Western Alliance Bank
Annual Report 2019
Dear Fellow Shareholders,
As I write, coronavirus (COVID-19) is making an unprecedented impact in the United States and around the world. This requires that all of us at Western Alliance apply our considerable expertise and energy to supporting our clients, caring for our communities and helping our people navigate through this challenging time.
President and Chief Executive Officer
While the current crisis is unlike any other, we arrive here uniquely prepared to address what’s ahead. Western Alliance achieved a record-breaking year in 2019, reaching a number of milestones – $27 billion in assets, industry-leading performance in all key financial metrics, robust capital and liquidity levels, and high-profile industry awards – all due, we believe, to our talented and entrepreneurial people.
Our experiences steering through the financial crisis of 2008 have helped prepare us for today’s challenges. In the interim, we have expanded our organization’s strengths, including higher capital ratios, ample liquidity, and asset quality that is strong and stable due to lower loan-to-value ratios. At year-end 2019, the bank had $3.3 billion in total regulatory capital and tangible common equity of more than 10% – among the highest in the banking industry. Importantly, our robust and diverse deposit sources support our capital position and have helped create a sustainable balance sheet.
Finally, in the years since 2008, our bank now lends primarily to companies that are themselves stronger and better positioned for the current crisis, with greater liquidity and capitalization. Another key strength of our bank is our seasoned and invested leadership team, many of whom played key roles at Western Alliance in working through the major impacts of the last recession.
Right now, Western Alliance is incredibly focused on helping businesses manage the economy’s significant short-term challenges. During this all-encompassing health and economic crisis, we are working diligently and around the clock, in most cases remotely, to help our clients make the most of critical federal aid for small businesses, including the substantial relief of the Paycheck Protection Program in the CARES Act and the Main Street Lending Program from the Federal Reserve. Both of these programs will provide clients with the liquidity necessary to keep their people employed and meet overhead expenses.
Since the beginning of this crisis, I am pleased that Western Alliance has been able to protect the well-being of our people. The bank’s business continuity plans and training have prepared us to work effectively from home, but I especially want to recognize our dedicated people who continue to serve clients at our offices. I am proud of our people who make us so resilient during these demanding times.
The qualities that differentiate Western Alliance, and contributed to our exceptional 2019, remain in place to manage present circumstances and pursue future opportunities. Our stakeholders can count on our prudent, clearheaded decision-making as we move Western Alliance forward. Our capabilities, in fair days as well as in times of uncertainty, start with our people.
President and Chief Executive Officer
The qualities that differentiate Western Alliance, and contributed to our exceptional 2019, remain in place to manage present circumstances and pursue future opportunities."
Our stakeholders can count on our prudent, clearheaded decision-making as we move Western Alliance forward. Our capabilities, in fair days as well as in times of uncertainty, start with our people."
People, Performance, Possibilities
People have always been the foundation of our extraordinary culture: People, Performance, Possibilities. Everyone across our organization – from our experienced board of directors to every person in every discipline that supports our front line – is committed to building long-term customer relationships and providing banking solutions that produce results for customers and for the bank. Our values are the precepts that guide everything we do at Western Alliance: integrity, creativity, teamwork, passion and excellence.
These core values power our flexible, differentiated business model that makes the most of our national presence and regional footprint. This proved especially effective in 2019 and will enable us to pivot to where we need to go in 2020 and beyond. In both good times and more trying ones, we have the ability to adapt quickly. Our unique organizational structure offers us various levers to optimize performance, including responsive and focused decision-making at the point of delivery.
While we remain reasonably optimistic about the longer-term economic outlook, we are ready today to manage and optimize the variables at play as the coronavirus response shifts near-term parameters. As we work with clients, we will also ask them to invest, using collateral as an even more important tentpole to secure performance. We believe our hands-on management style and diversified loan portfolio will help us to mitigate the risks in the current landscape, support our clients, and position Western Alliance for the ultimate recovery.
Conservative Credit Culture Shapes Decision-making
Our diversified business model is the centerpiece of our ability to prudently manage credit risk and allocate capital, and is not found at other similarly sized institutions. We underwrite considering stress-case scenarios in all business units. We understand the businesses we finance and understand what it takes to work through difficult situations.
Our full executive leadership team is active in relationship management to continuously assess the state of our borrowers’ businesses. We are thoroughly involved in every part of the underwriting and ongoing evaluation process – a culture we believe will continue to serve us well in coming months. Western Alliance’s approach to managing credit weakness is based on our philosophy of early identification, escalation and resolution that brings executive attention and heightened bank resources to bear for problem credits.
As I mentioned earlier, we see the Paycheck Protection Program and Main Street Lending Program as vital to our economy and our clients, and we are working closely with them to take advantage of these important relief programs. In addition, we are taking other specific actions, including providing liquidity on undrawn lines of credit and, where appropriate, we have granted increases to credit lines to help clients conduct business. Crucially, we are working with our clients to solve for the next year, not just the next 90 days. While we certainly hope this crisis doesn’t extend through the longer time frame, we believe it is pragmatic to be fully prepared – and to help clients prepare – as the best way through to the other side of this crisis.
Caring for Our Communities
Now and always, Western Alliance people care deeply about improving quality of life in our local communities. In 2019 we increased our support, making nearly $50 million in new community development loans in the bank’s assessment areas, contributions of more than $1.3 million to nonprofits and nearly $62 million in new community investments. In another important way we give back to our communities, our teams across the country volunteered 10,000+ CRA-eligible hours last year.
The current economic environment calls for us to be even more engaged and creative in bringing resources and expertise to our communities and to our clients.
Last year, we were gratified to be recognized as the #1 Regional Bank on Bank Director Magazine’s Bank Performance Scorecard; in the Top 10 of the Forbes “Best Banks in America” list for the fifth consecutive year; and as the #1 best-performing of the 50 largest public U.S. banks by S&P Global Market Intelligence.
I’d like to thank our client-oriented, caring and committed people all across the bank, who are the core of Western Alliance’s success. I am also grateful for the leadership and active engagement of our board of directors.
Finally, to our shareholders, thank you for your confidence in Western Alliance.
Kenneth A. Vecchione
President and Chief Executive Officer
April 13, 2020
A Message From Our Executive Chairman
Amid this turbulent time for our nation and our world, it’s worthwhile to look in the rear-view mirror at our bank’s transformation since the last recession. Capital accumulation, liquidity management, geographic and product diversification, and stronger credit standards were designed to position us to better weather today’s financial environment.
Executive Chairman of the Board
Guiding the overarching business strategy and execution for Western Alliance is the highest priority of our board. As always and even more so during the current circumstances, our board works actively with management to monitor performance against goals and priorities, adhere to appropriate governance, and underscore sound asset quality and risk management practices.
Right now, the board is actively supporting our bank’s management in their concerted efforts to manage through the economic shutdown caused by COVID-19, working with clients to provide liquidity so these businesses can make it through to the other side. As we navigate this crisis, our nimble organization – which has always focused on bankers who understand the individual businesses and industries they bank, led by a hands-on executive management team – is ready to meet today’s challenges as well as prosper from the future opportunities they will bring.
In these circumstances and always, understanding what it takes to guide our company so that we deliver for all our stakeholders is a central responsibility of our board.
This year, we are pleased to nominate to our board of directors two highly accomplished individuals: Juan Figuereo, C.P.A., currently a Venture Partner with Ocean Azul Partners, an early stage investment fund, who has extensive CFO experience with a number of public companies including Revlon, NII Holdings and Newell Rubbermaid; and Bryan Segedi, C.P.A., former Deputy Global Vice Chair of Ernst & Young and Executive in Residence at Arizona State University. Both Juan and Bryan will bring extensive financial and business perspectives to our board.
At this time, we wish to sincerely thank Dr. Jim Nave for his 26 years of outstanding service to our company. As a founding board member, Jim has been an invaluable supporter of the bank and contributor to our success. Jim has been a trusted advisor and an important voice for sound business principles as an accomplished veterinary entrepreneur.
On behalf of Western Alliance’s board of directors, we are grateful and proud of what our company and stakeholders accomplished together in 2019, and how our organization is responding to the current situation. I would like to thank our customers and recognize our own people and loyal business partners for their contributions, and our shareholders for their support of Western Alliance Bank.
We look forward to continuing to earn your support in 2020 and the years to come.
Robert G. Sarver
Executive Chairman of the Board
April 13, 2020
Executive Chairman of the Board
We are grateful and proud of what our company and stakeholders accomplished together in 2019, and how our organization is responding to the current situation."
Financial Highlights
|
|||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||
