Western Alliance Bancorporation Common Stock (DE)

Good day, everyone. Welcome to Western Alliance Bank Corporation's second quarter 2025 earnings call. You may also view the presentation today via webcast through the company's website at www.westernalliancebankcorporation.com. I would now like to turn the call over to Myles Ponderlick, Director of Investor Relations and Corporate Development. Please go ahead.

Thank you and welcome to Western Alliance Bank's second quarter 2025 conference call. Our speakers today are Ken Vecchione, President and Chief Executive Officer, and Dale Givens, 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 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 AKA filed yesterday, which are available on the company's website. Now for opening remarks, I'd like to turn the call over to Ken Beccione.

Thanks, Miles. Good afternoon, everyone. I'll make some brief comments about our second quarter performance before handing the call over to Dale to discuss our financial results and drivers in more detail. I'll then close with some prepared remarks by reviewing our updated 2025 outlook. Our Chief Banking Officer for Regional Banking, Tim Bruckner, will then join us for Q&A. But before diving into my prepared comments, I'd like to take a moment to address a planned CFO succession announcement. Dale has been an outstanding CFO for Western Alliance for an impressive 22 years, which is more than five times longer than the average CFO tenure. Throughout his tenure, Dale has been an instrumental leader guiding the bank through both prosperous and challenging times. His unwavering dedication and availability at all hours of the day have made him an invaluable partner and friend to the senior management team. After the new year, Dale will transition his CFO responsibilities to Vishal following a thorough transition period. In his new role as Chief Banking Officer of Deposit Initiatives and Innovation, Dale will oversee six standalone deposit verticals which generate strong liquidity. His contributions to the company are too numerous to list, but his skill and leadership were particularly evident during my absence at the beginning of the year. The board, the management team, and I are very excited to see him thrive in his new leadership role. Someone should pass the tissues over to Dale. Vishal will join us early in the fourth quarter, and after a 90-day transition period, he will assume the CFO responsibilities. Vishal has been a trusted advisor to the company and knows the bank very well. Over the past eight years, I have developed a strong professional relationship with him, and I am looking forward to fostering the same partnership I have had with Dale. Just feel free to reach out to both Dale and Vishal to congratulate them on their new assignments when you have a moment. Okay, let's get to the financial highlights and the quarter. Western Alliance, again, delivered strong financial results exceeding expectations in the second quarter as strong business momentum drove a meaningful acceleration across a broad array of financial metrics, sustained success in acquiring new client relationships supported by our deep sector expertise, fueled strong risk-adjusted balance sheet growth, robust net interest income expansion, and enhanced profitability, which resulted in continued earnings growth. We generated over $1 billion of sequential loan growth for the second straight quarter, which was funded by nearly $2 billion of quarterly deposit growth. Net interest margin rose six basis points sequentially, rebounding back above 3.5% from robust average earning asset growth and CD repricing tailwinds, which lowered interest-bearing deposit costs. Asset quality continued to perform as expected, as criticized loans declined $118 million in aggregate from Q1. Other real estate owned increased $167 million as we elected to repossess office properties where we can accelerate our normal credit resolution process and see value creation potential due to improving leasing, occupancy, and NOI trends. We have already secured an LOI for one property that we expect to be sold by quarter end. Total criticized assets increased negligibly and remained at approximately $1.7 billion, which we expect to be the high watermark for this credit cycle and to drift downward in coming quarters. Our liquidity position and capital base both remain stout and able to support our solid and improving PPNR, tangible book value, and total shareholder return. Earlier this week, we announced plans to unify six legacy division bank brands under the Western Bank brand by year end. These brands have operated under the Western Alliance Bank charter for over a decade, so this action will simply present a unified marketing presence emblematic of the much larger national bank Western Alliance has become. Importantly, we are encouraged by the inflection and profitability experienced in Q2. return on average tangible common equity of 14.9% and return on average assets of 1.1% were both notably higher from Q1. We continue to target upper teens return on tangible common equity as our near-term profitability north star. Dale will now take you through the results in more detail.