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Mar 31, 2020
Western Alliance Q1 2020 Earnings Report
Net income decreased due to increased provision for credit losses, while loan and deposit growth exceeded $2.0 billion.
Key Takeaways
Western Alliance Bancorporation reported a decrease in net income for Q1 2020, impacted by a $51.2 million provision for credit losses due to the COVID-19 pandemic and adoption of the CECL accounting standard. However, loan and deposit growth each exceeded $2.0 billion, bringing total assets to $29.2 billion.
Net income and earnings per share were $84.0 million and $0.83, respectively, compared to $128.1 million and $1.25 in the previous quarter.
Net operating revenue was $285.4 million, a decrease of 0.7% from the previous quarter.
Operating pre-provision net revenue was $163.4 million, up $4.7 million from the previous quarter.
Total loans reached $23.1 billion and total deposits reached $24.8 billion, both up by $2.0 billion.
Western Alliance
Western Alliance
Forward Guidance
Due to economic uncertainty, the Company will pause its stock repurchase program for the remainder of the second quarter.
Positive Outlook
- Helping business customers through the Paycheck Protection Program and other loan products
- Implementing a broad-based risk management strategy to manage credit segments on a real-time basis
- Tightened underwriting standards
- Monitoring portfolio risk and related mitigation strategies by segments
- Contacting customers in order to assess credit situations and needs and develop long-term contingency financial plans
Challenges Ahead
- The economic environment and uncertainty related to the COVID-19 pandemic contributed to the $51.2 million provision for credit losses recognized during the quarter under the CECL accounting standard
- Continued uncertainty regarding the severity and duration of the pandemic and related economic effects will continue to affect the accounting for credit losses under the new standard.
- The Company will pause its stock repurchase program for the remainder of the second quarter.
- Placing limits on originations to higher risk industries and customers including, but not limited, to transportation, travel, hospitality, entertainment, and retail
- Offering flexible repayment options to current customers and a streamlined loan modification process, when appropriate