Western Alliance Bancorporation Common Stock (DE)

Good day, everyone. Welcome to Western Alliance Bank Corporation's third quarter 2023 earnings call. You may also view the presentation today via webcast through the company's website at www.westernalliancebankcorporation.com. I'd now like to turn the call over to Myles Pondelic, Director of Investor Relations and Corporate Development. Please go ahead.

Thank you. Welcome to Western Alliance Bank's Third quarter 2023 conference call. Our speakers today are Ken Vecchione, President and Chief Executive Officer, Dale Givens, Chief Financial Officer, and Tim Bruckner, our Chief Credit Officer, will join for Q&A. 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 actual results to differ materially from any forward-looking statements, please refer to the company's SEC filing, including the form AK filed yesterday, which are available on the company's website. Now for opening remarks, I'd like to turn the call all over to Ken Beckett.

Thank you, Miles. Good morning, everyone. I'll make some brief comments about our third quarter 2020 through results, and then I'll turn the call over to Dale. One year ago, On our Q3 2022 call, we discussed our plans to temper balance sheet growth to bolster capital and liquidity in order to reinforce our financial foundation and position the bank to navigate to a volatile rate environment. The events of the spring caused by duration mismatch at several regional banks validated the importance of our strategy and accelerated its implementation through surgical balance sheet repositioning. The recalibration of our business model to enhance overall liquidity and deposit granularity is designed to make the balance sheet unassailable in the event of another significant market disruption. As a result, our CEP1 capital has grown from 8.7% a year ago to 10.6% today. Our HFI loan-to-deposit ratio has improved from 94% to 91%. To provide enhanced protection to depositors and cement the stability of our deposit base, Insured and collateralized deposits have risen from 47% at year end to 82%. In order to fortify our liquidity position, we have materially increased our cash and investment securities and now have $3.2 billion of high-quality liquid asset treasuries. Having established strong capital, liquidity, and deposit granularity, a sturdy foundation has been laid to deliver earnings improvement going forward. Over the last several quarters, we have prioritized stabilizing and growing deposits as well as optimizing the liability structure by paying down borrowings. This has led to net interest margin growing from our second quarter trough as we have sustained improvement in our funding structure, lowered our adjusted efficiency, and produced above peer return on average assets and return on average tangible common equity. Over the next one to two quarters, we will complete the optimization of our funding structure and be well positioned to deploy excess core deposits into loan growth. In the third quarter, Western Alliance profitability, strong liquidity generation, and stable asset quality are proof points to the dexterity of our diversified business model. Before handing the call over to Dale, I wanted to highlight the drivers of our strong deposit growth in Q3. Core commercial clients, both new and existing, were the primary sources contributing to $3.1 billion of growth. Mortgage Warehouse and HOA pushed growth upward, and the regional network posted a second consecutive quarter of vigorous deposit contributions. Overall, deposit costs increased 27 basis points, though overall cost of interest-bearing liabilities compressed five basis points to 2.8% in Q3, as we utilized deposits to pay down higher-cost borrowing which Dale will comment on later. Liquidity came in rapidly over the quarter to push down our average borrowings. Core commercial deposits cost a marginal 4.04%, including cost of earning credit rates. Cultivating multi-product customer relationships remains critical for solidifying and growing client relationships, which has held in the mid 80% range in recent quarters. Our digital consumer channel a source of liquidity uncorrelated with our core commercial business lines, generated approximately $800 million this quarter at attractive rates relative to the marginal cost of repaid borrowings. In short, I feel confident in the vitality of our deposit franchise and how it sets up for future success. Now, Dale will take you through our financial performance.