Western Alliance Bancorporation (NYSE:WAL) Q2 2019 Earnings Conference Call - Final Transcript
Jul 19, 2019 • 12:00 pm ET
Kenneth A. Vecchione
first mortgages as we will strive to more than double the proportion of our loans in this sector from 8% to 16%. As we enter a lower rate environment, we expect our deposit funding mix to remain fairly stable. We expect net interest income to continue to rise throughout the year as volume increases from residential purchases, higher earning assets and our strong loan pipeline will outpace de-risking activities, repositioning of our asset sensitivity and projected Fed rate actions.
In quarters where target Fed fund rates are stable, our margin should be fairly stable and lead to net interest income growth tracking our growth and earning assets. Further, we expect our efficiency ratio to increase modestly as we continue to invest in new business initiatives and value enhancing technology solutions. Our commitment to top level efficiency is advanced by our strategy of providing select business lines that have few -- advanced by our strategy of providing select business lines that have fewer competitors, lower losses and high operating leverage delivered through a branch lite business model. Despite economic uncertainty, particularly related to trade and the slope of the yield curve, we have not seen this effect, the behavior of our borrowers in terms of loan demand or potential credit stress. Given the mature stage of the economic cycle, we continue to emphasize underwriting discipline and the majority of our loan growth we have this quarter was in areas with little or no historical credit losses.
So to summarize, we grew loans while reducing our risk, had exceptional deposit growth while improving our mix, grew net interest income 12% annualized despite a 3% or 12 basis point decline in net interest margin, maintain stable asset quality at historically low levels continue to opportunistically repurchase shares and announce an initiation of quarterly dividends, grew year-over-year net income by 17%, EPS by 20% and position the Company to carry forward its momentum through the second half of the year. This should enable us to have ongoing EPS growth even in a declining rate scenario, and we remain comfortable with street consensus estimates for the remainder of this year and next.
At this time, Robert, Dale and I will be happy to answer your questions.