Western Alliance (WAL) in Phoenix reported a drop in quarterly profits largely because of debt valuation adjustments.
The $9.3 billion-asset company's fourth-quarter earnings fell 2% from a year earlier, to $31.4 million. Earnings per share of 36 cents were 3 cents higher than the average estimate of analysts polled by Bloomberg.
The quarter included a $3.7 million tax benefit from the company's purchase of Western Liberty Bancorp and $1.2 million in expenses tied to the acquisition. The company also reported a $1.3 million net gain on other repossessed assets and a $1.3 million net loss from debt valuation adjustments and securities sales. The company also took a $900,000 hit tied to the extinguishment of debt.
Western Alliance posted a $158,000 noninterest loss, compared to $24.5 million in noninterest income a year earlier.
Net interest income rose 16% from a year earlier, to $90 million. Income from loans rose 15% from the fourth quarter of 2012, to $86.9 million. Revenue from investment securities increased significantly. The net interest margin narrowed by 11 points from a year earlier, to 4.44%.
Noninterest expense rose 4% from a year earlier, to $51.1 million, partly because of higher costs from salaries and employee benefits and more legal, professional and directors' fees.
Improved credit quality prompted Western Alliance to cut its loan-loss provision by 63% from a year earlier, to $4.3 million. Net loan chargeoffs fell 84% from the fourth quarter of 2012, to $2.1 million.