Western Alliance Bancorp (NYSE:WAL) Q3 2019 Earnings Conference Call - Final Transcript

Oct 18, 2019 • 12:00 pm ET

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Western Alliance Bancorp (NYSE:WAL) Q3 2019 Earnings Conference Call - Final Transcript

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Q & A
Analyst
Timur Braziler

Executive
Dale M. Gibbons

That was a little over $500 million average balance for the quarter. We still have a relationship with the client, but that -- but those deposits always were zero at quarter end.

Analyst
Timur Braziler

Okay. And then maybe sticking with deposits, certainly quite encouraging to see the drop in funding costs this quarter, I know, from prior conversations, you guys have been proactive in addressing the deposit rates kind of right after the Fed has cut. I know the full impact of what's been done already will be reflected in the fourth quarter results. But going forward that proactive approach, does that reduce ability to lower deposit costs further on additional rate cuts or are you expecting to see similar magnitudes for each incremental rate cut we see?

Executive
Dale M. Gibbons

Well, I don't know how rate -- low rates are going to go. I mean, if we got to this zero band, I mean, eventually you're going to get some compression in terms of ability to cut. But this is where the floor has become so effective, because as rates get lower, a greater proportion of our loan portfolio becomes effectively fixed rate. So it's an asymmetric kind of a return and that, if and when rates ever go up again, we should actually have increased sensitivity on the other side. So yes, I mean, if rates continue to drop substantially in other number of cuts from here, you are going to see some compression, but the floors would be stronger.

Executive
Kenneth A. Vecchione

Hey, we moved pretty quickly, immediately after the two rate cuts and what we've noticed there's many of our competitors, who did not. So I think as they catch up to us next quarter on the next cut, then there'll be less opportunities for our clients to go elsewhere and they'll see the same action among many more banks.

Analyst
Timur Braziler

Okay, that's good color. And then just if I could one more, looking longer term in this rate drop environment. Are you guys still thinking that 1.5 to 1 kind of revenue to expense level is still achievable in 2020 or is that fully dependent on how many additional rate cuts are going to be?

Executive
Kenneth A. Vecchione

Look going forward, we expect to continue industry-leading and peer group operating leverage as part of our strategic growth management programs. We have a core discipline of expense management within the company, I do not expect that to change. And we'll balance that against the delivery on platform expenses and services and also new product expenses that we may spend. So we'll do what's right for the company as we go forward.

Analyst
Timur Braziler

Understood. Thank you.

Operator
Operator

The next question today comes from Brad Milsaps with Sandler O'Neill. Please go ahead.

Analyst
Brad Milsaps

Hey. Good morning, guys.

Executive
Kenneth A. Vecchione

Good morning. Afternoon.

Analyst
Brad Milsaps

Hey, maybe kind of a three part question around credit, you guys have excellent asset quality numbers, but just kind of curious kind of bigger picture kind of what you're seeing in the credit environment in terms of pricing underwriting. And then just