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November 28, 2014

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banking:

Owner of two Nevada banks reports $148.3 million loss

Western Alliance Bancorporation says economy is taking its toll

Earnings report

Western Alliance Bancorporation of Las Vegas, owner of two banks in Nevada, Thursday reported a substantial quarterly loss as it marked down the value of some assets in response to the troubled U.S. economy.

Western Alliance, which also has banking operations in California and Arizona and runs an asset management business, said that for the fourth quarter that ended Dec. 31 it lost $148.3 million or $3.94 per share, versus a profit in the same quarter of 2007 of $2.4 million or 8 cents per share.

In Nevada, Western Alliance owns Bank of Nevada and First Independent Bank of Nevada.

The company set aside $32.3 million for loan losses in the 2008 quarter, up from $13.9 million in the 2007 period. But most of the decline was caused by one-time write-offs. Fourth quarter results include securities impairment charges of $75.3 million -- mostly to write down the value of collateralized debt obligations (CDOs) -- and an estimated non-cash goodwill impairment charge of $59.6 million. By writing off goodwill -- which reflects the intangible value of a company and its brand in the marketplace -- the value of the company is reduced, on paper.

Without the charges, Western Alliance reported a net quarterly operating loss of $12.2 million.

Western Alliance said it shored up its capital position by raising $220 million through common stock deals totaling $80 million and with a $140 million investment by the U.S. government through the nationwide bank bailout legislation.

And the bank continued to grow in 2008, despite the troubled local economy.

"Our Nevada banking operations, which include Bank of Nevada and First Independent Bank of Nevada, reported loan growth of $25 million during the fourth quarter 2008 and $121 million during the full year to $2.66 billion at Dec. 31," the company said in its earnings report.

The net quarterly operating loss for the Nevada banks was $4.3 million excluding the charges against net operating income of $1.3 million in the 2007 quarter.

"This past year has been very challenging for our company due to unprecedented turmoil in the financial industry and housing markets. Despite this difficult operating environment, we succeeded in substantially boosting our capital position, maintaining strong margins, and addressing our most troubled asset class by writing off virtually our entire ... CDO portfolio," Western Alliance Chairman and Chief Executive Officer Robert Sarver said in a statement.

"Looking forward to 2009, WAL is focused on actively managing credit risk and aggressively addressing nonperforming assets, continuing to recruit local bankers with a strong customer following and increasing our deposit market share, as we take advantage of the economic dislocations and integration risk assumed by a number of our competitors. However, we recognize the U.S. economy will take some time to recover from the current recession," he said.

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