Western Alliance Bancorporation
Annual Report 2018

Plain-text annual report

Western Alliance Bank A N N U A L R E P O R T 2 0 1 8 At Western Alliance, we believe we are ‘Right for Business.’ Direct access to senior management, responsiveness and staying true to our word allow businesses to trust the commitments we make and benefit from our focus on their business goals. And, because our driving purpose is to serve the needs of our customers, including providing access to credit and liquidity, our success is very much aligned with our clients’ success.” Kenneth A. Vecchione / Chief Executive Officer Western Alliance Bank Annual Report 2018Views on the Year Client Stories Capabilities 04 Letter From Our CEO Kenneth Vecchione 06 Letter From Our Executive Chairman Robert Sarver Financial Highlights 08 Q&A With Our Vice Chairman and CFO Dale Gibbons 09 Consolidated Income Statements and Balance Sheets 10 Loan and Deposit Growth 12 Performance Measures 13 Noteworthy Rankings and Awards 22 Optimizely David Schwarzbach 24 Hines Chris Anderson 26 Arcturus Therapeutics KC Kummerfeld and Neda Safarzadeh 28 Foundation Gaming and Entertainment Donn Mitchell, Les McMackin and Greg Guida 30 DreamBox Learning Jessie Woolley-Wilson 32 Bronstein Hand Center Dr. Andrew J. Bronstein 34 AmeriHome Mortgage Jim Furash and Josh Adler 36 Theodora Oringher PC Todd Theodora 38 Community Health Group Norma Diaz and Scott Carroll 40 Frank Lloyd Wright Foundation Stuart Graff 14 National Presence, Regional Footprint 16 Here for Business Jim Haught, President and COO 18 Structured for Business Division Leaders on Customized Banking 20 Smart for Business Division Leaders on Key Differentiators 42 Experience for Business Q&A with Specialized Banking Leaders About Us 44 Involved for Business Supporting Communities 46 Motivated for Business Working at WAB 48 Board of Directors and Executive Leadership 50 Access for Business Where to Find Us Financial Highlights Inside the numbers that made the year at Western Alliance. National Presence, Regional Footprint Western Alliance’s unique structure benefits clients. 08–13 Client Stories Growing businesses pinpoint why the right bank matters. 22–41 14–21 Letter From Our CEO Dear Clients, Shareholders and Friends of Western Alliance, It is my privilege to be writing to the shareholders of this terrific company after my first full year as CEO. I have been connected to Western Alliance for over 10 years as an independent board member, director, president and now CEO. I love this company because of its passion for service, commitment to our clients and communities, and the hard work and loyalty of Western Alliance people. The success of our clients has always led to the success of Western Alliance. It is an honor for me to succeed Robert Sarver, and I’m humbled by the confidence our Board of Directors has shown in my leadership. I am pleased to share our 2018 results and future plans to lift Western Alliance to even higher levels of growth. Western Alliance had another strong year in 2018. In an environment dominated by change – business, technology, politics and culture – we achieved record financial performance and launched several new business initiatives designed to further our financial performance and meet client expectations in the future. In 2018, loans grew 17% or $2.6 billion while deposits grew 13% or $2.2 billion. Total assets rose to $23.1 billion, which was a 14% increase over the prior year. In 2018, we grew operating revenue 17% to $970 million, and we increased earnings per share by 34% to $4.14. Our predictable and carefully managed growth generated an industry-leading return on average assets of 2.05% and return on average tangible common equity of 20.6%. These results were achieved against the backdrop of continued strong asset quality, including net loan losses of only 0.06% and total nonperforming assets of just 0.20% to total assets. Our tangible common equity ratio, a common measure of bank capital strength, rose to 10.2% as we added $386 million to our tangible capital. These collective results earned us a top 10 ranking on the most recent Forbes “Best Banks in America” list for the fourth consecutive year, 2016-2019. This year, as with the banking industry overall, our stock performance did not keep pace with our financial performance. Our five-year total return to shareholders exceeds our peer group and the S&P 500 with a 65.5% total return, or 10.6% annualized, in comparison to share value contraction of 30.3% in 2018. While the company continues to deliver a very steady track record of financial performance, our share price has not captured our consistent results. I remain confident that our risk profile and diversified business model, overlaid with our culture and values, position Western Alliance to perform through a wide range of economic and market cycles. While we are proud of these financial accomplishments, there is still more to achieve. This is how Western Alliance consistently creates and delivers value -- by focusing on the future while tactically delivering near- term results. Ten years ago our National Business Lines did not exist. Our industry-leading financial performance is the direct result of the powerful combination of our commercial banking within our regional footprint and our specialty banking business expertise that spans the country. This is augmented by the ambition and energy we realize from layering fresh opportunities into the company. Over the years we have strengthened the company through thoughtful planning and rollout of new strategic initiatives that we have grown into a well-diversified portfolio of businesses. These include Hotel Franchise Finance, Alliance Association Bank (HOA services), Technology and Innovation Lending, along with Mortgage Warehouse Lending, Public and Nonprofit Finance and more. They all share similar characteristics – specialized lending and deposit services with limited competitors, strong asset quality, and high operating leverage requiring skilled bankers. I believe the scale and composition of our investments in specialized lending are difficult to replicate and provide us with a competitive advantage relative to our regional peer group. The combination of our regional footprint and national presence expands opportunities in different areas of banking and it is the key to our ability to deliver superior results. By managing the regional and national business mix and the customers and markets we serve, we have multiple ways to grow our business. This is not only effective but also efficient: Reflecting on 2018, revenue to expense grew 2.5:1 assisted by our peer-group-leading 41.9% operating efficiency rate, which generated industry-leading financial returns. At Western Alliance, we believe we are “Right for Business.” Direct access to senior management, responsiveness and staying true to our word allow businesses to trust the commitments we make and benefit from our focus on their business goals. Our nimbleness, and the fact that we see the world as it is and not as we’d like it to be, provide us with clear-eyed perspective. And, because our driving purpose is to serve the needs of our customers, including providing access to credit and liquidity, our success is very much aligned with our clients’ success. Being right for business also means we actively support the quality of life in the communities we serve. In 2018, we grew our commitment to our communities, making $205 million in new community development loans, contributions of $1.2 million to worthwhile nonprofit organizations, and $133 million in new community investments. Our employees across the country volunteered more than 10,000 hours with community organizations and projects – a real point of pride for us. Capital is the output of our collective business strategy and financial performance. In 2018, our tangible book value rose 20.5% to $22.07. And, in the fourth quarter of 2018, we adopted a $250 million stock buyback program demonstrating our belief in the value of our company and the strong future ahead. In the fourth quarter, we purchased 901,000 shares at a weighted average price of $39.58. We are appropriately positioned to continue to support balance sheet expansion while continuing to fund loan and deposit initiatives. Our proven business model provides the earnings power and capital generation needed for growth and M&A opportunities, as well as returning capital to shareholders through the share repurchase program. As we move through 2019 and beyond, I believe Western Alliance is well positioned to execute our long-term strategic vision. Our success is predicated upon the dedication and talent of the Western Alliance people delivering superior products and services to our clients. Lastly, on behalf of the Board and our entire management team, I would like to thank you for your investment and continued confidence in Western Alliance. Sincerely, Kenneth A. Vecchione Chief Executive Officer Western Alliance Bank 04 Views on the Year Views on the Year 05 The foundation of our success is investing in smart, capable people who have a demonstrated commitment to serving our clients.” Western Alliance’s long-term strategy is the highest priority of our Board of Directors. Our Board actively works with management to guide and evaluate company strategy, monitor performance against goals and priorities, and adhere to appropriate governance and risk management practices to deliver long-term value to our shareholders. Our Board is pleased with the company’s 2018 financial performance and believes we are well positioned for future success. The Board reviews corporate strategy at each meeting and evaluates the company’s performance in achieving our strategic priorities. Managing our capital, launching new deposit and loan initiatives, introducing residential mortgages into our loan mix, and de-emphasizing construction and development lending are just some of the strategic priorities undertaken in 2018 with the Board’s oversight and advice. The Board also continues to focus on long-term succession planning, within both management and the Board itself. At the upcoming annual shareholder meeting in June, two long-term directors will not stand for re-election. Bill Boyd, who has been a director and stockholder of the company since 2002 and was founder of the original BankWest of Nevada, has decided to retire from the Board. In recognition of his unique status as founder, and his long and distinguished service as a director, the Board has appointed Bill to the position of Director Emeritus, effective as of the annual meeting. Cary Mack, who has been a director of the company since 2005, also will step down from the Board following the annual meeting. Cary previously served as Chairman of Torrey Pines Bank. Both Bill and Cary were instrumental to Western Alliance’s success and we thank them for their many years of invaluable service. Our Nominating and Corporate Governance Committee regularly evaluates the size and composition of the Board to ensure the right mix of industry knowledge, experience and skills to support our strategic direction. This year the Board is pleased to nominate Adriane McFetridge as a new Director. Adriane has been an outstanding executive for a number of high-performing companies and will bring important technology experience to the Board. Going forward, the Governance Committee will continue to balance director continuity with the need for fresh perspectives and diversity. Our people and our culture remain the key to our success. We prioritize finding, motivating and retaining talent. Supporting skills and career growth helps people become experienced managers and leaders. It’s also important for us to continue developing a deep bench to help serve our clients so they can maximize the full potential of their businesses. The foundation of our success is investing in smart, capable people who have a demonstrated commitment to serving our clients. In closing, I am very proud of the management team and their accomplishments, and am confident that much future success lies ahead. On behalf of the Board of Directors and management, thank you for your confidence and investment in Western Alliance Bank. Sincerely, Robert G. Sarver Executive Chairman of the Board Western Alliance Bank 06 Views on the Year Views on the Year 07 Financial Highlights Q&A with Dale Gibbons, Vice Chairman and CFO How does Western Alliance’s 2018 performance help position the bank for a strong 2019? To paraphrase Newton’s first law, an object in motion stays in motion. We’re not at rest. We’re engaging with clients, we’re enhancing our products, services and digital delivery. Our loans were up 17% for the year, about $2.6 billion, and up nearly $1 billion in the fourth quarter alone. We have significant momentum. How is the interest rate environment affecting Western Alliance – what about clients? While the rising rate environment we’ve experienced the past couple of years has helped depositors, it also increased the required performance for some business initiatives to pencil out. As we enter a period of relative interest rate stability, it may result in business plans being more predictable. At Western Alliance, we have the tools to assist our clients with their financial needs and goals, and can structure fixed rate or variable rate loans, depending on what’s right for their business. How does Western Alliance continue to perform at consistently high levels, even as the economy offers some potential challenges? We maintain flexibility to be able to respond to changing economic conditions – most likely we will be operating within a continued expansion, but at a more measured pace. What helps Western Alliance is not relying on one set of tools to execute our business plan. Our multiple business lines have different demand generators. If the economy cools, this might bode well for the housing sector as the yield curve is likely to be less steep. If the economy doesn’t slow, commercial loan demand is likely to remain strong. Which performance metric offers the most insight about Western Alliance? I think the most important metric about Western Alliance is not necessarily in the numbers – it’s our repeat business with our clients. If they are repeat clients it means we’re offering them a value proposition. And we have one of the highest levels of repeat business in the industry. Our value proposition is our business acumen, our responsiveness and our ability to structure our services to meet our clients’ needs. It’s the engagement of our people in helping customers succeed. They stick with us and we are there for them, in the good times and the very challenging times. We were lending throughout the last recession when many banks were not. As CFO, what would you like clients and investors to know beyond the numbers? Our financial performance is how the story ends. I like to look upstream to see what’s really going on in the business. We have leading organic growth. How many meetings did our professionals have with clients? How many loan proposals did we develop? How many clients are we helping with treasury services? It’s not only the numbers, it’s what’s behind the numbers. It’s not the what, it’s the why. Western Alliance Bancorporation Consolidated Income Statements (Unaudited) ($ in Thousands, except per share amounts) 2018 2017 2016 2015 Interest Income Interest Expense $ 1,033,483 (117,604) $ 845,513 $ 700,506 $ 525,144 (60,849) (43,293) (32,568) Net Interest Income Provision for Credit Losses Net Interest Income After Provision Non-Interest Income Non-Interest Expense Income Before Income Tax Income Tax Expense 915,879 (23,000) 892,879 43,116 (425,667) 510,328 (74,540) 784,664 (17,250) 767,414 45,344 (360,941) 451,817 (126,325) 657,213 (8,000) 649,213 42,915 (330,949) 361,179 (101,381) 492,576 (3,200) 489,376 29,768 (260,606) 258,538 (64,294) Net Income $ 435,788 $ 325,492 $ 259,798 $ 194,244 Dividends on Preferred Stock – – – (750) Net Income Available to Common Stockholders Weighted Average Common Shares Outstanding (Diluted) Earnings Per Share Available to Common Stockholders (Diluted) $ 435,788 $ 325,492 $ 259,798 $ 193,494 105,370 104,997 103,843 95,219 $ 4.14 $ 3.10 $ 2.50 $ 2.03 Consolidated Balance Sheets (Unaudited) ($ in Thousands) Assets Cash Securities Loans Allowance for Credit Losses Net Loans Other Assets Total Assets Liabilities and Equity Deposits Borrowings Other Liabilities Total Liabilities Stockholders’ Equity 2018 2017 2016 2015 $ 498,572 3,761,093 17,710,629 (152,717) $ 416,768 3,820,354 15,093,935 (140,050) $ 284,491 2,767,761 13,208,436 (124,704) $ 224,640 2,042,237 11,136,663 (119,068) 17,557,912 1,291,909 14,953,885 1,138,078 13,083,732 1,064,858 11,017,595 990,617 $ 23,109,486 $ 20,329,085 $ 17,200,842 $ 14,275,089 $ 19,177,447 873,869 444,436 $ 16,972,532 792,922 333,933 $ 14,549,863 489,665 269,785 $ 12,030,624 398,483 254,480 20,495,752 2,613,734 18,099,387 2,229,698 15,309,313 1,891,529 12,683,587 1,591,502 Total Liabilities and Stockholders’ Equity $ 23,109,486 $ 20,329,085 $ 17,200,842 $ 14,275,089 08 Financial Highlights Financial Highlights 09 Built for Business Balancing growth and stability, Western Alliance has the muscle and mindset to meet the banking and finance needs of our clients’ growing businesses. 115% 66% 77% 39% 46% 55% 29% 0% 0% 0% 4% 17% 365% 269% 298% 222% 425% WAL Deposit Growth 332% WAL Loan Growth 178% Peer Loan Growth 173% Peer Deposit Growth 229% 145% 171% 105% Normalized Loan and Deposit Growth WAL Loans Peer Loans* WAL Deposits Peer Deposits* *Peer set is based on public financial institutions that have $10 billion to $100 billion in assets. Peer loans and peer deposits data accurate as of 12/31/18. Western Alliance Bancorporation Total Assets: $23.1 Billion 2018 Year End Total Regulatory Capital: $2.9 Billion 2018 Year End $2.9 Noteworthy $23.1 20.3 17.2 14.3 2.5 2.1 1.6 10.6 9.3 7.6 6.8 5.8 6.2 1.1 1.0 0.9 0.7 0.7 0.7 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Operating Performance 20.64% Return on Tangible Common Equity 2.05% Return on Average Assets Shareholder Performance $10,000 Investment Comparison 1 Year 3 Years 5 Years WAL $6,975 $11,012 $16,551 KBW Regional Banking Index $8,251 $11,687 $12,688 S&P 500 $9,561 $13,039 $15,027 Western Alliance earns top 10 spot on “Best Banks in America” list four years running, 2016-2019 FORBES Best Banks in America 2019 $4.1B Market Cap 12/31/18 34% Earnings per share growth from 2017 to 2018 Western Alliance recognized on Fortune’s 2018 “100 Fastest-Growing Companies” list FORTUNE MAGAZINE 100 Fastest-Growing Companies List 2018 #1 in the West for Best Commercial Lending Strategy, and in top five for Best Corporate Citizen and Best Board BANK DIRECTOR 2019 RankingBanking Study 21% Tangible book value per share increase from 2017 to 2018 Western Alliance Bank is rated investment grade 12 Financial Highlights Financial Highlights 13 National Presence Regional Footprint 14 National Presence, Regional Footprint National Presence, Regional Footprint 15 Here for Business Boundary-less Banking Jim Haught, Western Alliance Bank President and COO, has a clear view on how the bank delivers everything that its “national presence, regional footprint” structure means for customers. It’s about bringing seamless banking to businesses whether they are located in our regional geographies or anywhere else in the country. “We are very conscious of our hybrid approach – local decision-making and responsiveness paired with significant centralized capabilities,” said Haught. “This helps our bankers be at the center of the customer relationship, with all the processes and technologies in place to complement the service our bank is known for.” He added, “We are a $23 billion bank with the risk management and credit monitoring programs of a $50 billion bank. So, we can operate more like a smaller, specialized bank with all the customer service and expertise this entails, and go beyond to offer the robust capabilities of a much bigger bank.” Our job is to make it easy for clients to engage with the bank no matter how or when they need us – whether it’s 10 a.m. on a Tuesday or 10 p.m. on a Saturday.” Jim Jim Haught / President and Chief Operating Officer Western Alliance Bank 16 National Presence, Regional Footprint National Presence, Regional Footprint 17 Structured for Business Our bankers in every sector deliver valuable advice that draws on years of business banking experience, whether your field is transformational or tried and true, or whether the economy is humming along or shifting into a lower gear. Our proven expertise and client-centric structure provide the jumping-off point for crafting customized banking for your one-of-a-kind company. ALLIANCE BANK OF ARIZONA TORREY PINES BANK Don Garner / Chief Executive Officer John Maguire / Chief Executive Officer “As the state’s largest locally headquartered bank, with a strong focus on the business community, we understand what moves the Arizona economy. Our clients in all sectors benefit from our on-the- ground knowledge of local markets and industries. It’s not just financial resources – our expertise also helps our business customers grow.” “Some banks have salespeople who make the initial contact, however, they subsequently hand you off to other departments. We don’t send clients somewhere else to close their loans. We work as a team, bringing deep understanding of both the industry and local market, in order to meet clients’ specific needs. The resulting experience of working with one relationship banker is seamless and that brings value to our customers.” 18 National Presence, Regional Footprint National Presence, Regional Footprint 19 Smart for Business We are solutions-centric. Whether our clients are in our thriving regional markets – or in any of the 15+ tech hubs around the country where breakthrough approaches are spurring new businesses – we bring powerful expertise and a thoughtful process that add value. BANK OF NEVADA BRIDGE BANK John Guedry / Chief Executive Officer Dan Myers / Chief Executive Officer “We sit down and talk with our clients to understand their business plans, look at their budgets, how they’re modeling, what they’re doing and what they plan on doing. We pride ourselves on being responsive and available. Our process can mean better solutions for our clients, and a banking relationship that moves them forward.“ “Our bankers help tech and innovation sector companies maximize their most limited resource – their time – to achieve their business and strategic objectives. Our vast experience leads to smart banking solutions, and we’re also able to connect clients with other vital resources within the tech and innovation ecosystem we know very well.” We Know Business Business Escrow Services Mortgage Warehouse Lending Commercial and Residential Construction Municipal and Local Governments Data Warehousing Education Equipment Finance Gaming Healthcare Homeowner Associations Hotels Legal Life Sciences Nonprofits Professional Services Real Estate Development Renewable Resources Settlement Services Small Businesses Technology Timeshare Resorts Venture Capital and Private Equity Manufacturing and Logistics Wholesale and Distribution 20 National Presence, Regional Footprint National Presence, Regional Footprint 21 Client Stories Optimizely Opts for Relationship Banking By replacing digital guesswork with evidence-based results, Optimizely helps marketing, product, and engineering teams – including those at over 40% of Interbrand’s 100 top global brands – accelerate innovation and increase return on their digital investments. When the San Francisco-based company, which has over $90 million in annual recurring revenue, wanted to optimize its banking, Optimizely turned to the technology banking experts at Western Alliance’s Bridge Bank. “Everyone always talks about relationship banking, but with Bridge this is quite real,” said Optimizely COO/CFO David Schwarzbach. “They took the time to understand the financial needs of our business. They also took the time to craft a loan structure that worked for us.” Another key differentiator was a visit from Western Alliance CEO Ken Vecchione. Schwarzbach continued, “I felt a genuine focus on being partners – again, everyone talks about this, but with this bank it’s real. We feel like we have access to Ken and all the bank’s leadership. To get to have that level of access is rare.” David Schwarzbach / Chief Operating Officer and Chief Financial Officer 22 Client Stories Client Stories 23 We came to the bank when we were acquiring the land for a major mixed-use project, Chandler Viridian, which had lots of title issues, remnants of a failed development and all sorts of complications. Alliance was the best group for this complex project: They understood what we were trying to achieve and brought important local knowledge.” Chris Chris Anderson / Managing Director Hines Southwest Region Hines is a privately owned global real estate investment, development and management firm, with a presence in 207 cities in 24 countries. 24 Client Stories Client Stories 25 “We try to take a company’s problem and find a solution that works for the customer and the bank. It can be a tricky balance but it’s one of our hallmarks.” Chris Burson / Senior Vice President, Commercial Real Estate Lending Alliance Bank of Arizona Pictured left to right KC Kummerfeld / Vice President of Finance and Corporate Controller Neda Safarzadeh / Director, Head of Investor Relations/Public Relations/Marketing Rising Star in RNA Medicines Finds Innovative Bankers in Their Space Arcturus Therapeutics is a very bright star on the biomedical horizon. The emerging company is poised to be a major player in RNA-based therapeutics, targeting individual genes to address rare diseases. While the San Diego-based company has more than 150 patents in review, perhaps more importantly it already has strong partnerships with some of the biggest, multi-billion-dollar names in the pharmaceutical industry. When Arcturus became public in late 2017, the finance team looked for a bank with the ability to support larger facilities over time. “It is important to us to be with a bank that can grow with us,” said Neda Safarzadeh, Director, Head of Investor Relations/Public Relations/Marketing. “We have a very big opportunity and it’s up to us to grasp it.” She added: “The people at Western Alliance’s Bridge Bank are very engaged and incredibly responsive. They keep up with us and understand our sector remarkably well.” We appreciated the very quick turn-around, the bank was right on it. They created a loan structure that was just right for us and it was fairly priced.” KC KC Kummerfeld / Vice President of Finance and Corporate Controller Arcturus Therapeutics 26 Client Stories Client Stories 27 Foundation Gaming and Entertainment Brings Skills to the Game For Foundation Gaming and Entertainment, luck has nothing to do with it. Instead, the company’s edge is sound experience and sharp management. Four of Foundation Gaming’s five top executives worked together at Isle of Capri Casinos, one of the original regional casino resort companies, during its most substantial growth period for nearly a decade starting in the mid-1990s, and the fifth partner is a seasoned gaming operator with both Las Vegas and regional market experience. In an inspired, “let’s get the band back together” move, the team created Foundation Gaming to put their years of expertise to work and continue their winning streak. Today the growing regional gaming company owns two thriving properties in Mississippi with plans for several more in other markets. Donn Mitchell, CFO of Foundation Gaming, was looking for more than an off-the-shelf financing solution when the group was exploring banking relationships. “Western Alliance’s Gaming group wants to be a partner, and they are. Our banker raises questions that add a lot of value to the process, which comes from his own experience in the industry. We’ve moved all of our accounts over to Western Alliance.” Client Stories 29 Pictured left to right Donn Mitchell / Chief Financial Officer Les McMackin / Chief Operations and Marketing Officer Greg Guida / Co-Chief Executive Officer 28 Client Stories Innovative Problem-solving with DreamBox Learning Here’s a challenging math problem: What can be done when only 33% of U.S. eighth-graders test proficient at math, per the U.S. Department of Education? One promising answer comes from DreamBox Learning. The Bellevue, WA, education technology leader is tackling this issue with its proven, intelligent adaptive learning™ platform. The company’s online, game- like experience motivates K-8 students to persist, progress and achieve math success as they follow a personalized learning path based on their own understanding of math. Buoyed by a $130 million investment in 2018 from The Rise Fund, the world’s largest social impact investment fund, DreamBox Learning is on its way to becoming a powerful partner in classrooms across the globe. Already, the platform is used by 130,000 teachers and more than three million students in every state in the U.S., as well as the District of Columbia, Mexico and throughout Canada. Western Alliance’s Bridge Bank offers the growing tech company its own proven, problem-solving skillset. “Bridge met our innovative flair with financial innovation,” said Jessie Woolley-Wilson, President and CEO of DreamBox Learning. “They helped us see past impediments to possibilities. They understand what it means to be a banking partner.” Jessie Woolley-Wilson / President and Chief Executive Officer 30 Client Stories Client Stories 31 Western Alliance’s Bank of Nevada is sensitive to physicians’ needs – our recruitment process, owning my own building, financing equipment, having a line of credit. Their knowledge of healthcare and my particular practice, as well as the larger economy, has helped me as an orthopedic surgeon successfully steer decision- making for this business over many years.” Andrew Andrew J. Bronstein / M.D. Bronstein Hand Center Dr. Bronstein, a four-year collegiate hockey player for UC Berkeley, is a hand, wrist and elbow specialist in Las Vegas whose clients include professional hockey players, musicians and even highly skilled acrobats. “Because the majority of my team’s clients are in the medical field, we stay ahead of the curve on everything from insurance billing and reimbursements to policy changes for Medicare, Medicaid and more. We work hard to be a resource, and clients like Dr. Bronstein choose our bank and stay with us because of the added value we provide.” Walter Hashimoto / Vice President, Senior Loan Officer Bank of Nevada 32 Client Stories Client Stories 33 Funding One of the Country’s Top Mortgage Companies The story of AmeriHome Mortgage is about building a company with the right people and the right ideas, at the right time. The team joined forces to launch a best-of-the-best mortgage operation in 2013 that has since grown into the fourth-largest mortgage correspondent lender in the U.S. Driving AmeriHome’s success are powerful industry relationships combined with data systems built from scratch. Said CEO Jim Furash: “We started with 20 of the country’s most talented mortgage professionals and quickly worked to build our business to a level where we could optimize costs, customer service and profitability.” Today the company prices $1 billion in mortgages every day, or about a quarter of the U.S. market. While the Thousand Oaks, CA-based mortgage giant by necessity works with many money center banks, AmeriHome chooses Western Alliance’s Mortgage Warehouse Lending to fund its highly specialized MSR business. Western Alliance is very easy to work with. They understand our business and they get that not everything is a round peg in a round hole. They listen to us, and the bank delivers exactly what we need.” Josh Josh Adler / Chief Investment Officer AmeriHome Mortgage Pictured left to right Josh Adler / Chief Investment Officer Jim Furash / Chief Executive Officer Top 10 Founded in 2013 and a client of Western Alliance since 2014, AmeriHome Mortgage is a Top 10 U.S. mortgage lender in originations.* *The Wall Street Journal, September 6, 2018 34 Client Stories Client Stories 35 Todd Theodora / President and Chief Executive Officer Where Top Law Firms Turn for Wise (Banking) Counsel Widely known as “lawyer’s lawyers,” Theodora Oringher PC is a Southern California firm with more than 50 attorneys, three offices and a litany of high-profile cases – all the way from a headline-grabbing D.C. political scandal to contentious naming rights for a professional baseball team. In 2018, when Theodora Oringher was planning to add 30 people, the firm’s leadership turned to their bankers at Western Alliance’s Torrey Pines Bank. Noted President and CEO Todd Theodora: “We’ve come to rely on Torrey Pines Bank to supply the capital and wise counsel we require to be successful. We were able to achieve significant short-term growth without missing a beat.” 36 Client Stories Client Stories 37 Scott Carroll / Chief Financial Officer Health Plan Rx: A New Bank Community Health Group, a community- based nonprofit health plan serving nearly 275,000 Medi-Cal and Medicare patients in San Diego County, relies on exceptional customer service to differentiate its brand. Believing that it should hold its bank to the same high standards, this customer-oriented company last year began searching for a banking resource with similar values. According to CEO Norma Diaz, “Customer service and relationships are our claim to fame. So it makes sense that we would want a bank that has the same approach.” After many years of working with a large money center bank, the organization switched its significant treasury management accounts to Western Alliance’s Torrey Pines Bank. Added CFO Scott Carroll, “We make thousands of payments every month for tens of millions of dollars, and Torrey Pines Bank is up to this task. Customer service is so important to us that it’s part of our decision-making. We feel everyone we work with should be doing business this way, and this bank has shown us excellent responsiveness.” Norma Diaz / Chief Executive Officer 38 Client Stories Client Stories 39 As stewards of the homes where Frank Lloyd Wright lived and educated young architects, we ask, ‘how do we extend Taliesin’s legacy and also sustain the larger community around us?’ A lot of banks talk about community. The degree of connection to community service with Western Alliance’s Alliance Bank is really important to us. We found a bank that feels and lives the same way we do.” Stuart Stuart Graff / President and Chief Executive Officer Frank Lloyd Wright Foundation Taliesin West in Scottsdale was the winter home of iconic architect Frank Lloyd Wright and is a National Historic Landmark. Frank Lloyd Wright photo courtesy of The Frank Lloyd Wright Foundation Archives (The Museum of Modern Art | Avery Architectural & Fine Arts Library, Columbia University, New York). All rights reserved. Frank Lloyd Wright Taliesin West, photo by Andrew Pielage “Our experience in working with nonprofits led us to create customized products so that worthwhile organizations can put more of their resources toward their missions. It’s a tangible commitment to nonprofit businesses that goes beyond ordinary banking.” Kate Hickman / Senior Vice President, Treasury Management Alliance Bank of Arizona 40 Client Stories Client Stories 41 Experience for Business MORTGAGE WAREHOUSE LENDING Steve Curley / Division President How is customer service different at Western Alliance? Curley: What sets us apart is that we work hard for our customers every day. Our expert bankers make sure we’re delivering on what we promise during the sales process. Then we continue to innovate, adapt and augment what we’re doing because we are committed to constantly refining and improving so that our program fits hand in glove with each customer’s business. SETTLEMENT SERVICES Francesca Castagnola / Senior Vice President (right) Dana Rager / Vice President What do Settlement Services clients know about your group? Castagnola: Our customers know that we will always work with the class members’ benefit in mind, just as they do. They know we will work with them to devise a set of products that work for them and that help build efficiencies for their teams. They know we are dedicated to personalized service and that they can count on our tremendous experience in the industry. HOTEL FRANCHISE FINANCE Barry Lieberman / Senior Vice President Why do hotel developers and operators choose Western Alliance? Lieberman: Our team is exclusively dedicated to hotel finance. What that means is that everybody involved in the process – from the relationship manager to the underwriter, closer and portfolio manager – are all experts in the hospitality space and solely devoted to their industry. This is truly a differentiating factor for us. GAMING Philip Potamitis / Executive Vice President (right) Ashan Perera / Managing Director What do gaming clients value about the bank? Perera: Our clients value our team’s deep gaming industry expertise, along with our ability to tailor lending solutions and provide the full range of treasury management services to fit our customers’ needs. This expertise is a natural extension of our strengths in hospitality and hotel finance, as well our longstanding presence in Las Vegas. Even our Board of Directors brings us significant gaming industry credentials. Over time our customers realize that we really are what we say we are: solutions-centric and entrepreneurial. That we do deliver tailored solutions. That we are always open to new ideas. They come to know that we listen so that we can enhance their business.” Steve Steve Curley / Division President Alliance Association Bank and Other Lending Divisions 42 Industry Expertise Industry Expertise 43 Involved for Business Means Supporting Communities Western Alliance people are passionate about improving the quality of life in our local communities. We support affordable housing, education, job creation, workforce development, arts and culture, and so much more. The bank’s concentrated efforts in small business lending create opportunity that adds economic vitality at every level. And we always dedicate resources, time and talent to high-impact community service organizations that help low- to moderate-income individuals. 2018 By the Numbers $205.3 Million 10, 259 Hours $1.2 Million $133.6 Million in new community development loans in volunteer time in community donations to 157 organizations in new community investments Corporate Philanthropy Award for Community Impact The bank’s wide-ranging commitment to giving back to its communities earned the prestigious 2018 Corporate Philanthropy Award from the Phoenix Business Journal. The publication honored Alliance Bank of Arizona and Western Alliance for creating positive impacts across Arizona. In just one measure of our engagement, bankers hold leadership positions in 106 charitable and business organizations statewide. Green Our Planet Bank of Nevada teamed with the Green Our Planet conservation organization to bring nutrition, health and business skills to Title I schools in Las Vegas. As part of this “groundbreaking” garden program, students not only grow fresh produce to share with their families, but they also sell vegetables at a student-run farmers market, create business plans and manage money. In a first among Nevada financial institutions, Bank of Nevada earned the Community Commitment Award for Financial Education from the American Bankers Association Foundation for being part of this effective program. Dollars and Sense It’s just good sense for kids to understand how money works. That’s why Western Alliance devotes substantial funds and volunteer time to helping students from low- and moderate- income families learn the basics of financial literacy. In 2018, our bankers volunteered nearly 2,300 hours to this important cause that has life-long positive impacts. 44 Supporting Communities Supporting Communities 45 Motivated for Business The best way to describe our culture is entrepreneurial, just like the businesses we bank. Western Alliance is agile and client focused, with a structure that helps bankers move quickly for customers. This isn’t just a benefit for clients. It also helps us attract and retain the best bankers, who find a welcome environment for fresh ideas, access to senior management and the flexibility to do what’s right for our business customers and for the bank. We invest in the people, resources and expertise our clients count on with innovative programs – from demanding college internships and comprehensive management training to engaging professional development opportunities, including the growing WAL Women’s Alliance. Working at – and with – Western Alliance is all about possibilities. “I have the flexibility and freedom to do what’s best for my clients – allowing me to be a proactive professional – and this is very empowering. We are part of our clients’ success, and they are appreciative that we help them find solutions so they can achieve their goals.” Anca Bec / Vice President, Loan Officer Alliance Bank of Arizona 46 Working at WAB 46 Working at WAL Working at WAB 47 Leading for Business Board of Directors Executive Leadership Robert Sarver Executive Chairman of the Board Western Alliance Bank Robert Latta Partner Wilson, Sonsini, Goodrich & Rosati Strategic. Seasoned. And focused on putting the needs of clients first. Western Alliance Bank executives lead by delivering on the bank’s values of accountability, opportunity and innovation so bankers have the resources they need to perform for customers. Front row from left Jim Haught Kenneth Vecchione Dale Gibbons Back row from left Tim Bruckner Robert McAuslan Barbara Kennedy Randall Theisen Kenneth Vecchione Chief Executive Officer Western Alliance Bank Bruce Beach Chairman and Chief Executive Officer BeachFleischman PC William Boyd Director Emeritus Executive Chairman of the Board Boyd Gaming Corporation Todd Marshall Chairman of the Board Marshall Retail Group Adriane C. McFetridge 2019 Director nominee Director of Engineering – Subscription Platform Netflix James Nave, DVM Owner Tropicana Animal Hospital Howard Gould Managing Partner Carpenter Community Bancfund Michael Patriarca Retired Managing Director Promontory Financial Group Steven Hilton Chairman and Chief Executive Officer Meritage Homes Corporation Donald Snyder Community Leader and Retired Business Executive Marianne Boyd Johnson Executive Vice President and Vice Chairman of the Board Boyd Gaming Corporation Sung Won Sohn, PhD M.V. Smith Professor of Business and Economics California State University CI 48 Board of Directors Executive Leadership 49 Access for Business Western Alliance Bank 1 E. Washington St., Ste. 1400 Phoenix, AZ 85004 (602) 389-3500 Green Valley 2890 N. Green Valley Pkwy. Henderson, NV 89014 (702) 451-0624 Hualapai 1115 S. Hualapai Way Las Vegas, NV 89117 (702) 856-7100 San Francisco 201 Spear St., Ste. 1700 San Francisco, CA 94105 (415) 230-4834 San Francisco 201 Montgomery St. San Francisco, CA 94104 (628) 221-6630 La Mesa 8379 Center Dr. La Mesa, CA 91942 (619) 233-2555 Symphony Towers 750 B St., Ste. 100 San Diego, CA 92101 (619) 233-2200 Lake Mead 7251 W. Lake Mead, Ste. 108 Las Vegas, NV 89128 (702) 240-1734 Seattle 855 South King St., Ste. 800 Seattle, WA 98104 (253) 222-2405 Alliance Association Bank 3033 W. Ray Rd., Ste. 200 Chandler, AZ 85226 (888) 734-4567 Alliance Bank of Arizona CityScape 1 E. Washington St., Ste. 100 Phoenix, AZ 85004 (602) 629-1776 Biltmore 2701 E. Camelback Rd., Ste. 110 Phoenix, AZ 85016 (602) 952-5400 Chandler 3033 W. Ray Rd. Chandler, AZ 85226 (480) 384-3800 Flagstaff 501 E. Butler Ave. Flagstaff, AZ 86001 (928) 214-3400 Gilbert 1907 E. Pecos Rd. Gilbert, AZ 85295 (480) 867-4800 Mesa 1110 E. Baseline Rd. Mesa, AZ 85204 (480) 609-2900 Mesquite 11 Pioneer Blvd. Mesquite, NV 89027 (702) 346-6600 Siena Heights 10199 S. Eastern Ave. Henderson, NV 89052 (702) 940-8500 Bridge Bank San Jose 55 Almaden Blvd., Ste. 100 San Jose, CA 95113 (408) 423-8500 First Independent Bank Kietzke 5335 Kietzke Ln. Reno, NV 89511 (775) 828-2000 Carson City 1818 E. College Pkwy. Carson City, NV 89706 (775) 682-4747 Fallon 2061 W. Williams Ave. Fallon, NV 89406 (775) 423-9586 Atlanta 6 Concourse Pkwy., Ste. 2130 Atlanta, GA 30328 (470) 639-1656 Robb Drive 6290 Sharlands Ave. Reno, NV 89523 (775) 746-3000 Phoenix Plaza 2901 N. Central Ave., Ste. 100 Phoenix, AZ 85012 (602) 629-1700 Boston 28 State St., Ste. 2301 Boston, MA 02109 (617) 995-1310 Scottsdale/Paradise Valley 6263 N. Scottsdale Rd., Ste. 100 Scottsdale, AZ 85250 (480) 998-6500 Costa Mesa 600 Anton Blvd., Ste. 150 Costa Mesa, CA 92626 (949) 438-4000 Sparks Industrial 980 S. McCarran Blvd. Sparks, NV 89431 (775) 358-1300 Sparks Marina 725 Sparks Blvd. Sparks, NV 89434 (775) 358-8400 Tucson Swan 4703 E. Camp Lowell Dr. Tucson, AZ 85712 (520) 784-6000 Tucson Williams Centre 200 S. Craycroft Rd. Tucson, AZ 85711 (520) 322-7700 Bank of Nevada Sahara 2700 W. Sahara Ave. Las Vegas, NV 89102 (702) 248-4200 Aliante 6915 Aliante Pkwy. North Las Vegas, NV 89084 (702) 856-7140 Centennial Hills 8505 W. Centennial Pkwy. Las Vegas, NV 89149 (702) 856-7160 Durango 3985 S. Durango Dr. Las Vegas, NV 89147 (702) 363-5140 Grand Central Parkway 100 City Pkwy., Ste. 120 Las Vegas, NV 89106 (702) 696-6700 Durham 105 S. Mangum St., Ste. 200 Durham, NC 27701 (984) 260-3964 Menlo Park 2735 Sand Hill Rd., Ste. 210 Menlo Park, CA 94025 (650) 276-7670 New York 420 Lexington Ave., Ste. 300 New York, NY 10170 (212) 931-8945 Oakland 1951 Webster St. Oakland, CA 94612 (510) 899-7500 Pleasanton 5820 Stoneridge Mall Rd., Ste. 100 Pleasanton, CA 94588 (925) 249-4900 Reston 12011 Sunset Hills Rd., Ste. 425 Reston, VA 20190 (703) 481-1705 San Diego 4370 La Jolla Village Dr., Ste. 305 San Diego, CA 92122 (858) 523-4686 Torrey Pines Bank Carmel Valley 12220 El Camino Real, Ste. 110 San Diego, CA 92130 (858) 523-4630 Beverly Hills 9355 Wilshire Blvd., Ste. 102 Beverly Hills, CA 90210 (310) 623-8900 Carlsbad 2760 Gateway Rd. Carlsbad, CA 92009 (760) 444-8400 Downtown Los Angeles 601 W. 5th St., Ste. 100 Los Angeles, CA 90071 (213) 362-5200 Downtown San Diego 550 W. C St., Ste. 100 San Diego, CA 92101 (619) 233-2500 Golden Triangle 4350 Executive Dr., Ste. 130 San Diego, CA 92121 (858) 523-4688 Kearny Mesa 9280 Clairemont Mesa Blvd. San Diego, CA 92123 (858) 259-5300 Business Escrow Services 2901 N. Central Ave., Ste. 100 Phoenix, Arizona 85012 (602) 629-1701 Corporate Finance 4640 Admiralty Way, Ste. 500 Marina Del Rey, CA 90292 (213) 362-5213 Equity Fund Resources 2735 Sand Hill Rd., Ste. 210 Menlo Park, CA  94025 (650) 276-7670 Hotel Franchise Finance 1 E. Washington St., Ste. 1400 Phoenix, AZ 85004 (602) 346-7494 Life Sciences Group 4370 La Jolla Village Dr., Ste. 305 San Diego, CA 92122 (858) 523-4686 Mortgage Warehouse Lending 3033 W. Ray Rd., 1st Floor Chandler, AZ 85226 (480) 384-3990 Public and Nonprofit Finance 1 E. Washington St., Ste. 1400 Phoenix, AZ 85004 (602) 389-3500 Renewable Resource Group 55 Almaden Blvd., Ste. 100 San Jose, CA 95113 (408) 606-4846 Resort Finance 1 E. Washington St., Ste. 1400 Phoenix, AZ 85004 (602) 386-2315 Settlement Services 750 B St., Ste. 1960 San Diego, CA 92101 (619) 233-2250 Technology Finance 55 Almaden Blvd., Ste. 100 San Jose, CA 95113 (650) 462-8502 50 Where to Find Us Where to Find Us 51 View Full Report and Video Online walannualreport.com Annual Report 2018One East Washington Street, Suite 1400 Phoenix, Arizona 85004 (602) 389-3500 | westernalliancebank.com Alliance Association Bank, Alliance Bank of Arizona, Bank of Nevada, Bridge Bank, First Independent Bank and Torrey Pines Bank are divisions of Western Alliance Bank. Member FDIC. Western Alliance Bank is the primary subsidiary of Western Alliance Bancorporation. ©2018 Western Alliance Bancorporation 

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