WAL - Earnings call transcript Q1 2021 | Western Alliance Bancorporation

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Operator

Good day, everyone. Welcome to the Earnings Call for Western Alliance Bancorporation for the First Quarter 2021.

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

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 3 p.m. through XXXX XXth XX April Time, May at XX, p.m. Eastern using by number dialing Time conference in Eastern X-XXX-XXX-XXXX, ID XXXXXXX. and beliefs, The discussion statements future trends expectations, forward-looking facts. expressions not concerning maybe call events matters plans and projections, that similar during the that -- relate this strategies, or anticipated historically are contain to may results The forward-looking financial our and and differ subject are reflect in performance, those historical uncertainties, changes about results assumptions actual views forward-looking expressed statements current contained cause circumstances from significantly in that to to statements. herein and future our risks, and events any Factors Commission. that in historical this results the and differ included or related the materially with earnings release could from cause actual presentation, our are Exchange expected and results filings to Securities company required undertake forward-looking law, not any update as any to by statements. the does obligation Except

the the turn go Now like I Vecchione. call over remarks, for now Please Mr. Ken ahead. would to opening to

Ken Vecchione

to afternoon. Western Alliance’s welcome earnings quarter first Good And call.

drove quarter. results expanded the through environment. $XX.X and take continued will Dale this nearly are million $XXX quarterly in then $X.XX million economic net walk the Bank’s record results Western and conditions Net I Alliance’s we $XXX.X and will fundamental in Joining will the in strong QX. loan our an we of me we Officer. of strategy growth performance on overview company’s Chief as and asset of quarterly underlying of Gibbons; first per to Credit today the release share mirroring current the XXXX, this performance. our economic financial provide drove financial quality Dale fourth your X.X balance million business Afterwards, open and Officer you highs a year-over-year Tim earnings expenses drove sheet growth kick and And lines The flat the Chief the for our call will to off reserve managing and to questions. business quarter in the are commercial improvement loss trends, or Financial quarter income how a Bruckner, times and rate and revenue national

Our growth, than due XX% fewer while quarter PPNR to million, on approximately days. to focus which $XXX to lower last year-over-year two marginally continues be rose

of am of that place Regarding the acquisition pleased ahead closing approximately took I AmeriHome, the weeks schedule. three

While to focus balance sheets personnel we the begun funding down and and lines. synergies integrations are technology external of have minimal, pay credit with on

deposits. retain will of to $XXX we Alliance Western signed servicing to the sale allow mortgage of Additionally, agreements substantially million parties counter of approximately all the with that rights strong custodial

We expect the this fee expanding reliance businesses. and optionality to be to Alliance’s lowering an acquisition company’s attractive completed in was portfolio income, while income providing early growth spread May. our commercial on Western of AmeriHome strategic

loan and outstanding sheet up from growth billion $X.X billion, Turning quarterly and assets of the quarter, respectively, trends, to year. $X.X first balance $XX.X lifted XX% prior billion, total the deposit to

throughout driven our loan -- focus and Our on residential increased loans was traditional as low classes footprint. asset banking warehouse loan risk near-term growing funding, through activities and growth primarily was purchases in on by display, regional our

margin our short aided deposit down are tradeoff basis. the term is XX% franchise creation. to net the on a ongoing income the a net accept for Quarterly than access value of was loan loan funding strong by from and income and long-term we totaled XX% our interest liquidity deploy loan a growth and X.XX%, down was our growth to as broad commercial franchise, NIM our for impressive and AmeriHome across The Non-interest This Bridge creates $X.X the drove ratio continued deposit quarter, and growth Our to $XXX.X investment last loan-to-deposit quarter million it’s to improving higher interest or continued million million securities. year-over-year up compression, acquisition. $X.X from excess into based warrant Bank. willing foundation from fourth but which million loans we to liquidity income earnings XX% for at pushed for quarter, $XX.X pipeline of expense

as Asset quality the economic gained remained recovery stable this quarter steam.

liquidity net of basis and as continue For $X.X any X million annualized and businesses pandemic. the spending an or to to points quarter, many stimulus may the habits in meaningful consumer basis. not provided packages impact way loan Credit losses were positively charge-offs prior on appear weather the proposed

We assets the industry -- with and you Alliance growth. value through the generate continues tangible This Banks share on strong a excess financial equity significant reopening momentum XX.X% one or XX.X%, which to Dale Western an Western of common industry return XXXX. time, book respectively. let At or profitable on year-over-year Alliance economic of with well return I average this take X.XX% most capital, grew and leading coupled Finally, for will average positions $XX.XX tangible XX.X% remain year-over-year per the of in performance.

Dale Gibbons

Ken. Thanks,

of Western loss quarter, with each the continued X% in This million or in provisions generated historically economic relative XXXX forecast per to share Alliance of is year For loss about credit $XX.X improvement loan very quarter. continued of end income prior to reversal inclusive -- loan due net $X.XX and segments rates. low down the from $XXX.X million

related were expenses recognized. to acquisition the $XXX,XXX merger of AmeriHome Additionally

to QX of preponderance approximately as We significant expect quarter of be a to total XX% million our an primarily growth. $X.X Net result the grew increase $XX during incurred in of charges integration continues. will sheet $XXX.X income as million, balance which year-over-year, million be merger interest

yielding costs quarter, growth. assets loan cash mainly $XX.X for from mainly loan-to-deposit QX, XX% adjustments increased measured in look Non-interest relative which temporarily balance XX% partially higher higher we in by growth by to liquidity in AmeriHome grow QX, as commercial future proportion due average QX Quarter-over-quarter, billion, and in Non-interest and while gain income muted in to warrant dry excess proactively $X.X approximately to our offset rates deploy securities prepared loans. our to driven interest However, earning XX% assets into average million $X.X to generated income grew we value lower value as at low smaller fair fell securities our increased the fair from XX% yielding loans. prior ratio offset powder fell from cost million million to to as the higher with deposits deposit were in as $X.X lower by $X.X income. expense held million

over net ago. drove Continued sheet a growth of net generated year pre-provision income balance up from million, superior $XXX revenue XX% interest

XX to investments drivers, for grew Turning prior $X.X of than end the fees, Fed basis modestly the than balances an higher X.XX% ongoing residential Investment quarter shift balance portfolio and was PPP the the into due offset Significantly quarter well average account. end yields billion to our Higher basis growth was costs points reduced were loans. total deposit remainder deployed declined balances QX. income redeploy asset -- of for to quarter current loans of net strong strong rates for Interest which lower by towards we bearing Similarly the X includes due portfolio compared the now XX% mix basis a and investments partially the by already $X.X growth to our $X.X or yield Total and average billion, liquidity and on yields billion. billion the in credit points continued interest quarter, higher XX and the in core look ‘XX deploy reinvestment excess to This deployment low toward the of loans efforts QX deposits X.X% as lower $X.X throughout following liquidity as deposit to generally were non-interest-bearing ongoing declined loan spot quarter. risk. linked-loan basis from X linked-quarter and environment. with liquidity positions in class to cost for higher CDs. points from re-pricing more and The basis, yields maturities this to rate investment points.

perspective, at had investment levels. points compression. quarter, costs expect and XX interest in QX offset margin AmeriHome XX higher from XX% interest to posing interest acquisition deposit impacted growth in in million balances earning strong negatively to points. net to with balances increased loan securities declined increased cash purposeful Net $XXX We income basis funding our $X.X this XX%. during average the assets basis the by $XXX.X these To as NIM meaningfully million year-over-year put as stabilized advance million margin XX% the and generally

net quarter balances loan quarters interest into drag moderate end loan margin ability this pipeline access assets, healthy to of this our deploy the while higher over climbs. income and we earning expect to higher Given coming liquidity yielding

of PPP was loan PPP X fourth points basis the a X.X% quarter over Cumulatively to which recognize similar XXXX, to NIM $XX.X by yield we expect fees. Additionally, of the benefits. benefited the remainder million of

income in increased interest balances. XX.X% by related rose QX. modest was higher higher XX and in a points basis in partially efficiency fees to increased driven decline net expenses, Non-interest an ratio rise XX.X%, in growth an efficiency XX% by deposit to offset from increase the non-interest by deposit linked-quarter increase by annualized X.X% expense ratio driven This income. Our

a grew with focus grown $X.X this declined the been prior a a XX deposit expect in loan capital quarter. credit round to revenue AmeriHome the low XX% XX%. our segments period year-over-year mid-XXs billion loans approach X.XX% period, ROA quarter, of sheet XX% net billion provides at and have generation loans as all the and during the momentum decrease results $X.X meet $XX.X year-over-year quarter year. impacted growth, significant $XX to actions balance cost, have interest, net end. we rise Inclusive of to compared of and the base. and while capital PPP, increased assets from billion AmeriHome. by level Pre-provision Balance same ago of strong the X.X% continued Inclusive the much ongoing would Excluding loan fees flexibility for total approximately of billion from larger grew continued to year from $XX.X PPP or This performance deposits low ratio quarter XX% including the DDA the asset $X.X efficiency X.XX% for growth X.X% or to on million we of partially PPNR life to and second This fund last quarter year-over-year, the the funding as sheet management quarter points, asset balances XX% ratio or but increased our efficiency basis billion demands. in

the offering tangible to over both over acquisition. per million year common shares book stock $X.XX to AmeriHome the $XX.XX, and in $X.XX value increase share an during of the income quarter to QX net X.X of the and anticipation attributable Finally, of XX.X% prior prior increased completed

loans construction and the from XX.X% of loans C&I million by in real also growth X.X% of in in strong a loan of strong consumer supplemented now increase non-owner Our continues of loans was $XXX flexible residential growth estate strategy. million. business an portfolio, loans was $XXX to $XX national The growth increase an by of loans commercial billion loan $X.X benefit ago. majority and driven our year Residential CRE million. $XXX million occupied from comprised of Loan

growth $XXX million C&I assets million, the focus nearly for on from low in the were were loans Round and mortgage grew $XXX Within Round which originations X highlighting $XXX risk loans million offset PPP quarter payoffs. warehouse by our X the

deposit DDA quarter ability grow in our our diversified which gains tech to savings a continue seasonal of attractive now believe and to to sheet during balance into non-interest deposit we be -- league XX% XXXX. QX. relationships balance of significant expand developed to Deposits funding money of by grew given billion. deposits in in funds billion, look mortgage driven to to quarter the purposefully key in $X.X continue creation, our along majorly increases billion activity near-term growth in channels base market innovation the first value is share and bearing XX% and the assets of firm’s banking from or with ability $X.X the the liquidity core deploy long-term warehouse robust Market comprise inflows during for drivers and in $X.X We

events migration to Our entertainment borrowers impacted industries potential Total the and increased QX as stable, travel, increase reopening to classified a million million and but continues by in strong remains liquid supported these sponsors. for leisure uneven assets strong $XX quality such are to and and of $XXX We and borrowers see be quarters. few COVID credits an asset due pace. travel coming upgraded in as the at as

loans. total assets basis non-performing assets total rose basis compared Special during Our XX and the to end classified to points declined million plus X the to mention of funded OREO to X.XX% XXXX. loans loans at to of ratio assets increased total quarter points $XX ratio X.XX% to the

our emerging current of as apply mark not are fluctuate volatility. credit out. As SM identify, monitoring strategy discussed the to we losses or in a special credit and impacted and credits from early by loans especially COVID environment have elevate migrate segments loans before, result do and litigation to see mention We heightened

Regarding which $X.X loan of $X.X Quarterly deferrals, net credit we million are million quarter all LTV were low as had X in loans, $XX.X of losses in of quarter. or deferrals, million to basis end, points at fourth modest compared loans. residential the average of

rates. Our points million $XX excluding the million XX quarter to in below and loan from ACL fell total prior all loans $XXX to X.XX% loan segments In funded loan the to growth forecasts loans. improvement portfolio ACL macroeconomic basis expected loss and due to PPP were declined when

CECL funded was ACL loan For points comparison purposes adoption. loans before year basis XX to at XXXX end the

equity I strong and quarter cash were of common equity to value offering rose hand growth dividend the of driven of assets the increase basis our over XX.X%, mainly and an per capital XX% in $XX.X, Tier ratio points in payment increase generate an by assets. past to common now X this during to tangible call Inclusive to quarterly year. the continue down total our a our of strong quarter tangible regulatory share low $X.XX asset share, ratios. by the X.X%, book The stock Ken. quarter, in of the and of We growth back XX $X.XX risk will maintain common

Ken Vecchione

to a tangible offs. leaning growth, the charge double-digit net Banks with asset average the Thanks, return one liquidity strong Dale. interest growth, handful loan Western quality and growth that on Alliance peer equity, of improving ROA with consistent fund is industry income net and of only generates lower in steady common

current PPNR net on and our growth higher drive which to growth. Going income we per deposit quarter, expect $X.X forward billion loan of based billion pipelines, and will interest $X

asset the of into through We liquidity expect subside NIM pressure deployment to attractive classes.

be that very a programs a One characteristics purchase attractive it’s sheet world for will expenses be technology swift will is array platforms of worthy performance, will these excess pace it ratio of liquidity. and be generated AmeriHome established Inclusive, existing it’s sheet loans from -- of that There the the will with on are balance on rise PPNR AmeriHome will jumbo deployment the the EPS holding higher balance residential to credit liquidity. drag deployment. provides offset we loans our credit risk solution excess excess revenue product its include by management and and but that found these or enhances no solution liquidity employees. expanding investments. program, natural the of non-QM fit efficiency Placing and To our yielding overall, our the worthy and to box. and keep our mortgage evolving rise, to

Western take continue along Alliance the the happy loan imply sheet expect are migrations Depending loan with we we is leading growth sufficient for cover that is in into its At horizon. are Dale, quality, charge-offs timing incorporating reserve on PPR do to loss assets cycle believe some and through special material and QX not Finally, provisions a by don’t indicators of I more upward quality which and asset return industry the To our but consensus Tim on long-term reserves forecasts balance recovery, time, sub-standard. with events, asset began this should economic your on of steady any do pace trajectory questions. steady we than forward and economic pandemic balance. equity. the informed to imply could for not consistent the migration are are see from We the losses the charge-offs there tail conclude going mentioned category, as into since material -- be as well-positioned excess the risk could

Operator

the Thank Instructions] have from from line Brock you. You [Operator Vandervliet question our UBS. of first

Your line is open. now

Brock Vandervliet

like down in and Great. soak could picture of kind liquidity Thanks your with this debt to AmeriHome, pay of the look excess does that near-term? you ability the Dale, up much. if going very to review is the closing how shape what

Dale Gibbons

Yeah.

had billion about going over work kind little So, doing we of are out it’s and $X facing forward. They of a over now. that we those a borrowings worth are

be and we rolling out mortgages low is What are the which by from they but to on able be something that second to a that’s have we think product we think would is going are ready that are to put I have the of non-QM that kind our we I be would want we balance are kind going sheet AmeriHome into done, a in also going as you yielding, higher -- which quarter. going LTV, to getting sometime solution, to to going be toward pushes of to well. say, to prefer deployment

So, we mean of of couple almost deposits, let going think the to are next ability ready asset the that as to I our limitless it I it going growth quality do and have a the quarter, deposit and XXXX. kind terms deployment we happens to good in random that massive bringing of think in more because of quarters over be go you that’s this to that during near-term had see I case. now access we wasn’t in source

Brock Vandervliet

I give somewhat the that sale how QX announced year? on on like, their picture darkened sale us quarter the to of on And what Can gain since think and have the in has prior Okay. you AmeriHome, prior any the or may you was gain -- sense compared deal.

Dale Gibbons

because about mention been hasn’t has they pivot. did But AmeriHome the yet. public announced ability talk a that’s are what their enterprise was, we performance can’t to QX We of part

But that was of X% lying coming that their X% ability to be that we down. to so That call and is what rate, have doing to margins about that they which about that expected at the place have going is loans today. the they well. look take win and increasing we as also So they were taking been

are and in there So appropriately by we $X.XX pivoting indicated. they standing AmeriHome benefit that we are XXXX. us -- was going the to

second as that just able and see Okay, going their to you so where we including that’s think of in that, we being loans the $X.XX quarter I about, pay to like down this regarding $X.XX are are right? thing that in Brock, inquired are. process, to stuff face in we the

Ken Vecchione

the if our the want announced more We we Brock. to you Hey, accretion things, that back back call held call rising because uncertainty just to there maintain estimates using in I some few AmeriHome. we that AmeriHome. rates all coming February to potentially a numbers those in conference earnings that we or opportunities are earn to when provided. early and We with are recall It’s we as Ken. add we our of said to those of our for order other than intended earnings saw

Brock Vandervliet

Got it.

Okay. color. Appreciate the

Operator

Thank you.

line the our Casey have go question from You of from Haire Please next ahead. Jefferies.

Casey Haire

Great. Thanks. Good morning, guys.

Ken Vecchione

morning. Good

Casey Haire

with the this massively growth. I mean, quarter I -- wanted on you mean, guide, that. deposit the outperformed with updated touch I guys, bumping I you really to the up mean, even

it Just -- seeing? growth conservative current like what the wondering that to based environment is you ripe continue on environment possible based that. is still feels Is still the deposit there is the it are do to on

Dale Gibbons

you So $XXX we we $X.X in you think at came it’s told conservative million billion? because and

Casey Haire

Yeah.

Dale Gibbons

Maybe. to Look, it a to bumped we billion $X.X $X up billion.

eight the or performing last this quarters. to for six been quarters level at have better We

either the up into we the on on visibility real or some paperwork based finishing commitments now. are have just pipeline oral We things

So, is deposit the guide. the as possibility well guide, a there exceed loan to as yeah, both

Casey Haire

are and of get half in at the on And and quarter in sorry, you did realize back securities on work cash probably level? you cash. the with quarter the guys on, average even with balance to But still that the I pay X% target driving on your Okay. level? the you down that at What XX% are the How comfortable what AmeriHome around is debt, of loans. to

Dale Gibbons

Yeah.

higher number be the be securities we least at as number. substantially. So And of mean than to a that can But to billion what or XX% number down, is we is kind fall a it third $X.X needs book and to to. billion core frankly, deploy the $X I pull that that consider

Now that’s alternatives. of but better as other as good than loan-based not some cash these

we I where So, do a have that going of quarters ago were our that are right-size to we expect we to that long Wasn’t loan-to-deposit going ratio. XX%s. in couple the are

at -- loan-to-deposit $X.X be future. as growth down will distant are well to of we the ratio. under next means increased in Well, a in not loan Now XX%. that we that in excess way have doing get billion That’s that going too the

Casey Haire

the are Okay. new securities Great. loan just some side mortgage, of Ken, on money well on as seeing as NIM the in that yields money And new you things, follow-ups yields purchases?

Dale Gibbons

Yeah.

at to we about is. yields points purchases, what that basis XX was average yields loan that the basis are the So, X.XX% and we putting securities new the running on lower got than points are XX

I are pressure. experiencing think pricing we

of drive I wide and has think expectations But, for of price. what that best the is do this resulted in to and are pandemic adjusted shift velocity be. will reflected focus of industry the the and losses has our that’s economy ability volume that have terms credit being to in risk the got out reduced of we -- where come the industry returns kind in to kind again,

Casey Haire

Okay.

around was loan in right, Dale. the X.X%. quarter mean I clarify, to resi yield -- or? mortgages was as think your I Just than that, would XX existing lower

Dale Gibbons

our are mortgages putting around No. Yeah. are Resi that on X%. we books

Casey Haire

Got you.

Okay. Thank you.

Dale Gibbons

Yeah.

Operator

Thank you.

next Your of is Brad Milsaps Sandler. from line from question Piper the

is now line Your open.

Brad Milsaps

Hey. Good afternoon, guys.

Ken Vecchione

Hi, Brad.

Brad Milsaps

on standalone curious, some and around wanted forward a how interconnected? of loan related AmeriHome, to and it does is of guidance the guys, going much And more questions that basis of if with all from AmeriHome. what Just you so production kind in just to -- have kind what impact or AmeriHome would is increase retaining kind on any contribute stick change

Ken Vecchione

What in our other have wouldn’t I the I so dependent. and buying we say first last AmeriHome is of number, quarter Well, I from mortgages core mean kind mean gives AmeriHome it that -- happens year. that been sources kind do our, a We way that. than do to of it And the in also to parties. kind profitable keep in other to all more ready rather bore of of can family. terms full a is ability us was going

to So accretive right our get to AmeriHome again to net a size ratio income. loan way -- are on be able to of what going that also top in kind deposit interest from certainly of is we is that’s to

Brad Milsaps

Dale, guess you but this maybe exclusive ask back I differently, sort loan think is can are contribute initially to it still one two -- are was Yeah. what the when announced of you then you guidance, going increasing AmeriHome another, in February?

Dale Gibbons

Yeah.

We will -- and and of were year, we never that were last -- of certainly guidance have billion. and in increased $X our under AmeriHome a all pandemic we loan didn’t we we irrespective once that we is AmeriHome a

So a acknowledgement of that. it’s part

do of can price we more the gives kind going That’s AmeriHome. product execute to estate we point more to better are expanding confidence I don’t without But volume. us real be line. pick AmeriHome even able going a up. to They for give us, So be this residential to their

AmeriHome of -- billion you affect $X getting billion. it are kind we are So $X.X what That’s doesn’t to right.

Brad Milsaps

Yeah.

Dale Gibbons

Yeah.

Brad Milsaps

gain Got helpful. impact terms were margin on thinking of Got that I their kind was about sell rate how Would the -- That’s a going sale and Yeah. announce line in forward? does you you your with intention what to deal loan so in this And MSR. then know some comes it. of when run you of it.

Ken Vecchione

anticipated. Ken. This we more actually is than We MSRs sold Yeah. the had for money

we in do going pricing allows getting our transactions to the by better that should amount terms this smaller MSR about good us get feel forward, books large which on. transaction better with of of we we So think

Brad Milsaps

Great. you, Okay. guys. Thank

Operator

Thank you.

is from the Your of KBW. go from next line McGratty question Chris ahead. Please

Chris McGratty

specifically can Dale, deposit if and billion out $X.X you and afternoon. by of of and Good HOA innovation your growth kind mortgage? verticals wonder I Thanks. the Great. pass tech

Dale Gibbons

Yeah.

So about… the up group was HOA

Ken Vecchione

Got update.

Dale Gibbons

all did $XXX regions innovation in about is billion, the $X.X billion. $X.X and So Warehouse about Tech did all million. lending a about right.

business By much did this just HOA million. all the of year. almost did as in under Our $XXX quarter it as last HOA way

growth, of big Chris. deposit -- of are those So the HOA drivers

Chris McGratty

Okay. Great. then… And

Dale Gibbons

of sorry, $XXX I a excited grew -- too am grew there’s behind deposit our add QX things just in which businesses, the deposit should you couple business million. and one two, $XX number never due deposit of we said I one was business there about. business but give always to names in well deposit We are we which million

we So are businesses for do us. excited these can getting about what

Chris McGratty

Okay. great It’s color.

remarks. growth, were In missed can guidance you terms book? but was you C&I you the -- us of said your balance the you last did the Did the maybe inclusive know growth tell quarter -- that changes I I prepared commercial the in in in what warehouse, of your warehouse

Dale Gibbons

you Are question. am -- your not certain of I asking

again. it Ask

Chris McGratty

that the warehouse How mortgage how is and this The Sure. of much in quarter of side. lending much warehouse? was growth the

Dale Gibbons

quarter. have winning can as lending And keep telling collectively it keep warehouse came The year three $XXX MSR we for we this here lending of million XXXX. in warehouse But share quarter lending, that and basically All understanding this right. the QX balance in but grew you see. it lending. an we flat with this Okay. our we exactly we warehouse in you there warehouse there, we include note lending itself we manifests keep include is to and That on and items finance, which a separate business,

Chris McGratty

much. Thank Okay. very you

Operator

The is from next Thank Gary ahead. go you. Davidson. Tenner D.A. Please

Gary Tenner

morning. Good Thanks.

Just a quarter? us couple of the the questions, one what were you give of kind outstanding housekeeping average loans PPP, can just for on

Dale Gibbons

loans remaining. billion in We have $X.X about

Gary Tenner

Okay.

Dale Gibbons

With of course. including two

Gary Tenner

you. Right. Got

Okay.

to loan just of In as money perspective, terms of out kind what a prospective of knowing if from within amount through of, start floors this. status sensitivity that adding will change rate further we obviously loans thinking resi kind and as more today you of little the forward are variable mortgages your But run hikes? a thinking rate you kind and

Dale Gibbons

of the portfolio. today are floors active the our preponderance So in

are we XX% fixed. if we as So are behaving

contraction interest We of we floors go asymmetrical net will off of be of floors of rates yields rates if have if income, but the see rate we going I think [ph], asset the then very sensitive profile our rise forward. interesting little because lifting kind a because an even whereby loan lower become

to relative where we So it’s for benefit are. us an asymmetrical

if So our today we fixed rate. is as -- yeah, book behaving of XX% its

Gary Tenner

two Okay. variable rate until if of And in is an there rate there’s in terms one hike, just on benefit yield? rate those hikes upward actual

Dale Gibbons

Yeah, it’s staggering. mean I

immediate. of are -- There XXX away. others are kind are Some basis points

So before would rate start kind loan of of to need terms on two yields. are seeing going see are going notable improvement to to in but you I you probably increases say average

Ken Vecchione

Okay.

variable. you As loans are know these

are We are rate the today. are they so they floor looking putting at loans like them fixed

Gary Tenner

obviously balances last warehouse deposit business. related Okay. -- warehouse of talked volume? mortgage Right. just mortgage sensitivity to grew mortgage relative deposits to kind There pretty of continuing win the and you volume then about And Could just you warehouse the significantly. overall share question, overall about taking and you talk are

Ken Vecchione

are was sophisticated just of consolidating with loan competitors deposits have all fact last as think some larger are in that more us, service are -- we we performing not we out moved for weapon just share terms where interesting continuing deposits can see well ago it’s we And just out strategic us. than as got more the is of should because feeling channel market that XX, we of in get going years So, between today the more started primarily -- I in we up idea and we side more important there something if lending gain deliver with the It’s deposit and and the large comfortable just clients. loan to both side. dealing their XX call. another upscale we we delivering right, normally an to I see in more think a said loan have they will of They their a -- I very have anticipated and some more in the levels. that the we maybe in service we are the of deposits earnings the would I say some disproportion their in But clients, and there’s balances. then much on of

the circling think business. looking quickly airport how us us can you as of us overhead got give business. loan their we it’s both we onboard of If for matter have a an the deposit and for planes And and land

Dale Gibbons

that balances deposit the remember aren’t important it’s business. think really I to note to

So accounts it’s not operating the from source.

is dramatically. the the we is the contracts mortgage based say that balances but that we the of and that of these some But that affect actual enterprises refi the of escrow can balances balances have that’s small enterprise, number servicing both piece let’s So That upon relationships business the have. very deposit drive own. a that

So houses. balances volatility and deposit that’s see as origination on maintain MSR because mortgages you the the can be side. tends more stable in the much their to drives people But

Gary Tenner

Great. Thank you.

Operator

you. Thank

of from Wells Your the next Braziler question from Timur is line Fargo.

open. is line Your now

Timur Braziler

Good just following Hi. morning. up… Maybe

Ken Vecchione

Hi.

Timur Braziler

mortgage last is how industry start warehouse steepening broader yield curve guess that to I … and business trend sensitive slow discussion. that on if down. to

see the With should there onboard as to expect we irrespective wide kind in rates volume? clients circling if slowdown is new you a or industry are as of of volumes as growth runway happening and what’s well that is they broader low less

Ken Vecchione

Yeah.

cliental AmeriHome in we warehouse penetrating seeing list. we we with rise When of the of terms came the three a four. quarter there. first What is market client XXXX are for into planning terms not quarters two into question good things. are that natural to we had a have balances. then there’s that of going we two, continue lending up benefit good overall obviously in stepping that, And on today. taking growth One So, trend have share will and or going a we the we get did But top year just are, in from our

got, I have they as So XXX clients. said,

and that going or are XXX into able so going about got to have penetrate to We clients. we overlap their be

on that we and the $XX of credit line will million argument’s after So that offer just for buy if also two you -- into picture loans take very a we AmeriHome That’s -- look, a clients line. we give one you opportunity to of we we to of for one line sake. are AmeriHome And accumulate clients. a of say, called go argument will the you sort also that powerful out willing can you

business but loan yet, some that on numbers able our us that continue side. we into that the lending gives to confidence be factored warehouse should fully to haven’t grow our we So

Timur Braziler

That’s Okay. helpful.

start can shouldn’t we coming and from higher have new guide the we actually thinking of to well? loan continue as be just mortgage resi, directly ramp existing guidance, plus the the what on as been growth rest putting increase component haven’t your that larger So see growth you warehouse about it of

Ken Vecchione

billion right. do said, clarify what all to you going we just basically billion am I these as $X.X today, $X business Well, is to it

to ramp purchases help succeed we see billion either acquisition. So AmeriHome that more AmeriHome really acquisition or resi up our never you it will will get will if number. do more house The well $X -- provide will had lending that as would achieving comfort continue us it and that to $X.X billion see you we grow we the if as

Timur Braziler

Okay. Thank helpful. you. That’s

XX%. I look loan envision becoming? I a guys we side, what have the in of concentration can the On guess mind quarters Do big portfolio you overall are about of residential loan and like, talked residential past as out could have building think, the concentration we in limit that growth how you

Dale Gibbons

our the Well, I is we size easily average punch can XX. think mean through Bank I XX.

under First Republic is just XX.

very like is, it’s performance. mean I I space we So mean, what the good quality about

Now of got unlimited we some of kind have up. can have which that channel into of talked opportunity, we some other an cross-sell pick we that, about kind

through definitely that immediate are we So going spend at. the we toward and XX

Ken Vecchione

XX% LTV. unusual right, of strong we an very the It’s event you book delinquent. had could between been we XX% a in a FICO, That’s book. and loss XX%, XX-day give and just of DTI about the not gone are usually list We XX% have that have, probably all have a folks below

helps loan composition. really bring lot to asset -- quality it a asset So quality our -- to it’s of to good

Timur Braziler

coming just tax is look you next side, on month deposit the and the balances bills of as what like from am growth then if of pay could to deadline wondering for Okay. much you. I will? the me if last And one for tax the in back that any how extension the go Thank customers

Dale Gibbons

our $X.X did more of our I Remember liquidity, billion in $X.X That’s phenomenon, and liquidities coming book which we we say, of ‘XX. in quarter exceeded this all been a billion, year XXXX just ever best through would and one has strong Yeah. in consumer quarter. did far best, which far,

Timur Braziler

Thank you. Okay.

Operator

line Wedbush Thank you. from of David ahead. the Securities. is Please Chiaverini question from The next go

David Chiaverini

the I the in to securities of about had you ask ramp purchases pace a up Thanks. wanted strong first Hi. quarter.

that pay debt expect pace slow to of Going down with forward you the should somewhat closing AmeriHome? we as

Ken Vecchione

home will to growth lot balancing we we that. absolutely wanted slow. we we XX we at X% Yes. We have meaningless. is, into get we sitting are act and to on LTV did Again, points fourth into go quarter, so basis the What book, deploy also of quarter, securities if put got can can the that’s can get keep said, of It the as it out is, look, the first if from the low do we pretty trying loans or have we we Fed, can some I and it a been X.XX%.

of a to that because expected and it’s new going So, the deploy we also continue bit have little this generate. to sometime compromise it late but year, us the and take that deposit a there is to within sometime growth liquidity we

in to the bleed us. yeah, anytime in I think, the wouldn’t think time, side over security largely can but but So, is I that down, I see growth behind But expect book no book the soon. actually securities our

to We purchase the off all to also are that then our pay liquidity to mortgages current of channel. debt through begin using non-QM AmeriHome and

David Chiaverini

commentary. helpful. I on That’s also Great. up And NIM the wanted to follow

I deck lower the than should moderate quarter. XX basis the average in the in rate spot going and about You the how see how is drag portfolio points mentioned loans the slide about forward

not way it? In much magnitude XX margin guess, as to well, of the in expect points as being of quarter, terms to is that continued down, the the is I about first compression, basis but just clearly clarification the think

Dale Gibbons

on how company and power we EPS. again, with core earning do low has we think, the increase of so we hey, deploy that into do cost, into are focused we focused to deposits very assets. little is the that are earning Yeah. we I can where stable that, mean, translate on Margin power, profitable

love Now, on to for I’d -- get gosh, a without that risk. X%

not seeing are scale at point. at those price opportunities We that

because mortgage we I But if to we and little X% add can it are are am that and it to decrement think would doing? Well, is about XXX we I I the and have So going that’s basis investments what that a where XX take that on basis margin stuff at at if X less. our going that loans points is at I instead points. help But that’s X.XX% have that points, put I already to residential out at margin bit. the from lower margins unlimited even got points books basis X though spread XX actually

bit? thing, So sheet be down comes we those are would fundamental means the assets. that things, can the if then balance two actually earning what good that is combination little think because footings continuing of margin of into Yeah, it likely the a it’s deploy I really the to possible we a move that

Ken Vecchione

to said. add I what one to other Dale So want thing

Our rather early income started focus in interest NIM net than on XXXX.

is not us. phenomenon for new this So a

part is income early about interest Simply We since prioritize going that interest we growth this which NIM. that of over net income going EPS. to are the to talked is have take XXXX net the this was said direction drive

interest We net two quarter days. in things proud very the income am of made QX. of I made in we One less more was this than

interest strategy and is to bring to executed Dale upon the going excess So to robust to is our in. being guidance our what continue and said, the several our we keep liquidity we quarters for looking income deploy net goal upgrade next as that are continue as to

David Chiaverini

that quarter. your than be mentioned announcement of a -- $XX is charges Are million AmeriHome? total you That all And that -- million the housekeeping roughly I $XX think the you discussed last you in makes mostly the in at $XX merger to expectation are expecting it’s going now was sense. then lower second item, million

Dale Gibbons

Yeah. Yes.

pricing of was are those we few the costs transaction are the on preponderance we As be Ken that purchaser, alluding the mean book. de-conversion I to that the to our weeks. fees next that incurring servicer of that basically to of close within the earlier terms from in outsourced mortgage got disposition to going MSR

David Chiaverini

much. Thanks it. Got very

Operator

Michael next Truist. from Young is you. Thank The

open. Your now is line

Michael Young

morning. Good Thanks.

Ken Vecchione

Morning. Good

Michael Young

more basis coming maybe more maybe words, muted loan on flat Ken reserve stay of outstanding? level up stable? relative going on follow growth CECL sort from to the loans more are and comments your to other about wanted In a of Is I commercial I or impacts that of level forward. going maintaining guess, forward a kind

Ken Vecchione

numerator, -- balance really is was it’s was relatively to a That say I is, flat. the non-denominator to stay trying thing. Yeah. What going

just with we With CECL can shareholders, CECL will lost are that of A a that be that the numbers. upon I -- really think also see growing which as But the community the by drop. balance the of you we relatively our and in But categories loans you where analyst calculation. what had know in, drives the can outlook, driven could have economic investors, way flat. should which we ratio is move the XX% we the our or portfolio asset on ever that’s are is be say, not loss or loss lot it should never

Michael Young

on are a if just the capital, skinny you is to grow capital of would raise growth ratios? thinking we of area stay on just the the pace gotten you the kind about within the growth an flex TCE balance ratio. guys know willing this follow-up, impact a will tamper PPP as as to just even needed maybe to And of mortgage levels think of I Great. with capital some you growth sheet Okay. that has of kind relative more or areas there about But and quarter. maybe little capital issuance a

Ken Vecchione

grow, If you thing to do look look No. to for we the think, right I need raise and capital. to can -- capital us

Michael Young

to about one forward? the guess, buy going I in kind trying pipeline a go-forward like basis? in of of have with changed the guys the what just to on Okay. has sneak versus are on last sort this growth You build books, that if loan equation But equation always on verticals you I And Ken, just you view would do one some building? think that deposit your can now, AmeriHome or

Ken Vecchione

are work them Not banks all. like would a as just mean, at team the commercial that in But I things side of new No. AmeriHome look the of two has and opportunities jumbo right they on jump channel mentioned can of on out. that out separate. of that few couple I how to non-QM that’s are channel, business can at of XXXX’s probably terms That here team them opportunities is to Western other working and far our Alliance on opportunities what those of on sitting one pipeline And now. think That’s that continuing terms in the are work growth in are we our and levels. we work we we visibility.

Michael Young

Thanks. Okay.

Operator

Thank you.

from Coffey Your next from Janney. Tim Please question is ahead. go

Tim Coffey

Great. Thank you, gentlemen.

So, to in XX% be that net expect were about it you the level quarter Would residential your loan growth. mortgages going of forward?

Dale Gibbons

Yeah. Yeah. Yes.

the I as think core of kind mentioned and continue that’s I that’s going piece. to

of I to of something is think mortgage our toward we excess going that in lot -- a XX% $X.X up than be billion. well bad because liquidity kind is that when of number. see is It directly excess a skew we higher where acquisitions a not swap it’s going to much

Tim Coffey

you? efficiency you Okay. for you and do the given -- is we go quarter a think year of is going this new you XX% adding ratio past kind And to go such, the growth through as think the as kind AmeriHome of level of on

Dale Gibbons

or to sure under yeah, for fairly But there. I be mid-XX%s, XX%, think, well. of in going kind that mid something Yeah. it’s It’s XX% XX%-ish -- at something level, that’s stable where

Tim Coffey

you of growth allows to growth? And a Okay. below Western talk will a at expense asset what it is can little about well kind level bit about Alliance maintain

Ken Vecchione

Yeah.

characteristics terms when talk brings operating and just natural that as of and moderate keeping we the efficiency to low. more So it generally of compared the of competitors, we to coming business that, pricing are to that’s love about it and ratio us those growth Generally most several the lot group. talk in these businesses power business operating as very great helpful very And I for will the leverage. the are quality national part calculation there. we the a that of or lines shifts of national let the have leverage the over keep growth high one ratio that’s efficiency from But very our fourth in There peer the characteristics try, very our think line about one high commercial me is stability, strategy, asset then few national strategy. very,

is efficiency times four other The said that line. just front, growing up and the in keep I we will than thing revenues, too expenses we ratio as faster are

Tim Coffey

Okay. Great. questions. my Thank Those very you are much.

Ken Vecchione

Thank you.

Operator

Arfstrom is Thank you. The next from question RBC Markets. Capital from Jon

Your line is now open.

Jon Arfstrom

morning, Good Thanks. everyone.

Ken Vecchione

Jon. morning, Good

Jon Arfstrom

quarter earlier review you you made second question of that back Hey. and help a and can can where go with comments at the year, maybe the you, you Dale, might bit? of you think end end for sit the us and the you loan-to-deposit

Dale Gibbons

Yeah.

mean we So, to are well get it’s -- something underway I trying so now.

bit the $X.X be that to expect maybe a at growth each. $X presently better quarter, of close where will I think of end we billion, I we little with are maybe the a in second

I kind ratio dollars rapidly the it’s we think get like be to of certainly able would of so they end the year. kind by to and in of I new billions personally going loan-to-deposit at the these end volume we can that. see quarter are the would products to out the second of a to Maybe AmeriHome. range back then move of be on XX% for quarter into third and

growth where PPNR take of X.X% this. from -- deploying generates a out loan We $XXX already liquidity. we are, a you where right growth size million. X.X% That’s AmeriHome just of that spread. $XX at That add nearly with books I as million. from mean, in month are Then million that, have our the of as you in billion if increased about so, where of And $XXX have we just where we we substantial $X.X had very

as expect We rate to XXXX. $X be EPS an of run at exit we

Jon Arfstrom

going to later… was ask I

Ken Vecchione

I punctuate -- about want and talking want Jon. ratio. liquidity the Dale loan-to-deposit there, said moment just to Everyone’s for Just to when a

We acquisition that $XX that with said structuring that the pretax, confidence certain the and out at we quarter. can that AmeriHome what we versus What Dale That are billion interest we of among how is making are are exit business and EPS just a the is net rate. $XX we income. $X.X very, year interest million the put talking run margin net the about crux the that along of $X million powerful that’s just degree a we have very just

Jon Arfstrom

want Okay. you you you ask deposits. should one up it to numbers that do I to go more and if but answered I think did won’t could on be question was I me. But for ask construction on -- going what you are outside talk pipeline of seeing some you just of thinking the are kind your lending the what as and on about gut check trends national a of in economy. businesses, a overall

Ken Vecchione

Yeah.

outside actually our of So are what exactly footprint. are what -- footprint what we we inside our is seeing of seeing

a So, on are five seven longer quickly. a the built higher. moment. labor boom are months some the extending side shortages is bit out once Homes to are sold bit cost so little us months at that’s take and that hot this they little because build. construction very They than to for they of rather residential But

of been to a are Officer a of for loans period our or capital a our construction really am deals number be So and patiently comment is our how of the our Phoenix more sitting be to Tim, let in do going on said which opportunities very for a one the on West those the who’s hot. of are to longer us outstanding course are struggles outside this? seems Valley Bruckner. and you there. Arizona and here hasn’t you I seems residences Built-to-rent keep Tim But to we site, Credit than very, word, Chief good want active footprint footprint, mostly really time. built-to-rent do outskirts of so of single-family doing

Tim Bruckner

with on and I Residential uncertainties last think, commercial were shelf things the there year some book, that of the sat pandemic. sure. Well, definitely the

So projects delayed.

XXXX, major the and so stability that look so see we loan as our real portfolio. are seeing -- estate we demand. -- move crew are don’t big in within we out shifts across We groups we forward any across see We

So in that not trends we rent payments are are seeing alarming.

even give things weekly borrowers. close us gives a And maintaining comfort. with are information. we We that dialogue us very and direct that It are our or monthly seeing

estate… outlook think is for all the segments positive us very, across real I of very, So

Ken Vecchione

Yeah.

Tim Bruckner

… and not just residential.

Ken Vecchione

will of But does you as they are states shelf I pertains activity. should longer all would specked warehomes finance and in on spec. up. expect before or of in I -- warehouses They are the are very the even net side the have to active it residences. not are the seeing industrial we completed said industrial we as is are have construction already But they say, number for projects they only even leased migration started and pre-leased. single-family more No

is for that’s us. you market example hot an So of give how the CRE

Tim Bruckner

Yeah.

For -- point and at on data has past than that that, is portfolio. years now our stabilizing portfolio in the the stabilized four any just faster time

it moving So is very quickly.

Ken Vecchione

have the we one. answer. a Jon, short hope time don’t you long to give We

Jon Arfstrom

No. That’s fine.

Ken Vecchione

Fine.

Jon Arfstrom

are all? But you And I to special it’s mention did like guess sound make at it the flag but one are movement you expecting this sure I doesn’t some did I and -- you concerned you it thing and out cut classified, want about in there. say

Ken Vecchione

yes. the -- answer is, The short answer

where on give is. see We asset of going about bit the looked that’s trouble to little feel anything a don’t have quality horizon We and the us we around. good

Jon Arfstrom

All Okay. you. Thank right.

Operator

time. Mr. I no will back further call to this Thank you. at the over There turn questions are Vecchione. Ken

Ken Vecchione

our Listen, everyone dialing and story. you. thanks for to to listening Thank in

the We quarter. Thanks the again the from and are forward about to look were days everyone good we of proud enjoy talking feeling it. weekend. to now XX second very about results and very We

Operator

conference today’s concludes for call. This you Thank participating.

great You disconnect. now a Have day. may

Western Alliance Bancorporation (WAL) 16 Apr 212021 Q1 Earnings call transcript