WAL - Earnings call transcript Q1 2024 | Western Alliance Bancorporation

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Operator

Good day, everyone. Welcome to Western Alliance Bancorporation's First Quarter 2024 Earnings Call.

You may also view the presentation today via webcast through the company's website at www.westernalliancebancorporation.com. I would now like to turn the call over to Miles Pondelik, Director of Investor Relations and Corporate Development. Please go ahead.

Miles Pondelik

Thank you, and welcome to Western Alliance Bank's First Quarter 2024 Conference Call.

will Ken Financial and our Officer; Officer Regional are Dale Executive Chief today for Chief Q&A. Gibbons, and Banking speakers Vecchione, Chief President Officer; Banking Our for join Tim Bruckner,

to I The presentation forward-looking uncertainties company undertake today's and does the note to as except obligation are contains over Ken, not statements, to Before please update hand required statements. that assumptions, subject which any forward-looking risks, call by any law.

uncertainties the that discussion differ Form complete of filings, are and the website. which results forward-looking the more available including yesterday, cause a to company's could risks materially statements, For actual please company's the any from filed on refer X-K to SEC

Ken Vecchione. Now turn opening for I'd to like remarks, to over the call

Kenneth Vecchione

brief review Bruckner, then the back results I'll join us everyone. our the and 'XX for make about Q&A. discuss turning before detail. and Banking morning, first financial will over Tim earnings I'll to he the our will come call Chief some comments Officer, in more Dale, quarter Good outlook

support and higher X liquidity the establish the to been an launch. predictable, has deposits structure bank to as should sheet mission better volatility superior and foundation from our market Together, inflate long-term the the balance unassailable of future For company reposition and from further insured to of and optimize quarters, collateralized more last funding distance capital, provide us well last as the factors returns. these a [indiscernible] industry and

XX%, deposit CETX to increased growth pace of lowered XX%. anticipated. ratio already our XX%, plan faster repositioning exceptional to target than HFI points This leading accelerated our XX loan-to-deposit quarter, our at reached we of insured and $X.X our deposit that ratio billion by generated We a capital

-- summary, been excluding securities accomplished. growth, Our liquidity tangible down by also $X largely us the billion. In rate have to borrowings share, will in of enhanced from allow goals outsized also that $X.X Alliance to value increased cash book our to during despite unencumbered the a and the climb quarter pay also assessment pay profile I'm repositioning down which per pleased allow headwinds. Western special by $X.XX year-end, increase from continued liquidity and earned which us billion was FDIC,

mention quality steady in charge-offs assets and classified remained Asset X low with basis aggregate special $XXX loans. points loans average at QX. million of declining only remained Net from

exit with Our improved maintain track excellent should to to you liquidity market stronger positions deposits proportionately and QX. financial loan us loan-to-deposit will starting Loan our growth expectations. Dale now the line drive XXXX with in us to take ratio in allow growth results. through

Dale Gibbons

Thanks, Ken.

first net During income revenue generated of Alliance million $X.XX. and net per million, reported $XXX the of earnings pre-provision share $XXX of quarter, Western

earnings of balance income the and $XXX income and from increased revenue. GAAP charge-offs, including along primary million, MSR understated We reasons seasonal $XXX growth results consistent by our MSR which warehouse in revenue $X.X because growth $XXX our employee rights often of servicing excluding valuation look gain strong as discounted benefits values, are when rights holistically in net on dampened million process higher expense costs or in $XX in with valuation Banking from mortgage banking, mortgage improved a at net in servicing rebound or performance million was and million in seasonal higher QX. quarter-over-quarter million salaries deposit as sale created interest an $XXX and $XXX expense of QX charge, of owned. conservative average borrowings. from loan XXXX special the $XXX in earning million lows. Typical reset $X income during existing which $X Excluding million, in net million the PPNR accruals, share the $XX $X.XX. Net essentially QX continued compensation balances million quarter $XX factors of both from the above and the as million increased incentive FDIC million well lower was Noninterest as new special assessment. Juris well million was while average HOA FDIC offsetting assessment from per $XXX asset to driven mortgage Provision from income Deposit from clients as well outlook growth were million economic the interest levels, were increase businesses, the of as stable. our resulted for remains noninterest

a billion rate $XX.X for grew rate elevated tax quarter. from $X.X end. effective to billion deposits Lastly, $XXX increased last investment Loans our billion, at to while temporarily quarter held fell million to XX.X% $XX.X

quarter. Outsized our $X.X result, and by billion $X XX% ratio to liquidity quarter-over-quarter further our accelerated fell a a deposit held-for-investment building As for reduction allowed cash in and increased last loan-to-deposit growth Securities from borrowings. XX% billion efforts.

as more shift into $X.X where reacquired of deposit C&I surpassed each both channels. fully as in tech expecting banking our Banking estate. market On XX. Overall, categories. the DDA are Finally, March at C&I gains a $X.X businesses which real increased growth Trust bank. Outstanding regional billion in $XX.XX regions, purposeful million; XX $XXX resulted basis, warehouse offset success as share for replace million; commercial and broad-based billion, client position. Held-for-investment our balance than modest deposits strategy has industrial more deposit growth noteworthy $XXX and predominantly retained of were HOA mortgage our occurred and September tangible mitigated book $X.XX regions share higher billion commercial innovation. of $XXX $X.X consumer been total $XXX per reduction of contributed from demonstrated Mortgage digital digital approximately expanded added and commercial Corporate loans stable value a the $X deposit a the over specifically, cost increase existing QX quarter we for and our Commercial at billion and growth C&I which minimal Juris $XXX warehouse environment, earnings, in growth to of point million. More in we almost emphasis in mix our entirely in production, funds well million growth rate AOCI from a deposits. from negative consumer over also million and loan progress rate-driven from outflows and a year-over-year

now towards drivers. was points increased balances which exceeding growth total Turning loan to end high-quality $X by from on our as a rate efforts higher The billion balances liquid the in liquidity yield weighted basis from Held-for-investment environment. total securities resulted period-end billion. our increasing XX to points to enhance Loan yields due of loan to basis net interest by the decreased X.XX% securities profile, significantly our the demonstrated quarter $X.X QX. XX average

deploy deposits cost shift X% X.XX% points, due $X funds increased to net interest the asset securities XX% declined and from of Fed proportion the discussed. interest-bearing mix increased interest-earning fourth result million, cost as to in quarter which ahead securities of well us earlier initially of margin income net incremental commercial the of at expected interest X X.XX% repositioning points flat invested we funds to a average position and than in efforts ] and $X.X compressed In while these higher-yielding approximately well the cash basis as have billion expanded total as liabilities. In assets XX average deposits [ basis loans earning cost These been of completed. of the lower to the aggregate, largely rate efforts, XX% addition, to to was cut. The interest-bearing average of while as total short-term borrowings manage

X.X% billion Additionally, was or costs assessment ratio only higher adjusting deposit million for quarter average quarter-over-quarter, $X of up and ECR-related the X%. costs, seasonal grew or reflected efficiency Deposit increased $X.X our which for balances though FDIC moved special adjusted deposits also the XX.X%, costs. even

metrics as we XX are this In or resolution as loans of them and million debt $XXX to credit classified and our NPLs before with Nonperforming about aggregate, increased of execute forward-looking our low maturity. Notably, $XXX special mention accelerate service total remain quality and million our subset X/X assets to mitigation agreed continue losses. basis declined and are which proactive from to regard for of steady strategy, of address paying Asset realized produced strategy to reflective points proactively million $XXX obligations. portfolio QX. ongoing assets loans reaching monitoring assets,

million with to perform commercial than X nation projections of expense we've contraction more As value basis $X.X our better provision closely, of have in see loans stable provided charge-offs more or with in points watch that stated urban appraisals real average largest covered lending were previously, and concert the loan We continue we net avoided centers our borrowers for large. estate which net loan experienced largely growth. other at reserves submarkets, in that million charge-offs markets. Quarterly the $XX.X

The valuation are loans points of covering loans the fair million Our NPLs, $X million credit real primarily of stable, which allowance loss $XXX increased by appraisals secured the basis for credits for nonperforming and to XX% confirmed of collateral. loans. quarter and prior value estate was funded ratio funded to allowance XX consists of from

XX XX% year-over-year repositioning our began. XXX [indiscernible] our for points XXX to level negative when basis efforts basis which our XXXX higher ratio is acquisition, CETX points through points or Our and above when QX XX% AOC adjusted

share Our growth down earnings. Tangible exceeded value basis QX offset. tangible from to common equity-to-total categories AOCI for from points the X.X%, in asset retained higher XX accretion $XX.XX per as capital increased earnings from assets organic moved book ratio approximately to XX higher December outpacing $X.XX growth low-risk

call strong peers by XXXX. I'll Ken. to back growth value has XXXX, upward tangible the outpaced consistent and since trajectory book Our per hand share including Xx in now over

Kenneth Vecchione

Thanks, Dale. Okay.

we become and diversification that we expanded launched and developed We some finance produce XXXX which specialty markets strategy business a in launched that Bank access Arizona undue GFC, expertise the gain HOA XXXX, have we and verticals: XXXX tech growth stressed most during to bank digital to nationally, sources. In Vegas deposit and enabling transformed warehouse escrow and settlement strategy into deep to and business services, a the landlocked in consumer access strategy XXXX, times base. of business, after services the trust entered, expanding 'XX, hotel diversification and innovation risk. In XXXX, provides lines, granular corporate in Las sustainable the and Bank XXXX knowledge, industry company's to began history. deposit deposit deposit enter franchise new diversity, in in which that XXXX. Bridge without In and and earnings mortgage the into and national a as the our purchased a several to with bank vertical. In created added us and into business were that X the Starting we the California leader economy,

to XXXX, company hard higher worked team asset and sheet, capital reignite improved sheet Informed last protected. quality management by remains the carry to the the the as levels used significantly a and continues of deposits in launch, be can Now sheet funding, fortify to and collateralized the to its optimize balance has reposition and liquidity. events ensuring insured balance capital of generate foundation organic form grow which and sturdy safe solid, while balance and earnings,

return the continue what like Alliance the and Western mentioned, WAL new teens just growth sustainable equity and as capital company's we does have will to risk deliver in maintains avenues on look future? at develop growth management to the using upper architecture enhance disciplines continue So I that guardrails than tangible has consistent that banks. historical common to other accumulation reinforcing multiples will for organic higher Well, earnings and

excited the repositioning largely strategy has are We completed. that been

building XXXX fortified we at to and growth level updated quarter on and XXXX. To of continued our half from sheet XXXX -- sound, will allow first end, deploying results, that velocity balance of which back as into our liquidity safe balance through we a into earnings the slightly focused the the have generate which incremental QX We higher guidance sheet, loans. thoughtful follows: more on our thoughtful will company momentum and

as selectively loans flexibility more provides Our ratio current to opportunities loan-to-deposit make arise.

given For in full are wins loans grow $X billion $X client expected from current to the billion, new the year, up pipelines.

which deposits end our is up expect year to above billion also previous the consensus. billion, $XX We $X

capital. to Turning

We remain CETX near volume. steady to capturing loan at increase ratio XX%, expect our the in forecasted or

tracking annualized income, of off we upper Regarding growth to range. X% our end and point XXXX's QX from are net jumping reaffirm this the expectation interest to XX%

in from cuts rate without year points the cuts in NIM higher outlook rate rate environment half elevated to benefit and incrementally we would of expect rate includes the basis the or longer an X FRB, back XX point repricing loans Our by environment. by basis a mid-single-digit

interest billion, volume, the XXXX. dependent somewhat than to aggregate, expense, adjusted helped ECR-related we should Alliance X% company to sorry, accelerated of baseline rate achieved [ Our ascend the of effect of costs, should of earlier rise XXXs income the I'm throughout banking-related NIM X% a PPNR and ]. Noninterest should new full full but Noninterest repricing trough move expected. In encouraged to remains now NIM baseline expected results. XXXX liquidity build, primarily XX% is we resilience will grow our low income existing all to an the net and XX% due Western and but mortgage higher level from $X.XX build in million. which net growth targets consistently loan our of increase income QX these of from should interest the -- QX, effect loans full to are the ECR-related into expectation from headed liquidity which originations, baseline establish QX margin on QX environment in is in by QX enable deposit liquidity reach to from the year annualized of an continue $XXX quarter inclusive levels. deposit Mortgage adjusted higher generate with that will factors the a while year the

is remain and with sponsor of quality to performing Asset continued projects. as expected continues steady support

year Our to net loans. At to look time, Tim XX XX answering questions. basis of full remains charge-off and guidance forward average this your Dale, points I

Operator

The [Operator the from question Barclays. Shaw Jared first with line comes of Instructions]

Jared David Shaw

-- of up what's for the guidance help saying this also all why? and coming higher ECR? the end stages growth ECR. a drive higher deposit wouldn't loan with from we if Looking to expectation for early that growth, the I primarily expense that You're the spread at opportunity guess, with I guess, the NII? Why at but -- of that, looking growth are the giving big

Dale Gibbons

help will is of in quarter. issue first kind over that The drive It that, the NII. came No. growth No. ratably

going haven't genned quality say, process the good take we can, degree [ to up quarter. within, to disperse We ] That's a second the the additional to origination of credit funds. those

we second we're quarter higher So little it whereby for second will back in asset going bit to a to look bit. point that's quarter of than QX. a is catch a the And had pivot up. But the going growth hold

Kenneth Vecchione

add, prior we've loan offset million throughout To and from year revised cuts. rate The X guide a rest quarter. me $X a quarter been now continue helps cuts, included to -- just grow our that's prior income X growth our quarter-to-quarter. the guide which have the let of net increased billion the what to to $XXX that, also interest

Jared David Shaw

about sort at to here? we should the target Okay. capital impact All floor and that And can right. I give XX%. the little a the going now on desire guess on timing grow from an that you you're of maybe that? to shifting How the forward how that be of notes and thinking update the credit-linked

Kenneth Vecchione

Yes.

the excess capital strategy So CLN formation of capital. is numbers very rest trend of and repositioning ratio the QX will raising modest increased these remainder of our of runoff we we've CETX see CLNs on absolve Increasing year. from embedded the year-over-year. without capital points note the since or XXX We remaining that XX% XXXX, growth have of a for couple started basis do into above of year. the above modestly the capital the the will loan we I for at

Dale Gibbons

Yes.

we and As -- got X [indiscernible]. CLNs last that you collapsed residentials don't year in capital that have warehouse substitution in of are We've our credits a them. few recall, mortgage

So XX they basis CETX gaining from We're points are to just XX running that. off. in about

Operator

with from comes Haire The of line next Jefferies. Casey question the

Casey Haire

and growth. Great. on the loan Question deposit

an mean and or demonstrated just And growth I you to stronger obviously, you're $XXX wondering you're growth numbers. those of eye that on, putting line. have just conservative capable up to got guys the looking manage you it's that. how if wondering Just guys the if billion have than

So just color there. some

Kenneth Vecchione

Yes. Yes.

about classes, loans do to reviewed we we grow based that pipeline that have we actively So And the Casey, billion quarter. deemphasized while activity, basis. can cautious asset comfortable economic get weekly the on future per feel believe certain and we a on continue $X remain we rather that with

opportunities group we give us the the side. are best banking see we to maybe would and lending is on beginning on CRE you also areas, deemphasizing C&I little and warehouse the lending, construction, multifamily, certain regional general as the lot cautious a risk resource hold, better So lending business [indiscernible] loan dynamics residential, take expect, reward office, in

better we growth we we right powerful as $X with But could sound, long comfortable if hasn't now, $X safe, do and changed. than billion, and will the economic So it's billion. feel environment as

service is guide, wins trust had had number certainly quarter, its relates services think, take it we ever. to of at billion. share well a HOA of had really as monstrous. the as of market came good deposit $X.X number that levels, As we had of have deposit of to in Settlement corporate lot monstrous better best growing. new a because a quarter was our a we because quarter A our hold. and begun It verticals our,

deposits Okay? And the well think very also now billion. in are industry. And in for $X fact, HOA then as a region we the leader we the in quarter had good

that us will billion for we're we're when of So taking here, we've think deposits together, that over look grown $XX.X something comfortable deposits growing total the year, back year. I quarter rest say, all a we by the a you proud of informs billion. $X

you seems of and confidence billion very And If that billion broker billion $XX us $X we in take reasonable year. practical. $X level grew out to that deposits, the kind say gives for a

Casey Haire

Yes.

to expense Okay. And just switching then the front.

$XX I in it's layer like the it bit little the you've a does higher million past. clarify, then guiding in That's been with the in FDIC ratio than to expense running XXs. costs, obviously And to Just low do this obviously an deposit looks but guide, guide your year? assessment what delivering the include for efficiency it's if the

been I around think it's XX%.

expectation on new front. that the what's just So wondering

Dale Gibbons

we kind which we in XX% as we beginning you quarter from mid-XXs. little a of there's that X for do have Yes. We saw first something primarily house, but -- and better in Yes. to performance, the compensation would they're But mortgage to get a were process. with much number out talked that of stronger there's some and significant think kind of there. the FICO. of with lot We in can to I a with believe move they're want people costs, that There about were we seasonality but their bit do to the I related would kind pent-up think AmeriHome that look hope back do again. And for a of AmeriHome presently. that love was that in that demand rate their

-- after really hit that the have As when that we we at in lot it CPI down back the of in a FOMC commentary our and numbers. saw January this saw came that activities, more kind

side, down So steady denominator But we over mid-XXs. trail now, side that it more for in keep on with the the numerator number on the I their can situation ECRs, that, regarding think time.

Kenneth Vecchione

FDIC to XXs the and our that's numbers special that our in Casey, adjusted we going down the towards that's efficiency be assessment, our not what work say. and the would XXs. high I is guide in low as But

Operator

comes JPMorgan. from with of Alexopoulos line the The Steven next question

Steven Alexopoulos

I start... want to

Kenneth Vecchione

little Steven, can the a to you get closer phone.

probably muted. You'll get

Steven Alexopoulos

hear now? you Could me Yes.

Kenneth Vecchione

you. Thank better. Much

Steven Alexopoulos

Okay.

deposit for So would Ken, I that start that billion quarter. you right above Is could on side. the per $X year? the let thought $XX me take grow the billion you thought deposits said you you because

Kenneth Vecchione

a billion $X a last as but Well, QX softer on quarter where the little roll warehouse seen out. average, deposits lending quarter, you've is

is to just private think a tell that's think trying we'll up. of $XX we're -- end where think guide. of the little Basically, we we end billion more number about you So

Steven Alexopoulos

Got it.

should and or get Okay. I Once targets, maybe you, could X in how you calls be desire It's don't Ken. about appetite, a term. your row. long you Alliance funny, we growth Western I've to think know, where asked X

we you're if balance it deposits for is per that each. if maybe billion sheet? Is year ratio, that about [ adjusting that loan-to-deposit billion, probably So growth per $X.X X.X ] we loans call $X so think out, you'll about average that year how run for $X should this billion-ish the market, now billion about per this rate, quarter we and think at

Kenneth Vecchione

a got have optionality. of a and levers of we we've So pull to deal number great

we way we in, like about we're thing I'd bring from bring is thinking is to say loan-to-deposit the put it growth in, here, first deposit whatever about whatever at ratio. would we out liquidity So XX%

up what little obviously, deposits to getting forward. level. billion stay we're So if in that engine that to we try XX%, again. a up will but take in XX% between going to time that's telling XX% $X to loans, $X It And we're and we're build you loan target because back going that's billion could not growth that

You've done. deals get the got to

You've it got documented. to get

in, higher as to XXXX. And got do will clients their that, cash before throughout funding You've than deposits then XXXX we and in into we put go build meaning the use our to $X just that mute incremental and we or stay up have put billion-plus in a some if to sheet. Dale, to it of also use down add you growth that? that balance will anything borrowings, that we'll and that the loans range, and the then do pay of liquidity, we'll want better

Dale Gibbons

paying Yes. that another than Steve, down deposits growing with been numbers, way, say your because year it coincident I I exceed a $X to faster number. billion we've expect borrowings a we bit mean can those

Operator

next question the Chris line of from comes with McGratty KBW. The

Christopher McGratty

ongoing billion last of it. regulation, capital, Ken, of to there's ton feels the over addressed attention. but like every Obviously, last a is got like Dale, or trying message send the you're expenses, that has the quarters? liquidity with more you've feels it few It obviously actions piece less $XXX a

Kenneth Vecchione

Yes.

we've we've actions build indicated that. our reservoir in few are us liquidity accomplished that to improvements was preparing cross early and made that we okay? architecture, to management and in and today get So both we better years, done that to analysis analysis, on, wanted on a liquidity The planning billion taking and risk capital to it over $XXX

out forward. think going was capital right way. number the The XX% other that We around the let's is get of thing number

the behind company scenes to a But of the build more has that couple is all built into also, risk in done management last we've the over years. lot Chris, So occur. basically That's that. been

we of the the ready looking billion being of way It are not want $XXX for level. about a just us. when be XX% we we We're don't have all happen to opportunities we But $XXX us. we that sooner. where economy on, the to that and to to be say we're there today, want don't hit what depends is number again, get So is billion. in to us we'll front stopped

want So an to in unencumbered way. grow we

the meantime, that the risk how In somehow paying architecture company company. into manage putting we're and is think we return a and the and the dividends

we're So doing well. that we're happy that as

Operator

next Bernard from The Von with Gizycki Deutsche comes the line Bank. of question

Bernard Von Gizycki

So you guys had guide a nice outlook. the you full quarter didn't with but change fees, noninterest income year

year? Additionally, by fee mortgage on noted dependent the How different rest be have the encouraged will resilient lines there after color rates, the we think the should but any for about X you You maybe if the up rest were XQ the of of and investments you you year? should the for the it how could quarters. Wondering past for equity trend results. picked think seasonality provide

Kenneth Vecchione

at in that for gains around reasons. The QX on there to be you right every lower is physicians And of warrants, you that business I inside add of tech questions I always of hoop And think shot and because value this way positioned the I'll are that's in anything. hangs very on of industry consistent And based as it we next liner valuing and fee tech valuing And the would will cycle. Dale, expect of mortgage, valued. be similar course, good quarters, grows, say But it anything? more for we couple if the mortgage we're prior of It of retracement to point portion a quarter. of take the income would we fill a from comes at now, with XXX don't the QX. to mortgage the couple over valuing there miss the see of is, where at time. the the that, quarter. Dale a we're consists So a the mentioned seasonal it

Dale Gibbons

Yes.

of couple a Just things.

implications. other So seasonality

well the increase of and billion So to deposits. best HOA, $X as there quarter their recovery our as helped kind is that in nearly contributed warehouse QX

tracking out our what That's would that I of But income. be of So quarters we we a income quarter. And the we're guide. end than are in going first are expect regarding future put above net midpoint as to well. guidance, terms frankly, in little upper book the the interest our the in lower noninterest for towards

Bernard Von Gizycki

Okay. was you much mix shift you quarter mostly it. then interest-bearing, Got that great earlier don't noninterest-bearing. deposit is noted amount there I the Obviously, brought from with deposits the And in was mix the the but think you in, obviously And here. of Dale, favorable obviously, expect shift higher mix. the you $X kind for about similar out to cost look billion, year, we the you be of of rest kind think the the are less would focus said the on CDs. When additional minimal as of of kind Where outside you of thinking kind quarters?

Dale Gibbons

in we certainly a might hat, the of growth the We looking optimistic for Well, really doing continue. be primary show that that would regions, to where I saw deposits. in actually And noninterest-bearing things I creative get we're there. and which put my some could hope we we're on if I quarter, mean first growth would source

alluded think you that, the that to CDs, to in going preponderance run money through off trends the to continue of market. growth I going as terms is And maybe XXXX. to of we -- you As in of the come course, taper is

Operator

comes from Ben the question Citi. Gerlinger next line with of The

Benjamin Gerlinger

X to had flat, this next think in step kind could of year's the of cut to ECR. it thinking early you guys X of philosophically, I I part in lowered a of in noise, expectations down? if I half just background not expenses pushed But out any of just have if latter X had the of the terms X more we months. kind just out. next kind total year, so year. the actually about of Do question Sorry be know you a

Dale Gibbons

Yes.

be in the significantly as AmeriHome help Also discussed could we would that revenue as case. well. with certainly I think probably

Kenneth Vecchione

suggesting. were we we talking rate inflation what And have fund I was the future think XXXX way, say you're in Another any into base. help cuts about I will earlier. any it going to that's

Dale Gibbons

point, off push is Just one to pool are our about one ECRs down. undertaking comment gives to thing getting higher-cost them more to that of we really us us one to earlier liquidity which optionality, this now enable of to do Ken's some

so And we funding front lower costs. FOMC can get action of in with

a to that bit course. We'd average ECR see the declined to saw QX slightly. QX of little like You more of that, in where actually

Benjamin Gerlinger

[ I'll great. you to in Got the used of you. have to just of thought any about of the get And any growth over it's sort outside guys with fintechs, bolt-on And capital that M&A? to nice just but necessarily see powerhouse repurchase? that, terms ], billion kind potential. Not technology any WAL kind $XXX deployment those of That's sort the of share be back or of potential

Kenneth Vecchione

for take about a premature have in And it's think organic us So I it we'd we us, would and put would growth, us still capital say, we front that we M&A. of serve think see the that any to prospects like into to best. that given little excess

Operator

question line next The Clark comes with from Piper Sandler. of Matthew the

Matthew Clark

bps quarter. think deposit interest-bearing you're XX your costs, this On up I

rate here fair next stabilize start up interest-bearing or X give prior you Is what's deposits? And of bps. your on X? there? spot Can assume us to that, slow the a to and will maybe that think I quarter change it quarter rate outlook

Dale Gibbons

board, and volatility We're we last were rate kind of tapered been of both about since at kind kind the of talking the really July. obviously across hasn't of stable. looking liabilities off in really the asset last repricing is and kind September stability There of changes since Yes. very it's been kind It's here. on on

] amount mentioned see up I costs think income as earnings credit net interest earlier, I As going the rose. for approximately same that you [

rates great average presently. disparities rates and there's of So kind spot no between

Kenneth Vecchione

add flat of and funds that billion rid is went cost while borrowings, in of deposit I'd we our what got up, Well, costs overall $X stays quarter-to-quarter.

you for quarter what points. when our think relative So interest about happened the yields up XX loan to basis went net margin,

because in we costs line bit We on paid the and margin deposit sheet a Our And keeping liquidity up the really dropped the investment debt. here went in is of bps. balance in brought cash XX bottom securities. we're the little down that excess

Matthew Clark

Yes. Got it.

nonperformers. and and uptick one plan Can The there? speak you for just for last in And drove of assets Okay. the to then me. what classified those kind just resolution increases

Timothy Bruckner

Bruckner. Tim that. Sure. I'll Yes. take

how say the This a real our manage estate results portfolio. really to first, investor is related So I'll of secured just as majority function we loans.

our That So we of we have press early opportunity remargining the since hard taken for tell -- in rate increase resolution. cycle. all to we've every and as the constituents, drives

all classified the negotiation on principal that the value the doesn't asset. then based move to as we that loans and So and take loans of balance. will interest an we We result remargin. payments the loan the We reach effective balance ledger in endpoint reduce received apply of the those appropriately up

important it's made. of note to our in are think on I of terms books being payments X/X these that current

our to delinquency So not a for here. waiting action take we're

Kenneth Vecchione

ones we all And this the moved paying. in were all quarter

Timothy Bruckner

Thank you. Ken. Correct,

Operator

of comes Braziler the question Timur next Fargo. line from with The Wells

Timur Braziler

move level surprised just between flat line following and allowance much is Maybe was up on interplay guess allowance. the loan higher, of you overall to NPLs quarter-on-quarter? last questioning. through migration a see talk Could nonperforming little the just while us I pretty the I

Timothy Bruckner

Sure. Tim, again.

it's those the have of important was quarter, majority, with of small have of liquidity. of on loans think to current this every took the less note of plenty they as charge we charge-off value cost majority the balances a context the the in that this asset adjusting we very quarter associated so migrate, that coverage that the really based I we appraised

fairly reserves move that. aggressively as We nonperforming. opposed on we adjust our to placing So balance just into

Timur Braziler

Migration itself doesn't necessarily...

Timothy Bruckner

right. Absolutely

you loan-to-cost a when about so where philosophy XX%, we're When at lender. low we at. office, XX% our office, look is talk we're And here, underwritten

in at position collateral, demonstrated. see credit economy we the we And our sponsorship. character collateral increase that's So support underwriting creates this what from look of

loan we values in carrying low we -- where have balance. entire very carries process. the and through that get to it throughout adjustment, the So charge make take throughout we stay a typically close, an

Dale Gibbons

do we higher in walk Our about that the that of CLNs charge-off we a we that X of bit. at XXX level maybe we the as appendix points, the the is. like X/X or level is was little have estate X/X points annualized a a do, the the reserve well release, about XX earnings talked considering quarter others don't which a what things basis to rate basis for only industry levels residential of On up as that real

pretty a that's XX actually level points. think so And strong basis we at

there, loss duration got coverage So book if of within you X loan XX, into take X. X our under years basis our while points is of you've

Timothy Bruckner

at more add as I'd performing Yes. we to moving category, than look resolution as it's When this anything. expected and expected.

Timur Braziler

effect Okay. purchases what get of in that securities you the us to And will blended quarter, then can look XQ? just a at the sense like give maybe as my follow-up, just bridge looking this

Kenneth Vecchione

We didn't clearly. that hear

Timur Braziler

during rate purchases just on get rate blended For to idea of the quarter, what made securities of what the those an a the the like. purchases second get was quarter look sense will to the in trying

Dale Gibbons

Yes.

XX saw that term. purchases points done the rate what's we quarter, the fairly XXX you have average down been [ So for should that be basis fairly the The on that done. consistent ], that with short from were were which

We the as out and expect well. Reserve at of some Federal maybe of that to roll maybe keep more

So that's profile. probably a little bit of stronger a

Operator

line comes The the Research. with Autonomous next Smith David question from of

David Smith

the confirm just basis XX-K would that NII you by Could you shock true is that better towards XXX And The high said being sensitivity your loan you imply being the heard saying what I higher thought X there cuts today? asset by guide liability a is but the earlier which in point I is boost end, offset fewer X%. think the sensitivity. model, growth would NII

of the today? NII just rates. one is just you expand lower just for a costs how mortgage for that Fed you benefiting know view I lower higher or the with you impact deposit like But income the that? NII, from if and on So strictly the piece

Dale Gibbons

would of saw slope mean bit risk, looking call at in $X we're I changed, you did stable net a is earnings that And upward we more it going million. though up though, is a the at considers it than prefer that NII, in in put ECR I environment those because and a And if happen the then context. rather also all we might higher in considers lower AmeriHome would yields together, rate the income what be the rising as lower was what considers higher particular. still really pickup AmeriHome in so in Yes, it's bit would environment increase one. interest kind solely What's correct. the rate rate a increasing environment. have a But in even it's to yes, here, NII the we get additional little and of We leverage a NII declining environment.

David Smith

although of cuts just there staying range, same, and then how the being growth? NII higher outlook loan terms that for the And end fewer better with guide in of the the maybe in works Okay. the

Dale Gibbons

Yes, deploy then in higher $X looking get rather rest about, deposits billion of kind as $X that into a volume addition rate up. high-quality at I the of QX for, of for requirements. will talked asset the of prospective year a of the the least in that securities that fewer the it's as down got to what mean, were kind assets into than and we cuts, into not these on we're -- Yes, results higher-yielding we we're we basis, number. Because to in million on liquid satisfy short-term the then -- kind compression going the way and

Kenneth Vecchione

grow as quarter-over-quarter to QX improvement stronger and will loans in build slight It with and out we then in it begins QX. put QX a

Operator

with comes question from Brandon The of the Truist Securities. line next King

Brandon King

the second given expecting for is of So end quarter? quantify compression how I quarter in could just the NIM second the understand quarter. the particularly trough HQLA you to NIM But you're at close first build the much

Dale Gibbons

Yes.

X down that. QX from in So saw we QX, dipped you

we down XX another I volumes. can on think higher dip that

Brandon King

throughout is Okay. you're expansion very, -- correct, I that guess, the second year, half stable And expectation from the That's quarter-over-quarter. of right? here, as that you the then mid-single-digit

Dale Gibbons

we're increase and say, it That's overall. deposits. going because spread to be lending marginal to at pick to the We going out the Yes. margin we're up in to between for accretive look the that increase deposits loans, XX% of

Operator

line next comes question of D.A. Davidson. with Gary from The the Tenner

Gary Tenner

C&I side little another things. was had a office lower but and inclusive quarter, increase If was in little CRE side, follow-up a more I basically I increase look on of the total delta million at the credit an the $XXX the side. of hotel in classified the the over on flat, investor

lines just particular within book, the wonder weaker business and you about could movement more I were if any quarter? what So were comment there, experiencing that you're got C&I this

Timothy Bruckner

Thanks, Sure. Tim, again.

Okay.

vigilant a remain across but elevated a to really environment, in of are We stable. the we've in Outside talked movements the rate that remains in see specific seeing portfolio. we trend this more really portfolio any idiosyncratic and other all pronounced office, segments. not about stable Our that a performance interest business, related we're movements

Gary Tenner

kind The All Can fourth [indiscernible] line you to of that. half just what to statement. remind charge versus you on about forward? run And going the right. and income And then there? quarter us service one where question down the previous happened

Dale Gibbons

charges QX. came Yes. Yes, service a little in bit. here we've had for elevated They down

follow-on I in they're execution have going charges things lower doing regions. the think to we we're some in remain of until more basically service

Operator

comes The of the RBC. Jon from line next question Arfstrom with

Jon Arfstrom

that? in of out flatten deposits just deposits chunk billion. bit And was growth. understand you maybe so of reacquired QX, mean the quick ones the $X.X or of on used couple Dale, that a that. decline do A mortgage-related by That signaling the you a big What term here. you are the you kind we

Dale Gibbons

monthly so in a get funds is and come X I on and primarily mean payments fixed those the sources. some Well, cycle to interest, GSEs from and is what X later. from principal mortgage we remit we -- that the warehouse deposits are One then weeks mortgage them as

so you way. of And kind intra-month kind get this of sign

taxes taxes longer Regarding a insurance, some semiannual, annual. particularly, and And the that's think though, are I are usually cycle.

XX. number from where And at so what fourth property the deposits dip we That's a quarter. in it's drove that and really from in lower were have taxes pronounced September we payments, tax both very

those really up they're because we which in quickly. funds reacquired it, that too, have be it have of that and start then recovered And there, up clients to agencies been frankly, in the and built as terms but paid brought building it say second helped depleted And do so again in up to to taxing the didn't have wouldn't we they to other some boost quarter happen. quite kind you of quickly, they

Kenneth Vecchione

last end finance a What wins year had came And we QX the QX. little means. back up QX, thought to some of that market than at share in that's began in fund we Dale announced what because stronger in we Jon,

Jon Arfstrom

Yes.

tangible that that Okay. the but the is your goes upper stock mentioned early you And do you up, very sustainability helps Ken, what you that, can term? than you at? that mean your comments if view goal. on and of bigger on me just How understand It's I is in key the return of sustainability prepared look do teen longer metric the about do I that? you thought, that. think

Kenneth Vecchione

it in if again, the Well, velocity [ ] last the confidence earnings level didn't there, everything call of have high XXXX. on XXXX. or is about will and there we through we it up Yes. earnings one about into And wouldn't build out put this we talked we getting 'XX exit had that rate of think a --

more basic kind more up return Fed income have and that see event some comes of today. where income AmeriHome a return spike come rates, then we take that share it reducing and on and But up from actually entire over gearing higher could down, you see fee rates can at quarters for you'll the of in is X Now AmeriHome. Right and company. XXX a generating say, a state basis now, actions really does the equity the next reduces of whatever, the that greater or points steady far

Operator

Erik of the comes next from Zwick line Hovde The with question Group.

Erik Zwick

that question, follow-up estate of are secured question regarding by kind quick maybe loans collateral. your real multipart a A

just of in in often I'm has using somewhat market rates -- asking the of a are past the changes reason down. values, can higher guess has refreshed right, transaction of been or reflective valuations updated and the First, percentage that property what how muted X comfortable against is the in concerns how on direction, certain say, your quarters. current put months. currently that volume individual valuations? curious and received pressure But with And values recognition markets or I that recent either in have market potentially current I'm you reserving and has CRE that up portfolio in valuations are you're slow valuations, obscure

Timothy Bruckner

question. a Tim, That's Sure. again. I'll good it. Thanks. take

Okay.

for real okay? couple have from level a them just we're lender scenario things ongoing we of and a a we're in rate floating loans a on term commercial are maturity put appraisal an construction These rate in here bridge that So set, to place estate, against So or a to where loans. and that isn't waiting environment. long-term in was value basis. performance we at different a look benefiting And fixed that there are

for All of our documentation and terms remargin. reappraisal includes

around something to thoughts us. are handle. that a isn't value wait So critical And fall maturity to those that to or it we for

so we in track to Additionally, we can we that to track activity. value limited data tracking of have that, that and situations sale market submarket the that trends submarket advance translate really when occupancy substantial the how trends there's will in But we're value. in understand

Operator

question The from final Zach comes the of line with Westerlind UBS.

Zachary C. Westerlind

get think you beta think on cost equal exceed on you trying rate the down way Do Just the that start saw beta a ECR. quick know of or you follow-up of Dale, kind guys we higher cutting, the the you are those do up? I that be to ECR the ahead Fed that that could accounts. on way said to on the the when

Dale Gibbons

are. there I ECRs segment of into what mean that to have you types of kind

think warehouse as lower near deposits that But be ECRs to perhaps side, XXX%, yes, even we for HOA use going mortgage XXX% it at we're Within clients. the than as I or total, be will over in some for well.

begin much with. a at lower started so those And to rate

down were I way on that we'll on we some at least So even a way as think better. maybe as the fast and bit in cases do up, the be

Operator

call hand closing remarks. to over Thank for would to like Vecchione Ken you. I the now

Kenneth Vecchione

today. pleased Look, Thanks, time tell to the stated, repositioning a with quarter. good we Thanks and with we as again very you next call about the we balance spending for think had we look sheet some to everyone. more progress. our forward us We're

Operator

today's conference for concludes This call. your participation. Thank you

your now disconnect may You lines.

Western Alliance Bancorporation (WAL) 19 Apr 242024 Q1 Earnings call transcript