Western Alliance Bancorp (NYSE:WAL) Q3 2020 Earnings Conference Call - Final Transcript

Oct 23, 2020 • 12:00 pm ET

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Western Alliance Bancorp (NYSE:WAL) Q3 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] Our first question comes from Brad Milsaps of Piper Sandler. Please go ahead.

Analyst
Brad Milsaps

Hey, good morning, guys.

Executive
Kenneth A. Vecchione

Good morning, Brad.

Analyst
Brad Milsaps

Dale or Ken, I just wanted to make sure I understood kind of all the moving parts around the balance sheet. It sounds like a lot of the growth that you saw at the end of the quarter was mortgage warehouse related, which can obviously be very volatile end of the quarter, can vary given the average. As you go into the fourth quarter, is your expectation that you're going to be able to replace that if it does wane a little bit with other types of loan growth?

You also mentioned that you also just expect deposits from that -- from the warehouse to go down, so you'll get some liquidity bleed there as well. Just want to understand kind of what the moving parts would be within average earning assets as you go into 4Q with kind of everything you talked about?

Executive
Kenneth A. Vecchione

Yeah. So, mortgage warehouse had a great quarter as you can see by the results. They are increasing market share simultaneously as our warehouse lending clients increase their activity or see increased activity. So, we're getting a two-for-one and that's why you saw the increase -- the large increase in loan balances this quarter. Q4 is traditionally a little lighter and so we're just sticking to our Q4 analysis or historical viewpoint that loan growth there will be less. And yes, our model is designed such that we can replace loan growth there with other loan growth around the company and that's why we're giving you the $600 million to $800 million range for Q4 loan growth, and also the same for deposits. They lose some of their deposits in Q4 as taxes are paid.

Executive
Dale Gibbons

Brad, I would also say that we have a senior loan committee that meets weekly that approves the largest credits in the company and in the activity level of loans coming in from the line to that committee, which is loans above $15 million has really stepped up significantly over the past couple of months compared to where we were, say in the second quarter. And so we're seeing -- we think we're seeing broader strength in other classes of loan credit and at the same time, on the deposit side, despite what we think may happen on -- in terms of the, the warehouse lending piece, we're seeing some increase in some of these other channels as well that I think are going to bear fruition in the fairly near-term.

Executive
Kenneth A. Vecchione

Yeah, just to add to Dale. I mean we're seeing strength in capital call business, we're seeing strength in the CRE business certainly around the industrial side where both of them were doing a lot of deals for distribution centers and then Tech and Innovation is seeing a lot of new opportunities as well.

Analyst
Brad Milsaps

And maybe just a follow-up on the loan growth. Where are kind of new loan