Western Alliance Bancorporation Common Stock (DE)

Hello, everyone, and a warm welcome to the Western Alliance Bank Corporation Q3 2024 earnings call. My name is Emily, and I'll be coordinating your call today. After the presentation, there will be the opportunity for you to ask any questions, which you can do so by pressing Start, followed by the number 1 on your telephone keypad. I will now turn the call over to our host, Myles Pondolek, Head of Investor Relations. Please go ahead, Myles.

Thank you, and welcome to Western Alliance Bank's third quarter 2024 conference call. Our speakers today are Ken Vecchione, President and Chief Executive Officer, and Dale Gibbons, Chief Financial Officer, and Tim Bruckner, our Chief Banking Officer for Regional Banking, 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 and certainties and assumptions. That is required by law. The company does not undertake any obligation to update any forward-looking statements. For more complete discussion of the risks and maternities that could cause actual results different materially from any forward-looking statements, 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.

Good morning. As always, I'll make some brief comments about our third quarter earnings before turning the call over to Dale, who will review our financial results in more detail. After I discuss our outlook for the remainder of 2024, Tim Bruckner will join us for Q&A. Western Alliance delivered solid third quarter results and earned $1.80 per share. These results demonstrated the bank's ability to sustain diversified loan and deposit momentum, as well as grow earnings during a changing rate environment. We produced healthy deposit growth of $1.8 billion, or 11% annualized, and HFI loan growth of $916 million, or 7% annualized, despite sluggish demand overall for credit in the economy. Our national diversified credit origination and deposit platforms uniquely position us to sustain strong deposit growth and then deploy this liquidity into attractive commercial loans where we can provide deep segment and product expertise. During a transitional period for the rate cycle that began in Q3, net interest income grew 25% annualized due to higher average earning assets. Net interest margin compressed two basis points because of lower yields on variable rate loans. Continued interest rate cuts will enable Western Alliance to realize significant funding cost savings in both interest-bearing and ECR-related deposits going forward. We anticipate a more meaningful benefit from lower rates in Q4 from a full quarter impact of lower rates. Q3 results were modestly impacted by $4 billion of mortgage warehouse deposit growth driven by elevated mortgage refinance volumes. validating our operational excellence as we continue to win market share following several competitors retreating from the market. After the money center banks, Western Alliance is now the largest bank operating in the space. This excess deposit growth somewhat impacted Q3 earnings from elevated deposit costs, but these deposits have helped cement core customer relationships, which will continue to drive strong risk-adjusted loan volume and spread income. Typical seasonal declines in mortgage warehouse deposit balances are poised to push Q4 ECR-related deposit costs materially lower. Non-interest income increased $11 million, or 10% quarter over quarter, but this growth was tempered by a decline in mortgage banking income. Our franchise remains poised to significantly benefit from a resumption of stronger mortgage volume. Pre-provision net revenue grew marginally from Q2, while tangible book value per share climbed 19% year over year. Lastly, asset quality remained stable as non-performing assets, the total assets declined six basis points to 45 basis points. Net charge also of 20 basis points landed within our street guidance range. Dale will now take you through the results in more detail.