Western Alliance Bancorp (NYSE:WAL) Q4 2019 Earnings Conference Call - Final Transcript

Jan 24, 2020 • 12:00 pm ET

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Western Alliance Bancorp (NYSE:WAL) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good afternoon and welcome to the Western Alliance Fourth Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

I would now like to turn the conference over to Ken Vecchione, President and CEO. Please go ahead.

Executive
Kenneth A. Vecchione

Thank you. Good morning and a happy new year to everyone and thank you for joining us today. Today, I'm accompanied by Dale Gibbons, our Chief Financial Officer. I will provide an overview of the quarterly results, Dale will walk you through the Bank's financial performance in greater detail and at the conclusion of our prepared remarks, we will take your questions.

2019 was a record year on many levels for Western Alliance Bank and demonstrated the powerful advantages of our diversified and distinctive business model to continue advancing our key strategic objectives, which include promoting disciplined and thoughtful loan growth matched with rising deposits, carefully managing our balance sheet with regards to asset sensitivity, derisking our loan composition, maintaining industry-leading operating efficiency and thoughtfully returning capital to our shareholders through share buybacks and dividends.

Financially 2019 was a terrific year and was our 10th consecutive year of rising earnings. For the year we produced record revenues of $1.1 billion, net income of $499.2 million and EPS of $4.84. These results were driven by record organic loan and deposit growth of $3.4 billion and $3.6 billion respectively, which generated the highest total revenues in the Company's history against the backdrop of a volatile and falling rate environment. As our Bank has scaled and matured, we also took new capital management actions this year and announced our inaugural quarterly dividend of $0.25 in Q2 and repurchased 2.8 million shares, reducing our share count by 2.7%.

Given all these actions tangible book value per share grew 20% year-over-year to $26.54 and is now grown by 237% over the past six years, as we continue to expand our business. We believe shareholder value is deeply correlated to loan, deposit and revenue growth, outstanding asset quality and predictable and sustainable earnings. As you can see, Q4 was an extraordinary quarter for Western Alliance as EPS of $1.25 grew 11% year-over-year and was accompanied by strong asset quality metrics. Fourth quarter loan growth of $1 billion and deposit growth of $356 million drove our balance sheet to $26.8 billion in assets. As a reminder, deposit growth is seasonally lower in this quarter as our warehouse lending clients pay down taxes from custodial accounts housed with us. The yearly deposit growth noted above was supported by the best year ever for our HOA business, they were up $603 million, tech and innovation, which knocked the ball out of the park with growth of $1.2 billion and our deposit initiatives which saw our balances rise over $100 million.

On the lending side, our regional banking divisions continued their healthy growth trajectory, generating over $550 million growth year-over-year after the