Western Alliance Bancorporation Earnings Call Insights: Loan Guidance and Pipeline Outlook
Western Alliance Bancorporation (NYSE:WAL) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.
Casey Haire – Jefferies: I was hoping to dig in a little bit deeper on the loan guidance. It seems a little conservative at $100 million especially coming off a pretty robust organic quarter. I’m just curious, is that seasonality or are you – can you give us some color also on the pace of run-off at Centennial? It just seems a little conservative about $100 million a quarter.
Robert G. Sarver – Chairman and CEO: Yes. The Centennial probably is not going to be a lot of heavy run-off because the term of these loans is fairly lengthy and for the most part a lot of them they could have been refinanced at lower rates probably already have. I think it’s probably just conservative forecast, in our part because our pipelines are still pretty healthy.
Casey Haire – Jefferies: The securities yield is down 30 bps on the quarter, that’s the excess liquidity drag relating to the Centennial deposits?
Dale M. Gibbons – EVP and CFO: Partially related to that. We also had an acceleration of prepayment speeds in the second quarter that has subsequently retreated and what that acceleration did, is it resulted in higher amortization of our premiums in our portfolio as most of those bonds we have were bought – were purchased in the secondary market. As that reverses, that yield should maybe retreat a little bit. I’m not looking for the securities yield to decline from where it is today.
Casey Haire – Jefferies: So, ex the premium hit, it was much less than 30 bps?
Dale M. Gibbons – EVP and CFO: Right…
Casey Haire – Jefferies: Then. Just lastly on the credit front, I mean, the credit recovery trends just seem, you got a lot of tailwinds there. I know you guys have talked about normalized rates being around 50 bps, but just given all the tailwinds, it seems likely that we’re going to be running at pretty benign loss rates. I’m just curious about if that’s how we play out, your ability to hold the provision at this level or better going forward?
Robert G. Sarver – Chairman and CEO: We do have a little wind at our back in terms of recoveries as we’re collecting some of the stuff we’ve charged off over the last four five years. I think it’s just tough to project really low sustained rates because, you know, surprises always happen in this business. So, we’re not going to project 10 to 20 bps, but if it happened, it wouldn’t be a surprise.
Dale M. Gibbons – EVP and CFO: If you look at our gross charge-off numbers, that was kind of almost double the 17 which is more in line with kind of where we’ve kind of guided over time. We have recoveries this quarter and we’ll probably have some more a little bit, but we’re not looking for what’s taken place in the past at some other intuitions. They had a higher reserve level and we’re able to even run negative provisions for a while. So, we’ve got to continue to provide for our loan growth which we’re pleased with and so, I’m not looking for the provision to really fall any lower than it is now.
Joseph Morford III – RBC Capital Markets: Just a quick follow-up on Casey’s question there. Just, you touched on the pipeline being strong. Just in general how does that compare with where you were three months ago and are pay downs still much of an issue, an ongoing issue that you have to overcome at all?
Dale M. Gibbons – EVP and CFO: Yes. They are because for the most part our book is commercial and therefore the amortizations and the maturities are five years or less. So we do have a fair amount of amortization but I would say just our pipelines are strong or stronger than they were 90 days ago. So it is pretty good. The new business is good. The duration of our loan book is about two years. So there is a lot of activity just hold balances flat.
Joseph Morford III – RBC Capital Markets: Then while on it just a more broader question on the economy, you are obviously in some of the markets that enjoyed some of the strongest recovery tied to the housing. Just wondered, if you can kind of talk about what spillover effect if any you’re seeing in those different markets that is leading to increased business activity and is that driving some of the C&I growth that you are seeing too?
Robert G. Sarver – Chairman and CEO: Yes. I think it is a little bit. I mean construction activity has a pretty good waterfall in terms of guys going out and buying new trucks and subcontractors being busy and money being spent at C-stores and casinos after work and fast food operators get more revenue and so. Construction is good for the overall economy and it does affect some of our customers and we are seeing that especially in Las Vegas where it’s starting to pick up and hasn’t had any new construction there for a long time, so that will be good.