Western Alliance Bancorporation reported itsfinancial results for the second quarter 2015. Highlights include:
Net income of $34.7 million and earnings per share of $0.39
Operating net income of $43.5 million and earnings per share of $0.49, excluding merger charges, debt valuation adjustments, gains on other real estate, and operating performance of Bridge Capital Holding.
The Bridge merger, completed on June 30, increased total assets, gross loans, and deposits by $2.2 billion, $1.45 billion, and $1.74 billion, respectively
Second Quarter 2015 Highlights:
• Pre-tax, pre-provision operating earnings of $59.9 million, up from $54.5 million in the first quarter 2015, and up 26.3 percent from $47.4 million in the second quarter 20141
• Net operating revenue of $114.4 million, constituting year-over-year growth of 15.1 percent, or $15 million, compared to an increase in operating expenses of 4.9 percent, or $2.6 million1
• Net interest margin of 4.41 percent, compared to 4.35 percent in the first quarter 2015, and 4.39 percent in the second quarter 2014
• Efficiency ratio of 44.6 percent, compared to 46.7 percent in the first quarter 2015, and 49.3 percent in the second quarter 2014.
• Total loans of $10.36 billion, including $1.45 billion acquired from Bridge and loans held for sale of $39 million, with organic loan growth for the quarter of $95 million and $515 million for the first six months of 2015.
• Total deposits of $11.41 billion, including $1.74 billion acquired from Bridge, and organic deposit growth flat during the second quarter and $734 million for the first six months of 2015.
• Nonperforming assets (nonaccrual loans and repossessed assets) decreased to 0.88 percent of total assets, from 1.11 percent at March 31, and from 1.23 percent at June 30, 2014.
• Net loan recoveries (annualized) to average loans outstanding of 0.13 percent, compared to 0.06 percent in the first quarter in 2015, and 0.09 percent in the second quarter 2014.
• Qualifying debt of $208 million, an increase of $168 million from March 31, due to the issuance of $150 million in subordinated debt and $11 million in junior subordinated debt assumed in the Bridge merger
• Common Equity Tier 1 ratio of 9.1 percent and Total Capital ratio of 12.2 percent, compared to 9 percent and 11.3 percent, respectively, at March 31, under Basel III federal regulatory standards, which became effective on January 1.
• Stockholders’ equity of $1.51 billion, an increase of $463 million from March 31, 2015, including $431 million related to the Bridge acquisition, and an increase of $557 million from June 30, 2014
• Tangible book value per share, net of tax, of $11.25, an increase of 4.9 percent from $10.72 at March 31, and an increase of 24.7 percent from $9.02 at June 30, 2014.
Acquisition of Bridge Capital Holdings
Results include the acquisition of Bridge on June 30, which increased total assets, gross loans, and deposits by $2.20 billion, $1.45 billion, and $1.74 billion, respectively. However, the acquisition had no effect on the Company’s results of operations, except for merger charges incurred related to the acquisition. Pursuant to accounting guidance, acquired net assets are recorded at estimated fair value as of the acquisition date. The estimated fair value of certain net assets are preliminary and are subject to measurement period adjustments. The results of operations from Bridge will be included in the Company’s results beginning on July 1, 2015.
Income Statement
Net interest income was $108.7 million in the second quarter 2015, an increase of $5.6 million from $103.1 million in the first quarter 2015, and an increase of $14.8 million, or 15.8 percent, compared to the second quarter 2014. The company’s net interest margin increased in the second quarter 2015 to 4.41 percent, compared to 4.35 percent in the first quarter 2015, and 4.39 percent in the second quarter 2014.
Operating non-interest income was $5.7 million for both the second and first quarters of 2015, compared to $5.5 million for the second quarter 2014.
Net operating revenue was $114.4 million for the second quarter 2015, compared to $108.8 million for the first quarter 2015, and an increase of $15 million compared to $99.4 million for the second quarter 2014.
Operating non-interest expense was $54.6 million for the second quarter 2015, compared to $54.2 million for the first quarter 2015, and $52.0 million for the second quarter 2014. The Company’s operating efficiency ratio on a tax equivalent basis was 44.6 percent for the second quarter of 2015, an improvement from 46.7 percent for the first quarter 2015, and from 49.3 percent for the second quarter of 2014.
The company views its pre-tax, pre-provision operating earnings as a key metric for assessing the Company’s earnings power, which it defines as net operating revenue less operating non-interest expense. For the second quarter 2015, the Company’s pre-tax, pre-provision operating earnings were $59.9 million, up from $54.5 million in the first quarter 2015, and up 26.3 percent from $47.4 million in the second quarter 2014.
The company had 1,411 full-time equivalent employees and 48 offices at June 30, compared to 1,112 employees and 39 offices at June 30, 2014.
Nevada reported a gross loan balance of $1.76 billion at June 30, 2015, an increase of $93 million during the last six months, and an increase of $79 million during the last 12 months. Deposits were $3.32 billion at June 30, 2015, an increase of $86 million during the last six months, and an increase of $129 million during the last 12 months. Pre-tax income was $20.5 million and $17.7 million for the three months ended June 30, and 2014, respectively, and $37.2 million and $34.2 million for the six months ended June 30, and 2014, respectively.
