value Option Alternative Minimum Tax GAAP U.S. Generally Accepted Accounting Principles ALCO Asset and Liability Management Committee GSE Government-Sponsored Enterprise AOCI Accumulated Other Comprehensive Income HTM Held-to-Maturity ARPS Adjustable-Rate Preferred Stock ICS Insured Cash Sweep Service ASC Accounting Standards Codification IRC Internal Revenue Code ASU Accounting Standards Update LIBOR London Interbank Offered Rate BOLI Bank Owned Life Insurance LIHTC Low-Income Housing Tax Credit CDARS Certificate Deposit Account Registry Service MBS Mortgage-Backed Securities CDO Collateralized Debt Obligation NOL Net Operating Loss CEO Chief Executive Officer NPV Net Present Value CFO Chief Financial Officer NUBILs Net Unrealized Built In Losses CMO Collateralized Mortgage Obligations OCI Other Comprehensive Income Company Western Alliance Bancorporation OREO Other Real Estate Owned CRA Community Reinvestment Act OTTI Other-than-Temporary Impairment CRE Commercial Real Estate Parent WAL Holding Company FASB Financial Accounting Standards Board PCI Purchased Credit Impaired FDIC Federal Deposit Insurance Corporation SEC Securities and Use of Proceeds73Exchange Commission FHLB Federal Home Loan Bank TDR 73Troubled Debt Restructuring Form 10-Q Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2014 TEB 73Tax Equivalent Basis FRB Federal Reserve Bank XBRL 73eXtensible Business Reporting Language Item 6. Exhibits
| Item 1. | Financial Statements. |
PART I – FINANCIAL INFORMATION
Assets: Cash and due from banks Securities purchased under agreement to resell Interest-bearing deposits in other financial institutions Cash and cash equivalents Money market investments Investment securities—measured at fair value Investment securities—available-for-sale, at fair value; amortized cost of $1,095,942 at September 30, 2013 and $926,050 at December 31, 2012 Investment securities—held-to-maturity, at amortized cost; fair value of $287,543 at September 30, 2013 and $292,819 at December 31, 2012 Investments in restricted stock, at cost Loans—held for sale Loans—held for investment, net of deferred fees Less: allowance for credit losses Total loans held for investment Premises and equipment, net Other assets acquired through foreclosure, net Bank owned life insurance Goodwill Other intangible assets, net Deferred tax assets, net Prepaid expenses Other assets Total assets Liabilities: Deposits: Non-interest-bearing demand Interest-bearing Total deposits Customer repurchase agreements Securities sold short Other borrowings Junior subordinated debt, at fair value Other liabilities Total liabilities Commitments and contingencies (Note 7) Stockholders’ equity: Preferred stock—par value $0.0001 and liquidation value per share of $1,000; 20,000,000 authorized; 141,000 shares issued and outstanding at September 30, 2013 and December 31, 2012 Common stock—par value $0.0001; 200,000,000 authorized; 87,098,782 shares issued and outstanding at September 30, 2013 and 86,465,050 at December 31, 2012 Additional paid in capital Accumulated deficit Accumulated other comprehensive (loss) income Total stockholders’ equity Total liabilities and stockholders’ equity Interest income: Loans, including fees Investment securities—taxable Investment securities—tax exempt Dividends—taxable Dividends—tax exempt Other Total interest income Interest expense: Deposits Other borrowings Junior subordinated debt Customer repurchase agreements Total interest expense Net interest income Provision for credit losses Net interest income after provision for credit losses Non-interest income: Service charges and fees Income from bank owned life insurance Amortization of affordable housing investments (Loss) gain on sales of securities, net Mark to market (losses) gains, net Bargain purchase gain from acquisition Other income Total noninterest income Non-interest expense: Salaries and employee benefits Occupancy Legal, professional and directors’ fees Data processing Insurance Marketing Loan and repossessed asset expenses Customer service Net loss (gain) on sales / valuations of repossesed assets and bank premises, net Intangible amortization Goodwill and intangible impairment Merger / restructure expenses Other expense Total non-interest expense Income from continuing operations before provision for income taxes Income tax expense Income from continuing operations Loss from discontinued operations, net of tax benefit Net income Dividends on preferred stock Net income available to common shareholders (Unaudited) Earnings per share from continuing operations: Basic Diluted Loss per share from discontinued operations: Basic Diluted Earnings per share applicable to common shareholders: Basic Diluted Weighted average number of common shares outstanding: Basic Diluted Dividends declared per common share (Unaudited) Net income Other comprehensive (loss) income, net: Unrealized (loss) gain on securities available-for-sale (AFS), net (tax effect of $2,887, $(4,607), $14,327, $(10,637) for each respective period presented) Unrealized (loss) gain on cash flow hedge, net (tax effect of $18, $(5), $10, $(10) for each respective period presented) Realized gain on cash flow hedge, net (tax effect of $294 for the respective period presented) Realized loss (gain) on sale of securities AFS included in income, net (tax effect of $(633), $363, $(580), $904 for each respective period presented) Net other comprehensive (loss) income Comprehensive income STOCKHOLDERS’ EQUITY (Unaudited) Balance, December 31, 2012: Net income Exercise of stock options Stock-based compensation Restricted stock grants, net Dividends on preferred stock Other comprehensive loss, net Balance, September 30, 2013 Cash flows from operating activities: Net income Adjustments to reconcile net income to cash provided by operating activities: Provision for credit losses Depreciation and amortization Stock-based compensation Deferred income taxes and income taxes receivable Net amortization of discounts and premiums for investment securities Goodwill and intangible impairment Accretion and amortization of fair market value adjustments due to acquisitions (Gains) / Losses on: Sales of securities, AFS Acquisition of Centennial Bank Other assets acquired through foreclosure, net Valuation adjustments of other repossessed assets, net Sale of premises and equipment, net Sale of minority interest in Miller / Russell & Associates, Inc. Changes in, net of acquisitions: Other assets/liabilities, net Fair value of assets and liabilities measured at fair value Net cash provided by operating activities Cash flows from investing activities: Investment securities—measured at fair value Principal pay downs and maturities Investment securities—available-for-sale Proceeds from sales Principal pay downs and maturities Purchases Investment securities—held-to-maturity Principal pay downs and maturities Purchase of investment tax credits (Purchase) / sale of money market investments, net Liquidation of restricted stock Loan fundings and principal collections, net Proceeds from loan sales Sale and purchase of premises and equipment, net Proceeds from sale of other real estate owned and repossessed assets, net Cash and cash equivalents acquired in acquisition, net Net cash used in investing activities Cash flows from financing activities: Net increase in deposits Net decrease in customer repurchases Proceeds from securities sold short Net increase (decrease) in borrowings Proceeds from exercise of common stock options Cash dividends paid on preferred stock Net cash provided by financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of period Supplemental disclosure: Cash paid during the period for: Interest Income taxes Non-cash investing and financing activity: Transfers to other assets acquired through foreclosure, net Unfunded commitments to purchase investment tax credits Assets acquired in Centennial merger transaction Liabilities assumed in Centennial merger transaction Change in unrealized (loss) gain on AFS securities, net of tax Change in unrealized gain on cash flow hedge, net of tax loans and OREO. Statements during their preparation. Business Combinations, the entities were combined in a method similar to a pooling of interests. 2013 security. non-interest expense. Level 1 Level 2 Level 3 hierarchy, excluding impaired loans that are categorized as Level 3. Assets: Cash and cash equivalents(1) Federal funds sold(1) Investment securities - avaialable-for-sale Loans Deferred tax assets, net Premises and equipment Other assets acquired through foreclosure, net Other assets Total assets acquired Liabilities: Deposits FHLB advances Other liabilities Total liabilities assumed Net assets acquired Consideration paid(1) Bargain purchase gain from acquisition Net Interest income (1) Non Interest income (2) Net income (3) Earnings per share—basic Earnings per share—diluted Operating revenue Non-interest expenses Loss before income taxes Income tax benefit Net loss Held-to-maturity Collateralized debt obligations Corporate bonds Municipal obligations Other Available-for-sale U.S. government sponsored agency securities Municipal obligations Adjustable-rate preferred stock Mutual funds Direct U.S. obligations and GSE residential mortgage-backed securities Private label residential mortgage-backed securities Trust preferred securities CRA investments Collateralized mortgage-backed securities Measured at fair value Direct U.S. obligations and GSE residential mortgage-backed securities Held-to-maturity Collateralized debt obligations Corporate bonds Municipal obligations CRA investments Available-for-sale Municipal obligations Adjustable-rate preferred stock Mutual funds Direct U.S. obligations and GSE residential mortgage-backed securities Private label residential mortgage-backed securities Private label commercial mortgage-backed securities Trust preferred securities CRA investments Direct U.S. obligations and GSE residential mortgage-backed securities (3) Accounting" of these Notes to Unaudited Consolidated Financial Statements. 2013. Held-to-maturity Corporate bonds Municipal obligations Available-for-sale U.S. Government-sponsored agency securities Adjustable-rate preferred stock Mutual funds Direct U.S obligations and GSE residential mortgage-backed securities Municipal obligations Private label residential mortgage-backed securities Trust preferred securities Other Held-to-maturity Corporate bonds Municipal obligations Available-for-sale Adjustable-rate preferred stock Mutual funds Corporate bonds Direct U.S obligations and GSE residential mortgage-backed securities Municipal obligations Private label residential mortgage-backed securities Trust preferred securities Held-to-maturity Due in one year or less After one year through five years After five years through ten years After ten years Available-for-sale Due in one year or less After one year through five years After five years through ten years After ten years (1) maturity summary. Municipal obligations Direct U.S. obligations & GSE residential mortgage-backed securities Private label residential mortgage-backed securities Mutual funds (3) U.S. Government-sponsored agency securities Adjustable-rate preferred stock Trust preferred securities Collateralized debt obligations Corporate bonds Collarteralized mortgage-backed securities Total (1) (2) September 30, December 31, 2013 2012 (unaudited) (in thousands, except per share amounts) $ 142,625 $ 141,789 128,102 — 238,306 62,836 509,033 204,625 4,176 664 3,621 5,061 1,073,886 939,590 289,108 291,333 30,186 30,936 25,413 31,124 6,490,870 5,678,194 (97,851 ) (95,427 ) 6,393,019 5,582,767 105,925 107,910 76,475 77,247 139,658 138,336 23,224 23,224 4,747 6,539 79,570 51,757 5,236 12,029 158,152 119,495 $ 8,921,429 $ 7,622,637 $ 1,972,474 $ 1,933,169 5,302,837 4,522,008 7,275,311 6,455,177 55,524 79,034 126,664 — 394,105 193,717 39,447 36,218 204,090 98,875 8,095,141 6,863,021 141,000 141,000 9 9 792,140 784,852 (92,357 ) (174,471 ) (14,504 ) 8,226 826,288 759,616 $ 8,921,429 $ 7,622,637 March 31, 2014 December 31, 2013 (Unaudited) (in thousands, except per share amounts) Assets: Cash and due from banks $ 161,302 $ 134,906 Securities purchased under agreement to resell 111,085 — Interest-bearing deposits in other financial institutions 193,538 170,608 Cash and cash equivalents 465,925 305,514 Money market investments 851 2,632 Investment securities—measured at fair value 2,943 3,036 Investment securities—AFS, at fair value; amortized cost of $1,384,219 at March 31, 2014 and $1,404,048 at December 31, 2013 1,366,433 1,370,696 Investment securities—HTM, at amortized cost; fair value of $281,483 at March 31, 2014 and $281,704 at December 31, 2013 275,738 283,006 Investments in restricted stock, at cost 25,275 30,186 Loans, net of deferred loan fees and costs 7,108,599 6,801,415 Less: allowance for credit losses (103,899 ) (100,050 ) Total loans 7,004,700 6,701,365 Premises and equipment, net 106,579 105,565 Other assets acquired through foreclosure, net 56,450 66,719 Bank owned life insurance 141,511 140,562 Goodwill 23,224 23,224 Other intangible assets, net 3,553 4,150 Deferred tax assets, net 78,322 80,688 Prepaid expenses 4,660 4,778 Other assets 190,460 185,221 Total assets $ 9,746,624 $ 9,307,342 Liabilities: Deposits: Non-interest-bearing demand $ 2,093,604 $ 2,199,983 Interest-bearing 6,055,369 5,638,222 Total deposits 8,148,973 7,838,205 Customer repurchase agreements 57,407 71,192 Securities sold short 109,793 — Other borrowings 342,816 341,096 Junior subordinated debt, at fair value 42,836 41,858 Other liabilities 149,994 159,493 Total liabilities 8,851,819 8,451,844 Commitments and contingencies (Note 6) Stockholders’ equity: Preferred stock - par value $0.0001 and liquidation value per share of $1,000; 20,000,000 authorized; 141,000 shares issued and outstanding at March 31, 2014 and December 31, 2013 141,000 141,000 Common stock - par value $0.0001; 200,000,000 authorized; 87,553,976 shares issued and outstanding at March 31, 2014 and 87,186,403 at December 31, 2013 9 9 Additional paid in capital 795,306 797,146 Accumulated deficit (30,379 ) (61,111 ) Accumulated other comprehensive loss (11,131 ) (21,546 ) Total stockholders’ equity 894,805 855,498 Total liabilities and stockholders’ equity $ 9,746,624 $ 9,307,342 unauditedUnaudited Consolidated Financial Statements.(unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2013 2012 2013 2012 (in thousands, except per share amounts) $ 83,994 $ 69,580 $ 239,812 $ 205,682 3,977 5,295 11,523 17,522 3,356 2,723 9,712 7,491 286 305 909 899 667 711 2,122 2,096 400 55 995 262 92,680 78,669 265,073 233,952 4,232 3,974 11,893 12,904 3,409 2,225 8,808 6,624 460 487 1,381 1,458 20 37 77 158 8,121 6,723 22,159 21,144 84,559 71,946 242,914 212,808 — 8,932 8,920 35,343 84,559 63,014 233,994 177,465 2,425 2,412 7,408 7,014 1,832 1,116 3,904 3,359 (1,504 ) (651 ) (3,304 ) (710 ) (1,679 ) 1,031 (1,537 ) 2,502 (7 ) 470 (3,865 ) 701 — — 10,044 — 1,558 2,604 4,736 7,397 2,625 6,982 17,386 20,263 28,689 25,500 83,363 78,159 4,901 4,655 14,500 14,046 3,006 2,291 8,017 6,380 1,872 1,390 5,912 3,678 1,884 2,121 6,350 6,323 1,599 1,231 4,970 4,061 1,136 1,236 3,453 4,573 677 653 2,037 1,926 371 126 (234 ) 3,678 597 880 1,791 2,660 — 3,435 — 3,435 1,018 113 3,833 113 3,925 3,912 11,143 10,839 49,675 47,543 145,135 139,871 37,509 22,453 106,245 57,857 9,288 6,752 22,913 16,452 28,221 15,701 83,332 41,405 (29 ) (243 ) (160 ) (686 ) 28,192 15,458 83,172 40,719 352 352 1,058 3,440 $ 27,840 $ 15,106 $ 82,114 $ 37,279 Three Months Ended March 31, 2014 2013 (in thousands, except per share amounts) Interest income: Loans, including fees $ 86,804 $ 74,725 Investment securities 10,226 6,961 Dividends 1,099 1,197 Other 572 225 Total interest income 98,701 83,108 Interest expense: Deposits 4,665 3,732 Other borrowings 2,819 2,672 Junior subordinated debt 421 466 Customer repurchase agreements 19 35 Total interest expense 7,924 6,905 Net interest income 90,777 76,203 Provision for credit losses 3,500 5,439 Net interest income after provision for credit losses 87,277 70,764 Non-interest income: Service charges and fees 2,530 2,534 Income from bank owned life insurance 949 1,036 Gain on sales of investment securities, net 366 147 Unrealized losses on assets / liabilities measured at fair value, net (1,276 ) (471 ) Other fee revenue 1,108 957 Other income 1,158 596 Total non-interest income 4,835 4,799 Non-interest expense: Salaries and employee benefits 29,555 26,574 Occupancy 4,682 4,846 Legal, professional and directors’ fees 3,639 3,023 Data processing 2,674 1,865 Insurance 2,393 2,370 Loan and repossessed asset expenses 1,234 1,596 Customer service 620 643 Marketing 559 667 Net (gain) loss on sales / valuations of repossessed and other assets (2,547 ) 519 Intangible amortization 597 597 Merger / restructure expenses 157 195 Other expense 6,186 4,034 Total non-interest expense 49,749 46,929 Income from continuing operations before provision for income taxes 42,363 28,634 Income tax expense 10,624 7,787 Income from continuing operations 31,739 20,847 (Loss) gain from discontinued operations, net of tax (654 ) 38 Net income 31,085 20,885 Dividends on preferred stock 353 353 Net income available to common shareholders $ 30,732 $ 20,532 Three Months Ended March 31, 2014 2013 (in thousands, except per share amounts) Earnings per share from continuing operations: Basic $ 0.36 $ 0.24 Diluted 0.36 0.24 Loss per share from discontinued operations: Basic (0.01 ) — Diluted (0.01 ) — Earnings per share applicable to common shareholders: Basic 0.35 0.24 Diluted 0.35 0.24 Weighted average number of common shares outstanding: Basic 86,256 85,324 Diluted 87,123 85,980 Dividends declared per common share $ — $ — STATEMENTS (unaudited)(continued) Three Months Ended Nine Months Ended September 30, September 30, 2013 2012 2013 2012 (in thousands, except per share amounts) $ 0.32 $ 0.19 $ 0.96 $ 0.47 $ 0.32 $ 0.19 $ 0.95 $ 0.46 $ — $ (0.00 ) $ — $ (0.01 ) $ — $ (0.00 ) $ — $ (0.01 ) $ 0.32 $ 0.18 $ 0.96 $ 0.46 $ 0.32 $ 0.18 $ 0.95 $ 0.45 85,799 81,758 85,596 81,570 86,769 82,294 86,428 82,159 $ — $ — $ — $ — Three Months Ended March 31, 2014 2013 (in thousands) Net income $ 31,085 $ 20,885 Other comprehensive income (loss), net: Unrealized gain (loss) on AFS securities, net of tax effect of $(6,365) and $459, respectively 10,644 (890 ) Unrealized loss on cash flow hedge, net of tax effect of $0 and $18, respectively — (34 ) Realized gain on sale of AFS securities included in income, net of tax effect of $137 and $50, respectively (229 ) (97 ) Net other comprehensive income (loss) 10,415 (1,021 ) Comprehensive income $ 41,500 $ 19,864 unauditedUnaudited Consolidated Financial Statements.COMPREHENSIVE (LOSS) INCOME (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2013 2012 2013 2012 (in thousands) $ 28,192 $ 15,458 $ 83,172 $ 40,719 (4,770 ) 8,478 (23,670 ) 18,803 (30 ) 9 (17 ) 17 — — — (519 ) 1,046 (668 ) 957 (1,598 ) (3,754 ) 7,819 (22,730 ) 16,703 $ 24,438 $ 23,277 $ 60,442 $ 57,422 Preferred Stock Common Stock Additional Paid in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity Shares Amount Shares Amount (in thousands) December 31, 2012 (1) 141 $ 141,000 86,465 $ 9 $ 784,852 $ 8,226 $ (174,666 ) $ 759,421 Net income — — — — — — 20,885 20,885 Exercise of stock options — — 156 — 1,118 — — 1,118 Stock-based compensation — — 59 — 803 — — 803 Restricted stock grants, net — — 399 — 168 — — 168 Other — — — — — — — Dividends on preferred stock — — — — — — (353 ) (353 ) Other comprehensive income, net — — — — — (1,021 ) — (1,021 ) Balance, March 31, 2013 141 $ 141,000 87,079 $ 9 $ 786,941 $ 7,205 $ (154,134 ) $ 781,021 December 31, 2013 141 $ 141,000 87,186 $ 9 $ 797,146 $ (21,546 ) $ (61,111 ) $ 855,498 Net income — — — — — — 31,085 31,085 Exercise of stock options — — 64 — 703 — — 703 Stock-based compensation — — 37 — 854 — — 854 Restricted stock grants, net — — 267 — (3,397 ) — — (3,397 ) Dividends on preferred stock — — — — — — (353 ) (353 ) Other comprehensive income, net — — — — — 10,415 — 10,415 Balance, March 31, 2014 141 $ 141,000 87,554 $ 9 $ 795,306 $ (11,131 ) $ (30,379 ) $ 894,805 (1) As adjusted, see "Note 10. Income Taxes" to the Unaudited Consolidated Financial Statements. unauditedUnaudited Consolidated Financial Statements.CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (unaudited) Accumulated Additional Other Total Preferred Stock Common Stock Paid In Comprehensive Accumulated Stockholders’ Shares Amount Shares Amount Capital (Loss) Income Deficit Equity (in thousands) 141 $ 141,000 86,465 $ 9 $ 784,852 $ 8,226 $ (174,471 ) $ 759,616 — — — — — — 83,172 83,172 — — 332 — 2,924 — — 2,924 — — 111 — 1,608 — — 1,608 — — 191 — 2,756 — — 2,756 — — — — — — (1,058 ) (1,058 ) — — — — — (22,730 ) — (22,730 ) 141 $ 141,000 87,099 $ 9 $ 792,140 $ (14,504 ) $ (92,357 ) $ 826,288 See accompanying Notes to unaudited Consolidated Financial Statements.WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Nine Months Ended September 30, 2013 2012 (in thousands) $ 83,172 $ 40,719 8,920 35,343 6,655 7,319 4,364 4,725 1,761 16,125 7,658 8,027 — 3,435 (10,285 ) — 1,537 (2,502 ) (10,044 ) — (2,388 ) (317 ) 2,279 4,060 (125 ) (65 ) — (776 ) 26,437 9,554 3,865 (701 ) 123,806 124,946 1,358 954 63,153 143,553 161,394 304,428 (373,485 ) (277,619 ) — 735 (28,172 ) (17,901 ) (3,512 ) 1,577 750 676 (388,259 ) (612,929 ) — 3,435 (2,472 ) (5,951 ) 20,513 26,650 21,204 — (527,528 ) (432,392 ) WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES (unaudited)(continued)(Unaudited) Nine Months Ended September 30, 2013 2012 (in thousands) 481,989 503,464 (23,510 ) — 126,664 — 121,121 (42,276 ) 2,924 2,620 (1,058 ) (3,440 ) 708,130 460,368 304,408 152,922 204,625 154,995 $ 509,033 $ 307,917 $ 22,648 $ 22,263 20,245 1,290 14,010 19,522 21,828 34,599 410,827 — 421,987 — (23,670 ) 18,803 (17 ) 17 Three Months Ended March 31, 2014 2013 (in thousands) Cash flows from operating activities: Net income $ 31,085 $ 20,885 Adjustments to reconcile net income to cash provided by operating activities: Provision for credit losses 3,500 5,439 Depreciation and amortization 2,044 2,153 Stock-based compensation 332 971 Deferred income taxes and income taxes receivable (1,696 ) (1,754 ) Net amortization of discounts and premiums for investment securities 2,050 2,577 Accretion and amortization of fair market value adjustments due to acquisitions (3,305 ) (3,288 ) Income from bank owned life insurance (949 ) (1,036 ) (Gains) / losses on: Sales of securities, AFS (366 ) (147 ) Other assets acquired through foreclosure, net (1,168 ) (455 ) Valuation adjustments of other repossessed assets, net 35 1,017 Sale of premises and equipment and other assets, net (1,411 ) (43 ) Changes in: Other assets 3,191 18,475 Other liabilities 5,359 828 Fair value of assets and liabilities measured at fair value 1,276 471 Net cash provided by operating activities 39,977 46,093 Cash flows from investing activities: Investment securities - measured at fair value Principal pay downs and maturities 112 279 Investment securities - AFS Purchases (24,082 ) (124,909 ) Principal pay downs and maturities 38,332 51,196 Proceeds from sales 4,196 4,072 Investment securities - HTM Principal pay downs and maturities 6,600 — Purchase of investment tax credits (10,529 ) (5,084 ) Sale / (purchase) of money market investments, net 1,781 (132 ) Liquidation of restricted stock 4,911 1,169 Loan fundings and principal collections, net (322,640 ) (124,390 ) Sale and purchase of premises and equipment, net (1,103 ) (761 ) Proceeds from sale of other real estate owned and repossessed assets, net 13,512 5,343 Net cash used in investing activities (288,910 ) (193,217 ) Three Months Ended March 31, 2014 2013 (in thousands) Cash flows from financing activities: Net increase in deposits 310,939 279,737 Net increase in borrowings 98,055 218,272 Proceeds from exercise of common stock options 703 1,118 Cash dividends paid on preferred stock (353 ) (353 ) Net cash provided by financing activities 409,344 498,774 Net increase in cash and cash equivalents 160,411 351,650 Cash and cash equivalents at beginning of year 305,514 204,625 Cash and cash equivalents at end of period $ 465,925 $ 556,275 Supplemental disclosure: Cash paid during the period for: Interest $ 5,916 $ 7,132 Income taxes 2,501 1,450 Non-cash investing and financing activity: Transfers to other assets acquired through foreclosure, net 2,110 6,609 Unfunded commitments to purchase investment tax credits 12,298 46,582 Change in unrealized gain (loss) on AFS securities, net of tax 10,415 (1,021 ) Change in unrealized loss on cash flow hedge, net of tax — (34 ) Change in unfunded obligations 16,625 35,451 unauditedUnaudited Consolidated Financial Statements.operationsWestern Alliance Bancorporation (“WAL” or “the Company”),operationthree wholly ownedwholly-owned subsidiary banks: Bank ofbank: WAB, doing business as ABA in Arizona, as FIB in Northern Nevada, (“BON”)as AAB throughout the U.S., operatingas BON in Southern Nevada; Western Alliance Bank (“WAB”), operating in ArizonaNevada, and Northern Nevada; and Torrey Pines Bank (“TPB”), operatingas TPB in California. In addition, there arethe Company has two non-bank subsidiaries, Western Alliance Equipment Finance (“WAEF”),WAEF, which offers equipment finance services nationwide, and Las Vegas Sunset Properties (“LVSP”),LVSP, which holds and manages certain non-performing assets. These entities are collectively referred to herein as the Company.accounting principles generally accepted in the United States (“GAAP”)GAAP and conform to practices within the financial services industry. The accounts of the Company and its consolidated subsidiaries are included in thesethe unaudited Consolidated Financial Statements. All intercompany balances and transactions have been eliminated.acquisitions, including loans acquired with deteriorated credit quality; fair value of other assets acquired through foreclosure;acquisitions; and determination of the valuation allowance related to deferred tax assets; impairment of goodwill and other intangible assets and other than temporary impairment of securities.assets. Although the Company’s management (“Management”) believes these estimates to be reasonably accurate, actual amounts may differ. In the opinion of Management,management, all adjustments considered necessary have been reflected in the unaudited Consolidated Financial Statements.eleven wholly ownednine wholly-owned subsidiaries: BON, WAB, TPB, which are all banking subsidiaries; WAEF, which provides equipment finance services; LVSP which holds certain non-performing assets; and six unconsolidated subsidiaries used as business trusts in connection with the issuance of trust-preferred securities. In addition, until October 31, 2012, WAL maintained an 80% interest in Shine Investment Advisory Services (“Shine”), a registeredBON Investments, Inc., and TPB Investments, Inc., which hold certain investment advisor. WAL divested its 80% interest in Shine as of October 31, 2012. On April 30, 2013, the Company completed its acquisition of Centennial Bank (“Centennial”)securities, municipal loans and merged Centennial into WAB effective as of the acquisition date. The assets and liabilities of Centennial are included in the Company’s Consolidated Financial Statements as of April 30, 2013. See Note 2, “Acquisitions and Dispositions” for further discussion.BON has three wholly owned subsidiaries:leases; BW Real Estate, Inc., which operates as a real estate investment trust and holds certain of BON’sWAB's real estate loans and related securities; BON Investments, Inc., which holds certain investment securities, municipal loans and leases; and BW Nevada Holdings, LLC, which owns the Company’s 2700 West Sahara Avenue, Las Vegas, Nevada office building.WAB has one wholly owned subsidiary, WAB Investments, Inc., which holds certain investment securities, municipal loans and leases, and TPB has one wholly owned subsidiary, TPB Investments, Inc., which holds certain investment securities and leases.Consolidated Financial Statementsconsolidated financial statements as of December 31, 20122013 and for the three and nine months ended September 30,March 31, 2013 have been reclassified to conform to the current presentation. The reclassifications have no effect on net income or stockholders’ equity as previously reported.September 30,and for the three months ended March 31, 2014 and 2013 and 2012 have been prepared in condensed format and, therefore, do not include all of the information and footnotes required by GAAP for complete financial statements. These statements have been prepared on a basis that is substantially consistent with the accounting principles applied to the Company’sCompany's audited Consolidated Financial Statements included in the Company’sCompany's Annual Report on Form 10-K for the year ended December 31, 2012.Management,management, necessary for a fair statement of the results for each respective period presented. Such adjustments are of a normal, recurring nature. The results of operations in the interim statements are not necessarily indicative of the results that may be expected for any other quarter or for the full year. The interim financial information should be read in conjunction with the Company’sCompany's audited Consolidated Financial Statements.Business combinationsAcquisitions are accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805,Business Combinations(“ASC 805”), which requires that all identified assets acquired and liabilities assumed are recorded at their estimated fair value as of the acquisition date. Any excess of the purchase price over amounts allocated to assets acquired, including identifiable intangible assets, and liabilities assumed, is recorded as goodwill. Where amounts allocated to assets acquired and liabilities assumed is greater than the purchase price, a bargain purchase gain is recognized. Acquisition-related costs are expensed as incurred.Fair values are determined in accordance with FASB ASC 820,Fair Value Measurements and Disclosures(“ASC 820”). In many cases, the determination of these fair values required Management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are subjective in nature and subject to change. Determining the fair value of the assets and liabilities, especially the loan portfolio and other real estate owned (“OREO”), is a complex process involving significant judgment regarding the methods and assumptions used to calculate estimated fair values. The fair value of loans acquired is estimated based on discounted cash flows, which take into consideration current portfolio interest rates and repricing characteristics as well as assumptions related to prepayment speeds and credit losses. Loans acquired with credit deterioration are considered to be impaired and are accounted for in accordance with GAAP (see the policy note, “Loans Acquired with Deteriorated Credit Quality,” for further discussion).held-to-maturity (“HTM”), available-for-sale (“AFS”)HTM, AFS or trading. The appropriate classification is initially decided at the time of purchase. Securities classified as HTM are those debt securities that the Company has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs or general economic conditions. These securities are carried at amortized cost. The sale of a security within three months of its maturity date or after the majority of the principal outstanding has been collected is considered a maturity for purposes of classification and disclosure.other comprehensive income (“OCI”),OCI, except for impaired securities. When AFS securities are sold, the unrealized gain or loss is reclassified from OCI to non-interest income. ChangesThe changes in the fair values of trading securities are reported in non-interest income. Securities classified as AFS are both equity and debt securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as AFS would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, decline in credit quality, and regulatory capital considerations.other than temporary impairment (“OTTI”)OTTI losses, Managementmanagement considers (1) the 1) length of time and the extent to which the fair value has been less than amortized cost, (2) thecost; 2) financial condition and near term prospects of the issuer, (3) theissuer; 3) impact of changes in market interest rates,rates; and (4) the4) intent and ability of the Company to retain its investment for a period of time sufficient to allow for any anticipated recovery in fair value and whether it is not more likely than not the Company would be required to sell the security prior to recovery. classified as AFS that are deemed to be other than temporary are reflected in earnings when identified. The fair value of the debt security then becomes the new cost basis. For individual debt securities where the Company does not intend to sell the security and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, the other than temporary decline in fair value of the debt security related to (1)1) credit loss is recognized in earnings,earnings; and (2)2) market or other factors is recognized in other comprehensive income or loss. Credit losses areloss is recorded if the present value of cash flows is less than amortized cost.Managementmanagement believes that the contractual principal or interest will not be collected. Subsequent recoveries, if any, are credited to the allowance. The allowance is an amount believed adequate to absorb estimated probable losses on existing loans that may become uncollectable, based on evaluation of the collectability of loans and prior credit loss experience, together with other factors. The Company formally re-evaluates and establishes the appropriate level of the allowance for credit losses on a quarterly basis.the Company’sour historical loss experience, delinquency and charge-off trends, collateral values, changes in the level of nonperforming loans and other factors. Qualitative factors include the economic condition of the Company’sour operating markets and the state of certain industries. Specific changes in the risk factors are based on actual loss experience, as well as perceived risk of similar groups of loans classified by collateral type, purpose and loan grade.term. An internal one-year and five-year loss history areis also incorporated into the allowance calculation model. Due to the credit concentration of the Company’sour loan portfolio in real estate secured loans, the value of collateral is heavily dependent on real estate values in Nevada, Arizona and California.California, which, in some cases, have declined substantially from their peak. While Managementmanagement uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in economic or other conditions. In addition, the Federal Deposit Insurance Corporation (“FDIC”)FDIC and state bank regulatory agencies,agency, as an integral part of their examination processes, periodically review the Company’s subsidiary banks’bank's allowances for credit losses, and may require the subsidiary banksus to make additions to theour allowance based on their judgment about information available to them at the time of their examinations.examination. Management regularly reviews the assumptions and formulasformulae used in determining the allowance and makes adjustments if required to reflect the current risk profile of the portfolio.non-accrualthose where interest recognition has been suspended, loans loansthat are more than 90 days past due and still accruing,delinquent but because of adequate collateral coverage, income continues to be recognized, and other criticized and classified loans.loans not paying substantially according to the original contract terms. For such loans, an allowance is established when the discounted cash flows, collateral value or observable market price of the impaired loan are lower than the carrying value of that loan, pursuant to FASB ASC 310,Receivables (“ASC 310”). Loans not collateral dependent are evaluated based on the expected future cash flows discounted at the original contractual interest rate. The amount to which the present value falls short of the current loan obligation is recordedwill be set up as a reserve for that account or charge-off.charged-off.or charge-off on impaired, collateral dependent loans and further discounts the appraisal for disposition costs. TheGenerally, the Company obtains an independent collateral valuation analysis for each impaired loan at least annually.Loans acquired with deterioratedevery twelve months.qualityFASB ASC 310-30,Accounting for Certain Loans or Debt Securities Acquiredand standby letters of credit. Such financial instruments are recorded in the consolidated financial statements when they are funded. They involve, to varying degrees, elements of credit risk in excess of amounts recognized in the consolidated balance sheets. Losses would be experienced when the Company is contractually obligated to make a Transfer(“ASC 310-30”), appliespayment under these instruments and must seek repayment from the borrower, which may not be as financially sound in the current period as they were when the commitment was originally made. Commitments to extend credit are agreements to lend to a loan with evidencecustomer as long as there is no violation of deteriorationany condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company enters into credit quality since its origination, andarrangements that generally provide for which it is probable, at acquisition, that the investor will be unable to collect all contractually required payments receivable. For these loans, accounted for under ASC 310-30, Management determinestermination of advances in the valueevent of a covenant violation or other event of default. Since many of the loan portfolio based, in part, on work provided by an appraiser. Factors considered in the valuation are projected cash flows for the loans, type of loan and related collateral, loan grade, delinquency and loan to value. Loans are grouped together according to similar characteristics and are treated in the aggregate when applying various valuation techniques. Loans are first evaluated individually to determine if there has been credit deterioration since origination. Once acquired loans are determined to have deteriorated credit quality, the Company evaluates such loans for common risk characteristics and aggregation into one or more pools. Common risk characteristics for pooling acquired loans may include credit ratings, loan type, collateral type, delinquency status, geographic location, loan to value, or combinations thereof. Management also estimates the amount of credit losses thatcommitments are expected to be realized for individual loans by estimatingexpire without being drawn upon, the probability of default and the loss given default, which incorporates the liquidation valuetotal commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral securing loans. These estimates are subjective. The accretionobtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the fair value adjustments attributableparty. The commitments are collateralized by the same types of assets used as loan collateral.interest rates on loans acquired with deteriorated credit quality is recordedits off-balance sheet obligations in interest incomedetermining an estimate of losses inherent in the Consolidated Income Statements over the estimated life of the pool.these contractual obligations. The fair value adjustment attributable toestimate for credit losses on these loansoff-balance sheetnon-accretable. When a loanincluded within other liabilities and the charge to income that establishes this liability is sold, paid off or transferred to OREO and liquidated, any remaining non-accretable yield is recordedincluded in interest income.Adjustments to these loan values in future periods may occur based on Management’s expectation of future cash flows to be collected over the lives of the loans. Estimating cash flows is performed at a pool level and incorporates analysis of historical cash flows, delinquencies, and charge-offs as well as assumptions about future cash flows. Performance can vary from period to period, causing changes in estimates of the expected cash flows. If based on the review of a pool of loans, it is probable that a significant increase or improvement in cash flows previously expected to be collected, any valuation allowance established for the pool of loans is first reduced for the increase in the present value of cash flows expected to be collected, and any remaining increase in estimated cash flows increases the accretable yield and is recognized over the remaining estimated life of the loan pool. If based on the review of a pool of loans, it is probable that a decrease or impairment in cash flows previously expected to be collected or if actual cash flows are less than cash flows previously expected, the allowance for credit losses is increased for the decrease in the present value of the cash flows expected to be collected.other real estate ownedOREO and other repossessed property and are initially reported at fair value of the asset less estimated selling costs. Subsequent adjustments are based on the lower of carrying value or fair value, less estimated costs to sell the property. Costs relatingrelated to the development or improvement of the assets are capitalized and costs relatingrelated to holding the assets are charged to non-interest expense. Property is evaluated regularly to ensure the recorded amount is supported by its current fair value and valuation allowances.(1)1) the fair value of certain fixed-rate financial instruments (fair value hedges) and (2)2) certain cash flows related to future interest payments on variable rate financial instruments (cash flow hedges). (“ASC 815”). The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. On the date the derivative contract is entered into, the Company designates the derivative as a fair value hedge or cash flow hedge. Derivative instruments designated in a hedge relationship to mitigate exposure to changes in the fair value of an asset or liability attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivative instruments designated in a hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.earnings.non-interest income in the Consolidated Income Statement. For a cash flow hedge, the effective portion of the change in the fair value of the derivative is recorded in accumulated other comprehensive income (loss) (“AOCI”)AOCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Any ineffective portion of the change in fair value of a cash flow hedge is recognized immediately in non-interest income in the Consolidated Income Statement. Under both the fair value and cash flow hedge scenarios, changes in the fair value of derivatives not considered to be highly effective in hedging the change in fair value or the expected cash flows of the hedged item are recognized in earnings as non-interest income during the period of the change.(1)1) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, and (2)2) a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is separated from the host contract and carried at fair value. However, in cases where (1)1) the host contract is measured at fair value, with changes in fair value reported in current earnings, or (2)2) the Company is unable to reliably identify and measure an embedded derivative for separation from its host contract, the entire contract is carried on the Consolidated Balance Sheet at fair value and is not designated as a hedging instrument.Commitments and letters of creditIn the ordinary course of business, the Company enters into commitments to extend credit, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded in the Consolidated Financial Statements when they become payable. The credit risk associated with these commitments is evaluated in a manner similar to the allowance for credit losses.“temporarytemporary differences.” Deferred taxes are provided on an asset and liability method, whereby deferred tax assets are recognized for deductible temporary differences and tax credit carry-forwardscarryovers and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences areA temporary difference is the differencesdifference between the reported amountsamount of assetsan asset or liability and liabilities and theirits tax bases. Deferredbasis. A deferred tax assets areasset is reduced by a valuation allowance when, in the opinion of Management,management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.—- Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.—- Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, prepayment speeds, volatilities, etc.) or model-based valuation techniques where all significant assumptions are observable, either directly or indirectly, in the market.—- Valuation is generated from model-based techniques where one or more significant inputs are not observable, either directly or indirectly, in the market. These unobservable assumptions reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques may include use of matrix pricing, discounted cash flow models and similar techniques.(“ASC 825”), requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value.September 30, 2013 orMarch 31, 2014 and December 31, 2012.2013. The estimated fair value amounts for September 30, 2013March 31, 2014 and December 31, 20122013 have been measured as of period-end, and have not been reevaluated or updated for purposes of these Consolidated Financial Statements subsequent to those dates. As such, the estimated fair values of these financial instruments subsequent to the reporting date may be different than the amounts reported at the period-end.Note 11, “Fair"Note 11. Fair Value Accounting,”Accounting" in these Notes to Unaudited Consolidated Financial Statements should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only required for a limited portion of the Company’s assets and liabilities.bonds,debt securities, mutual funds, and exchange-listed preferred stock are based on quoted market prices and are categorized as Level 1 in the fair value hierarchy.valuevalues of other investment securities were determined based on matrix pricing. Matrix pricing is a mathematical technique that utilizes observable market inputs including, for example, yield curves, credit ratings and prepayment speeds. Fair values determined using matrix pricing are generally categorized as Level 2 in the fair value hierarchy.collateralized debt obligations (“CDOs”)CDOs for which quoted prices are not available. Quoted prices for similar assets are also not available for these investment securities. In order to determine the fair value of these securities, the Company has estimated the future cash flows and discount rate using observable market inputsthird party quotes adjusted based on assumptions regarding the adjustments a market participant would assume necessary for each specific security. As a result of the lack of an active market, the resulting fair values have been categorized as Level 3 in the fair value hierarchy.The Company’s subsidiary banks are membersFederal Home Loan Bank (“FHLB”)FHLB system and maintainmaintains an investment in capital stock of the FHLB. The Company’s subsidiary banksWAB also maintainmaintains an investment in theirits primary correspondent bank. These investments are carried at cost since no ready market exists for them, and they have no quoted market value. The Company conducts a periodic review and evaluation of its FHLB stock to determine if any impairment exists. The fair values have been categorized as Level 2 in the fair value hierarchy.Note 11, “Fair"Note 11. Fair Value Accounting,”Accounting" of these Notes to Unaudited Consolidated Financial Statements is categorized as Level 2 in the fair value hierarchy.SheetSheets at their fair value. The fair value for derivatives is determined based on market prices, broker-dealer quotations on similar products or other related input parameters. As a result, the fair values have been categorized as Level 2 in the fair value hierarchy.Note 11, “Fair"Note 11. Fair Value Accounting,”Accounting" of these Notes to Unaudited Consolidated Financial Statements is categorized as Level 2 in the fair value hierarchy.benchmark indices offered to institutions with similar credit profilesan index relative to the Companyten year treasury rate and discounting the contractual cash flows on the Company’sCompany's debt using these market rates. The junior subordinated debt has been categorized as Level 3 in the fair value hierarchy.In January 2013, the FASB issued guidance within Accounting Standards Update (“ASU”) 2013-01,Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. The amendments in ASU 2013-01 to Topic 210,Balance Sheet,clarify that the scope of ASU 2011-11,Disclosures about Offsetting Assets and Liabilities, would apply to derivatives, including bifurcated embedded derivatives, repurchase and reverse agreements, and securities borrowing and lending transactions that are either offset or subject to a master netting arrangement. The amendments are effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. The adoption of this guidance did not have a material impact on the Company’s Consolidated Income Statement, Consolidated Balance Sheet, or Consolidated Cash Flows.In February 2013, the FASB issued guidance within ASU 2013-02,Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The amendments in ASU 2013-02 to Topic 220,Comprehensive Income,update, supersede and replace the presentation requirements for reclassifications out of accumulated other comprehensive income in ASUs 2011-05 and 2011-12. The amendments require an entity to provide additional information about reclassifications out of accumulated other comprehensive income. The amendments are effective prospectively for reporting periods beginning after December 15, 2012. The adoption of this guidance did not have a material impact on the Company’s Consolidated Income Statement, Consolidated Balance Sheet, or Consolidated Cash Flows and only impacted the presentation of other comprehensive income in the Consolidated Financial Statements.Early adoption is permitted. The adoption of this guidance isdid not expected to have a material impact on the Company’s Consolidated Income Statement, Consolidated Balance Sheet, or Consolidated Cash Flows.Financial Statements.2. ACQUISITIONS AND DISPOSITIONSAcquisitionsOn April 30, 2013, the Company completed its acquisitionCentennial Bank (“Centennial”). Under the terms of the merger, the Company paid $57.5 million in cash for all equity interests in Centennial. The Company merged Centennial into WAB effective April 30, 2013, reporting combined assets for the resulting bank of $3.16 billion and deposits of $2.76 billion. The merger was undertaken, in part, because the purchase price of Centennial was at a discount to its tangible book value and was accretive to capital at close of the transaction.Centennial’s results of operations are included in the Company’s results beginning April 30, 2013. Merger / restructure expenses related to the Centennial acquisition of $0.2 million and $2.7 million for the three and nine months ended September 30, 2013, respectively, have been included in non-interest expense, of which, $1.0 million are acquisition related costs as defined by ASC 805. The acquisition was accounted for under the acquisition method of accounting in accordance with ASC 805. Assets purchased and liabilities assumed were all recorded at their respective acquisition date fair values. A bargain purchase gain of $10.0 million resulted from the acquisition and is included as a component of non-interest income in the Consolidated Income Statement. The amount of gain is equal to the amount by which the estimated fair value of net assets purchased exceeded the consideration paid. Pursuant to the terms of the transaction, $12.7 million in loan receivables were not acquired by the Company.The recognized amounts of identifiable assets acquired and liabilities assumed are as follows: (in thousands) $ 70,349 8,355 26,014 351,474 21,666 44 5,622 6,007 489,531 338,811 79,943 3,233 $ 421,987 67,544 57,500 $ 10,044 (1)Cash acquired, net of cash consideration paid of $57.5 million represents the net cash and cash equivalents acquired of $21.2 million as part of the acquisition.The fair values of assets acquired and liabilities assumed are subject to adjustment during the first twelve months after the acquisition date if additional information becomes available to indicate a more accurate or appropriate value for an asset or liability. Accordingly, the estimated fair value of net assets are preliminary and subject to measurement period adjustments. Assets that are particularly susceptible to adjustment include certain loans and other assets acquired through foreclosure. However, these adjustments are not expected to be significant. The fair value of net assets acquired includes fair value adjustments to certain receivables that were not considered impaired as of the acquisition date. The fair value adjustments were determined using discounted contractual cash flows. However, the Company believes that all contractual cash flows related to these financial instruments will be collected. As such, these receivables were not considered impaired at the acquisition date and were not subject to the guidance relating to acquired loans which have shown evidence of credit deterioration since origination.On October 17, 2012, the Company acquired Western Liberty Bancorp (“Western Liberty”), which included two wholly owned subsidiaries, Service 1st Bank of Nevada and LVSP. Service 1st Bank of Nevada was merged into the Company’s wholly owned subsidiary, BON, effective October 19, 2012. LVSP remains a wholly owned subsidiary of WAL.The following table presents pro forma information as if the Centennial and Western Liberty acquisitions had occurred as of January 1, 2012. The pro forma information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed dates. Three Months Ended
September 30, Nine Months Ended
September 30, 2013 2012 2013 2012 (in thousands, except per share amounts) $ 81,093 $ 85,151 $ 238,430 $ 254,535 2,625 8,138 7,468 22,147 25,820 13,549 69,435 36,012 $ 0.30 $ 0.17 $ 0.81 $ 0.44 $ 0.30 $ 0.16 $ 0.80 $ 0.44 (1)Excludes accretion (or amortization) of fair market value adjustments for loans, deposits and other borrowings advances of $3,466 for the three months ended September 30, 2013 and $10,285 for the nine months ended September 30, 2013.(2)Excludes bargain purchase gain of $10,044 related to the Centennial acquisition.(3)Excludes merger / restructure related costs incurred by the Company($181 for the three months ended September 30, 2013 and $2,660 for the nine months ended September 30, 2013) and Centennial ($0 for the three months ended September 30, 2013 and $1,000 for the nine months ended September 30, 2013) and footnotes 1 and 2 noted above as well as the related tax effects.Discontinued OperationsThe Company has discontinued its affinity credit card business, PartnersFirst, and has presented these activities as discontinued operations. At September 30, 2013 and December 31, 2012, the outstanding credit card loans held for sale were $25.4 million and $31.1 million, respectively. As discussed in Note 14, “Subsequent Events,” certain receivables in this portfolio were sold on October 1, 2013.The following table summarizes the operating results of the discontinued operations for the periods indicated: Three Months Ended Nine Months Ended September 30, September 30, 2013 2012 2013 2012 (in thousands) $ 1,105 $ 315 $ 3,376 $ 947 (1,155 ) (734 ) (3,653 ) (2,130 ) (50 ) (419 ) (277 ) (1,183 ) (21 ) (176 ) (117 ) (497 ) $ (29 ) $ (243 ) $ (160 ) $ (686 ) 3.ContentsSeptember 30, 2013March 31, 2014 and December 31, 20122013 are summarized as follows: September 30, 2013 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains (Losses) Value (in thousands) $ 50 $ 578 $ — $ 628 97,778 647 (4,586 ) 93,839 189,680 3,531 (1,735 ) 191,476 1,600 — — 1,600 $ 289,108 $ 4,756 $ (6,321 ) $ 287,543 OTTI Recognized in Other Gross Gross Amortized Comprehensive Unrealized Unrealized Fair Cost Income Gains (Losses) Value (in thousands) $ 28,694 $ — $ — $ (1,317 ) $ 27,377 110,081 — 302 (4,838 ) 105,545 66,093 — 864 (5,568 ) 61,389 32,422 — 123 (222 ) 32,323 769,983 — 5,748 (7,253 ) 768,478 27,683 — 8 (1,544 ) 26,147 32,000 — — (8,166 ) 23,834 23,703 — — (403 ) 23,300 5,283 — 210 — 5,493 $ 1,095,942 $ — $ 7,255 $ (29,311 ) $ 1,073,886 $ 3,621 December 31, 2012 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains (Losses) Value (in thousands) $ 50 $ 1,401 $ — $ 1,451 97,781 984 (6,684 ) 92,081 191,902 5,887 (102 ) 197,687 1,600 — — 1,600 $ 291,333 $ 8,272 $ (6,786 ) $ 292,819 OTTI Recognized in Other Gross Gross Amortized Comprehensive Unrealized Unrealized Fair Cost Income Gains (Losses) Value (in thousands) $ 71,777 $ — $ 1,578 $ (184 ) $ 73,171 72,717 — 3,591 (753 ) 75,555 36,314 — 1,647 — 37,961 648,641 — 14,573 (10 ) 663,204 35,868 (1,811 ) 2,067 (517 ) 35,607 5,365 — 376 — 5,741 32,000 — — (7,865 ) 24,135 23,368 — 848 — 24,216 $ 926,050 $ (1,811 ) $ 24,680 $ (9,329 ) $ 939,590 Measured at fair value $ 5,061 During the second quarter 2013, a private label mortgage-backed security with a $1.8 million balance March 31, 2014 Held-to-maturity Gross
Unrealized Gains Gross
Unrealized (Losses) (in thousands) Collateralized debt obligations $ 50 $ 4,869 $ — $ 4,919 Corporate debt securities 97,776 821 (3,156 ) 95,441 Municipal obligations 177,912 4,490 (1,279 ) 181,123 Total HTM securities $ 275,738 $ 10,180 $ (4,435 ) $ 281,483 Available-for-sale Amortized
Cost Gross
Unrealized Gains Gross
Unrealized (Losses) Fair
Value (in thousands) U.S. Government-sponsored agency securities $ 59,112 $ — $ (1,440 ) $ 57,672 Municipal obligations 121,242 1,048 (3,412 ) 118,878 Preferred stock 75,902 1,313 (3,268 ) 73,947 Mutual funds 37,422 256 (435 ) 37,243 Residential MBS issued by GSEs 989,705 5,799 (8,097 ) 987,407 Commercial MBS issued by GSEs 2,088 — (54 ) 2,034 Private label residential MBS 37,611 30 (2,026 ) 35,615 Private label commercial MBS 5,225 187 — 5,412 Trust preferred securities 32,000 — (7,272 ) 24,728 CRA investments 23,912 — (415 ) 23,497 Total AFS securities $ 1,384,219 $ 8,633 $ (26,419 ) $ 1,366,433 Securities measured at fair value Residential MBS issued by GSEs $ 2,460 Private label residential MBS 483 Total securities measured at fair value $ 2,943 December 31, 2013 Held-to-maturity Amortized
Cost Gross
Unrealized Gains Gross
Unrealized (Losses) Fair
Value (in thousands) Collateralized debt obligations $ 50 $ 1,346 $ — $ 1,396 Corporate debt securities 97,777 775 (3,826 ) 94,726 Municipal obligations 183,579 2,773 (2,370 ) 183,982 CRA investments 1,600 — — 1,600 Total HTM securities $ 283,006 $ 4,894 $ (6,196 ) $ 281,704 Available-for-sale Amortized
Cost Gross
Unrealized Gains Gross
Unrealized (Losses) Fair
Value (in thousands) U.S. Government-sponsored agency securities $ 49,110 $ — $ (2,135 ) $ 46,975 Municipal obligations 121,671 316 (6,322 ) 115,665 Preferred stock 68,110 853 (7,479 ) 61,484 Mutual funds 37,423 93 (984 ) 36,532 Residential MBS issued by GSEs 1,028,402 5,567 (12,548 ) 1,021,421 Private label residential MBS 38,250 — (2,151 ) 36,099 Private label commercial MBS 5,252 181 — 5,433 Trust preferred securities 32,000 — (8,195 ) 23,805 CRA investments 23,830 — (548 ) 23,282 Total AFS securities $ 1,404,048 $ 7,010 $ (40,362 ) $ 1,370,696 Securities measured at fair value Residential MBS issued by GSEs $ 3,036 Note 11, “Fair"Note 11. Fair Value Accounting.”andtaking into account the severity and duration of the decline. Another potential indication of OTTI is a downgrade below investment grade. In determining whether an impairment is OTTI, the Company considers the length of time and the extent to which the market value has been below cost, recent events specific to the issuer, including investment downgrades by rating agencies and economic conditions of its industry, and the Company’s ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery. For marketable equity securities, the Company also considers the issuer’s financial condition, capital strength and near-term prospects.adjustable-rate preferred stock (“ARPS”)for ARPS that are treated as debt securities for the purpose of OTTI analysis, the Company also considers the cause of the price decline (general level of interest rates and industry-industry and issuer-specificissuer specific factors), the issuer’s financial condition, near-term prospects and current ability to make future payments in a timely manner, the issuer’s ability to service debt, and any change in agencies’ ratings at evaluation date from acquisition date and any likely imminent action. For ARPS with a fair value below cost that is not attributable to the credit deterioration of the issuer, such as a decline in cash flows from the security or a downgrade in the security’s rating below investment grade, the Company does not recognize an OTTI charge where determinesit is able to assert that it has the intent and ability to retain its investment for a period of time sufficient to allow for any anticipated recovery in fair value.Gross unrealized losses at September 30, 2013 and December 31, 2012 are primarily caused by interest rate fluctuations, credit spread widening and reduced liquidity in applicable markets. securities impairment charges needed for the three and nine months ended September 30, 2013March 31, 2014 and 2012. other securities to be other-than-temporarily impaired as of September 30, 2013March 31, 2014 and December 31, 2012.2013. No assurance can be made that additional OTTI will not occur in future periods.September 30, 2013March 31, 2014 and December 31, 2012,2013, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows: September 30, 2013 Less Than Twelve Months More Than Twelve Months Total Gross Gross Gross Unrealized Fair Unrealized Fair Unrealized Fair Losses Value Losses Value Losses Value (in thousands) $ — $ — $ 4,586 $ 80,414 $ 4,586 $ 80,414 1,735 41,505 — — 1,735 41,505 $ 1,735 $ 41,505 $ 4,586 $ 80,414 $ 6,321 $ 121,919 $ 1,317 $ 17,377 $ — $ — $ 1,317 $ 17,377 5,568 43,599 — — 5,568 43,599 222 25,862 — — 222 25,862 7,242 358,092 11 1,528 7,253 359,620 4,838 79,308 — — 4,838 79,308 1,500 20,322 44 3,460 1,544 23,782 — — 8,166 23,834 8,166 23,834 403 23,299 — — 403 23,299 $ 21,090 $ 567,859 $ 8,221 $ 28,822 $ 29,311 $ 596,681 December 31, 2012 Less Than Twelve Months More Than Twelve Months Total Gross Gross Gross Unrealized Fair Unrealized Fair Unrealized Fair Losses Value Losses Value Losses Value (in thousands) $ 206 $ 14,794 $ 6,478 $ 63,522 $ 6,684 $ 78,316 102 10,908 — — 102 10,908 $ 308 $ 25,702 $ 6,478 $ 63,522 $ 6,786 $ 89,224 $ 110 $ 7,811 $ 643 $ 8,723 $ 753 $ 16,534 — — — — — — — — — — — — 2 557 8 1,938 10 2,495 184 15,713 — — 184 15,713 120 16,901 397 6,986 517 23,887 — — 7,865 24,135 7,865 24,135 $ 416 $ 40,982 $ 8,913 $ 41,782 $ 9,329 $ 82,764 March 31, 2014 Less Than Twelve Months More Than Twelve Months Total (in thousands) Held-to-maturity Corporate debt securities $ — $ — $ 3,156 $ 71,844 $ 3,156 $ 71,844 Municipal obligations 480 17,233 799 8,486 1,279 25,719 Total HTM securities $ 480 $ 17,233 $ 3,955 $ 80,330 $ 4,435 $ 97,563 Available-for-sale U.S. government sponsored agency securities $ 298 $ 40,117 $ 1,142 $ 17,555 $ 1,440 $ 57,672 Preferred stock 3,268 36,712 — — 3,268 36,712 Mutual funds 435 25,648 — — 435 25,648 Residential MBS issued by GSEs 7,247 489,288 850 13,788 8,097 503,076 Commercial MBS issued by GSEs 54 2,034 — — 54 2,034 Municipal obligations 1,290 46,367 2,122 20,761 3,412 67,128 Private label residential MBS 1,986 29,349 40 3,393 2,026 32,742 Trust preferred securities — — 7,272 24,728 7,272 24,728 CRA investments 415 23,442 — — 415 23,442 Total AFS securities $ 14,993 $ 692,957 $ 11,426 $ 80,225 $ 26,419 $ 773,182 December 31, 2013 Less Than Twelve Months Over Twelve Months Total (in thousands) Held-to-maturity Corporate debt securities $ 163 $ 9,837 $ 3,663 $ 71,337 $ 3,826 $ 81,174 Municipal obligations 1,624 50,740 746 5,102 2,370 55,842 Total HTM securities $ 1,787 $ 60,577 $ 4,409 $ 76,439 $ 6,196 $ 137,016 Available-for-sale U.S. government sponsored agency securities $ 2,135 $ 46,976 $ — $ — $ 2,135 $ 46,976 Preferred stock 7,479 44,637 — — 7,479 44,637 Mutual funds 984 30,101 — — 984 30,101 Residential MBS issued by GSEs 11,934 601,756 614 8,984 12,548 610,740 Municipal obligations 3,545 72,300 2,777 17,923 6,322 90,223 Private label residential MBS 2,009 32,517 142 3,583 2,151 36,100 Trust preferred securities — — 8,195 23,807 8,195 23,807 Other 548 23,823 — — 548 23,823 Total AFS securities $ 28,634 $ 852,110 $ 11,728 $ 54,297 $ 40,362 $ 906,407 September 30, 2013March 31, 2014 was 202,192, compared to 66252 at December 31, 2012.2013. In analyzing an issuer’s financial condition, Management managementManagementmanagement does not intend to sell the debt securities forin the foreseeable future, none of the securities described in the above table or in this paragraph were deemed to be other than temporarily impaired.September 30, 2013 and DecemberMarch 31, 2012,2014, the grossnet unrealized loss on trust preferred securities classified as AFS was $7.3 million, compared with $8.2 million and $7.9 million, respectively.at December 31, 2013. The Company actively monitors its debt and other structured securities portfolios classified as AFS for declines in fair value. At September 30, 2013,March 31, 2014, the gross unrealized loss on the corporate bond portfolio classified as HTM was $4.6$3.2 million, compared to $6.7$3.8 million at December 31, 2012. During the prior year, the Federal Reserve announced2013. The FRB continues to express its intention to keep interest rates at historically low levels into 2015. The yields of most of the bonds in the portfolio are tied to LIBOR, thus negatively affecting their anticipated returns. Additionally, Moody’s had downgraded certain bonds held in the portfolio during 2012. However, all of the bonds remain investment grade.September 30, 2013 and DecemberMarch 31, 2012,2014, by contractual maturities, are shown below. The actual maturities of the mortgage-backed securitiesMBS may differ from their contractual maturities because the loans underlying the securities may be repaid without any penalties due to borrowers that have the right to call or prepay obligations with or without call or prepayment penalties. TheseTherefore, these securities are includedlisted separately in the after ten years category in the following table. September 30, 2013 December 31, 2012 Amortized Estimated Amortized Estimated Cost Fair Value Cost Fair Value (in thousands) $ 2,517 $ 2,534 $ 1,600 $ 1,600 15,400 15,760 13,596 13,934 147,897 144,898 121,238 116,020 123,294 124,351 154,899 161,265 $ 289,108 $ 287,543 $ 291,333 $ 292,819 $ 56,226 $ 55,725 $ 65,190 $ 67,794 23,694 24,216 24,261 25,906 34,019 32,661 8,165 8,000 982,003 961,284 828,434 837,890 $ 1,095,942 $ 1,073,886 $ 926,050 $ 939,590 (1)Includes mortgage-backed securities. March 31, 2014 (in thousands) Held-to-Maturity Due in one year or less $ 3,608 $ 3,673 After one year through five years 17,596 18,191 After five years through ten years 146,688 145,735 After ten years 107,846 113,884 Total HTM $ 275,738 $ 281,483 Available-for-Sale Due in one year or less $ 66,543 $ 65,949 After one year through five years 16,920 17,513 After five years through ten years 64,404 63,021 After ten years 201,723 189,482 Mortgage backed securities 1,034,629 1,030,468 Total AFS $ 1,384,219 $ 1,366,433 table summarizestables summarize the carrying amounts of the Company’s investment ratings position as of September 30,March 31, 2014 and December 31, 2013: As of September 30, 2013 AAA Split-rated
AAA/AA+ AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Totals (in thousands) $ 8,006 $ — $ 130,149 $ 149,477 $ 7,323 $ 270 $ 295,225 — 772,098 — — — — 772,098 12,396 — 151 5,563 4,145 3,892 26,147 — — — — 32,323 — 32,323 — 27,377 — — — — 27,377 — — — — 45,970 13,371 59,341 — — — — 23,834 — 23,834 — — — — — 50 50 — — 2,697 40,105 54,976 — 97,778 5,493 — — — — — 5,493 $ 25,895 $ 799,475 $ 132,997 $ 195,145 $ 168,571 $ 17,583 $ 1,339,666 As of March 31, 2014 AAA AA+
to AA- A+ to A- BBB+
to BBB- BB+
and below Totals (in thousands) Municipal obligations $ 7,928 $ — $ 131,355 $ 150,004 $ 7,288 $ 215 $ 296,790 Residential MBS issued by GSEs — 989,867 — — — — 989,867 Commercial MBS issued by GSEs — 2,034 — — — — 2,034 Private label residential MBS 23,343 — 107 4,143 5,028 3,477 36,098 Private label commercial MBS 5,412 — — — — — 5,412 Mutual funds (3) — — — — 37,243 — 37,243 U.S. government sponsored agency — 57,672 — — — — 57,672 Preferred stock — — — — 46,452 19,385 65,837 Trust preferred securities — — — — 24,728 — 24,728 Collateralized debt obligations — — — — — 50 50 Corporate debt securities — — 2,698 25,098 69,980 — 97,776 Total (1) (2) $ 36,683 $ 1,049,573 $ 134,160 $ 179,245 $ 190,719 $ 23,127 $ 1,613,507 (1) The Company used the average credit rating of the combination of S&P, Moody’s and Fitch in the above table where ratings differed. (2) Securities values are shown at carrying value as of September 30, 2013.March 31, 2014. Unrated securities consist of CRA investments with a carrying value of $23.3$23.5 million ARPSand preferred stock with a carrying value of $2.0 million and an other investment of $1.6$8.1 million.(3) At least 80% of mutual funds are investment grade corporate bonds.debt securities.
The following table summarizes the Company’s investment ratings position as of December 31, 2012:
| As of December 31, 2012 | ||||||||||||||||||||||||||||
| AAA | Split-rated AAA/AA+ | AA+ to AA- | A+ to A- | BBB+ to BBB- | BB+ and below | Totals | ||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||
Municipal obligations | $ | 8,120 | $ | — | $ | 149,352 | $ | 92,401 | $ | 14,922 | $ | 278 | $ | 265,073 | ||||||||||||||
Direct U.S. obligations & GSE residential mortgage-backed securities | — | 668,265 | — | — | — | — | 668,265 | |||||||||||||||||||||
Private label residential mortgage-backed securities | 15,219 | — | 1,649 | 6,069 | 5,249 | 7,421 | 35,607 | |||||||||||||||||||||
Private label commercial mortgage-backed securities | 5,741 | — | — | — | — | — | 5,741 | |||||||||||||||||||||
Mutual funds (3) | — | — | — | — | 37,961 | — | 37,961 | |||||||||||||||||||||
U.S. Government-sponsored agency securities | — | — | — | — | — | — | — | |||||||||||||||||||||
Adjustable-rate preferred stock | — | — | 826 | — | 60,807 | 10,838 | 72,471 | |||||||||||||||||||||
Trust preferred securities | — | — | — | — | 24,135 | — | 24,135 | |||||||||||||||||||||
Collateralized debt obligations | — | — | — | — | — | 50 | 50 | |||||||||||||||||||||
Corporate bonds | — | — | 2,696 | 40,116 | 54,969 | — | 97,781 | |||||||||||||||||||||
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Total (1) (2) | $ | 29,080 | $ | 668,265 | $ | 154,523 | $ | 138,586 | $ | 198,043 | $ | 18,587 | $ | 1,207,084 | ||||||||||||||
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| December 31, 2013 | ||||||||||||||||||||||||||||
| AAA | Split-rated AAA/AA+ | AA+ to AA- | A+ to A- | BBB+ to BBB- | BB+ and below | Totals | ||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||
| Municipal obligations | $ | 7,965 | $ | — | $ | 129,810 | $ | 153,949 | $ | 7,305 | $ | 215 | $ | 299,244 | ||||||||||||||
| Residential MBS issued by GSEs | — | 1,024,457 | — | — | — | — | 1,024,457 | |||||||||||||||||||||
| Private label residential MBS | 23,646 | — | 125 | 4,101 | 4,625 | 3,602 | 36,099 | |||||||||||||||||||||
| Private label commercial MBS | 5,433 | — | — | — | — | — | 5,433 | |||||||||||||||||||||
| Mutual funds (3) | — | — | — | — | 36,532 | — | 36,532 | |||||||||||||||||||||
| U.S. government sponsored agency | — | 46,975 | — | — | — | — | 46,975 | |||||||||||||||||||||
| Preferred stock | — | — | — | — | 45,847 | 13,244 | 59,091 | |||||||||||||||||||||
| Trust preferred securities | — | — | — | — | 23,805 | — | 23,805 | |||||||||||||||||||||
| Collateralized debt obligations | — | — | — | — | — | 50 | 50 | |||||||||||||||||||||
| Corporate debt securities | — | — | 2,697 | 35,102 | 59,978 | — | 97,777 | |||||||||||||||||||||
| Total (1) (2) | $ | 37,044 | $ | 1,071,432 | $ | 132,632 | $ | 193,152 | $ | 178,092 | $ | 17,111 | $ | 1,629,463 | ||||||||||||||
| (1) | The Company used the average credit rating of the combination of S&P, Moody’s and Fitch in the above table where ratings differed. |
| (2) | Securities values are shown at carrying value as of December 31, |
| (3) | At least 80% of mutual funds are investment grade corporate |
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| (in thousands) | ||||||||||||||||
Gross gains | $ | 602 | $ | 1,073 | $ | 870 | $ | 2,786 | ||||||||
Gross (losses) | (2,281 | ) | (42 | ) | (2,407 | ) | (284 | ) | ||||||||
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| |||||||||
| $ | (1,679 | ) | $ | 1,031 | $ | (1,537 | ) | $ | 2,502 | |||||||
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4.
| Three Months Ended March 31, | ||||||||
| 2014 | 2013 | |||||||
| (in thousands) | ||||||||
| Gross gains | $ | 366 | $ | 200 | ||||
| Gross losses | — | (53 | ) | |||||
| Net gains | $ | 366 | $ | 147 | ||||
| September 30, | December 31, | |||||||
| 2013 | 2012 | |||||||
| (in thousands) | ||||||||
Commercial and industrial | $ | 1,990,568 | $ | 1,659,003 | ||||
Commercial real estate—non-owner occupied | 1,864,333 | 1,505,600 | ||||||
Commercial real estate—owner occupied | 1,551,187 | 1,396,797 | ||||||
Construction and land development | 459,764 | 394,319 | ||||||
Residential real estate | 358,962 | 407,937 | ||||||
Commercial leases | 244,312 | 288,747 | ||||||
Consumer | 29,850 | 31,836 | ||||||
Deferred fees and unearned income, net | (8,106 | ) | (6,045 | ) | ||||
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| 6,490,870 | 5,678,194 | |||||||
Allowance for credit losses | (97,851 | ) | (95,427 | ) | ||||
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Total | $ | 6,393,019 | $ | 5,582,767 | ||||
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| March 31, 2014 | December 31, 2013 | |||||||
| (in thousands) | ||||||||
| Commercial and industrial | $ | 2,501,499 | $ | 2,236,740 | ||||
| Commercial real estate - non-owner occupied | 1,849,211 | 1,843,415 | ||||||
| Commercial real estate - owner occupied | 1,606,243 | 1,561,862 | ||||||
| Construction and land development | 553,655 | 537,231 | ||||||
| Residential real estate | 344,859 | 350,312 | ||||||
| Commercial leases | 221,916 | 235,968 | ||||||
| Consumer | 38,330 | 45,153 | ||||||
| Deferred fees and costs | (7,114 | ) | (9,266 | ) | ||||
| Loans, net of deferred fees and costs | 7,108,599 | 6,801,415 | ||||||
| Allowance for credit losses | (103,899 | ) | (100,050 | ) | ||||
| Total | $ | 7,004,700 | $ | 6,701,365 | ||||
| September 30, 2013 | ||||||||||||||||||||||||
| Current | 30-59 Days Past Due | 60-89 Days Past Due | Over 90 days Past Due | Total Past Due | Total | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||
Owner occupied | $ | 1,538,589 | $ | 2,123 | $ | — | $ | 10,475 | $ | 12,598 | $ | 1,551,187 | ||||||||||||
Non-owner occupied | 1,629,045 | 1,475 | 12,607 | 7,294 | 21,376 | 1,650,421 | ||||||||||||||||||
Multi-family | 213,912 | — | — | — | — | 213,912 | ||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||
Commercial | 1,986,782 | 1,094 | 817 | 1,875 | 3,786 | 1,990,568 | ||||||||||||||||||
Leases | 243,959 | — | — | 353 | 353 | 244,312 | ||||||||||||||||||
Construction and land development | ||||||||||||||||||||||||
Construction | 264,145 | — | — | — | — | 264,145 | ||||||||||||||||||
Land | 194,218 | 56 | — | 1,345 | 1,401 | 195,619 | ||||||||||||||||||
Residential real estate | 342,382 | 560 | 127 | 15,893 | 16,580 | 358,962 | ||||||||||||||||||
Consumer | 54,195 | 309 | 248 | 511 | 1,068 | 55,263 | ||||||||||||||||||
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Total loans | $ | 6,467,227 | $ | 5,617 | $ | 13,799 | $ | 37,746 | $ | 57,162 | $ | 6,524,389 | ||||||||||||
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| December 31, 2012 | ||||||||||||||||||||||||
| Current | 30-59 Days Past Due | 60-89 Days Past Due | Over 90 days Past Due | Total Past Due | Total | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||
Owner occupied | $ | 1,372,550 | $ | 13,153 | $ | 1,757 | $ | 9,337 | $ | 24,247 | $ | 1,396,797 | ||||||||||||
Non-owner occupied | 1,327,481 | 917 | 4,416 | 8,573 | 13,906 | 1,341,387 | ||||||||||||||||||
Multi-family | 164,213 | — | — | — | — | 164,213 | ||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||
Commercial | 1,654,787 | 3,109 | 121 | 986 | 4,216 | 1,659,003 | ||||||||||||||||||
Leases | 287,768 | 515 | — | 464 | 979 | 288,747 | ||||||||||||||||||
Construction and land development | ||||||||||||||||||||||||
Construction | 215,597 | — | — | — | — | 215,597 | ||||||||||||||||||
Land | 171,919 | 826 | 571 | 5,406 | 6,803 | 178,722 | ||||||||||||||||||
Residential real estate | 387,641 | 3,525 | 1,837 | 14,934 | 20,296 | 407,937 | ||||||||||||||||||
Consumer | 62,271 | 524 | — | 165 | 689 | 62,960 | ||||||||||||||||||
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Total loans | $ | 5,644,227 | $ | 22,569 | $ | 8,702 | $ | 39,865 | $ | 71,136 | $ | 5,715,363 | ||||||||||||
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fees and costs:
| March 31, 2014 | ||||||||||||||||||||||||
| Current | 30-59 Days Past Due | 60-89 Days Past Due | Over 90 days Past Due | Total Past Due | Total | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Commercial real estate | ||||||||||||||||||||||||
| Owner occupied | $ | 1,597,539 | $ | 4,416 | $ | 996 | $ | 3,292 | $ | 8,704 | $ | 1,606,243 | ||||||||||||
| Non-owner occupied | 1,651,963 | 17,824 | 1,548 | 6,454 | 25,826 | 1,677,789 | ||||||||||||||||||
| Multi-family | 171,422 | — | — | — | — | 171,422 | ||||||||||||||||||
| Commercial and industrial | ||||||||||||||||||||||||
| Commercial | 2,499,734 | 651 | 216 | 898 | 1,765 | 2,501,499 | ||||||||||||||||||
| Leases | 221,916 | — | — | — | — | 221,916 | ||||||||||||||||||
| Construction and land development | ||||||||||||||||||||||||
| Construction | 310,599 | 479 | — | — | 479 | 311,078 | ||||||||||||||||||
| Land | 241,234 | — | — | 1,343 | 1,343 | 242,577 | ||||||||||||||||||
| Residential real estate | 330,550 | 2,764 | 4,286 | 7,259 | 14,309 | 344,859 | ||||||||||||||||||
| Consumer | 37,882 | 270 | 11 | 167 | 448 | 38,330 | ||||||||||||||||||
| Total loans | $ | 7,062,839 | $ | 26,404 | $ | 7,057 | $ | 19,413 | $ | 52,874 | $ | 7,115,713 | ||||||||||||
| December 31, 2013 | ||||||||||||||||||||||||
| Current | 30-59 Days Past Due | 60-89 Days Past Due | Over 90 days Past Due | Total Past Due | Total | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Commercial real estate | ||||||||||||||||||||||||
| Owner occupied | $ | 1,555,210 | $ | 1,759 | $ | 406 | $ | 4,487 | $ | 6,652 | $ | 1,561,862 | ||||||||||||
| Non-owner occupied | 1,627,062 | 8,774 | 4,847 | 15,767 | 29,388 | 1,656,450 | ||||||||||||||||||
| Multi-family | 186,965 | — | — | — | — | 186,965 | ||||||||||||||||||
| Commercial and industrial | ||||||||||||||||||||||||
| Commercial | 2,232,186 | 1,868 | 233 | 2,453 | 4,554 | 2,236,740 | ||||||||||||||||||
| Leases | 235,618 | — | — | 350 | 350 | 235,968 | ||||||||||||||||||
| Construction and land development | ||||||||||||||||||||||||
| Construction | 291,883 | — | — | — | — | 291,883 | ||||||||||||||||||
| Land | 243,741 | 264 | 1,343 | — | 1,607 | 245,348 | ||||||||||||||||||
| Residential real estate | 339,566 | 2,423 | 1,368 | 6,955 | 10,746 | 350,312 | ||||||||||||||||||
| Consumer | 44,018 | 466 | 155 | 514 | 1,135 | 45,153 | ||||||||||||||||||
| Total loans | $ | 6,756,249 | $ | 15,554 | $ | 8,352 | $ | 30,526 | $ | 54,432 | $ | 6,810,681 | ||||||||||||
| September 30, 2013 | December 31, 2012 | |||||||||||||||||||||||||||||||
| Loans past | Loans past | |||||||||||||||||||||||||||||||
| Non-accrual loans | due 90 days | Non-accrual loans | due 90 days | |||||||||||||||||||||||||||||
| Past Due/ | Total | or more and | Past Due/ | Total | or more and | |||||||||||||||||||||||||||
| Current | Delinquent | Non-accrual | still accruing | Current | Delinquent | Non-accrual | still accruing | |||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||||||||
Owner occupied | $ | 10,222 | $ | 10,391 | $ | 20,613 | $ | 388 | $ | 14,392 | $ | 18,394 | $ | 32,786 | $ | 1,272 | ||||||||||||||||
Non-owner occupied | 12,761 | 12,885 | 25,646 | 4,553 | 18,299 | 8,572 | 26,871 | — | ||||||||||||||||||||||||
Multi-family | — | — | — | — | 318 | — | 318 | — | ||||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||||||||||
Commercial | 1,909 | 2,092 | 4,001 | 4 | 2,549 | 3,194 | 5,743 | 15 | ||||||||||||||||||||||||
Leases | 114 | 353 | 467 | — | — | 979 | 979 | — | ||||||||||||||||||||||||
Construction and land development | ||||||||||||||||||||||||||||||||
Construction | — | — | — | — | — | — | ��� | — | ||||||||||||||||||||||||
Land | 5,241 | 1,401 | 6,642 | — | 4,375 | 6,718 | 11,093 | — | ||||||||||||||||||||||||
Residential real estate | 3,350 | 15,894 | 19,244 | — | 11,561 | 15,161 | 26,722 | 101 | ||||||||||||||||||||||||
Consumer | 28 | — | 28 | 511 | 39 | 165 | 204 | — | ||||||||||||||||||||||||
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Total | $ | 33,625 | $ | 43,016 | $ | 76,641 | $ | 5,456 | $ | 51,533 | $ | 53,183 | $ | 104,716 | $ | 1,388 | ||||||||||||||||
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|
|
| |||||||||||||||||
| March 31, 2014 | December 31, 2013 | |||||||||||||||||||||||||||||||
| Non-accrual loans | Loans past due 90 days or more and still accruing | Non-accrual loans | Loans past due 90 days or more and still accruing | |||||||||||||||||||||||||||||
| Current | Past Due/ Delinquent | Total Non-accrual | Current | Past Due/ Delinquent | Total Non-accrual | |||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||
| Commercial real estate | ||||||||||||||||||||||||||||||||
| Owner occupied | $ | 6,663 | $ | 4,460 | $ | 11,123 | $ | — | $ | 9,330 | $ | 3,600 | $ | 12,930 | $ | 887 | ||||||||||||||||
| Non-owner occupied | 15,454 | 22,306 | 37,760 | — | 17,930 | 23,996 | 41,926 | — | ||||||||||||||||||||||||
| Multi-family | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Commercial and industrial | ||||||||||||||||||||||||||||||||
| Commercial | 1,534 | 1,104 | 2,638 | — | 622 | 2,682 | 3,304 | 125 | ||||||||||||||||||||||||
| Leases | 432 | — | 432 | — | 99 | 350 | 449 | — | ||||||||||||||||||||||||
| Construction and land development | ||||||||||||||||||||||||||||||||
| Construction | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Land | 2,277 | 1,341 | 3,618 | — | 3,133 | 1,392 | 4,525 | — | ||||||||||||||||||||||||
| Residential real estate | 2,751 | 12,051 | 14,802 | — | 5,067 | 7,413 | 12,480 | 47 | ||||||||||||||||||||||||
| Consumer | 28 | — | 28 | 167 | 27 | 39 | 66 | 475 | ||||||||||||||||||||||||
| Total | $ | 29,139 | $ | 41,262 | $ | 70,401 | $ | 167 | $ | 36,208 | $ | 39,472 | $ | 75,680 | $ | 1,534 | ||||||||||||||||
| September 30, 2013 | ||||||||||||||||||||||||
| Pass | Special Mention | Substandard | Doubtful | Loss | Total | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||
Owner occupied | $ | 1,465,697 | $ | 35,217 | $ | 49,293 | $ | 980 | $ | — | $ | 1,551,187 | ||||||||||||
Non-owner occupied | 1,490,250 | 64,405 | 95,766 | — | — | 1,650,421 | ||||||||||||||||||
Multi-family | 206,586 | 5,618 | 1,708 | — | — | 213,912 | ||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||
Commercial | 1,964,491 | 9,661 | 14,904 | 1,512 | — | 1,990,568 | ||||||||||||||||||
Leases | 239,002 | 4,843 | 467 | — | — | 244,312 | ||||||||||||||||||
Construction and land development | ||||||||||||||||||||||||
Construction | 256,037 | 8,108 | — | — | — | 264,145 | ||||||||||||||||||
Land | 167,523 | 4,676 | 23,420 | — | — | 195,619 | ||||||||||||||||||
Residential real estate | 324,254 | 3,865 | 30,843 | — | — | 358,962 | ||||||||||||||||||
Consumer | 53,518 | 853 | 892 | — | — | 55,263 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 6,167,358 | $ | 137,246 | $ | 217,293 | $ | 2,492 | $ | — | $ | 6,524,389 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Current (up to 29 days past due) Past due 30—59 days Past due 60—89 days Past due 90 days or more Total September 30, 2013 Pass Special
Mention Substandard Doubtful Loss Total (in thousands) $ 6,164,416 $ 136,297 $ 165,836 $ 678 $ — $ 6,467,227 2,622 378 2,617 — — 5,617 320 571 12,908 — — 13,799 — — 35,932 1,814 — 37,746 $ 6,167,358 $ 137,246 $ 217,293 $ 2,492 $ — $ 6,524,389
| December 31, 2012 | ||||||||||||||||||||||||
| Pass | Special Mention | Substandard | Doubtful | Loss | Total | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||
Owner occupied | $ | 1,280,337 | $ | 50,552 | $ | 65,908 | $ | — | $ | — | $ | 1,396,797 | ||||||||||||
Non-owner occupied | 1,257,011 | 21,065 | 63,311 | — | — | 1,341,387 | ||||||||||||||||||
Multi-family | 163,895 | — | 318 | — | — | 164,213 | ||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||
Commercial | 1,630,166 | 12,370 | 15,499 | 968 | — | 1,659,003 | ||||||||||||||||||
Leases | 282,075 | 5,693 | 979 | — | — | 288,747 | ||||||||||||||||||
Construction and land development | ||||||||||||||||||||||||
Construction | 215,395 | 202 | — | — | — | 215,597 | ||||||||||||||||||
Land | 141,436 | 5,641 | 31,645 | — | — | 178,722 | ||||||||||||||||||
Residential real estate | 365,042 | 7,559 | 32,446 | 2,890 | — | 407,937 | ||||||||||||||||||
Consumer | 61,469 | 469 | 1,022 | — | — | 62,960 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 5,396,826 | $ | 103,551 | $ | 211,128 | $ | 3,858 | $ | — | $ | 5,715,363 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| December 31, 2012 | ||||||||||||||||||||||||
| Pass | Special Mention | Substandard | Doubtful | Loss | Total | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
Current (up to 29 days past due) | $ | 5,387,543 | $ | 100,549 | $ | 152,827 | $ | 3,308 | $ | — | $ | 5,644,227 | ||||||||||||
Past due 30—59 days | 4,410 | 1,310 | 16,849 | — | — | 22,569 | ||||||||||||||||||
Past due 60—89 days | 4,450 | 1,692 | 2,560 | — | — | 8,702 | ||||||||||||||||||
Past due 90 days or more | 423 | — | 38,892 | 550 | — | 39,865 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 5,396,826 | $ | 103,551 | $ | 211,128 | $ | 3,858 | $ | — | $ | 5,715,363 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| March 31, 2014 | ||||||||||||||||||||||||
| Pass | Special Mention | Substandard | Doubtful | Loss | Total | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Commercial real estate | ||||||||||||||||||||||||
| Owner occupied | $ | 1,525,617 | $ | 33,638 | $ | 46,355 | $ | 633 | $ | — | $ | 1,606,243 | ||||||||||||
| Non-owner occupied | 1,539,862 | 53,132 | 84,795 | — | — | 1,677,789 | ||||||||||||||||||
| Multi-family | 170,948 | — | 474 | — | — | 171,422 | ||||||||||||||||||
| Commercial and industrial | ||||||||||||||||||||||||
| Commercial | 2,474,755 | 9,249 | 17,495 | — | — | 2,501,499 | ||||||||||||||||||
| Leases | 217,460 | 4,024 | 432 | — | — | 221,916 | ||||||||||||||||||
| Construction and land development | ||||||||||||||||||||||||
| Construction | 310,599 | 479 | — | — | — | 311,078 | ||||||||||||||||||
| Land | 208,513 | 13,509 | 20,555 | — | — | 242,577 | ||||||||||||||||||
| Residential real estate | 317,513 | 3,044 | 24,302 | — | — | 344,859 | ||||||||||||||||||
| Consumer | 37,515 | 339 | 476 | — | — | 38,330 | ||||||||||||||||||
| Total | $ | 6,802,782 | $ | 117,414 | $ | 194,884 | $ | 633 | $ | — | $ | 7,115,713 | ||||||||||||
| March 31, 2014 | ||||||||||||||||||||||||
| Pass | Special Mention | Substandard | Doubtful | Loss | Total | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Current (up to 29 days past due) | $ | 6,800,191 | $ | 115,223 | $ | 146,792 | $ | 633 | $ | — | $ | 7,062,839 | ||||||||||||
| Past due 30 - 59 days | 2,472 | 2,090 | 21,842 | — | — | 26,404 | ||||||||||||||||||
| Past due 60 - 89 days | 119 | 101 | 6,837 | — | — | 7,057 | ||||||||||||||||||
| Past due 90 days or more | — | — | 19,413 | — | — | 19,413 | ||||||||||||||||||
| Total | $ | 6,802,782 | $ | 117,414 | $ | 194,884 | $ | 633 | $ | — | $ | 7,115,713 | ||||||||||||
| December 31, 2013 | ||||||||||||||||||||||||
| Pass | Special Mention | Substandard | Doubtful | Loss | Total | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Commercial real estate | ||||||||||||||||||||||||
| Owner occupied | $ | 1,483,190 | $ | 33,065 | $ | 44,649 | $ | 958 | $ | — | $ | 1,561,862 | ||||||||||||
| Non-owner occupied | 1,498,500 | 64,588 | 93,362 | — | — | 1,656,450 | ||||||||||||||||||
| Multi-family | 186,479 | — | 486 | — | — | 186,965 | ||||||||||||||||||
| Commercial and industrial | ||||||||||||||||||||||||
| Commercial | 2,208,947 | 10,058 | 16,231 | 1,504 | — | 2,236,740 | ||||||||||||||||||
| Leases | 231,344 | 4,175 | 449 | — | — | 235,968 | ||||||||||||||||||
| Construction and land development | ||||||||||||||||||||||||
| Construction | 291,402 | 481 | — | — | — | 291,883 | ||||||||||||||||||
| Land | 210,615 | 13,762 | 20,971 | — | — | 245,348 | ||||||||||||||||||
| Residential real estate | 323,333 | 3,037 | 23,942 | — | — | 350,312 | ||||||||||||||||||
| Consumer | 43,516 | 799 | 838 | — | — | 45,153 | ||||||||||||||||||
| Total | $ | 6,477,326 | $ | 129,965 | $ | 200,928 | $ | 2,462 | $ | — | $ | 6,810,681 | ||||||||||||
| December 31, 2013 | ||||||||||||||||||||||||
| Pass | Special Mention | Substandard | Doubtful | Loss | Total | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Current (up to 29 days past due) | $ | 6,471,951 | $ | 129,208 | $ | 154,441 | $ | 649 | $ | — | $ | 6,756,249 | ||||||||||||
| Past due 30 - 59 days | 4,205 | 602 | 10,747 | — | — | 15,554 | ||||||||||||||||||
| Past due 60 - 89 days | 1,123 | 155 | 7,074 | — | — | 8,352 | ||||||||||||||||||
| Past due 90 days or more | 47 | — | 28,666 | 1,813 | — | 30,526 | ||||||||||||||||||
| Total | $ | 6,477,326 | $ | 129,965 | $ | 200,928 | $ | 2,462 | $ | — | $ | 6,810,681 | ||||||||||||
| September 30, | December 31, | |||||||
| 2013 | 2012 | |||||||
| (in thousands) | ||||||||
Impaired loans with a specific valuation allowance under ASC 310 | $ | 20,717 | $ | 51,538 | ||||
Impaired loans without a specific valuation allowance under ASC 310 | 153,514 | 146,617 | ||||||
|
|
|
| |||||
Total impaired loans | $ | 174,231 | $ | 198,155 | ||||
|
|
|
| |||||
Valuation allowance related to impaired loans | $ | (5,909 | ) | $ | (12,866 | ) | ||
|
|
|
| |||||
| March 31, 2014 | December 31, 2013 | |||||||
| (in thousands) | ||||||||
| Impaired loans with a specific valuation allowance under FASB ASC 310 | $ | 22,127 | $ | 25,754 | ||||
| Impaired loans without a specific valuation allowance under FASB ASC 310 | 149,135 | 152,623 | ||||||
| Total impaired loans | $ | 171,262 | $ | 178,377 | ||||
| Valuation allowance related to impaired loans | $ | (3,925 | ) | $ | (5,280 | ) | ||
| September 30, | December 31, | |||||||
| 2013 | 2012 | |||||||
| (in thousands) | ||||||||
Commercial real estate | ||||||||
Owner occupied | $ | 45,516 | $ | 58,074 | ||||
Non-owner occupied | 54,052 | 52,146 | ||||||
Multi-family | — | 318 | ||||||
Commercial and industrial | ||||||||
Commercial | 14,106 | 15,531 | ||||||
Leases | 467 | 979 | ||||||
Construction and land development | ||||||||
Construction | — | — | ||||||
Land | 26,748 | 32,492 | ||||||
Residential real estate | 32,811 | 37,851 | ||||||
Consumer | 531 | 764 | ||||||
|
|
|
| |||||
Total | $ | 174,231 | $ | 198,155 | ||||
|
|
|
| |||||
An
| March 31, 2014 | December 31, 2013 | |||||||
| (in thousands) | ||||||||
| Commercial real estate | ||||||||
| Owner occupied | $ | 35,329 | $ | 37,902 | ||||
| Non-owner occupied | 68,756 | 73,152 | ||||||
| Multi-family | — | — | ||||||
| Commercial and industrial | ||||||||
| Commercial | 15,233 | 449 | ||||||
| Leases | 432 | 16,892 | ||||||
| Construction and land development | ||||||||
| Construction | — | — | ||||||
| Land | 22,012 | 23,069 | ||||||
| Residential real estate | 29,026 | 26,376 | ||||||
| Consumer | 474 | 537 | ||||||
| Total | $ | 171,262 | $ | 178,377 | ||||
2013.
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| (in thousands) | ||||||||||||||||
Commercial real estate | ||||||||||||||||
Owner occupied | $ | 46,108 | $ | 61,223 | $ | 52,030 | $ | 55,881 | ||||||||
Non-owner occupied | 54,211 | 60,207 | 54,553 | 57,433 | ||||||||||||
Multi-family | — | 882 | 118 | 983 | ||||||||||||
Commercial and industrial | ||||||||||||||||
Commercial | 13,786 | 25,616 | 14,558 | 26,097 | ||||||||||||
Leases | 565 | 1,030 | 817 | 839 | ||||||||||||
Construction and land development | ||||||||||||||||
Construction | — | — | — | 1,315 | ||||||||||||
Land | 27,418 | 35,215 | 28,268 | 37,440 | ||||||||||||
Residential real estate | 34,616 | 37,814 | 34,972 | 34,567 | ||||||||||||
Consumer | 564 | 794 | 629 | 1,256 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 177,268 | $ | 222,781 | $ | 185,945 | $ | 215,811 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| Three Months Ended March 31, | ||||||||
| 2014 | 2013 | |||||||
| (in thousands) | ||||||||
| Commercial real estate | ||||||||
| Owner occupied | $ | 36,748 | $ | 60,065 | ||||
| Non-owner occupied | 70,039 | 52,986 | ||||||
| Multi-family | — | 230 | ||||||
| Commercial and industrial | ||||||||
| Commercial | 15,583 | 15,088 | ||||||
| Leases | 439 | 1,028 | ||||||
| Construction and land development | ||||||||
| Construction | — | — | ||||||
| Land | 22,586 | 29,362 | ||||||
| Residential real estate | 26,799 | 37,040 | ||||||
| Consumer | 502 | 705 | ||||||
| Total | $ | 172,696 | $ | 196,504 | ||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| (in thousands) | ||||||||||||||||
Commercial real estate | ||||||||||||||||
Owner occupied | $ | 426 | $ | 841 | $ | 1,182 | $ | 1,696 | ||||||||
Non-owner occupied | 458 | 649 | 1,283 | 1,661 | ||||||||||||
Multi-family | — | — | — | — | ||||||||||||
Commercial and industrial | ||||||||||||||||
Commercial | 185 | 406 | 454 | 920 | ||||||||||||
Leases | — | — | — | — | ||||||||||||
Construction and land development | ||||||||||||||||
Construction | — | — | — | — | ||||||||||||
Land | 328 | 171 | 874 | 867 | ||||||||||||
Residential real estate | 21 | 78 | 45 | 199 | ||||||||||||
Consumer | 7 | 13 | 22 | 31 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 1,425 | $ | 2,158 | $ | 3,860 | $ | 5,374 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| Three Months Ended March 31, | ||||||||
| 2014 | 2013 | |||||||
| (in thousands) | ||||||||
| Commercial real estate | ||||||||
| Owner occupied | $ | 391 | $ | 420 | ||||
| Non-owner occupied | 373 | 404 | ||||||
| Multi-family | — | — | ||||||
| Commercial and industrial | ||||||||
| Commercial | 193 | 150 | ||||||
| Leases | — | — | ||||||
| Construction and land development | ||||||||
| Construction | — | — | ||||||
| Land | 261 | 259 | ||||||
| Residential real estate | 157 | 5 | ||||||
| Consumer | 11 | 8 | ||||||
| Total | $ | 1,386 | $ | 1,246 | ||||
| September 30, | December 31, | |||||||
| 2013 | 2012 | |||||||
| (in thousands) | ||||||||
Nonaccrual loans | $ | 76,641 | $ | 104,716 | ||||
Loans past due 90 days or more on accrual status | 5,456 | 1,388 | ||||||
Troubled debt restructured loans | 87,387 | 84,609 | ||||||
|
|
|
| |||||
Total nonperforming loans | 169,484 | 190,713 | ||||||
Other assets acquired through foreclosure, net | 76,475 | 77,247 | ||||||
|
|
|
| |||||
Total nonperforming assets | $ | 245,959 | $ | 267,960 | ||||
|
|
|
| |||||
| March 31, 2014 | December 31, 2013 | |||||||
| (in thousands) | ||||||||
| Nonaccrual loans | $ | 70,401 | $ | 75,680 | ||||
| Loans past due 90 days or more on accrual status | 167 | 1,534 | ||||||
| Troubled debt restructured loans | 89,524 | 89,576 | ||||||
| Total nonperforming loans | 160,092 | 166,790 | ||||||
| Other assets acquired through foreclosure, net | 56,450 | 66,719 | ||||||
| Total nonperforming assets | $ | 216,542 | $ | 233,509 | ||||
The following table presents information regarding the contractually required payments receivable, cash flows expected to be collected and the estimated fair value of loans acquired in the Centennial acquisition, as of April 30, 2013, the closing date of the transaction:
| April 30, 2013 | ||||||||||||
| Commercial | Residential | |||||||||||
| Real Estate | Real Estate | Total | ||||||||||
| (in thousands) | ||||||||||||
Contractually required payments: | ||||||||||||
Loans with credit deterioration since origination | $ | 253,419 | $ | — | $ | 253,419 | ||||||
Purchased non-credit impaired loans | 368,040 | 2,136 | 370,176 | |||||||||
|
|
|
|
|
| |||||||
Total loans acquired | $ | 621,459 | $ | 2,136 | $ | 623,595 | ||||||
|
|
|
|
|
| |||||||
Cash flows expected to be collected: | ||||||||||||
Loans with credit deterioration since origination | $ | 145,346 | $ | — | $ | 145,346 | ||||||
Purchased non-credit impaired loans | 304,818 | 1,352 | 306,170 | |||||||||
|
|
|
|
|
| |||||||
Total loans acquired | $ | 450,164 | $ | 1,352 | $ | 451,516 | ||||||
|
|
|
|
|
| |||||||
Fair value of loans acquired: | ||||||||||||
Loans with credit deterioration since origination | $ | 108,863 | $ | — | $ | 108,863 | ||||||
Purchased non-credit impaired loans | 241,541 | 1,070 | 242,611 | |||||||||
|
|
|
|
|
| |||||||
Total loans acquired | $ | 350,404 | $ | 1,070 | $ | 351,474 | ||||||
|
|
|
|
|
| |||||||
| September 30, 2013 | ||||||||
| Three Months Ended | Nine Months Ended | |||||||
| (in thousands) | ||||||||
Balance, at beginning of period | $ | 26,073 | $ | 7,072 | ||||
Addition due to acquisition | — | 22,318 | ||||||
Reclassification from nonaccretable difference | 4,804 | 5,851 | ||||||
Accretion to interest income | (2,044 | ) | (6,408 | ) | ||||
|
|
|
| |||||
Balance, at end of period | $ | 28,833 | $ | 28,833 | ||||
|
|
|
| |||||
The addition during the nine months ended September 30, 2013 reflected in the above table relate to the acquisition of Centennial.
| Three Months Ended March 31, | ||||||||
| 2014 | 2013 | |||||||
| (in thousands) | ||||||||
| Balance, at beginning of period | $ | 28,164 | $ | 7,072 | ||||
| Reclassification from non-accretable to accretable yield | 1,466 | — | ||||||
| Accretion to interest income | (2,404 | ) | (2,079 | ) | ||||
| Reversal of fair value adjustments upon disposition of loans | (395 | ) | — | |||||
| Balance, at end of period | $ | 26,831 | $ | 4,993 | ||||
| For the Three Months Ended September 30, | ||||||||||||||||||||||||
| Construction and | Commercial | Residential | Commercial | |||||||||||||||||||||
| Land Development | Real Estate | Real Estate | and Industrial | Consumer | Total | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
2013 | ||||||||||||||||||||||||
Beginning Balance | $ | 9,614 | $ | 34,583 | $ | 13,847 | $ | 37,383 | $ | 896 | $ | 96,323 | ||||||||||||
Charge-offs | — | (864 | ) | (1,138 | ) | (544 | ) | (712 | ) | (3,258 | ) | |||||||||||||
Recoveries | 966 | 422 | 430 | 2,242 | 726 | 4,786 | ||||||||||||||||||
Provision | (533 | ) | (278 | ) | (247 | ) | 354 | 704 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Ending balance | $ | 10,047 | $ | 33,863 | $ | 12,892 | $ | 39,435 | $ | 1,614 | $ | 97,851 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
2012 | ||||||||||||||||||||||||
Beginning Balance | $ | 13,378 | $ | 36,733 | $ | 16,957 | $ | 26,132 | $ | 4,312 | $ | 97,512 | ||||||||||||
Charge-offs | (2,315 | ) | (1,470 | ) | (2,242 | ) | (4,100 | ) | (799 | ) | (10,926 | ) | ||||||||||||
Recoveries | 567 | 633 | 153 | 501 | 38 | 1,892 | ||||||||||||||||||
Provision | 18 | 2,324 | (82 | ) | 5,611 | 1,061 | 8,932 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Ending balance | $ | 11,648 | $ | 38,220 | $ | 14,786 | $ | 28,144 | $ | 4,612 | $ | 97,410 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| For the Nine Months Ended September 30, | ||||||||||||||||||||||||
| Construction and Land Development | Commercial Real Estate | Residential Real Estate | Commercial and Industrial | Consumer | Total | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
2013 | ||||||||||||||||||||||||
Beginning Balance | $ | 10,554 | $ | 34,982 | $ | 15,237 | $ | 32,860 | $ | 1,794 | $ | 95,427 | ||||||||||||
Charge-offs | (852 | ) | (6,142 | ) | (5,641 | ) | (3,379 | ) | (1,005 | ) | (17,019 | ) | ||||||||||||
Recoveries | 1,787 | 1,997 | 1,548 | 4,440 | 751 | 10,523 | ||||||||||||||||||
Provision | (1,442 | ) | 3,026 | 1,748 | 5,514 | 74 | 8,920 | |||||||||||||||||
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Ending balance | $ | 10,047 | $ | 33,863 | $ | 12,892 | $ | 39,435 | $ | 1,614 | $ | 97,851 | ||||||||||||
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2012 | ||||||||||||||||||||||||
Beginning Balance | $ | 14,195 | $ | 35,031 | $ | 19,134 | $ | 25,535 | $ | 5,275 | $ | 99,170 | ||||||||||||
Charge-offs | (10,587 | ) | (12,023 | ) | (5,756 | ) | (12,687 | ) | (3,571 | ) | (44,624 | ) | ||||||||||||
Recoveries | 870 | 2,897 | 765 | 2,695 | 294 | 7,521 | ||||||||||||||||||
Provision | 7,170 | 12,315 | 643 | 12,601 | 2,614 | 35,343 | ||||||||||||||||||
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Ending balance | $ | 11,648 | $ | 38,220 | $ | 14,786 | $ | 28,144 | $ | 4,612 | $ | 97,410 | ||||||||||||
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| Three Months Ended March 31, | ||||||||||||||||||||||||
| Construction and Land Development | Commercial Real Estate | Residential Real Estate | Commercial and Industrial | Consumer | Total | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| 2014 | ||||||||||||||||||||||||
| Beginning Balance | $ | 14,519 | $ | 32,064 | $ | 11,640 | $ | 39,657 | $ | 2,170 | $ | 100,050 | ||||||||||||
| Charge-offs | — | (171 | ) | (406 | ) | (1,478 | ) | (12 | ) | (2,067 | ) | |||||||||||||
| Recoveries | 211 | 560 | 553 | 922 | 170 | 2,416 | ||||||||||||||||||
| Provision | 1,970 | 2,400 | (490 | ) | 392 | (772 | ) | 3,500 | ||||||||||||||||
| Ending balance | $ | 16,700 | $ | 34,853 | $ | 11,297 | $ | 39,493 | $ | 1,556 | $ | 103,899 | ||||||||||||
| 2013 | ||||||||||||||||||||||||
| Beginning Balance | $ | 10,554 | $ | 34,982 | $ | 15,237 | $ | 32,860 | $ | 1,794 | $ | 95,427 | ||||||||||||
| Charge-offs | (614 | ) | (2,887 | ) | (2,493 | ) | (1,770 | ) | (275 | ) | (8,039 | ) | ||||||||||||
| Recoveries | 701 | 942 | 569 | 441 | 14 | 2,667 | ||||||||||||||||||
| Provision | 398 | 1,864 | 1,282 | 2,654 | (759 | ) | 5,439 | |||||||||||||||||
| Ending balance | $ | 11,039 | $ | 34,901 | $ | 14,595 | $ | 34,185 | $ | 774 | $ | 95,494 | ||||||||||||
| Commercial | Commercial | |||||||||||||||||||||||||||||||
| Real Estate- | Real Estate- | Commercial | Residential | Construction | ||||||||||||||||||||||||||||
| Owner | Non-Owner | and | Real | and Land | Commercial | Total | ||||||||||||||||||||||||||
| Occupied | Occupied | Industrial | Estate | Development | Leases | Consumer | Loans | |||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||
Loans Held for Investment as of September 30, 2013: | ||||||||||||||||||||||||||||||||
Recorded Investment: | ||||||||||||||||||||||||||||||||
Impaired loans with an allowance recorded | $ | 2,440 | $ | 7,654 | $ | 2,285 | $ | 6,018 | $ | 2,178 | $ | 114 | $ | 28 | $ | 20,717 | ||||||||||||||||
Impaired loans with no allowance recorded | 43,076 | 46,398 | 11,821 | 26,793 | 24,570 | 353 | 503 | 153,514 | ||||||||||||||||||||||||
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| |||||||||||||||||
Total loans individually evaluated for impairment | 45,516 | 54,052 | 14,106 | 32,811 | 26,748 | 467 | 531 | 174,231 | ||||||||||||||||||||||||
Loans collectively evaluated for impairment | 1,482,207 | 1,709,255 | 1,976,080 | 323,942 | 432,521 | 243,845 | 29,319 | 6,197,169 | ||||||||||||||||||||||||
Loans acquired with deteriorated credit quality | 23,464 | 101,026 | 382 | 2,209 | 495 | — | — | 127,576 | ||||||||||||||||||||||||
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Total loans held for investment | $ | 1,551,187 | $ | 1,864,333 | $ | 1,990,568 | $ | 358,962 | $ | 459,764 | $ | 244,312 | $ | 29,850 | $ | 6,498,976 | ||||||||||||||||
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Unpaid Principal Balance | ||||||||||||||||||||||||||||||||
Impaired loans with an allowance recorded | $ | 2,933 | $ | 8,169 | $ | 2,498 | $ | 6,082 | $ | 2,178 | $ | 114 | $ | 28 | 22,002 | |||||||||||||||||
Impaired loans with no allowance recorded | 49,720 | 48,656 | 12,325 | 33,706 | 25,223 | 505 | 515 | 170,650 | ||||||||||||||||||||||||
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| |||||||||||||||||
Total loans individually evaluated for impairment | 52,653 | 56,825 | 14,823 | 39,788 | 27,401 | 619 | 543 | 192,652 | ||||||||||||||||||||||||
Loans collectively evaluated for impairment | 1,482,207 | 1,709,255 | 1,976,080 | 323,942 | 432,521 | 243,845 | 29,319 | 6,197,169 | ||||||||||||||||||||||||
Loans acquired with deteriorated credit quality | 33,112 | 145,235 | 1,513 | 3,750 | 827 | — | — | 184,437 | ||||||||||||||||||||||||
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| �� |
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| |||||||||||||||||
Total loans held for investment | $ | 1,567,972 | $ | 1,911,315 | $ | 1,992,416 | $ | 367,480 | $ | 460,749 | $ | 244,464 | $ | 29,862 | $ | 6,574,258 | ||||||||||||||||
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| |||||||||||||||||
Related Allowance for Credit Losses | ||||||||||||||||||||||||||||||||
Impaired loans with an allowance recorded | $ | 580 | $ | 810 | $ | 1,004 | $ | 2,594 | $ | 831 | $ | 86 | $ | 4 | 5,909 | |||||||||||||||||
Impaired loans with no allowance recorded | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
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| |||||||||||||||||
Total loans individually evaluated for impairment | 580 | 810 | 1,004 | 2,594 | 831 | 86 | 4 | 5,909 | ||||||||||||||||||||||||
Loans collectively evaluated for impairment | 14,255 | 16,845 | 35,482 | 10,298 | 9,216 | 2,863 | 1,610 | 90,569 | ||||||||||||||||||||||||
Loans acquired with deteriorated credit quality | — | 1,373 | — | — | — | — | — | 1,373 | ||||||||||||||||||||||||
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|
|
|
|
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|
|
|
|
|
|
|
|
| |||||||||||||||||
Total loans held for investment | $ | 14,835 | $ | 19,028 | $ | 36,486 | $ | 12,892 | $ | 10,047 | $ | 2,949 | $ | 1,614 | $ | 97,851 | ||||||||||||||||
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| |||||||||||||||||
| Commercial | Commercial | |||||||||||||||||||||||||||||||
| Real Estate- | Real Estate- | Commercial | Residential | Construction | ||||||||||||||||||||||||||||
| Owner | Non-Owner | and | Real | and Land | Commercial | Total | ||||||||||||||||||||||||||
| Occupied | Occupied | Industrial | Estate | Development | Leases | Consumer | Loans | |||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||
Loans Held for Investment as of December 31, 2012: | ||||||||||||||||||||||||||||||||
Recorded Investment: | ||||||||||||||||||||||||||||||||
Impaired loans with an allowance recorded | $ | 13,615 | $ | 15,217 | $ | 4,700 | $ | 16,482 | $ | 844 | $ | 515 | $ | 165 | $ | 51,538 | ||||||||||||||||
Impaired loans with no allowance recorded | 44,459 | 37,247 | 10,831 | 21,369 | 31,648 | 464 | 599 | 146,617 | ||||||||||||||||||||||||
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| |||||||||||||||||
Total loans individually evaluated for impairment | 58,074 | 52,464 | 15,531 | 37,851 | 32,492 | 979 | 764 | 198,155 | ||||||||||||||||||||||||
Loans collectively evaluated for impairment | 1,332,185 | 1,440,214 | 1,642,313 | 368,034 | 361,074 | 287,768 | 31,072 | 5,462,660 | ||||||||||||||||||||||||
Loans acquired with deteriorated credit quality | 6,538 | 12,922 | 1,159 | 2,052 | 753 | — | — | 23,424 | ||||||||||||||||||||||||
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| |||||||||||||||||
Total loans held for investment | $ | 1,396,797 | $ | 1,505,600 | $ | 1,659,003 | $ | 407,937 | $ | 394,319 | $ | 288,747 | $ | 31,836 | $ | 5,684,239 | ||||||||||||||||
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Unpaid Principal Balance | ||||||||||||||||||||||||||||||||
Impaired loans with an allowance recorded | $ | 13,634 | $ | 18,746 | $ | 9,877 | $ | 17,837 | $ | 848 | $ | 515 | $ | 540 | $ | 61,997 | ||||||||||||||||
Impaired loans with no allowance recorded | 54,947 | 43,208 | 11,248 | 27,098 | 35,669 | 464 | 612 | 173,246 | ||||||||||||||||||||||||
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| |||||||||||||||||
Total loans individually evaluated for impairment | 68,581 | 61,954 | 21,125 | 44,935 | 36,517 | 979 | 1,152 | 235,243 | ||||||||||||||||||||||||
Loans collectively evaluated for impairment | 1,332,185 | 1,440,214 | 1,642,313 | 368,034 | 361,074 | 287,768 | 31,072 | 5,462,660 | ||||||||||||||||||||||||
Loans acquired with deteriorated credit quality | 11,893 | 18,397 | 3,730 | 3,811 | 1,170 | — | — | 39,001 | ||||||||||||||||||||||||
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| |||||||||||||||||
Total loans held for investment | $ | 1,412,659 | $ | 1,520,565 | $ | 1,667,168 | $ | 416,780 | $ | 398,761 | $ | 288,747 | $ | 32,224 | $ | 5,736,904 | ||||||||||||||||
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| |||||||||||||||||
Related Allowance for Credit Losses | ||||||||||||||||||||||||||||||||
Impaired loans with an allowance recorded | $ | 2,815 | $ | 1,602 | $ | 2,314 | $ | 5,448 | $ | 284 | $ | 238 | $ | 165 | $ | 12,866 | ||||||||||||||||
Impaired loans with no allowance recorded | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
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| |||||||||||||||||
Total loans individually evaluated for impairment | 2,815 | 1,602 | 2,314 | 5,448 | 284 | 238 | 165 | 12,866 | ||||||||||||||||||||||||
Loans collectively evaluated for impairment | 15,118 | 15,447 | 27,546 | 9,789 | 10,270 | 2,762 | 1,629 | 82,561 | ||||||||||||||||||||||||
Loans acquired with deteriorated credit quality | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
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| |||||||||||||||||
Total loans held for investment | $ | 17,933 | $ | 17,049 | $ | 29,860 | $ | 15,237 | $ | 10,554 | $ | 3,000 | $ | 1,794 | $ | 95,427 | ||||||||||||||||
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As
Commercial Real Estate- Owner Occupied | Commercial Real Estate- Non-Owner Occupied | Commercial and Industrial | Residential Real Estate | Construction and Land Development | Commercial Leases | Consumer | Total Loans | |||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||
| Loans as of March 31, 2014: | ||||||||||||||||||||||||||||||||
| Recorded Investment: | ||||||||||||||||||||||||||||||||
| Impaired loans with an allowance recorded | $ | 1,462 | $ | 13,503 | $ | 940 | $ | 6,111 | $ | — | $ | 83 | $ | 28 | $ | 22,127 | ||||||||||||||||
| Impaired loans with no allowance recorded | 33,867 | 55,253 | 14,293 | 22,915 | 22,012 | 349 | 446 | 149,135 | ||||||||||||||||||||||||
| Total loans individually evaluated for impairment | 35,329 | 68,756 | 15,233 | 29,026 | 22,012 | 432 | 474 | 171,262 | ||||||||||||||||||||||||
| Loans collectively evaluated for impairment | 1,548,059 | 1,691,360 | 2,486,004 | 313,376 | 531,615 | 221,484 | 37,856 | 6,829,754 | ||||||||||||||||||||||||
| Loans acquired with deteriorated credit quality | 22,855 | 89,095 | 262 | 2,457 | 28 | — | — | 114,697 | ||||||||||||||||||||||||
| Total loans | $ | 1,606,243 | $ | 1,849,211 | $ | 2,501,499 | $ | 344,859 | $ | 553,655 | $ | 221,916 | $ | 38,330 | $ | 7,115,713 | ||||||||||||||||
| Unpaid Principal Balance | ||||||||||||||||||||||||||||||||
| Impaired loans with an allowance recorded | $ | 1,462 | $ | 13,503 | $ | 1,153 | $ | 6,260 | $ | — | $ | 83 | $ | 28 | $ | 22,489 | ||||||||||||||||
| Impaired loans with no allowance recorded | 39,398 | 58,050 | 14,859 | 28,567 | 23,117 | 501 | 459 | 164,951 | ||||||||||||||||||||||||
| Total loans individually evaluated for impairment | 40,860 | 71,553 | 16,012 | 34,827 | 23,117 | 584 | 487 | 187,440 | ||||||||||||||||||||||||
| Loans collectively evaluated for impairment | 1,548,059 | 1,691,360 | 2,486,004 | 313,376 | 531,615 | 221,484 | 37,856 | 6,829,754 | ||||||||||||||||||||||||
| Loans acquired with deteriorated credit quality | 30,841 | 120,728 | 870 | 3,709 | 100 | — | — | 156,248 | ||||||||||||||||||||||||
| Total loans | $ | 1,619,760 | $ | 1,883,641 | $ | 2,502,886 | $ | 351,912 | $ | 554,832 | $ | 222,068 | $ | 38,343 | $ | 7,173,442 | ||||||||||||||||
| Related Allowance for Credit Losses | ||||||||||||||||||||||||||||||||
| Impaired loans with an allowance recorded | $ | 450 | $ | 803 | $ | 666 | $ | 1,938 | $ | — | $ | 65 | $ | 3 | $ | 3,925 | ||||||||||||||||
| Impaired loans with no allowance recorded | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Total loans individually evaluated for impairment | 450 | 803 | 666 | 1,938 | — | 65 | 3 | 3,925 | ||||||||||||||||||||||||
| Loans collectively evaluated for impairment | 13,563 | 18,625 | 36,155 | 9,359 | 16,700 | 2,607 | 1,553 | 98,562 | ||||||||||||||||||||||||
| Loans acquired with deteriorated credit quality | — | 1,412 | — | — | — | — | — | 1,412 | ||||||||||||||||||||||||
| Total loans | $ | 14,013 | $ | 20,840 | $ | 36,821 | $ | 11,297 | $ | 16,700 | $ | 2,672 | $ | 1,556 | $ | 103,899 | ||||||||||||||||
Commercial Real Estate- Owner Occupied | Commercial Real Estate- Non-Owner Occupied | Commercial and Industrial | Residential Real Estate | Construction and Land Development | Commercial Leases | Consumer | Total Loans | |||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||
| Loans as of December 31, 2013: | ||||||||||||||||||||||||||||||||
| Recorded Investment: | ||||||||||||||||||||||||||||||||
| Impaired loans with an allowance recorded | $ | 1,092 | $ | 17,932 | $ | 1,907 | $ | 4,580 | $ | 118 | $ | 99 | $ | 26 | $ | 25,754 | ||||||||||||||||
| Impaired loans with no allowance recorded | 36,810 | 55,220 | 14,985 | 21,796 | 22,951 | 350 | 511 | 152,623 | ||||||||||||||||||||||||
| Total loans individually evaluated for impairment | 37,902 | 73,152 | 16,892 | 26,376 | 23,069 | 449 | 537 | 178,377 | ||||||||||||||||||||||||
| Loans collectively evaluated for impairment | 1,500,740 | 1,678,242 | 2,219,500 | 321,683 | 513,681 | 235,519 | 44,616 | 6,513,981 | ||||||||||||||||||||||||
| Loans acquired with deteriorated credit quality | 23,220 | 92,021 | 348 | 2,253 | 481 | — | — | 118,323 | ||||||||||||||||||||||||
| Total loans | $ | 1,561,862 | $ | 1,843,415 | $ | 2,236,740 | $ | 350,312 | $ | 537,231 | $ | 235,968 | $ | 45,153 | $ | 6,810,681 | ||||||||||||||||
| Unpaid Principal Balance | ||||||||||||||||||||||||||||||||
| Impaired loans with an allowance recorded | $ | 1,092 | $ | 19,273 | $ | 2,120 | $ | 4,729 | $ | 118 | $ | 99 | $ | 27 | $ | 27,458 | ||||||||||||||||
| Impaired loans with no allowance recorded | 43,537 | 58,322 | 15,731 | 27,550 | 24,137 | 502 | 523 | 170,302 | ||||||||||||||||||||||||
| Total loans individually evaluated for impairment | 44,629 | 77,595 | 17,851 | 32,279 | 24,255 | 601 | 550 | 197,760 | ||||||||||||||||||||||||
| Loans collectively evaluated for impairment | 1,500,740 | 1,678,242 | 2,219,500 | 321,683 | 513,681 | 235,519 | 44,616 | 6,513,981 | ||||||||||||||||||||||||
| Loans acquired with deteriorated credit quality | 34,951 | 130,279 | 1,403 | 3,728 | 804 | — | — | 171,165 | ||||||||||||||||||||||||
| Total loans | $ | 1,580,320 | $ | 1,886,116 | $ | 2,238,754 | $ | 357,690 | $ | 538,740 | $ | 236,120 | $ | 45,166 | $ | 6,882,906 | ||||||||||||||||
| Related Allowance for Credit Losses | ||||||||||||||||||||||||||||||||
| Impaired loans with an allowance recorded | $ | 402 | $ | 2,121 | $ | 702 | $ | 1,896 | $ | 85 | $ | 70 | $ | 4 | $ | 5,280 | ||||||||||||||||
| Impaired loans with no allowance recorded | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Total loans individually evaluated for impairment | 402 | 2,121 | 702 | 1,896 | 85 | 70 | 4 | 5,280 | ||||||||||||||||||||||||
| Loans collectively evaluated for impairment | 12,158 | 17,061 | 36,344 | 9,744 | 14,434 | 2,541 | 2,166 | 94,448 | ||||||||||||||||||||||||
| Loans acquired with deteriorated credit quality | — | 322 | — | — | — | — | — | 322 | ||||||||||||||||||||||||
| Total loans | $ | 12,560 | $ | 19,504 | $ | 37,046 | $ | 11,640 | $ | 14,519 | $ | 2,611 | $ | 2,170 | $ | 100,050 | ||||||||||||||||
During the secondfourth quarter of 2013 that the Company further revised its methodology for calculating the allowance for credit losses. Previously, the Company calculated5-year historical loss factors based on net charge-offs. During the second quarter of 2013, the Company recognized elevated recoveries primarily related to earlier charge-offs stemming from the economic downturn. The Company believes that gross charge-offs isrates were a better representation of the loss characteristicslonger-term expectations for the current economic environment. This change in methodology resulted in an increase ofprobable losses. Accordingly, the allowance for credit losses of $7.2 millioncalculation for the quarter ended June 30, 2013.
March 31, 2014 continues to apply a 100% weight to the 5-year historical loss rate (per loan category).
| Three Months Ended | ||||||||||||||||||||||||
| September 30, 2013 | ||||||||||||||||||||||||
| Number of Loans | Pre-Modification Outstanding Recorded Investment | Forgiven Principal Balance | Lost Interest Income (1) | Post-Modification Outstanding Recorded Investment | Waived Fees and Other Expenses | |||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||
Owner occupied | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Non-owner occupied | — | — | — | — | — | — | ||||||||||||||||||
Multi-family | — | — | — | — | — | — | ||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||
Commercial | 3 | 1,253 | — | 10 | 1,243 | — | ||||||||||||||||||
Leases | — | — | — | — | — | — | ||||||||||||||||||
Construction and land development | ||||||||||||||||||||||||
Construction | — | — | — | — | — | — | ||||||||||||||||||
Land | — | — | — | — | — | — | ||||||||||||||||||
Residential real estate | 3 | 2,304 | 267 | 613 | 1,424 | 9 | ||||||||||||||||||
Consumer | — | — | — | — | — | — | ||||||||||||||||||
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Total | 6 | $ | 3,557 | $ | 267 | $ | 623 | $ | 2,667 | $ | 9 | |||||||||||||
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Commercial real estate Owner occupied Non-owner occupied Multi-family Commercial and industrial Commercial Leases Construction and land development Construction Land Residential real estate Consumer Total Nine Months Ended September 30, 2013 Pre-Modification Forgiven Lost Post-Modification Waived Fees Number Outstanding Principal Interest Outstanding and Other of Loans Recorded Investment Balance Income (1) Recorded Investment Expenses (dollars in thousands) 7 $ 3,506 $ — $ 54 $ 3,452 $ 28 5 10,735 1,030 63 9,642 14 — — — — — — 11 3,611 — 19 3,592 11 — — — — — — — — — — — — 2 286 — — 286 1 12 5,308 267 887 4,154 24 2 74 — 5 69 3 39 $ 23,520 $ 1,297 $ 1,028 $ 21,195 $ 81
| Three Months Ended September 30, 2012 | ||||||||||||||||||||||||
| Pre-Modification | Forgiven | Lost | Post-Modification | Waived Fees | ||||||||||||||||||||
| Number | Outstanding | Principal | Interest | Outstanding | and Other | |||||||||||||||||||
| of Loans | Recorded Investment | Balance | Income (1) | Recorded Investment | Expenses | |||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||
Owner occupied | 2 | $ | 3,111 | $ | — | $ | 28 | $ | 3,083 | $ | 11 | |||||||||||||
Non-owner occupied | 10 | 19,773 | 10 | 194 | 19,569 | 5 | ||||||||||||||||||
Multi-family | — | — | — | — | — | — | ||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||
Commercial | — | — | — | — | — | — | ||||||||||||||||||
Leases | — | — | — | — | — | — | ||||||||||||||||||
Construction and land development | ||||||||||||||||||||||||
Construction | — | — | — | — | — | — | ||||||||||||||||||
Land | 1 | 2,581 | — | 26 | 2,555 | — | ||||||||||||||||||
Residential real estate | 4 | 4,113 | — | 163 | 3,950 | 1 | ||||||||||||||||||
Consumer | 1 | 46 | — | 3 | 43 | 2 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | 18 | $ | 29,624 | $ | 10 | $ | 414 | $ | 29,200 | $ | 19 | |||||||||||||
|
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|
|
|
|
|
|
|
|
|
| |||||||||||||
| Nine Months Ended September 30, 2012 | ||||||||||||||||||||||||
| Pre-Modification | Forgiven | Lost | Post-Modification | Waived Fees | ||||||||||||||||||||
| Number | Outstanding | Principal | Interest | Outstanding | and Other | |||||||||||||||||||
| of Loans | Recorded Investment | Balance | Income (1) | Recorded Investment | Expenses | |||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||
Owner occupied | 14 | $ | 21,740 | $ | 750 | $ | 493 | $ | 20,497 | $ | 71 | |||||||||||||
Non-owner occupied | 15 | 33,629 | 440 | 321 | 32,868 | 16 | ||||||||||||||||||
Multi-family | — | — | — | — | — | — | ||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||
Commercial | 14 | 7,707 | — | 26 | 7,681 | 37 | ||||||||||||||||||
Leases | — | — | — | — | — | — | ||||||||||||||||||
Construction and land development | ||||||||||||||||||||||||
Construction | — | — | — | — | — | — | ||||||||||||||||||
Land | 6 | 6,460 | — | 259 | 6,201 | 12 | ||||||||||||||||||
Residential real estate | 19 | 10,306 | 40 | 1,148 | 9,118 | 8 | ||||||||||||||||||
Consumer | 3 | 114 | — | 3 | 111 | 2 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | 71 | $ | 79,956 | $ | 1,230 | $ | 2,250 | $ | 76,476 | $ | 146 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| Three Months Ended March 31, 2014 | |||||||||||||||||||||||
Number of Loans | Pre-Modification Outstanding Recorded Investment | Forgiven Principal Balance | Lost Interest Income | Post-Modification Outstanding Recorded Investment | Waived Fees and Other Expenses | ||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Commercial real estate | |||||||||||||||||||||||
| Owner occupied | 1 | $ | 798 | $ | 378 | $ | 117 | $ | 303 | $ | 33 | ||||||||||||
| Non-owner occupied | — | — | — | — | — | — | |||||||||||||||||
| Multi-family | — | — | — | — | — | — | |||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||
| Commercial | 1 | 63 | — | — | 63 | 3 | |||||||||||||||||
| Leases | — | — | — | — | — | — | |||||||||||||||||
| Construction and land development | |||||||||||||||||||||||
| Construction | — | — | — | — | — | — | |||||||||||||||||
| Land | — | — | — | — | — | — | |||||||||||||||||
| Residential real estate | 1 | 405 | 166 | 37 | 202 | — | |||||||||||||||||
| Consumer | — | — | — | — | — | — | |||||||||||||||||
| Total | 3 | $ | 1,266 | $ | 544 | $ | 154 | $ | 568 | $ | 36 | ||||||||||||
| Three Months Ended March 31, 2013 | |||||||||||||||||||||||
Number of Loans | Pre-Modification Outstanding Recorded Investment | Forgiven Principal Balance | Lost Interest Income | Post-Modification Outstanding Recorded Investment | Waived Fees and Other Expenses | ||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Commercial real estate | |||||||||||||||||||||||
| Owner occupied | 5 | $ | 2,686 | $ | — | $ | 54 | $ | 2,632 | $ | — | ||||||||||||
| Non-owner occupied | 4 | 10,318 | 1,030 | 63 | 9,225 | 7 | |||||||||||||||||
| Multi-family | — | — | — | — | — | — | |||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||
| Commercial | 5 | 1,846 | — | 10 | 1,836 | 8 | |||||||||||||||||
| Leases | — | — | — | — | — | — | |||||||||||||||||
| Construction and land development | |||||||||||||||||||||||
| Construction | — | — | — | — | — | — | |||||||||||||||||
| Land | 2 | 286 | — | — | 286 | 1 | |||||||||||||||||
| Residential real estate | 1 | 40 | — | 6 | 34 | 3 | |||||||||||||||||
| Consumer | 1 | 39 | — | — | 39 | 3 | |||||||||||||||||
| Total | 18 | $ | 15,215 | $ | 1,030 | $ | 133 | $ | 14,052 | $ | 22 | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||||||
| Number | Recorded | Number | Recorded | Number | Recorded | Number | Recorded | |||||||||||||||||||||||||
| of Loans | Investment | of Loans | Investment | of Loans | Investment | of Loans | Investment | |||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||||||||
Owner occupied | — | $ | — | 5 | $ | 4,263 | 3 | $ | 2,506 | 10 | $ | 10,611 | ||||||||||||||||||||
Non-owner occupied | 2 | 1,330 | 1 | 1,049 | 3 | 1,490 | 3 | 4,442 | ||||||||||||||||||||||||
Multi-family | — | — | — | — | — | — | 1 | 193 | ||||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||||||||||
Commercial | 1 | 307 | 3 | 1,794 | 3 | 1,089 | 7 | 6,700 | ||||||||||||||||||||||||
Leases | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Construction and land development | ||||||||||||||||||||||||||||||||
Construction | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Land | — | — | 1 | 347 | 2 | 330 | 5 | 4,013 | ||||||||||||||||||||||||
Residential real estate | — | — | 3 | 3,823 | 2 | 655 | 5 | 4,143 | ||||||||||||||||||||||||
Consumer | — | — | — | — | — | — | 1 | 375 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 3 | $ | 1,637 | 13 | $ | 11,276 | 13 | $ | 6,070 | 32 | $ | 30,477 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||
| 2014 | 2013 | |||||||||||||
Number of Loans | Recorded Investment | Number of Loans | Recorded Investment | |||||||||||
| (dollars in thousands) | ||||||||||||||
| Commercial real estate | ||||||||||||||
| Owner occupied | 1 | $ | 303 | 3 | $ | 2,506 | ||||||||
| Non-owner occupied | — | — | 1 | 160 | ||||||||||
| Multi-family | — | — | — | — | ||||||||||
| Commercial and industrial | ||||||||||||||
| Commercial | 1 | 63 | 2 | 782 | ||||||||||
| Leases | — | — | — | — | ||||||||||
| Construction and land development | ||||||||||||||
| Construction | — | — | — | — | ||||||||||
| Land | — | — | 2 | 330 | ||||||||||
| Residential real estate | 1 | 202 | 2 | 655 | ||||||||||
| Consumer | — | — | — | — | ||||||||||
| Total | 3 | $ | 568 | 10 | $ | 4,433 | ||||||||
Payment defaults, along with other qualitative indicators, are considered by management in the determination of the allowance for credit losses.
loans.
In
| For the Three Months Ended September 30, | ||||||||||||||||||||||||
| 2013 | 2012 | |||||||||||||||||||||||
| Gross Balance | Valuation Allowance | Net Balance | Gross Balance | Valuation Allowance | Net Balance | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
Balance, beginning of the period | $ | 102,923 | $ | (26,424 | ) | $ | 76,499 | $ | 120,391 | $ | (43,397 | ) | $ | 76,994 | ||||||||||
Transfers to other assets acquired through foreclosure, net | 2,737 | — | 2,737 | 10,807 | — | 10,807 | ||||||||||||||||||
Proceeds from sale of other real estate owned and repossessed assets, net | (3,411 | ) | 1,055 | (2,356 | ) | (13,733 | ) | 4,335 | (9,398 | ) | ||||||||||||||
Valuation adjustments, net | — | (697 | ) | (697 | ) | — | (781 | ) | (781 | ) | ||||||||||||||
Gains (losses), net(1) | 292 | — | 292 | 611 | — | 611 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balance, end of period | $ | 102,541 | $ | (26,066 | ) | $ | 76,475 | $ | 118,076 | $ | (39,843 | ) | $ | 78,233 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| Three Months Ended March 31, | ||||||||||||
| 2014 | ||||||||||||
| Gross Balance | Valuation Allowance | Net Balance | ||||||||||
| (in thousands) | ||||||||||||
| Balance, beginning of the period | $ | 88,421 | $ | (21,702 | ) | $ | 66,719 | |||||
| Transfers to other assets acquired through foreclosure, net | 2,110 | — | 2,110 | |||||||||
| Proceeds from sale of other real estate owned and repossessed assets, net | (19,473 | ) | 5,961 | (13,512 | ) | |||||||
| Valuation adjustments, net | — | (35 | ) | (35 | ) | |||||||
| Gains, net (1) | 1,168 | — | 1,168 | |||||||||
| Balance, end of period | $ | 72,226 | $ | (15,776 | ) | $ | 56,450 | |||||
| 2013 | ||||||||||||
| Balance, beginning of the period | $ | 113,474 | $ | (36,227 | ) | $ | 77,247 | |||||
| Transfers to other assets acquired through foreclosure, net | 6,609 | — | 6,609 | |||||||||
| Proceeds from sale of other real estate owned and repossessed assets, net | (12,120 | ) | 6,747 | (5,373 | ) | |||||||
| Valuation adjustments, net | — | (1,017 | ) | (1,017 | ) | |||||||
| Gains, net (1) | 455 | — | 455 | |||||||||
| Balance, end of period | $ | 108,418 | $ | (30,497 | ) | $ | 77,921 | |||||
| (1) |
Balance, beginning of the period Transfers to other assets acquired through foreclosure, net Additions from acquisition of Centennial Proceeds from sale of other real estate owned and repossessed assets, net Valuation adjustments, net Gains (losses), net(1) Balance, end of period For the Nine Months Ended September 30, 2013 2012 Gross Balance Valuation
Allowance Net Balance Gross Balance Valuation
Allowance Net Balance (in thousands) $ 113,474 $ (36,227 ) $ 77,247 $ 135,148 $ (46,044 ) $ 89,104 14,010 — 14,010 19,522 — 19,522 5,622 — 5,622 — — — (32,953 ) 12,440 (20,513 ) (36,911 ) 10,261 (26,650 ) — (2,279 ) (2,279 ) — (4,060 ) (4,060 ) 2,388 — 2,388 317 — 317 $ 102,541 $ (26,066 ) $ 76,475 $ 118,076 $ (39,843 ) $ 78,233
|
At September 30, 2013 and 2012, the majority of the Company’s repossessed assets wereconsisted of properties located in Nevada.
Short Term: Federal funds purchased Revolving line of credit FHLB advances Total short term debt Long Term: FHLB advances Other long term debt the borrowing. consolidated balance sheets. Commitments to extend credit, including unsecured loan commitments of $266,189 at September 30, 2013 and $172,002 at December 31, 2012 Credit card commitments and financial guarantees Standby letters of credit, including unsecured letters of credit of $4,032 at September 30, 2013 and $3,915 at December 31, 2012 Total Beginning balance Other comprehensive income before reclassifications Amounts reclassified from accumulated other comprehensive income Net current-period other comprehensive income Ending balance Beginning balance Other comprehensive income before reclassifications Amounts reclassified from accumulated other comprehensive income Net current-period other comprehensive income Ending balance comprehensive income components where net income is presented Unrealized gains and losses on AFS comprehensive income components where net income is presented Unrealized gains and losses on AFS Weighted average shares—basic Dilutive effect of stock awards Weighted average shares—diluted Net income available to common shareholders Earnings per share—basic Earnings per share—diluted Policies" of these Notes to Unaudited Consolidated Financial Statements. Description Three Months Ended September 30, 2013 Securities measured at fair value Junior subordinated debt Nine Months Ended September 30, 2013 Securities measured at fair value Junior subordinated debt Description Three Months Ended September 30, 2012 Securities measured at fair value Junior subordinated debt Nine Months Ended September 30, 2012 Securities measured at fair value Junior subordinated debt Net losses for the period on trading securities included in earnings Less: net gains and (losses) recognized during the period on trading securities sold during the period Change in unrealized gains or (losses) for the period included in earnings for trading securities held at the end of the reporting period reporting date: September 30, 2013 Assets: Measured at fair value Direct U.S. obligations and GSE residential mortgage- backed securities Available-for-sale U.S. Government-sponsored agency securities Municipal obligations Direct U.S. obligations and GSE residential mortgage-backed securities Mutual funds Private label residential mortgage-backed securities Adjustable-rate preferred stock Trust preferred Collateralized mortgage-backed securities Other Interest rate swaps Liabilities: Securities sold short Junior subordinated debt Interest rate swaps December 31, 2012 Assets: Measured at fair value Direct U.S. obligations and GSE residential mortgage- backed securities Available-for-sale Municipal obligations Direct U.S. obligations and GSE residential mortgage-backed securities Mutual funds Private label residential mortgage-backed securities Private label commercial mortgage-backed securities Adjustable-rate preferred stock Trust preferred Other Interest rate swaps Liabilities: Junior subordinated debt Interest rate swaps Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Opening balance Transfers into Level 3 Transfers out of Level 3 Total gains or losses for the period Included in earnings (or changes in net assets) (1) Included in other comprehensive income Purchases, sales, and settlements Purchases Sales Settlements Closing balance Change in unrealized gains (losses) for the period included in earnings (or changes in net assets) held at the end of the reporting period. 6. AND OTHER LIABILITIESSeptember 30, 2013March 31, 2014 and December 31, 2012: September 30, December 31, 2013 2012 (in thousands) $ 13,285 $ — 32,500 — — 120,000 $ 45,785 $ 120,000 $ 274,277 $ — 74,043 73,717 $ 348,320 $ 73,717 Federal funds purchased consist2013: March 31, 2014 December 31, 2013 (in thousands) Short-Term: Revolving line of credit $ 5,000 $ 3,000 FHLB advances 56,324 25,906 Total short-term borrowings $ 61,324 $ 28,906 Long-Term: FHLB advances $ 217,166 $ 247,973 Other long term debt 64,326 64,217 Total long-term borrowings $ 281,492 $ 312,190 unsecured advancescredit totaling $70.0 million, of excess balances in reserve accounts held at the Federal Reserve Bank (“FRB”) providedwhich $25.0 million is secured by third parties. During the third quarter of 2013, the Company purchased federal funds to enhance efficiency.pledged securities and $45.0 million is unsecured. As of September 30, 2013, federal funds purchased totaled $13.3 million.At September 30, 2013,March 31, 2014, the Company had revolvingoutstanding advances on the $25.0 million secured line of credit totaling $5.0 million at an interest rate of with otheras of March 31, 2014. The lending institutions with outstanding advances totaling $32.5 million. The interest rates on these advances range from 1.75% to 4.70% and have a weighted averagewill determine the interest rate charged on borrowings at the time of 2.43%.The Company also maintains credit lines with other sources secured by pledged securities. AsAt March 31, 2014, there was $56.3 million of September 30, 2013, the Company had no short-term FHLB or FRB advances.In 2010, the Company completed a public offering of $75.0 million, at a discount, in principal Senior Notes due in 2015, bearing interest of 10%. In the first quarter of 2013, the Company executed a long-term FHLB advance for $200.0 million, bearing interest of 1.04%, due January 2, 2018. As part of the Centennial acquisition, the Company acquired long-term FHLB advances of $77.2 million, of which, $5.0 million was repaid during the second quarter 2013. These advances were purchased at a premium of $2.5 million,classified as short-term, with interest rates ranging from 1.56% to 3.05% and a weighted average interest rate of 2.67%2.91%. At December 31, 2013, short-term FHLB advances had a weighted average interest rate of 2.90%.costrate on all long-term debt was 3.30%3.16% and 3.65% for the three and nine months ended September 30,March 31, 2014 and 2013, and 10.80% and 10.81% for the three and nine months ended September 30, 2012, respectively.September 30, 2013March 31, 2014 and December 31, 2012,2013, the Company had additional available credit with the FHLB of approximately $1.05$1.03 billion and $952.8 million,$1.39 billion, respectively, and with the FRB of approximately $598.3$1.00 billion and $588.2 million, and $600.6 million, respectively.During the first three quarters of 2013, the Company entered into a Treasury short transaction to mitigate the Company’s modest liability sensitive interest rate risk profile. The Company sold short fixed-rate Treasury securities and invested the proceeds in a short-term repurchase agreement with a balance of $126.7 million as of September 30, 2013.7.Consolidated Balance Sheets.borrower’sborrower's current financial condition may indicate less ability to pay than when the commitment was originally made. In the case of standby letters of credit, the risk arises from the possibility of thepotential failure of the customer to perform according to the terms of a contract. In such a situation, the third party might draw on the standby letter of credit to pay for completion of the contract and the Company would look to its customer to repay these funds with interest. To minimize the risk, the Company uses the same credit policies in making commitments and conditional obligations as it would for a loan to that customer. September 30 December 31, 2013 2012 (in thousands) $ 1,692,150 $ 1,096,264 287,186 295,506 28,105 32,757 $ 2,007,441 $ 1,424,527 March 31, 2014 December 31, 2013 (in thousands) Commitments to extend credit, including unsecured loan commitments of $221,669 at March 31, 2014 and $237,063 at December 31, 2013 $ 1,840,740 $ 1,878,340 Credit card commitments and financial guarantees 33,932 33,632 Standby letters of credit, including unsecured letters of credit of $5,957 at March 31, 2014 and $4,896 at December 31, 2013 38,501 31,271 Total $ 1,913,173 $ 1,943,243 Management’smanagement’s credit evaluation of the party. The commitments are collateralized by the same types of assets used as loan collateral. The unfunded commitments on the credit cards loans held for sale at September 30, 2013 and December 31, 2012 was $2.8 million and $262.6 million, respectively.Note 4, “Loans,"Note 3. Loans, Leases and Allowance for Credit Losses”Losses" of thesethe Unaudited Consolidated Financial Statements and are accounted for as a separate loss contingency as a liability.contingency. This loss contingency for unfunded loan commitments and letters of credit was $2.0$2.1 million and $1.3$2.0 million as of September 30, 2013March 31, 2014 and December 31, 2012,2013, respectively. Changes to this liability are adjusted through other non-interest expense.primarily driven in large part by the customers served in the market areas where the Company has branch offices in the states of Arizona, Nevada California and Arizona.California. Despite the geographic concentration of lending activities, the Company does not have a single external customer from which it derives 10% or more of its revenues. The Company monitors concentrations within five broad categories: geography, industry, product, call code, and collateral. The Company grants commercial, construction, real estate and consumer loans to customers through branch offices located in the Company’s primary markets. The Company’s business is concentrated in these areas and the loan portfolio includes significant credit exposure to the commercial real estateCRE market of these areas. As of September 30, 2013March 31, 2014 and December 31, 2012, commercial real estate2013, CRE related loans accounted for approximately 59%56% and 58% of total loans, respectively, and approximately 1% and 3%2%, respectively, of theseCRE related loans are secured by undeveloped land, respectively.land. Substantially all of these loans are secured by first liens with an initial loan to value ratio of generally not more than 75%. Approximately 40%47% and 48%46% of these commercial real estateCRE loans, excluding construction and land loans, were owner occupied at September 30, 2013March 31, 2014 and December 31, 2012,2013, respectively. In addition, approximately 3% and 4% of total loans were unsecured as of September 30, 2013March 31, 2014 and December 31, 2012,2013, respectively.defending the Company,these lawsuits, but in the opinion of Management,management, based in part on consultation with outside legal counsel, the resolution of these lawsuits and associated defense costs will not have a material impact on the Company’s financial position, results of operations, or cash flows.$1.8$1.6 million and $1.5$1.9 million was included in occupancy expenses for the three months ended September 30,March 31, 2014 and 2013, and 2012, respectively. For the nine months ended September 30, 2013 and 2012, total rent expense included in occupancy expenses was $5.5 million and $4.4 million, respectively.8.Stock-based Compensationand nine months ended September 30, 2013, 17,600 and 537,125March 31, 2014, 376,175 shares of restricted stock were granted to Company employees respectively.that vest over three years and 64,000 shares were granted to non-employee WAL and WAB directors that vest over six months. The Company estimates the compensation cost for restricted stock grants based upon the grant date fair value. Generally, these restricted stock grants have a three year vesting period. The aggregate grant date fair value for the restricted stock issued in the three month period ended March 31, 2014 was $10.5 million.nine month periods1,204,216 restricted shares outstanding at March 31, 2014 and December 31, 2013, respectively. For the three months ended September 30, 2013 wasMarch 31, 2014, the Company recognized $0.3 million and $6.7in stock-based compensation expense related to restricted stock grants, compared to $1.0 million respectively. In addition,in expense for the Company granted 56,311 shares during the ninethree months ended September 30, 2013March 31, 2013. Other restricted stock components causing the reduction of $3.4 million to non-employee WAL and subsidiary directors that vested immediately. There were no grants to non-employee WAL and subsidiary directorsAPIC during the three months ended September 30, 2013.There were 1,255,640March 31, 2014 include shares withheld on cashless exercises and 1,469,285 restricted shares outstanding at September 30, 2013forfeitures.2012, respectively. For the three and nine months ended September 30, 2013, the Company recognized stock-based compensation related to restricted stock grants of $1.3there were 0.8 million and $2.8 million, respectively, compared to $1.1 million and $3.4 million, respectively, for the three and nine months ended September 30, 2012.As of September 30, 2013 and 2012, there were 1.2 million and 1.71.0 million, respectively, of stock options outstanding.9.incomeloss by component, net of tax, for the periodperiods indicated: Three Months Ended September 30, 2013 2012 Unrealized
holding gains
(losses) on AFS Unrealized gain
on cash flow
hedge Total Unrealized
holding gains
(losses) on AFS Unrealized gain
on cash flow
hedge Total (in thousands) $ (10,780 ) $ 30 $ (10,750 ) $ 4,283 $ 8 $ 4,291 (4,770 ) (30 ) (4,800 ) 8,478 9 8,487 1,046 — 1,046 (668 ) — (668 ) (3,724 ) (30 ) (3,754 ) 7,810 9 7,819 $ (14,504 ) $ — $ (14,504 ) $ 12,093 $ 17 $ 12,110 Nine Months Ended September 30, 2013 2012 Unrealized Unrealized gain Unrealized Unrealized gain holding gains on cash flow holding gains on cash flow (losses) on AFS hedge Total (losses) on AFS hedge Total (in thousands) $ 8,209 $ 17 $ 8,226 $ (5,112 ) $ 519 $ (4,593 ) (23,670 ) (17 ) (23,687 ) 18,803 17 18,820 957 — 957 (1,598 ) (519 ) (2,117 ) (22,713 ) (17 ) (22,730 ) 17,205 (502 ) 16,703 $ (14,504 ) $ — $ (14,504 ) $ 12,093 $ 17 $ 12,110 Three Months Ended March 31, 2014 2013 Impairment loss on securities Total Unrealized
holding gains
(losses) on AFS securities Unrealized gain on cash flow hedge Total (in thousands) Beginning balance $ (21,690 ) $ 144 $ (21,546 ) $ 8,209 $ 17 $ 8,226 Other comprehensive income (loss) before reclassifications 10,644 — 10,644 (890 ) (34 ) (924 ) Amounts reclassified from accumulated other comprehensive loss (229 ) — (229 ) (97 ) — (97 ) Net current-period other comprehensive income (loss) 10,415 — 10,415 (987 ) (34 ) (1,021 ) Ending balance $ (11,275 ) $ 144 $ (11,131 ) $ 7,222 $ (17 ) $ 7,205 income: Amount reclassified from accumulated other comprehensive income Details about accumulated other Three Months Ended
September 30, Affected line item in the statement 2013 2012 (in thousands) $ (1,679 ) $ 1,031 Realized gain on sale of Investment securities 633 (363 ) Income tax expense $ (1,046 ) $ 668 Net of tax Amount reclassified from accumulated other comprehensive income Details about accumulated other Nine Months Ended
September 30, Affected line item in the statement 2013 2012 (in thousands) $ (1,537 ) $ 2,502 Realized gain on sale of Investment securities 580 (904 ) Income tax expense $ (957 ) $ 1,598 Net of tax 10.loss: Amount reclassified from accumulated other comprehensive income Details about accumulated other Three Months Ended March 31, Affected line item in the statement comprehensive loss components 2014 2013 where net income is presented (in thousands) Unrealized gains and losses on AFS $ 366 $ 147 Gain on sales of investment securities, net (137 ) (50 ) Income tax expense $ 229 $ 97 Net of tax Basicbased onfor the weighted average outstanding shares, are summarized as follows: Three Months Ended Nine Months Ended September 30, September 30, 2013 2012 2013 2012 (in thousands,except per share amounts) 85,799 81,758 85,596 81,570 970 536 832 589 86,769 82,294 86,428 82,159 $ 27,840 $ 15,106 $ 82,114 $ 37,279 0.32 0.18 0.96 0.46 0.32 0.18 0.95 0.45 Three Months Ended March 31, 2014 2013 (in thousands, except per share amounts) Weighted average shares - basic 86,256 85,324 Dilutive effect of stock awards 867 656 Weighted average shares - diluted 87,123 85,980 Net income available to common shareholders $ 30,732 $ 20,532 Earnings per share - basic 0.35 0.24 Earnings per share - diluted 0.35 0.24 216,3104,000 and 1,053,045163,300 stock options outstanding as of September 30, 2013March 31, 2014 and December 31, 2012,2013, respectively, that were not included in the computation of diluted earnings per common share because their effect would be anti-dilutive. December 31, 2013 (in thousands) Consolidated Balance Sheet: Deferred tax assets, net As previously reported $ 79,374 As reported under new guidance 80,688 Other assets As previously reported (1) 186,288 As reported under new guidance 185,221 Stockholders' Equity As previously reported 855,251 As reported under new guidance 855,498 (1) Includes a $14.6 million reclassification from premises and equipment, net. Three Months Ended
March 31, 2013 (in thousands) Consolidated Income Statement: Non-interest income As previously reported $ 3,899 As reported under new guidance 4,799 Income tax expense As previously reported 6,808 As reported under new guidance 7,787 Income from continuing operations As previously reported 20,926 As reported under new guidance 20,847 Net income As previously reported 20,964 As reported under new guidance 20,885 Net income available to common shareholders As previously reported 20,611 As reported under new guidance 20,532 Earnings per share applicable to common shareholders--basic As previously reported 0.24 As reported under new guidance 0.24 Earnings per share applicable to common shareholders--diluted As previously reported 0.24 As reported under new guidance 0.24 820825 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level(Level 1 measurements) and the lowest priority to unobservable inputs (level(Level 3 measurements). The three levels of the fair value hierarchy under FASB ASC 825 are described in Note 1, “Summary"Note 1. Summary of Significant Accounting Policies.”Managementmanagement believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Furthermore, the reported fair value amounts have not been comprehensively revalued since the presentation dates, and therefore, estimates of fair value after the balance sheet date mayfair value option (“FVO”)FVO treatment for the junior subordinated debt and certain investment securities. This election is generally irrevocable and unrealized gains and losses on these items must be reported in earnings at each reporting date. The Company continues to account for these items under the FVO. Since adoption, there were no financial instruments purchased by the Company which met the FASB ASC 825 fair value election criteria, and therefore, no additional instruments have been added under the FVO election.inon the Consolidated Balance Sheet titled “Investment securities—balance sheet entitled “securities measured at fair value.”and nine months ended September 30,March 31, 2014 and 2013, and 2012, gains and losses from fair value changes included in the Consolidated Income Statements were as follows: Changes in Fair Values for Items Measured at Fair Value Pursuant to Election of the FVO Unrealized Total Gain/(Loss) on Interest Changes Assets and Expense on Included in Liabilities Interest Junior Current- Measured at Income on Subordinated Period Fair Value, Net Securities Debt Earnings (in thousands) $ (142 ) $ 1 $ — $ (141 ) 478 — 329 149 $ 336 $ 1 $ 329 $ 8 $ (196 ) $ 7 $ — $ (189 ) (3,229 ) — 1,012 (4,241 ) $ (3,425 ) $ 7 $ 1,012 $ (4,430 ) Changes in Fair Values for Items Measured at Fair Value Pursuant to Election of the FVO Unrealized Total Gain/(Loss) on Interest Changes Assets and Expense on Included in Liabilities Interest Junior Current- Measured at Income on Subordinated Period Fair Value, Net Securities Debt Earnings (in thousands) $ — $ 3 $ — $ 3 469 — 329 140 $ 469 $ 3 $ 329 $ 143 $ (66 ) $ 10 $ — $ (56 ) 767 — 981 (214 ) $ 701 $ 10 $ 981 $ (270 ) Changes in Fair Values for Items Measured at Fair Value Pursuant to Election of the Fair Value Option Description Unrealized Gain/(Loss) on Assets and Liabilities Measured at Fair Value, Net Interest Income on Securities Interest Expense on Junior Subordinated Debt Total Changes Included in Current-Period Earnings (in thousands) Three Months Ended March 31, 2014 Securities measured at fair value $ 18 $ 1 $ — $ 19 Junior subordinated debt (978 ) — (421 ) (1,399 ) Total $ (960 ) $ 1 $ (421 ) $ (1,380 ) Three Months Ended March 31, 2013 Securities measured at fair value $ (2 ) $ 2 $ — $ — Junior subordinated debt (469 ) — (466 ) (935 ) Total $ (471 ) $ 2 $ (466 ) $ (935 ) gains andthe portion of trading securities losses from fair value changes onrelated to trading securities measuredstill held at fair value: Three Months Ended Nine Months Ended September 30, September 30, 2013 2012 2013 2012 (in thousands) $ (142 ) $ — $ (196 ) $ (66 ) — — — — $ (142 ) $ — $ (196 ) $ (66 ) The difference between the aggregate fair value of junior subordinated debt of $39.4 million and the aggregate unpaid principal balance of $66.5 million was $27.1 million at September 30, 2013. The difference between the aggregate fair value of junior subordinated debt of $36.2 million and the aggregate unpaid principal balance of $66.5 million was $30.3 million at December 31, 2012. March 31, 2014 2013 (in thousands) Net gains and (losses) for the period on trading securities included in earnings $ 18 $ (2 ) Less: net gains and (losses) recognized during the period on trading securities sold during the period — — Change in unrealized gains or (losses) for the period included in earnings for trading securities held at the end of the reporting period $ 18 $ (2 ) Adjustable-rate ARPS securities, trust preferred securities, corporate debt securities and CRA mutual fund investments are reported at fair value utilizing Level 1 inputs. Other securities classified as AFS are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things.available-for-sale.available for sale. all of the fair value measurements received from its third partyour third-party pricing service through multiple review steps. First, Managementmanagement reviews what has transpired in the market- placemarket-place with respect to interest rates, credit spreads, volatility, mortgage rates, etc.,among other things, and makes an expectation on changes to the securities valuations from the previous quarter. Then Management compares expected changes to the actual valuation changes provided to it by its pricing service. Next, Management compares a robust sampling of safekeeping marks on securities with the marks provided by the Company’s third party pricing service and determines whether there are any notable differences. Then, Management compares the prices on Level 1 priced securities to publicly available prices to verify those prices are similar. Finally, Management discusses the assumptions used for Level 2 priced securities with its pricing service.management obtains market values from additional sources. The pricing service provides Managementmanagement with observable market data, including interest rate curves and mortgage prepayment speed grids, as well as dealer quote sheets, new bond offering sheets, and historical trade documentation. Management reviews the assumptions and decides whether they are reasonable. Management may compare interest rates, credit spreads and prepayments speeds used as part of the assumptions to those that Managementmanagement believes are reasonable. Management may price securities using the provided assumptions to determine whether they can develop similar prices on like securities. Any discrepancies with Management’smanagement’s review and the prices provided by the vendor are discussed with the vendor and the Company’s other valuation advisors. Management has formally challengedLast, management selects a sample of investment securities and compares the prices on several securities, but has found thatvalues provided by our primary third party pricing service to the vendor prices are reasonable.market values obtained from secondary sources and evaluates those with notable variances.aan SSAE 16 report from its independent pricing service attesting to the controls placed on the operations of the service from its auditor.Company’s practice of determiningCompany estimated the discount rate as of March 31, 2013 and prior was to use a Peer Index derived from market data available for similar non-investment grade trust preferred securities. As of June 30, 2013 the available market data contracted and the small population of similar non-investment grade trust preferred securities was no longer adequately diversified to ensure an accurate representation of change in the discount rate. As a result, the Company replaced the Peer Index with the BB 20 Year Index relative to the 10 Year Treasury (BB Corporate Bond over Treasury Index), which provides a broader base and correlates similarly with the credit and maturity characteristics of the junior subordinated debt. As of September 30, 2013, the discount rate was determined to be 6.280%at 5.692%, which is a 603546 basis point spread over 3 month LIBOR (0.250%(0.231% as of September 30, 2013)March 31, 2014). As of September 30, 2012,December 31, 2013, the Company estimated the discount rate at 6.530%5.861%, which was a 617562 basis point spread over 3 month LIBOR (0.359%)0.246%. Asthese assets and liabilities measured at fair value on a recurring basis were determined using the following inputs at the periods presented: Fair Value Measurements at the End of the Reporting Period Using: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs Fair (Level 1) (Level 2) (Level 3) Value (in thousands) $ — $ 3,621 $ — $ 3,621 $ — $ 27,377 $ — $ 27,377 — 105,545 — 105,545 — 768,478 — 768,478 32,323 — — 32,323 — 26,147 — 26,147 61,389 — — 61,389 — 23,834 — 23,834 — 5,493 — 5,493 23,300 — — 23,300 $ 117,012 $ 956,874 $ — $ 1,073,886 $ — $ 39 $ — $ 39 $ 126,664 $ — $ — $ 126,664 $ — $ — $ 39,447 $ 39,447 $ — $ 2,188 $ — $ 2,188 Fair Value Measurements at the End of the Reporting Period Using: Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Fair
Value (in thousands) $ — $ 5,061 $ — $ 5,061 $ — $ 73,171 $ — $ 73,171 — 663,204 — 663,204 37,961 — — 37,961 — 35,607 — 35,607 — 5,741 5,741 75,555 — — 75,555 24,135 — — 24,135 24,216 — — 24,216 $ 161,867 $ 777,723 $ — $ 939,590 $ — $ 777 $ — $ 777 $ — $ — $ 36,218 $ 36,218 $ — $ 751 $ — $ 751 As Fair Value Measurements at the End of the Reporting Period Using: Quoted Prices in Active Markets for Identical Assets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3) Fair Value (in thousands) March 31, 2014 Assets: Measured at fair value Residential MBS issued by GSEs $ — $ 2,460 $ — $ 2,460 Private label residential MBS — 483 — 483 Total securities measured at fair value $ — $ 2,943 $ — $ 2,943 Available-for-sale U.S. government sponsored agency securities $ — $ 57,672 $ — $ 57,672 Municipal obligations — 118,878 — 118,878 Preferred stock 73,947 — — 73,947 Mutual funds 37,243 — — 37,243 Residential MBS issued by GSEs — 987,407 — 987,407 Commercial MBS issued by GSEs — 2,034 — 2,034 Private label residential MBS — 35,615 — 35,615 Private label commercial MBS — 5,412 — 5,412 Trust preferred — 24,728 — 24,728 CRA Investments 23,497 — — 23,497 Total AFS $ 134,687 $ 1,231,746 $ — $ 1,366,433 Positive NPVs on interest rate swaps $ — $ 14,650 $ — $ 14,650 Liabilities: Junior subordinated debt $ — $ — $ 42,836 $ 42,836 Negative NPVs on interest rate swaps $ — $ 15,553 $ — $ 15,553 Fair Value Measurements at the End of the Reporting Period Using: Quoted Prices in Active Markets for Identical Assets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3) Fair Value (in thousands) December 31, 2013 Assets: Measured at fair value Residential MBS issued by GSEs $ — $ 3,036 $ — $ 3,036 Available-for-sale U.S. government sponsored agency securities $ — $ 46,975 $ — $ 46,975 Municipal obligations — 115,665 — 115,665 Preferred stock 61,484 — — 61,484 Mutual funds 36,532 — — 36,532 Residential MBS issued by GSEs — 1,021,421 — 1,021,421 Private label residential MBS — 36,099 — 36,099 Private label commercial MBS — 5,433 — 5,433 Trust preferred — 23,805 — 23,805 CRA Investments 23,282 — — 23,282 Total AFS $ 121,298 $ 1,249,398 $ — $ 1,370,696 Positive NPVs on interest rate swaps $ — $ 2,783 $ — $ 2,783 Liabilities: Junior subordinated debt $ — $ — $ 41,858 $ 41,858 Negative NPVs on interest rate swaps $ — $ 4,168 $ — $ 4,168 and nine months ended September 30,March 31, 2014 and 2013, the change in Level 3 liabilities measured at fair value on a recurring basis was as follows: Junior Subordinated Debt Three Months Ended
September 30, 2013 2012 (in thousands) $ (39,925 ) $ (36,687 ) — — — — 478 469 — — — — — — — — $ (39,447 ) $ (36,218 ) $ 478 $ 469 Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Junior Subordinated Debt Three Months Ended March 31, 2014 2013 (in thousands) Opening balance $ (41,858 ) $ (36,218 ) Total losses for the period Included in earnings (and changes in net assets) (a) (978 ) (469 ) Closing balance $ (42,836 ) $ (36,687 ) Change in unrealized losses for the three month period included in earnings (and changes in net assets) $ (978 ) $ (469 ) (1)(a) Total gains (losses)losses for the period are included in the non-interest income line, mark to market (losses) gains,unrealized losses on assets / liabilities measured at fair value, net.
Opening balance Transfers into Level 3 Transfers out of Level 3 Total gains or losses for the period Included in earnings (or changes in net assets) (1) Included in other comprehensive income Purchases, sales, and settlements Purchases Sales Settlements Closing balance Change in unrealized gains (losses) for the period included in earnings (or changes in net assets) held at the end of the reporting period. Junior Subordinated Debt Nine Months Ended
September 30, 2013 2012 (in thousands) $ (36,218 ) $ (36,985 ) — — — — �� (3,229 ) 767 — — — — — — — — $ (39,447 ) $ (36,218 ) $ (3,229 ) $ 767
| Fair Value at | ||||||||||||
| September 30, 2013 | Valuation Technique | Significant Unobservable Inputs | Input Value | |||||||||
| (dollars in thousands) | ||||||||||||
Junior subordinated debt | $ | 39,447 | Discounted cash flow | BB Corporate Bond over Treasury Index with comparable credit spread | 6.280 | % | ||||||
| Fair Value at | ||||||||||||
| December 31, 2012 | Valuation Technique | Significant Unobservable Inputs | Input Value | |||||||||
| (dollars in thousands) | ||||||||||||
Junior subordinated debt | $ | 36,218 | Discounted cash flow | Median market spreads on publicly issued trust preferreds with comparable credit risk | 6.846 | % | ||||||
Fair Value at March 31, 2014 | Valuation Technique | Significant Unobservable Inputs | Input Value | ||||||||
| (dollars in thousands) | |||||||||||
| Junior subordinated debt | $ | 42,836 | Discounted cash flow | BB Corporate Bond over Treasury Index with comparable credit spread | 5.692 | % | |||||
Fair Value at December 31, 2013 | Valuation Technique | Significant Unobservable Inputs | Input Value | ||||||||
| (dollars in thousands) | |||||||||||
| Junior subordinated debt | $ | 41,858 | Discounted cash flow | BB Corporate Bond over Treasury Index with comparable credit spread | 5.861 | % | |||||
| Fair Value Measurements at the End of the Reporting Period Using | ||||||||||||||||
| Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Active Markets for Similar Assets (Level 2) | Unobservable Inputs (Level 3) | |||||||||||||
| (in thousands) | ||||||||||||||||
As of September 30, 2013: | ||||||||||||||||
Impaired loans with specific valuation allowance | $ | 14,808 | $ | — | $ | — | $ | 14,808 | ||||||||
Impaired loans without specific valuation allowance | 95,843 | — | — | 95,843 | ||||||||||||
Other assets acquired through foreclosure, net | 76,475 | — | — | 76,475 | ||||||||||||
As of December 31, 2012: | ||||||||||||||||
Impaired loans with specific valuation allowance | $ | 38,672 | $ | — | $ | — | $ | 38,672 | ||||||||
Impaired loans without specific valuation allowance | 67,207 | — | — | 67,207 | ||||||||||||
Other assets acquired through foreclosure, net | 77,247 | — | — | 77,247 | ||||||||||||
| Fair Value Measurements at the End of the Reporting Period Using | ||||||||||||||||
| Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Active Markets for Similar Assets (Level 2) | Unobservable Inputs (Level 3) | |||||||||||||
| (in thousands) | ||||||||||||||||
| As of March 31, 2014: | ||||||||||||||||
| Impaired loans with specific valuation allowance | $ | 18,202 | $ | — | $ | — | $ | 18,202 | ||||||||
| Impaired loans without specific valuation allowance | 91,925 | — | — | 91,925 | ||||||||||||
| Other assets acquired through foreclosure | 56,450 | — | — | 56,450 | ||||||||||||
| December 31, 2013 | ||||||||||||||||
| Impaired loans with specific valuation allowance | $ | 20,474 | $ | — | $ | — | $ | 20,474 | ||||||||
| Impaired loans without specific valuation allowance | 95,695 | — | — | 95,695 | ||||||||||||
| Other assets acquired through foreclosure | 66,719 | — | — | 66,719 | ||||||||||||
The Company applies
other comprehensive income.
| Private Label Mortgage-Backed Securities | ||||||||
| Nine Months Ended September 30, | ||||||||
| 2013 | 2012 | |||||||
| (in thousands) | ||||||||
Beginning balance of impairment losses held in other comprehensive income | $ | (1,811 | ) | $ | (1,811 | ) | ||
Current period other-than temporary impairment credit losses recognized through earnings | — | — | ||||||
Reductions for securities sold during the period | 1,811 | — | ||||||
Additions or reductions in credit losses due to change of intent to sell | — | — | ||||||
Reductions for increases in cash flows to be collected on impaired securities | — | — | ||||||
|
|
|
| |||||
Ending balance of net unrealized gains and (losses) held in other comprehensive income | $ | — | $ | (1,811 | ) | |||
|
|
|
| |||||
| Private Label Mortgage- Backed Securities | |||||||
| Three Months Ended | |||||||
| 2014 | 2013 | ||||||
| (in thousands) | |||||||
| Beginning balance of impairment losses held in other comprehensive income | $ | — | $ | (1,811 | ) | ||
| Current period OTTI credit losses recognized through earnings | — | — | |||||
| Reductions for securities sold during the period | — | — | |||||
| Additions or reductions in credit losses due to change of intent to sell | — | — | |||||
| Reductions for increases in cash flows to be collected on impaired securities | — | — | |||||
| Ending balance of net unrealized losses held in other comprehensive income | $ | — | $ | (1,811 | ) | ||
| September 30, 2013 | ||||||||||||||||||||
| Carrying | Fair Value | |||||||||||||||||||
| Amount | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
| (in thousands) | ||||||||||||||||||||
Financial assets: | ||||||||||||||||||||
Investment securities | $ | 1,366,615 | $ | 176,570 | $ | 1,188,472 | $ | 8 | $ | 1,365,050 | ||||||||||
Derivatives (1) | 39 | — | 39 | — | 39 | |||||||||||||||
Loans, net | 6,418,432 | — | 5,876,917 | 110,651 | 5,987,568 | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits | 7,275,311 | — | 7,349,886 | — | 7,349,886 | |||||||||||||||
Customer repurchases | 55,524 | — | 55,524 | — | 55,524 | |||||||||||||||
Securities sold short | 126,664 | 126,664 | — | — | 126,664 | |||||||||||||||
Other borrowings | 394,105 | 45,785 | 274,277 | 82,500 | 402,562 | |||||||||||||||
Junior subordinated debt | 39,447 | — | — | 39,447 | 39,447 | |||||||||||||||
Derivatives (2) | 2,188 | — | 2,188 | — | 2,188 | |||||||||||||||
| December 31, 2012 | ||||||||||||||||||||
| Carrying | Fair Value | |||||||||||||||||||
| Amount | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
| (in thousands) | ||||||||||||||||||||
Financial assets: | ||||||||||||||||||||
Investment securities | $ | 1,235,984 | $ | 216,337 | $ | 1,021,133 | $ | — | $ | 1,237,470 | ||||||||||
Derivatives (1) | 777 | — | 777 | — | 777 | |||||||||||||||
Loans, net | 5,613,891 | — | 5,156,776 | 105,879 | 5,262,655 | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits | 6,455,177 | — | 6,458,100 | — | 6,458,100 | |||||||||||||||
Customer repurchases | 79,034 | — | 79,034 | — | 79,034 | |||||||||||||||
Other borrowings | 193,717 | — | 120,000 | 85,125 | 205,125 | |||||||||||||||
Junior subordinated debt | 36,218 | — | — | 36,218 | 36,218 | |||||||||||||||
Derivatives (2) | 751 | — | 751 | — | 751 | |||||||||||||||
| March 31, 2014 | ||||||||||||||||||||
| Carrying Amount | Fair Value | |||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Financial assets: | ||||||||||||||||||||
| Investment securities: | ||||||||||||||||||||
| HTM | $ | 275,738 | $ | 10,781 | $ | 270,694 | $ | 8 | $ | 281,483 | ||||||||||
| AFS | 1,366,433 | 134,687 | 1,231,746 | — | 1,366,433 | |||||||||||||||
| Trading | 2,943 | — | 2,943 | — | 2,943 | |||||||||||||||
| Positive NPVs on interest rate swaps | 14,650 | — | 14,650 | — | 14,650 | |||||||||||||||
| Loans, net | 7,004,700 | — | 6,358,264 | 110,127 | 6,468,391 | |||||||||||||||
| Financial liabilities: | ||||||||||||||||||||
| Deposits | 8,148,973 | — | 8,152,956 | — | 8,152,956 | |||||||||||||||
| Customer repurchases | 57,407 | — | 57,407 | — | 57,407 | |||||||||||||||
| Securities sold short | 109,793 | 109,793 | — | — | 109,793 | |||||||||||||||
| FHLB and FRB advances | 273,490 | — | 273,490 | — | 273,490 | |||||||||||||||
| Other borrowed funds | 69,326 | 5,000 | — | 71,683 | 76,683 | |||||||||||||||
| Junior subordinated debt | 42,836 | — | — | 42,836 | 42,836 | |||||||||||||||
| Negative NPVs on interest rate swaps | 15,553 | — | 15,553 | — | 15,553 | |||||||||||||||
| December 31, 2013 | ||||||||||||||||||||
| Carrying Amount | Fair Value | |||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Financial assets: | ||||||||||||||||||||
| Investment securities: | ||||||||||||||||||||
| HTM | $ | 283,006 | $ | 22,200 | $ | 259,496 | $ | 8 | $ | 281,704 | ||||||||||
| AFS | 1,370,696 | 121,298 | 1,249,398 | — | 1,370,696 | |||||||||||||||
| Trading | 3,036 | — | 3,036 | — | 3,036 | |||||||||||||||
| Positive NPVs on interest rate swaps | 2,783 | — | 2,783 | — | 2,783 | |||||||||||||||
| Loans, net | 6,701,365 | — | 6,090,962 | 116,169 | 6,207,131 | |||||||||||||||
| Financial liabilities: | ||||||||||||||||||||
| Deposits | 7,838,205 | — | 7,842,014 | — | 7,842,014 | |||||||||||||||
| Customer repurchases | 71,192 | — | 71,192 | — | 71,192 | |||||||||||||||
| FHLB and FRB advances | 273,879 | — | 273,879 | — | 273,879 | |||||||||||||||
| Other borrowed funds | 67,217 | 3,000 | — | 71,475 | 74,475 | |||||||||||||||
| Junior subordinated debt | 41,858 | — | — | 41,858 | 41,858 | |||||||||||||||
| Negative NPVs on interest rate swaps | 4,168 | — | 4,168 | — | 4,168 | |||||||||||||||
Each of the Company’s subsidiary banks
2013.
Deferred taxDISPOSITIONS
| Three Months Ended March 31, | ||||||||
| 2014 | 2013 | |||||||
| (in thousands) | ||||||||
| Operating revenue | $ | (144 | ) | $ | 1,139 | |||
| Non-interest expenses | (858 | ) | (1,074 | ) | ||||
| (Loss) income before income taxes | (1,002 | ) | 65 | |||||
| Income tax (benefit) expense | (348 | ) | 27 | |||||
| Net (loss) income | $ | (654 | ) | $ | 38 | |||
Although realization is not assured, the Company believes that the realization of the recognized net deferred tax asset of $79.6 million at September 30, 2013 is more likely than notallocated across all segments based on expectationskey metrics, such as number of employees, average loan balances and average deposit balances. These types of expenses include information technology, operations, human resources, finance, risk management, credit administration, legal and marketing.
Based on its internal analysis, the Company believes that it is more likely than not that the Company will fully utilize deferred federal tax assets pertaining to the existing net operating loss carryforwards and any net operating loss (“NOL”) that would be created by the reversal of the future net deductions that have not yet been taken on a tax return.
The Company’s effective tax rate was 24.8% and 30.1% for the three months ended September 30, 2013 and 2012, respectively, and 21.6% and 28.4% for the nine months ended September 30, 2013 and 2012, respectively. The reduction in the effective tax rate fromfor the first three quartersgeographic location of 2012, compared to the first three quarters of 2013 is primarily due to the bargain purchase gain related to the Centennial acquisition, low income housing tax credits, an increase in tax exempt income from revenue from municipal obligations, as well as a reductionsegment. Any difference in the deferredcorporate tax valuation allowance for capital loss carryovers arising from transactions that resulted in capital gains.
At September 30, 2013,rate and the Company has a deferredaggregate effective tax valuation allowance of $5.2 million (compared to $8.0 million at December 31, 2012).
The deferred tax asset related to state net operating loss carryovers outstanding at September 30, 2013 is comprised of $1.9 million of tax benefits from Arizona net operating loss carryovers that began to expire in 2013. All of the Company’s remaining California net operating loss carryforwards have been utilized in 2013.
Uncertain Tax Position
The Company files income tax returnsrates in the U.S. federal jurisdiction andsegments are adjusted in various states. With few exceptions, the Company is no longer subject to U.S. federal, state or local tax examinations by tax authorities for years before 2008.
The Company would recognize interest accrued related to unrecognized tax benefits in tax expense. The Company has not recognized or accrued any interest or penalties for the three and nine month periods ended September 30, 2013 and 2012.
Management believes that the Company has appropriate support for the income tax positions taken and to be taken on its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessmentCorporate & Other segment.
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, 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 | ) | |||||||||||||
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Loans, net | 2,561.2 | 2,336.1 | 1,480.4 | 58.3 | (43.0 | ) | 6,393.0 | |||||||||||||||||
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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 | ||||||||||||||||||
| (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 | ) | — | — | ||||||||||||||||
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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 | ) | |||||||||||||
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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 | |||||||||||||||||
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Income (loss) from continuing operations | 9,797 | �� | 16,294 | 4,597 | (2,467 | ) | — | 28,221 | ||||||||||||||||
Loss from discontinued operations, net | — | — | — | (29 | ) | — | (29 | ) | ||||||||||||||||
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Net income (loss) | $ | 9,797 | $ | 16,294 | $ | 4,597 | $ | (2,496 | ) | $ | — | $ | 28,192 | |||||||||||
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| (in thousands) | ||||||||||||||||||||||||
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 | |||||||||||||||||
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Net interest income (expense) after 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 | ) | |||||||||||||
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Income (loss) from continuing 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 | |||||||||||||||||
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Income (loss) from continuing operations | 38,765 | 39,702 | 16,754 | (11,889 | ) | — | 83,332 | |||||||||||||||||
Loss from discontinued operations, net | — | — | — | (160 | ) | — | (160 | ) | ||||||||||||||||
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Net income (loss) | $ | 38,765 | $ | 39,702 | $ | 16,754 | $ | (12,049 | ) | $ | — | $ | 83,172 | |||||||||||
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| Arizona | Nevada | California | Specialty Finance | Corporate & Other | Consolidated Company | |||||||||||||||||||
| (dollars in millions) | ||||||||||||||||||||||||
| At March 31, 2014 | ||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||
| Cash, cash equivalents and investment securities | $ | 3.3 | $ | 7.0 | $ | 2.6 | $ | 0.5 | $ | 2,123.8 | $ | 2,137.2 | ||||||||||||
| Gross loans and deferred fees, net | 2,032.3 | 1,723.8 | 1,663.1 | 1,621.2 | 68.2 | 7,108.6 | ||||||||||||||||||
| Less: allowance for credit losses | (29.7 | ) | (25.2 | ) | (24.3 | ) | (23.7 | ) | (1.0 | ) | (103.9 | ) | ||||||||||||
| Loans, net | 2,002.6 | 1,698.6 | 1,638.8 | 1,597.5 | 67.2 | 7,004.7 | ||||||||||||||||||
| Other repossessed assets | 11.9 | 21.9 | 0.3 | — | 22.0 | 56.1 | ||||||||||||||||||
| Goodwill and intangible assets, net | 2.4 | 24.4 | — | — | — | 26.8 | ||||||||||||||||||
| Other assets | 33.8 | 67.8 | 25.5 | 18.0 | 376.7 | 521.9 | ||||||||||||||||||
| Total assets | $ | 2,054.0 | $ | 1,819.7 | $ | 1,667.2 | $ | 1,616.0 | $ | 2,589.7 | $ | 9,746.6 | ||||||||||||
| Liabilities: | ||||||||||||||||||||||||
| Deposits | $ | 2,166.0 | $ | 3,024.6 | $ | 1,867.3 | $ | 845.1 | $ | 246.0 | $ | 8,149.0 | ||||||||||||
| Borrowings | — | — | — | — | 342.8 | 342.8 | ||||||||||||||||||
| Other liabilities | 21.7 | 48.3 | 9.8 | 20.4 | 259.8 | 360.0 | ||||||||||||||||||
| Total liabilities | 2,187.7 | 3,072.9 | 1,877.1 | 865.5 | 848.6 | 8,851.8 | ||||||||||||||||||
| Allocated equity | 219.4 | 207.9 | 178.7 | 123.2 | 165.6 | 894.8 | ||||||||||||||||||
| Liabilities and stockholders' equity | $ | 2,407.1 | $ | 3,280.8 | $ | 2,055.8 | $ | 988.7 | $ | 1,014.2 | $ | 9,746.6 | ||||||||||||
| Excess funds provided (used) | 353.1 | 1,461.1 | 388.6 | (627.3 | ) | (1,575.5 | ) | — | ||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Three Months Ended March 31, 2014: | ||||||||||||||||||||||||
| Net interest income (expense) | $ | 26,608 | $ | 28,595 | $ | 22,792 | $ | 13,964 | $ | (1,182 | ) | $ | 90,777 | |||||||||||
| Provision for credit losses | 1,558 | (884 | ) | 655 | 2,170 | 1 | 3,500 | |||||||||||||||||
| Net interest income (expense) after provision for credit losses | 25,050 | 29,479 | 22,137 | 11,794 | (1,183 | ) | 87,277 | |||||||||||||||||
| Non-interest income | 820 | 2,289 | 1,250 | 82 | 394 | 4,835 | ||||||||||||||||||
| Non-interest expense | (13,304 | ) | (15,236 | ) | (13,043 | ) | (6,508 | ) | (1,658 | ) | (49,749 | ) | ||||||||||||
| Income (loss) from continuing operations before income taxes | 12,566 | 16,532 | 10,344 | 5,368 | (2,447 | ) | 42,363 | |||||||||||||||||
| Income tax expense (benefit) | 4,929 | 5,787 | 4,350 | 2,013 | (6,455 | ) | 10,624 | |||||||||||||||||
| Income from continuing operations | 7,637 | 10,745 | 5,994 | 3,355 | 4,008 | 31,739 | ||||||||||||||||||
| Loss from discontinued operations, net | — | — | — | — | (654 | ) | (654 | ) | ||||||||||||||||
| Net income | $ | 7,637 | $ | 10,745 | $ | 5,994 | $ | 3,355 | $ | 3,354 | $ | 31,085 | ||||||||||||
| Item 2. | Management's Discussions and Analysis of Financial Condition and Results of 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 | ) | ||||||||||||||
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Loans, net | 1,851.0 | 2,001.5 | 1,413.1 | 12.8 | (42.9 | ) | 5,235.5 | |||||||||||||||||
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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 | ||||||||||||||||||
| (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 | ||||||||||||||||||
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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 | ) | |||||||||||||
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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 | |||||||||||||||||
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Income (loss) from continuing operations | 8,762 | 5,836 | 6,408 | (5,305 | ) | — | 15,701 | |||||||||||||||||
Loss from discontinued operations, net | — | — | — | (243 | ) | — | (243 | ) | ||||||||||||||||
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Net income (loss) | $ | 8,762 | $ | 5,836 | $ | 6,408 | $ | (5,548 | ) | $ | — | $ | 15,458 | |||||||||||
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| (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 | ||||||||||||||||||
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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 | ) | |||||||||||||
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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 | |||||||||||||||||
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Income (loss) from continuing operations | 26,353 | 10,562 | 17,488 | (12,998 | ) | — | 41,405 | |||||||||||||||||
Loss from discontinued operations, net | — | — | — | (686 | ) | — | (686 | ) | ||||||||||||||||
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Net income (loss) | $ | 26,353 | $ | 10,562 | $ | 17,488 | $ | (13,684 | ) | $ | — | $ | 40,719 | |||||||||||
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14. SUBSEQUENT EVENTS
On October 1, 2013, the Company completed the sale of certain receivables related to its discontinued affinity credit card business, PartnersFirst. These receivables were classified as held for sale and totaled $25.4 million as of September 30, 2013. No significant gain or loss was recognized as a result of this transaction.
Management has reviewed events occurring through the date the financial statements were available to be issued and other than the subsequent event disclosed above, no other subsequent events have occurred that would require accrual or disclosure.
This report contains certain forward-looking
Forward-looking statements contained in this Quarterly Report on Form 10-Q reflect our current views about future events and financial performance and involve substantialcertain risks, uncertainties, assumptions and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company andchanges in circumstances that may cause our actual results to differ significantly from historical results and those expressed in any forward-looking statement.statement, including those risks discussed under the heading “Risk Factors” in this Form 10-Q. Risks and uncertainties include those set forth in our filings with the Securities and Exchange CommissionSEC and the following factors that could cause actual results to differ materially from those presented:
1) financial market and economic conditions in the financial markets and the economy may adversely impacteffecting financial performance;
2) dependency on real estate and events that negatively impact real estate;
3) high concentration of commercial real estate, construction and development and commercial and industrial loans;
4) actual credit losses may exceed expected losses in the loan portfolio;
5) the geographic concentrations of our assets increaseincreases the risks related to local economic conditions;
the effects of interest rates and interest rate policy;
6) sovereign credit rating downgrades; 7) exposure of financial instruments to certain market risks may cause volatility in earnings;
8) dependence on low-cost deposits;
9) ability to borrow from Federal Home Loan Bank (“FHLB”)the FHLB or Federal Reserve Bank (“FRB”);
the FRB; 10) events that further impair goodwill;
increase 11) a change in the cost of funding as a result of changes to our credit rating;
creditworthiness; 12) expansion strategies may not be successful;
our ability to control costs;
13) risk associated with changes in internal controls and processes;
the recent consolidation of our bank subsidiaries; 14) our ability to compete in a highly competitive market;
15) our ability to recruit and retain qualified employees, especially seasoned relationship bankers;
bankers and senior management; 16) the effects of terrorist attacks or threats of war;
17) perpetration of internalinternet fraud;
18) information security breaches; 19) reliance on other companies' infrastructure; 20) risk management policies not fully effective; 21) risks associated with new lines of businesses; 22) risk of operating in a highly regulated industry and our ability to remain in compliance;
possible need 23) failure to revalue our deferred tax assets if stock transactions resultcomply with state and federal banking agency laws and regulations; 24) changes in limitations on deductibility of net operating losses or loan losses;
interest rates and increased rate competition; 25) exposure to environmental liabilities related to the properties to which we acquire title;
legislative and regulatory changes including Emergency Economic Stabilization Act of 2008, or EESA, the American Recovery and Reinvestment Act of 2009, or ARRA, and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations that might be promulgated thereunder;
cyber security risks; and
26) risks related to ownership and price of our common stock.
2013.
Western Alliance Bancorporation
wholly-owned banking subsidiary bank: WAB, doing business as ABA in Arizona, as FIB in Northern Nevada, as AAB throughout the U.S., as BON in Southern Nevada, and as TPB in California. In addition, the Company has two non-bank subsidiaries, WAEF, which offers equipment finance services nationwide, and LVSP, which holds and manages certain non-performing loans and OREO.
2013.
Net income available
Net interest income increased by 17.5% to $84.6 million for the thirdfirst quarter of 2013, compared to $71.9 million for2014, the third quarter of 2012.
Net interest margin for the third quarter of 2013 remained flat at 4.41%, compared to the third quarter of 2012.
Provision for credit losses decreased to zero for the third quarter of 2013, compared to $8.9 million for the third quarter of 2012.
Net loan growth in the third quarter of 2013 of $104.8Company increased deposits by $310.8 million to $6.52 billion. Total loans increased $1.18 billion over the last twelve months from $5.33$8.15 billion at September 30, 2012.
Total deposits increased during the quarter by $274.0 million to $7.28March 31, 2014 from $7.84 billion at September 30,December 31, 2013. Deposits increased $1.11 billion over the last twelve months from $6.16 billion at September 30, 2012.
Net recoveries (annualized) to average loans outstanding were 0.10% in the third quarter of 2013, compared to net charge-offs of 0.70% in the third quarter of 2012.
Nonperforming assets (nonaccrual loans and assets acquired through foreclosure) decreased to 1.7% of total assets from 2.7% in the third quarter 2012.
Other assets acquired through foreclosure declined by $10.2 million to $76.5$56.5 million at September 30, 2013March 31, 2014 from $78.2$66.7 million at September 30, 2012.
Operations and Financial Conditions
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||
Net income available to common stockholders | $ | 27,840 | $ | 15,106 | $ | 82,114 | $ | 37,279 | ||||||||
Basic earnings per share | 0.32 | 0.18 | 0.96 | 0.46 | ||||||||||||
Diluted earnings per share | 0.32 | 0.18 | 0.95 | 0.45 | ||||||||||||
Total assets | $ | 8,921,429 | $ | 7,403,603 | ||||||||||||
Gross loans | $ | 6,516,283 | $ | 5,332,932 | ||||||||||||
Total deposits | $ | 7,275,311 | $ | 6,161,976 | ||||||||||||
Net interest margin | 4.41 | % | 4.41 | % | 4.38 | % | 4.47 | % | ||||||||
Return on average assets | 1.30 | % | 0.85 | % | 1.35 | % | 0.77 | % | ||||||||
Return on average stockholders’ equity | 13.63 | % | 8.95 | % | 14.01 | % | 8.09 | % | ||||||||
| Three Months Ended March 31, | ||||||||
| 2014 | 2013 | |||||||
| (in thousands, except per share amounts) | ||||||||
| Net income available to common stockholders | $ | 30,732 | $ | 20,532 | ||||
| Earnings per share applicable to common shareholders--basic | 0.35 | 0.24 | ||||||
| Earnings per share applicable to common shareholders--diluted | 0.35 | 0.24 | ||||||
| Net interest margin | 4.41 | % | 4.36 | % | ||||
| Return on average assets | 1.35 | 1.07 | ||||||
| Return on average tangible common equity | 17.55 | 13.93 | ||||||
| Mar 31, 2014 | Dec 31, 2013 | |||||||
| (in thousands) | ||||||||
| Total assets | $ | 9,746,624 | $ | 9,307,342 | ||||
| Loans, net of deferred loan fees and costs | 7,108,599 | 6,801,415 | ||||||
| Total deposits | 8,148,973 | 7,838,205 | ||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| (in thousands) | ||||||||||||||||
Non-accrual loans | $ | 76,641 | $ | 121,238 | ||||||||||||
Non-performing assets | 245,959 | 294,517 | ||||||||||||||
Non-accrual loans to gross loans | 1.18 | % | 2.27 | % | ||||||||||||
Net (recoveries) charge-offs to average loans—annualized | (0.10 | )% | 0.70 | % | 0.22 | % | 0.99 | % | ||||||||
| Mar 31, 2014 | Dec 31, 2013 | |||||||
| (in thousands) | ||||||||
| Non-accrual loans | $ | 70,401 | $ | 75,680 | ||||
| Non-performing assets | 216,542 | 233,509 | ||||||
| Non-accrual loans to gross loans | 0.99 | % | 1.11 | % | ||||
| Net (recoveries) charge-offs to average loans - annualized | (0.02 | ) | 0.13 | |||||
2013. Total deposits increased $310.8 million, or 4.0%, to $8.15 billion as of March 31, 2014 from $7.84 billion as of December 31, 2013.
| Three Months Ended March 31, | Increase | |||||||||||
| 2014 | 2013 | (Decrease) | ||||||||||
| (in thousands, except per share amounts) | ||||||||||||
| Consolidated Income Statement Data: | ||||||||||||
| Interest income | $ | 98,701 | $ | 83,108 | $ | 15,593 | ||||||
| Interest expense | 7,924 | 6,905 | 1,019 | |||||||||
| Net interest income | 90,777 | 76,203 | 14,574 | |||||||||
| Provision for credit losses | 3,500 | 5,439 | (1,939 | ) | ||||||||
| Net interest income after provision for credit losses | 87,277 | 70,764 | 16,513 | |||||||||
| Non-interest income | 4,835 | 4,799 | 36 | |||||||||
| Non-interest expense | 49,749 | 46,929 | 2,820 | |||||||||
| Net income from continuing operations before income taxes | 42,363 | 28,634 | 13,729 | |||||||||
| Income tax provision | 10,624 | 7,787 | 2,837 | |||||||||
| Income from continuing operations | 31,739 | 20,847 | 10,892 | |||||||||
| (Loss) gain from discontinued operations, net of tax benefit | (654 | ) | 38 | (692 | ) | |||||||
| Net income | $ | 31,085 | $ | 20,885 | $ | 10,200 | ||||||
| Net income available to common stockholders | $ | 30,732 | $ | 20,532 | $ | 10,200 | ||||||
| Earnings per share applicable to common shareholders—basic | $ | 0.35 | $ | 0.24 | $ | 0.11 | ||||||
| Earnings per share applicable to common shareholders—diluted | $ | 0.35 | $ | 0.24 | $ | 0.11 | ||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
| September 30, | Increase | September 30, | Increase | |||||||||||||||||||||
| 2013 | 2012 | (Decrease) | 2013 | 2012 | (Decrease) | |||||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||||||||
Consolidated Income Statement Data: | ||||||||||||||||||||||||
Interest income | $ | 92,680 | $ | 78,669 | $ | 14,011 | $ | 265,073 | $ | 233,952 | $ | 31,121 | ||||||||||||
Interest expense | 8,121 | 6,723 | 1,398 | 22,159 | 21,144 | 1,015 | ||||||||||||||||||
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Net interest income | 84,559 | 71,946 | 12,613 | 242,914 | 212,808 | 30,106 | ||||||||||||||||||
Provision for credit losses | — | 8,932 | (8,932 | ) | 8,920 | 35,343 | (26,423 | ) | ||||||||||||||||
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Net interest income after provision for credit losses | 84,559 | 63,014 | 21,545 | 233,994 | 177,465 | 56,529 | ||||||||||||||||||
Non-interest income | 2,625 | 6,982 | (4,357 | ) | 17,386 | 20,263 | (2,877 | ) | ||||||||||||||||
Non-interest expense | 49,675 | 47,543 | 2,132 | 145,135 | 139,871 | 5,264 | ||||||||||||||||||
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Net income from continuing operations before income taxes | 37,509 | 22,453 | 15,056 | 106,245 | 57,857 | 48,388 | ||||||||||||||||||
Income tax provision | 9,288 | 6,752 | 2,536 | 22,913 | 16,452 | 6,461 | ||||||||||||||||||
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Income from continuing operations | 28,221 | 15,701 | 12,520 | 83,332 | 41,405 | 41,927 | ||||||||||||||||||
Loss from discontinued operations, net of tax benefit | (29 | ) | (243 | ) | 214 | (160 | ) | (686 | ) | 526 | ||||||||||||||
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Net income | $ | 28,192 | $ | 15,458 | $ | 12,734 | $ | 83,172 | $ | 40,719 | $ | 42,453 | ||||||||||||
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Net income available to common stockholders | $ | 27,840 | $ | 15,106 | $ | 12,734 | $ | 82,114 | $ | 37,279 | $ | 44,835 | ||||||||||||
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Income per share—basic | $ | 0.32 | $ | 0.18 | $ | 0.14 | $ | 0.96 | $ | 0.46 | $ | 0.50 | ||||||||||||
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Income per share—diluted | $ | 0.32 | $ | 0.18 | $ | 0.14 | $ | 0.95 | $ | 0.45 | $ | 0.50 | ||||||||||||
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2013:
| Three Months Ended March 31, | |||||||
| 2014 | 2013 | ||||||
| (in thousands) | |||||||
| Total non-interest income | $ | 4,835 | $ | 4,799 | |||
| Less: | |||||||
| Unrealized losses on assets / liabilities measured at fair value, net | (1,276 | ) | (471 | ) | |||
| Legal settlements | — | 38 | |||||
| Gains on sales of investment securities, net | 366 | 147 | |||||
| Total operating non-interest income | 5,745 | 5,085 | |||||
| Add: net interest income | 90,777 | 76,203 | |||||
| Net operating revenue | $ | 96,522 | $ | 81,288 | |||
| Total non-interest expense | $ | 49,749 | $ | 46,929 | |||
| Less: | |||||||
| Net (gain) loss on sales and valuations of repossessed and other assets | (2,547 | ) | 519 | ||||
| Merger / restructure expense | 157 | 195 | |||||
| Total operating non-interest expense | $ | 52,139 | $ | 46,215 | |||
| Pre-tax, pre-provision operating earnings | $ | 44,383 | $ | 35,073 | |||
| March 31, 2014 | December 31, 2013 | ||||||
| (dollars and shares in thousands) | |||||||
| Total stockholders' equity | $ | 894,805 | $ | 855,498 | |||
| Less: | |||||||
| Goodwill and intangible assets | 26,777 | 27,374 | |||||
| Total tangible stockholders' equity | 868,028 | 828,124 | |||||
| Less: | |||||||
| Preferred stock | 141,000 | 141,000 | |||||
| Total tangible common equity | 727,028 | 687,124 | |||||
| Add: | |||||||
| Deferred tax - attributed to intangible assets | 1,243 | 1,452 | |||||
| Total tangible common equity, net of tax | $ | 728,271 | $ | 688,576 | |||
| Total assets | $ | 9,746,624 | $ | 9,307,342 | |||
| Less: | |||||||
| Goodwill and intangible assets | 26,777 | 27,374 | |||||
| Tangible assets | 9,719,847 | 9,279,968 | |||||
| Add: | |||||||
| Deferred tax - attributed to intangible assets | 1,243 | 1,452 | |||||
| Total tangible assets, net of tax | $ | 9,721,090 | $ | 9,281,420 | |||
| Tangible equity ratio | 8.9 | % | 8.9 | % | |||
| Tangible common equity ratio | 7.5 | 7.4 | |||||
| Return on tangible common equity | 17.3 | 18.1 | |||||
| Common shares outstanding | 87,554 | 87,186 | |||||
| Tangible book value per share, net of tax | $ | 8.32 | $ | 7.90 | |||
| March 31, | |||||||
| 2014 | 2013 | ||||||
| (dollars in thousands) | |||||||
| Total operating non-interest expense | $ | 52,139 | $ | 46,215 | |||
| Divided by: | |||||||
| Total net interest income | $ | 90,777 | $ | 76,203 | |||
| Add: | |||||||
| Tax equivalent interest adjustment | 5,705 | 3,382 | |||||
| Operating non-interest income | 5,745 | 5,085 | |||||
| Net operating revenue - tax equivalent basis | $ | 102,227 | $ | 84,670 | |||
| Efficiency ratio - tax equivalent basis | 51.0 | % | 54.6 | % | |||
| March 31, 2014 | December 31, 2013 | ||||||
| (dollars and shares in thousands) | |||||||
| Stockholders' equity | $ | 894,805 | $ | 855,498 | |||
| Less: | |||||||
| Accumulated other comprehensive (loss) income | (11,131 | ) | (21,546 | ) | |||
| Non-qualifying goodwill and intangibles | 26,008 | 25,991 | |||||
| Other non-qualifying assets | — | — | |||||
| Disallowed unrealized losses on equity securities | 2,550 | 8,059 | |||||
| Add: | |||||||
| Qualifying trust preferred securities | 49,120 | 48,485 | |||||
| Tier 1 capital (regulatory) | 926,498 | 891,479 | |||||
| Less: | |||||||
| Qualifying trust preferred securities | 49,120 | 48,485 | |||||
| Preferred stock | 141,000 | 141,000 | |||||
| Tier 1 common equity | $ | 736,378 | $ | 701,994 | |||
| Divided by: | |||||||
| Risk-weighted assets (regulatory) | $ | 8,338,965 | $ | 8,016,500 | |||
| Tier 1 common equity ratio | 8.8 | % | 8.8 | % | |||
| March 31, 2014 | December 31, 2013 | ||||||
| (dollars in thousands) | |||||||
| Classified assets | $ | 251,851 | $ | 270,375 | |||
| Divide: | |||||||
| Tier 1 capital (regulatory) | 926,498 | 891,479 | |||||
| Plus: Allowance for credit losses | 103,899 | 100,050 | |||||
| Total Tier 1 capital plus allowance for credit losses | $ | 1,030,397 | $ | 991,529 | |||
| Classified assets to Tier 1 capital plus allowance | 24.4 | % | 27.3 | % | |||
Interest-Earning Assets Securities: Taxable Tax-exempt (1) Total securities Loans (1) (2) (3) Federal funds sold and other Total earnings assets Nonearning Assets Cash and due from banks Allowance for credit losses Bank-owned life insurance Other assets Total assets Interest-Bearing Liabilities Sources of Funds Interest-bearing deposits: Interest checking Savings and money market Time deposits Total interest-bearing deposits Short-term borrowings Long-term debt Junior subordinated Total interest-bearing liabilities Noninterest-Bearing Liabilities Noninterest-bearing demand deposits Other liabilities Stockholders’ equity Total Liabilities and Stockholders’ Equity Net interest income and margin (4) Net interest spread (5) Three Months Ended September 30, 2013 2012 (dollars in thousands) Average
Balance Interest Average
Yield/Cost
(6), (7) Average
Balance Interest Average
Yield/Cost
(6), (7) $ 955,263 $ 4,263 1.79 % $ 1,062,835 $ 5,600 2.11 % 348,055 4,023 6.37 % 309,543 3,434 6.83 % 1,303,318 8,286 3.01 % 1,372,378 9,034 3.17 % 6,306,394 83,994 5.44 % 5,191,175 69,580 5.42 % 364,580 400 0.11 % 195,321 55 0.03 % 7,974,292 92,680 4.81 % 6,758,874 78,669 4.81 % 119,209 120,128 (96,672 ) (98,169 ) 139,740 136,522 492,035 356,643 $ 8,628,604 $ 7,273,998 $ 641,695 $ 376 0.23 % $ 510,462 $ 296 0.23 % 2,828,113 2,172 0.31 % 2,414,194 1,990 0.33 % 1,675,482 1,684 0.40 % 1,286,512 1,688 0.52 % 5,145,290 4,232 0.33 % 4,211,168 3,974 0.38 % 182,683 2,420 5.30 % 382,064 275 0.29 % 392,084 1,009 1.03 % 73,575 1,987 10.80 % 39,920 460 4.61 % 36,672 487 5.31 % 5,759,977 8,121 0.56 % 4,703,479 6,723 0.57 % 1,931,127 1,813,050 114,750 70,702 822,750 686,767 $ 8,628,604 $ 7,273,998 $ 84,559 4.41 % $ 71,946 4.41 % 4.25 % 4.24 %
| Three Months Ended March 31, | ||||||||||||||||||||||
| 2014 | 2013 | |||||||||||||||||||||
| Average Balance | Interest | Average Yield/ Cost | Average Balance | Interest | Average Yield/ Cost | |||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||
| Interest earning assets | ||||||||||||||||||||||
| Loans (1) | $ | 6,893,248 | $ | 86,804 | 5.27 | % | $ | 5,610,432 | $ | 74,725 | 5.42 | % | ||||||||||
| Securities (1) | 1,651,670 | 11,325 | 3.15 | 1,283,378 | 8,158 | 3.21 | ||||||||||||||||
| Federal funds sold and other | 210,263 | 572 | 1.09 | 404,776 | 225 | 0.22 | ||||||||||||||||
| Total interest earning assets | 8,755,181 | 98,701 | 4.77 | 7,298,586 | 83,108 | 4.74 | ||||||||||||||||
| Non-interest earning assets | ||||||||||||||||||||||
| Cash and due from banks | 137,516 | 126,429 | ||||||||||||||||||||
| Allowance for credit losses | (101,154 | ) | (96,859 | ) | ||||||||||||||||||
| Bank owned life insurance | 140,895 | 138,694 | ||||||||||||||||||||
| Other assets | 433,084 | 421,873 | ||||||||||||||||||||
| Total assets | $ | 9,365,522 | $ | 7,888,723 | ||||||||||||||||||
| Interest-bearing liabilities | ||||||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||||||
| Interest-bearing transaction accounts | $ | 765,036 | $ | 384 | 0.20 | % | $ | 608,663 | $ | 301 | 0.20 | % | ||||||||||
| Savings and money market | 3,452,333 | 2,562 | 0.30 | 2,620,874 | 1,911 | 0.29 | ||||||||||||||||
| Time certificates of deposit | 1,619,564 | 1,719 | 0.42 | 1,449,535 | 1,520 | 0.42 | ||||||||||||||||
| Total interest-bearing deposits | 5,836,933 | 4,665 | 0.32 | 4,679,072 | 3,732 | 0.32 | ||||||||||||||||
| Short-term borrowings | 163,339 | 130 | 0.32 | 176,445 | 214 | 0.49 | ||||||||||||||||
| Long-term debt | 301,826 | 2,708 | 3.59 | 272,882 | 2,493 | 3.65 | ||||||||||||||||
| Junior subordinated debt | 41,869 | 421 | 4.02 | 36,224 | 466 | 5.15 | ||||||||||||||||
| Total interest-bearing liabilities | 6,343,967 | 7,924 | 0.50 | 5,164,623 | 6,905 | 0.53 | ||||||||||||||||
| Non-interest-bearing liabilities | ||||||||||||||||||||||
| Non-interest-bearing demand deposits | 2,054,125 | 1,855,070 | ||||||||||||||||||||
| Other liabilities | 81,134 | 90,669 | ||||||||||||||||||||
| Stockholders’ equity | 886,296 | 778,361 | ||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 9,365,522 | $ | 7,888,723 | ||||||||||||||||||
| Net interest income and margin | $ | 90,777 | 4.41 | % | $ | 76,203 | 4.36 | % | ||||||||||||||
| Net interest spread | 4.27 | % | 4.21 | % | ||||||||||||||||||
| (1) | Yields on loans and securities have been adjusted to a |
| (2) | Net loan fees of |
| (3) | Includes nonaccrual loans. |
| (4) | Net interest margin is computed by dividing net interest income by total average earning assets. |
Interest-Earning Assets Securities: Taxable Tax-exempt (1) Total securities Loans (1) (2) (3) Federal funds sold and other Total earnings assets Nonearning Assets Cash and due from banks Allowance for credit losses Bank-owned life insurance Other assets Total assets Interest-Bearing Liabilities Sources of Funds Interest-bearing deposits: Interest checking Savings and money market Time deposits Total interest-bearing deposits Short-term borrowings Long-term debt Junior subordinated Total interest-bearing liabilities Noninterest-Bearing Liabilities Noninterest-bearing demand deposits Other liabilities Stockholders’ equity Total Liabilities and Stockholders’ Equity Net interest income and margin (4) Net interest spread (5) Nine Months Ended September 30, 2013 2012 (dollars in thousands) Average
Balance Interest Average
Yield/Cost
(6), (7) Average
Balance Interest Average
Yield/Cost
(6), (7) $ 945,316 $ 12,432 1.75 % $ 1,123,340 $ 18,421 2.19 % 348,957 11,834 6.55 % 280,810 9,587 7.00 % 1,294,273 24,266 3.05 % 1,404,150 28,008 3.15 % 6,008,435 239,812 5.42 % 4,996,754 205,682 5.53 % 392,193 995 0.25 % 153,489 262 0.17 % 7,694,901 265,073 4.76 % 6,554,393 233,952 4.90 % 130,258 115,677 (97,238 ) (98,813 ) 139,687 135,410 440,660 353,801 $ 8,308,268 $ 7,060,468 $ 625,830 $ 1,047 0.22 % 511,028 920 0.24 % 2,739,973 6,090 0.30 % 2,314,941 6,114 0.35 % 1,570,510 4,756 0.40 % 1,343,624 5,870 0.58 % 4,936,313 11,893 0.32 % 4,169,593 12,904 0.41 % 182,237 2,848 2.08 % 318,833 827 0.35 % 343,809 6,037 2.34 % 73,470 5,955 10.81 % 37,636 1,381 4.89 % 36,974 1,458 5.26 % 5,499,995 22,159 0.54 % 4,598,870 21,144 0.61 % 1,895,090 1,734,576 110,716 56,092 802,467 670,930 $ 8,308,268 $ 7,060,468 $ 242,914 4.38 % $ 212,808 4.47 % 4.22 % 4.29 %
| (5) | Net interest spread represents average yield earned on interest-earning assets less the average rate paid on |
| Three Months Ended March 31, | ||||||||||||
| 2014 versus 2013 | ||||||||||||
Increase (Decrease) Due to Changes in (1) | ||||||||||||
| Volume | Rate | Total | ||||||||||
| (in thousands) | ||||||||||||
| Interest income: | ||||||||||||
| Loans | $ | 16,154 | $ | (4,075 | ) | $ | 12,079 | |||||
| Interest on investment securities | 2,525 | 642 | 3,167 | |||||||||
| Federal funds sold and other | (530 | ) | 877 | 347 | ||||||||
| Total interest income | 18,149 | (2,556 | ) | 15,593 | ||||||||
| Interest expense: | ||||||||||||
| Interest bearing transaction accounts | 79 | 4 | 83 | |||||||||
| Savings and money market | 617 | 34 | 651 | |||||||||
| Time deposits | 180 | 19 | 199 | |||||||||
| Short-term borrowings | (10 | ) | (74 | ) | (84 | ) | ||||||
| Long-term debt | 260 | (45 | ) | 215 | ||||||||
| Junior subordinated debt | 57 | (102 | ) | (45 | ) | |||||||
| Total interest expense | 1,183 | (164 | ) | 1,019 | ||||||||
| Net increase (decrease) | $ | 16,966 | $ | (2,392 | ) | $ | 14,574 | |||||
The table below sets forth the relative impact on net interest income of changes in the volume of earning assets and interest-bearing liabilities and changes in rates earned and paid by the Company on such assets and liabilities. For purposes of this table, nonaccrual loans have been included in the average loan balances.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
| 2013 versus 2012 | 2013 versus 2012 | |||||||||||||||||||||||
| Increase (Decrease) | Increase (Decrease) | |||||||||||||||||||||||
| Due to Changes in(1)(2) | Due to Changes in(1)(2) | |||||||||||||||||||||||
| Volume | Rate | Total | Volume | Rate | Total | |||||||||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||||||||||
Interest on investment securities: | ||||||||||||||||||||||||
Taxable | $ | (632 | ) | $ | 647 | $ | 15 | $ | (2,570 | ) | $ | (2,135 | ) | $ | (4,705 | ) | ||||||||
Tax-exempt | 464 | (1,227 | ) | (763 | ) | 3,089 | (2,126 | ) | 963 | |||||||||||||||
Loans | 15,167 | (753 | ) | 14,414 | 41,012 | (6,882 | ) | 34,130 | ||||||||||||||||
Federal funds sold and other | 46 | 299 | 345 | 453 | 280 | 733 | ||||||||||||||||||
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Total interest income | 15,045 | (1,034 | ) | 14,011 | 41,984 | (10,863 | ) | 31,121 | ||||||||||||||||
Interest expense: | ||||||||||||||||||||||||
Interest checking | 75 | 5 | 80 | 189 | (62 | ) | 127 | |||||||||||||||||
Savings and money market | 321 | (139 | ) | 182 | 954 | (978 | ) | (24 | ) | |||||||||||||||
Time deposits | 389 | (393 | ) | (4 | ) | 679 | (1,793 | ) | (1,114 | ) | ||||||||||||||
Short-term borrowings | (2,642 | ) | 4,787 | 2,145 | (2,125 | ) | 4,146 | 2,021 | ||||||||||||||||
Long-term debt | 820 | (1,798 | ) | (978 | ) | 4,731 | (4,649 | ) | 82 | |||||||||||||||
Junior subordinated debt | 37 | (64 | ) | (27 | ) | 24 | (101 | ) | (77 | ) | ||||||||||||||
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Total interest expense | (1,000 | ) | 2,398 | 1,398 | 4,452 | (3,437 | ) | 1,015 | ||||||||||||||||
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Net increase (decrease) | $ | 16,045 | $ | (3,432 | ) | $ | 12,613 | $ | 37,532 | $ | (7,426 | ) | $ | 30,106 | ||||||||||
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| (1) | Changes due to both volume and rate have been allocated to volume changes. |
quarter. Service charges and fees Income from bank owned life insurance Amortization of affordable housing investments (Loss) Gain on sale of investment securities, net Mark to market (losses) gains, net Bargain purchase gain from acquisition Other income Total non-interest income Salaries and employee benefits Occupancy Legal, professional and directors’ fees Data processing Insurance Marketing Loan and repossessed asset expense Customer service Net loss (gain) on sales/valuations of repossesed assets and bank premises, net Intangible amortization Goodwill and intangible impairment Merger / restructure expenses Other expense Total non-interest expense presented: first quarter of 2014. The following table summarizes the operating results of the discontinued operations for the periods indicated: Operating revenue Non-interest expenses Loss before income taxes Income tax benefit Net loss charter, Western Alliance 2013. $109.8 million. 2013. The increase in stockholders' equity is due to a decrease in accumulated deficit of $30.7 million as a result of net income available to common shareholders for the three months ended March 31, 2014, in addition to the decrease in unrealized losses on AFS securities included in AOCI. Commercial and industrial Commercial real estate—non-owner occupied Commercial real estate—owner occupied Construction and land development Residential real estate Commercial leases Consumer Deferred fees and unearned income, net Allowance for credit losses Total indicated: loans 2013. Nonaccrual loans Loans past due 90 days or more on accrual status Troubled debt restructured loans Total nonperforming loans Other assets acquired through foreclosure, net Total nonperforming assets Total nonaccrual loans Loans past due 90 days or more on accrual status Total nonperforming loans Troubled debt restructured loans Other impaired loans Total impaired loans Other assets acquired through foreclosure, net Nonaccrual loans to gross loans Loans past due 90 days or more on accrual status to total loans Interest income received on nonaccrual loans Interest income that would have been recorded under the original terms of nonaccrual loans Construction and land development Residential real estate Commercial real estate Commercial and industrial Consumer Total nonaccrual loans Corporate & Other. 2014. Construction and land development Residential real estate Commercial real estate Commercial and industrial Consumer Total impaired loans Construction and land development Residential real estate Commercial real estate Commercial and industrial Consumer Total impaired loans reserves for the periods indicated: Allowance for credit losses: Balance at beginning of period Provisions charged to operating expenses : Commercial and industrial Commercial real estate—non-owner occupied Commercial real estate—owner occupied Construction and land development Residential real estate Consumer Total Provision Recoveries of loans previously charged-off: Commercial and industrial Commercial real estate—non-owner occupied Commercial real estate—owner occupied Construction and land development Residential real estate Consumer Total recoveries Loans charged-off: Commercial and industrial Commercial real estate—non-owner occupied Commercial real estate—owner occupied Construction and land development Residential real estate Consumer Total charged-off Net loan (recoveries) charge-offs Balance at end of period Net (recoveries) charge-offs to average loans outstanding—annualized Allowance for credit losses to gross loans period indicated: Construction and land development Commercial real estate Residential real estate Commercial and industrial Consumer Total Construction and land development Commercial real estate Residential real estate Commercial and industrial Consumer Total categories. quality in its portfolio as well as a change in portfolio mix toward higher rated credits. Construction and land development Commercial real estate Residential real estate Commercial and industrial Consumer Total Construction and land development Commercial real estate Residential real estate Commercial and industrial Consumer Total U.S. government sponsored agency securities Direct obligations and GSE residential mortgage-backed securities Private label residential mortgage-backed securities Municipal obligations Adjustable-rate preferred stock Mutual funds CRA investments Trust preferred securities Collateralized debt obligations Private label commercial mortgage-backed securities Collateralized mortgage-backed securities Corporate bonds Total investment securities Balance, beginning of the period Transfers to other assets acquired through foreclosure, net Proceeds from sale of other real estate owned and repossessed assets, net Valuation adjustments, net Gains (losses), net(1) Balance, end of period Balance, beginning of the period Transfers to other assets acquired through foreclosure, net Additions from acquisition of Centennial Proceeds from sale of other real estate owned and repossessed assets, net Valuation adjustments, net Gains (losses), net(1) Balance, end of period Other assets acquired through foreclosure consist primarily of properties acquired as a result of, or in-lieu-of, foreclosure. Properties or other assets (primarily repossessed assets formerly leased) are classified as September 30, 2013March 31, 2014 was $92.7$98.7 million, an increase of 18% when comparing interest income for the three months ended September 30, 2012. For the nine months ended September 30, 2013, interest income was $265.1 million,18.8%, compared to $234.0 million for the nine months ended September 30, 2012. This increase was primarily from interest income from loans, as a result of an increase in the loan portfolio. Interest income from loans increased by $14.4$83.1 million for the three months ended September 30, 2013, compared to the three months ended September 30, 2012 and by $34.1 million for the nine months ended September 30, 2013, compared to the nine months ended September 30, 2012.March 31, 2013. This increase was aprimarily the result of loan growth, including results from acquired loans. Interestinterest income from investment securities decreasedloans, which increased by $0.7 million to $8.3 million for the three month period ended September 30, 2013, compared to $9.0$12.1 million for the three months ended September 30, 2012. ForMarch 31, 2014 compared to the nine months ended September 30, 2013,same period in 2013. Interest income on investment securities increased $3.2 million and other interest income from investment securities decreased by $3.7 million to $24.3 million, compared to $28.0 million for the nine months ended September 30, 2012. Other interest income increased slightly by $0.3 million for the comparable three month periods and by $0.7 million for the comparable nine month periods. Despite the increased interest income, averageperiod. Average yield on interest earning assets remained constant at 4.81%increased 3 basis points for the three months ended September 30, 2013,March 31, 2014 compared to the three months ended September 30, 2012,same period in 2013, which was primarily the result of decreased yields ona change in investment securities of 16 basis points, whichmix and was partially offset by increased yields ona decrease in loan yield due to a decline in payoffs of acquired loans, which resulted in lower accretion for the loan portfolio and other interest earning assets of 10 basis points. For the nine months ended September 30, 2013, average yield dropped 14 basis points to 4.76%, compared to the nine months ended September 30, 2012, primarily as a result of the decreased yields on the loan portfolio of 11 basis points.September 30,March 31, 2014 was $7.9 million, compared to $6.9 million in 2013, an increase of $1.0 million, or 14.8%. This increase was primarily driven by the increase in average interest bearing deposits of $1.16 billion. Despite this increase, the average cost of interest bearing deposits remained flat at 0.32%, compared to the three months ended September 30, 2012 increasedMarch 31, 2013. Interest paid on short-term borrowings, long-term debt and junior subordinated debt decreased by $1.4 million to $8.1 million from $6.7 million. Interest expense for the nine months ended September 30, 2013 compared to the nine months ended September 30, 2012 increased by $1.1 million to $22.2 million from $21.1 million. Average cost of interest bearing deposits decreased 917 and 6 and 113 basis points, for the nine months ended September 30, 2013 compared to the nine months ended September 30, 2012. Average cost of long-term debt decreased from 10.81% for the nine months ended September 30, 2012 to 2.34% in 2012.Net interest income was $84.6 millionrespectively, for the three months ended September 30, 2013March 31, 2014 compared to $71.9 million for the third quarter 2012, an increase of $12.7 million, or 18%. same period in 2013.$242.9$90.8 million for the ninethree months ended September 30, 2013,March 31, 2014, compared to $212.8$76.2 million for in the nine months ended September 30, 2012,same period in 2013, an increase of $30.1$14.6 million, or 14%19.1%. The increase in net interest income reflects a $1.35 billion and $1.14$1.46 billion increase in average earning assets, compared to the three and nine months ended September 30, 2012, respectively. This increase was offset by a $1.06 billion and $0.90$1.18 billion increase in average interest bearing liabilities compared to the three and nine months ended September 30, 2012, respectively. Net interest margin was 4.41% for the three months ended September 30, 2013 and 2012. Net interest margin was 4.38% for the nine months ended September 30, 2013, compared to 4.47% for the nine months ended September 30, 2012.liabilities. The decreasedincrease in net interest margin of 95 basis points for the nine months ended September 30, 2013 was mostly due to an increase in our average yield on interest earning assets and a decrease in yields on loans and investment securities, partially offset by a decrease inthe average cost of funds primarily as a result of downward repricing of depositsrelated to short-term borrowings, long-term debt and reduced funding costs on long-termjunior subordinated debt.$8.9$1.9 million, to $0 for the three months ended September 30, 2013, compared with $8.9$3.5 million for the three months ended September 30, 2012. ForMarch 31, 2014, compared with $5.4 million for the ninethree months ended September 30, 2013 compared to the nine months ended September 30, 2012, the provision for credit losses decreased by $26.4 million to $8.9 million compared to $35.3 million.March 31, 2013. The provision decrease for the three and nine month comparable periodsmonths ended March 31, 2014 compared to the same period in 2013, was mostlyprimarily due to loan recoveries of $533 thousand and $1.4 million on construction and land development loans, respectively, as well as recoveries of $278 thousand on commercial real estate loans for the three months ended September 30, 2013. The Company has been experiencing a downward trendan improvement in net charge-offs and overall improved credit quality which released some reserves due to improved quantitative factors.period over period. The Company may establish an additional allowance for credit losses for the PCI loans acquired with deteriorated credit quality through a charge to provision for creditloan losses when impairment is determined as a result of lower than expected cash flows. As of September 30,Company held an additional allowance for credit losses on PCI loans acquired with deteriorated credit quality ofwas $1.4 million.Non-Interestmillion and $0.3 million, respectively.The Company earned non-interest income primarily through fees related to services, services provided to loan and deposit customers, bank owned life insurance, investment securities gains, mark to market gains (losses) and other.table presentstables present a summary of non-interest income for the periods presented: Three Months Ended Nine Months Ended September 30, Increase
(Decrease) September 30, Increase
(Decrease) 2013 2012 2013 2012 $ 2,425 $ 2,412 $ 13 $ 7,408 $ 7,014 $ 394 1,832 1,116 716 3,904 3,359 545 (1,504 ) (651 ) (853 ) (3,304 ) (710 ) (2,594 ) (1,679 ) 1,031 (2,710 ) (1,537 ) 2,502 (4,039 ) (7 ) 470 (477 ) (3,865 ) 701 (4,566 ) — — — 10,044 — 10,044 1,558 2,604 (1,046 ) 4,736 7,397 (2,661 ) $ 2,625 $ 6,982 $ (4,357 ) $ 17,386 $ 20,263 $ (2,877 ) Three Months Ended March 31, 2014 2013 Increase (Decrease) (in thousands) Service charges and fees $ 2,530 $ 2,534 $ (4 ) Income from bank owned life insurance 949 1,036 (87 ) Gain on sales of investment securities, net 366 147 219 Unrealized losses on assets / liabilities measured at fair value, net (1,276 ) (471 ) (805 ) Other fee revenue 1,108 957 151 Other 1,158 596 562 Total non-interest income $ 4,835 $ 4,799 $ 36 September 30, 2013 decreased by $4.4 million, or 62%,March 31, 2014, compared to the three months ended September 30, 2012. This decrease is primarily duesame period in 2013 increased by 0.8%. The increase relates to the change from a netincrease in the gain on sale of investment securities of $1.0$0.2 million, for the three months ended September 30, 2012, compared to a net lossother fee revenue of $1.7$0.2 million, for the three months ended September 30, 2013. In addition, there was a decrease of $1.0 million in other non-interest income for the three months ended September 30, 2013, compared to the same period last year.Total non-interest income for the nine months ended September 30, 2013 compared to the nine months ended September 30, 2012 declined by $2.9 million, or 14%. This decrease is attributable to the $2.6 million decrease in amortization of affordable housing investments, the change from a net gain on sale of investment securities to a net loss in 2013, resulting in a $4.0 million decrease, the change from a net mark to market gain to a net loss, causing a decrease of $4.6 million, and the decrease in other non-interest income of $2.7$0.6 million. These decreases were partiallyThe increase in the gain on sales of investment securities relates to market conditions, the increase in other fee revenue is due to greater miscellaneous fees, and the increase in other revenue is due to enhanced other operating lease income. The increase was offset by the $10.0decrease in unrealized losses on assets / liabilities measured at fair value, net of $0.8 million, bargain purchase gain recognized duringwhich primarily relates to the nine months ended September 30, 2013trust preferred securities fair value adjustment loss of $1.0 million as a result of the Centennial acquisition.Non-InterestMarch 31, 2014, compared to $0.5 million as of March 31, 2013.indicated: Three Months Ended Nine Months Ended September 30, Increase
(Decrease) September 30, Increase
(Decrease) 2013 2012 2013 2012 (in thousands) (in thousands) $ 28,689 $ 25,500 $ 3,189 $ 83,363 $ 78,159 $ 5,204 4,901 4,655 246 14,500 14,046 454 3,006 2,291 715 8,017 6,380 1,637 1,872 1,390 482 5,912 3,678 2,234 1,884 2,121 (237 ) 6,350 6,323 27 1,599 1,231 368 4,970 4,061 909 1,136 1,236 (100 ) 3,453 4,573 (1,120 ) 677 653 24 2,037 1,926 111 371 126 245 (234 ) 3,678 (3,912 ) 597 880 (283 ) 1,791 2,660 (869 ) — 3,435 (3,435 ) — 3,435 (3,435 ) 1,018 113 905 3,833 113 3,720 3,925 3,912 13 11,143 10,839 304 $ 49,675 $ 47,543 $ 2,132 $ 145,135 $ 139,871 $ 5,264 Three Months Ended March 31, 2014 2013 Increase (Decrease) (in thousands) Salaries and employee benefits $ 29,555 $ 26,574 $ 2,981 Occupancy 4,682 4,846 (164 ) Legal, professional and directors’ fees 3,639 3,023 616 Data processing 2,674 1,865 809 Insurance 2,393 2,370 23 Loan and repossessed asset expenses 1,234 1,596 (362 ) Customer service 620 643 (23 ) Marketing 559 667 (108 ) Net (gain) loss on sales / valuations of repossessed and other assets (2,547 ) 519 (3,066 ) Intangible amortization 597 597 — Merger / restructure expenses 157 195 (38 ) Other expense 6,186 4,034 2,152 Total non-interest expense $ 49,749 $ 46,929 $ 2,820 September 30, 2013March 31, 2014, compared to the same period in 20122013 increased by $2.1 million. The most significant changes for the third quarter 2013 compared to the third quarter 2012 were an$2.8 million, or 6.0%. This increase in salaries and employee benefits of $3.2 million and merger / restructure expenses of $0.9 million. These increases were offsetis primarily caused by the decrease in goodwill and intangible impairment of $3.4 million from the third quarter 2012.Total non-interest expense for the nine months ended September 30, 2013 compared to the same period in 2012 increased by $5.3 million. The change primarily relates to the increases in salaries and employee benefits of $5.2$3.0 million, legal, professional and directors' fees of $0.6 million, data processing costsof $0.8 million, and other non-interest expenses of $2.2 millionmillion. The increase in the salaries and merger / restructureemployee benefits is due to employment growth. The legal, professional, directors' fees, and data processing increase relates primarily to information technology initiatives. The increase in other non-interest expense primarily relates to higher operating lease depreciation, office expenses, business development, and off-balance sheet provisionwereare offset by the change from adecrease in loan and repossessed asset expenses of $0.4 million and net (gain) loss to a net gain on sales/sales / valuations of repossessed and other assets, and bank premises, generating a decreasenet of $3.9$3.1 million, andwhich primarily relates to the decrease in goodwill and intangible impairmentsale of $3.4 million fromtwo properties during the nine months ended September 30, 2012.At September 30, 2013 and December 31, 2012, the outstanding credit card loans held for sale were $25.4 million and $31.1 million, respectively. No significant gain or loss was recognized as a result of this transaction. Three Months Ended Nine Months Ended September 30, September 30, 2013 2012 2013 2012 (in thousands) $ 1,105 $ 315 $ 3,376 $ 947 (1,155 ) (734 ) (3,653 ) (2,130 ) (50 ) (419 ) (277 ) (1,183 ) (21 ) (176 ) (117 ) (497 ) $ (29 ) $ (243 ) $ (160 ) $ (686 ) Three Months Ended March 31, 2014 2013 (in thousands) Operating revenue $ (144 ) $ 1,139 Non-interest expenses (858 ) (1,074 ) (Loss) income before income taxes (1,002 ) 65 Income tax (benefit) expense (348 ) 27 Net (loss) income $ (654 ) $ 38 Thehas three wholly owned subsidiary banks: Western Alliance Bank, Bank of Nevada, and Torrey Pines Bank. The Company has filed with the FDIC and state regulators an application to consolidateconsolidated its three bank subsidiaries intounder one charter.Bank, which consistsBank. As a result, the Company has redefined its operating segments to reflect the new organizational and internal reporting structure. Prior year segment information has not been recast to conform to the new segmentation methodology due to the impracticability of Alliance Bankrestating segments because of the change in legal structure at December 31, 2013. The new operating segments are as follows: Arizona, operating in Nevada, California, Specialty Finance and Corporate & Other.and First Independent Bank, operating in Northern reported net income of $7.6 million for the three months ended March 31, 2014. During the first quarter of 2014, total loans grew $7.6 million to $2.03 billion at March 31, 2014. In addition, during the same period, total deposits grew by $77.8 million to $2.17 billion at March 31, 2014.$9.8$10.7 million and $38.8 million for the three and nine months ended September 30, 2013, respectively, compared to $8.8 million and $26.4 million for the three and nine months ended September 30, 2012, respectively. The increase in net income of $12.4 million for the nine months ended September 30, 2013 compared to 2012 is mostly due to the $10.0 million bargain purchase gain on the Centennial acquisition. Total loans grew by $552.1 million to $2.59 billion at September 30, 2013, compared to $2.04 billion at December 30, 2012. In addition, total deposits increased by $607.8 million to $2.83 billion at September 30, 2013 from $2.22 billion at December 31, 2012.Bank of Nevada reported net income of $16.3 million and $39.7 million for the three and nine months ended September 30, 2013, respectively, compared to net income of $5.8 million and $10.6 million for the three and nine months ended September 30, 2012, respectively. The $10.5 million increase in net income for the comparable three month periods was primarily due to decreased provision for credit losses of $13.5 million, resulting in a $6.9 million recovery for the three months ended September 30, 2013, as credit quality has improved andMarch 31, 2014. During the first quarter of 2014, total loans decreased $30.6 million to interest income of $6.0 million for the three months ended March 31, 2014. During the first quarter of 2014, total loans increased by $4.2$47.9 million partially offsetto $1.66 billion at March 31, 2014. In addition, in during the same period, total deposits decreased by increased$30.4 million to $1.87 billion at March 31, 2014.tax expense of $4.0$3.4 million and increased non-interest expensefor the three months ended March 31, 2014. During the first quarter of $2.3 million. For the comparable nine month periods of 2013 to 2012, the increase was also due to similar factors. The provision for credit losses decreased $34.4 million, as credit quality improved and net interest income2014, total loans increased by $8.8 million, partially offset by increased income tax expense of $13.0 million. Total deposits at Bank of Nevada grew by $44.4$271.2 million to $2.61$1.62 billion at September 30, 2013,March 31, 2014. In addition, in during the same period, total deposits increased by $92.8 million to $845.1 million at March 31, 2014.$2.57$9.31 billion at December 31, 2012. Total loans increased by $203.8 million to $2.39 billion at September 30, 2013 from $2.18 billion at December 31, 2012, primarily due to net affiliate loan sales and participations.Torrey Pines Bank, which excludes discontinued operations, reported net income for the three and nine months ended September 30, 2013 of $4.6 million and $16.8 million, respectively, compared to $6.4 million and $17.5 million for the three and nine months ended September 30, 2012, respectively.2013. The decreaseincrease in net income of $1.8 million for the third quarter 2013 compared to 2012 was mostly due to increased provision for credit losses of $1.2 million and decreased non-interest income of $0.7 million. For the nine months ended September 30, 2013 compared to 2012, the $0.7 million decrease in net income was primarily the result of decreased net interest income of $2.0 million and decreased non-interest income of $1.8 million, offset by decreased provision for credit losses of $2.1 million. Total deposits at Torrey Pines Bank increased by $165.4 million to $1.84 billion at September 30, 2013, compared to $1.68 billion at December 31, 2012. Total loans increased by $15.9 million to $1.52 billion at September 30, 2013 from $1.51 billion at December 31, 2012.The other business segment, which includes the holding company, Shine (until October 31, 2012), Western Alliance Equipment Finance, the discontinued operations related to the affinity credit card business, excluding loans held for sale (which are included in TPB), and Las Vegas Sunset Properties, reported a net loss of $2.5 million and $12.0 million for the three and nine months ended September 30, 2013, respectively, compared to a net loss of $5.5 million and $13.7 million for the three and nine months ended September 30, 2012, respectively. The decline in the net loss for the comparable three month periods of $3.0 million was primarily due to a recovery in credit losses of $1.7 million and decreased non-interest expense of $3.0 million, slightly offset by the decrease in non-interest income of $1.7 million. The decline in the net loss for the comparable nine month periods of $1.7 million is primarily due to increased income tax benefit of $3.2 million, slightly offset by increased provision for credit losses of $1.3 million.Balance Sheet AnalysisTotal assets increased $1.30 billion, or 17%, to $8.92 billion at September 30, 2013, compared to $7.62 billion at December 31, 2012. The increase primarily relates to increasedthe increase in loans held for investment of $812.7$307.2 million, increased deposits in other financial institutions of $175.5 millionor 4.5%, to $7.11 billion and the additionincrease in cash and cash equivalents of $160.4 million, or 52.5%, due to securities purchased under agreement to resell of $128.1$111.1 million asat March 31, 2014, compared to zero at December 31, 2012.$1.24 billion,$400.0 million, or 18%4.7%, to $8.10$8.85 billion at September 30, 2013 from $6.86March 31, 2014, compared to $8.45 billion at December 31, 2012.2013. The increase primarily relatesin liabilities is due to increased interest bearingthe increase in total deposits of $780.8$310.8 million, or 4.0%, to $8.15 billion and increased other borrowingsthe increase in securities sold short of $200.4 million, as compared to December 31, 2012.$66.7$39.3 million or 9%4.6%, to $826.3$894.8 million at September 30, 2013 from $759.6March 31, 2014, compared to $855.5 million at December 31, 2012.showssummarizes the amountscarrying value of loans heldthe investment securities portfolio at March 31, 2014 and December 31, 2013: March 31, 2014 December 31, 2013 (in thousands) U.S. government sponsored agency securities $ 57,672 $ 46,975 Municipal obligations 296,790 299,244 Preferred stock 73,947 61,484 Mutual funds 37,243 36,532 Residential MBS issued by GSEs 989,867 1,024,457 Commercial MBS issued by GSEs 2,034 — Private label residential MBS 36,098 36,099 Private label commercial MBS 5,412 5,433 Trust preferred securities 24,728 23,805 CRA investments 23,497 24,882 Collateralized debt obligations 50 50 Corporate debt securities 97,776 97,777 Total investment securities $ 1,645,114 $ 1,656,738 investment by typeOTTI securities described in "Note 2. Investment Securities" to the Consolidated Financial Statements contained herein. There were no impairment charges recorded during the three months ended March 31, 2014 and 2013.loanMarch 31, 2014 and December 31, 2013. However, the Company cannot guarantee that additional OTTI will not occur in future periods.indicated. September 30, December 31, 2013 2012 (in thousands) $ 1,990,568 $ 1,659,003 1,864,333 1,505,600 1,551,187 1,396,797 459,764 394,319 358,962 407,937 244,312 288,747 29,850 31,836 (8,106 ) (6,045 ) 6,490,870 5,678,194 (97,851 ) (95,427 ) $ 6,393,019 $ 5,582,767 March 31, 2014 December 31, 2013 (in thousands) Commercial and industrial $ 2,501,499 $ 2,236,740 Commercial real estate - non-owner occupied 1,849,211 1,843,415 Commercial real estate - owner occupied 1,606,243 1,561,862 Construction and land development 553,655 537,231 Residential real estate 344,859 350,312 Commercial leases 221,916 235,968 Consumer 38,330 45,153 Net deferred loan fees (7,114 ) (9,266 ) Loans, net of deferred fees and costs 7,108,599 6,801,415 Less: allowance for credit losses (103,899 ) (100,050 ) Total loans, net $ 7,004,700 $ 6,701,365 primarily driven in large part by the customers served in the market areas where the Company has branch offices in the states of Arizona, Nevada California and Arizona.California. The Company monitors concentrations within five broad categories: geography, industry, product, call code,report classifications, and collateral. The Company grants commercial, construction, real estate and consumer loans to customers through branch offices located in the Company’s primary markets. The Company’s business is concentrated in these areas and the loan portfolio includes significant credit exposure to the commercial real estateCRE market inof these areas. As of September 30, 2013March 31, 2014 and December 31, 2012, commercial real estate2013, CRE related loans accounted for approximately 59%56% and 58% of total loans respectively, and approximately 1% and 3%2%, respectively, of theseCRE related loans are secured by undeveloped land, respectively.land. Substantially all of these loans are secured by first liens with an initial loan to value ratio of generally not more than 75%. Approximately 40%47% and 48%46% of these commercial real estateCRE loans, excluding construction and land loans, were owner occupied at September 30, 2013March 31, 2014 and December 31, 2012,2013, respectively. In addition, approximately 3% and 4% of total loans were unsecured as of September 30, 2013March 31, 2014 and December 31, 2012,2013, respectively.Loansbut whichthat are both fully secured by collateral and are current in their interest and principal payments. Impaired loans are measured for reserve requirements in accordance with FASB ASC 310,Receivables,based on the present value of expected future cash flows discounted at the loan’sloan's effective interest rate or, as a practical expedient, at the loan’sloan's observable market price or the fair value of the collateral less applicable disposition costs if the loan is collateral dependent. The amount of an impairment reserve, if any, and any subsequent changes are charged against the allowance for credit losses. In addition to our own internal loan review process, the Federal Deposit Insurance Corporation (“FDIC”) may from time to time direct the Company to modify loan grades, loan impairment calculations or loan impairment methodology.$24.0$6.6 million, or 23%8.6%, at September 30, 2013March 31, 2014 to $82.1$70.6 million from $106.1$77.2 million at December 31, 2012. March 31, 2014 December 31, 2013 (dollars in thousands) Total nonaccrual loans $ 70,401 $ 75,680 Loans past due 90 days or more on accrual status 167 1,534 Total nonperforming loans 70,568 77,214 Troubled debt restructured loans 89,524 89,576 Other impaired loans 11,170 11,587 Total impaired loans $ 171,262 $ 178,377 Other assets acquired through foreclosure, net $ 56,450 $ 66,719 Nonaccrual loans to gross loans 0.99 % 1.11 % Loans past due 90 days or more on accrual status to total loans — 0.02 Interest income received on nonaccrual loans $ 606 $ 626 Interest income that would have been recorded under the original terms of nonaccrual loans 1,048 1,626 following table summarizes nonperforming assets: September 30, December 31, 2013 2012 (in thousands) $ 76,641 $ 104,716 5,456 1,388 87,387 84,609 169,484 190,713 76,475 77,247 $ 245,959 $ 267,960 The following table summarizes the loans for which the accrual of interest has been discontinued, loans past due 90 days or more and still accruing interest, restructured loans, and other impaired loans: September 30, December 31, 2013 2012 (dollars in thousands) $ 76,641 $ 104,716 5,456 1,388 82,097 106,104 87,387 84,609 4,747 7,442 $ 174,231 $ 198,155 $ 76,475 $ 77,247 1.18 % 1.83 % 0.08 0.02 $ 260 $ 191 $ 1,319 $ 5,469 The compositecomposition of nonaccrual loans werewas as follows as of the dates indicated: At September 30, 2013 At December 31, 2012 Nonaccrual
Balance % Percent of
Total Loans Nonaccrual
Balance % Percent of
Total Loans (dollars in thousands) $ 6,642 8.67 % 0.10 % $ 11,093 10.59 % 0.19 % 19,244 25.11 % 0.30 % 26,722 25.52 % 0.47 % 46,259 60.35 % 0.71 % 59,975 57.28 % 1.05 % 4,468 5.83 % 0.07 % 6,722 6.42 % 0.12 % 28 0.04 % 0.00 % 204 0.19 % 0.00 % $ 76,641 100.00 % 1.18 % $ 104,716 100.00 % 1.83 % At March 31, 2014 At December 31, 2013 Nonaccrual Balance % Percent of Total Loans Nonaccrual Balance % Percent of Total Loans (dollars in thousands) Commercial and industrial $ 3,070 4.36 % 0.04 % $ 3,753 4.96 % 0.06 % Commercial real estate 48,883 69.43 0.69 54,856 72.48 0.80 Construction and land development 3,618 5.14 0.05 4,525 5.98 0.07 Residential real estate 14,802 21.03 0.21 12,480 16.49 0.18 Consumer 28 0.04 ��� 66 0.09 — Total nonaccrual loans $ 70,401 100.00 % 0.99 % $ 75,680 100.00 % 1.11 % September 30, 2013March 31, 2014 and December 31, 2012,2013, nonaccrual loans totaled $76.6$70.4 million and $104.7$75.7 million, respectively. Nonaccrual loans by banksegment at September 30, 2013March 31, 2014 were $35.4$30.4 million at Bank offor Arizona, $17.6 million for Nevada, $14.8$4.2 million at Western Alliance Bankfor California and $7.2$18.2 million at Torrey Pines Bank, compared to $73.5 million at Bank of Nevada, $23.6 million at Western Alliance Bank and $7.6 million at Torrey Pines Bank at December 31, 2012. Nonaccrual loans held at the parent and Las Vegas Sunset Properties were $19.3 million at September 30, 2013, compared to $0 at September 30, 2012.for Corporate & Other. Nonaccrual loans as a percentage of total gross loans were 1.18%0.99% and 1.83%1.11% at September 30, 2013March 31, 2014 and December 31, 2012,2013, respectively. Nonaccrual loans as a percentage of each bank’ssegment's total gross loans at September 30, 2013March 31, 2014 were 1.48% at Bank of1.50% for Arizona, 1.02% for Nevada, 0.57% at Western Alliance Bank,0.25% for California and 0.47% at Torrey Pines Bank, compared to 3.37% at Bank of Nevada, 1.16% at Western Alliance Bank and 0.51% at Torrey Pines Bank at December 31, 2012. Total lost interest on nonaccrual loans26.70% for the three and nine months ended September 30, 2013 was $1.3 million and $3.8 million, respectively, compared to $1.3 million and $4.1 million for the three and nine months ended September 30, 2012, respectively. The Company recognized $0.3 million and $1.3 million of cash interest on nonaccrual loans for the three and nine months ended September 30, 2013, respectively, compared to $30 thousand and $0.2 million for the three and nine months ended September 30, 2012.troubled debt restructuredTDR loan is a loan, on which the Company, for reasons related to a borrower’s financial difficulties, grantsgranted a concession to the borrower that the Companylender would not otherwise consider. The loan terms that have been modified or restructured due to a borrower’s financial situation include, but are not limited to, a reduction in the stated interest rate, an extension of the maturity or renewal of the loan at an interest rate below current market, a reduction in the face amount of the debt, a reduction in the accrued interest, extensions, deferrals, renewals and rewrites. A troubled debt restructuredTDR loan is also considered impaired. Generally, a loan that is modified at an effective market rate of interest mayis no longer be disclosed as a troubled debt restructuringTDR in years subsequent to the restructuring if it is not impairedperforming based on the terms specified by the restructuring agreement.During the first quarter 2012, the FDIC conducted an annual safety and soundness examination of Bank of Nevada. As part of the exam, the FDIC reviewed the Company’s allowance for loan and lease losses and evaluated certain loans for which the net present value method was used to measure impairment. The FDIC recommended that the Company change from the net present value method to the collateral dependent method for certain loans which had adequate current cash flows to meet principal and interest debt service requirements, but which had collateral deficits relative to the principal amount of the loan obligation, and limited guarantor support. Following the exam and in the course of evaluating assets for impairment in the first quarter of 2012, the Company substituted the collateral dependent method with respect to the loans identified by the FDIC, which resulted in an increase to the allowance for credit losses of $4.1 million.September 30, 2013March 31, 2014 and December 31, 2012,2013, the aggregate amount of loans classified as impaired was $174.2$171.3 million and $198.2$178.4 million, respectively, a net decrease of 12%4.0%. The total specific allowance for creditloan losses related to these loans was $5.9$3.9 million and $12.9$5.3 million at September 30, 2013March 31, 2014 and December 31, 2012,2013, respectively. As of September 30,March 31, 2014 and 2013, and December 31, 2012, the Company had $87.4$89.5 million and $84.6$89.6 million, respectively, in loans classified as accruing restructured loans. The net decrease in impaired loans is primarily attributable to decreased commercial real estate, construction and land development and residential real estate impaired loans, by $11.0 million, $5.7 million and $5.0 million, respectively, compared to December 31, 2012. Impaired loans by bank (excluding loans acquired with deteriorated credit quality)segment at September 30, 2013March 31, 2014 were $77.2$49.0 million at Bank offor Arizona, $61.4 million for Nevada $30.9and $13.9 million at Western Alliance Bank, and $18.2for California. Additionally, Corporate & Other held $46.9 million at Torrey Pines Bank, compared to $123.4 million at Bank of Nevada, $43.4 million at Western Alliance Bank, and $18.8 million at Torrey Pines Bank at December 31, 2012. Additionally, Western Alliance Bancorporation held $47.9 million of impaired loans at September 30, 2013, compared to $12.7 million at DecemberMarch 31, 2012.table includes thetables present a breakdown of total impaired loans and the related specific reserves: At September 30, 2013 Impaired
Balance Percent Percent of
Total Loans Reserve
Balance Percent Percent of
Total Allowance (dollars in thousands) $ 26,748 15.35 % 0.41 % $ 831 14.05 % 0.85 % 32,811 18.83 % 0.50 % 2,594 43.90 % 2.65 % 99,568 57.16 % 1.53 % 1,390 23.52 % 1.42 % 14,573 8.36 % 0.22 % 1,090 18.45 % 1.11 % 531 0.30 % 0.01 % 4 0.08 % 0.00 % $ 174,231 100.00 % 2.67 % $ 5,909 100.00 % 6.03 % At December 31, 2012 Impaired Percent of Reserve Percent of Balance Percent Total Loans Balance Percent Total Allowance (dollars in thousands) $ 32,492 16.40 % 0.57 % $ 284 2.21 % 0.30 % 37,851 19.10 % 0.66 % 5,448 42.34 % 5.71 % 110,538 55.78 % 1.94 % 4,417 34.33 % 4.63 % 16,510 8.33 % 0.29 % 2,552 19.84 % 2.67 % 764 0.39 % 0.01 % 165 1.28 % 0.17 % $ 198,155 100.00 % 3.47 % $ 12,866 100.00 % 13.48 % March 31, 2014 Percent Percent (dollars in thousands) Commercial and industrial $ 15,665 9.15 % 0.22 % $ 731 18.62 % 0.70 % Commercial real estate 104,085 60.77 1.46 1,253 31.92 1.21 Construction and land development 22,012 12.85 0.31 — — — Residential real estate 29,026 16.95 0.41 1,938 49.38 1.87 Consumer 474 0.28 0.01 3 0.08 — Total impaired loans $ 171,262 100.00 % 2.41 % $ 3,925 100.00 % 3.78 % December 31, 2013 Impaired
Balance Percent Percent of
Total Loans Reserve
Balance Percent Percent of
Total
Allowance (dollars in thousands) Commercial and industrial $ 17,341 9.72 % 0.25 % $ 772 14.62 % 0.77 % Commercial real estate 111,054 62.26 1.63 2,523 47.78 2.52 Construction and land development 23,069 12.93 0.34 85 1.61 0.08 Residential real estate 26,376 14.79 0.39 1,896 35.91 1.90 Consumer 537 0.30 0.01 4.00 0.08 — Total impaired loans $ 178,377 100.00 % 2.62 % $ 5,280 100.00 % 5.27 % periods indicated. Three Months Ended Nine Months Ended September 30, September 30, 2013 2012 2013 2012 (dollars in thousands) $ 96,323 $ 97,512 $ 95,427 $ 99,170 354 5,611 5,514 12,601 967 180 4,691 3,312 (1,245 ) 2,144 (1,665 ) 9,003 (533 ) 18 (1,442 ) 7,170 (247 ) (82 ) 1,748 643 704 1,061 74 2,614 — 8,932 8,920 35,343 2,242 501 4,440 2,695 273 27 867 1,030 149 606 1,130 1,867 966 567 1,787 870 430 153 1,548 765 726 38 751 294 4,786 1,892 10,523 7,521 544 4,100 3,379 12,687 465 998 3,373 5,380 399 472 2,769 6,643 — 2,315 852 10,587 1,138 2,242 5,641 5,756 712 799 1,005 3,571 3,258 10,926 17,019 44,624 (1,528 ) 9,034 6,496 37,103 $ 97,851 $ 97,410 $ 97,851 $ 97,410 (0.10 )% 0.70 % 0.22 % 0.99 % 1.50 % 1.83 % Three Months Ended March 31, 2014 2013 (dollars in thousands) Allowance for credit losses: Balance at beginning of period $ 100,050 $ 95,427 Provisions charged to operating expenses: Commercial and industrial 392 2,654 Commercial real estate 2,400 1,864 Construction and land development 1,970 398 Residential real estate (490 ) 1,282 Consumer (772 ) (759 ) Total Provision 3,500 5,439 Recoveries of loans previously charged-off: Commercial and industrial 922 441 ��Commercial real estate 560 942 Construction and land development 211 701 Residential real estate 553 569 Consumer 170 14 Total recoveries 2,416 2,667 Loans charged-off: Commercial and industrial (1,478 ) (1,770 ) Commercial real estate (171 ) (2,887 ) Construction and land development — (614 ) Residential real estate (406 ) (2,493 ) Consumer (12 ) (275 ) Total charged-off (2,067 ) (8,039 ) Net recoveries (charge-offs) 349 (5,372 ) Balance at end of period $ 103,899 $ 95,494 Net recoveries (charge-offs) to average loans outstanding-annualized 0.02 % (0.38 )% Allowance for credit losses to gross loans 1.46 1.63 categories: Allowance for Credit Losses at September 30, 2013 (dollars in thousands) Amount % of Total
Allowance For
Credit Losses % of Loans in Each
Category to Gross
Loans $ 10,047 10.27 % 7.07 % 33,863 34.60 % 52.55 % 12,892 13.18 % 5.52 % 39,435 40.30 % 34.39 % 1,614 1.65 % 0.47 % $ 97,851 100.00 % 100.00 % Allowance for Credit Losses at December 31, 2012 (dollars in thousands) Amount % of Total
Allowance For
Credit Losses % of Loans in Each
Category to Gross
Loans $ 10,554 11.06 % 6.90 % 34,982 36.66 % 51.10 % 15,237 15.97 % 7.20 % 32,860 34.43 % 34.30 % 1,794 1.88 % 0.50 % $ 95,427 100.00 % 100.00 % March 31, 2014 December 31, 2013 Amount % of Total Allowance for Credit Losses % of Loans to Gross Loans Amount % of Total Allowance for Credit Losses % of Loans to Gross Loans (dollars in thousands) Commercial and industrial $ 39,493 38.0 % 38.3 % $ 39,657 39.7 % 36.3 % Commercial real estate 34,853 33.5 48.6 % 32,064 32.0 50.0 Construction and land development 16,700 16.1 7.8 % 14,519 14.5 7.9 Residential real estate 11,297 10.9 4.8 % 11,640 11.6 5.1 Consumer 1,556 1.5 0.5 % 2,170 2.2 0.7 Total $ 103,899 100.0 % 100.0 % $ 100,050 100.0 % 100.0 % 1.50%1.46% at September 30, 2013March 31, 2014 from 1.67%1.47% at December 31, 2012.2013. The Company’s credit loss reserve at September 30, 2013 increased to $97.9 million from $95.4 million at December 31, 2012. Although the Company has increased the size of its loan portfolio, the total balance of the allowance for credit losses has stayed relatively flatincreased due to improvingthe increase in the size of its loan portfolio; however, the increase in the allowance is not proportional to the increase in the portfolio as the Company has experienced improved credit quality.Company’sCompany's Annual Report on Form 10-K for the year ended December 31, 2012 under “Item 1. Business.”2013. The following table presents information regarding potential problem loans, consisting of loans graded special mention, substandard, doubtful, and loss, but still performing: At September 30, 2013 Number Loan Percent of of Loans Balance Percent Total Loans (dollars in thousands) 6 $ 11,327 9.26 % 0.17 % 63 82,311 67.33 % 1.26 % 24 9,761 7.99 % 0.15 % 66 17,569 14.37 % 0.27 % 8 1,289 1.05 % 0.02 % 167 $ 122,257 100.00 % 1.87 % At December 31, 2012 Number Loan Percent of of Loans Balance Percent Total Loans (dollars in thousands) 8 $ 5,821 4.89 % 0.10 % 70 82,422 69.30 % 1.44 % 34 9,749 8.20 % 0.17 % 79 20,155 16.95 % 0.35 % 6 783 0.66 % 0.01 % 197 $ 118,930 100.00 % 2.07 % Investment SecuritiesInvestment securities are classified at the time of acquisition as either held-to-maturity (“HTM”), available-for-sale (“AFS”), or trading based upon various factors, including Management’s asset/liability strategies, liquidityperforming, and profitability objectives, and regulatory requirements. HTM securities are carried at amortized cost, adjusted for amortization of premiums or accretion of discounts. AFS securities are securities that may be sold prior to maturity based upon Management’s asset/liability decisions. Investment securities identified as available-for-sale are carried at fair value. Unrealized gains or losses on available-for-sale securities are recorded as accumulated other comprehensive income in stockholders’ equity. Amortization of premiums or accretion of discounts on mortgage-backed securities is periodically adjusted for estimated prepayments. Investment securities measured at fair value are reported at fair value, with unrealized gains and losses included in current period earnings.The investment securities portfolio of the Company is utilized as collateral for borrowings, required collateral for public deposits and customer repurchase agreements and, to manage liquidity, capital and interest rate risk.The carrying value of investment securities at September 30, 2013 and December��31, 2012 was as follows: September 30, December 31, 2013 2012 (in thousands) $ 27,377 $ — 772,099 668,265 26,147 35,607 295,225 265,073 61,389 75,555 32,323 37,961 24,900 25,816 23,834 24,135 50 50 — 5,741 5,493 — 97,778 97,781 $ 1,366,615 $ 1,235,984 Gross unrealized losses at September 30, 2013 and December 31, 2012excluding acquired loans: March 31, 2014 Number of Loans Loan Balance Percent Percent of Total Loans (dollars in thousands) Commercial and industrial 66 $ 16,912 14.30 % 0.24 % Commercial real estate 67 79,160 66.95 1.11 Construction and land development 6 13,666 11.56 0.19 Residential real estate 19 7,919 6.70 0.11 Consumer 11 584 0.49 0.01 Total 169 $ 118,241 100.00 % 1.66 % At December 31, 2013 Number of Loans Loan Balance Percent Percent of Total Loans (dollars in thousands) Commercial and industrial 68 $ 15,532 14.05 % 0.23 % Commercial real estate 63 71,390 64.55 1.05 Construction and land development 7 13,357 12.08 0.20 Residential real estate 20 8,988 8.13 0.13 Consumer 17 1,317 1.19 0.02 Total 175 $ 110,584 100.00 % 1.63 % causedsecured by interest rate fluctuations, credit spread widening and reduced liquidity in applicable markets. The Company has reviewed investment securities on which there is an unrealized loss in accordance with its accounting policy for OTTI described in Note 3, “Investment Securities,” and determined there was no OTTI for the three and nine months ended September 30, 2013 and 2012.The Company does not consider any securities, other than those impaired in prior periods, to be other-than-temporarily impaired asreal estate.presentsrepresents the changes in other assets acquired through foreclosure: For the Three Months Ended September 30, 2013 2012 Gross
Balance Valuation
Allowance Net Balance Gross Balance Valuation
Allowance Net Balance (in thousands) $ 102,923 $ (26,424 ) $ 76,499 $ 120,391 $ (43,397 ) $ 76,994 2,737 — 2,737 10,807 — 10,807 (3,411 ) 1,055 (2,356 ) (13,733 ) 4,335 (9,398 ) — (697 ) (697 ) — (781 ) (781 ) 292 — 292 611 — 611 $ 102,541 $ (26,066 ) $ 76,475 $ 118,076 $ (39,843 ) $ 78,233 Three Months Ended March 31, 2014 Gross Balance Valuation Allowance Net Balance (in thousands) Balance, beginning of the period $ 88,421 $ (21,702 ) $ 66,719 Transfers to other assets acquired through foreclosure, net 2,110 — 2,110 Proceeds from sale of other real estate owned and repossessed assets, net (19,473 ) 5,961 (13,512 ) Valuation adjustments, net — (35 ) (35 ) Gains, net (1) 1,168 — 1,168 Balance, end of period $ 72,226 $ (15,776 ) $ 56,450 2013 Balance, beginning of the period $ 113,474 $ (36,227 ) $ 77,247 Transfers to other assets acquired through foreclosure, net 6,609 — 6,609 Proceeds from sale of other real estate owned and repossessed assets, net (12,120 ) 6,747 (5,373 ) Valuation adjustments, net — (1,017 ) (1,017 ) Gains, net (1) 455 — 455 Balance, end of period $ 108,418 $ (30,497 ) $ 77,921 (1)(1) Included in gains (losses), net areIncludes gains related to initial transfers to other assets of $62 thousandzero and $0.3 million during the quarterthree months ended September 30,March 31, 2014 and 2013, and $249 thousand during the quarter ended September 30, 2012respectively, pursuant to accounting guidance. For the Nine Months Ended September 30, 2013 2012 Gross
Balance Valuation
Allowance Net
Balance Gross
Balance Valuation
Allowance Net
Balance (in thousands) $ 113,474 $ (36,227 ) $ 77,247 $ 135,148 $ (46,044 ) $ 89,104 14,010 — 14,010 19,522 — 19,522 5,622 — 5,622 — — — (32,953 ) 12,440 (20,513 ) (36,911 ) 10,261 (26,650 ) — (2,279 ) (2,279 ) — (4,060 ) (4,060 ) 2,388 — 2,388 317 — 317 $ 102,541 $ (26,066 ) $ 76,475 $ 118,076 $ (39,843 ) $ 78,233 (1)Included in gains (losses), net are gains related to transfers to other assets of $407 thousand during the nine month period ended September 30, 2013 and $291 thousand during the nine month period ended September 30, 2012 pursuant to accounting guidance.other real estate ownedOREO and other repossessed property and are reported at the lower of carrying value or fair value, less estimated costs to sell the property. Costs relating to the development or improvement of the assets are capitalized and costs relating to holding the assets are charged to expense. The Company had $76.5$56.5 million and $77.2$66.7 million respectively, of such assets at September 30, 2013March 31, 2014 and December 31, 2012.2013, respectively. At September 30, 2013,73 other real estate owned63 OREO properties, compared to 7570 at December 31, 2012.2013. When significant adjustments were based on unobservable inputs, such as when a current appraised value is not available or Managementmanagement determines the fair value of the collateral is further impaired below appraised value and there is no observable market price, the resulting fair value measurement has been categorized as a Level 3 measurement.
Junior Subordinated Debt
| Three Months Ended March 31, | ||||||||||||||
| 2014 | 2013 | |||||||||||||
| Average Balance | Rate | Average Balance | Rate | |||||||||||
| (dollars in thousands) | ||||||||||||||
| Interest checking (NOW) | $ | 765,036 | 0.20 | % | $ | 608,663 | 0.20 | % | ||||||
| Savings and money market | 3,452,333 | 0.30 | 2,620,874 | 0.29 | ||||||||||
| Time | 1,619,564 | 0.42 | 1,449,535 | 0.42 | ||||||||||
| Total interest-bearing deposits | 5,836,933 | 0.32 | 4,679,072 | 0.32 | ||||||||||
| Noninterest bearing demand deposits | 2,054,125 | — | 1,855,070 | — | ||||||||||
| Total deposits | $ | 7,891,058 | 0.24 | % | $ | 6,534,142 | 0.23 | % | ||||||
March 31, 2014.
$0.6 million.
In 2010, the Company completed a public offering of $75.0 million in principal Senior Notes due in 2015, bearing interest of 10%. At September 30, 2013, the net principal balance was $74.0 million. In the first quarter of 2013, the Company entered into a long-term fixed rate advance with the FHLB for $200.0 million at an interest rate of 1.04% due in January 2018.
Securities Sold Short
During the first quarter 2013, the Company entered into a Treasury short transaction to mitigate the Company’s modest liability sensitive interest rate risk profile. The Company sold short fixed rate Treasury securitiesmeasures the balance of junior subordinated debt at fair value, which was $42.8 million at March 31, 2014 and invested the proceeds in a short-term repurchase agreement. The balance was $126.7 million at September 30, 2013.
Other Liabilities
The increase of $105.2 million to $204.1 million at September 30, 2013 compared to $98.9$41.9 million at December 31, 2012 was primarily due to an increase in payables for committed, but unfunded transactions and the addition2013.
$1.00 billion.
The Company’s
The increase from purchases or pay downs of securities, net for the three months ended March 31, 2014 and 2013 was $25.2 million and $69.4 million, respectively.
months ended March 31, 2014, respectively.
| Adequately- | Minimum For | |||||||||||||||||||||||
| Actual | Capitalized | Well-Capitalized | ||||||||||||||||||||||
| Requirements | Requirements | |||||||||||||||||||||||
As of September 30, 2013 | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||
Total Capital (to Risk Weighted Assets) | $ | 951,656 | 12.5 | % | $ | 610,108 | 8.0 | % | $ | 762,635 | 10.0 | % | ||||||||||||
Tier I Capital (to Risk Weighted Assets) | 856,224 | 11.2 | 305,205 | 4.0 | 457,808 | 6.0 | ||||||||||||||||||
Leverage ratio (to Average Assets) | 856,224 | 10.0 | 344,107 | 4.0 | 430,134 | 5.0 | ||||||||||||||||||
| Adequately- | Minimum For | |||||||||||||||||||||||
| Actual | Capitalized | Well-Capitalized | ||||||||||||||||||||||
| Requirements | Requirements | |||||||||||||||||||||||
As of December 31, 2012 | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||
Total Capital (to Risk Weighted Assets) | $ | 856,199 | 12.6 | % | $ | 543,618 | 8.0 | % | $ | 679,523 | 10.0 | % | ||||||||||||
Tier I Capital (to Risk Weighted Assets) | 768,687 | 11.3 | 272,102 | 4.0 | 408,152 | 6.0 | ||||||||||||||||||
Leverage ratio (to Average Assets) | 768,687 | 10.1 | 304,430 | 4.0 | 380,538 | 5.0 | ||||||||||||||||||
tables as of the periods indicated:
| Actual | Adequately-Capitalized Requirements | Minimum For Well-Capitalized Requirements | |||||||||||||||||||
| Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||
| March 31, 2014 | |||||||||||||||||||||
| Total Capital (to Risk Weighted Assets) | $ | 1,031,371 | 12.4 | % | $ | 665,401 | 8.0 | % | $ | 831,751 | 10.0 | % | |||||||||
| Tier 1 Capital (to Risk Weighted Assets) | 926,498 | 11.1 | 333,873 | 4.0 | 500,810 | 6.0 | |||||||||||||||
| Leverage Ratio (to Average Assets) | 926,498 | 9.9 | 374,343 | 4.0 | 467,928 | 5.0 | |||||||||||||||
| December 31, 2013 | |||||||||||||||||||||
| Total Capital (to Risk Weighted Assets) | $ | 991,461 | 12.4 | % | $ | 639,652 | 8.0 | % | $ | 799,565 | 10.0 | % | |||||||||
| Tier 1 Capital (to Risk Weighted Assets) | 891,232 | 11.1 | 321,165 | 4.0 | 481,747 | 6.0 | |||||||||||||||
| Leverage Ratio (to Average Assets) | 891,232 | 9.8 | 363,768 | 4.0 | 454,710 | 5.0 | |||||||||||||||
| Item 3. |
| Interest Rate Scenario (change in basis points from Base) | ||||||||||||||||||||||||
| (in 000’s) | Down 100 | Base | Up 100 | Up 200 | Up 300 | Up 400 | ||||||||||||||||||
Interest Income | $ | 353,338 | $ | 358,333 | $ | 380,419 | $ | 406,956 | $ | 436,106 | $ | 465,925 | ||||||||||||
Interest Expense | $ | 31,625 | $ | 31,677 | $ | 51,762 | $ | 71,848 | $ | 91,934 | $ | 112,020 | ||||||||||||
Net Interest Income | $ | 321,713 | $ | 326,656 | $ | 328,657 | $ | 335,108 | $ | 344,172 | $ | 353,905 | ||||||||||||
% Change | (1.5 | )% | 0.6 | % | 2.6 | % | 5.4 | % | 8.3 | % | ||||||||||||||
| Interest Rate Scenario (change in basis points from Base) | ||||||||||||||||||||||||
| (in 000’s) | Down 100 | Base | Up 100 | Up 200 | Up 300 | Up 400 | ||||||||||||||||||
| Interest Income | $ | 382,888 | $ | 389,645 | $ | 419,660 | $ | 456,597 | $ | 496,029 | $ | 536,066 | ||||||||||||
| Interest Expense | 38,726 | 38,882 | 67,088 | 95,385 | 123,669 | 151,922 | ||||||||||||||||||
| Net Interest Income | 344,162 | 350,763 | 352,572 | 361,212 | 372,360 | 384,144 | ||||||||||||||||||
| % Change | (1.9 | )% | 0.5 | % | 3.0 | % | 6.2 | % | 9.5 | % | ||||||||||||||
March 31, 2014:
| Down 100 | Base | Up 100 | Up 200 | Up 300 | Up 400 | |||||||||||||||||||
Present Value (000’s) | ||||||||||||||||||||||||
Assets | $ | 9,168,034 | $ | 9,055,369 | $ | 8,855,476 | $ | 8,669,114 | $ | 8,495,260 | $ | 8,336,093 | ||||||||||||
Liabilities | $ | 7,967,637 | $ | 7,832,059 | $ | 7,629,111 | $ | 7,458,913 | $ | 7,290,636 | $ | 7,122,640 | ||||||||||||
Net Present Value | $ | 1,200,397 | $ | 1,223,310 | $ | 1,226,365 | $ | 1,210,201 | $ | 1,204,624 | $ | 1,213,453 | ||||||||||||
% Change | (1.9 | )% | 0.2 | % | (1.1 | )% | (1.5 | )% | (0.8 | )% | ||||||||||||||
| Interest Rate Scenario (change in basis points from Base) | ||||||||||||||||||||||||
| Down 100 | Base | Up 100 | Up 200 | Up 300 | Up 400 | |||||||||||||||||||
| Present Value (000’s) | ||||||||||||||||||||||||
| Assets | $ | 9,960,462 | $ | 9,854,087 | $ | 9,654,380 | $ | 9,467,117 | $ | 9,291,542 | $ | 9,127,199 | ||||||||||||
| Liabilities | 8,616,470 | 8,465,725 | 8,244,799 | 8,067,695 | 7,893,008 | 7,718,861 | ||||||||||||||||||
| Net Present Value | 1,343,992 | 1,388,362 | 1,409,581 | 1,399,422 | 1,398,534 | 1,408,338 | ||||||||||||||||||
| % Change | (3.2 | )% | 1.5 | % | 0.8 | % | 0.7 | % | 1.4 | % | ||||||||||||||
| Weighted Average | ||||
Notional | Net Value | Maturity (in yrs) | ||
108,275,668 | (2,148,234) | 17.0 |
The following table summarizes the aggregate notional amounts, market values and terms
| March 31, 2014 | December 31, 2013 | |||||||||||||||||||
| Notional | Net Value | Weighted Average Term (Yrs) | Notional | Net Value | Weighted Average Term (Yrs) | |||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| $ | 516,672 | $ | 10,013 | 18.3 | $ | 287,947 | $ | 1,709 | 17.2 | |||||||||||
| Item 4. |
1934)1934, as amended) are effective to ensure that information required to be disclosed by the Company in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission (“SEC”) rules and forms. Additionally, our disclosure controls and procedures were also effective in ensuring that information required to be disclosed by the Company in the reports we file or subject under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.Company’sCompany's internal control over financial reporting during the quarter ended September 30, 2013,March 31, 2014, which have materially affected, or are reasonably likely to materially affect, the Company’sCompany's internal control over financial reporting.ITEMItem 1. LEGAL PROCEEDINGSLegal Proceedings.As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, one of the Company’s banking subsidiaries, Bank of Nevada, operated under informal supervisory oversight by banking regulators in the form of an MOU. The MOU required enhanced management of such matters as asset quality, credit administration, repossessed property, information technology, and imposed a number of other requirements. The MOU was terminated, effective as of July 9, 2013.ITEMItem 1A. RISK FACTORSRisk Factors.Company’sCompany's Annual Report on Form 10-K for the year ended December 31, 2012.2013.ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSItem 6. Exhibits. None.ITEM 3.DEFAULTS UPON SENIOR SECURITIESNot applicable.ITEM 4.MINE SAFETY DISCLOSURESNot applicable.ITEM 5.OTHER INFORMATIONNone.ITEM 6.EXHIBITS31.1* CEO Certification Pursuant to Rule 13a-14(a)/15d-14(a).31.2* CFO Certification Pursuant to Rule 13a-14(a)/15d-14(a).32** CEO and CFO Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes – Oxley Act of 2002.101.INS101.INS* XBRL Instance DocumentDocument.101.SCH* XBRL Taxonomy Extension Schema Document. 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document. 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document. 101.LAB* XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document. The following materials from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30,2013, formatted in Extensible Business Reporting Language (XBRL), include: (i) Consolidated Balance Sheets at September 30, 2013 and December 31, 2012 (ii) Consolidated Income Statements and Comprehensive Income for the three and nine months ended September 30, 2013 and 2012, (iii) Consolidated StatementStockholders’ Equity at September 30, 2013, (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012, and (v) Notes to (unaudited) Condensed Consolidated Financial Statements***.*Filed herewith.**Furnished herewith.***Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act, as amended, and otherwise are not subject to liability under those sections. WESTERN ALLIANCE BANCORPORATION Date: October 31, 2013 April 30, 2014 By: /s/ Robert Sarver Robert Sarver Chairman of the Board and Chief Executive Officer Date: October 31, 2013 April 30, 2014 By: /s/ Dale Gibbons Dale Gibbons Executive Vice President and Chief Financial Officer Date: October 31, 2013 April 30, 2014 By: /s/ J. Kelly Ardrey Jr. J. Kelly Ardrey Jr. Senior Vice President and Chief Accounting Officer