WESTERN ALLIANCE BANCORPORATION - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - WESTERN ALLIANCE BANCORPORATION 8-K - WESTERN ALLIANCE BANCORPORATION	a6583825.htm
EX-99.2 - EXHIBIT 99.2 - WESTERN ALLIANCE BANCORPORATION	a6583825ex99-2.htm

Exhibit 99.1

FOR IMMEDIATE RELEASE	CONTACT:	Dale Gibbons
January 26, 2011		CFO
		602-952-5476

Western Alliance Reports Results for the Fourth Quarter 2010

Loan Growth Continuing

Core Earnings Momentum Maintained

Significant Drop In Charge-offs And Provision

Phoenix – January 26, 2011 -- Western Alliance Bancorporation (NYSE:WAL) announced today its financial results for the fourth quarter 2010.

Fourth Quarter 2010 Highlights:

Pre-tax, pre-provision operating earnings of $25.0 million, up 1.6% from $24.6 million in third quarter 2010 and 44.5% from $17.3 million in fourth quarter 20091

Record net interest income of $60.9 million, compared to $59.5 million in prior quarter and $51.8 million in same quarter last year

Net interest margin of 4.26%, compared to 4.32% in third quarter and 3.84% in fourth quarter last year

Nonperforming assets (nonaccrual loans and repossessed assets) of 3.6% of total assets, compared to 3.9% in third quarter 2010 and 4.1% in fourth quarter 2009

Total watch and classified loans (including nonaccrual) of $452 million at December 31, 2010, compared to $491 million at September 30, 2010 and $701 million at December 31, 2009

Provision for credit losses of $18.4 million, compared to $23.0 million in third quarter and $40.8 million in fourth quarter last year

Net loan charge-offs of $15.9 million, down from $24.8 million for the third quarter and $36.4 million in fourth quarter last year

Net loss of $10.8 million, including pre-tax loss on repossessed asset valuations/sales of $13.0 million and mark-to-market charge from write-up of our junior subordinated debt of $6.7 million and net $0.4 million loss for all assets/liabilities measured at fair value in 2010

Diluted net loss per common share of $0.17 compared to net loss of $0.01 for the third quarter of 2010 and $0.41 net loss for the fourth quarter 2009

Tier I Leverage capital of 9.5% and Total Risk-Based Capital ratio of 13.2%, compared to 9.3% and 14.4% a year ago

Consolidated its banking subsidiaries from five to three

1 See Reconciliation of Non-GAAP Financial Measures beginning on page 16

Financial Performance

“2010 culminated with Western Alliance well along the road to recovery from the global recession,” said Robert Sarver, Chairman and Chief Executive Officer of Western Alliance Bancorporation. “We had record net interest income, expanded our interest margin and improved our operating efficiency. Each of the leading indicators of future non-performing assets of delinquent, watch and classified loans declined every quarter last year, which resulted in our credit loss provision dropping by more than one third from 2009. As additions to impaired assets have slowed and property valuations stabilize, we expect more modest charges in the future than the losses on repossessed real estate we have recently incurred. Continuing declining credit costs in 2011, against the backdrop of our strong and growing operating franchise, will result in increased earnings power and a positive return to shareholders.”

Ken Vecchione, President and Chief Operating Officer, added, “The fourth quarter of 2010 marked our sixth consecutive increase in our pre-tax, pre-provision income, up more than 50 percent since 2009. Our operating efficiency ratio dropped 8 points to 62 percent during the past year, which we expect to continue as we see continued revenue growth and little expense increase on the horizon, in part benefiting from cost efficiencies we will soon realize from the bank charter consolidations we completed at the end of 2010.1 During 2010 we demonstrated our ability to grow loans and deposits, thus improving our franchise value in the face of a difficult economic environment.” Mr. Vecchione also noted, “Net charge-offs for the fourth quarter declined 36% versus the prior quarter and provision for credit losses dropped 20% quarter to quarter.”

Western Alliance Bancorporation reported net loss of $10.8 million in the fourth quarter 2010, including a net loss from sales/valuation of repossessed assets of $13 million, a net loss from mark to market adjustments on assets/liabilities held at fair value of $6.7 million, and a loss on discontinued operations net of tax of $0.7 million.

The Company reported net loss per common share of $0.17 in the fourth quarter 2010. The loss included $0.10 loss from sales/valuations of repossessed assets after tax, a net loss from mark to market adjustments of $0.05 after tax, and a loss from discontinued affinity credit card operations held for sale net of tax of $0.01.

Total loans increased $67 million to $4.24 billion at December 31, 2010 from $4.17 billion on September 30, 2010. This increase was driven by growth in commercial and industrial and commercial real estate loans; partially offset by reductions in construction and land loans and residential real estate loans. Geographically, loans outstanding at our Las Vegas, Nevada affiliate decreased by $25 million and increased by $92 million at our other affiliates. For the full year, loans increased $161 million.

Total deposits increased $10 million to $5.34 billion at December 31, 2010 from $5.33 billion at September 30, 2010, with significant growth in non-interest bearing demand, time certificates of deposit and money market/savings accounts, largely offset by a decline in interest bearing demand deposits. Deposits increased $616 million from December 31, 2009.

Income Statement

Net interest income increased 2.4 percent to $60.9 million in the fourth quarter 2010 from $59.5 million in the third quarter 2010 and 17.6 percent compared to the fourth quarter 2009, propelled by both reductions in cost of funds and increases in asset yields. The net interest margin in the fourth quarter 2010 was 4.26 percent compared to 4.32 percent in the third quarter 2010 and 3.84 percent in the fourth quarter of 2009.

1 See reconciliation of Non-GAAP Financial Measures beginning on page 16

Operating non-interest income was $6.0 million for the fourth quarter 2010. This performance was a decrease from $7.7 million for the same period in 2009 and slight decrease from $6.3 million for the third quarter of 2010, resulting from the disposition of certain asset management businesses.1

Net revenue was $66.9 million for the fourth quarter 2010, an increase of 1.7 percent from $65.8 million for the third quarter of 2010 and 12.4 percent from net revenue of $59.5 million for the fourth quarter 2009.1

Operating non-interest expense was $41.9 million for the fourth quarter 2010, compared to $42.1 million for the same period in 2009.1 For the third quarter 2010, operating non-interest expense was $41.3 million. The operating efficiency ratio was 62 percent for the fourth quarter 2010, compared to 71 percent for the fourth quarter 2009.1 The Company had 908 full-time equivalent employees at December 31, 2010, compared to 930 one year ago.

A key performance metric for the Company is its pre-tax, pre-provision operating earnings, which it defines as net revenue less its operating non-interest expense.1 For the fourth quarter 2010, the Company’s performance was $25.0 million, compared to $24.6 million in the third quarter 2010 and $17.3 million in the fourth quarter 2009.1

The provision for credit losses was $18.4 million for the fourth quarter 2010 compared to $23.0 million for the third quarter 2010 and $40.8 million for the fourth quarter 2009. Nonaccrual loans and repossessed assets were $225 million or 3.6 percent of total assets at December 31, 2010, compared with $241 million or 3.9 percent of total assets at September 30, 2010 and $237 million or 4.1 percent of total assets at December 31, 2009. Net loan charge-offs in the fourth quarter 2010 were $15.9 million or 1.52 percent of average loans (annualized), compared to $24.8 million or 2.41 percent of average loans (annualized) for the third quarter 2010 and $36.4 million or 3.68% of average loans (annualized) for the fourth quarter 2009. Loans past due 90 days and still accruing totaled $1.5 million at December 31, 2010, down from $5.7 million at September 30, 2010 and down from $5.5 million at December 31, 2009. Loans past due 30-89 days totaled $18.2 million at quarter end, down from $20.4 million at September 30, 2010 and down from $50.4 million at December 31, 2009. Classified assets to Tier I capital plus allowance for credit losses, a common regulatory measure of asset quality improved to 52 percent at December 31, 2010 from 74 percent one year ago.1

Net loss on sales and valuation of repossessed assets (primarily other real estate) was $13.0 million for the fourth quarter 2010 compared to $4.9 million in the prior quarter. Of the Company’s $107.7 million in repossessed assets, 67 percent were new or re-appraised during the fourth quarter. For the fourth quarter 2010, mark-to-market losses were $6.7 million due to an increase in the liability for junior subordinated debt issued by the Company as credit spreads narrowed. At December 31, 2010, junior subordinated debt was valued at $43 million. Mark-to-market losses for the third quarter 2010 were $0.2 million.

At year end, the Company merged its Alta Alliance Bank subsidiary into Torrey Pines Bank and its First Independent Bank of Nevada subsidiary into Alliance Bank of Arizona and renamed the subsidiary Western Alliance Bank. The Company incurred $1.7 million in merger charges related to these transactions.

Balance Sheet

Gross loans totaled $4.24 billion at December 31, 2010, an increase of $67 million from September 30, 2010 and an increase of $161 million from $4.08 billion at December 31, 2009. At December 31, 2010 the allowance for credit losses was 2.61 percent of total loans up from 2.59 percent at September 30, 2010 and down from 2.66 percent at December 31, 2009.

Deposits totaled $5.34 billion at December 31, 2010, an increase of $10 million from $5.33 billion at September 30, 2010 and an increase of $616 million from $4.72 billion at December 31, 2009.

1 See Reconciliation of Non-GAAP Financial Measures beginning on page 16

Non-interest bearing deposits increased by $21.6 million to $1.44 billion at December 31, 2010 from September 30, 2010 and increased $286.3 million from $1.16 billion at December 31, 2009. Non-interest bearing deposits comprised 27 percent of total deposits at December 31, 2010, compared to 24.5 percent a year ago.

At December 31, 2010 the Company’s loans were 79.4 percent of deposits, compared to 86.4 percent one year earlier and 78.3 percent at September 30, 2010. Borrowings, including junior subordinated debt totaled $116 million at December 31, 2010, down $15.8 million from one year earlier, and up $6.7 million for the quarter as a result of the junior subordinated debt valuation adjustment.

Stockholders’ equity decreased to $602.2 million at December 31, 2010 from $619.8 million at September 30, 2010. At December 31, 2010, tangible common equity was 7 percent of tangible assets1 and total risk-based capital was 13.2 percent of risk-weighted assets.

Total assets increased 7.7 percent to $6.19 billion at December 31, 2010 from $5.75 billion at December 31, 2009 and increased slightly from $6.18 billion at September 30, 2010.

Operating Unit Highlights

As of December 31, 2010, the Company merged its Alta Alliance Bank subsidiary into its Torrey Pines Bank subsidiary, and its First Independent Bank of Nevada subsidiary into its Alliance Bank of Arizona subsidiary. As part of the latter merger, Alliance Bank of Arizona was renamed Western Alliance Bank doing business as Alliance Bank of Arizona and First Independent Bank. As a result of the mergers and recent subsidiary sales the Company has changed its reportable operating segments. The new structure is segmented by bank entity as “Bank of Nevada”, “Western Alliance Bank”, “Torrey Pines Bank” and “Other” which includes Western Alliance Bancorporation, Western Alliance Equipment Finance, Shine Investment Advisory Services, and discontinued operations. Prior period data has been restated to reflect this change.

Bank of Nevada banking operations reported that loans declined $25 million during the fourth quarter and declined $158 million during the last 12 months to $1.91 billion at December 31, 2010. Deposits decreased $19 million since September 30, 2010 and increased $184 million over the last twelve months to $2.39 billion. Net loss for our Bank of Nevada was $5.8 million during the fourth quarter 2010, compared with a net loss of $6.9 million for the third quarter of 2010 and $12.7 million during the fourth quarter 2009.

Western Alliance Bank reported loan growth of $38 million during the fourth quarter 2010 and an increase of $180 million during the last 12 months to $1.31 billion. Deposits decreased $60 million in the fourth quarter and increased $231 million during the last 12 months to $1.67 billion. Net income for Western Alliance Bank was $3.6 million during the fourth quarter 2010 compared with net income of $4.3 million during the third quarter of 2010 and a net loss of $4.0 million during the fourth quarter 2009.

Our Torrey Pines Bank operations reported that loans increased $54 million during the fourth quarter 2010 and increased $189 million during the last 12 months to $1.06 billion. Deposits increased $49 million and $200 million to $1.28 billion during the same periods, respectively. Net income for Torrey Pines Bank was $3.2 million during the fourth quarter 2010 compared with a net income of $4.0 million for the third quarter of 2010 and net loss of $1.6 million during the fourth quarter 2009.

Attached to this press release is summarized financial information for the quarter and year to date ended December 31, 2010.

Conference Call and Webcast

Western Alliance Bancorporation will host a conference call and live audio webcast to discuss its fourth quarter 2010 financial results at 11.00 a.m. ET on Thursday, January 27, 2011. Participants may access the call by dialing 1-866-843-0890 and using passcode: 1271738 or via live audio webcast using the website link: http://www.talkpoint.com/viewer/starthere.asp?Pres=133937. The webcast is also available via our website at www.westernalliancebancorp.com. Participants should log in at least 15 minutes early to receive instructions. The call will be recorded and made available for replay after 2:00 p.m. ET January 27 until 9 a.m. ET February 17th by dialing 1-877-344-7529 using the pass code 447485.

About Western Alliance Bancorporation

Western Alliance Bancorporation is the parent company of Bank of Nevada, Western Alliance Bank doing business as Alliance Bank of Arizona and First Independent Bank, Torrey Pines Bank, and Shine Investment Advisory Services. These dynamic organizations provide a broad array of deposit and credit services to clients in Nevada, Arizona and California, and investment services in Colorado. Staffed with experienced financial professionals, these organizations deliver a broader product array and larger credit capacity than community banks, yet are empowered to be more responsive to customers' needs than larger institutions. Additional investor information can be accessed on the Investor Relations page of the company's website, www.westernalliancebancorp.com.

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. 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: factors listed in the Form 10-K as filed with the Securities and Exchange Commission; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; 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; 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.

We do not intend and disclaim any duty or obligation to update or revise any industry information or forward-looking statements set forth in this press release to reflect new information, future events or otherwise.

This press release contains both financial measures based on accounting principles generally accepted in the United States (“GAAP”) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding Western Alliance Bancorporation’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconcilement 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.

Western Alliance Bancorporation and Subsidiaries
Summary Consolidated Financial Data
Unaudited
	At or for the Three Months									For the Twelve Months
	Ended December 31,									Ended December 31,
	2010			2009			Change %			2010			2009			Change %
	(in thousands, except per share data)
Selected Balance Sheet Data:
(dollars in millions)
Total assets	$	6,193.9		$	5,753.3			7.7	%
Loans, net of deferred fees		4,240.5			4,079.6			3.9
Securities and money market investments		1,273.1			864.8			47.2
Federal funds sold		0.9			3.5			(74.3	)
Total deposits		5,338.4			4,722.1			13.1
Borrowings		73.0			29.4			148.3
Junior subordinated and subordinated debt		43.0			102.4			(58.0	)
Stockholders' equity		602.2			575.7			4.6

Selected Income Statement Data:
(dollars in thousands)
Interest income	$	72,374		$	67,813			6.7	%	$	281,813		$	276,023			2.1	%
Interest expense		11,463			16,025			(28.5	)		49,260			73,734			(33.2	)
Net interest income		60,911			51,788			17.6			232,553			202,289			15.0
Provision for loan losses		18,384			40,792			(54.9	)		93,211			149,099			(37.5	)
Net interest income after provision for credit losses		42,527			10,996			286.7			139,342			53,190			162.0
Non-interest income		(720	)		4,269			(116.9	)		46,836			4,435			956.1
Non-interest expense		56,545			51,320			10.2			196,758			242,977			(19.0	)
Loss from continuing operations
before income taxes		(14,738	)		(36,055	)		(59.1	)		(10,580	)		(185,352	)		(94.3	)
Income tax benefit		(4,580	)		(10,258	)		(55.4	)		(6,410	)		(38,453	)		(83.3	)
Loss from continuing operations		(10,158	)		(25,797	)		(60.6	)		(4,170	)		(146,899	)		(97.2	) %
Loss on discontinued operations, net		(657	)		(1,115	)		(41.1	)		(3,025	)		(4,507	)
Net loss	$	(10,815	)	$	(26,912	)		(59.8	) %	$	(7,195	)	$	(151,406	)
Diluted net loss from continuing operations	$	(0.16	)	$	(0.39	)				$	(0.19	)	$	(2.66	)
Diluted net loss from discontinued operations, net of tax	$	(0.01	)	$	(0.02	)				$	(0.04	)	$	(0.08	)
Diluted net loss per common share	$	(0.17	)	$	(0.41	)		(58.5	) %	$	(0.23	)	$	(2.74	)		(91.7	) %

Common Share Data:
Diluted net income (loss) per common share	$	(0.17	)	$	(0.41	)		(58.5	) %	$	(0.23	)	$	(2.74	)		(91.7	) %
Book value per common share	$	5.77		$	6.18			(6.6	) %
Tangible book value per share, net of tax (1)	$	5.35		$	5.66			(5.5	) %
Average shares outstanding (in thousands):
Basic		80,522			71,788			12.2			75,083			58,836			27.6
Diluted		80,522			71,788			12.2			75,083			58,836			27.6
Common shares outstanding		81,669			72,504			12.6

(1) See Reconciliation of Non-GAAP Financial Measures

Western Alliance Bancorporation and Subsidiaries
Summary Consolidated Financial Data (continued)
Unaudited
	At or for the Three Months									For the Twelve Months
	Ended December 31,									Ended December 31,
	2010			2009			Change %			2010			2009			Change %
	(in thousands, except per share data)
Selected Performance Ratios:
Return on average assets (1)		(0.69	) %		(1.83	) %		(62.3	) %		(0.12	) %		(2.72	) %		(95.6	) %
Return on average stockholders' equity (1)		(6.85	)		(17.57	)		(61.0	)		(1.20	)		(25.83	)		(95.4	)
Net interest margin (1)		4.26			3.84			10.9			4.23			3.97			6.5
Net interest spread		3.97			3.45			15.1			3.92			3.52			11.4
Efficiency ratio - tax equivalent basis (2)		62.19			70.57			(11.9	)
Loan to deposit ratio		79.43			86.39			(8.1	)

Capital Ratios:
Tangible equity (2)		9.1	%		9.3	%		(1.9	) %
Tangible common equity (2)		7.0			7.1			(0.9	)
Tier one common equity (2)		8.5			8.2			3.6
Tier 1 Leverage ratio (3)		9.5			9.3			2.2
Tier 1 Risk Based Capital (3)		12.0			11.8			1.7
Total Risk Based Capital (3)		13.2			14.4			(8.3	)

Asset Quality Ratios:
Net charge-offs to average loans outstanding (1)		1.52	%		3.68	%		(58.7	) %		2.22	%		3.24	%		(31.5	) %
Nonaccrual loans to gross loans		2.76			3.77			(26.8	)
Nonaccrual loans and repossessed assets to total assets		3.63			4.12			(11.9	)
Loans past due 90 days and still accruing to total loans		0.03			0.14			(78.6	)
Allowance for credit losses to loans		2.61			2.66			(1.9	)
Allowance for credit losses to nonaccrual loans		94.62			70.67			33.9

(1) Annualized for the three and twelve month periods ended December 31, 2010 and 2009.
(2) See Reconciliation of Non-GAAP Financial Measures.
(3) Capital ratios are preliminary until Call Reports are filed.

Western Alliance Bancorporation and Subsidiaries
Condensed Consolidated Statements of Operations
Unaudited	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2010			2009			2010			2009
Interest income:	(dollars in thousands)
Loans	$	64,985		$	60,532		$	255,626		$	248,098
Investment securities		7,054			6,621			24,732			26,689
Federal funds sold and other		335			660			1,455			1,236
Total interest income		72,374			67,813			281,813			276,023
Interest expense:
Deposits		8,652			13,785			41,329			61,905
Customer repurchase agreements		65			466			538			3,629
Borrowings		2,032			526			3,745			3,234
Junior subordinated and subordinated debt		714			1,248			3,648			4,966
Total interest expense		11,463			16,025			49,260			73,734
Net interest income		60,911			51,788			232,553			202,289
Provision for credit losses		18,384			40,792			93,211			149,099
Net interest income after provision for credit losses		42,527			10,996			139,342			53,190
Non-interest income
Unrealized (losses) gains on assets/liabilities measured at fair value,net		(6,710	)		(1,874	)		(369	)		3,631
Securities impairment charges		(12	)		(1,748	)		(1,186	)		(43,784	)
Gains on sales of investment securities, net		-			167			19,757			16,100
Gain on extinguishment of debt		-			-			3,000			-
Trust and investment advisory services		608			2,320			4,003			9,287
Service charges		2,177			2,298			8,969			8,172
Operating lease income		864			1,091			3,793			4,066
Bank owned life insurance		1,027			669			3,299			2,193
Other		1,326			1,346			5,570			4,770
		(720	)		4,269			46,836			4,435
Non-interest expenses:
Salaries and employee benefits		21,125			20,807			86,586			91,504
Occupancy		5,075			5,040			19,580			20,802
Insurance		4,109			2,991			15,475			12,525
Net loss on sales and valuations of repossessed assets		12,991			5,081			28,826			21,274
Repossessed asset and loan expenses		2,230			1,779			8,076			6,363
Legal, professional and director's fees		2,038			3,978			7,591			8,973
Merger related expenses		1,651			-			1,651			-
Customer service		1,050			986			4,256			4,131
Intangible amortization		889			945			3,604			3,781
Marketing		982			1,185			4,061			4,915
Data Processing		948			971			3,374			4,274
Operating lease depreciation		542			750			2,506			3,229
Goodwill impairment		-			4,095			-			49,671
Other		2,915			2,712			11,172			11,535
		56,545			51,320			196,758			242,977
Loss from continuning operations before income taxes		(14,738	)		(36,055	)		(10,580	)		(185,352	)
Income tax benefit		(4,580	)		(10,258	)		(6,410	)		(38,453	)
Loss from continuing operations		(10,158	)		(25,797	)		(4,170	)		(146,899	)
Loss from discontined operations net of tax benefit		(657	)		(1,115	)		(3,025	)		(4,507	)
Net loss		(10,815	)		(26,912	)		(7,195	)		(151,406	)
Preferred stock dividends		1,750			1,750			7,000			7,000
Accretion on preferred stock discount		734			697			2,882			2,742
Net loss available to common stockholders	$	(13,299	)	$	(29,359	)	$	(17,077	)	$	(161,148	)
Loss per share	$	(0.17	)	$	(0.41	)	$	(0.23	)	$	(2.74	)

Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Statements of Operations
Unaudited	Three Months Ended
	Dec. 31,			Sept. 30,			June 30,			Mar. 31,			Dec. 31,
	2010			2010			2010			2010			2009
Interest income:	(in thousands, except per share data)
Loans	$	64,985		$	64,273		$	64,201		$	62,167		$	60,532
Investment securities		7,054			6,047			5,327			6,304			6,621
Federal funds sold and other		335			385			472			263			660
Total interest income		72,374			70,705			70,000			68,734			67,813
Interest expense:
Deposits		8,652			9,531			11,067			12,079			13,785
Borrowings		2,097			970			483			733			992
Junior subordinated and subordinated debt		714			736			994			1,204			1,248
Total interest expense		11,463			11,237			12,544			14,016			16,025
Net interest income		60,911			59,468			57,456			54,718			51,788
Provision for credit losses		18,384			22,965			23,115			28,747			40,792
Net interest income after provision for credit losses		42,527			36,503			34,341			25,971			10,996
Non-interest income
Mark-to-market (losses) gains, net		(6,710	)		(210	)		6,250			301			(1,874	)
Gains on sales of investment securities, net		-			5,460			6,079			8,218			167
Gain on extinguishment of debt		-			-			3,000			-			-
Securities impairment charges		(12	)		-			(1,071	)		(103	)		(1,748	)
Trust and investment advisory services		608			1,001			1,181			1,213			2,320
Service charges		2,177			2,276			2,319			2,197			2,298
Operating lease income		864			998			967			964			1,091
Bank owned life insurance		1,027			773			780			719			669
Other		1,326			1,869			1,255			1,120			1,346
		(720	)		12,167			20,760			14,629			4,269
Non-interest expenses:
Salaries and employee benefits		21,125			21,860			22,161			21,440			20,807
Occupancy		5,075			4,890			4,828			4,787			5,040
Insurance		4,109			4,115			3,759			3,492			2,991
Repossessed asset and loan expenses		2,230			1,918			1,564			2,364			1,779
Net (gain) loss on sales and valuations of repossessed assets		12,991			4,855			11,994			(1,014	)		5,081
Legal, professional and director's fees		2,038			1,546			2,139			1,868			3,978
Merger related expense		1,651			-			-			-			-
Marketing		982			878			1,045			1,156			1,185
Intangible amortization		889			901			907			907			945
Customer service		1,050			987			1,154			1,065			986
Data Processing		948			842			793			791			971
Operating lease depreciation		542			627			647			689			750
Goodwill impairment		-			-			-			-			4,095
Other		2,915			2,690			2,271			3,298			2,712
		56,545			46,109			53,262			40,843			51,320
Income (loss) from continuing operations before
income taxes		(14,738	)		2,561			1,839			(243	)		(36,055	)
Income tax benefit		(4,580	)		(79	)		(190	)		(1,562	)		(10,258	)
Income (loss) from continuing operations	$	(10,158	)	$	2,640		$	2,029		$	1,319		$	(25,797	)
Loss from discontinued operations, net of tax		(657	)		(631	)		(802	)		(935	)		(1,115	)
Net income (loss)	$	(10,815	)	$	2,009		$	1,227		$	384		$	(26,912	)
Preferred stock dividends		1,750			1,750			1,750			1,750			1,750
Accretion on preferred stock		734			716			716			716			697
Net loss available to common stockholders	$	(13,299	)	$	(457	)	$	(1,239	)	$	(2,082	)	$	(29,359	)
Loss per share	$	(0.17	)	$	(0.01	)	$	(0.02	)	$	(0.03	)	$	(0.41	)

Western Alliance Bancorporation and Subsidiaries
Five Quarter Condensed Consolidated Balance Sheets
Unaudited
	Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,
	2010			2010			2010			2010			2009
Assets:	(in millions)
Cash and due from banks	$	215.8		$	615.0		$	560.6		$	827.6		$	393.3
Federal funds sold		0.9			1.0			-			2.4			3.5
Cash and cash equivalents		216.7			616.0			560.6			830.0			396.8

Securities and money market investments		1,273.1			929.7			848.6			781.1			864.8
Loans:
Commercial		934.6			876.8			832.8			757.9			802.2
Commercial real estate - owner occupied		1,223.1			1,227.7			1,234.1			1,209.3			1,091.4
Construction and land development		451.5			488.3			532.4			556.9			623.2
Commercial real estate - non-owner occupied		1,038.5			981.4			926.0			902.9			933.2
Residential real estate		527.3			533.6			536.1			560.2			568.3
Consumer		71.5			71.4			74.6			77.6			80.3
Deferred fees, net		(6.0	)		(5.7	)		(6.0	)		(5.7	)		(19.0	)
		4,240.5			4,173.5			4,130.0			4,059.1			4,079.6
Allowance for credit losses		(110.7	)		(108.2	)		(110.0	)		(112.7	)		(108.6	)
Loans, net		4,129.8			4,065.3			4,020.0			3,946.4			3,971.0

Premises and equipment, net		114.4			116.5			118.7			121.2			125.9
Other repossessed assets		107.7			110.1			104.4			105.6			83.3
Bank owned life insurance		129.8			94.8			94.0			93.2			92.5
Goodwill and other intangibles		39.3			40.2			41.3			42.2			43.1
Other assets		183.1			206.5			171.9			176.5			175.9
Total assets	$	6,193.9		$	6,179.1		$	5,959.5		$	6,096.2		$	5,753.3
Liabilities and Stockholders' Equity:
Liabilities:
Deposits:
Non-interest bearing demand deposits	$	1,443.3		$	1,421.7		$	1,330.4		$	1,348.7		$	1,157.0
Interest bearing
Demand		523.8			645.4			611.4			510.2			362.7
Savings and money market		1,926.1			1,892.2			1,845.9			1,798.5			1,752.5
Time certificates		1,445.2			1,369.2			1,442.5			1,532.7			1,449.9
Total deposits		5,338.4			5,328.5			5,230.2			5,190.1			4,722.1
Customer repurchase agreements		109.4			86.8			87.1			169.1			223.3
Total customer funds		5,447.8			5,415.3			5,317.3			5,359.2			4,945.4
Borrowings		73.0			72.9			-			20.0			29.4
Junior subordinated and subordinated debt		43.0			36.3			36.3			102.3			102.4
Accrued interest payable and other liabilities		27.9			34.8			30.0			39.0			100.4
Total liabilities		5,591.7			5,559.3			5,383.6			5,520.5			5,177.6
Stockholders' Equity
Common stock and additional paid-in capital		739.6			737.8			688.2			686.0			684.1
Preferred Stock		130.8			130.1			129.4			128.7			127.9
Retained earnings (deficit)		(258.8	)		(245.5	)		(245.0	)		(243.7	)		(241.7	)
Accumulated other comprehensive income (loss)		(9.4	)		(2.6	)		3.3			4.7			5.4
Total stockholders' equity		602.2			619.8			575.9			575.7			575.7
Total liabilities and stockholders' equity	$	6,193.9		$	6,179.1		$	5,959.5		$	6,096.2		$	5,753.3

Western Alliance Bancorporation and Subsidiaries
Changes in the Allowance For Credit Losses
Unaudited
	Three Months Ended
	Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,
	2010			2010			2010			2010			2009

	(in thousands)
Balance, beginning of period	$	108,170		$	110,013		$	112,724		$	108,623		$	104,181
Provision for credit losses		18,384			22,965			23,115			28,747			40,792
Recoveries of loans previously charged-off:
Construction and land development		773			214			1,801			409			888
Commercial real estate		13			160			808			22			91
Residential real estate		304			1,209			295			231			340
Commercial and industrial		800			389			573			1,238			216
Consumer		36			47			14			67			42
Total recoveries		1,926			2,019			3,491			1,967			1,577
Loans charged-off:
Construction and land development		3,221			3,843			7,921			8,638			9,859
Commercial real estate		7,297			12,813			7,827			5,884			6,204
Residential real estate		3,278			3,695			7,835			5,855			5,909
Commercial and industrial		2,823			5,036			4,602			4,757			14,924
Consumer		1,162			1,440			1,132			1,479			1,031
Total loans charged-off		17,781			26,827			29,317			26,613			37,927
Net loans charged-off		15,855			24,808			25,826			24,646			36,350
Balance, end of period	$	110,699		$	108,170		$	110,013		$	112,724		$	108,623

Net charge-offs (annualized) to average loans outstanding		1.52	%		2.41	%		2.53	%		2.43	%		3.68	%
Allowance for credit losses to gross loans		2.61			2.59			2.66			2.78			2.66
Nonaccrual loans	$	116,999		$	130,905		$	134,264		$	148,760		$	153,702
Repossessed assets		107,655			110,096			104,365			105,637			83,347
Loans past due 90 days, still accruing		1,458			5,667			8,233			8,437			5,538
Loans past due 30 to 89 days, still accruing		18,164			20,432			20,343			38,611			50,376
Classified loans (including nonaccrual)		256,657			285,972			304,270			336,624			374,847
Watch loans		194,905			205,114			257,715			266,734			325,721

Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields and Rates
Unaudited
	Three Months Ended December 31,
	2010								2009
	Average Balance			Interest		Average Yield/ Cost			Average Balance			Interest		Average Yield/ Cost
Interest earning assets	($ in millions)				($ in thousands)					($ in millions)			($ in thousands)
Investment securities (1)	$	1,122.8		$	7,054		2.66	%	$	806.0		$	6,621		3.39	%
Federal funds sold and other		3.0			9		1.19	%		54.4			277		2.02	%
Loans (1)		4,169.3			64,985		6.18	%		3,953.4			60,532		6.07	%
Short term investments		376.7			269		0.28	%		516.1			376		0.29	%
Investment in restricted stock		38.5			57		0.59	%		41.4			7		0.07	%
Total interest earning assets		5,710.3			72,374		5.06	%		5,371.3			67,813		5.03	%
Non-interest earning assets
Cash and due from banks		137.1								161.1
Allowance for credit losses		(111.4	)							(108.3	)
Bank owned life insurance		117.0								92.1
Other assets		406.9								303.7
Total assets	$	6,259.9							$	5,819.9
Interest-bearing liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts	$	632.5		$	676		0.42	%	$	348.2		$	753		0.86	%
Savings and money market		1,930.8			3,830		0.79	%		1,793.4			5,463		1.21	%
Time certificates of deposit		1,408.3			4,146		1.17	%		1,462.5			7,372		2.00	%
Total interest-bearing deposits		3,971.6			8,652		0.86	%		3,604.1			13,588		1.50	%
Borrowings		160.0			2,097		5.20	%		308.2			1,189		1.53	%
Junior subordinated and subordinated debt		36.4			714		7.78	%		101.9			1,248		4.86	%
Total interest-bearing liabilities		4,168.0			11,463		1.09	%		4,014.2			16,025		1.58	%
Noninterest-bearing liabilities
Noninterest-bearing demand deposits		1,434.4								1,166.7
Other liabilities		31.4								31.4
Stockholders’ equity		626.1								607.6
Total liabilities and stockholders' equity	$	6,259.9							$	5,819.9
Net interest income and margin				$	60,911		4.26	%				$	51,788		3.84	%
Net interest spread							3.97	%							3.45	%

(1) Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $464 and $265 for the fourth quarter ended 2010 and 2009, respectively.
(2) Net interest income and margin for the quarter ended September 30, 2010 was 4.32% as furnished in the second quarter report.

Western Alliance Bancorporation and Subsidiaries
Analysis of Average Balances, Yields and Rates
Unaudited
	Twelve Months Ended December 31,
	2010								2009
	Average Balance			Interest		Average Yield/ Cost			Average Balance			Interest		Average Yield/ Cost
Interest earning Assets	($ in millions)			($ in thousands)					($ in millions)			($ in thousands)
Investment securities (1)	$	915.2		$	24,753		2.83	%	$	690.4		$	25,815		3.91	%
Federal funds sold & other		17.3			141		0.82	%		33.5			1,103		3.29	%
Loans (1)		4,105.0			255,626		6.23	%		4,037.7			248,098		6.14	%
Short term investments		448.8			1,130		0.25	%		322.9			874		0.27	%
Investment in restricted stock		40.2			163		0.41	%		41.1			133		0.32	%
Total interest earnings assets		5,526.5			281,813		5.12	%		5,125.6			276,023		5.41	%
Non-interest earning assets
Cash and due from banks		116.6								174.1
Allowance for credit losses		(114.1	)							(88.2	)
Bank owned life insurance		99.4								91.3
Other assets		402.2								272.2
Total assets	$	6,030.6							$	5,575.0
Interest-bearing liabilities
Interest-bearing deposits:
Interest bearing transaction accounts	$	581.1		$	2,898		0.50	%	$	303.4		$	3,216		1.06	%
Savings and money market		1,861.7			16,724		0.90	%		1,666.7			26,903		1.61	%
Time certificates of deposits		1,437.2			21,707		1.51	%		1,280.4			31,786		2.48	%
Total interest-bearing deposits		3,880.0			41,329		1.07	%		3,250.5			61,905		1.90	%
Borrowings		158.4			4,283		2.70	%		538.0			6,863		1.28	%
Junior subordinated and subordinated debt		62.3			3,648		5.86	%		103.0			4,966		4.82	%
Total interest-bearing liabilities	$	4,100.7			49,260		1.20	%	$	3,891.5			73,734		1.89	%
Noninterest-bearing liabilities
Noninterest-bearing demand deposits		1,296.6								1,070.0
Other liabilities		32.1								27.3
Stockholders’ equity		601.2								586.2
Total liabilities and stockholders' equity	$	6,030.6							$	5,575.0
Net interest income and margin				$	232,553		4.23	%				$	202,289		3.97	%
Net interest spread							3.92	%							3.52	%

(1) Yields on loans and securities have been adjusted to a tax equivalent basis. The taxable-equivalent adjustment was $1,164 and $1,210 for the year ended December 31, 2010 and 2009, respectively.

Western Alliance Bancorporation and Subsidiaries
Operating Segment Results													Inter-
Unaudited													segment			Consoli-
	Bank			Western			Torrey						elimi-			dated
	of Nevada			Alliance Bank			Pines Bank			Other			nations			Company
At December 31, 2010	(in millions)
Assets	$	2,771.4		$	1,953.5		$	1,452.2		$	731.0		$	(714.2	)	$	6,193.9
Gross loans and deferred fees, net		1,914.1			1,305.4			1,063.8			-			(42.8	)		4,240.5
Less: Allowance for credit losses		(73.5	)		(20.4	)		(16.8	)		-			-			(110.7	)
Net loans		1,840.6			1,285.0			1,047.0			-			(42.8	)		4,129.8
Goodwill		23.2			-			-			2.7			-			25.9
Deposits		2,388.3			1,671.1			1,281.6			-			(2.6	)		5,338.4
Stockholders' equity		310.6			163.3			135.5			609.6			(616.8	)		602.2

No. of branches		12			16			11			-			-			39
No. of FTE		421			225			203			59.0			-			908

Three Months Ended December 31, 2010:
	(in thousands)
Net interest income	$	26,857		$	18,997		$	17,311			(2,254.0	)	$	-		$	60,911
Provision for credit losses		15,935			-			2,449			-			-			18,384
Net interest income (loss) after
provision for credit losses		10,922			18,997			14,862			(2,254	)		-			42,527
Non-interest income		3,506			1,760			1,040			(4,853	)		(2,173	)		(720	)
Non-interest expense		(23,414	)		(14,840	)		(10,220	)		(10,244	)		2,173			(56,545	)
Income (loss) from continuing
operations before income taxes		(8,986	)		5,917			5,682			(17,351	)		-			(14,738	)
Income tax expense (benefit)		(3,206	)		2,361			2,449			(6,184	)		-			(4,580	)
Income(loss) from continuing
operations		(5,780	)		3,556			3,233			(11,167	)		-			(10,158	)
Loss from discontinued operations, net		-			-			-			(657	)		-			(657	)
Net income (loss)	$	(5,780	)	$	3,556		$	3,233		$	(11,824	)	$	-		$	(10,815	)


Twelve Months Ended December 31, 2010:
	(in thousands)
Net interest income	$	104,536		$	69,223		$	62,714		$	(3,920	)	$	-		$	232,553
Provision for credit losses		76,669			6,374			10,168			-			-			93,211
Net interest income (loss) after
provision for credit losses		27,867			62,849			52,546			(3,920	)		-			139,342
Non-interest income		21,053			9,369			4,489			11,925			-			46,836
Non-interest expense		(90,336	)		(51,270	)		(38,893	)		(16,259	)		-			(196,758	)
Income (loss) from continuing
operations before income taxes		(41,416	)		20,948			18,142			(8,254	)		-			(10,580	)
Income tax expense (benefit)		(15,010	)		8,147			7,825			(7,372	)		-			(6,410	)
Income(loss) from continuing
operations		(26,406	)		12,801			10,317			(882	)		-			(4,170	)
Loss from discontinued operations, net		-			-			-			(3,025	)		-			(3,025	)
Net income (loss)	$	(26,406	)	$	12,801		$	10,317		$	(3,907	)	$	-		$	(7,195	)

Western Alliance Bancorporation and Subsidiaries
Operating Segment Results
Unaudited													Inter-
													segment			Consoli-
	Bank			Western			Torrey						elimi-			dated
	of Nevada			Alliance Bank			Pines Bank			Other			nations			Company
At Dec. 31, 2009:	(in millions)
Assets	$	2,779.1		$	1,640.8		$	1,338.1		$	132.8		$	(137.4	)	$	5,753.3
Gross loans and deferred fees, net		2,072.4			1,125.4			924.8			-			(43.0	)		4,079.6
Less: Allowance for credit losses		(67.8	)		(26.3	)		(14.5	)		-			-			(108.6	)
Net loans		2,004.6			1,099.1			910.3			-			(43.0	)		3,971.0
Goodwill		23.2			-			-			2.7			-			25.9
Customer deposits		2,203.8			1,439.8			1,081.9			-			(3.4	)		4,722.1
Stockholders' equity		251.7			121.9			122.0			85.7			(5.6	)		575.7

No. of branches		12			16			9			-			-			37
No. of FTE		438			224			205			63			-			930


Three Months Ended Dec. 31, 2009:	(in thousands)
Net interest income	$	26,129		$	13,695		$	11,965		$	(1	)	$	-		$	51,788
Provision for credit losses		26,635			9,012			5,145			0			-			40,792
Net interest income after provision
for credit losses		(506	)		4,683			6,820			(1	)		-			10,996
Non-interest income		1,843			1,576			851			1,284			(1,285	)		4,269
Noninterest expense		(20,196	)		(11,939	)		(9,968	)		(10,502	)		1,285			(51,320	)
Income (loss) from continuing
operations before income taxes		(18,859	)		(5,680	)		(2,297	)		(9,219	)		-			(36,055	)
Income tax expense (benefit)		(6,199	)		(1,675	)		(699	)		(1,685	)		-			(10,258	)
Income(loss) from continuing
operations		(12,660	)		(4,005	)		(1,598	)		(7,534	)		-			(25,797	)
Loss from discontinued operations, net		-			-			-			(1,115	)		-			(1,115	)
Net income (loss)	$	(12,660	)	$	(4,005	)	$	(1,598	)	$	(8,649	)	$	-		$	(26,912	)



Twelve Months Ended Dec. 31, 2009:	(in thousands)
Net interest income	$	106,014		$	52,521		$	45,205		$	(1,451	)	$	-		$	202,289
Provision for credit losses		104,859			30,450			13,790			0			-			149,099
Net interest income after provision
for credit losses		1,155			22,071			31,415			(1,451	)		-			53,190
Non-interest income		6,093			5,617			4,319			(7,009	)		(4,585	)		4,435
Goodwill impairment charge		(45,000	)		-			-			(4,670	)		-			(49,670	)
Noninterest expense		(87,977	)		(51,832	)		(40,383	)		(17,700	)		4,585			(193,307	)
Income (loss) from continuing
operations before income taxes		(125,729	)		(24,144	)		(4,649	)		(30,830	)		-			(185,352	)
Income tax expense (benefit)		(28,074	)		(8,542	)		(1,386	)		(451	)		-			(38,453	)
Income(loss) from continuing
operations		(97,655	)		(15,602	)		(3,263	)		(30,379	)		-			(146,899	)
Loss from discontinued operations, net		-			-			-			(4,507	)		-			(4,507	)
Net income (loss)	$	(97,655	)	$	(15,602	)	$	(3,263	)	$	(34,886	)	$	-		$	(151,406	)

Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures (Unaudited)
	Dec. 31,			Sept. 30,			June 30,			Mar. 31,			Dec. 31,
	2010			2010			2010			2010			2009
	(dollars in thousands)
Total stockholder's equity	$	602,174		$	619,764		$	575,858		$	575,779		$	575,725
Less:
Goodwill and intangible assets		39,291			40,180			41,307			42,214			43,121
Total tangible stockholders' equity		562,883			579,584			534,551			533,565			532,604
Less:
Preferred stock		130,827			130,094			129,378			128,661			127,945
Total tangible common equity		432,056			449,490			405,173			404,904			404,659
Add:
Deferred tax		4,774			5,087			5,400			5,713			6,026
Total tangible common equity, net of tax	$	436,830		$	454,577		$	410,573		$	410,617		$	410,685
Total assets	$	6,193,883		$	6,179,146		$	5,959,479		$	6,096,238		$	5,753,279
Less:
Goodwill and intangible assets		39,291			40,180			41,307			42,214			43,121
Tangible assets		6,154,592			6,138,966			5,918,172			6,054,024			5,710,158
Add:
Deferred tax		4,774			5,087			5,400			5,713			6,026
Total tangible assets, net of tax	$	6,159,366		$	6,144,053		$	5,923,572		$	6,059,737		$	5,716,184
Tangible equity ratio (1)		9.1	%		9.4	%		9.0	%		8.8	%		9.3	%
Tangible common equity ratio (2)		7.0	%		7.3	%		6.8	%		6.7	%		7.1	%
Common shares outstanding		81,669			81,503			73,344			73,031			72,504
Tangible book value per share, net of tax (3)	$	5.35		$	5.58		$	5.60		$	5.62		$	5.66

	Three Months Ended
	Dec. 31,			Sept. 30,			June 30,			Mar. 31,			Dec. 31,
	2010			2010			2010			2010			2009
	(in thousands)
Total non-interest income	$	(720	)	$	12,167		$	20,760		$	14,629		$	4,269
Less:
Mark-to-market (losses) gains, net		(6,710	)		(210	)		6,250			301			(1,874	)
Securities impairment charges		(12	)		-			(1,071	)		(103	)		(1,748	)
Gains on sales of investment securities, net		-			5,460			6,079			8,218			167
Gain on extinguishment of debt		-			-			3,000			-			-
Gain on sale of subsidiary		-			568			-			-			54
Total operating non-interest income		6,002			6,349			6,502			6,213			7,670
Add: net interest income		60,911			59,468			57,456			54,718			51,788
Net revenue (4)	$	66,913		$	65,817		$	63,958		$	60,931		$	59,458

Total non-interest expense	$	56,545		$	46,109		$	53,262		$	40,843		$	51,320
Less:
Net loss (gain) on sales/valuations of
repossessed assets		12,991			4,855			11,994			(1,014	)		5,081
Merger related		1,651			-			-			-			-
Goodwill impairment		-			-			-			-			4,095
Total operating non-interest expense (4)	$	41,903		$	41,254		$	41,268		$	41,857		$	42,144

Net revenue	$	66,913		$	65,817		$	63,958		$	60,931		$	59,458
Less:
Operating non-interest expense		41,903			41,254			41,268			41,857			42,144
Pre-tax, pre-provision operating earnings (5)	$	25,010		$	24,563		$	22,690		$	19,074		$	17,314

Western Alliance Bancorporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures (Unaudited)

	Three Months Ended
	Dec. 31,			Sept. 30,			June 30,			Mar. 31,			Dec. 31,
	2010			2010			2010			2010			2009
	(in thousands)
Total operating non-interest expense	$	41,903		$	41,254		$	41,268		$	41,857		$	42,144
Divided by:
Total net interest income	$	60,911		$	59,468		$	57,456		$	54,718		$	51,788
Add:
Tax equivalent interest adjustment		464			307			149			244			265
Operating non-interest income		6,002			6,349			6,502			6,213			7,670
	$	67,377		$	66,124		$	64,107		$	61,175		$	59,723
Efficiency ratio - tax equivalent basis (6)		62.2	%		62.4	%		64.4	%		68.4	%		70.6	%

	Three Months Ended
	Dec. 31,			Dec. 31,
	2010			2009
	(in thousands)
Stockholder's equity	$	602,174		$	575,725
Less:
Accumulated other comprehensive (loss) income		(9,422	)		5,405
Non-qualifying goodwill and intangibles		35,269			37,900
Other non-qualifying assets		25,730			25,115
Add:
Qualifying trust preferred securities		41,037			40,441
Tier 1 capital (regulatory) (7)		591,634			547,746
Less:
Qualifying non-controlling interests		214			137
Qualifying trust preferred securities		41,037			40,441
Preferred stock		130,827			127,248
Estimated Tier 1 common equity (8)	$	419,556		$	379,920
Divided by:
Estimated risk-weighted assets (regulatory (8)	$	4,940,918		$	4,633,541
Tier 1 common equity ratio (8)		8.5	%		8.2	%

	Dec. 31,			Dec. 31,
	2010			2009
	(in thousands)
Classified assets	$	366,915		$	485,911
Divide:
Tier 1 capital (regulatory) (7)		591,634			547,746
Plus: Allowance for credit losses		110,699			108,623
Total Tier 1 captial plus allowance for credit losses	$	702,333		$	656,369
Classified assets to Tier 1 capital plus allowance (9)		52	%		74	%

(1) We believe this non-GAAP ratio provides a critical metric with which to analyze and evaluate financial condition and capital strength.
(2) We believe this non-GAAP ratio provides critical metrics with which to analyze and evaluate financial condition and capital strength.
(3) We believe this non-GAAP ratio improves the comparability to other institutions that have not engaged in acquisitions that resulted in recorded goodwill and other intangibles.
(4) We believe this non-GAAP measurement is better indicative of the cash generating capacity of the Company.
(5) We believe this non-GAAP measurement is a key indicator of the earnings power of the Company which is otherwise obscured by the asset quality issues.
(6) We believe this non-GAAP ratio provides understanding of the operating efficiency of the Company.
(7) Under the guidelines of the Federal Reserve and the FDIC in effect at December 31, 2010, Tier 1 capital consisted of common stock, retained earnings, non-cumulative perpetual preferred stock, trust preferred securities up to a certain limit, and minority interests in certain subsidiaries, less most other intangible assets.

(8) Tier 1 common equity is often expressed as a percentage of risk-weighted assets. Under the risk-based capital framework, a bank's balance sheet assets and credit equivalent amounts of off-balance sheet items, are assigned to one of four broad risk categories. The aggregated dollar amount in each category is then multiplied by the risk weighting assigned to that category. The resulting weighted values from each of the four categories are added together and this sum is the risk-weighted assets total that, as adjusted, comprises the denominator (risk-weighted assets) to determine the Tier 1 capital ratio. Adjustments are made to Tier 1 capital to arrive at Tier 1 common equity. Tier 1 common equity is also divided by the risk-weighted assets to determine the Tier 1 common equity ratio. We believe this non-GAAP ratio provides a critical metric with which to analyze and evaluate financial condition and capital strength.
(9) We believe this non-GAAP ratio provides a critical regulatory metric in which to analyze asset quality.

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