Western Alliance Bancorporation Common Stock (DE)

Welcome to the Western Alliance Band Corporation's third quarter 2022 earnings call. You may also view the presentation today via webcast through the company's website at www.westernalliancebandcorporation.com. I would now like to turn the call over to Myles Pondlick, Director of Investor Relations and Corporate Development. Please go ahead.

Thank you. Welcome to Western Alliance. Thanks. third quarter 2022 conference call. Our speakers today are Ken Becchione, President and Chief Executive Officer, and Dale Gibbons, Chief Financial Officer. Before I hand the call over to Ken, please note that today's presentation contains forward-looking statements which are subject to risks, uncertainties, and assumptions. Except as required by law, the company does not undertake any obligation to update any forward-looking statements. For more complete discussion of the risks and uncertainties that could cause accidents, Please refer to the company's SEC filings, including the Form 8K filed yesterday, which are available on the company's website. Now, for opening remarks, I'd like to turn the call over to Ken Vecchione.

Thanks, Miles. This quarter, the company continued its strong financial performance as our diversified National Commercial Bank again delivered record net interest income, PPNR, and earnings, complemented by strong deposit and loan growth, supporting higher net interest margin with stable asset quality. For the third quarter, Western Alliance generated record total net revenues of $664 million, net income of $264 million, and EPS of $2.42. Earnings were propelled by accelerating net interest income quarterly growth of $77 million, or 15% from the prior quarter, to $602 million as the rising rate environment expanded our net interest margin 24 basis points to 3.78%. We maintain industry-leading performance with return on average assets and return on average tangible common equity of 1.53% and 24.9% respectively, which will continue to support building capital levels in the quarters to come. Sound balance sheet expansion continued with quarterly loan growth of $3.6 billion, or 7.5% quarter-over-quarter, and deposits rose by $1.9 billion, or 3.5% quarterly. mostly from non-interest-bearing DDA accounts. Loan demand remained healthy with 27% of growth coming from our regional banking divisions and 50% from national business lines. Deposit growth of $1.9 billion trailed strong loan growth this quarter. In Q3, our regional banking divisions contributed 32% of deposit growth and our specialized deposit franchises added 63%. We are proud that one of our new deposit business lines, Business Escrow Services, is gaining meaningful traction and contributed $424 million this quarter. We expect Business Escrow Services, settlement services, and other deposit initiatives to meaningfully contribute to growth and continue to enhance our funding profile in 2023. Mortgage banking-related income declined $35 million as the origination market continues to face major market disruptions. The speed and level to which rates have climbed have greatly reduced refinance activity and strained affordability in the purchase market. Servicing revenue was negatively impacted by a $22 million MSR hedge loss driven by volatility that spiked towards the back end of the quarter. We have positioned AmeriHome to profitably operate in a lower origination market, focused on becoming the industry's leading low-cost operator and have implemented a strategy to prioritize profitability against volume market share. Finally, asset quality continues to remain in great shape, and we do not see issues on the horizon. For the quarter, Wall recorded net loan recoveries of $1.9 billion, or negative two basis points. And year-to-date, we are in a net recovery position. At this point, Dale will take you through our financial performance.