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Western Alliance Bancorporation Reports Second Quarter 2022 Financial Results

·26-min read

PHOENIX, July 21, 2022--(BUSINESS WIRE)--Western Alliance Bancorporation (NYSE:WAL):

SECOND QUARTER 2022 FINANCIAL RESULTS

Second Quarter Highlights:

Net income

Earnings per share

PPNR1

Net interest margin

Efficiency ratio1

Book value per

common share

$260.2 million

$2.39

$351.1 million

3.54%

42.8%

$43.07

$36.671, excluding

goodwill and intangibles

CEO COMMENTARY:

"Western Alliance's solid performance in the second quarter of 2022 produced record revenues, PPNR and earnings for the quarter," said Kenneth Vecchione, President and Chief Executive Officer. "Our capital driven business model delivered strong quarterly results, achieving $260.2 million in net income and earnings per share of $2.39, an increase of 10.1% over prior year. Quarterly loan and deposit increases of $7.2 billion and $1.6 billion, respectively, lifted total assets to $66 billion. Quarterly net interest margin of 3.54% increased 22 basis points from prior quarter, driving net interest income higher by 16.8% to $525.0 million. Asset quality remained strong with nonperforming assets to total assets of 0.15%."

Acquisition of Digital Disbursements and AmeriHome Mortgage Company:

On January 25, 2022, the Company completed its acquisition of Digital Settlement Technologies LLC, doing business as Digital Disbursements, a digital payments platform for the class action legal industry. On April 7, 2021, the Company completed its acquisition of Aris Mortgage Holding Company, LLC, the parent company of AmeriHome Mortgage Company, LLC ("AmeriHome"). The Company's results include the financial results of Digital Disbursements and AmeriHome beginning on the acquisition dates noted.

LINKED-QUARTER BASIS

YEAR-OVER-YEAR

FINANCIAL HIGHLIGHTS:

  • Net income of $260.2 million and earnings per share of $2.39, compared to $240.1 million and $2.22, respectively

  • Net income of $260.2 million and earnings per share of $2.39, up 16.3% and 10.1%, from $223.8 million and $2.17, respectively

  • Net revenue of $620.0 million, an increase of 11.6%, or $64.2 million, compared to an increase in non-interest expenses of 8.2%, or $20.3 million

  • Net revenue of $620.0 million, an increase of 22.4%, or $113.5 million, compared to an increase in non-interest expenses of 9.8%, or $24.1 million

  • Pre-provision net revenue1 of $351.1 million, up $43.9 million from $307.2 million

  • Pre-provision net revenue1 of $351.1 million, up $89.4 million from $261.7 million

  • Effective tax rate of 19.6%, compared to 19.5%

  • Effective tax rate of 19.6%, compared to 19.0%

FINANCIAL POSITION RESULTS:

  • HFI loans of $48.4 billion, up $5.3 billion, net of a $1.9 billion HFS to HFI loan transfer, or 52.2% annualized

  • Increase in HFI loans of $16.4 billion, net of a $1.9 billion HFS to HFI loan transfer, or 48.9%

  • Total deposits of $53.7 billion, up $1.6 billion, or 11.9% annualized

  • Increase in total deposits of $11.8 billion, or 28.1%

  • Stockholders' equity of $5.0 billion, down $53 million

  • Increase in stockholders' equity of $924.5 million

LOANS AND ASSET QUALITY:

  • Nonperforming assets (nonaccrual loans and repossessed assets) to total assets of 0.15%, compared to 0.17%

  • Nonperforming assets to total assets of 0.15%, compared to 0.20%

  • Annualized net loan charge-offs to average loans outstanding of 0.01%, compared to approximately 0.00%

  • Annualized net loan charge-offs to average loans outstanding of 0.01%, compared to approximately 0.00%

KEY PERFORMANCE METRICS:

  • Net interest margin of 3.54%, compared to 3.32%

  • Net interest margin of 3.54%, compared to 3.51%

  • Return on average assets and on tangible common equity1 of 1.62% and 25.6%, compared to 1.64% and 23.9%, respectively

  • Return on average assets and on tangible common equity1 of 1.62% and 25.6%, compared to 1.86% and 28.1%, respectively

  • Tangible common equity ratio1 of 6.1%, compared to 6.7%

  • Tangible common equity ratio1 of 6.1%, compared to 7.1%

  • Tangible book value per share1, net of tax, of $36.67, a decrease of 1.2% from $37.13

  • Tangible book value per share1, net of tax, of $36.67, an increase of 11.6% from $32.86

  • Efficiency ratio1 of 42.8%, compared to 44.1%

  • Efficiency ratio1 of 42.8%, compared to 47.5%

1 See reconciliation of Non-GAAP Financial Measures.

Income Statement

Net interest income was $525.0 million in the second quarter 2022, an increase of $75.5 million from $449.5 million in the first quarter 2022, and an increase of $154.5 million, or 41.7%, compared to the second quarter 2021. The increase in net interest income from the first quarter 2022 is due to strong HFI loan growth and a higher rate environment, which drove an increase in yields on interest earning assets and also pushed interest rates higher on deposits and short-term borrowings. HFI loan growth, partially offset by higher interest rates on deposits, drove the increase in net interest income from the second quarter 2021.

The Company recorded a provision for credit losses totaling $27.5 million in the second quarter 2022, an increase of $18.5 million from $9.0 million in the first quarter 2022, compared to a provision release of $14.5 million in the second quarter 2021. The provision for credit losses during the second quarter 2022 is primarily due to loan growth and emerging economic uncertainty.

The Company’s net interest margin in the second quarter 2022 was 3.54%, an increase from 3.32% in the first quarter 2022, and an increase from 3.51% in the second quarter 2021. The higher rate environment drove an increase in net interest margin, with yields on interest earning assets more than offsetting the increase in rates on deposits and short-term borrowings. The increase in net interest margin from the second quarter 2021 was driven by HFI loan growth, partially offset by higher debt and deposit balances coupled with higher rates on deposits.

Non-interest income was $95.0 million for the second quarter 2022, compared to $106.3 million for the first quarter 2022, and $136.0 million for the second quarter 2021. The $11.3 million decrease in non-interest income from the first quarter 2022 was primarily the result of a decrease in net gain on loan origination and sale activities of $9.7 million from decreased gain on sale margins and a small loss on sale of securities in the current quarter of $0.2 million compared to a gain of $6.9 million in the first quarter 2022, which was partially offset by an increase in gain on recovery from credit guarantees of $6.7 million and an increase in loan servicing revenue of $4.3 million. The $41.0 million decrease from the second quarter 2021 was driven by a decrease in net gain on loan origination and sale activities of $104.8 million from lower production volume and gain on sale margins and a $10.0 million loss on fair value adjustments on assets measured at fair value compared to a gain of $3.2 million in the second quarter 2021, partially offset by a $66.2 million increase in loan servicing revenue and a $9.0 million gain on recovery from credit guarantees, which arose from the credit risk transfer transactions undertaken by the Company that transfer first loss exposure to unrelated third parties.

Net revenue was $620.0 million for the second quarter 2022, an increase of $64.2 million, or 11.6%, compared to $555.8 million for the first quarter 2022, and an increase of $113.5 million, or 22.4%, compared to $506.5 million for the second quarter 2021.

Non-interest expense was $268.9 million for the second quarter 2022, compared to $248.6 million for the first quarter 2022, and $244.8 million for the second quarter 2021. The Company’s efficiency ratio1 was 42.8% for the second quarter 2022, compared to 44.1% in the first quarter 2022, and 47.5% for the second quarter 2021. Non-interest expense increased from the first quarter 2022 due to increased deposit costs and loan servicing expenses. The increase in non-interest expense from the second quarter 2021 is attributable to increased legal, professional, and director's fees, deposit and compensation costs, partially offset by lower acquisition and restructuring costs and loan servicing expenses.

Income tax expense was $63.4 million for the second quarter 2022, compared to $58.1 million for the first quarter 2022, and $52.4 million for the second quarter 2021.

Net income was $260.2 million for the second quarter 2022, an increase of $20.1 million from $240.1 million for the first quarter 2022, and an increase of $36.4 million from $223.8 million for the second quarter 2021. Earnings per share was $2.39 for the second quarter 2022, compared to $2.22 for the first quarter 2022, and $2.17 for the second quarter 2021.

The Company views its pre-provision net revenue1 ("PPNR") as a key metric for assessing the Company’s earnings power, which it defines as net revenue less non-interest expense. For the second quarter 2022, the Company’s PPNR1 was $351.1 million, up $43.9 million from $307.2 million in the first quarter 2022, and up $89.4 million from $261.7 million in the second quarter 2021.

The Company had 3,254 full-time equivalent employees and 60 offices at June 30, 2022, compared to 3,170 employees and 60 offices at March 31, 2022, and 3,075 employees and 53 offices at June 30, 2021.

1 See reconciliation of Non-GAAP Financial Measures.

Balance Sheet

HFI loans, net of deferred fees totaled $48.4 billion at June 30, 2022, compared to $41.1 billion at March 31, 2022, and $30.0 billion at June 30, 2021. HFI loan growth of $5.3 billion from the prior quarter excludes a $1.9 billion transfer of government guaranteed early buyout ("EBO") residential loans from HFS to HFI and was driven by increases of $2.9 billion in commercial and industrial, $1.5 billion in residential real estate, and $926 million in CRE non-owner occupied loans. From June 30, 2021, HFI loan growth of $16.4 billion (which excludes $1.9 billion of transferred EBO loans), was primarily driven by residential real estate, commercial and industrial, and CRE non-owner occupied loans which increased $7.7 billion, $6.5 billion, and $2.1 billion, respectively.

The Company's allowance for credit losses on HFI loans consists of an allowance for funded HFI loans and an allowance for unfunded loan commitments. At June 30, 2022, the allowance for loan losses to funded HFI loans ratio was 0.56%, compared to 0.63% at March 31, 2022, and 0.78% at June 30, 2021. The allowance for credit losses, which includes the allowance for unfunded loan commitments, to funded HFI loans ratio was 0.68% at June 30, 2022, compared to 0.73% at March 31, 2022, and 0.88% at June 30, 2021. The decrease in the allowance for credit loss ratios from the prior quarter and the prior year is due to loan mix changes resulting from growth in low loss segments. The Company is a party to credit linked note transactions, which effectively transfers a portion of the risk of loan losses on reference pools of loans to the purchasers of the notes. As of June 30, 2022 and March 31, 2022, the Company is protected from credit losses on reference pools of loans totaling $11.1 billion and $5.4 billion, respectively, under these transactions. However, as these note transactions are considered to be free standing credit enhancements, the allowance for credit losses cannot be reduced by the expected credit losses that may be mitigated by these notes. Accordingly, the allowance for loan and credit losses ratios as of June 30, 2022 and March 31, 2022 include an allowance of $19 million and $10 million, respectively, related to these pools of loans. The allowance for credit losses to funded HFI loans ratio, adjusted to take into consideration the transfer of risk associated with the credit linked note transactions, was 0.88% at June 30, 2022 and 0.84% at March 31, 2022.

Deposits totaled $53.7 billion at June 30, 2022, an increase of $1.6 billion from $52.2 billion at March 31, 2022, and an increase of $11.8 billion from $41.9 billion at June 30, 2021. By deposit type, the increase from the prior quarter is attributable to an increase of $760 million from certificates of deposits, $473 million from savings and money market accounts, $201 million from non-interest bearing demand deposits, and $119 million from interest bearing demand deposits. From June 30, 2021, deposits increased across all deposit types, with increases in interest-bearing demand deposits of $4.2 billion, non-interest bearing demand deposits of $3.6 billion, savings and money market accounts of $3.2 billion, and certificates of deposit of $761 million. Non-interest bearing deposits were $23.7 billion at June 30, 2022, compared to $23.5 billion at March 31, 2022, and $20.1 billion at June 30, 2021.

The table below shows the Company's deposit types as a percentage of total deposits:

Jun 30, 2022

Mar 31, 2022

Jun 30, 2021

Non-interest bearing

44.2

%

45.1

%

48.0

%

Savings and money market

35.4

35.6

37.7

Interest-bearing demand

15.6

15.8

10.0

Certificates of deposit

4.8

3.5

4.3

The Company’s ratio of HFI loans to deposits was 90.0% at June 30, 2022, compared to 78.8% at March 31, 2022, and 71.6% at June 30, 2021.

Borrowings were $5.2 billion at June 30, 2022, $833 million at March 31, 2022, and $615 million at June 30, 2021. The increase in borrowings from March 31, 2022 is due primarily to an increase in short-term borrowings of $3.9 billion and the issuance of credit linked notes totaling $486 million, net of $8 million in issuance costs, during the quarter. The increase in borrowings from June 30, 2021 is due to the increases described above and the issuance of $225 million in credit linked notes, net of issuance costs, during the second half of 2021.

Qualifying debt totaled $891 million at June 30, 2022, compared to $893 million at March 31, 2022, and $1.1 billion at June 30, 2021. The decrease in qualifying debt from June 30, 2021 is primarily related to $250 million in subordinated debt redemptions during 2021.

Stockholders’ equity was $5.0 billion at June 30, 2022, compared to $5.0 billion at March 31, 2022, and $4.0 billion at June 30, 2021. Stockholders' equity remained consistent quarter over quarter as net income was offset by dividends to shareholders and unrealized fair value losses of approximately $285 million on the Company's available for sale securities, which are recorded in other comprehensive income, net of tax. A cash dividend of $0.35 per share was paid to common shareholders on May 27, 2022, totaling $37.9 million, and a cash dividend of $0.27 per depository share was paid to preferred shareholders on June 30, 2022, totaling $3.2 million. The increase in stockholders' equity from June 30, 2021 is primarily a function of net income, issuance of preferred stock, and sales of common stock under the Company's ATM program, partially offset by dividends to shareholders and losses on available for sale securities.

At June 30, 2022, tangible common equity, net of tax1, was 6.1% of tangible assets1 and total capital was 11.9% of risk-weighted assets. The Company’s tangible book value per share1 was $36.67 at June 30, 2022, a decrease of 1.2% from $37.13, and up 11.6% from $32.86 at June 30, 2021. The decrease in tangible book value per share from March 31, 2022 is attributable to fair value marks on the Company's available for sale securities, which are recorded in other comprehensive income, net of tax.

Total assets increased 9.0% to $66.1 billion at June 30, 2022, from $60.6 billion at March 31, 2022, and increased 34.6% from $49.1 billion at June 30, 2021. The increase in total assets from March 31, 2022 was driven by continued organic loan and deposit growth. The increase in total assets from June 30, 2021 was also driven by continued organic loan growth.

1 See reconciliation of Non-GAAP Financial Measures.

Asset Quality

Provision for credit losses totaled $27.5 million for the second quarter 2022, compared to $9.0 million for the first quarter 2022, and a recovery of credit losses of $14.5 million for the second quarter 2021. Net loan charge-offs in the second quarter 2022 were $1.4 million, or 0.01% of average loans (annualized), compared to $0.2 million, or approximately 0.00%, in the first quarter 2022, and $0.1 million, or approximately 0.00%, in the second quarter 2021.

Nonaccrual loans decreased $6 million to $85 million during the quarter and decreased $12 million from June 30, 2021. Loans past due 90 days and still accruing interest were zero (excluding government insured loans of $555 million) at June 30, 2022, compared to zero at March 31, 2022 and June 30, 2021. Loans past due 30-89 days and still accruing interest totaled $117 million (excluding government insured loans of $161 million) at June 30, 2022, an increase from $58 million at March 31, 2022, and an increase from $10 million at June 30, 2021.

Repossessed assets totaled $12 million at June 30, 2022, flat from March 31, 2022, and an increase of $8 million from $4 million at June 30, 2021. Classified assets totaled $346 million at June 30, 2022, a decrease of $19 million from $365 million at March 31, 2022, and an increase of $107 million from $239 million at June 30, 2021.

The ratio of classified assets to Tier 1 capital plus the allowance for credit losses, a common regulatory measure of asset quality, was 6.7% at June 30, 2022, compared to 7.4% at March 31, 2022, and 6.4% at June 30, 2021.

1 See reconciliation of Non-GAAP Financial Measures.

Segment Highlights

The Company's reportable segments are aggregated with a focus on products and services offered and consist of three reportable segments:

  • Commercial segment: provides commercial banking and treasury management products and services to small and middle-market businesses, specialized banking services to sophisticated commercial institutions and investors within niche industries, as well as financial services to the real estate industry.

  • Consumer Related segment: offers both commercial banking services to enterprises in consumer-related sectors and consumer banking services, such as residential mortgage banking and beginning on January 25, 2022 includes the financial results of Digital Disbursements.

  • Corporate & Other segment: consists of the Company's investment portfolio, Corporate borrowings and other related items, income and expense items not allocated to our other reportable segments, and inter-segment eliminations.

Key management metrics for evaluating the performance of the Company's Commercial and Consumer Related segments include loan and deposit growth, asset quality, and pre-tax income.

The Commercial segment reported an HFI loan balance of $29.4 billion at June 30, 2022, an increase of $3.7 billion during the quarter, and an increase of $8.8 billion during the last twelve months. Deposits for the Commercial segment totaled $29.5 billion at June 30, 2022, a decrease of $651 million during the quarter, and an increase of $3.2 billion during the last twelve months.

Pre-tax income for the Commercial segment was $239.9 million for the three months ended June 30, 2022, an increase of $3.1 million from the three months ended March 31, 2022, and an increase of $30.8 million from the three months ended June 30, 2021. For the six months ended June 30, 2022, the Commercial segment reported total pre-tax income of $476.6 million, an increase of $46.6 million compared to the six months ended June 30, 2021.

The Consumer Related segment reported an HFI loan balance of $18.9 billion at June 30, 2022, an increase of $3.6 billion during the quarter, and an increase of $9.5 billion during the last twelve months. The Consumer Related segment also has loans held for sale, initially acquired as part of the AmeriHome acquisition, of $3.0 billion at June 30, 2022, a decrease of $1.8 billion during the quarter. Deposits for the Consumer Related segment totaled $19.7 billion, an increase of $1.2 billion during the quarter, and an increase of $4.8 billion during the last twelve months.

Pre-tax income for the Consumer Related segment was $160.1 million for the three months ended June 30, 2022, an increase of $33.2 million from the three months ended March 31, 2022, and an increase of $46.5 million from the three months ended June 30, 2021. Pre-tax income for the Consumer Related segment for the six months ended June 30, 2022 totaled $287.1 million, an increase of $102.0 million compared to the six months ended June 30, 2021.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live webcast to discuss its second quarter 2022 financial results at 12:00 p.m. ET on Friday, July 22, 2022. Participants may access the call by dialing 1-888-396-8049 and using the conference ID 57514725 or via live audio webcast using the website link https://event.on24.com/wcc/r/3825847/3012FB8A58AE72C7E9C5700F7983D54D. The webcast is also available via the Company’s website at www.westernalliancebancorporation.com. Participants should log in at least 15 minutes early to receive instructions. The call will be recorded and made available for replay after 3:00 p.m. ET July 22nd through 11:00 p.m. ET August 22nd by dialing 1-877-674-7070, using passcode 514725#.

Reclassifications

Certain amounts in the Consolidated Income Statements for the prior periods have been reclassified to conform to the current presentation. The reclassifications have no effect on net income or stockholders’ equity as previously reported.

Use of Non-GAAP Financial Information

This press release contains both financial measures based on GAAP and non-GAAP based financial measures, which are used where management believes them to be helpful in understanding the Company’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Cautionary Note Regarding Forward-Looking Statements

This release contains forward-looking statements that relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Examples of forward-looking statements include, among others, statements we make regarding our expectations with regard to our business, financial and operating results, future economic performance and dividends. The forward-looking statements contained herein reflect our current views about future events and financial performance and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from historical results and those expressed in any forward-looking statement. Some factors that could cause actual results to differ materially from historical or expected results include, among others: the risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and the Company's subsequent Quarterly Reports on Form 10-Q, each as filed with the Securities and Exchange Commission; the potential adverse effects of unusual and infrequently occurring events such as the COVID-19 pandemic and any governmental or societal responses thereto; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; the impact on financial markets from geopolitical conflicts such as the war between Russia and Ukraine; inflation, interest rate, market and monetary fluctuations; increases in competitive pressures among financial institutions and businesses offering similar products and services; higher defaults on our loan portfolio than we expect; changes in management’s estimate of the adequacy of the allowance for credit losses; legislative or regulatory changes or changes in accounting principles, policies or guidelines; supervisory actions by regulatory agencies which may limit our ability to pursue certain growth opportunities, including expansion through acquisitions; additional regulatory requirements resulting from our continued growth; management’s estimates and projections of interest rates and interest rate policy; the execution of our business plan; and other factors affecting the financial services industry generally or the banking industry in particular.

Any forward-looking statement made by us in this release is based only on information currently available to us and speaks only as of the date on which it is made. We do not intend and disclaim any duty or obligation to update or revise any industry information or forward-looking statements, whether written or oral, that may be made from time to time, set forth in this press release to reflect new information, future events or otherwise.

About Western Alliance Bancorporation

With more than $60 billion in assets, Western Alliance Bancorporation (NYSE:WAL) is one of the country’s top-performing banking companies. The company is #2 best-performing of the 50 largest public U.S. banks in the S&P Global Market Intelligence listing for 2021, ranks high year after year on the Forbes list of "America’s Best Banks" and was named #1 Best Emerging Regional Bank per Bank Director’s 2022 RankingBanking study. Its primary subsidiary, Western Alliance Bank, Member FDIC, helps clients realize their ambitions with teams of experienced bankers and mortgage experts who deliver superior service and a full spectrum of customized loan, deposit and treasury management capabilities, including 24/7 funds transfer and other blockchain-based offerings. Business clients also benefit from a powerful array of specialized financial services that provide strong expertise and tailored solutions for a wide variety of industries and sectors. Serving clients across the country wherever business happens, Western Alliance Bank operates individual, full-service banking brands and has offices in key markets nationwide. For more information, visit westernalliancebank.com.

Western Alliance Bancorporation and Subsidiaries

Summary Consolidated Financial Data

Unaudited

Selected Balance Sheet Data:

As of June 30,

2022

2021

Change %

(in millions)

Total assets

$

66,055

$

49,069

34.6

%

Loans held for sale

3,010

4,465

(32.6

)

HFI loans, net of deferred fees

48,365

30,027

61.1

Investment securities

8,802

7,845

12.2

Total deposits

53,712

41,921

28.1

Qualifying debt

891

1,140

(21.8

)

Stockholders' equity

4,959

4,035

22.9

Tangible common equity, net of tax (1)

3,971

3,426

15.9

Selected Income Statement Data:

For the Three Months Ended June 30,

For the Six Months Ended June 30,

2022

2021

Change %

2022

2021

Change %

(in millions, except per share data)

(in millions, except per share data)

Interest income

$

579.6

$

398.5

45.4

%

$

1,064.1

$

732.6

45.2

%

Interest expense

54.6

28.0

95.0

89.6

44.8

NM

Net interest income

525.0

370.5

41.7

974.5

687.8

41.7

Provision for (recovery of) credit losses

27.5

(14.5

)

NM

36.5

(46.9

)

NM

Net interest income after provision for credit losses

497.5

385.0

29.2

938.0

734.7

27.7

Non-interest income

95.0

136.0

(30.1

)

201.3

155.7

29.3

Non-interest expense

268.9

244.8

9.8

517.5

379.8

36.3

Income before income taxes

323.6

276.2

17.2

621.8

510.6

21.8

Income tax expense

63.4

52.4

21.0

121.5

94.3

28.8

Net income

260.2

223.8

16.3

500.3

416.3

20.2

Dividends on preferred stock

3.2

6.4

Net income available to common stockholders

$

257.0

$

223.8

14.8

$

493.9

$

416.3

18.6

Diluted earnings per common share

$

2.39

$

2.17

10.1

$

4.61

$

4.07

13.3

(1)

See Reconciliation of Non-GAAP Financial Measures.

NM

Changes +/- 100% are not meaningful.

Western Alliance Bancorporation and Subsidiaries

Summary Consolidated Financial Data

Unaudited

Common Share Data:

At or For the Three Months Ended June 30,

For the Six Months Ended June 30,

2022

2021

Change %

2022

2021

Change %

Diluted earnings per common share

$

2.39

$

2.17

10.1

%

$

4.61

$

4.07

13.3

%

Book value per common share

43.07

38.70

11.3

Tangible book value per common share, net of tax (1)

36.67

32.86

11.6

Average common shares outstanding

(in millions):

Basic

107.3

102.7

4.5

106.7

101.8

4.8

Diluted

107.7

103.4

4.2

107.1

102.4

4.6

Common shares outstanding

108.3

104.2

3.9

Selected Performance Ratios:

Return on average assets (2)

1.62

%

1.86

%

(12.9

) %

1.63

%

1.89

%

(13.8

) %

Return on average tangible common equity (1, 2)

25.6

28.1

(8.9

)

24.8

26.2

(5.4

)

Net interest margin (2)

3.54

3.51

0.9

3.44

3.45

(0.3

)

Efficiency ratio - tax equivalent basis (1)

42.8

47.5

(9.9

)

43.4

44.2

(1.8

)

Loan to deposit ratio

90.0

71.6

25.7

Asset Quality Ratios:

Net charge-offs to average loans outstanding (2)

0.01

%

0.00

%

NM

0.01

%

0.01

%

%

Nonaccrual loans to funded HFI loans

0.18

0.32

(43.8

)

Nonaccrual loans and repossessed assets to total assets

0.15

0.20

(25.0

)

Allowance for loan losses to funded HFI loans

0.56

0.78

(28.2

)

Allowance for loan losses to nonaccrual HFI loans

322

242

33.2

Capital Ratios:

Jun 30, 2022

Mar 31, 2022

Jun 30, 2021

Tangible common equity (1)

6.1

%

6.7

%

7.1

%

Common Equity Tier 1 (3)

9.0

9.0

9.2

Tier 1 Leverage ratio (3)

7.6

8.0