UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

Commission File Number: 001-32550

WESTERN ALLIANCE BANCORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Nevada		88-0365922
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer I.D. Number)
2700 W. Sahara Avenue, Las Vegas, NV (Address of Principal Executive Offices)		89102 (Zip Code)

(702)-248-4200
(Registrant’s telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of Each Class		Name on Each Exchange in Which Registered
Common Stock, $0.0001 Par Value		New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act Yes o No þ

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 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o

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

The aggregate market value of the registrant’s voting stock held by non-affiliates is approximately $495.5 million based on the June 30, 2009 closing price of said stock on the New York Stock Exchange ($6.84 per share).

As of February 28, 2010, 73,005,930 shares of the registrant’s common stock were outstanding.

Portions of the registrant’s definitive proxy statement for its 2010 Annual Meeting of Stockholders are incorporated by reference into Part III of this report.

 

 

INDEX

		Page
PART I
Forward-Looking Statements			3
Item 1. Business			4
Item 1A. Risk Factors			14
Item 1B. Unresolved Staff Comments			20
Item 2. Properties			20
Item 3. Legal Proceedings			20
Item 4. Reserved			20
PART II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			20
Item 6. Selected Financial Data			22
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			24
Item 7A. Quantitative and Qualitative Disclosures About Market Risk			71
Item 8. Financial Statements and Supplementary Data			71
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures			125
Item 9A. Controls and Procedures			125
Item 9B. Other Information			127
PART III
Item 10. Directors, Executive Officers and Corporate Governance			127
Item 11. Executive Compensation			127
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			127
Item 13. Certain Relationships and Related Transactions, and Director Independence			127
Item 14. Principal Accountant Fees and Services			127
PART IV
Item 15. Exhibits and Financial Statement Schedules			128
SIGNATURES			131
Exhibit 10.18
Exhibit 10.21
Exhibit 21.1
Exhibit 23.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32
Exhibit 99.1
Exhibit 99.2

PART I

Forward-Looking Statements

Certain statements contained in this Annual Report on Form 10-K (“Form 10K”) are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements be covered by the safe harbor provisions for forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of Federal and State securities laws, including statements that related to or are dependent on estimates or assumptions relating 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 in this Form 10K reflect our current views about future events and financial performance and involve certain 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, including those risks discussed under the heading “Risk Factors” in this 2009 Form 10K. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: 1) the decline in economic conditions and disruptions to the financial markets around the world; 2) recent legislative and regulatory initiatives, including EESA, ARRA, and the rules and regulations that might be promulgated thereunder; 3) the soundness of other financial institutions with which we do business; 4) our ability to raise capital, attract deposits and borrow from the Federal Home Loan Bank (“FHLB”) and the Federal Reserve (“FRB”); 5) the possibility of asset, including goodwill, write-downs; 6) the effect of fair value accounting on the financial instruments that we hold; 7) defaults on our loan portfolio; 8) changes in management’s estimate of the adequacy of the allowance for credit losses; 9) our ability to recruit and retain qualified employees, especially seasoned relationship bankers; 10) inflation, interest rate, market and monetary fluctuations; 11) changes in gaming or tourism in Las Vegas, Nevada, our primary market area; 12) risks associated with the execution of our business strategy and related costs; 13) increased lending risks associated with our concentration of commercial real estate, construction and land development and commercial and industrial loans; 14) supervisory actions by regulatory agencies which limit our ability to pursue certain growth opportunities; 15) competitive pressures among financial institutions and businesses offering similar products and services; 16) the effects of interest rates and interest rate policy; and 17) other factors affecting the financial services industry generally or the banking industry in particular.

For more information regarding risks that may cause our actual results to differ materially from any forward-looking statements, see “Risk Factors” beginning on page 14. Forward-looking statements speak only as of the date they are made, the Company does not undertake any obligations to update forward-looking statements to reflect circumstances and or events that occur after the date the forward-looking statements are made.

Purpose

The following discussion is designed to provide insight on the financial condition and results of operations of Western Alliance Bancorporation and its subsidiaries. Unless otherwise stated, “the Company or WAL” refers to this consolidated entity and “we” refers to the Company’s Management. This discussion should be read in conjunction with the Company’s Consolidated Financial Statements and notes to the Consolidated Financial Statement, herein referred to as “the Consolidated Financial Statements”. These Consolidated Financial Statements are presented on pages 74 through 124 of this Form 10-K.

ITEM 1. BUSINESS

Organization Structure and Description of Services

Western Alliance Bancorporation, incorporated in the state of Nevada, is a multi-bank holding company headquartered in Las Vegas, Nevada, 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 subsidiary banks and financial services companies located in Nevada, Arizona, California and Colorado. The Company provides all aspects of commercial and consumer lending and deposit services including cash management and credit card services. In addition, its non-bank subsidiaries offer a broad array of financial products and services aimed at satisfying the needs of small to mid-sized businesses and their proprietors, including trust administration and estate planning, custody and investments and equipment leasing.

WAL has 13 wholly-owned subsidiaries. Bank of Nevada (“BON”) Alliance Bank of Arizona (“ABA”), Torrey Pines Bank (“TPB”), Alta Alliance Bank (“AAB”), First Independent Bank of Nevada (“FIBN”) all of which are banking subsidiaries, Premier Trust, Inc. (“PTI”), a State Chartered Trust Company, 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 as described in Note 10, “Junior Subordinated and Subordinated Debt” beginning on page 107 of this Form 10-K. In addition, in July 2007, WAL made an 80 percent interest investment in Shine Investment Advisory Services Inc. (“Shine”), a registered investment advisor.

Bank Subsidiaries

				Year		Number of
				Founded/		Branch				Total				Net
Bank Name		Headquarter		Acquired		Locations		Location Cities		Assets				Loans				Deposits
										(in millions)
BON (1)		Las Vegas Nevada		1994		12		Las Vegas, North Las Vegas, Henderson, and Mesquite		$	2,779.1			$	2,004.6			$	2,203.8
FIBN		Reno, Nevada		2007		6		Reno, Sparks, Fallon, and Spanish Springs		$	517.9			$	370.5			$	455.4
ABA		Phoenix, Arizona		2003		10		Phoenix, Tucson, Scottsdale, Sedona, Mesa, and Flagstaff		$	1,122.9			$	728.6			$	984.4
TPB		San Diego, CA		2003		7		San Diego, La Mesa, and Carlsbad		$	1,161.8			$	807.9			$	931.4
AAB		Oakland, CA		2006		2		Oakland and Piedmont		$	176.3			$	102.4			$	150.5

In the third quarter of 2009, the Company announced a strategic cost reduction program, which includes the consolidation of four branch locations in Arizona and Nevada into other nearby branch facilities, operational efficiency enhancements and other cost reduction programs. The Company is also evaluating consolidation of its banking subsidiary charters. The Company expects to see positive net operating results in 2010 from these and other recent efficiency improvement initiatives.

Non-Bank Subsidiaries and Affiliates

In December 2003, WAL acquired PTI located in Las Vegas, Nevada, which provides trust and investment services to businesses, individuals and non-profit entities. PTI has one wholly owned subsidiary, PT Insurance, LLC which is inactive.

WAL acquired Miller/Russell & Associates, Inc. (“MRA”), an Arizona registered investment advisor in 2004. MRA provides investment advisory services to individuals, foundations, retirement plans and corporations. On December 31, 2009, the Company completed the sale of a 75 percent interest in Miller/Russell to certain members of the Miller/Russell management team in exchange for approximately $2.7 million. The purchase price included $600,000 in cash and proceeds from a $2.1 million secured term loan extended by ABA. The transaction closed on December 31, 2009.

The Company provides a full range of banking services, as well as trust and investment advisory services, through its consolidated subsidiaries. Applicable accounting guidance provides for the identification of reportable segments on the basis of discreet business units and their financial information to the extent such units are reviewed by an entity’s chief operating decision maker.

Market Segments

The Company had six reportable operating segments at December 31, 2009. The Company’s reporting segments were modified in the second quarter of 2008 to reflect the way the Company manages and assesses the performance of the business. The Company reports the banking operations on a state-by-state basis rather than on a per bank basis, as was done in the past. The Company also created two new segments to report the asset management and credit card operations.

Previously, the asset management operations were included in “Other” and the credit card operations were included in “Torrey Pines Bank.”

The six reportable operating segments are “Nevada” (Bank of Nevada and First Independent Bank of Nevada), “Arizona” (Alliance Bank of Arizona), “California” (Torrey Pines Bank and Alta Alliance Bank), “Asset Management” (Miller/Russell, Premier Trust and Shine), “Credit Card Services” (PartnersFirst) and “Other” (Western Alliance Bancorporation holding company and the Company’s Equipment Leasing unit). Prior period balances were reclassified to reflect the change.

The accounting policies of the reported segments are the same as those of the Company as described in Note 1. “Nature of Business and Summary of Significant Accounting Policies” beginning on page 80. Transactions between segments consisted primarily of borrowings and loan participations. All intercompany transactions are eliminated for reporting consolidated results of operations. Loan participations are recorded at par value with no resulting gain or loss. The Company allocated centrally-provided services to the operating segments based upon estimated usage of those services. Please refer to Note 20, “Segments” in our Consolidated Financial Statements for financial information regarding segment reporting beginning on page 121.

The state-by-state bank and credit card segments derive a majority of their revenues from net interest income generated from quality loan growth offset by deposit costs. The Company’s chief executive officer relies primarily on the success of loan and deposit growth while maintaining net interest margin and net profits from these efforts to assess the performance of these segments. The asset management segment derives a majority of its revenue from fees based on assets under management. The Company’s chief executive officer relies primarily on fees and managed assets when assessing the performance of and allocating resources to this segment

Nevada Segment

The Nevada banking operations include Bank of Nevada, a Nevada-chartered commercial bank headquartered in Las Vegas, Nevada and First Independent Bank of Nevada, a Nevada-chartered commercial bank headquartered in Reno, Nevada.

Arizona Segment

The Arizona banking operations include Alliance Bank of Arizona, an Arizona-chartered commercial bank headquartered in Phoenix, Arizona.

California Segment

The California banking operations includes Torrey Pines Bank, a California-chartered commercial bank headquartered in San Diego, California, and Alta Alliance Bank, a California-chartered commercial bank headquartered in Oakland, California.

Asset Management Segment

Our asset management operating segment included the former Miller/Russell & Associates, Inc., Shine Investment Advisory Services, Inc., and Premier Trust, Inc., all of which offer investment advisory services to businesses, individuals, and non-profit entities. Other services offered include wealth management services such as trust administration of personal and retirement accounts, estate and financial planning, custody services and other investments. As of December 31, 2009, the asset management operating segment had $1.7 billion in total assets under management and $518.5 million in total trust assets. The asset management operating segment had offices in Phoenix, Arizona; Las Vegas, Nevada; and Lone Tree, Colorado.

Credit Card Services Segment

The credit card services segment consists of PartnersFirst Affinity Services (“PartnersFirst”), a division of Torrey Pines Bank. PartnersFirst focuses on affinity credit card marketing using an innovative model and approach. As of December 31, 2009, it had $50.2 million in credit card loans outstanding.

Other

The other segment consists of the holding company, Western Alliance Bancorporation and Western Alliance Equipment Finance, Inc., which generates equipment leasing and loan transactions for the Company’s banking subsidiaries and provides administrative support services for these transactions.

Lending Activities

Through its banking segments, the Company provides a variety of financial services to customers, including commercial and residential real estate loans, construction and land development loans, commercial loans, and consumer loans. The Company’s lending has focused primarily on meeting the needs of business customers. Loans to business comprised 84.1% and 83.9% of the total loan portfolio at December 31, 2009 and 2008, respectively.

Commercial Real Estate (”CRE”): Loans to finance the purchase of CRE and loans to finance inventory and working capital that are additionally secured by CRE make up the majority of our loan portfolio. These CRE loans are secured by apartment buildings, professional offices, industrial facilities, retail centers and other commercial properties. As of December 31, 2009 and 2008, 53.9% and 58.1% of our CRE loans were owner-occupied.

Construction and Land Development: Construction and land development loans include industrial/warehouse properties, office buildings, retail centers, medical facilities, restaurants and single-family homes. These loans are primarily originated to experienced local developers with whom the Company has a satisfactory lending history. An analysis of each construction project is performed as part of the underwriting process to determine whether the type of property, location, construction costs and contingency funds are appropriate and adequate. Loans to finance commercial raw land are primarily to borrowers who plan to initiate active development of the property within two years.

Commercial and Industrial: Commercial and industrial loans include working capital lines of credit, inventory and accounts receivable lines, equipment loans and other commercial loans. Commercial loans are primarily originated to small and medium-sized businesses in a wide variety of industries. ABA is designated a “Preferred Lender” in Arizona with the Small Business Association (“SBA”) under its “Preferred Lender Program.”

Residential Real Estate: We originate residential mortgage loans secured by one to four single family properties, the majority of which serve as the primary residence of the borrower. These loans generally result from relationships with existing or past customers, members of our local community, and referrals from realtors, attorneys and builders.

Consumer: A variety of consumer loan types are offered to meet customer demand and to respond to community needs. Consumer loans are generally offered at a higher rate and shorter term than residential mortgages. Examples of our consumer loans include: home equity loans and lines of credit; home improvement loans; credit card loans; new and used automobile loans; and personal lines of credit.

As of December 31, 2009, our loan portfolio totaled $4.1 billion, or approximately 70.9% of our total assets. The following table sets forth the composition of our loan portfolio as of December 31, 2009 and 2008.

		December 31,
		2009								2008
		Amount				Percent				Amount				Percent
		(dollars in thousands)
Commercial real estate-owner occupied		$	1,091,363				26.7	%		$	1,024,947				25.0	%
Commercial real estate-non-owner			933,261				22.7	%			738,445				17.9	%
Commercial and industrial			802,193				19.5	%			860,280				21.0	%
Construction and land development			623,198				15.2	%			820,874				20.0	%
Residential real estate			568,319				13.9	%			589,196				14.4	%
Consumer			80,300				2.0	%			71,148				1.7	%
Total loans			4,098,634				100.0	%			4,104,890				100.0	%
Net deferred fees and unearned income			(18,995	)							(9,179	)
Total loans, net of deferred loan fees		$	4,079,639							$	4,095,711

For additional information concerning loans, refer to Note 4, “Loans, Leases and Allowance for Credit Losses” of the Consolidated Financial Statements or see the “Management Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Loans” discussion beginning on page 36.

General

The Company adheres to a specific set of credit standards across our bank subsidiaries that ensure the proper management of credit risk. Furthermore, our holding company’s management team plays an active role in monitoring compliance with such standards by our banks.

Loan originations are subject to a process that includes the credit evaluation of borrowers, established lending limits, analysis of collateral, and procedures for continual monitoring and identification of credit deterioration. Loan officers actively monitor their individual credit relationships in order to report suspected risks and potential downgrades as early as possible. The respective boards of directors of each of our banking subsidiaries establish their own loan policies, as well as loan limit authorizations. Except for variances to reflect unique aspects of state law and local market conditions, our lending policies generally incorporate consistent underwriting standards. The Company monitors all changes to each respective bank’s loan policy to ensure this philosophy. Our credit culture has helped us to identify troubled credits early, allowing us to take corrective action when necessary.

Loan Approval Procedures and Authority

Our loan approval procedures are executed through a tiered loan limit authorization process, which is structured as follows:

•

Individual Authorities. The chief credit officer (“CCO”) of each subsidiary bank sets the authorization levels for individual loan officers on a case-by-case basis. Generally, the more experienced a loan officer, the higher the authorization level. The maximum approval authority for a loan officer is $2.0 million for real estate secured loans and $750,000 for other loans.

•

Management Loan Committees. Credits in excess of individual loan limits are submitted to the appropriate bank’s Management Loan Committee. The Management Loan Committees consist of members of the senior management team of that bank and are chaired by that bank’s chief credit officer. The Management Loan Committees have approval authority up to $6.0 million at Bank of Nevada, $7.5 million at Alliance Bank of Arizona, $5.0 million at Torrey Pines Bank and First Independent Bank of Nevada and $5.5 million at Alta Alliance Bank.

•

Credit Administration. Credits in excess of the Management Loan Committee authority are submitted by the bank subsidiary to Western Alliance’s Credit Administration (“WACA”). WACA consists of the CCOs of Western Alliance and Bank of Nevada. WACA has approval authority up to established house concentration limits which range from $10 million to $35 million, depending on quality risk rating.

•

Board of Directors Oversight. The chief executive officer (“CEO”) of Western Alliance Bancorporation acting with the Chairman of the Board of Directors of Bank of Nevada has approval authority up to the bank’s legal lending limit.

Our credit administration department works independent of loan production.

Loans to One Borrower. In addition to the limits set forth above, state banking law generally limits the amount of funds that a bank may lend to a single borrower. Under Nevada law, the combination of investments in private securities and total amount of outstanding loans that a bank may make to a single borrower generally may not exceed 25% of stockholders’ tangible equity. Under Arizona law, the obligations of one borrower to a bank may not exceed 20% of the bank’s capital, plus an additional 10% of its capital if the additional amounts are fully secured by readily marketable collateral. Under California law, the unsecured obligations of any one borrower to a bank generally may not exceed 15% of the sum of the bank’s shareholders’ equity, allowance for loan losses, capital notes and debentures; and the secured and unsecured obligations of any one borrower to a bank generally may not exceed 25% of the sum of the bank’s shareholders’ equity, allowance for loan losses, capital notes and debentures.

Concentrations of Credit Risk. Our lending policies also establish customer and product concentration limits to control single customer and product exposures. Our lending policies have several different measures to limit concentration exposures. Set forth below are the primary segmentation limits and actual measures as of December 31, 2009:

		Percent of Total Capital								Percent of Total Loans
		Policy Limit				Actual				Policy Limit				Actual
Commercial Real Estate — Term			350	%			305	%			65	%			50	%
Construction			140				92				30				15
Commercial and Industrial			225				118				30				19
Residential Real Estate			125				85				65				14
Consumer			25				12				15				2

Asset Quality

General

To measure asset quality, the Company has instituted a loan grading system consisting of nine different categories. The first five are considered “satisfactory.” The other four grades range from a “watch” category to a “loss” category and are consistent with the grading systems used by Federal banking regulators. All loans are assigned a credit risk grade at the time they are made, and each originating loan officer reviews the credit with his or her immediate supervisor on a quarterly basis to determine whether a change in the credit risk grade is warranted. In addition, the grading of our loan portfolio is reviewed, at minimum, annually by an external, independent loan review firm.

Collection Procedure

If a borrower fails to make a scheduled payment on a loan, the bank attempts to remedy the deficiency by contacting the borrower and seeking payment. Contacts generally are made within 15 business days after the payment becomes past due. Bank of Nevada, Alliance Bank of Arizona and Torrey Pines Bank each maintain a Special Assets Department, which generally services and collects loans rated substandard or worse. Due to a smaller volume of classified loans, Alta Alliance Bank and First Independent Bank of Nevada have collection of classified loans supervised by a senior executive. Each bank’s CCO is responsible for monitoring activity that may indicate an increased risk rating, such as past-dues, overdrafts, loan agreement covenant defaults, etc. All charge-offs in excess of $25,000 require the formal review of each bank’s respective board of directors. Loans deemed uncollectible are proposed for charge-off at each respective bank’s board meeting.

Nonperforming Assets

Nonperforming assets include loans past due 90 days or more and still accruing interest, nonaccrual loans, restructured loans, and other repossessed assets including other real estate owned (“OREO”). In general, loans are placed on nonaccrual status when we determine timely recognition of interest to be in doubt due to the borrower’s financial condition and collection efforts. Restructured loans have modified terms to reduce either principal or interest due to deterioration in the borrower’s financial condition. Other repossessed assets resulted from loans where we have received title or physical possession of the borrower’s assets. The Company attempts to sell these assets, which has resulted in losses on repossessed assets of $21.3 million and $0.7 million for the years ended December 31, 2009 and 2008, respectively. These losses may continue in future periods.

Criticized Assets

Federal regulations require that each insured bank classify its assets on a regular basis. In addition, in connection with examinations of insured institutions, examiners have authority to identify problem assets, and, if appropriate, classify them. Loan grades six through nine of our loan grading system are utilized to identify potential problem assets.

The following describes the potential problem assets in our loan grading system:

•

“Watch List/Special Mention.” Generally these are assets that require more than normal management attention. These loans may involve borrowers with adverse financial trends, higher debt to equity ratios, or weaker liquidity positions, but not to the degree of being considered a “problem loan” where risk of loss may be apparent. Loans in this category are usually performing as agreed, although there may be some minor non-compliance with financial covenants.

•

“Substandard.” These assets contain well-defined credit weaknesses and are characterized by the distinct possibility that the bank will sustain some loss if such weakness or deficiency is not corrected. These loans generally are adequately secured and in the event of a foreclosure action or liquidation, the bank should be protected from loss. All loans 90 days or more past due and all loans on nonaccrual are considered at least “substandard,” unless extraordinary circumstances would suggest otherwise.

•

“Doubtful.” These assets have an extremely high probability of loss, but because of certain known factors which may work to the advantage and strengthening of the asset (for example, capital injection, perfecting liens on additional collateral and refinancing plans), classification as an estimated loss is deferred until a more precise status may be determined.

•

“Loss.” These assets are considered uncollectible, and of such little value that their continuance as assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practicable or desirable to defer writing off the asset, even though partial recovery may be achieved in the future.

Allowance for Credit Losses

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 collectability of the contractual principal or interest is unlikely. 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 the other factors noted earlier. For a detailed discussion of the Company’s methodology see “Management’s Discussion and Analysis and Financial Condition — Critical Accounting Policies — Allowance for Credit Losses” beginning on page 47.

Investment Activities

Each of our banking subsidiaries has its own investment policy, which is approved by each respective bank’s board of directors. These policies dictate that investment decisions will be made based on the safety of the investment, liquidity requirements, potential returns, cash flow targets, and consistency with our interest rate risk management. Each bank’s chief financial officer (“CFO”) is responsible for making securities portfolio decisions in accordance with established policies. The CFO has the authority to purchase and sell securities within specified guidelines established by the Company’s accounting and investment policies. All transactions for a specific bank are reviewed by that bank’s asset and liability management committee or board of directors.

Based on changes to the policies made in 2008, our banks’ investment policies generally limit securities investments to cash and cash equivalents, which includes short-term investments with a duration of less than 180 days issued by companies rated “A” or better; securities backed by the full faith and credit of the U.S. government, including U.S. treasury bills, notes, and bonds, and direct obligations of Ginnie Mae (and may in the future encompass certain securities associated with the TARP program); mortgage-backed securities (“MBS”) or collateralized mortgage obligations (“CMO”) issued by a government-sponsored enterprise (“GSE”) such as Fannie Mae, Freddie Mac, or Ginnie Mae; municipal securities with a rating of “AAA,” and mandatory purchases of equity securities of the FRB and FHLB.

The Company no longer purchases (although we may continue to hold previously acquired) collateralized debt obligations, adjustable rate preferred securities, or private label collateralized mortgage obligations. Our policies also govern the use of derivatives, and provide that the Company and its banking subsidiaries are to prudently use derivatives as a risk management tool to reduce the Bank’s overall exposure to interest rate risk, and not for speculative purposes.

All of our investment securities are classified as available-for-sale (“AFS”), held-to-maturity (“HTM”) or measured at fair value (“trading”) pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 320, “Investments” and FASB ASC Topic 825, “Financial Instruments”. Available-for -sale securities are reported at fair value in accordance with FASB Topic 820, “Fair Value Measurements and Disclosures.” For additional information regarding the Company’s accounting policy for investment securities see, “Management’s Discussion and Analysis of Financial Condition — Critical Accounting Policies — Investment Securities” beginning on page 47.

As of December 31, 2009, the Company had an investment securities portfolio of $810.8 million, representing approximately 14.1% of our total assets, with the majority of the portfolio invested in AAA-rated securities. The average duration of our investment securities is 5.0 years as of December 31, 2009. The following table summarizes the investment securities portfolio as of December 31, 2009 and 2008.

		December 31,
		2009								2008
		Amount				Percent				Amount				Percent
		(dollars in millions)
Direct obligation and GSE residential mortgage-backed		$	655.1				80.8	%		$	436.8				77.3	%
Private label residential mortgage-backed			18.2				2.2	%			38.4				6.8	%
U.S. Treasury securities			0.0				0.0	%			8.2				1.5	%
U.S. Government sponsored agency securities			2.5				0.3	%			2.5				0.4	%
Adjustable rate preferred stock			18.3				2.3	%			27.7				4.9	%
Trust preferred securities			22.0				2.7	%			16.3				2.9	%
Municipal obligations			5.4				0.7	%			19.0				3.4	%
Collateralized debt obligations			0.9				0.1	%			1.2				0.2	%
FDIC guaranteed corporate bonds			71.2				8.8	%			0.0				0.0	%
Other			17.2				2.1	%			15.3				2.7	%
Total		$	810.8				100.0	%		$	565.4				100.0	%

As of December 31, 2009 and 2008, the Company had an investment in bank-owned life insurance (“BOLI”) of $92.5 million and $90.7 million, respectively. The BOLI was purchased to help offset employee benefit costs. For additional information concerning investments, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Investments.”

Deposit Products

The Company offers a variety of deposit products including checking accounts, savings accounts, money market accounts and other types of deposit accounts, including fixed-rate, fixed maturity retail certificates of deposit. The Company has historically focused on growing its lower cost core customer deposits. As of December 31, 2009, the deposit portfolio was comprised of 24.5% non-interest bearing deposits and 75.5% interest-bearing deposits.

Noninterest bearing deposits consist of non-interest bearing checking. The Company considers these deposits to be core deposits.

The competition for deposits in our markets is fierce. The Company has historically been successful in attracting and retaining deposits due to several factors, including (1) the high level of customer service we provide; (2) our experienced relationship bankers who have strong relationships within their communities; (3) the broad selection of cash management services we offer; (4) competitive pricing on earnings credits paid for deposits; and (5) the ability to leverage our multiple bank charters to provide extended federal deposit insurance. The Company intends to continue its focus on attracting deposits from our business lending relationships in order to maintain low cost of funds and improve net interest margin. The loss of low-cost deposits could negatively impact future profitability.

Deposit balances are generally influenced by national and local economic conditions, changes in prevailing interest rates, internal pricing decisions, perceived stability of financial institutions and competition. The Company’s deposits are primarily obtained from communities surrounding our branch offices. In order to attract and retain quality deposits, we rely on providing quality service and introducing new products and services that meet the needs of customers.

The Company’s deposit rates are determined by each individual bank through an internal oversight process under the direction of its asset and liability committee. The banks consider a number of factors when determining deposit rates, including:

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current and projected national and local economic conditions and the outlook for interest rates;

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local competition;

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loan and deposit positions and forecasts, including any concentrations in either; and

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FHLB and FRB advance rates and rates charged on other funding sources.

The following table shows our deposit composition:

		December 31,
		2009								2008
		Amount				Percent				Amount				Percent
		(dollars in thousands)
Non-interest bearing demand		$	1,157.013				24.5	%		$	1,010,625				27.7	%
Interest-bearing demand			362,682				7.7	%			253,529				6.9	%
Savings and money market			1,752,450				37.1	%			1,351,502				37.0	%
Time certificates of $100,000 or more			1,205,162				18.8	%			638,806				17.5	%
Other time deposits			244,795				11.9	%			397,804				10.9	%
Total deposits		$	4,722,102				100.0	%		$	3,652,266				100.0	%

In addition to our deposit base, we have access to other sources of funding, including FHLB and FRB advances, repurchase agreements and unsecured lines of credit with other financial institutions. Additionally, in the past, we have accessed the capital markets through trust preferred offerings. For additional information concerning our deposits see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Balance Sheet Analysis — Deposits” beginning on page 42.

Financial Products and Services

In addition to traditional commercial banking activities, the Company offers other financial services to customers, including: internet banking, wire transfers, electronic bill payment, lock box services, courier, and cash management services.

Through the Asset Management segment, the Company offers asset allocation and investment advisory services, wealth management services including trust administration of personal and retirement accounts, estate and financial planning, and custody services.

Customer, Product and Geographic Concentrations

Approximately 64.6% of the loan portfolio at December 31, 2009 consisted of commercial real estate secured loans, including commercial real estate loans and construction and land development loans. The Company’s business is concentrated in the Las Vegas, San Diego, Tucson, Phoenix, Reno and Oakland metropolitan areas. Consequently, the Company is dependent on the trends of these regional economies. The Company is not dependent upon any single or limited number of customers, the loss of which would have a material adverse effect on the Company. No material portion of the Company’s business is seasonal.

Acquisitions

In February 2009, BON was selected to acquire the deposits and certain assets of a failed institution in Nevada. See “Recent Developments and Company Response” beginning on page 12 for further detailed information.

Foreign Operations

The Company has no foreign operations. The bank subsidiaries occasionally provide loans, letters of credit and other trade-related services to commercial enterprises that conduct business outside the United States.

Competition

The banking and financial services industries in our market areas remain highly competitive despite the recent economic downturn. Many of our competitors are much larger in total assets and capitalization, have greater access to capital markets, and offer a broader range of financial services than we can offer.

This increasingly competitive environment is primarily a result of changes in regulation that made mergers and geographic expansion easier; changes in technology and product delivery systems, such as ATM networks and web-based tools; the accelerating pace of consolidation among financial services providers; and the flight of deposit customers to perceived increased safety. We compete for loans, deposits and customers with other commercial banks, local community banks, savings and loan associations, securities and brokerage companies, mortgage companies, insurance companies, finance companies, money market funds, credit unions, and other non-bank financial services providers. In recent periods, we have also had the opportunity to bid on resolutions of a number of financial institutions and the asset portfolios of other institutions, and we face stiff competition for these investment opportunities from these same competitors, and also from well-funded investment vehicles that have been formed to capitalize on the recent market distress.

Competition for deposit and loan products remains strong from both banking and non-banking firms, and this competition directly affects the rates of those products and the terms on which they are offered to consumers. Competition for deposits has increased markedly, with many bank customers turning to deposit accounts at the largest, most-well capitalized financial institutions or the purchase of U.S. treasury securities.

Technological innovation continues to contribute to greater competition in domestic and international financial services markets. Many customers now expect a choice of several delivery systems and channels, including telephone, mail, home computer and ATMs.

Mergers between financial institutions have placed additional pressure on banks to consolidate their operations, reduce expenses and increase revenues to remain competitive. In addition, competition has intensified due to federal and state interstate banking laws, which permit banking organizations to expand geographically with fewer restrictions than in the past. These laws allow banks to merge with other banks across state lines, thereby enabling banks to establish or expand banking operations in our market. The competitive environment is also significantly impacted by federal and state legislation that makes it easier for non-bank financial institutions to compete with us.

Employees

As of December 31, 2009, the Company had 930 full-time equivalent employees. The Company’s employees are not represented by a union or covered by a collective bargaining agreement. Management believes that its employee relations are good.

Recent Developments and Company Response

The global and U.S. economies, and the economies of the local communities in which we operate, experienced a rapid decline in 2008. The financial markets and the financial services industry in particular suffered unprecedented disruption, causing many major institutions to fail or require government intervention to avoid failure. These conditions were brought about largely by the erosion of U.S. and global credit markets, including a significant and rapid deterioration of the mortgage lending and related real estate markets. Despite these conditions, in 2009 we continued to grow net interest income to $202.3 million, up 3.7% from $194.9 million in 2008. However, as with many financial institutions, we suffered losses resulting primarily from significant provisions for credit losses, and write-downs of securities holdings and goodwill.

The United States, state and foreign governments have taken extraordinary actions in an attempt to deal with the worldwide financial crisis and the severe decline in the economy. In the United States, the federal government has adopted the Emergency Economic Stabilization Act of 2008 (enacted on October 3, 2008) and the American Recovery and Reinvestment Act of 2009 (enacted on February 17, 2009). Among other matters, these laws:

•

provide for the government to invest additional capital into banks and otherwise facilitate bank capital formation (commonly referred to as the Troubled Asset Relief Program, or “TARP”);

•

increase the limits on federal deposit insurance; and

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provide for various forms of economic stimulus, including to assist homeowners in restructuring and lowering mortgage payments on qualifying loans.

Other laws, regulations, and programs at the federal, state and even local levels are under consideration that seek to address the economic climate and/or the financial institutions industry. The effect of these initiatives cannot be predicted.

During 2008, the Company took advantage of TARP to raise new capital and strengthen its balance sheet. This capital, and capital that was raised in 2009 from private investors, provides us with the flexibility to take advantage of opportunities that may arise out of the current disruption in the financial institution market.

The Company’s Bank of Nevada subsidiary was notified by banking regulators that its operations and activities will be subject to additional informal supervisory oversight in the form of a Memorandum of Understanding following their September 30, 2008 examination of the bank. During the fourth quarter 2008, the Bank of Nevada board of directors formed a regulatory oversight committee to ensure timely and complete resolution to all issues raised during its regulatory examination. Since that time, the regulatory oversight committee has met on average no less than monthly. During 2009, management of Bank of Nevada, under the supervision of the regulatory oversight committee, has completed the following: (a) revised the policy for allowance for loan and lease losses, (b) adopted a written model governance process for measuring, monitoring, controlling and reporting loan and investment portfolio risks, and (c) revised its policy on asset liability management, with guidelines for interest rate risk modeling, monitoring results for adherence to board risk tolerances, and guidelines for periodic validation and back testing. The bank has adopted a three year strategic plan to be updated annually. The bank has further adopted formal written plans to: (1) improve loan underwriting and administration, (2) manage delinquent and non-performing loans, (3) reduce loan concentration risks, (4) improve identification of other than temporary impairment within its investment portfolio, and (5) improve liquidity. Each of the above documents has been formally approved by the Bank of Nevada board of directors. Additionally, the board of directors expanded oversight and governance by requiring formal quarterly reporting by management on specified topics as part of a standing agenda.

On November 16, 2009, the Federal Deposit Insurance Corporation (“FDIC”) issued a Consent Order with respect to the Company’s Torrey Pines Bank subsidiary. Pursuant to the Order, Torrey Pines Bank has consented to take certain actions to enhance a variety of its policies, procedures and processes regarding management and board oversight, holding company and affiliate transactions, compliance programs with training, monitoring and audit procedures, and risk management. Under the oversight of its Board of Directors, Torrey Pines Bank has taken a number of steps to fully comply with each of the requirements set forth in the Consent Order. Specifically, the bank has enhanced its compliance management system and its policies in the following areas: (a) transactions with affiliates, (b) allowance for credit losses, (c) vendor management, (d) ACH transactions; (e) business continuity planning, (f) remote deposit capture. In addition, the bank has enhanced its monitoring, training and audit procedures, and developed written plans to: (1) maintain Tier 1 capital at no less than 8 percent of the bank’s total assets for the duration of the Order, (2) dispose of large classified assets, (3) reduce and collect delinquent loans, and (4) reduce its commercial real estate loan concentrations, The bank also has adopted a written three-year strategic plan, formulated a written profit plan, and strengthened its information technology programs.

The Company’s Alliance Bank of Arizona subsidiary executed a Memorandum of Understanding with the FDIC and the Arizona Department of Financial Institutions (“DFI”) on November 24, 2009, following examination of the bank by the FDIC and DFI. Pursuant to the Memorandum of Understanding, the board of directors of Alliance Bank of Arizona agreed to take certain actions to enhance a variety of its policies, procedures and processes regarding board oversight and participation, management, asset quality and credit underwriting and administration, concentrations of credit, earnings and capital planning, and violations of laws and regulations. Under the oversight of its Board of Directors, Alliance Bank of Arizona has taken a number of steps to fully comply with each of the requirements set forth in the Memorandum of Understanding. Specifically, the bank has enhanced its methodology for allowance for credit losses, and adopted a comprehensive three year strategic plan. The bank also has adopted formal written plans to: (1) improve loan underwriting and administration, (2) manage delinquent and non-performing loans, and (3) reduce loan concentration risks. In addition, the Board of Directors has increased the frequency of its regular meetings to monthly, and created additional committees to strengthen its oversight of the bank.

The Company has bid from time to time on the purchase of select assets and deposits of such institutions. In February, 2009, Bank of Nevada was selected to acquire the deposits and certain assets of the former Security Savings Bank (Henderson, Nevada). On February 27, 2009 Security Savings Bank was closed by the Nevada Financial Institutions Division, and the FDIC was named receiver. Bank of Nevada agreed to assume all of the failed bank’s deposits, totaling approximately $132 million, excluding brokered deposits. Bank of Nevada paid no premium to acquire the deposits. No loans were acquired in this transaction.

The Company expects to continue evaluating similar failed bank opportunities in the future and, in addition, is pursuing financially sound borrowers whose financing sources are unable to service their current needs as a result of liquidity or other concerns, seeking both their lending and deposits business. Although there can be no assurance that the Company’s efforts will be successful, we are seeking to take advantage of the current disruption in our markets to continue to grow market share, assets and deposits in a prudent fashion, subject to applicable regulatory limitations.

Supervision and Regulation

The Company and its subsidiaries are extensively regulated and supervised under both Federal and State laws. A summary description of the laws and regulations which relate to the Company’s operations are discussed on pages 56 through 71.

Additional Available Information

The Company maintains an Internet website at http://www.westernalliancebancorp.com. The Company makes available its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and other information related to the Company free of charge, through this site as soon as reasonably practicable after it electronically files those documents with, or otherwise furnishes them to the Securities Exchange Commission (“SEC”). The SEC maintains an internet site, http://www.sec.gov, in which all forms filed electronically may be accessed. The Company’s internet website and the information contained therein are not intended to be incorporated in this Form 10-K.

ITEM IA. RISK FACTORS

Investing in our common stock involves various risks which are specific to the Company. Several of these risks and uncertainties, are discussed below and elsewhere in this report. This listing should not be considered as all-inclusive. These factors represent risks and uncertainties that could have a material adverse effect on our business, results of operations and financial condition. Other risks that we do not know about now, or that we do not believe are significant, could negatively impact our business or the trading price of our securities. In addition to common business risks such as theft, loss of market share and disasters, the Company is subject to special types of risk due to the nature of its business. See additional discussions about credit, interest rate, market and litigation risks in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this report beginning on page 24 and additional information regarding legislative and regulatory risks in the “Supervision and Regulation” section beginning on page 56.

The Company’s business may be adversely affected by conditions in the financial markets and economic conditions generally

The continued decline in economic conditions and disruptions to financial markets may not improve for the foreseeable future, which could cause the Company to suffer additional operating losses, adversely affect its liquidity position, erode its capital base, or create other business problems. The global and U.S. economies, and the economies of the local communities in which we operate, have experienced a rapid decline, which began in 2008. The financial markets and the financial services industry in particular have suffered unprecedented disruption, causing many major institutions to fail or require government intervention to avoid failure. These conditions were largely the result of the erosion of the U.S. and global credit markets, including a significant and rapid deterioration of the mortgage lending and related real estate markets. As a consequence of the difficult economic environment, we experienced losses, resulting primarily from significant provisions for credit losses, losses on sales of repossessed assets, and substantial impairments of our investment securities and goodwill. Although the Company continued to grow net interest income in 2009, there can be no assurance that the economic conditions that have adversely affected the financial services industry, and the capital, credit and real estate markets generally, will improve in the near term, in which case the Company could continue to experience significant losses and write-downs of assets, and could face capital and liquidity constraints or other business challenges.

The soundness of other financial institutions with which the Company does business could adversely affect us

The financial services industry and the securities markets have been materially adversely affected by significant declines in values of almost all asset classes and by extreme lack of liquidity in the capital and credit markets. Financial institutions specifically have been subject to increased volatility and an overall loss in investor confidence.

Financial institutions are interrelated as a result of trading, clearing, counterparty, investment or other relationships. We routinely execute transactions with counterparties in the financial services industry such as commercial banks, brokers and dealers, investment banks and other institutional clients for a range of transactions including loan participations, derivatives and hedging transactions. In addition, we invest in securities or loans originated or issued by financial institutions or supported by the loans they originate. Recent defaults by financial services institutions, and even rumors or questions about one or more financial services institutions or the financial services industry in general, have led to market-wide liquidity problems and could lead to losses or defaults by the Company or other institutions. Many of these transactions expose us to credit or investment risk in the event of default by our counterparty. In addition, our credit risk may be exacerbated if the collateral we hold cannot be realized or is liquidated at prices not sufficient to recover the full amount of the loan or other exposure to us. We have taken significant impairments or write-downs in our securities portfolio and have suffered periodic gains or losses on other investments under mark to market accounting treatment. We could incur additional losses to our securities portfolio in the future as a result of these issues. These types of losses may have a material adverse effect on our business, financial condition or results of operation.

Our current primary market area is substantially dependent on gaming and tourism revenue, and the downturn in the gaming and tourism industries has hurt our business and our prospects

Our business is currently concentrated in the Las Vegas metropolitan area. The economy of the Las Vegas metropolitan area is unique in the United States for its level of dependence on services and industries related to gaming and tourism. Although we have no substantial customer relationships in the gaming and tourism industries, the downturn in the Las Vegas economy has adversely affected our customers, and has resulted in an increase in loan delinquencies and foreclosures, a reduction in the demand for some of our products and services, and a reduction of the value of our collateral for loans, which has adversely affected our business, financial condition, results of operations and prospects.

Any event or state of affairs that negatively impacts the gaming or tourism industry adversely impacts the Las Vegas economy. Gaming and tourism revenue (whether or not such tourism is directly related to gaming) is particularly vulnerable to fluctuations in the economy. Virtually any development or event that dissuades travel or spending related to gaming and tourism, whether inside or outside of Las Vegas, adversely affects the Las Vegas economy. In this regard, the Las Vegas economy is more susceptible than the economies of other cities to such issues as higher gasoline and other fuel prices, increased airfares, unemployment levels, recession, rising interest rates, and other economic conditions, whether domestic or foreign. Gaming and tourism are also susceptible to certain political conditions or events, such as military hostilities and acts of terrorism, whether domestic or foreign. In addition, Las Vegas competes with other areas of the country, and other parts of the world, for gaming revenue, and it is possible that the expansion of gaming operations in other states, such as California, and other countries, as a result of changes in laws or otherwise, could significantly reduce gaming revenue in the Las Vegas area.

The Company is highly dependent on real estate and events that negatively impact the real estate market hurt our business

The Company is located in areas in which economic growth is largely dependent on the real estate market, and a significant portion of our loan portfolio is dependent on real estate. As of December 31, 2009, real estate related loans accounted for a significant percentage of total loans. Real estate values have been declining in our markets, in some cases in a material and even dramatic fashion, which affects collateral values and has resulted in increased provisions for loan losses. We expect the weakness in these portions of our loan portfolio to continue well into 2010. Accordingly, it is anticipated that our nonperforming asset and charge-off levels will remain elevated.

Further, the effects of recent mortgage market challenges, combined with the ongoing decrease in residential real estate market prices and demand, could result in further price reductions in home values, adversely affecting the value of collateral securing the residential real estate and construction loans that we hold, as well as loan originations and gains on sale of real estate and construction loans. A further decline in real estate activity would likely cause a further decline in asset and deposit growth and further negatively impact our financial condition.

The Company’s high concentration of commercial real estate, construction and land development and commercial, industrial loans expose us to increased lending risks

Commercial real estate, construction and land development and commercial and industrial loans, comprise a significant percentage of the total loan portfolio as of December 31, 2009, and expose the Company to a greater risk of loss than residential real estate and consumer loans, which comprised a smaller percentage of the total loan portfolio at December 31, 2009. Commercial real estate and land development loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to residential loans. Consequently, an adverse development with respect to one commercial loan or one credit relationship exposes us to a significantly greater risk of loss compared to an adverse development with respect to one residential mortgage loan.

Credit losses are inherent in the business of making loans and could have a material adverse effect on our operating results. We make various assumptions and judgments about the collectability of our loan portfolio and provide an allowance for estimated credit losses based on a number of factors. Management believes that the allowance for credit losses is adequate. However, if assumptions or judgments are wrong, the allowance for credit losses may not be sufficient to cover actual credit losses. The Company may have to increase the allowance in the future in response to the request of one of our primary banking regulators, to adjust for changing conditions and assumptions, or as a result of any deterioration in the quality of the loan portfolio. The actual amount of future provisions for credit losses cannot be determined at this time and may vary from the amounts of past provisions.

The Company’s financial instruments expose it to certain market risks and may increase the volatility of reported earnings

The Company maintains certain financial instruments at measured at fair value. For those financial instruments measured at fair value, the Company is required to recognize the changes in the fair value of such instruments in earnings. Therefore, any increases or decreases in the fair value of these financial instruments have a corresponding impact on reported earnings. Fair value can be affected by a variety of factors, many of which are beyond our control, including our credit position, interest rate volatility, volatility in capital markets and other economic factors. Accordingly, our earnings are subject to mark-to-market risk and the application of fair value accounting may cause our earnings to be more volatile than would be suggested by our underlying performance.

If the Company lost a significant portion of its low-cost deposits, it could negatively impact our liquidity and profitability.

The Company’s profitability depends in part on successfully attracting and retaining a stable base of low-cost deposits. While we generally do not believe these core deposits are sensitive to interest rate fluctuations, the competition for these deposits in our markets is strong and customers are increasingly seeking investments that are safe, including the purchase of U.S. Treasury securities and other government-guaranteed obligations, as well as the establishment of accounts at the largest, most-well capitalized banks. If the Company were to lose a significant portion of its low-cost deposits, it would negatively impact its liquidity and profitability.

The Company is reliant on borrowings from the FHLB and the FRB, and there can be no assurance these programs will continue in their current manner

As pressure on retaining and obtaining deposits has increased, the Company has been reliant on borrowings from the FHLB of San Francisco and the FRB. The amount loaned to the Company is generally dependent on the value of the Company’s collateral pledged to these entities. These lenders could reduce the borrowing capacity of the Company or eliminate certain types of collateral and could otherwise modify or even terminate its loan programs. In this regard, the FHLB of San Francisco suspended dividend payments in the fourth quarter of 2008. Any change or termination would have an adverse affect on the Company’s liquidity and profitability.

A decline in the Company’s stock price or expected future cash flows, or a material adverse change in our results of operations or prospects, could result in further impairment of our goodwill

A further significant and sustained decline in our stock price and market capitalization, a significant decline in our expected future cash flows, a significant adverse change in the business climate or slower growth rates could result in additional impairment of our goodwill. If we were to conclude that a future write-down of our goodwill is necessary, then we would record the appropriate charge, which could be materially adverse to our operating results and financial position. For further discussion, see Note 6, “Goodwill and Other Intangible Assets” in the notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

Any reduction in the Company’s credit rating could increase the cost of funding from the capital markets

The major rating agencies regularly evaluate the Company and their ratings of its long-term debt based on a number of factors, including its financial strength as well as factors not entirely within our control, including conditions affecting the financial services industry generally. In light of the difficulties in the financial services industry and the housing and financial markets, there can be no assurance that the Company will not be subject to credit downgrades. Credit ratings measure a company’s ability to repay its obligations and directly affect the cost and availability to that company of unsecured financing. Downgrades could adversely affect the cost and other terms upon which we are able to obtain funding and increase our cost of capital.

The Company’s expansion strategy may not prove to be successful and our market value and profitability may suffer

The Company continually evaluates expansion through acquisitions of banks, selected assets or deposits of failed or distressed banks, the organization of new banks and the expansion of our existing banks through establishment of new branches. Any future acquisitions will be accompanied by the risks commonly encountered in acquisitions. These risks include, among other things: 1) difficulty of integrating the operations and personnel; 2) potential disruption of our ongoing business; and 3) inability of our management to maximize our financial and strategic position by the successful implementation of uniform product offerings and the incorporation of uniform technology into our product offerings and control systems.

The recent crisis also revealed and caused risks that are unique to acquisitions of financial institutions and banks, and that are difficult to assess, including the risk that the acquired institution has troubled, illiquid, or bad assets or an unstable base of deposits or assets under management. The Company expects that competition for suitable acquisition candidates may be significant. We may compete with other banks or financial service companies with similar acquisition strategies, many of which are larger and have greater financial and other resources. The Company cannot assure you that we will be able to successfully identify and acquire suitable acquisition targets on acceptable terms and conditions.

In addition to the acquisition of existing financial institutions, the Company may consider the organization of new banks in new market areas. We do not have any current plans to organize a new bank. Any acquisition or organization of a new bank carries with it numerous risks, including the following:

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the inability to obtain all required regulatory approvals;

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significant costs and anticipated operating losses during the application and organizational phases, and the first years of operation of the new bank;

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the inability to secure the services of qualified senior management;

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the local market may not accept the services of a new bank owned and managed by a bank holding company headquartered outside of the market area of the new bank;

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the inability to obtain attractive locations within a new market at a reasonable cost; and

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the additional strain on management resources and internal systems and controls.

The Company cannot provide any assurance that it will be successful in overcoming these risks or any other problems encountered in connection with acquisitions and the organization of new banks. The Company’s inability to overcome these risks could have an adverse effect on the achievement of our business strategy and maintenance of our market value.

The Company may not be able to control costs and its business, financial condition, results of operations and prospects could suffer

Our ability to manage our business successfully will depend in part on our ability to maintain low-cost deposits and to control operating costs. If the Company is not able to efficiently manage our costs, results of operations could suffer.

The Company may be forced to divert resources from maintaining and growing existing businesses and client relationships, which could cause us to experience a material adverse effect.

The Company’s future success will depend on the ability of officers and other key employees to continue to implement and improve operational, credit, financial, management and other internal risk controls and processes, and improve reporting systems and procedures, while at the same time maintaining and growing existing businesses and client relationships. We may not successfully implement such improvements in an efficient or timely manner and may discover deficiencies in existing systems and controls. Such activities would divert management from maintaining and growing our existing businesses and client relationships and could require us to incur additional expenditures to expand our administrative and operational infrastructure. If we are unable to improve our controls and processes, or our reporting systems and procedures, we may experience compliance and operational problems or incur additional expenditures beyond current projections, any one of which could adversely affect our financial results.

The Company’s future success will depend on our ability to compete effectively in a highly competitive market.

The Company faces substantial competition in all phases of our operations from a variety of different competitors. Our competitors, including commercial banks, community banks, savings and loan associations, mutual savings banks, credit unions, consumer finance companies, insurance companies, securities dealers, brokers, mortgage bankers, investment advisors, money market mutual funds and other financial institutions, compete with lending and deposit-gathering services offered by us. Increased competition in our markets may result in reduced loans and deposits.

There is very strong competition for financial services in the market areas in which we conduct our businesses from many local commercial banks as well as numerous regionally based commercial banks. Many of these competing institutions have much greater financial and marketing resources than we have. Due to their size, many competitors can achieve larger economies of scale and may offer a broader range of products and services than us. If we are unable to offer competitive products and services, our business may be negatively affected.

Some of the financial services organizations with which we compete are not subject to the same degree of regulation as is imposed on bank holding companies and federally insured depository institutions. As a result, these non-bank competitors have certain advantages over us in accessing funding and in providing various services. The banking business in our primary market areas is very competitive, and the level of competition facing us may increase further, which may limit our asset growth and financial results.

The success of the Company is dependent upon its ability to recruit and retain qualified employees especially seasoned relationship bankers

The Company’s business plan includes and is dependent upon hiring and retaining highly qualified and motivated executives and employees at every level. In particular, our relative success to date has been partly the result of our management’s ability to seek and retain highly qualified relationship bankers that have long-standing relationships in their communities. These professionals bring with them valuable customer relationships and have been an integral part of our ability to attract deposits and to expand our market areas. Our declining stock price and new government limits on employee compensation for TARP recipients could make it more difficult to recruit and retain people. From time to time, the Company recruits or utilizes the services of employees who are subject to the limitations on their ability to use confidential information of a prior employer, to freely compete with that employer, or to solicit customers of that employer. If the Company is unable to hire or retain qualified employees it may not be able to successfully execute its business strategy. If the Company is found to have violated any nonsolicitation or other restrictions applicable to it or its employees, the Company or its employee could become subject to litigation or other proceedings.

The limitations on bonuses, retention awards and incentive compensation contained in ARRA may adversely affect the Company’s ability to retain its highest performing employees

Competition for qualified personnel in the banking industry is intense and there are a limited number of persons both knowledgeable and experienced in our industry. The process of recruiting personnel with the combination of skills and attributes required to carry out the Company’s strategic initiatives is often lengthy. In addition, for so long as any equity or debt securities that were issued to the Treasury under TARP remain outstanding, ARRA restricts bonuses, retention awards and other compensation payable to an institution’s senior executive officers and certain other highly paid employees. It is possible that the Company may be unable to create a compensation structure that permits us to retain our highest performing employees or recruit additional employees, especially if we are competing against institutions that are not subject to the same restrictions. If this were to occur, our business and results of operations could be materially adversely affected.

The Company would be harmed if it lost the services of any of its senior management team or senior relationship bankers

We believe that our success to date has been substantially dependent on our senior management team, which includes Robert Sarver, our Chairman, President and Chief Executive Officer, Dale Gibbons, our Chief Financial Officer, Bruce Hendricks, Chief Executive Officer of Bank of Nevada, James Lundy, President and Chief Executive Officer of Alliance Bank of Arizona, Gerald Cady, President and Chief Operating Officer of Bank of Nevada and Chief Executive Officer of Torrey Pines Bank, James DeVolld, President and Chief Executive Officer of First Independent Bank of Nevada, and certain of our senior relationship bankers. We also believe that our prospects for success in the future are dependent on retaining our senior management team and senior relationship bankers. In addition to their skills and experience as bankers, these persons provide us with extensive community ties upon which our competitive strategy is based. Our ability to retain these persons may be hindered by the fact that we have not entered into employment agreements with any of them. The loss of the services of any of these persons, particularly Mr. Sarver, could have an adverse effect on our business if we cannot replace them with equally qualified persons who are also familiar with our market areas. See also “The limitations on bonuses, retention awards and incentive compensation contained in ARRA may adversely affect our ability to retain our highest performing employees.”

Mr. Sarver’s involvement in outside business interests requires substantial time and attention and may adversely affect the Company’s ability to achieve its strategic plan

Mr. Sarver joined the Company in December 2002 and is an integral part of our business. He has substantial business interests that are unrelated to us, including his position as managing partner of the Phoenix Suns National Basketball Association franchise. Mr. Sarver’s other business interests demand significant time commitments, the intensity of which may vary throughout the year. Mr. Sarver’s other commitments may reduce the amount of time he has available to devote to our business. We believe that Mr. Sarver spends the substantial majority of his business time on matters related to our company. However, a significant reduction in the amount of time Mr. Sarver devotes to our business may adversely affect our ability to achieve our strategic plan.

Terrorist attacks and threats of war or actual war may impact all aspects of our operations, revenues, costs and stock price in unpredictable ways

Terrorist attacks in the United States, as well as future events occurring in response or in connection to them including, without limitation, future terrorist attacks against United States targets, rumors or threats of war, actual conflicts involving the United States or its allies or military or trade disruptions, may impact our operations. Any of these events could cause consumer confidence and savings to decrease or result in increased volatility in the United States and worldwide financial markets and economy. Any of these occurrences could have an adverse impact on the Company’s operating results, revenues and costs and may result in the volatility of the market price for our common stock and impair its future price.

If the real estate investment trust (“REIT”) affiliate fails to qualify as a REIT, we may be subject to a higher consolidated effective tax rate

The Company holds certain commercial real estate loans, residential real estate loans and other loans in a real estate investment trust through its wholly owned subsidiary, Bank of Nevada. Qualification as a REIT involves application of specific provisions of the Internal Revenue Code relating to various assets. If the REIT fails to meet any of the required provisions for REITs, or there are changes in tax laws or interpretations thereof, it could no longer qualify as a REIT and the resulting tax consequences would increase our effective tax rate or cause us to have a tax liability for prior years.

The Company does not anticipate paying dividends on our common stock. As a result, an increase in the price of our common stock may be an investor’s sole source of gains in the future

The Company has never paid a cash dividend, and does not anticipate paying a cash dividend in the foreseeable future. Further, the Company cannot pay dividends for so long as the Series A Preferred Stock that we issued to the Treasury is outstanding. As a result, investors may only receive a return on their investment in the common stock if the market price of the common stock increases over their purchase price.

The business may be adversely affected by internet fraud

The Company is inherently exposed to many types of operational risk, including those caused by the use of computer, internet and telecommunications systems. These risks may manifest themselves in the form of fraud by employees, by customers, other outside entities targeting us and/or our customers that use our internet banking, electronic banking or some other form of our telecommunications systems. Given the growing level of use of electronic, internet-based, and networked systems to conduct business directly or indirectly with our clients, certain fraud losses may not be avoidable regardless of the preventative and detection systems in place.

If credit losses exceed management’s projections, we may be required to record a valuation allowance against our deferred tax asset

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some or all deferred tax assets will not be realized. This determination is based upon an evaluation of all available positive or negative evidence. As a result of losses incurred in 2009, the Company is in a three-year cumulative pretax loss position at December 31, 2009. A cumulative loss position is considered significant negative evidence in assessing the realizability of a deferred tax asset. The Company has assessed its ability to utilize deferred tax assets, and although the Company has a 20 year carryforward period, we currently forecast sufficient taxable income to utilize the deferred tax asset within five years including under stressed conditions. In addition, management has identified substantial tax planning strategies that would also be available to utilize deferred tax assets. The Company has concluded that there is sufficient positive evidence to overcome negative evidence, and that it is not more likely than not that deferred tax assets will not be realized. However, if future results underperform management’s forecasts, the Company may be required to record a valuation allowance against some or all of its deferred tax asset.

Risks Related to the Banking Industry

The Company operates in a highly regulated environment and changes in the laws and regulations that govern our operations, changes in the accounting principles that are applicable to us, and our failure to comply with the foregoing, may adversely affect us

The Company is subject to extensive regulation, supervision, and legislation that governs almost all aspects of our operations. See “Management’s Discussion and Analysis — Supervision and Regulation.” The laws and regulations applicable to the banking industry could change at any time and are primarily intended for the protection of customers, depositors and the deposit insurance funds. Changes to the banking regulatory system, including the creation of a specialized consumer protection agency, are currently under consideration in the U.S. Congress. Any changes to these laws or regulations or any applicable accounting principles could make it more difficult and expensive for us to comply with such laws, regulations, or principles, and could affect the way that we conduct business. The foregoing, and our failure to comply with any such laws, regulations, or principles or changes thereto, may negatively impact our results of operations and financial condition. While we cannot predict what effect any presently contemplated or future changes in the laws or regulations or their interpretations would have on us, these changes could be materially adverse to our investors and stockholders.

Changes in interest rates could adversely affect our profitability, business and prospects

Most of the Company’s assets and liabilities are monetary in nature, which subjects us to significant risks from changes in interest rates and can impact our net income and the valuation of our assets and liabilities. Increases or decreases in prevailing interest rates could have an adverse effect on our business, asset quality and prospects. The Company’s operating income and net income depend to a great extent on our net interest margin. Net interest margin is the difference between the interest yields we receive on loans, securities and other interest earning assets and the interest rates we pay on interest bearing deposits, borrowings and other liabilities. These rates are highly sensitive to many factors beyond our control, including competition, general economic conditions and monetary and fiscal policies of various governmental and regulatory authorities, including the Federal Reserve. If the rate of interest we pay on our interest bearing deposits, borrowings and other liabilities increases more than the rate of interest we receive on loans, securities and other interest earning assets, our net interest income, and therefore our earnings, could be adversely affected. The Company’s earnings could also be adversely affected if the rates on our loans and other investments fall more quickly than those on our deposits and other liabilities.

In addition, loan volumes are affected by market interest rates on loans; rising interest rates generally are associated with a lower volume of loan originations while lower interest rates are usually associated with higher loan originations. Conversely, in rising interest rate environments, loan repayment rates will decline and in falling interest rate environments, loan repayment rates will increase. The Company cannot guarantee that it will be able to minimize interest rate risk. In addition, an increase in the general level of interest rates may adversely affect the ability of certain borrowers to pay the interest on and principal of their obligations.

Interest rates also affect how much money the Company can lend. When interest rates rise, the cost of borrowing increases. Accordingly, changes in market interest rates could materially and adversely affect our net interest spread, asset quality, loan origination volume, business, financial condition, results of operations and cash flows.

The Company is required to maintain an allowance for credit losses that may have to be adjusted in the future. Any adjustment to the allowance for credit losses, whether due to regulatory changes, economic conditions or other factors, may affect our financial condition and earnings.

The Company maintains an allowance for credit losses. This allowance is established through a provision for credit losses based on our management’s evaluation of the risks inherent in the loan portfolio and the general economy. The allowance is based upon a number of factors, including the size of the loan portfolio, asset classifications, economic trends, industry experience and trends, industry and geographic concentrations, estimated collateral values, management’s assessment of the credit risk inherent in the portfolio, historical loan loss experience and loan underwriting policies. In addition, the Company evaluates all loans identified as problem loans and augments the allowance based upon our estimation of the potential loss associated with those problem loans. Additions to the allowance for credit losses decrease net income.

The actual amount of future provisions for credit losses cannot be determined at this time and may exceed past provisions.

If the evaluation we perform in connection with establishing credit loss reserves is inaccurate, our allowance for credit losses may not be sufficient to cover actual credit losses, which would have an adverse effect on our operating results. Due to the significant increase in loans originated in recent periods, which lack repayment history, and the volatile economy, the Company cannot guarantee that we will not experience an increase in delinquencies and losses as these loans continue to mature.

The federal regulators, in reviewing our loan portfolio as part of a regulatory examination, from time to time may require us to increase our allowance for credit losses, thereby negatively affecting our financial condition and earnings. Moreover, additions to the allowance may be necessary based on changes in economic and real estate market conditions, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our management’s control.

The Company is exposed to risk of environmental liabilities with respect to properties to which we obtain title

Approximately 78.5% of the Company’s loan portfolio at December 31, 2009 was secured by real estate. In the course of our business, the Company may foreclose and take title to real estate, and could be subject to environmental liabilities with respect to these properties. We may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination, or may be required to investigate or clean up hazardous or toxic substances, or chemical releases at a property. The costs associated with investigation or remediation activities could be substantial. In addition, if we are the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. These costs and claims could adversely affect our business and prospects.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None

ITEM 2. PROPERTIES

At December 31, 2009, the Company operated 37 domestic branch locations, of which 17 are owned and 20 are on leased premises. In addition, the Company leases a 7,000 square foot service center in San Diego, California, owns a 36,000 square foot operations facility in Las Vegas, Nevada, and leases spaces in Los Angeles and Los Altos, California, Denver, Colorado, Wilmington, Delaware and Columbus, Georgia. The Company has two owned branches not in use, one leased branch not in use and one leased office that is subleased. The Company also owns three hotel condominiums for employee travel to the Company’s corporate headquarters located in Las Vegas, Nevada. For information regarding rental payments, see Note 5, “Premises and Equipment” of the Consolidated Financial Statements.

The Company continually evaluates the suitability and adequacy of its offices. Management believes that the existing facilities are adequate for present and anticipated future use.

ITEM 3. LEGAL PROCEEDINGS

There are no material pending legal proceedings to which the Company is a party or to which any of our properties are subject. There are no material proceedings known to us to be contemplated by any governmental authority. See “Supervision and Regulation” for additional information. From time to time, we are involved in a variety of litigation matters in the ordinary course of our business and anticipate that we will become involved in new litigation matters in the future.

ITEM 4. RESERVED

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

The Company’s common stock began trading on the New York Stock Exchange under the symbol “WAL” on June 30, 2005. The Company has filed, without qualifications, its 2009 Domestic Company section 303A CEO certification regarding its compliance with the NYSE’s corporate governance listing standards. The following table presents the high and low sales prices of the Company’s common stock for each quarterly period for the last two years as reported by The NASDAQ Global Select Market:

		2009 Quarters																2008 Quarters
		Fourth				Third				Second				First				Fourth				Third				Second				First
Range of stock prices:
High		$	6.33			$	7.84			$	9.22			$	10.54			$	17.00			$	27.66			$	14.06			$	18.90
Low			2.99				5.86				4.00				3.72				8.60				6.79				7.74				10.06

Holders

At December 31, 2009, there were approximately 1,086 stockholders of record. At such date, our directors and executive officers owned approximately 17.1% of our outstanding shares. This number excludes an estimate for the number of stockholders whose shares are held in the name of brokerage firms or other financial institutions. The Company is not provided the exact number of or identities of these stockholders. There are no other classes of common equity outstanding.

Dividends

Western Alliance Bancorporation (“Western Alliance”) is a legal entity separate and distinct from the banks and our other non-bank subsidiaries. As a holding company with no significant assets other than the capital stock of our subsidiaries, Western Alliance’s ability to pay dividends depends primarily upon the receipt of dividends or other capital distributions from our subsidiaries. Our subsidiaries’ ability to pay dividends to Western Alliance is subject to, among other things, their individual earnings, financial condition and need for funds, as well as federal and state governmental policies and regulations applicable to Western Alliance and each of those subsidiaries, which limit the amount that may be paid as dividends without prior approval. See the additional discussion in the “Supervision and Regulation” section of this report for information regarding restrictions on the ability to pay cash dividends. In addition, if any required payments on outstanding trust preferred securities or preferred stock, including the preferred stock that we issued to the Treasury in November 2008 pursuant to the Capital Purchase Program, are not made, Western Alliance would be prohibited from paying cash dividends on our common stock. Western Alliance has never paid a cash dividend on its common stock and does not anticipate paying any cash dividends in the foreseeable future.

Sale of Unregistered Securities

There were no unregistered sales of equity securities during 2009.

Share Repurchases

For the year ended December 31, 2008, the Company repurchased 20,000 shares of common stock on the open market with a weighted average price of $17.75 per share. All repurchased shares were retired as soon practicable after settlement.

There were no shares repurchased during the 2009. While the Series A Preferred Stock that we issued to the Treasury are outstanding, the Company is prohibited from repurchasing shares of our common stock.

Performance Graph

The following graph summarizes a five year comparison of the cumulative total returns for the Company’s common stock, the Standard & Poor’s 500 stock index and the KBW Regional Banking Index, each of which assumes an initial value of $100.00 on June 30, 2005 and reinvestment of dividends.

		Measurement Point
		Jun ’05				Dec ’05				Dec ’06				Dec ’07				Dec ’08				Dec ’09
Western Alliance			100.00				117.60				136.89				73.90				39.72				14.88
S&P 500 Index			100.00				105.76				122.45				129.17				81.39				102.94
KBW Regional Banking Index			100.00				103.32				112.17				87.55				71.29				55.56

The information under the caption “Equity Compensation Plans” in our definitive proxy statement to be filed with the SEC is incorporated by reference into this Item 5.

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data have been derived from the Company’s consolidated financial condition and results of operations, as of and for the years ended December 31, 2009, 2008, 2007, 2006 and 2005, and should be read in conjunction with the consolidated financial statements and the related notes included elsewhere in this report:

		Year Ended December 31,
		2009				2008				2007				2006				2005
		(in thousands, except per share data)
Results of Operations:
Interest income		$	276,023			$	295,591			$	305,822			$	233,085			$	134,910
Interest expense			73,734				100,683				125,933				84,297				32,568
Net interest income			202,289				194,908				179,889				148,788				102,342
Provision for credit losses			149,099				68,189				20,259				4,660				6,179
Net interest income after provision for credit losses			53,190				126,719				159,630				144,128				96,163
Non-interest income			(15,016	)			(117,046	)			22,538				13,434				12,138
Non-interest expense			231,186				300,299				133,780				96,086				64,864
(Loss)/income before taxes			(193,012	)			(290,626	)			48,388				61,476				43,437
Income tax (benefit)/provision			(41,606	)			(54,166	)			15,513				21,587				15,372
Net (loss)/income		$	(151,406	)		$	(236,460	)		$	32,875			$	39,889			$	28,065

		Year Ended December 31,
		2009				2008				2007				2006				2005
		(in thousands, except per share data)
Per Share Data:
(Loss)/income per share—basic		$	(2.74	)		$	(7.27	)		$	1.14			$	1.56			$	1.36
(Loss)/income per share—diluted		$	(2.74	)		$	(7.27	)		$	1.06			$	1.41			$	1.24
Book value per common share		$	6.18			$	9.59			$	16.63			$	15.09			$	10.71
Tangible book value per share, net of tax (non-GAAP)(1)		$	5.66			$	7.19			$	8.88			$	9.81			$	10.48
Shares outstanding at period end			72,504				38,601				30,157				27,085				22,810
Weighted average shares outstanding—basic			58,836				32,652				28,918				25,623				20,583
Weighted average shares outstanding—diluted			58,836				32,652				31,019				28,218				22,666
Selected Balance Sheet Data:
Cash and cash equivalents		$	396,830			$	139,954			$	115,629			$	264,880			$	174,336
Investments and other securities		$	864,779			$	565,377			$	736,200			$	542,321			$	748,533
Gross loans, including net deferred loan fees		$	4,079,638			$	4,095,711			$	3,633,009			$	3,003,222			$	1,793,337
Allowance for loan losses		$	108,623			$	74,827			$	49,305			$	33,551			$	21,192
Assets		$	5,753,279			$	5,242,761			$	5,016,096			$	4,169,604			$	2,857,271
Deposits		$	4,722,102			$	3,652,266			$	3,546,922			$	3,400,423			$	2,393,812
Junior subordinated and subordinated debt		$	102,438			$	103,038			$	122,240			$	101,857			$	30,928
Stockholders’ equity		$	575,725			$	495,497			$	501,518			$	408,579			$	244,223
Selected Other Balance Sheet Data:
Average assets		$	5,575,025			$	5,198,237			$	4,667,243			$	3,668,405			$	2,488,740
Average earning assets		$	5,125,574			$	4,600,466			$	4,123,956			$	3,304,325			$	2,324,463
Average stockholders’ equity		$	586,171			$	512,872			$	493,365			$	348,294			$	195,284
Selected Financial and Liquidity Ratios:
Return on average assets			(2.72	%)			(4.55	%)			0.70	%			1.09	%			1.13	%
Return on average stockholders’ equity			(25.83	%)			(46.11	%)			6.66	%			11.45	%			14.37	%
Net interest margin (2)			3.97	%			4.28	%			4.40	%			4.52	%			4.41	%
Loan to deposit ratio			86.39	%			112.14	%			102.43	%			88.32	%			74.92	%
Capital Ratios:
Leverage ratio			9.5	%			8.9	%			7.4	%			8.2	%			10.2	%
Tier 1 risk-based capital ratio			11.8	%			9.8	%			7.9	%			9.4	%			12.8	%
Total risk-based capital ratio			14.4	%			12.3	%			10.3	%			11.5	%			13.8	%
Tangible Equity (non-GAAP) (3)			9.3	%			7.7	%			5.4	%			6.5	%			8.4	%
Tangible Common Equity (non-GAAP) (4)			7.1	%			5.3	%			5.4	%			6.5	%			8.4	%
Average assets to average equity			9.51				10.14				9.46				10.53				12.74
Selected Asset Quality Ratios:
Nonaccrual loans to gross loans			3.77	%			1.44	%			0.49	%			0.05	%			0.01	%
Nonaccrual loans and OREO to total assets			4.12	%			1.40	%			0.42	%			0.03	%			0.00	%
Loans past due 90 days or more and still accruing to total loans			0.14	%			0.30	%			0.02	%			0.03	%			0.00	%
Allowance for credit losses to total loans			2.66	%			1.83	%			1.36	%			1.12	%			1.18	%
Allowance for credit losses to nonaccrual loans			70.67	%			128.34	%			275.86	%			2367.75	%			19805.61	%
Net charge-offs to average loans			2.86	%			1.10	%			0.23	%			0.04	%			0.02	%

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with “Item 8 — Consolidated Financial Statements and Supplementary Data.” This discussion and analysis contains forward-looking statements that involve risk, uncertainties and assumptions. Certain risks, uncertainties and other factors, including but not limited to those set forth under “Cautionary Note Regarding Forward-Looking Statements” may cause actual results to differ materially from those projected in the forward-looking statements.

Financial Overview and Highlights

Western Alliance Bancorporation is a multi-bank holding company headquartered in Las Vegas, Nevada that provides full service banking, trust and investment advisory services and lending through its subsidiaries.

Financial Result Highlights of 2009

Net loss for the Company of $151.4 million, or ($2.74) loss per diluted share for 2009 compared to net loss of $236.5 million or ($7.27) loss per diluted share for 2008.

The significant factors impacting earnings of the Company during 2009 were:

•

Record growth in deposits of $1.07 billion or 29.2% during 2009, including approximately $132 million acquired from the FDIC in the first quarter.

•

In the second quarter of 2009, the Company completed a public offering, which contributed $191.1 million to capital for 33.4 million common stock shares and qualified the Company to retire half of the warrants issued to the U.S. Treasury under the TARP agreement.

•

The challenging economic conditions in the Company’s primary markets resulted in further deterioration of credit quality and increased provision for credit losses of $149.1 million, increased net charges offs to $115.3 million and losses on sales of repossessed assets of $21.3 million.

•

During 2009 the Company recorded non-cash goodwill impairment charges related to its Bank of Nevada, Miller/Russell and Associates, and Shine acquisitions of $49.7 million due to the decline in the Company’s stock price and in conjunction with disposition activities.

•

Additional costs associated with increased regulatory actions and oversights during 2009.

•

Impairment charges related to the securities portfolio of $43.8 million during 2009.

The impact to the Company from these items, and others of both a positive and negative nature, will be discussed in more detail as they pertain to the Company’s overall comparative performance for the year ended December 31, 2009 throughout the analysis sections of this report.

A summary of our results of operations and financial condition and select metrics is included in the following table:

		Year Ended December 31,
		2009				2008				2007
		(in thousands, except per share amounts)
Net (loss)/income available to common stockholders		$	(161,148	)		$	(237,541	)		$	32,875
Basic earnings (loss) per share			(2.74	)			(7.27	)			1.14
Diluted earnings (loss) per share			(2.74	)			(7.27	)			1.06
Total assets		$	5,753,279			$	5,242,761			$	5,016,096
Gross loans		$	4,079,638			$	4,095,711			$	3,633,009
Total deposits		$	4,722,102			$	3,652,266			$	3,546,922
Net interest margin			3.97	%			4.28	%			4.40	%
Return on average assets			(2.72	)%			(4.55	)%			0.70	%
Return on average stockholders’ equity			(25.84	)%			(46.11	)%			6.66	%

As a bank holding company, management focuses on key ratios in evaluating the Company’s financial condition and results of operations. In the current economic environment, key ratios regarding asset credit quality and efficiency are more informative as to the financial condition of the Company than those utilized in a more normal economic period such as return on equity and return on assets.

Asset Quality

For all banks and bank holding companies, asset quality plays a significant role in the overall financial condition of the institution and results of operations. The Company measures asset quality in terms of nonaccrual loans as a percentage of gross loans, and net charge-offs as a percentage of average loans. Net charge-offs are calculated as the difference between charged-off loans and recovery payments received on previously charged-off loans. As of December 31, 2009, nonaccrual loans were $153.7 million compared to $58.3 million at December 31, 2008. Nonaccrual loans as a percentage of gross loans were 3.77% as of December 31, 2009, compared to 1.42% as of December 31, 2008. At December 31, 2009 and December 31, 2008, our nonperforming assets were $289.7 million and $10.0 million, respectively and were comprised of nonaccrual loans, loans past due 90 days or more and still accruing, restructured and other impaired loans. For the year ended December 31, 2009, net charge-offs as a percentage of average loans were 2.86%, compared to 1.10% for the year ended December 31, 2008.

Asset and Deposit Growth

The ability to originate new loans and attract new deposits is fundamental to the Company’s asset growth. The Company’s assets and liabilities are comprised primarily of loans and deposits. Total assets increased during 2009 to $5.75 billion at December 31, 2009 from $5.24 billion at December 31, 2008. Total gross loans excluding net deferred fees and unearned income decreased slightly by $6.3 million as of December 31, 2009 compared to December 31, 2008. Total deposits increased significantly by 29.3% to $4.72 billion as of December 31, 2009 from $3.65 billion as of December 31, 2008.

RESULTS OF OPERATIONS

The following table sets forth a summary financial overview for the comparable years:

		Year Ended
		December 31,								Increase
		2009				2008				(Decrease)
		(in thousands, except per share amounts)
Interest income		$	276,023			$	295,591			$	(19,568	)
Interest expense			73,734				100,683				(26,949	)
Net interest income			202,289				194,908				7,381
Provision for credit losses			149,099				68,189				80,910
Net interest income after provision for credit losses			53,190				126,719				(73,529	)
Non-interest income			(15,016	)			(117,046	)			102,030
Non-interest expense			231,186				300,299				(69,113	)
Net (loss) before income taxes			(193,012	)			(290,626	)			97,614
Income tax benefit			(41,606	)			(54,166	)			12,560
Net loss		$	(151,406	)		$	(236,460	)		$	85,054
Net loss available to common stockholders		$	(161,148	)		$	(237,541	)		$	76,393
Loss per share — basic		$	(2.74	)		$	(7.27	)		$	4.53
Loss per share — diluted		$	(2.74	)		$	(7.27	)		$	4.53

Net Interest Margin

The net interest margin is reported on a fully tax equivalent (“FTE”) basis. A tax equivalent adjustment is added to reflect interest earned on certain municipal securities and loans that are exempt from Federal income tax. The following table sets forth the average balances and interest income on a fully tax equivalent basis and interest expense for the years indicated:

		Year Ended December 31,
		2009												2008
		(dollars in thousands)
		Average								Average				Average								Average
		Balance				Interest				Yield/Cost				Balance				Interest				Yield/Cost
Interest-Earning Assets
Investment Securities:
Taxable		$	634,916			$	24,124				3.80	%		$	589,416			$	32,938				5.59	%
Tax-exempt (1)			55,515				1,691				5.23	%			78,096				2,896				6.07	%
Total securities			690,431				25,815				3.91	%			667,512				35,834				5.64	%
Federal funds sold and other			33,479				1,103				3.29	%			18,574				322				1.73	%
Loans (1) (2) (3)			4,037,659				248,098				6.14	%			3,872,918				257,528				6.65	%
Short term investments			322,883				874				0.27	%			—				—				0.00	%
Restricted stock			41,122				133				0.32	%			41,462				1,907				4.60	%
Total earnings assets			5,125,574				276,023				5.41	%			4,600,466				295,591				6.47	%
Nonearning Assets
Cash and due from banks			174,112												113,423
Allowance for credit losses			(88,243	)											(56,124	)
Bank-owned life insurance			91,321												89,343
Other assets			272,261												451,129
Total assets		$	5,575,025											$	5,198,237
Interest-Bearing Liabilities
Sources of Funds
Interest-bearing deposits:
Interest checking		$	303,388			$	3,216				1.06	%		$	253,783			$	3,965				1.56	%
Savings and money market			1,666,728				26,903				1.61	%			1,517,189				35,475				2.34	%
Time deposits			1,280,381				31,786				2.48	%			781,828				29,696				3.80	%
Total interest-bearing deposits			3,250,497				61,905				1.90	%			2,552,800				69,136				2.71	%
Short-term borrowings			512,265				5,286				1.03	%			896,309				19,721				2.20	%
Long-term debt			25,727				1,577				6.13	%			141,954				4,569				3.22	%
Junior subordinated and subordinated debt			103,034				4,966				4.82	%			114,741				7,257				6.32	%
Total interest-bearing liabilities			3,891,523				73,734				1.89	%			3,705,804				100,683				2.72	%
Noninterest-Bearing Liabilities
Noninterest-bearing demand deposits			1,070,011												961,703
Other liabilities			27,320												17,858
Stockholders’ equity			586,171												512,872
Total Liabilities and Stockholders’ Equity		$	5,575,025											$	5,198,237
Net interest income and margin (4)						$	202,289				3.97	%						$	194,908				4.28	%
Net interest spread (5)											3.52	%											3.75	%

The table below sets forth the relative impact on net interest income of changes in the volume of earning assets and interest-bearing liabilities and changes in rates earned and paid by us on such assets and liabilities. For purposes of this table, nonaccrual loans have been included in the average loan balances.

		Year Ended December 31,
		2009 versus 2008
		Increase (Decrease)
		Due to Changes in (1)(2)
		Volume				Rate				Total
		(in thousands)
Interest on investment securities:
Taxable		$	1,729			$	(10,543	)		$	(8,814	)
Tax-exempt			(688	)			(517	)			(1,205	)
Federal funds sold and other			491				290				781
Loans			10,123				(19,553	)			(9,430	)
Short term investments			874				—				874
Restricted stock			(1	)			(1,773	)			(1,774	)
Total interest income			12,528				(32,096	)			(19,568	)
Interest expense:
Interest checking			526				(1,275	)			(749	)
Savings and money market			2,414				(10,986	)			(8,572	)
Time deposits			12,377				(10,287	)			2,090
Short-term borrowings			(3,963	)			(10,472	)			(14,435	)
Long-term debt			(7,124	)			4,132				(2,992	)
Junior subordinated debt			(564	)			(1,727	)			(2,291	)
Total interest expense			3,666				(30,615	)			(26,949	)
Net increase (decrease)		$	8,862			$	(1,481	)		$	7,381

The Company’s primary source of income is interest income. Interest income for the year ended December 31, 2009 was $276.0 million, a decrease of 6.6% when comparing interest income for 2009 to 2008. This decrease was primarily from interest income from investment securities and dividends due to decreased rates received on these investments. Interest income from loans also declined primarily due to rates. Average yield on loans decreased 51 basis points to 6.14% for the year ended December 31, 2009 compared to 2008. The Company’s increased nonaccrual loans also contributed to this decline.

Interest expense for the year ended 2009 compared to 2008 decreased by 26.8% to $73.7 million from $100.7 million. This decline was primarily due to decreased average interest paid on deposits which declined 81 basis points to 1.90% for the year ended December 31, 2009 compared to the same period in 2008. Total average cost of interest paid on interest-bearing liabilities declined 83 basis points for the comparable years 2009 to 2008.

Net interest income for the year ended December 31, 2009 compared to the year ended December 31, 2008 increased $7.4 million, or 3.8%, as the decrease in interest expense more than offset the decrease in interest income. Net interest margin declined by 31 basis points to 3.97% for the year ended December 31, 2009 compared to 2008 while net interest spread declined by 23 basis points to 3.52% from 3.75% for 2009 compared to 2008.

Comparison of net interest margin for 2008 to 2007

The following table sets forth a summary financial overview for the years ended December 31, 2008 and 2007:

		Year Ended
		December 31,								Increase
		2008				2007				(Decrease)
		(in thousands, except per share amounts)
Interest income		$	295,591			$	305,822			$	(10,231	)
Interest expense			100,683				125,933				(25,250	)
Net interest income			194,908				179,889				15,019
Provision for loan losses			68,189				20,259				47,930
Net interest income after provision for loan losses			126,719				159,630				(32,911	)
Non-interest income			(117,046	)			22,538				(139,584	)
Non-interest expense			300,299				133,780				166,627
Net (loss) income before income taxes			(290,626	)			48,388				(339,014	)
Income tax expense (benefit)			(54,166	)			15,513				(69,679	)
Net income (loss)		$	(236,460	)		$	32,875			$	(269,335	)
Net income (loss) available to common stockholders		$	(237,541	)		$	32,875			$	(270,416	)
Earnings (loss) per share — basic		$	(7.27	)		$	1.14			$	(8.41	)
Earnings (loss) per share — diluted		$	(7.27	)		$	1.06			$	(8.33	)

The net loss of $236.5 million in 2008 was due primarily to securities impairment charges of $156.8 million, a non-cash goodwill impairment charge of $138.8 million and a $47.9 million increase to the provision for credit losses caused by challenging economic conditions. These amounts were partially offset by a $25.3 million decrease in interest expense due to lower costs of funds compared with the same period in 2007.

The net interest margin is reported on a fully tax equivalent (“FTE”) basis. A tax equivalent adjustment is added to reflect interest earned on certain municipal securities and loans that are exempt from Federal income tax. The following table sets forth the average balances and interest income on a fully tax equivalent basis and interest expense for the years indicated:

		Year Ended December 31,
		2008												2007
		Average								Average				Average								Average
		Balance				Interest				Yield/Cost				Balance				Interest				Yield/Cost
Interest-Earning Assets
Securities:
Taxable		$	589,416			$	32,938				5.59	%		$	629,846			$	36,320				5.77	%
Tax-exempt (1)			78,096				2,896				6.07	%			50,432				2,396				7.46	%
Total securities			667,512				35,834				5.64	%			680,278				38,716				5.89	%
Federal funds sold and other			18,574				322				1.73	%			30,900				1,644				5.32	%
Loans (1) (2) (3)			3,872,918				257,528				6.65	%			3,393,299				264,480				7.79	%
Restricted stock			41,462				1,907				4.60	%			19,479				982				5.04	%
Total earnings assets			4,600,466				295,591				6.47	%			4,123,956				305,822				7.45	%
Nonearning Assets
Cash and due from banks			113,423												103,163
Allowance for loan losses			(56,124	)											(37,935	)
Bank-owned life insurance			89,343												85,509
Other assets			451,129												392,550
Total assets		$	5,198,237											$	4,667,243
Interest-Bearing Liabilities
Sources of Funds
Interest-bearing deposits:
Interest checking		$	253,783			$	3,965				1.56	%		$	259,774			$	6,391				2.46	%
Savings and money market			1,517,189				35,475				2.34	%			1,602,980				58,867				3.67	%
Time deposits			781,828				29,696				3.80	%			681,229				32,870				4.83	%
Total interest-bearing deposits			2,552,800				69,136				2.71	%			2,543,983				98,128				3.86	%
Short-term borrowings			896,309				19,721				2.20	%			372,547				17,097				4.59	%
Long-term debt			141,954				4,569				3.22	%			61,119				3,092				5.06	%
Junior subordinated and subordinated debt			114,741				7,257				6.32	%			106,802				7,616				7.13	%
Total interest-bearing liabilities			3,705,804				100,683				2.72	%			3,084,451				125,933				4.08	%
Noninterest-Bearing Liabilities
Noninterest-bearing demand deposits			961,703												1,065,592
Other liabilities			17,858												23,835
Stockholders’ equity			512,872												493,365
Total Liabilities and Stockholders’ Equity		$	5,198,237											$	4,667,243
Net interest income and margin (4)						$	194,908				4.28	%						$	179,889				4.40	%
Net interest spread (5)											3.75	%											3.37	%