UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

þ		Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

or

o		Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 001-32550

WESTERN ALLIANCE BANCORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Nevada		88-0365922
(State or Other Jurisdiction		(I.R.S. Employer I.D. Number)
of Incorporation or Organization)
One E. Washington Street, Phoenix, AZ		85004
(Address of Principal Executive Offices)		(Zip Code)
(602) 389-3500
(Registrant’s telephone number,
including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ                     No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes o                     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
Yes o                     No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common stock issued and outstanding: 82,250,886 shares as of April 30, 2011.

 

 

Table of Contents

Index		Page
Part I. Financial Information
Item 1 — Financial Statements
Consolidated Balance Sheets as of March 31, 2011 (unaudited) and December 31, 2010			3
Consolidated Statements of Operations for the three months ended March 31, 2011 and 2010 (unaudited)			4
Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2011 and 2010 (unaudited)			6
Consolidated Statement of Stockholders’ Equity (unaudited)			7
Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010 (unaudited)			8
Notes to Unaudited Consolidated Financial Statements			10
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations			45
Item 3 — Quantitative and Qualitative Disclosures About Market Risk			65
Item 4 — Controls and Procedures			66
Part II. Other Information
Item 1 — Legal Proceedings			67
Item 1A — Risk Factors			67
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds			67
Item 3 — Defaults Upon Senior Securities			67
Item 4 — Removed and Reserved			67
Item 5 — Other Information			68
Item 6 — Exhibits			68
Signatures			69
Exhibit Index			70
EX-31.1
EX-31.2
EX-32

PART I — FINANCIAL INFORMATION

Item 1.		Financial Statements (unaudited)

WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES

		March 31,
		2011				December 31,
		(unaudited)				2010
		(in thousands, except per share
		amounts)
Assets:
Cash and due from banks		$	99,875			$	87,984
Federal funds sold and other			—				918
Interest-bearing demand deposits in other financial institutions			263,463				127,844
Cash and cash equivalents			363,338				216,746
Money market investments			29,947				37,733
Investment securities — measured, at fair value			10,603				14,301
Investment securities — available-for-sale, at fair value; amortized cost of $1,254,095 at March 31, 2011 and $1,187,608 at December 31, 2010			1,230,896				1,172,913
Investment securities — held-to-maturity, at amortized cost; fair value of $47,869 at March 31, 2011 and $47,996 at December 31, 2010			48,150				48,151
Investments in restricted stock, at cost			35,425				36,877
Loans:
Held for investment, net of deferred fees			4,278,007				4,240,542
Less: allowance for credit losses			(106,133	)			(110,699	)
Total loans			4,171,874				4,129,843
Premises and equipment, net			112,028				114,372
Goodwill and other intangible assets			38,401				39,291
Other assets acquired through foreclosure, net			98,312				107,655
Bank owned life insurance			130,992				129,808
Deferred tax assets, net			79,752				79,860
Prepaid expenses			21,755				24,741
Other assets			33,281				41,501
Discontinued operations, assets held for sale			82				91
Total assets		$	6,404,836			$	6,193,883
Liabilities:
Deposits:
Non-interest-bearing demand		$	1,455,064			$	1,443,251
Interest-bearing			4,042,400				3,895,190
Total deposits			5,497,464				5,338,441
Customer repurchase agreements			163,404				109,409
Other borrowings			73,049				72,964
Junior subordinated debt, at fair value			43,034				43,034
Other liabilities			26,310				27,861
Total liabilities			5,803,261				5,591,709
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock — par value $.0001 and liquidation value per share of $1,000; 20,000,000 authorized; 140,000 issued and outstanding			131,580				130,827
Common stock — par value $.0001; 200,000,000 authorized; 82,237,267 shares issued and outstanding at March 31, 2011 and 81,668,565 at December 31, 2010			8				8
Surplus			740,878				739,561
Retained deficit			(256,150	)			(258,800	)
Accumulated other comprehensive income (loss)			(14,741	)			(9,422	)
Total stockholders’ equity			601,575				602,174
Total liabilities and stockholders’ equity		$	6,404,836			$	6,193,883

See the accompanying notes.

WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES

		Three Months Ended
		March 31,
		2011				2010
		(in thousands, except per share amounts)
Interest income:
Loans, including fees		$	63,882			$	62,350
Investment securities — taxable			6,897				5,726
Investment securities — non-taxable			20				51
Dividends — taxable			308				108
Dividends — non-taxable			705				236
Other			154				263
Total interest income			71,966				68,734
Interest expense:
Deposits			7,898				12,079
Customer repurchase agreements			86				284
Other borrowings			2,182				449
Junior subordinated and subordinated debt			702				1,204
Total interest expense			10,868				14,016
Net interest income			61,098				54,718
Provision for credit losses			10,041				28,747
Net interest income after provision for credit losses			51,057				25,971
Non-interest income:
Securities impairment charges, net			—				(103	)
Portion of impairment charges recognized in other comprehensive loss (before taxes)			—				—
Net securities impairment charges recognized in earnings			—				(103	)
Gain on sales of securities, net			1,379				8,218
Mark to market (losses) gains, net			(509	)			301
Service charges and fees			2,284				2,197
Trust and investment advisory fees			636				1,213
Operating lease income			671				964
Other fee revenue			760				762
Income from bank owned life insurance			1,184				719
Other			425				358
Total non-interest income (loss)			6,830				14,629
Non-interest expense:
Salaries and employee benefits			22,840				21,440
Occupancy expense, net			4,854				4,787
Net loss (gain) on sales/valuations of repossessed assets and bank premises, net			6,129				(1,014	)
Insurance			3,863				3,492
Loan and repossessed asset expenses			2,122				2,364
Legal, professional and director fees			1,366				1,868
Marketing			1,157				1,156
Customer service			892				1,065
Data processing			848				791
Intangible amortization			890				907
Operating lease depreciation			421				689
Merger expenses			217				—
Other			2,547				3,298
Total non-interest expense			48,146				40,843
Income (loss) from continuing operations before provision for income taxes			9,741				(243	)
Income tax expense (benefit)			4,029				(1,562	)
Income from continuing operations			5,712				1,319
Loss from discontinued operations, net of tax benefit			(559	)			(935	)
Net income			5,153				384
Dividends and accretion on preferred stock			2,503				2,466
Net income (loss) available to common shareholders		$	2,650			$	(2,082	)

WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(continued)

		Three Months Ended
		March 31,
		2011				2010
		(in thousands, except per share amounts)
Income (loss) per share — basic and diluted
Continuing operations		$	0.04			$	(0.02	)
Discontinued			(0.01	)			(0.01	)
		$	0.03			$	(0.03	)
Average number of common shares — basic			80,794				71,965
Average number of common shares — diluted			81,013				71,965
Dividends declared per common share		$	—			$	—

See the accompanying notes.

WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES

		Three Months Ended
		March 31,
		2011				2010
		(in thousands)
Net income		$	5,153			$	384
Other comprehensive (loss)/ income, net:
Unrealized (loss)/ gain on securities AFS, net			(4,486	)			4,548
Impairment loss on securities, net			—				63
Realized loss/ (gain) on sale of securities AFS included in income, net			(833	)			(5,333	)
Net other comprehensive (loss)/ income			(5,319	)			(722	)
Comprehensive (loss)		$	(166	)		$	(338	)

There was no impairment loss recognized for the three months ended March 31, 2011. Amount of impairment losses reclassified out of accumulated other comprehensive income into earnings for the three months ended March 31, 2010 were $0.1 million. The income tax benefit related to these losses was $40,000.

See the accompanying notes.

WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES

																						Accumulated
		Preferred Stock								Common Stock												Other				Retained				Total
																						Comprehensive				Earnings				Stockholders’
		Shares				Amount				Shares				Amount				Surplus				Income (Loss)				(Deficit)				Equity
		(in thousands)
Balance, December 31, 2010			140			$	130,827				81,669			$	8			$	739,561			$	(9,422	)		$	(258,800	)		$	602,174
Net income			—				—				—				—				—				—				5,153				5,153
Exercise of stock options			—				—				46				—				312				—				—				312
Stock-based compensation			—				—				76				—				753				—				—				753
Restricted stock grants, net			—				—				447				—				252				—				—				252
Dividends on preferred stock			—				—				—				—				—				—				(1,750	)			(1,750	)
Accretion on preferred stock discount			—				753				—				—				—				—				(753	)			—
Other comprehensive loss, net			—				—				—				—				—				(5,319	)			—				(5,319	)
Balance, March 31, 2011			140			$	131,580				82,238			$	8			$	740,878			$	(14,741	)		$	(256,150	)		$	601,575

WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES

		Three Months Ended
		March 31,
		2011				2010
		(in thousands)
Cash flows from operating activities:
Net Income		$	5,153			$	384
Adjustments to reconcile net loss
to cash provided by operating activities:
Provision for credit losses			10,041				28,747
Depreciation and amortization			2,705				3,610
Stock-based compensation			1,005				2,142
Deferred income taxes and income taxes receivable			2,972				117
Net amortization of discounts and premiums for investment securities			2,696				1,475
Securities impairment			—				103
(Gains)/Losses on:
Sales of securities, AFS			(1,379	)			(8,218	)
Derivatives			69				(67	)
Sale of repossessed assets, net			5,829				(233	)
Sale of premises and equipment, net			300				(781	)
Sale of loans, net			—				(8	)
Changes in:
Other assets			10,723				(35,527	)
Other liabilities			(1,601	)			(61,458	)
Fair value of assets and liabilities measured at fair value			509				(301	)
Servicing rights, net			161				9
Net cash provided by (used in) operating activities			39,183				(70,006	)
Cash flows from investing activities:
Proceeds from sale of securities measured at fair value			—				5
Principal pay downs and maturities of securities measured at fair value			3,606				9,284
Proceeds from sale of available-for-sale securities			72,996				182,218
Principal pay downs and maturities of available-for-sale securities			33,512				40,682
Purchase of available-for-sale securities			(174,320	)			(183,623	)
Proceeds from maturities of securities held-to-maturity			—				1,655
Loan originations and principal collections, net			(63,247	)			(4,116	)
Investment in money market			7,786				40,724
Liquidation of restricted stock			1,452				—
Sale and purchase of premises and equipment, net			229				3,498
Proceeds from sale of other real estate owned, net			13,815				10,158
Net cash (used in) provided by investing activities			(104,171	)			100,485

WESTERN ALLIANCE BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(continued)

		Three Months Ended
		March 31,
		2011				2010
		(in thousands)
Cash flows from financing activities:
Net increase in deposits			159,023				468,028
Net increase/ (decrease) in borrowings			53,995				(63,547	)
Proceeds from issuance of common stock options and stock warrants			312				—
Cash dividends paid on preferred stock			(1,750	)			(1,750	)
Net cash provided by financing activities			211,580				402,731
Net increase/ (decrease) in cash and cash equivalents			146,592				433,210
Cash and cash equivalents at beginning of year			216,746				396,830
Cash and cash equivalents at end of year		$	363,338			$	830,040
Supplemental disclosure:
Cash paid during the period for:
Interest		$	13,018			$	12,692
Income taxes			—				—
Non-cash investing and financing activity:
Transfers to other assets acquired through foreclosure, net			11,175				22,290
Assets transferred to held for sale			—				480

See the accompanying notes.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operation

Western Alliance Bancorporation (“WAL or “the Company”), incorporated in the state of Nevada, is a bank holding company providing full service banking and related services to locally owned businesses, professional firms, real estate developers and investors, local non-profit organizations, high net worth individuals and other consumers through its three wholly owned subsidiary banks: Bank of Nevada, operating in Nevada, Western Alliance Bank, operating in Arizona and Northern Nevada and Torrey Pines Bank, operating in California. In addition, its non-bank subsidiaries, Shine Investment Advisory Services, Inc. and Western Alliance Equipment Finance, offer an array of financial products and services aimed at satisfying the needs of small to mid-sized businesses and their proprietors, including financial planning, investment advice, and equipment leasing nationwide. These entities are collectively referred to herein as the Company.

Basis of Presentation

The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted in the United States (“GAAP”) and conform to practices within the financial services industry. The accounts of the Company and its consolidated subsidiaries are included in these Consolidated Financial Statements. All significant intercompany balances and transactions have been eliminated.

Use of estimates in the preparation of financial statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant changes in the near term relate to the determination of the allowance for credit losses; fair value of other real estate owned; determination of the valuation allowance related to deferred tax assets; impairment of goodwill and other intangible assets and other than temporary impairment on securities. Although Management believes these estimates to be reasonably accurate, actual amounts may differ. In the opinion of Management, all adjustments considered necessary have been reflected in the financial statements during their preparation.

Principles of consolidation

WAL has 10 wholly-owned subsidiaries: Bank of Nevada (“BON”), Western Alliance Bank (“WAB”), Torrey Pines Bank (“TPB”), which are all banking subsidiaries; Western Alliance Equipment Finance, Inc. (“WAEF”), which provides equipment leasing; and six unconsolidated subsidiaries used as business trusts in connection with issuance of trust-preferred securities. In addition, WAL maintains an 80 percent interest in Shine Investment Advisory Services Inc. (“Shine”), a registered investment advisor. WAL divested formerly wholly-owned subsidiary Premier Trust, Inc. as of September 1, 2010.

BON has a wholly-owned Real Estate Investment Trust (“REIT”) that is used to hold certain commercial real estate loans, residential real estate loans and other loans in a real estate investment trust. The Company does not have any other entities that should be considered for consolidation. All significant intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Certain amounts in the consolidated financial statements as of December 31, 2010 and for the three months ended March 31, 2010 have been reclassified to conform to the current presentation. The reclassifications have no effect on net income or stockholders’ equity as previously reported.

Interim financial information

The accompanying unaudited consolidated financial statements as of March 31, 2011 and 2010 have been prepared in condensed format, and therefore do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These statements have been prepared on a basis that is substantially consistent with the accounting principles applied to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2010.

The information furnished in these interim statements reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the results for each respective period presented. Such adjustments are of a normal recurring nature. The results of operations in the interim statements are not necessarily indicative of the results that may be expected for any other quarter or for the full year. The interim financial information should be read in conjunction with the Company’s audited financial statements.

Investment securities

Investment securities may be classified as held-to-maturity (“HTM”), available-for-sale (“AFS”) or trading. The appropriate classification is initially decided at the time of purchase. Securities classified as held-to-maturity are those debt securities the Company has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs or general economic conditions. These securities are carried at amortized cost. The sale of a security within three months of its maturity date or after at least 85 percent of the principal outstanding has been collected is considered a maturity for purposes of classification and disclosure.

Securities classified as AFS or trading are reported as an asset on the Consolidated Balance Sheets at their estimated fair value. As the fair value of AFS securities changes, the changes are reported net of income tax as an element of other comprehensive income (“OCI”), except for impaired securities. When AFS securities are sold, the unrealized gain or loss is reclassified from OCI to non-interest income. The changes in the fair values of trading securities are reported in non-interest income. Securities classified as AFS are both equity and debt securities the Company intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as AFS would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, and regulatory capital considerations.

Interest income is recognized based on the coupon rate and increased by accretion of discounts earned or decreased by the amortization of premiums paid over the contractual life of the security using the interest method. For mortgage-backed securities, estimates of prepayments are considered in the constant yield calculations.

In estimating whether there are any other than temporary impairment losses, management considers 1) the length of time and the extent to which the fair value has been less than amortized cost, 2) the financial condition and near term prospects of the issuer, 3) the impact of changes in market interest rates, and 4) the intent and ability of the Company to retain its investment for a period of time sufficient to allow for any anticipated recovery in fair value.

Declines in the fair value of individual debt securities available for sale that are deemed to be other than temporary are reflected in earnings when identified. The fair value of the debt security then becomes the new cost basis. For individual debt securities where the Company does not intend to sell the security and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, the other than temporary decline in fair value of the debt security related to 1) credit loss is recognized in earnings, and 2) market or other factors is recognized in other comprehensive income or loss. Credit loss is recorded if the present value of cash flows is less than amortized cost. For individual debt securities where the Company intends to sell the security or more likely than not will not recover all of its amortized cost, the other than temporary impairment is recognized in earnings equal to the entire difference between the securities cost basis and its fair value at the balance sheet date. For individual debt securities for which a credit loss has been recognized in earnings, interest accruals and amortization and accretion of premiums and discounts are suspended when the credit loss is recognized. Interest received after accruals have been suspended is recognized on a cash basis.

Derivative financial instruments

All derivatives are recognized on the balance sheet at their fair value, with changes in fair value reported in current-period earnings. These instruments consist primarily of interest rate swaps.

Certain derivative transactions that meet specified criteria qualify for hedge accounting. The Company occasionally purchases a financial instrument or originates a loan that contains an embedded derivative instrument. Upon purchasing the instrument or originating the loan, the Company assesses whether the economic characteristics of the embedded derivative are clearly and closely related to the economic characteristics of the remaining component of the financial instrument (i.e., the host contract) and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When it is determined that (1) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, and (2) a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is separated from the host contract and carried at fair value. However, in cases where (1) the host contract is measured at fair value, with changes in fair value reported in current earnings, or (2) the Company is unable to reliably identify and measure an embedded derivative for separation from its host contract, the entire contract is carried on the balance sheet at fair value and is not designated as a hedging instrument.

Allowance for credit losses

Credit risk is inherent in the business of extending loans and leases to borrowers. Like other financial institutions, the Company must maintain an adequate allowance for credit losses. The allowance for credit losses is established through a provision for credit losses charged to expense. Loans are charged against the allowance for credit losses when Management believes that the contractual principal or interest will not be collected. Subsequent recoveries, if any, are credited to the allowance. The allowance is an amount believed adequate to absorb probable losses on existing loans that may become uncollectable, based on evaluation of the collectability of loans and prior credit loss experience, together

with other factors. The Company formally re-evaluates and establishes the appropriate level of the allowance for credit losses on a quarterly basis.

Our allowance for credit loss methodology incorporates several quantitative and qualitative risk factors used to establish the appropriate allowance for credit losses at each reporting date. Quantitative factors include our historical loss experience, delinquency and charge-off trends, collateral values, changes in the level of nonperforming loans and other factors. Qualitative factors include the economic condition of our operating markets and the state of certain industries. Specific changes in the risk factors are based on perceived risk of similar groups of loans classified by collateral type, purpose and term. An internal one-year and three-year loss history are also incorporated into the allowance calculation model. Due to the credit concentration of our loan portfolio in real estate secured loans, the value of collateral is heavily dependent on real estate values in Nevada, Arizona and California, which have declined significantly in recent periods. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are significant changes in economic or other conditions. In addition, the FDIC and state bank regulatory agencies, as an integral part of their examination processes, periodically review our subsidiary banks’ allowances for credit losses, and may require us to make additions to our allowance based on their judgment about information available to them at the time of their examinations. Management regularly reviews the assumptions and formulae used in determining the allowance and makes adjustments if required to reflect the current risk profile of the portfolio.

The allowance consists of specific and general components. The specific allowance relates to impaired loans. In general, impaired loans include those where interest recognition has been suspended, loans that are more than 90 days delinquent but because of adequate collateral coverage, income continues to be recognized, and other criticized and classified loans not paying substantially according to the original contract terms. For such loans, an allowance is established when the discounted cash flows, collateral value or observable market price of the impaired loan are lower than the carrying value of that loan, pursuant to FASB ASC 310 Receivables (“ASC 310”). Loans not collateral dependent are evaluated based on the expected future cash flows discounted at the original contractual interest rate. The amount to which the present value falls short of the current loan obligation will be set up as a reserve for that account or charged-off.

The Company uses an appraised value method to determine the need for a reserve on impaired, collateral dependent loans and further discounts the appraisal for disposition costs. Due to the rapidly changing economic and market conditions of the regions within which we operate, the Company obtains independent collateral valuation analysis on a regular basis for each loan, typically every six months.

The general allowance covers all non-impaired loans and is based on historical loss experience adjusted for the various qualitative and quantitative factors listed above. The change in the allowance from one reporting period to the next may not directly correlate to the rate of change of the nonperforming loans for the following reasons:

1. A loan moving from impaired performing to impaired nonperforming does not mandate an increased reserve. The individual account is evaluated for a specific reserve requirement when the loan moves to impaired status, not when it moves to nonperforming status, and is reevaluated at each subsequent reporting period. Because our nonperforming loans are predominately collateral dependent, reserves are primarily based on collateral value, which is not affected by borrower performance but rather by market conditions.

2. Not all impaired accounts require a specific reserve. The payment performance of the borrower may require an impaired classification, but the collateral evaluation may support adequate collateral coverage. For a number of impaired accounts in which borrower performance has ceased, the collateral coverage is now sufficient because a partial charge off of the account has been taken. In those instances, neither a general reserve nor a specific reserve is assessed.

Other assets acquired through foreclosure

Other assets acquired through foreclosure consist primarily of properties acquired as a result of, or in-lieu-of, foreclosure. Properties or other assets (primarily repossessed assets formerly leased) are classified as other real estate owned and other repossessed property and are initially reported at fair value of the asset less selling costs. Subsequent write downs are based on the lower of carrying value or fair value, less estimated costs to sell the property. Costs relating to the development or improvement of the assets are capitalized and costs relating to holding the assets are charged to non-interest expense. Property is evaluated regularly to ensure the recorded amount is supported by its current fair value and valuation allowances.

Goodwill

The Company recorded as goodwill the excess of the purchase price over the fair value of the identifiable net assets acquired in accordance with applicable guidance. As per this guidance, a two-step process is outlined for impairment testing of goodwill. Impairment testing is generally performed annually, as well as when an event triggering impairment

may have occurred. The first step tests for impairment, while the second step, if necessary, measures the impairment. The resulting impairment amount if any is charged to current period earnings as non-interest expense.

Income taxes

Western Alliance Bancorporation and its subsidiaries, other than BW Real Estate, Inc., file a consolidated federal tax return. Due to tax regulations, several items of income and expense are recognized in different periods for tax return purposes than for financial reporting purposes. These items represent “temporary differences.” Deferred taxes are provided on an asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and tax credit carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of Management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.

Although realization is not assured, the Company believes that the realization of the recognized net deferred tax asset of $79.8 million at March 31, 2011 is more likely than not based on expectations as to future taxable income and based on available tax planning strategies as defined in FASB ASC 740, Income Taxes (“ASC 740”) that could be implemented if necessary to prevent a carryforward from expiring.

The most significant source of these timing differences are the credit loss reserve build and net operating loss carryforwards, which account for substantially all of the net deferred tax asset. In general, the Company will need to generate approximately $222 million of taxable income during the respective carryforward periods to fully realize its deferred tax assets.

As a result of the recent losses, the Company is in a three-year cumulative pretax loss position at March 31, 2011. A cumulative loss position is considered significant negative evidence in assessing the realizability of a deferred tax asset. The Company has concluded that there is sufficient positive evidence to overcome this negative evidence. This positive evidence includes Company forecasts, exclusive of tax planning strategies that show realization of deferred tax assets by the end of 2013 based on current projections. In addition, the Company has evaluated tax planning strategies, including potential sales of businesses and assets in which it could realize the excess of appreciated value over the tax basis of its assets. The amount of deferred tax assets considered realizable, however, could be significantly reduced in the near term if estimates of future taxable income during the carryforward period are significantly lower than forecasted due to deterioration in market conditions.

Based on the above discussion, the net operating loss carryforward of 20 years provides sufficient time to utilize deferred federal and state tax assets pertaining to the existing net operating loss carryforwards and any NOL that would be created by the reversal of the future net deductions that have not yet been taken on a tax return.

Fair values of financial instruments

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities. FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair value measurement and enhances disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The Company uses various valuation approaches, including market, income and/or cost approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would consider in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs, as follows:

	•		Level 1— Observable quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
	•		Level 2— Observable quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or model-based valuation techniques where all significant assumptions are observable, either directly or indirectly in the market.
	•		Level 3— Model-based techniques where all significant assumptions are not observable, either directly or indirectly, in the market. These unobservable assumptions reflect our own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques may include use of matrix pricing,

discounted cash flow models and similar techniques.

The availability of observable inputs varies based on the nature of the specific financial instrument. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. When market assumptions are available, ASC 820 requires the Company to make assumptions regarding the assumptions that market participants would use to estimate the fair value of the financial instrument at the measurement date.

FASB ASC 825, Financial Instruments (“ASC 825”) requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value.

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction at March 31, 2011 or 2010. The estimated fair value amounts for 2011 and 2010 have been measured as of period-end, and have not been reevaluated or updated for purposes of these consolidated financial statements subsequent to those dates. As such, the estimated fair values of these financial instruments subsequent to the reporting date may be different than the amounts reported at the period-end.

The information in Note 10, “Fair Value of Financial Instruments,” should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only required for a limited portion of the Company’s assets and liabilities.

Due to the wide range of valuation techniques and the degree of subjectivity used in making the estimate, comparisons between the Company’s disclosures and those of other companies or banks may not be meaningful.

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:

Cash and cash equivalents

The carrying amounts reported in the consolidated balance sheets for cash and due from banks and federal funds sold and other approximates their fair value.

Securities

The fair values of U.S. Treasuries, corporate bonds, and exchange-listed preferred stock are based on quoted market prices and are categorized as Level 1 of the fair value hierarchy.

The fair value of other investment securities were determined based on matrix pricing. Matrix pricing is a mathematical technique that utilizes observable market inputs including, for example, yield curves, credit ratings and prepayment speeds. Fair values determined using matrix pricing are generally categorized as Level 2 in the fair value hierarchy.

The Company owns certain collateralized debt obligations (“CDOs”) and structured notes for which quoted prices are not available. Quoted prices for similar assets are also not available for these investment securities. In order to determine the fair value of these securities, the Company has estimated the future cash flows and discount rate using observable market inputs adjusted based on assumptions regarding the adjustments a market participant would assume necessary for each specific security. As a result, the resulting fair values have been categorized as Level 3 in the fair value hierarchy.

Restricted stock

The Company’s subsidiary banks are members of the Federal Home Loan Bank (“FHLB”) system and maintain an investment in capital stock of the FHLB. The Company’s subsidiary banks also maintain an investment in their primary correspondent bank. These investments are carried at cost since no ready market exists for them, and they have no

quoted market value. The Company conducts a periodic review and evaluation of our FHLB stock to determine if any impairment exists.

Loans

Fair value for loans is estimated based on discounted cash flows using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality with adjustments that the Company believes a market participant would consider in determining fair value based on a third party independent valuation. As a result, the fair value for loans disclosed in Note 10, “Fair Value of Financial Instruments,” is categorized as Level 3 in the fair value hierarchy.

Accrued interest receivable and payable

The carrying amounts reported in the consolidated balance sheets for accrued interest receivable and payable approximate their fair value. Accrued interest receivable and payable fair value measurements disclosed in Note 10 “Fair Value of Financial Instruments,” are classified as Level 3 in the fair value hierarchy.

Derivative financial instruments

All derivatives are recognized on the balance sheet at their fair value. The fair value for derivatives is determined based on market prices, broker-dealer quotations on similar product or other related input parameters. As a result, the fair values have been categorized as Level 2 in the fair value hierarchy.

Deposit liabilities

The fair value disclosed for demand and savings deposits is by definition equal to the amount payable on demand at their reporting date (that is, their carrying amount) which the Company believes a market participant would consider in determining fair value. The carrying amount for variable-rate deposit accounts approximates their fair value. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on these deposits. The fair value measurement of the deposit liabilities disclosed in Note 10, “Fair Value of Instruments,” is categorized as Level 3 in the fair value hierarchy.

Federal Home Loan Bank and Federal Reserve advances and other borrowings

The fair values of the Company’s borrowings are estimated using discounted cash flow analyses, based on the market rates for similar types of borrowing arrangements. The FHLB and FRB advances and other borrowings have been categorized as Level 3 in the fair value hierarchy.

Other Borrowings

The Company issued senior notes are based on quoted market prices and categorized as Level 3 of the fair value hierarchy.

Junior subordinated and subordinated debt

Junior subordinated debt and subordinated debt are valued by comparing interest rates and spreads to benchmark indices offered to institutions with similar credit profiles to our own and discounting the contractual cash flows on our debt using these market rates. The junior subordinated debt and subordinated debt have been categorized as Level 3 in the fair value hierarchy.

Off-balance sheet instruments

Fair values for the Company’s off-balance sheet instruments (lending commitments and standby letters of credit) are based on quoted fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing.

Recent Accounting Pronouncements

In December 2010, the Financial Accounting Standards Board (“FASB”) issued guidance within the Accounting Standards Update (“ASU”) 2010-20 “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.” ASU 2010-20 requires entities to provide disclosures designed to facilitate financial statement users’ evaluation of (i) the nature of credit risk inherent in the entity’s portfolio of financing receivables, (ii) how that risk is analyzed and assessed in arriving at the allowance for credit losses, and (iii) the changes and reasons for those changes in the allowance for credit losses. Disclosures must be disaggregated by portfolio segment, the level at which an entity develops and documents a systematic method for determining its allowance for credit losses, and class of financing receivable, which is generally a disaggregation of portfolio segment. The required disclosures include, among other things, a roll forward of the allowance for credit losses as well as information about modified, impaired, nonaccrual and past due loans and credit quality indicators. ASU 2010-20 became effective for the Company’s financial statements as of December 31,

2010, as it relates to disclosures required as of the end of a reporting period. Disclosures that relate to activity during a reporting period are required for the Company’s financial statements that include periods beginning on or after January 1, 2011. The adoption of this guidance did not have any impact on the Company’s consolidated statement of income (loss), its consolidated balance sheet, or its consolidated statement of cash flows.

In April 2011, the FASB issued guidance within the ASU 2011-02 “A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring.” ASU 2011-02 clarifies when a loan modification or restructuring is considered a troubled debt restructuring. This guidance is effective for the first interim or annual period beginning on or after June 15, 2011, and will be applied retrospectively to the beginning of the annual period of adoption. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated statement of income (loss), its consolidated balance sheet, or its consolidated statement of cash flows.

2. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

In the first quarter of 2010, the Company decided to discontinue its affinity credit card segment, PartnersFirst, and has presented certain activities as discontinued operations. The Company transferred certain assets with balances at March 31, 2011 of $0.1 million to held-for-sale and reported a portion of its operations as discontinued. At March 31, 2011 and December 31, 2010, the Company had $41.7 million and $45.6 million, respectively, of outstanding credit card loans which will have continuing cash flows related to the collection of these loans. These credit card loans are included in loans held for investment as of March 31, 2011 and December 31, 2010.

The following table summarizes the operating results of the discontinued operations for the periods indicated:

		Three Months Ended
		March 31,
		2011				2010
		(in thousands)
Affinity card revenue		$	371			$	491
Non-interest expenses			(1,335	)			(2,103	)
Loss before income taxes			(964	)			(1,612	)
Income tax benefit			(405	)			(677	)
Net loss		$	(559	)		$	(935	)

3. EARNINGS PER SHARE

Diluted earnings per share is based on the weighted average outstanding common shares during each period, including common stock equivalents. Basic earnings (loss) per share is based on the weighted average outstanding common shares during the period.

Basic and diluted (loss) per share, based on the weighted average outstanding shares, are summarized as follows:

		Three Months Ended
		March 31,
		2011				2010
		(in thousands, except
		per share amounts)
Basic:
Net income (loss) available to common stockholders		$	2,650			$	(2,082	)
Average common shares outstanding			80,794				71,965
Earnings (loss) per share		$	0.03			$	(0.03	)
Diluted:
Net income (loss) available to common stockholders		$	2,650			$	(2,082	)
Average common shares outstanding			81,607				71,965
Earnings (loss) per share		$	0.03			$	(0.03	)

As of March 31, 2011, the dilutive effect of stock options and restricted stock was 219,501 shares. As of March 31, 2010, all stock options and restricted stock were considered anti-dilutive and excluded for purposes of calculating diluted loss per share.

4. INVESTMENT SECURITIES

Carrying amounts and fair values of investment securities at March 31, 2011 and December 31, 2010 are summarized as follows:

		March 31, 2011
						Gross				Gross
		Amortized				Unrealized				Unrealized				Fair
		Cost				Gains				(Losses)				Value
		(in thousands)
Securities held-to-maturity
Collateralized debt obligations		$	276			$	439			$	(3	)		$	712
Corporate bonds			45,000				—				(735	)			44,265
Municipal obligations			1,374				18				—				1,392
Other			1,500				—				—				1,500
		$	48,150			$	457			$	(738	)		$	47,869

						OTTI
						Recognized
						in Other				Gross				Gross
		Amortized				Comprehensive				Unrealized				Unrealized				Fair
		Cost				Loss				Gains				(Losses)				Value
		(in thousands)
Securities available-for-sale
US Government-sponsored agency securities		$	290,041			$	—			$	—			$	(9,185	)		$	280,856
Municipal obligations			312				—				—				(11	)			301
Adjustable-rate preferred stock			66,137				—				2,587				(15	)			68,709
Corporate securities			5,000				—				—				(60	)			4,940
Direct obligation and GSE residential mortgage-backed securities			829,651				—				3,238				(12,801	)			820,088
Private label residential mortgage-backed securities			8,513				(1,811	)			1,837				(671	)			7,868
Trust preferred securities			32,047				—				—				(6,202	)			25,845
Other			22,394				—				39				(144	)			22,289
		$	1,254,095			$	(1,811	)		$	7,701			$	(29,089	)		$	1,230,896
Securities measured at fair value
Direct obligation and GSE residential mortgage-backed securities																		$	10,603

		December 31, 2010
						Gross				Gross
		Amortized				Unrealized				Unrealized				Fair
		Cost				Gains				(Losses)				Value
		(in thousands)
Securities held-to-maturity
Collateralized debt obligations		$	276			$	459			$	—			$	735
Corporate bonds			45,000				—				(632	)			44,368
Municipal obligations			1,375				18				—				1,393
Other			1,500				—				—				1,500
		$	48,151			$	477			$	(632	)		$	47,996

						OTTI
						Recognized
						in Other				Gross				Gross
		Amortized				Comprehensive				Unrealized				Unrealized				Fair
		Cost				Loss				Gains				(Losses)				Value
		(in thousands)
Securities available-for-sale
US Government-sponsored agency securities		$	280,299			$	—			$	622			$	(3,329	)		$	277,592
Municipal obligations			312				—				1				(11	)			302
Adjustable-rate preferred stock			66,255				—				1,410				(422	)			67,243
Corporate securities			5,000				—				—				(93	)			4,907
Direct obligation and GSE residential mortgage-backed securities			772,217				—				5,804				(8,632	)			769,389
Private label residential mortgage-backed securities			9,203				(1,811	)			1,811				(1,092	)			8,111
Trust preferred securities			32,057				—				—				(8,931	)			23,126
Other			22,265				—				99				(121	)			22,243
		$	1,187,608			$	(1,811	)		$	9,747			$	(22,631	)		$	1,172,913
Securities measured at fair value
U.S. Government-sponsored agency securities																		$	2,511
Direct obligation and GSE residential mortgage-backed securities																			11,790
																		$	14,301

The Company conducts an other-than-temporary impairment (“OTTI”) analysis on a quarterly basis. The initial indication of OTTI for both debt and equity securities is a decline in the market value below the amount recorded for an investment, and the severity and duration of the decline. In determining whether an impairment is OTTI, the Company considers the length of time and the extent to which the market value has been below cost, recent events specific to the issuer, including investment downgrades by rating agencies and economic conditions of its industry, and the Company’s ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery. For marketable equity securities, the Company also considers the issuer’s financial condition, capital strength, and near-term prospects.

For debt securities and for ARPS that are treated as debt securities for the purpose of OTTI analysis, the Company also considers the cause of the price decline (general level of interest rates and industry- and issuer-specific factors), the issuer’s financial condition, near-term prospects and current ability to make future payments in a timely manner, the issuer’s ability to service debt, and any change in agencies’ ratings at evaluation date from acquisition date and any likely imminent action. For ARPS with a fair value below cost that is not attributable to the credit deterioration of the issuer, such as a decline in cash flows from the security or a downgrade in the security’s rating below investment grade, the Company may avoid recognizing an OTTI charge by asserting that it has the intent and ability to retain its investment for a period of time sufficient to allow for any anticipated recovery in fair value.

Gross unrealized losses at March 31, 2011 are primarily caused by interest rate fluctuations, credit spread widening and reduced liquidity in applicable markets. The Company has reviewed securities on which there is an unrealized loss in accordance with its accounting policy for OTTI described above and recorded no impairment charges and $0.1 million for the three months ended March 31, 2011 and 2010, respectively. For 2010, the impairment charge is attributed to the unrealized losses in the Company’s CDO portfolio.

The Company does not consider any other securities to be other-than-temporarily impaired as of March 31, 2011 and December 31, 2010. However, without recovery in the near term such that liquidity returns to the applicable markets and spreads return to levels that reflect underlying credit characteristics, additional OTTI may occur in future periods.

Information pertaining to securities with gross unrealized losses at March 31, 2011 and December 31, 2010, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:

		March 31, 2011
		Less Than Twelve Months								Over Twelve Months
		Gross								Gross
		Unrealized				Fair				Unrealized				Fair
		Losses				Value				Losses				Value
		(in thousands)
Securities held-to-maturity
Collateralized debt obligations		$	3			$	149			$	—			$	—
Corporate bonds			735				44,265				—				—
		$	738			$	44,414			$	—			$	—

		March 31, 2011
		Less Than Twelve Months								Over Twelve Months
		Gross								Gross
		Unrealized				Fair				Unrealized				Fair
		Losses				Value				Losses				Value
		(in thousands)
Securities available-for-sale
US Government-sponsored agency securities		$	9,185			$	280,856			$	—			$	—
Adjustable-rate preferred stock			15				1,730				—				—
Corporate securities			60				4,940
Direct obligation and GSE residential mortgage-backed securities			12,736				549,565				65				8,362
Municipal obligations			11				245				—				—
Private label residential mortgage-backed securities			—				—				671				6,146
Trust preferred securities			—				—				6,202				25,845
Other			144				6,106				—				—
		$	22,151			$	843,442			$	6,938			$	40,353

		December 31, 2010
		Less Than Twelve Months								Over Twelve Months
		Gross								Gross
		Unrealized				Fair				Unrealized				Fair
		Losses				Value				Losses				Value
		(in thousands)
Securities held-to-maturity
Corporate bonds		$	632			$	39,368			$	—			$	—
		$	632			$	39,368			$	—			$	—

		December 31, 2010
		Less Than Twelve Months								Over Twelve Months
		Gross								Gross
		Unrealized				Fair				Unrealized				Fair
		Losses				Value				Losses				Value
		(in thousands)
Securities available-for-sale
US Government-sponsored agency securities		$	3,329			$	173,561			$	—			$	—
Adjustable-rate preferred stock			422				21,549				—				—
Corporate securities			93				4,907
Direct obligation and GSE residential mortgage-backed securities			8,562				425,248				69				8,798
Municipal obligations			11				206				—				—
Private label residential mortgage-backed securities			2				1,990				1,091				6,121
Trust preferred securities			—				—				8,931				23,126
Other			121				6,129				—				—
		$	12,540			$	633,590			$	10,091			$	38,045

At March 31, 2011 and December 31, 2010, 112 and 84 debt securities (excluding adjustable rate preferred stock, debt obligations and other structured securities), respectively, have unrealized losses with aggregate depreciation of approximately 1.9% and 1.2%, respectively, from the Company’s amortized cost basis. These unrealized losses relate primarily to fluctuations in the current interest rate environment. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and industry analysis reports. Since material downgrades have not occurred and management does not have the intent to sell the debt securities for the foreseeable future, none of the securities described in the above table or in this paragraph were deemed to be other than temporarily impaired.

At March 31, 2011 and December 31, 2010, two investments in trust preferred securities have unrealized losses with aggregate depreciation of approximately 19.4% and 27.9%, respectively, from the Company’s amortized cost basis. These unrealized losses relate primarily to fluctuations in the current interest rate environment, and specifically to the widening of credit spreads on virtually all corporate and structured debt, which began in 2007. The Company has the intent and ability to hold trust preferred securities for the foreseeable future, none were deemed to be other than temporarily impaired.

At March 31, 2011, the net unrealized loss on trust preferred securities classified as AFS was $6.2 million, compared to $8.9 million at December 31, 2010. The Company actively monitors its debt and other structured securities portfolios classified as AFS for declines in fair value.

The amortized cost and fair value of securities as of March 31, 2011 and December 31, 2010, by contractual maturities, are shown in the table below. The actual maturities of the mortgage-backed securities may differ from their contractual maturities because the loans underlying the securities may be repaid without any penalties. Therefore, these securities are listed separately in the maturity summary. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

		March 31, 2011								December 31, 2010
		Amortized				Estimated				Amortized				Estimated
		Cost				Fair Value				Cost				Fair Value
		(in thousands)
Securities held-to-maturity
Due in one year or less		$	—			$	—			$	—			$	—
After one year through five years			998				1,005				999				1,011
After five years through ten years			40,376				39,712				40,376				39,843
After ten years			5,276				5,652				5,276				5,642
Other			1,500				1,500				1,500				1,500
		$	48,150			$	47,869			$	48,151			$	47,996
Securities available-for-sale
Due in one year or less		$	5			$	5			$	13,005			$	13,632
After one year through five years			18,088				18,450				8,434				8,663
After five years through ten years			293,998				285,254				294,027				291,243
After ten years			89,959				84,809				77,660				67,743
Mortgage backed securities			829,651				820,089				772,217				769,389
Other			22,394				22,289				22,265				22,243
		$	1,254,095			$	1,230,896			$	1,187,608			$	1,172,913

The following table summarizes the Company’s investment ratings position as of March 31, 2011:

		Securities ratings profile
		As of March 31, 2011
						Investment- grade (1)												Noninvestment-grade (1)
		AAA				AA+ to AA-				A+ to A-				BBB+ to BBB-				BB+ and below				Totals
		(in thousands)
Municipal obligations		$	40			$	1,373			$	—			$	—			$	261			$	1,674
Direct & GSE residential mortgage-backed securities			830,691				—				—				—				—				830,691
Private label residential mortgage-backed securities			5,574				—				—				—				2,294				7,868
U.S. Government-sponsered agency securities			280,856				—				—				—				—				280,856
Adjustable-rate preferred stock			—				—				61,649				7,060				—				68,709
CDOs & trust preferred securities			—				—				25,845				—				276				26,121
Corporate bonds			—				5,000				44,940				—				—				49,940
Total (2)		$	1,117,161			$	6,373			$	132,434			$	7,060			$	2,831			$	1,265,859

The following table summarizes the Company’s investment ratings position as of December 31, 2010.

		Securities ratings profile
		As of December 31, 2010
						Investment- grade (1)												Noninvestment-grade (1)
		AAA				AA+ to AA-				A+ to A-				BBB+ to BBB-				BB+ and below				Totals
		(in thousands)
Municipal obligations		$	40			$	1,375			$	—			$	—			$	262			$	1,677
Direct & GSE residential mortgage-backed securities			781,179				—				—				—				—				781,179
Private label residential mortgage-backed securities			5,796				—				—				—				2,315				8,111
U.S. Government-sponsered agency securities			280,103				—				—				—				—				280,103
Adjustable-rate preferred stock			—				—				60,263				6,980				—				67,243
CDOs & trust preferred securities			—				—				21,681				1,445				276				23,402
Corporate bonds			—				5,000				44,907				—				—				49,907
Total (2)		$	1,067,118			$	6,375			$	126,851			$	8,425			$	2,853			$	1,211,622