Western Alliance Bancorp (NYSE:WAL) Q3 2019 Earnings Conference Call - Final Transcript
Oct 18, 2019 • 12:00 pm ET
Thank you. [Operator Instructions] The first question today comes from Michael Young with SunTrust. Please go ahead.
Hey, good morning.
Kenneth A. Vecchione
Good afternoon to you.
Thank you. We ended the last call with unsolicited comment on M&A, so maybe we'll start this call with a solicited comment on M&A. Where do you feel the appetite is for acquisitions at this point or should we take the activity on the share buyback is just seeing a better value in buying your own stock at this point?
Yeah. It's Robert. I would say probably more the latter. I mean, we're continually evaluating the best use of our capital on a daily basis looking at a lot of deals. But as of now, we've chosen to invest in our own brand and our organic growth and to repurchase our own shares. So I would say probably more the latter.
Okay. And then just on the one to four family purchase strategy. I'm curious if you could just talk about, it sounds like you have a pretty strong appetite to continue that as a de-risking measure, but has anything changed relative to the drop in tenure rates and the yields you're able to get on that paper and the seasonal impact, capital allocation to that or anything like that. Any changes in the strategy there?
Nothing in strategy, we still think it's a very effective method which will extend the duration of our assets, and do so with something that should perform quite well, should an economic downturn present itself at some time in the future. So rates are lower than what we were getting initially going into the program, but we're still getting into the lower 4s [Phonetic] in terms of yields. These are really good quality underwriting at 67%, 68% loan to value, 760 FICO, mid 30s on debt to income and we're able to do this because we're buying things that maybe don't quite fit in the box from our mortgage warehouse originators, that would be qualified. So some of these are loans that have an IO period in the beginning. Some of these are loans that are not necessarily primary residences, but by well-heeled borrowers. So we're continuing to execute on that, and we think it's really helping in terms of our interest rate risk management.
Kenneth A. Vecchione
And there's one other thing to add to that, which is it puts us closer to our warehouse lender. So we now have another product to offer them in addition to warehouse lines, MSR lines financing, getting in deeper with the deposits and now picking up some of their volume on a forward flow basis. It gives us an opportunity to remain close to them.
The next question today comes from Timur Braziler with Wells Fargo Securities.
Hi, good morning. First one from me, Dale, you had mentioned couple of times that there was a large deposit on the books for the quarter that has now exited. I'm just wondering what's the size of that deposit?