WAL - Earnings call transcript Q3 2018 | Western Alliance Bancorporation

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Operator

Good day everyone and welcome to the Earnings Call for Western Alliance Bancorporation for the Third Quarter of 2018.

Our speakers today are Ken Vecchione, Chief Executive Officer; Dale Gibbons, Chief Financial Officer; and Robert Sarver, Executive Chairman.

You may also view the presentation today via webcast through the company’s website at www.westernalliancebancorporation.com. The call will be recorded and made available for replay after 2:00 P.M. Eastern Time on October 19th, 2018, through November 19th, 2018, at 9:00 A.M. X-XXX-XXX-XXXX entering dialing XXXXXXXX. by Time and passcode then Eastern or forward-looking call relate plans, The expressions events historical this are contain matters and and statements that concerning anticipated future discussion during facts. projections, may that not similar beliefs, to strategies, trends, expectations, financial results assumptions, our statements and historical and significantly those circumstances may herein cause changes results any future contained subject to forward-looking from are forward-looking our current in and The about expressed in to actual differ views and reflect events performance risks, uncertainties, statement. that

undertake cause call ahead. factors that listed forward-looking any results Some over go the Except company the from materially would any historical I filings statements. Please not by the expected could Securities like to those obligation actual include to required to to Exchange Vecchione. turn Commission. the as differ update results and Ken now with or law, in does

Kenneth Vecchione

and everyone afternoon welcome third Western Alliance Good earnings to call. you quarter

performance the the Dale walk and through and on today open results Alliance, shorter organic selling deposit to for deck loan future quarter been The that's again, the questions. me are higher slide low your with and while reinvesting balances, efficiency stable going yielding yields. delivered and durations maintaining Robert also on a by and then for posted Gibbons investing one-time Sarver. its by in margin, reinvested and ratio, for securities the bank quality. asset we'll are the call higher Western tax benefit Joining website Dale I lines consistent and

the expenses future. foundation company's the which also We reduce will in funded

average over book point be and by XX%, XX%, a to quality earnings total assets, on Western Alliance tangible basis For the quarter, revenue equity, an while on the asset increased company. XX%, continues standards, on maintaining return focus XXX which net the achieving XX.X% by of tangible return basis, value annualized

of more even This XX% will $XXX XXrd earnings a both consecutive reported our focus from net of more important. expansion quarter $X.XX, record record on continues, year. income. EPS become the period credit for our economic up the and last was Yesterday were As of quality same third we quarter the million than

total continue XX% one acquired management kept on loan stands flat the increasing as total quarter loans. $XX.X $X total $XX.X rose to compared to at the up September accretion billion $XXX billion to year. $XXX billion graded essentially prior X.XX% growth. equity only assets XX.X%. XX%. from ratio million Year-over-year, equity added Adversely support Year-over-year, two MPAs benefit decline for million from to deposits from quarter just in margin As grew quarter or Quarterly -- rose were of million to the up prior X%. basis to points X. assets Interest ability providing low or billion, loans the million XX.X%. rose ratio $XXX $XXX earnings as assets $X.X loans XXth, $X.X continue lower Expense improved X.XX% the billion common and tangible their efficiency the Deposits to organic company at QX. to despite the

face elevated are it Before into to in turn tougher Industry issues will the real context. these turning put grew the Dale. to like would through growth is but Dale, time, becoming this forward. I'll competition presentation going challenging to our financial concerns loan pricing over At I we and quarter, over Alliance results there downs. amid Western pay

Dale Gibbons

we for strategies several undertook to in of cash Thanks deductions Ken. $XXX expected deferred until At company XXXX, loss XXXX million the savings revenue accelerated and resulted carry-forward. end this year. that the and This tax

foundation rate years deduct utilized third carry and as to we benefit the benefit tax XX% quarter. XX% which as million one-time company than the carry-forward. the We funded a loss $XX of results million and to of able said million were most benefit at rather sold loss tax back we this XXXX shorter proceeds our years The should to approximately a by securities in yields for eliminate able of $XXX being However, some at beyond. $X.X and was million this loss durations. funding and $X.X the This in reinvested in recognized higher in need

reactions loss We in interest higher in net run-up also value, changes rates September. the with These incurred mark-to-market from $X.X largely income periods. fair for future trade securities held will in million in produce

a added $X.X charge also to was $XX.X our non-recurring the million million loss the tax. per column which The million these savings tax net $X.X increased million We for of share shown tax the these million carry-back, $X.XX income the net all savings of of $X.X $XX middle income had from when to adjustments million, The investment totals on for XXX(k) in quarter. plan. or effect by $XX.X items in during

pages, net second down income in which have basis was pre-provision On million, achieved rising as the pretax third basis, for million million, incurred largely income, to rose which on as Total quality brought of remained an revenue X%, decrease XX% non-interest office. times increase. million, the would've $X.X quarter $XXX would expense revenue revenue company loan expense of a the second the million, from net asset Looking annualized revenue million to period. second second $XXX tax compared $XX.X would million, to the effective an last $XX.X X% Net the growth $X.XX. year. quarter. The The revenue normal a second tax have $XXX.X Cuts million, million from the losses Tax million, due to passed ratios $X.X steady; added essentially $X.X was of been quarter. net cost. count flat the dollar at expense in at growth to expenses income orange $X.X million million been the with rate $XXX.X $X.X from growth to loan Jobs Act up the and increase rise rose on income column, XXXX pretax in of late in operating income in the $X.X $XXX tax With quarter due the in for a at average income nearly also was the what share was XX% achieved by million adjusted $XXX target to unchanged quality $X for warrant nearly increase EPS expense has next X.X growth $X.X X:X incentive we compensation to quarter elevated driven benefits in on show period a Operating basis Diluted million or quarter in reduction normalized $X.XX. rate. Net million, interest was million to without XX.X%. of XX% line annualized basically $XXX a for $XXX EPS a million resulting year was million in of income was was to loan credit the from provision which growth. $XXX income these million rose been to interest quarter three to an million Operating was due and largely ago In $XXX.X a income

the provide quarter year. at climbed climbed Investment the in the third during second in X.XX% consistently which semiannual yields year the quarter X.XX% third had investment actual XXXX the in are change continuity numbers been recent increased that of have QX, X.XX% remained quarter the but QX the the the tax of performance, in three from the effect in occur adjusting by most about as of quarters the yield Loan and Tax stable points in some Cuts XXXX also prior XXXX. in in reported X.XX%, rising basis to past the has in payments While the yield the it basis the green the benefited numbers orange over dividend in The yield that yield after quarter XX for period. from during from effect points. to quarter

a in yields quarter resulting trailing rose loan points, the XX%. increase XX basis XX%. year the of basis rose the XXX X% cost was On over As a in fed bearing of percentage funds of the deposit past basis, adjusted linked-quarter Interest target beta loan fourth pressure respond beta rose sustain XX pricing core to as From beta. organic and its the XQ continues deposit or healthy points in strength growth competitive continue cost third at basis profile. its company funding to XX% bearing the XX% deposit beta sufficient with interest quarter to the points XXXX, of

accretion with points points provides the funding sensitivity bank's rising four by primarily funding points XX acquired in after increased year, funding the driven over the cost structure prior beta. our The year the in last effective picture last loan funding company funding While basis sheet. by including higher past beta total fed points basis From of XX% points funding more a bank's The taxable estimate of benefits, the and has this XX% comprise believes consistent year. acknowledges the to for a margin from sensitive all last company's which adjusting deposits bearing X.XX%, non-interest basis back fairly reduction and benefit basis asset year and basis the company's equivalent funds XX resulting in by earlier of to and Over XX%. and past the improvement points points five deposit quarter rates the trailing considered increase exceeded basis over one on year climbed only the two both by -- XX are the non-interest-bearing FOMC. basis sources beta all of the from our metric X.XX%, increased cost and cost basis funding and XX its to the funding six that a the during by price the quarter portion quarter are margin of interest a the of cost for borrowings, The betas X.XX%, compensation. quarter rate in bank's margin linked-quarter and complete beta of margin points six balance increase rates a margin considered of is to including sources held lower loan

all future $X just if Forecasted accretion loans contractual their million will periods commitments. fall loan principal to paid acquired discounted in

However, adjusting tax ratio a up a from this XX.X% by slightly growth activity, operating will from was is after linked-quarter in X.X likely and driven with XX% expense $XX actual The expenses. the of incentive compensation estimate. quarter because the of first million loan costs, year-over-year change. was exceed $XX.X basis on ago efficiency driven accretion to the for operating increase by year quarter for decreased prepayment increase The for times million to in -- $X.X second increase million XX.X% revenue

on compared decile to to top was These peers. metrics have and revenue the Our assets been was X.XX%. return pre-provision net ROA the X.XX% consistently

and billion Continued in deposit loan end. growth assets total $XX.X to growth period took

rate exceeded and lowered our this deposit million million as of and XX% of to reported our loan same growth $XXX annualized quarter from Our beta the to third quarter very to annual close deposit growth growth Similarly, $XXX loan loan million us ratio to growth $XXX was XX% growth compounded three to of years. have increase as XX% Deposit $XX consistent past the FHLB XX.X% from zero growth momentum enabled $XXX the by deposit XX%, at million we the in borrowings compares balance reduce sheet three closely to loan year of continued XXth the our during XX.X%. million loans. annualized we in for September

graded construction loan as XX% million construction. Our growth types residential and XX% split quarter growth eight provision the the Year-over-year up loans and of increase recoveries with of of million was is lines. residential largest comprised the by $XXX C&I Non-performing decreased in credit credit the an accruing NBLs million $XXX business $XXX $XX Growth by of all growth geographic losses classified net Loan Deposit was million million. growth also $XXX and and offset to growth was September growth higher only resulting compared spread driven $X.X during international annualized. $XX year across million quarter million approximately and million loan reserve $X.X with growth spread in was the C&I regions growth balances. us loan accounts, million in greater up the than ago. of losses regions for were $X and in mention. which repossessed losses basis of $X.XX% geographic loan eliminate to $XXX $X.X lease of between savings $XXX markets driven million adversely offset allowance $XX the of across by also largest quarter of enabling estate and Year-over-year with to to increase of or interest for million as a carry million, to in declined X.XX% quarter and at million. total a This assets. million non-accrual lines. loss all savings total Deposit an The and market decrease at a million grew in partially increase and special $XX deposits rose higher deposits our $XXX all up loan money loans acquisition. support the types points from unpaid prior assets costs. million market to $XXX in among assets loans loans $X of million quarter acquired no money during reserves in the balance The was real fiscal by or the reserve in a non-acquired business in Total on discount borrowings both during by are to XXth short-term have funding loans and at the as hence

$XX For portfolio, Bridge end primarily discounts Franchise acquired totaled at billion Hotel X.X% which purchase credit Bank loan from Finance were quarter $X.X million loans, transactions. and to

growth equity strong per just capital At year. the of XX% drove the balance growth Our rose common common equity ratio back quartile in $XX.XX in ratio XX%, again book $X.XX is Ken. past exceeded each to peer share for on to return Tangible turn group, quarter in the top I'll the capital sheet call our from value quarter. the while exceeded second tangible and and the XX%. higher our tangible

Kenneth Vecchione

mute on margin strong a expansion moderate sides balance in fourth the sheet XXXX. our we've After quarter. pricing growth Competitive sheet Dale. of may quarter, pressure Thanks in the to balance stepped third both

However, strategy quarter to securities in increase part prior reinvestment we benefiting our guidance from mentioned. our expect margin to just fourth the similar Dale

issues we of increase new as in XX% to circumstances of have initiatives Primarily $XXX,XXX revenue increase borrow yet increase absorbing to any operating we have and change any to non-interest migrate with our have and operating and take quality a a and the expect quarter that dollars not a We times We half to modest viewpoint In to amount asset revenue. do business growth sheet XXXX held stable. charges, leverage continuing ratio. X:X efficiency in the of your questions. two been XXXX in historical the information X:X losses incurred balance see to improvements for time, funding the specific not expenses. third our outlook these Robert, target do marginal other of in target The to a words systemic deposit revenue at in costs our of lines. this rate not bearing the remains for efficiency one myself rate expense have generate that to rate At growth result leads and us related expect pace this to a be Dale, are growth happy and

Operator

We question go question-and-answer Jefferies. Casey will first the now [Operator Please Instructions] Haire of begin session. ahead. Our comes from

Casey Haire

Thanks. Good morning guys.

Kenneth Vecchione

morning. Good

Casey Haire

in going fourth to did If versus the the out like some today quarter. restructuring us on a Wanted you spot little in I quarter? is the securities in could what and rate guys quarter come to book securities X.XX% third start-off, the sounds stronger that book actually, in bit guess, possible, the the give you are

Dale Gibbons

Yes, it's up this points basis transaction. from six

Casey Haire

got All you. Okay right.

when show might Okay. initiatives topline there's to that we then up revenue I'm see -- the the understanding from you so on start And currently, P&L? there's the -- correctly, to nothing initiatives you these guys if expect them development in

Kenneth Vecchione

Okay.

results. are not producing So, yet progressing, all businesses but meaningful

business come. not deposits be at to and team that we two the loan in business QX, more expect But On to it's the the then So, deposit new too, and XXXX positive XXXX. buildout sometime running operational organizational completed and until be quarters we of QX sometime businesses. remember and we're in to mentioned. expected we number are I one, expected Deposit two we two now coming middle end businesses, of the late in On will have what still okay. loan some our have would have in businesses, we deposits up call

first place. is the one, On the in team

on have as loan going but the grow really this continues. growth We second book follow We it to volume some loan did small will we've XXXX. always said we quarter, team And loan business, and forward. loan in the QX in commitments buildout expect

Casey Haire

I enough. switching I'll there. just Thanks. then Okay, -- just fair And actually it guess to leave

Kenneth Vecchione

Thanks.

Operator

Michael of comes question next Our from Young ahead. Please SunTrust. go

Michael Young

Hey good morning.

Kenneth Vecchione

morning. Good

Dale Gibbons

Good morning.

Michael Young

follow-up to your for in of those of Just on or of to guidance ratio, that will kick-up is outlook marginal current expense those? that they when Casey's the or kind new efficiency inclusive on question, is start exclusive revenue running businesses and growth

Kenneth Vecchione

No, that's inclusive.

Michael Young

growth, there towards on that some was that quarter, of that areas? Got or are more the you're acquisition of residential a this with something is other it. going And the focus in strong just growth some competitive the shifting of more pricing portfolio forward

Robert Sarver

take back a what me we're we warehouse from loans a you let just lending that. So, our half doing kind underwrite fully buy step a customers after of and give here. viewpoint residential We into

without access branch expenses. don't having and -- the we loans, not So, to we locking networks expense expenses there buildout to the have we're obligated like their having And if buy compliance them. without without

of cherry in we this that our improve So, a also the strategy put that have that we as quarter, operating in helps was purchase of this and we're approach, Having us there you said see going the like. because in but future, place. we get to residential -- loans putting general, be that, to in the generally, pick loans residential it's grow this best leverage

Michael Young

And and that you now pricing reward about areas? other Okay. vertical risk than the of in some the just feel dynamics better

Robert Sarver

to -- as our into going either on need closely. we're And push we'll do. or three, years this pullback we We'll variable interest one, to. rate rate we these depending viewpoint; it watch are and five Yes, loans, stuff

Dale Gibbons

I on a of time. for our the bank X%. been average of estate because resi the real for margin this estate we're those portfolio have better think reason sector is in residents the at what of about only real years, put getting We for is that mean is exceed our loans why lending they that tenth at Part a of size. mix our into

going proportion see you're growing overtime. to So, that

Michael Young

Okay, makes Thanks. sense.

Operator

Rabatin question Jaffray. ahead. from Please Piper go Brett next Our of comes

Brett Rabatin

Hey good morning.

Kenneth Vecchione

Morning.

Brett Rabatin

of that I was you about The business a Wanted segment other first lines. and little thinking hoping ask talk kind of was I was two bit. then growth platform. guess curious the tech was about little And to maybe the the those I pretty of could in about things. concentrated that I central side just decrease bit in to a a surprised see you talk could

Robert Sarver

the So, in financing the we side. some tech tech side, do equity

in, come have And them. so come out; more they those bit a volatility little to loans they

dotcom just mean side. So, that's probably They busy, side. say the best in having era. tech innovation, the busy of are raising fund since I will the tech very on years very deposit I general, one their

Okay strategic and a up deposits go so, on portfolio. pulling of take-outs depending could on of we're and in of our we're loans but a that seeing down lot lot side, take-outs

where have through QX's So, I when great your and had we're quarter, Brett? that growth. Did about we just overall answer there that's things sort what to grow a of question meant little total we a cautious

Brett Rabatin

was concentration what the other Yes. Then was the I other there? guess businesses, just part the

Robert Sarver

up million. growth overall about $XXX of will million; our terms C&I $XXX in not talk about about went that; we up So, land construction like residential, went

of properties. mostly their seeing and slightly. occupied We're people be taken came out investor, because payoffs down CRE, taking are So, there -- owner

Kenneth Vecchione

sector reporting -- segment the mostly in warehouse is operation. So, mortgage we're reporting our the within

Brett Rabatin

Okay.

wanted moderating pressures Okay. talked concerns on to real you just And about and growth. competitive some then ask

makes bank, but double-digit too moderate? about as growth been guys it full it's maybe -- year, to XXXX talk XXXX about or about early -- thinking we're to that sense have is would would think still you stellar a As

Robert Sarver

think so. No, I

strong sheet I think front growth of good we -- have still opportunities in us. balance

past. XXXX. I that -- as in we've going play improvement been think come pace is seen the believe as efficiency the rate new these to are we've year don't the well, same to We executing next at going business continue of it's of been ratio some that on our throughout I lines into

many don't we year the -- XXXX, was on changes had increases that's this in tax to efficiency But going whereby a little part there's it we continue. of expect bit some the But going employees. a to rate flat time, of forward. that same at -- total we necessarily see because Now we that don't be reinvested of benefits these into as

I are improvements to going double-digit And so set year be -- we we're share in next well well. for earnings as think per

Kenneth Vecchione

want Yes. for full deposit none comments world -- cognizant tell have And growth. out a We're QX of to the summary let balanced going there, the consensus that's going that has well. said way We'll we're my good okay. deposit we're I've same year, today the and growth; problems going loan a changed. and are have taken QX trying okay. hit growth me to I add here had to of we're probably for we sure quite trying what to shooting very of be in the as just growth that's loan into to you was so these way, team lot By that, to to we're not changing earlier for even make We're frankly, better my

there's and what what trying saying do. So, to I make in want you we're just to here understand balance sure we're

Brett Rabatin

it. Appreciate color. great that's Okay,

Operator

of Our next Milsaps go from Please O'Neill. Sandler question Brad comes ahead.

Brad Milsaps

Hey good morning guys.

Kenneth Vecchione

Morning.

Dale Gibbons

Morning.

Brad Milsaps

of us got might there how commercial, to that kind a any dice slice kind of kind everything you've this think other fair of Can sense calls, just book remind you was guys you and to the at want in this year. I just you get kind get have on I -- on help of construction between amount residential, may we Ken, in point? donates this of of update previous touched growth way want had us but an curious, a have

Kenneth Vecchione

in the the investors' moment a it's little is broader a and for of fair question Yes, industry, to on reported I think make going I'm minds. this I a bit some because this given think results

you and the me let following. note So, for things with of we start kind several just

in like is about have in construction in special sell have books, which about no loans. okay. total Two; special million that's there right, We loans, one a of estate, Closed are family sub and end sub-standard under and mention for is land loan we million mention that's building All special only $XX that and $X our industrial mention million. investor real only loans one. mention. or special $X multi-family in Just

and sponsors call Our for brought to a our that rural very less exceed sits book about our with that's exposure right. you that at the entire And even there's of in do right. lot when that land banking team X.XX% billion, very, all book, never is a than strong XX%, of couple at loan ago land downturn, XX% not Back the your over all construction years LTDs right. book $X.X question, the had we loss all total look in what of we

We that market condo don't was it's important just CRE, again, our rest is also I family then we seeing that information. there. are one well. do not very other to of is is have and and just just viewpoint book a know still asset single brush quality. the that of we XX% financing. And and about Generally, closely, probably doing stuff downturn in just broader watched occupied well. the or in but homes thing any CLND too, investor, any there, tidbits maybe little leave it add know, I'll don't One, we're to holding, economy rates owner absorption doing

a or in we marketplace. us pulling going that back New problems we're little in and not financing areas certain Chicago Miami more condo find think to overtime or the in you're doing could So, York create

and So, strongly them we to lending are pull we performers to any banks. are those see encouraging that in other contractors back our marginal book,

everything company. to to take we're else we -- comes proactive that So, at can times. us we -- And we asset matters as and all this are before trying trying in quality to be as

Robert Sarver

equity to I'll contracts have get to estate contractors, got guarantees projects of significant real our On or assurance and finished. we on that. our just Robert, in strong It's we've add financing, bonds amounts commercial

we cost issues had in some there. seen problems overruns, haven't we've though even book any with some our So,

land On higher side, the profile of the little upfront cash high markets number in ratio most lots. the finished than a their fairly housing residential a of side, we side, are require construction The on on markers. is and housing we're XX% on average national -- to

into being that the loan construction, And our on loan rolled built so value. financing as XX% gets at typically is to house the somewhere houses that's the we're house around

cushion So, have should prices begin bit. to soften a little amount fair we home of a

Brad Milsaps

just follow-up And by sense or that other kind kind a $X.X what migrates of out of to balance your ultimately you helpful. the That's is do on taken that sheet billion, on most of to have guys of sources?

Robert Sarver

taken and time gets other where of it about of by we're keep some as Well, downward migration out a And to see sources. probably it going more now total than a loans percentage our you'll is over upward.

Dale Gibbons

There [Indiscernible], are some out. taken gets of those but most of it

Brad Milsaps

the rate sort as of like ongoing does of does recognition change of tax tax benefit, think XXXX? about housekeeping, kind just you that the Dale a then And final Okay. your

Dale Gibbons

No, is think the we're I range the in headed. kind XX% -- of XX% where

Brad Milsaps

Thank great. you, guys. Okay,

Operator

go Arfstrom from of comes Jon question Please next Our ahead. Markets. RBC Capital

Jon Arfstrom

Thanks. Hi guys.

Kenneth Vecchione

doing? how Hey, are you

Jon Arfstrom

away banks you a of it to the saying narrative are that somewhat the coming on Good. Question lending bit similar backing for there's that are again, keeps a non-bank this lot seems up. like things just and

guys seeing Just Is curious at change you're if you has are intensifying? and competing changed appetite who it any behavior their in all? against

Kenneth Vecchione

good a That's question. Yes.

there funds SERCs. it against. done. loans fare on to We we the retreat. and pricing seeing us, And able we're for becoming Two of answer more when competitor. things, the will very, creating bit is difficult out want we you for and is it is lower They're competing in more borrowers deal advanced they get price important tell And closed very done, that. because but get you headwind and is a a are rates pay-up to market that yields of all that's and rather loans. we don't to we well our of those are done, are a they issues We to -- tend deal get when the to higher premium at we're that try existing So, coming the little our

so And are here. we flowing had But that. money institutional some more seeing success with we've

Robert Sarver

The sale that heading large are funds the that to flip these a for side of exit. right is now. percentage They're of

Jon Arfstrom

kind that question. just What of seeing was I Yes, ask changes? are you

Robert Sarver

change Well, the don't needs of want what number from to little other make loans, another up money should the a cycle. changes you borrow one, is quicker companies, of have dry a lender through started they to take that number bit. these to when you're people your And economy funding is that people sources going that a risk

inundated really books attractive supply/demand reinforce prices sale of there's stable is that opportunity with and these I bank getting ways. I offering create buy think a going we're because and think two, it's at that's is to changing. two opportunity place to then to maybe to to more non-bank a So, from. of One, borrowers in some money borrow going for sale companies of And for lenders

lining there. And so I a in silver there's kind think of

Jon Arfstrom

My do that you more higher question. I question you next answered think Okay. for opportunities you and was rates for strategic just create

Robert Sarver

their part of and liquidity, account performance their I a going of capital higher road rates think not valuations is their to I to I into does too. guess their too, companies mean based performance the further between going bump but of a position. two to Yes, see little tale you're cities think I performance, the taken going where be differentiation see funding only that in you're on credit margin,

but opportunities little dividend interesting accumulating reason opportunities and like some some to a Lupita's pay of -- in us I some bit I is to The contrarian some counter have as of to opportunities on of a years. I capital make over a well we price some road. bumps here for I which a we've rocky think in bit companies value, some differentiation That -- the amount we're out road the this you're of had see -- so is getting think where to there's in So, we we're and going high of acquisitions little for of think been also next the think quick -- we've always there I earnings book help of but terms our bigger were part to differentiation is very couple the in shown select differentiation. that opportunities kind should that's and ratio our a always waiting differentiation

Jon Arfstrom

Thanks Okay, guys. great. for Thanks. help the

Operator

comes Tenner question ahead. Our of next Gary Davidson. go D.A. from Please

Gary Tenner

Good morning. Thanks.

Kenneth Vecchione

Gary. morning Good

Gary Tenner

the margin question. to your between trailing the addressed deposits. approvers the loans of around think but and relates questions in positioned answers capital With my as I to information the commentary with kind relative regard of you just question data or terms that, the you and

deposit you correctly. if you forecast margin of just mean kind reiterate I on were could alluded So, you expectations of I betas your on to role previous think the you what those with Can ahead heard was players. margin and to what of stay guidance if kind the loan

Kenneth Vecchione

I'll half see expect expansion in that to the but until question margin Dell other have QX. we Yes, the of with

pricing our grow pressures to So, side clear get some of on be time, better okay, what but I want a the out on to to we're trying we're the viewpoint what right. to on And and book more that, we balance do with extending see all trying the as business. to liability we just over that, XXXX closer

the take beta to part? want You

Dale Gibbons

Sure ye.

betas were slow that when were a highlighted think in QX. From did. at they then run to our last to which betas So, down our current we in we said rate. going we going stronger going here going be fairly probably stable period our we call in quarter, of we in QX was that are second thought I and we there costs there saw to be the on that funding And expected

So, have security numbers. kind familiar going in the QX. did of it rate had them then was We $XXX off course rise September. of of with reflected We of And had everyone we the that about to of one a they we opportunity X.X on is since that's well a up million -- pick-up. not is also would does in technical LIBOR end eased to be where sold the end and XQ an margin us us really deal we a I And couple point at in then the our what had where basis LIBOR improve as that That's shot -- trade again margin. gives should expansion. say things

be normalized. it's going right like I QX help. looks think more would probably to That now

expansion in see So, QX. don't going margin in that XXXX. optimistic that to will see we're know we're fairly I that we

the But away, the to margin way, to but I to there here and been or six be basis whatever expansion XX really just no that we going -- from down. speculation. get the fewer have a yes, think that that's FOMC five went little concern may get what we that or is bit it's points is a that changes bit compared to needs maybe I competition for increased our mute

Gary Tenner

additional the appreciate I Thank color. you.

Operator

comes McGratty ahead. from of Chris go question Please KBW. next Our

Chris McGratty

your Thanks a little morning. taking Hey good further. comments on a the bit question. Dale for comment deposit the pricing maybe

You've to your of Interested HOA been of the tech on the book? going got those about with rest and what's of the repricing between book in compared kind and in XX% XX%, businesses. portfolios

Dale Gibbons

not they mean again HOA on it's technology credit driven beta by the fairly are driven side. driven low -- sectors, by I the those relationships to those continue It's deposit think on its have nominal. I side, it's in tech very pricing and what on,

Robert Sarver

service and side. technology on Yes, the HOA

Chris McGratty

that's did balance then the a how And and should the slower missed about like what securities size absolute in hard growth? thinking prospects considering apologize. The the of quarter -- portfolio, little Okay, you great. kind comments, we for the sounds bit I Dale sheet

Dale Gibbons

gives have deposit balance but there's I'm loans. today, where we be than portfolio for we this us slower sheet. in unit Well, securities the balance sure our -- are going more growth, kind been not is of the That to faster growing have core sheet

probably portfolio. balances excess think to so growth for higher we're that deposit going that see portend growth that in of I and still in Going could forward loan

Robert Sarver

loan so. ratio Now, from to talked quarter we last did which to XX.X%, about was dropped XX.X% deposit

Chris McGratty

just And maybe you about you growth, I Okay. misheard kind it. could balance comment maybe I of a you, while the repeat or have sheet

this forward, of close balance overall to of just that. right. kind kind of the going is I'm got trying mid-teens-ish or I moderation message sure make growing to of mid-teens, lot year, sheet, kind You're inside year-to-date, XX% of it is it of kind

Kenneth Vecchione

No, QX -- slower than we're okay. balanced going to just that not seeing. and folks park. we're thought make a we trying And that want it frankly say and really phone quite what know a certainly to going slower on quarter, going I'm was that we're in we little wait as And runs out I it's mean XXXX, be this to see, in I there -- of but bit I little did I'm be guidance yet. but what to the hit give not sure the to the ball just into

And that been the so tune we tell just that see. grow, of growing, want will it to has but we'll it you not kind maybe but to

Chris McGratty

All right. much. Thank you Awesome. very

Operator

Fargo. question comes ahead. Timur from Please Our go next Wells of Braziler

Timur Braziler

morning. good Hi,

on over quarters the is business pretty growth warehouse question some despite broad industry more last some First of strong that's seen the trends. mortgage here few the

application on continues wondering that guys Just business? that business growth to going that within get for of actively item growth to adding How hit? what's in as you much kind be expectations that the driving volume should and are and what line

Kenneth Vecchione

very that got note inside pricing marketplace. like opportunities. businesses few captured Pipeline of we a we comprises and get warehouse are lending warehouse still -- We financing lending, the in good premium to heading. business, all the it's is active So, lending, MSR that

we're to line to going continue So, pursue of business. that

Dale Gibbons

not affected been there as much as others. some have We

is that's volatility asset. less in Our that us toward been purchase always money rather business skewed given mix and than refi

a To I the in permanent think terms demand financing it's reduction degree, of continue. for likely do to purchases. you see

other are sectors course, increasing that value at growing is, of that well. higher these rate mentioned MSR have levels. also Ken We

Timur Braziler

Okay.

So, concessions really get business? it, to as we the been able hasn't looking of that you're out too that grow you've there yield business to line, kind growing much in look at yields at been of

Kenneth Vecchione

seeing with That that that pricing all. currently sure at what is not growth business premium but in you at I'll is the some market pricing get pressure, business tell at. the we We're to

Robert Sarver

pay lower We leave think let risk have who And in is gone a We are a us the have of significantly willing couple good this pricing. who adjusted let customers to we quarter department leave. places to them that we with what those return.

that's okay. So,

Timur Braziler

one Understood, And maybe lending helpful. more that's the then just on side.

deals some from more in loan and the we to enough of non-bank at in competition funds, increasing Given assume is the the of local for from continue geographies? can comfortable that of the near-term, pick-off come to that to lending these it basis least growth guys Or national kind platforms? of you're small expect you is the continuance the within different should the safe

Kenneth Vecchione

you more me let So, insight.

pricing, we losing are all we active very lose and for a regions businesses, we're in asset all have quality, deals right. Where seeing in okay. strong good deals, with We pipeline them the

should of You're being price believe We a get lot, should because we deals we to on not go pricing. are us premium we because them get going we -- what people but to right. we get deliver our all that below premium and think we XXX, aggressive loans lose too

think good that's So, We lowest shareholders. to and it's person out not is we for the for But be lowest good right. all investors, delivering let's active, our we're that's going don't clear, our chase don't pipeline spread. there good. think sure it's the don't make very think We

think don't it's Just good.

opportunities. had active. lot So, the pipeline a very of We great is

out some doing We We're But the too are are following people tight. that pricing are we think market are down that. to grudgingly. I losing

Kenneth Vecchione

But be Bank competition U.S. far to of Fargo, Wells and our and America, continues away Bank.

Timur Braziler

that's Okay, helpful.

Robert Sarver

we against And -- compete daily against a compete on basis. that's we where

Timur Braziler

right. All

sorry already for Just -- on last me question that was one one a asked.

or as around structure with further as that expectation of you there wondering you some of excess as the funds within loan those this you funds, still securities talk could start I'm environment? growth deposit had we're outpaces -- know and opportunities portfolio saw the the of And little We about quarter, portfolio for kind maybe book. redeploying are the or I into thoughts that some through rising that enter just the think park of this to itself of of Given the securities that kind cash restructuring? scenario we hypothetical a duration indicated continues. bit rate growth those flow

Dale Gibbons

little still much a like But neutral position it. it that I like to We tech, the Duration, bit moved little taking more prospectively. think acquisitions where shorter I we funds some we're mean in we've in to four another bit PACs in that's residential large we investments we've period. if of are in. this we are doing But kind asset-sensitive. over whether it has thought point want It be prudent. that or have I preponderance was things CMOs don't or of are maybe too a been doing duration push are going one securities down a with up front that we've seems from going years. in been mortgage-backed been what the and shortened of time last maybe or rate at slowing loan our or I securities and some because think increases type still that's

combination going well acquisitions some liquidity So, see between of is you're those being of as continued deployed. to NBS where I loan residential the preponderance our think as purchases

Timur Braziler

you. Perfect. Thank

Operator

question is go follow-up of next Davidson. ahead. Please Tenner a Gary D.A. Our from

Gary Tenner

book, barely I for our quickly it was of mean still X% growth. year-over-year it's revisit your really on loan it's Thanks real I the follow-up question. your wanted growth just to just XX% this lending. half resi estate the loan but of quarter, -- of

process got It that-- sheet really like and you've about supply you turn that kind of that. around sounds just on a So, off pace your kind put could the on at decision-making of of it and spigot wondering the quarter-by-quarter balance

Robert Sarver

when what things. couple at against back I business. the in C&I a we're is and securities do hedge started going a -- and to estate also also our is alternative we real to in book, our competition it year a two we commercial mean that going good ways a Yes, investment looked higher good mortgage-backed planning

Gary Tenner

you. Thank Perfect. right. All

Operator

Our Please Chiaverini Wedbush. ahead. next question is David go from of

David Chiaverini

about been question expenses. of efficiency And ask and of how you've revenue about it ratio ratio the efficiency an a how wanted the as XX%. growing prepared about to remarks in X:X a you said had ratio growth the I historically think going you to thanks. in at -- Hi about forward mentioned

are you expense ratio in as Now that does Board? the think revenue forward? similar the managing growth on efficiency business that that XX% should new be what could businesses to that growth towards now apply going referring were we of to coming Or

Dale Gibbons

this our our of growth expense. in period we're we right has now at these also in X:X breakout in looking That non-interest So, ratio. increases we're investment cost new challenged our deposit that and businesses

we're I And we expense. when looking gear our can at to it be take and go But be improving that it's at -- historically. going improve able ratio to $X.X continue hope would okay $X these at forward revenue have this so terms to not not same do below efficiency to should to we least situations of XX%. that in going saying we we're the kick-in rate

sheet double-digits at a opportunity slower improvement. little in we're of still So, that terms I margin look our improving balance double-digit terms that expansion, growth, EPS in I efficiency see here ratio of and

David Chiaverini

I had. all That's very Thanks much.

Operator

I question-and-answer closing session. like This the Ken concludes any our would turn remarks. Vecchione to back conference for over to

Kenneth Vecchione

everyone. Thanks

this with we the quarter to very look again quarter our fourth future. about results in you near were forward to Now and we talking results Thanks pleased listen, everyone.

Operator

today's conference for now presentation. concluded. attending The Thank has you

may disconnect. You now

Western Alliance Bancorporation (WAL) 19 Oct 182018 Q3 Earnings call transcript